Thriving stock exchange eyed in PNG

Companies are not currently obliged to list on the Papua New Guinea stock exchange (PNGX), but a thriving stock exchange in the country can act as a catalyst for broader economic growth, says chairman David Lawrence.

On PNGX trading, Lawrence said: “For the March quarter this year, there were 154 trades (down 49 percent on the same quarter last year) with a volume of 5.5 million shares (down 9 percent) and a value of K61.8 million (US$17.3 million) (up 36 per cent).”

International Trade and Investment Minister Richard Maru recently urged all companies with activities in PNG listed on overseas markets to voluntarily list on PNGX.

“The minister states that this is a part of their social obligations as responsible corporate citizens in PNG,” Lawrence said.

“The minister goes on to say that the Government is working on a policy to compel all public companies and international companies operating in PNG and listed outside the country to list on PNGX.

“He is urging them to voluntarily list before they are forced to list.”

Lawrence said PNGX had recently released updated listing rules to assist companies to list.

“Unlike many other developing markets, there are no government incentives for PNG companies to list on PNGX. Those incentives are generally tax concessions or subsidies.

“For example, in Fiji, listed companies pay only a 15 per cent corporate tax for the first seven years of listing rather than the full 25 per cent tax rate.

“Other options to increase listings include allowing a 150 percent tax deduction for the costs of listing or allowing dividends of listed companies to be tax free to shareholders.

“The expectation would be that the tax concessions would encourage listing which improves the mobilisation of capital and promotes economic growth,” he said.