flag Papua New Guinea Papua New Guinea: Investing

FDI in Figures

Papua New Guinea is the largest economy among the Pacific Islands and offers enormous trade and investment potential. According to UNCTAD's 2021 World Investment Report, FDI flows to Papua New Guinea amounted to USD -935 million in 2020 and showed a slight decline from USD -901 million in 2019, due to the economic and health crisis triggered by the Covid-19 pandemic and a massive government budget shortfall. The stock of FDI grew to USD 3.9 billion in 2020. Traditionally, the mining, agriculture, finance and trade and gas sectors attract most FDI (Bank of Papua New Guinea data), and the country is attempting to diversify it through a free and special economic zone reached with blockchain firm Ledger Atlas.

Under the current Prime Minister M. Marape, Papua New Guinea reaffirmed its openness to trade and investment, is stepping up reforms to recover from high debt levels and seeks to attract more foreign direct investment (FDI) to stimulate its economy. However, the Marape Administration’s inability to reach agreement with multinational companies on key energy and mining projects created a shadow over this strategy (US State Department, 2022). The country aims to increase Foreign Direct Investment (FDI) in mining and the petroleum/gas sector from USD 40.0 million in 2016 to USD 100.0 million by 2022. The mining, oil, and gas sectors attract most of the FDI. There is a target to increase stock to USD 10 billion by the end of 2022. The government also aims to increase FDI in the renewable sector. Last but not least, the world’s first public-private, Digital Foreign Direct Investment (FDI) working group has been recently created in PNG to encourage tech investment (World Economic Forum, 2022).

Papua New Guinea has six preferential trade agreements in force. The trade-weighted average tariff rate is 2.3 percent, but numerous nontariff barriers undercut trade flows. Foreign investors may not own land, and investment in several other sectors is restricted (Heritage Foundation, 2022).

Papua New Guinea (PNG) is the largest economy among the Pacific Islands and offers enormous trade and investment potential.  Key investment prospects are in infrastructure development, a growing urban-based middle-class market, abundant natural resources in mining, oil and gas, forestry, and fisheries. FDI remain weak compared to the country’s potential due to lack of equipment, state monopolies, political instability and insecurity. Law does not allow direct foreign ownership of land and investment in several sectors is restricted. The judicial framework is inadequately resourced and underdeveloped. Pervasive corruption and nepotism are the biggest hindrances to development. Papua New Guinea ranks 120th out of 190 countries in the last 2020 Doing Business report, 12 spots down compared to the previous year. The government aims to provide security for foreign investors and regaining their confidence, promoting economic efficiency by privatising moribund state institutions and maintaining good relations with Australia, its former colonial ruler. A raft of foreign capital investments across new and existing mines are set to boost production and lead to a rebound in government revenues. However, there are concerns over proposed legislative changes that could hinder activity moving forward. The PNG Government remains focused on fostering an enabling environment for businesses to grow and attracting foreign direct investment. In 2021, the country faced a severe economic downturn, related to both a massive government budget shortfall and the COVID-19 pandemic. Foreign direct investment will play a significant role in PNG’s recovery and economic future, but at present has many barriers to overcome.

For additionnal information on FDI in Papua New Guinea access the IMF web page on this country.

 

Country Comparison For the Protection of Investors

  Papua New Guinea East Asia & Pacific United States Germany
Index of Transaction Transparency* 5.0 5.9 7.0 5.0
Index of Manager’s Responsibility** 5.0 5.2 9.0 5.0
Index of Shareholders’ Power*** 9.0 6.7 9.0 5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

 
Foreign Direct Investment 201920202021
FDI Inward Flow (million USD) 33511287
FDI Stock (million USD) 4,843.43,800.03,886.8
Number of Greenfield Investments* 0.00.01.0
Value of Greenfield Investments (million USD) 0052

Source: UNCTAD - Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

 

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Tax Rates

Goods and services tax (GST)
10% (standard rate).
Zero-rated items include exported goods and services; sale of going concerns; supplies of goods and services to foreign aid providers; supplies of goods and services to nonprofit bodies, which are religious, charitable or community organizations carrying on charitable activities approved by the Commissioner General of Internal Revenue, provided that the supplies or goods are not used for profit-making taxable activities; and international travel.
Exempt items include financial services; certain fine metals; medical services; educational services; public transport and taxis; newspapers; supplies of housing or motor vehicles by employers to employees; and specific exemptions as notified in the National Gazette.
Company Tax
30% for a resident corporation
48% for a non-resident corporation
Withholding Taxes
Dividends: 0% (resident company)/15% (resident individual, non-resident company or individual); Interests: 15%, Royalties: 0% (resident company or individual)/10% (non-resident company or individual)/30% (where the parties are associated).
Social Security Contributions Paid By Employers
8.4% (superannuation, compulsory for companies with 15 or more permanent employees)
Other Domestic Resources
Internal Revenue Commision
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 
 

Individual Taxes

Personal income tax (residents) Progressive rates from 0 to 42%
PGK 0 - 12,500 0%
PGK 12,501 - 20,000 22%
PGK 20,001 - 33,000 30%
PGK 33,000 - 70,000 35%
PGK 70,001 - 250,000 40%
Above PGK 250,000 42%
Personal income tax (non-residents)
PGK 0 - 20,000 22%
PGK 20,001 - 33,000 30%
PGK 33,000 - 70,000 35%
PGK 70,001 - 250,000 40%
Above PGK 250,000 42%
 
 

Country Comparison For Corporate Taxation

  Papua New Guinea East Asia & Pacific United States Germany
Number of Payments of Taxes per Year 45.0 23.4 10.6 9.0
Time Taken For Administrative Formalities (Hours) 207.0 195.1 175.0 218.0
Total Share of Taxes (% of Profit) 37.1 33.8 36.6 48.8

Source: Doing Business - Latest available data.

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Investment Opportunities

Tenders, Projects and Public Procurement
Tenders Info, Tenders in Papua New Guinea
DgMarket, Tenders Worldwide
Setting Up a Company
Consult Doing Business Website, to know about procedures to start a Business in Papua New Guinea.
Useful Resources
Investment Promotion Authority of Papua New Guinea
 

Business Setup Procedures

Setting Up a Company Papua New Guinea East Asia & Pacific
Procedures (number) 6.00 7.25
Time (days) 41.00 29.73

Source: Doing Business.

 
 
 

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Latest Update: June 2022