Papua New Guinea (PNG) is often described as the land of the unexpected. Although unpredicted events can happen at any time (and they often do), PNG still offers many opportunities to foreign investors.

Investor confidence in PNG looks set to increase in 2014. During last year PNG demonstrated that not only does it have a stable and growing economy, but its government was taking action to invest in large scale national projects to upgrade substandard infrastructure such as roads and power generation, which are critical for investment confidence.

The Asia Development Bank recently reported that PNG’s economy is robust and business is upbeat.[1] Major projects such as the multibillion dollar PNG LNG are about to come online, while new projects such as Highlands Region Road Improvement Investment Program and the Civil Aviation Development Investment Program should improve investment confidence because such projects are intended to increase capacity development and provide economic growth.

With growing investor confidence you may now want to consider starting business operations in PNG. So what do you need to know?

  1. Before you start business operations in PNG

A foreign company wishing to conduct business in Papua New Guinea (PNG) must (unless an exemption applies) obtain Investment Promotion Authority (IPA) approval and be issued with an IPA certificate. Without IPA certification any contract, agreement or understanding would be considered unlawful and may be found void and unenforceable.

Before an IPA certificate can be issued a foreign business must either register as an Overseas Company under the Companies Act 1997 or incorporate a new PNG company.

To register an Overseas Company in PNG you will need to complete Form 46 and pay the prescribed fee of 500 Kina (about AUD $200).

Note: a resident agent and a physical address in PNG are required to complete the form.

To incorporate a PNG company you will need to complete Forms 1, 2 ,3, 4 and 6 and pay the prescribed fee of 500 Kina (about AUD $200). Note: you can also purchase a PNG shelf company. Typically this will cost about 2,000 Kina or about AUD $1,000.

Downloading free company forms:

A range of IPA and company forms can be downloaded for free at http://www.ipa.gov.pg/

  1. Before you arrive in PNG - Visa

Prior to landing in PNG you need to make sure that you have the correct visa. This will depend on the purpose of the trip.

(a) Visitors

All visitor entry permits are valid for a single entry stay of 60 days from the date of arrival. Work is prohibited under visitor entry permits. A visitor entry permit may be extended for a further 30 days. Visas may be obtained from:

  • PNG High Commissions; and
  • Consulates and Offices overseas.

Note: From 1 March 2014, all Australians wanting a visitor, short-term single entry or restricted employment visa must apply through their nearest PNG consulate. Previously it was possible for Australian citizens to apply upon arrival at Jackson’s airport.

(b) Business Visa

This type of visa entitles the holder to attend business meetings and visit clients.

(c) Short-Term Employment

Any persons wishing to work in PNG for 6 months to 3 years will require a valid work permit.

Persons wishing to perform short work assignments and relief duties for period of up to 12 months will need a visa. Approval from the Department of Labour and Employment is required prior to the visa being issued. A specialist or consultant single entry 90 day visa can also be obtained.

(d) PNG Posting - Long Term Employment Visa

In most cases Long Term Employment Visas are issued only to skilled staff. Approval is required by the Department of Labour and Employment prior to the issue of the visa.

In addition, undertakings must be given by the employing company regarding the maintenance, accommodation, and repatriation of the workers concerned.

(e) Dependants Visa

The existing legislation allows for the spouse or a child of the holder of a valid work permit to apply for a multiple entry dependant visa. If the visa is issued, then it will be for the same period as the work permit. Dependant visa holders are prohibited from undertaking employment.

  1. Housing in PNG

The costs of expatriate rental accommodation can be very expensive. In Port Moresby the average rental for a two bedroom apartment is around K4,500 (A$2,200) per week, plus GST.

  1. Tax rates

All taxpayers must lodge their tax returns each year. Tax returns are based on income earned from 1 January to 31 December (balance date). In certain situations the Internal Revenue Commission may approve to adopt a substituted balance date.

PNG has different tax rates for resident, non-resident, resident mining, non-resident mining and petroleum companies.

Sometimes, local knowledge makes a huge difference. Rockwell Olivier has relationships with local firms which can assist you with establishing a new business presence in PNG. Contact Dan Ward or our Corporate & International Business team for more information.