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Doing Business in Papua New Guinea: Overview
Practical Law Country Q&A w-007-1171 (Approx. 23 pages)
Doing Business in Papua New Guinea: Overview
by Stephen Massa, Steve Patrick and Deborah Edo, Dentons PNG
| Law stated as at 01 Jul 2021 • Papua New Guinea |
A Q&A guide to doing business in Papua New Guinea.
This Q&A gives an overview of key recent developments affecting doing business in Papua New Guinea as well as an introduction to the legal system; foreign investment, including restrictions, currency regulations and incentives; and business vehicles and their relevant restrictions and liabilities. The article also summarises the laws regulating employment relationships, including redundancies and mass layoffs, and provides short overviews on competition law; data protection; and product liability and safety. In addition, there are comprehensive summaries on taxation and tax residency; and intellectual property rights over patents, trade marks, registered and unregistered designs.
Overview
Economy
A modern economic system co-exists with traditional communities (especially involving key sectors such as mining and petroleum production and export) and alongside government organisations and regulatory bodies.
Dominant Industries
PNG boasts a high-level natural resources sector which accounts for the bulk of the country's gross domestic product.
The economy is dominated by the:
- Agriculture, forestry, and fisheries sector that engages most of PNG's labour force (the majority of which are informal).
- The minerals and energy extraction sector. PNG has a high level of copper, gold, nickel, oil, and natural gas deposits which has stimulated its extractive industry and overall economic growth through the export of these crude resources.
Population and Language
PNG's current population is approximately 8.8 million. The majority of the populace are primarily based in rural areas with informal jobs including subsistent farming, crop growing and crop selling. The residents of urban centers around PNG, including major cities of Port Moresby and Lae, make up a small fraction of urban dwellers.
The country is diverse in culture and has well over 800 different languages. Its official languages are English, Tok Pisin and Hiri Motu. The two former languages are commonly used as the primary mode of communication.
Business Culture
General business etiquette is observed in most formal employment settings but may vary between public and private sectors.
Normal office hours are Monday to Friday 08.00 to 16.30 or 17.00 but may differ according to the type of organisation. Government offices typically stop work at 16.00 whereas companies operate until 1700.
Key Business and Economic Events
The first wave of Covid-19 hit the shores of PNG in February 2020. This produced a spike in the number of victims who tested positive and ultimately affected the economy as many government institutions, corporate organisations, and small to medium enterprises were affected.
Port Moresby, the capital city and business hub of PNG, observed a three-week temporary isolation period from March to April 2021.
Political Events
Following the death of sitting member for Port Moresby North-West electorate, late Sir Mekere Morauta in December of 2020, a by-election was held in the National Capital District on 5 June 2021 to elect and appoint an interim member for the electorate pending the National Elections in 2022.
Two months of campaigning and rallying by candidates culminated in a day of polling that saw public/government offices cease work to cast their votes.
The pending 2022 national election is likely to affect business and economic activities as PNG may see a change in leadership and government.
New Legislation
Whistleblower Act 2020. The legislation was certified in May of 2020 and is designed to:
- Provide procedures for employees to report suspected improprieties in the workplace.
- Protect employees who make protected disclosures from occupational detriment.
- Provide remedies to employees who suffer occupational detriment having made protected disclosures.
It enables employees to disclose any suspicious impropriety within their workplace including a criminal offence, a failure to comply with a legal obligation, a miscarriage of justice, endangering the health and safety of an individual, environment damage, unfair discrimination and deliberately concealing any conduct mentioned above.
Mining (Amendment) Act 2020. Parliament certified this legislation in June 2020. The amendment allows the state to reserve land that is part of an expired, cancelled, surrendered or relinquished tenement and to specifically prioritise state applicants for a mining tenement over the reserved land.
The amendment also makes it mandatory for all operating mines to submit to the Mineral Resources Authority relevant data on mineral production, extraction and sale.
Oil & Gas (Amendment) Act 2020. Together with the Mining (Amendment) Act 2020, this legislation was passed in June 2020. It has made significant changes to the principal Oil & Gas Act 1998 including:
- New ministerial powers in respect of grant and refusal of petroleum development licences.
- Ministers can impose a minimum expected level of return where petroleum production under a petroleum development licence proposal is likely to be of "national significance".
Employment of Non-Citizens (Amendment) Bill 2021 and Immigration and Citizenship Service (Amendment) Bill 2021. Under these pieces of legislation, the PNG Immigration and Citizenship Authority will assume responsibility for work permit processing and administration provisions contained in the Employment of Non-Citizens Act 2008. The Department of Labor and Industrial Relations will retain overarching responsibility for non-citizens' employment policies and related approval criteria, consistent with their broad constitutional mandate.
Legal System
The legal system is based on English common law. The two main sources of law are statutes (laws passed by parliament) and the underlying law. The underlying law is made by judges and applies the principles and rules of common law and equity in England (as they stood at the time of Papua New Guinea's independence on 16 September 1975) as well as law derived from the customs of the various peoples of Papua New Guinea (where these customs and traditions are not offensive to present day beliefs). There is no jury or federal system in Papua New Guinea.
Foreign Investment
Government Authorisations
Government authorisation is not required for foreign investment. The three independent regulatory authorities that control and oversee foreign investment are the:
- Investment Promotion Authority (IPA).
- Internal Revenue Commission (IRC).
- Independent Consumer and Competition Commission (ICCC).
The IPA in particular operates as a quasi-department of government and acts as a registry, overseeing the management of different pieces of legislation that cover all aspects of doing business in PNG, both by citizen and non-citizen enterprises.
Restrictions on Foreign Shareholders
Where a foreign enterprise is 50% or more owned directly or indirectly by non-citizens or is declared by the Minister for Commerce and Industry to be a foreign enterprise, it must first obtain certification from the IPA before it carries on business in PNG.
Restrictions on Acquisition of Shares
Foreign nationals and foreign companies can acquire shares from domestic companies. However, as a matter of policy, share acquisition of state-owned enterprises by foreign investors is restricted in that a majority of local equity must be kept to maintain the status quo and preserve the controlling interest in state-owned enterprises.
Specific Industries
Papua New Guinea is aspiring to build a liberal investment environment and encourages foreign investment with relatively few restrictions. All foreign enterprises must obtain certification from the IPA before carrying on any business in the country.
Foreign enterprises are restricted from engaging in the following activities:
- Small-scale agricultural, forestry and fisheries.
- Traditional arts and crafts.
- Alluvial mining.
- Certain small retail and wholesale undertakings.
5. Are there any restrictions or prohibitions on doing business with certain countries, jurisdictions, entities, organizations or individuals?
Trading restrictions are implemented through legislation and only apply to those entities designated by the Charter of the United Nations and United Nations Security Council Resolutions.
See the Bank of Papua New Guinea website for more details (www.bankpng.gov.pg/financial-sanctions-in-png-an-overview).
6. Are there any exchange control or currency regulations or any registration requirements under anti-money laundering laws?
Papua New Guinea's anti-money laundering and counter terrorist financing framework is regulated by the following pieces of legislation:
- Anti-Money Laundering and Counter Terrorist Financing Act 2015.
- Criminal Code (Money Laundering and Terrorist Financing) (Amendment) Act 2015.
- Mutual Assistance in Criminal Matters (Amendment) Act 2015.
- Proceeds of Crime (Amendment) Act 2015.
- United Nations Financial Sanctions Act 2015.
All financial institutions are required to register with the Financial Analysis and Supervision Unit for the purpose of the Anti-Money Laundering Act. A failure to register will result in a penalty of:
- For an individual: a fine not exceeding PGK25,000.
- For a body corporate: a fine not exceeding PGK50,000.
Approval by the Bank of Papua New Guinea is required for certain foreign exchange transactions. These include where a:
- Resident company contracts with another resident company in a foreign currency.
- Guarantee or security contract is provided by a resident company in favour of an offshore lender (unless there is a benefit to Papua New Guinea).
- Resident company opens and maintains foreign currency accounts within and outside Papua New Guinea.
Companies must also submit balance of payment forms to the Bank of Papua New Guinea or another authorised dealer reporting the movement of funds. Taxation clearance certificates obtained from the Internal Revenue Commission (IRC) are required for certain transactions, including:
- Remission of funds offshore in excess of PGK500,000 a year.
- Remission of funds of any amount offshore to an IRC-listed tax haven.
Foreign Investors
The government provides direct and indirect taxation-based incentives for large and small investment proposals. Significant tax incentives include the following:
- 100% of the net income derived from export sales of a wide variety of goods for three years is treated as exempt income.
- Double deduction for salary and wages paid to registered apprentices and employees attending full-time professional training courses.
- New industrial plants are eligible for increased depreciation up to 100% of cost.
- Numerous incentives for mining and petroleum-designated gas projects.
Investors will also have access to incentives provided by numerous international treaties and agreements to which Papua New Guinea is a party.
Business Vehicles
9. What are the main formation, registration and reporting requirements for the most common corporate business vehicle used by foreign companies in your jurisdiction?
Registration and Formation
All foreign enterprises must first apply for certification with the IPA. They can then register a company under the Companies Act 1997 at the Registrar of Companies division. At this point, a foreign investor must either choose to incorporate a new company or register as an overseas company.
When incorporating a new company, the proposed company name must first be reserved and then applied for use on the prescribed forms. Companies that are incorporated outside of Papua New Guinea and choose to carry on business within the country must apply for registration as a foreign-owned company, using different forms. The application to the Registrar must include copies of its certificate of incorporation and constituent documents.
All companies must have:
- At least one director who is a resident of Papua New Guinea.
- A registered office that is accessible to the public.
- An address for service that is not a postal address.
- A constitution (this is not mandatory but rights will be limited without one).
Companies will have an official company name ending with the abbreviation "Ltd", and a business name used for trading purposes. All business names must be registered with the IPA. At its registered office, a company must keep records of all important documents such as the register of interests, share register, minutes of all meetings and the constitution.
Reporting Requirements
Every year, all companies must lodge an annual return with the Registrar of Companies within six months from the end of the financial year. Annual returns must be lodged on a prescribed form within 14 days of the annual general meeting, together with a small fee. Registered overseas companies must also submit a certified copy of their audited financial statements, but can apply to be exempted.
Foreign owned or controlled companies are also required to lodge bi-annual reports with the Foreign Certification Division.
Rights Attaching to Shares
Restrictions on rights attaching to shares. Shares cannot be held by the company or a subsidiary of the company they belong to. If they are, the rights and obligations of that company will be suspended. A company can prescribe other restrictions on its shares in the constitution.
Automatic rights attaching to shares. The Companies Act provides automatic rights to a shareholder, including the right to:
- One vote on a poll at a meeting of the company on any resolution.
- An equal share in dividends authorised by the board.
- An equal share in the distribution of the company's surplus assets.
10. What is the standard management structure and key liability issues for the most common form of corporate business vehicle used by foreign companies in your jurisdiction?
Management Structure
The only mandatory management structure is for a company to have at least one director who is ordinarily resident in Papua New Guinea.
Environment
11. What are the main environmental regulations and considerations that a business must take into account when setting up and doing business in your jurisdiction?
Depending on the sector specific area the business venture wishes to engage in, environmental permits may be required.
In general, a person must not carry out an activity that causes or is likely to cause environmental harm unless the person takes all reasonable and practicable measures to prevent or minimise the environmental harm.
Under the Environment Act 2000, certain activities cannot be undertaken without first applying for and successfully obtaining an Environment Permit under Part V of the Environment Act.
The PNG Department of Environment and Conservation (DEC) is responsible for administering this legislation and underlying regulations including the Environment (Prescribed Activities) Regulation and Environment (Permits) Regulation.
The Environment Act and regulations provide for three levels of activities that require an Environment Permit.
Under the Environment Act, an activity will be considered to be carried out when a person carries out:
- Construction works, land clearance, demolition, excavation or other works in relation to land or water.
- Installation, operation or maintenance of plant or equipment.
- Activities for the purpose of extracting or harvesting natural resources.
- Release of contaminants to air, land or water, in connection with any of the activities specified above.
Employment
Employees Working Abroad
National employment laws do not extend to employees from PNG who work abroad.
Mandatory Rules of Law
The statutory framework governing all employment relationships is made up of:
- The Employment Act 1978.
- The Employment of Non-Citizens Act 2007.
- The Industrial Relations Act (Chapter 174).
- Any relevant agreements such as awards and determinations.
Awards and determinations are arrived at through collective bargaining and are registered with the Department of Labour Industrial Relations. Any registered award or determination supersedes any relevant legislation. Examples include:
- Port Moresby Common Rules.
- Minimum Wage Determination No. 1 of 2014.
Employment in PNG is principally governed by the Employment Act and its associated regulations and the Industrial Relations Act. There is both a national minimum wage and a national minimum youth wage which are set by the Minimum Wages Board. These minimum wages apply to all employees in PNG, other than apprentices. The determination of the board can be displaced by more generous terms and conditions offered by an employer. Other laws relevant to employers include various taxation laws, laws on worker's compensation, occupational health and safety, discrimination, superannuation and long service leave.
The Employment of Non-citizens Act applies specifically to non-citizens working in PNG.
Main Terms
The main terms that are typically seen in an employment contract include:
- A termination clause where the employer:
- is at liberty to terminate with or without cause in accordance with the terms of the contract; and
- can choose to terminate with notice or without notice with payment in lieu of notice.
- Superannuation (especially for a non-citizen opting to voluntarily contribute to a superannuation fund in PNG).
- Key performance indicators.
- Any other terms that are material to the operation of the employment contract.
Implied Terms
The terms of an employment contract can be expressed or implied at law. Where the terms are expressed, the courts honour the terms of the agreement.
Collective Agreements
See above, Implied Terms. A written contract is not mandatory, but in the absence of a contract, the provisions of the Employment Act and any relevant collective agreements will apply.
Work Permits
For all non-citizens employed in PNG, an employer must obtain both:
- An entry permit (visa) under the Migration Act.
- A work permit under the Employment of Non-Citizens Act.
The above applies whether the employer carries on its business alone or in a joint venture. The work permit and visa are unique to the role, employer and person and any variation of that role. Employers must maintain a register of all work permits that have been granted under the Employment of Non-Citizens Act. Working in PNG without a work permit is an offence. A person issued with a work permit will need to apply to the Department of Foreign Affairs, Trade and Immigration for an entry visa.
Foreign contractors or consultants attending PNG to conduct business such as participating in a meeting, conference or workshop, but not to undertake employment activities, will often enter under a Business Entry Visa. Persons present in PNG for business, but not undertaking employment, do not require a work permit. Business visas come in two types: 30 days single entry and 12-month multiple entry, with each visit not exceeding 60 days.
Residency Permits
All foreign (non-citizen) employees must have both an entry permit (visa) and a work permit. The work permit and visa are unique to:
- The role.
- Any variation to the role.
- The employer.
- The worker.
Employers must maintain a register of all work permits granted.
For more details see www.immigration.gov.pg/working-resident.html.
15. Are employees entitled to management representation and/or to be consulted in relation to corporate transactions (such as changes in control, redundancies and disposals)?
Termination
The Employment Act details the law on termination of employment contracts. Either party can terminate an employment contract but a period of notice must be given, depending on the length of the contract. The notice periods are:
- One day if employed for a period of less than a month.
- One week if employed for a period of between one month and a year.
- Two weeks if employed for between one year and five years.
- Four weeks if employed for five years or more.
In the alternative, either party can pay to the other a sum of money in lieu of notice.
Fair Dismissal
Termination without notice or payment is only permitted on certain grounds. The court can award any relevant damages to the party against whom the contract was terminated.
Casual employees' contracts can be terminated without notice, but the employee is entitled to one full day's pay if the termination is without grounds.
Termination of employees can occur with or without cause, depending on the terms of the employment contract.
Statutory minimum notice. The Employment Act sets out the minimum notice period requirements given depending on the length of the contract. These minimum requirements must be met and provided for under an employment contract.
Severance payment. Where termination occurs without notice, there must be payment in lieu of notice, which is generally captured under employment contracts.
Unfair Dismissal
Grounds for unfair dismissal. In the absence of any contractual rights or terms and conditions of employment, an employer must give due notice to the employee, notifying them of their impending termination under the Employment Act. Alternatively, an employer can pay salary in lieu of the statutory requirement to give notice of termination to the employee. Failure to do so will constitute unfair dismissal.
The English common law doctrine of "master and servant" has been adopted by the PNG courts. An employer can hire and fire at will with or without reasons and without giving a right to be heard, unless provided for under the contract of employment.
Remedies. In general, the remedy for an employee who has been wrongfully terminated is damages for unfair dismissal. An order for specific performance, reinstatement, or an injunction restraining the employer from terminating the employee can be made in exceptional circumstances as determined on a case-by-case basis.
Tax
Tax Residence
Employees are taxed through salary or wages regardless of whether they are tax residents or not. Tax residents are given more favourable tax rates but are taxed on their worldwide income. An individual will be considered a tax resident after being physically present in Papua New Guinea for 180 days or more during a tax year.
The salary or wages tax incorporates a number of earnings including:
- Commissions.
- Bonuses.
- Allowances paid in respect of or in relation to employment.
- Remuneration of any kind (including remuneration through fees or otherwise for professional services, or services as an advisor, consultant or manager).
19. What income tax, social security and other tax or contributions must be paid by the employee and the employer during the employment relationship?
Tax Resident Employees
The rates for tax residents are as follows:
- Under PGK10,000: 0%.
- Between PGK10,001 and PGK18,000: 22%.
- Between PGK18,001 and PGK33,000: 30%.
- Between PGK33,001 and PGK70,000: 35%.
- Between PGK70,001 and PGK250,000: 40%.
- Over PGK250,000: 42%.
Taxpayers who have only employment income and are solely taxed through salary or wages tax do not complete an annual income tax return. Taxpayers with other income such as interest, dividends, rental income, trust distribution or partnership income must complete an annual income tax return. In the tax return, an employee can claim a number of tax rebates such as 25% for allowable deductions and rebates for expenses relating to dependants.
There is no social security tax but employees who are citizens must become a member of an Authorised Superannuation Fund (ASF) as soon as they have been continuously employed for three months. The contribution rate for employees is 6%.
Non-Tax Resident Employees
The rates for non-tax residents are as follows:
- Under PGK18,000: 22%.
- Between PGK18,001 and PGK33,000: 30%.
- Between PGK33,001 and PGK70,000: 35%.
- Between PGK70,001 and PGK250,000: 40%.
- Over PGK250,000: 42%.
Non-tax residents must pay salary or wages tax on any payment received within PNG, including wages or salary paid by a foreign contractor for employment performed in the country. A person or company who is deemed to be an agent of a foreign contractor can be held liable for any undercharged tax. Superannuation contributions by non-citizen employees are voluntary.
Employers
Employers are responsible for paying the salary or wages tax of their employees, which is calculated every fortnight and sent to the IRC. The employer must pay the salary or wages tax deducted from their employees on the seventh day of each month. Any person or company that begins to employ staff must register as a group employer with the IRC within seven days. Once registered as a group employer, a group number is assigned, which is used for all payment advices, statements of earnings and any letters to the IRC about group tax.
All employers with 15 or more employees, whether they are citizens or non-citizens, must register with an ASF. The contribution rate for employers is 8.4% but it is not mandatory for non-citizen employees.
Tax Resident Business
A company incorporated under Papua New Guinea law is considered to have its residence there. Where companies are incorporated in a foreign jurisdiction but carry on business in PNG and are effectively managed and controlled there, they are still considered to have PNG residence. Resident companies are taxed on their worldwide income and may also be liable to pay a number of taxes.
Non-Tax Resident Business
Non-resident companies are only required to remit tax on income sourced in Papua New Guinea. There are double tax treaties in place with a number of countries that may reduce or vary a non-resident company's tax liability (see Question 27).
21. What are the main taxes that potentially apply to a business vehicle subject to tax in your jurisdiction?
Corporate income tax applies to all resident and non-resident companies carrying on business in PNG. The general rate for resident companies is 30% and for non-resident companies is 48%. Different rates apply to companies that generate income from mining, petroleum or gas operations.
Non-resident contractors involved in certain contracts have the option of being taxed on their contract income at a deemed taxable income (equal to 25% of the gross contract proceeds) or the actual taxable income from the contract. Non-resident insurers who do not have a permanent establishment in PNG are taxed at 48% on 10% of gross premiums earned from insuring property or events in the country. Non-resident insurers that are unincorporated associations are taxed at 30% on 10% of gross premiums earned from insuring property or events in PNG.
A company with an annual turnover likely to exceed PGK100,000 must register for goods and services tax (GST). To register, it must lodge a form with the IRC and submit monthly GST returns. The standard GST rate is 10% but certain goods and services, as well as land, are exempt from this tax.
Other taxes that foreign investors may be exposed to include:
- Stamp duty.
- Land tax.
- Excise taxes.
Resident companies must lodge annual tax returns but non-resident companies need only lodge a tax return if they have income derived in PNG. Resident companies must also pay three equal instalments of provisional tax on 30 April, 31 July and 31 October every year, based on the last assessment issued to the company. There are a number of allowable deductions and tax incentives available to resident companies.
22. How are the following taxed:
- Dividends paid to foreign corporate shareholders?
- Dividends received from foreign companies?
- Interest paid to foreign corporate shareholders?
- Intellectual property (IP) royalties paid to foreign corporate shareholders?
Dividends Paid
Dividends paid to non-residents are subject to withholding tax at 17%. Withholding tax is reduced to 10% for mining income. Dividends paid out of oil or gas income are exempt from dividend withholding tax. Under an applicable tax treaty, the rate may be reduced to 15%.
Dividends Received
Dividends received by a resident company from any other resident company are included in the assessable income of the recipient. The company receiving the dividends is entitled to a rebate against tax otherwise payable on the dividends received.
Interest Paid
Interest payments to either resident or non-resident companies are subject to a withholding tax of 15%. This rate can be reduced to 10% under a double tax treaty. Under some circumstances, the interest withholding tax will not be applied (for example, when the interest is paid to a financial institution or by a resource company to a non-resident lender).
IP Royalties Paid
IP royalties paid to non-residents are subject to tax at the rate of 10% for an associated person and 30% for an non-associated person. This rate is reduced to 10% if resident in a country that is party to a double tax treaty. The person making payment to the non-resident must deduct the withholding tax and remit it to the IRC.
Interest on debt in excess of a prescribed debt equity ratio is non-deductible to the extent that the interest is paid to a non-resident (including unrelated parties).
Taxpayers in the natural resource sector apply a debt equity ratio of 3:1 while all other taxpayers apply a ratio of 2:1.
The rules do not apply to licensed financial institutions or interest deductions on domestic debt.
24. Must the profits of a foreign subsidiary be imputed to a parent company that is tax resident in your jurisdiction (controlled foreign company rules)?
Although there are no rules affecting the taxation of income if there is transfer pricing, the IRC does require any dealings with international related parties to be reported.
Companies that have dealings that exceed PGK100,000 in a year or have loan balances that exceed PGK2 million with related international parties must lodge an international dealings schedule with their income tax return. The IRC requires disclosures and supporting documentation to be disclosed on the nature of the transactions with international related parties and the underlying transfer pricing methodologies.
The majority of manufacturing imports attract no customs duties. Where customs duties apply, they are levied on the value of a wide range of imported goods. The relevant rate varies depending on the nature of the goods. Higher rates generally apply to alcohol, tobacco, sugar, canned fish and petroleum products.
Competition
28. Are restrictive agreements and practices regulated by competition law? Is unilateral (or single-firm) conduct regulated by competition law?
Competition Authority
The ICCC is the regulatory authority for competition law under the statutory power of the Independent Consumer and Competition Commission Act 2002 (ICCC Act).
Comprehensive guidance on competition law can be found on the ICCC website at www.iccc.gov.pg.
Restrictive Agreements and Practices
The ICCC Act prohibits practices, agreements and arrangements that lessen competition in the market. Its goal is to protect consumers with regard to price, quality and reliability of significant goods and services, and to promote economic efficiency in industry structure, investment and conduct.
The ICCC has the authority to allow certain prohibited business practices and arrangements that might be otherwise anti-competitive if they are of public benefit. Violations of the ICCC Act are regulated by the ICCC and can be subject to civil penalties.
Unilateral Conduct
Unilateral conduct is prevented by regulating particular services and goods that have a substantial degree of power in a market. The minister responsible for treasury matters chooses the entities to be regulated and each is subject to a regulatory contract.
A regulatory contract sets out a ten-year price path for the entity and requires specifics about quality of service. Obligations under the contract are supervised by the ICCC. The ICCC has various remedies available to ensure that the regulated entities comply with the price path and service quality standards specified. The ICCC can also make additional codes or rules relating to the conduct or operations of participants in a regulated entity.
Transactions Subject to Merger Control
The ICCC and ICCC Act set out the laws on company acquisitions. The main priority of the ICCC is to prevent the lessening of competition in the market. Acquisitions that may result in the lessening of competition are prohibited.
The ICCC Act allows the ICCC to formally approve business acquisitions only in specific circumstances. The ICCC can grant clearance if it is satisfied that the proposed acquisition will not result in a substantial lessening of competition (section 81, ICCC Act). If the acquisition may result in a substantial lessening of competition, the ICCC can still permit it if there will be a positive benefit to the public (section 82, ICCC Act).
Acquisitions or mergers can also be prevented if they are considered to be a takeover that is not in PNG's national interest. The Securities Commission is required under the Takeover Code 1998 to prevent any party from acquiring any shares that are not in the interests of PNG. The Securities Commission has discretionary powers to determine whether a takeover is not in the country's national interest.
PNG has now introduced new merger controls. The Independent Consumer and Competition (Amendment) Act 2018 introduced pre-merger notification requirements if either the:
- Transaction value of the proposed acquisition exceeds PGK50 million.
- Proposed transaction is likely to result in a market share increase of 50% or more of the acquirer.
Under the new process, the acquirer must submit a notice to the ICCC seeking clearance for the acquisition, if one of the above thresholds are met. The ICCC can:
- Clear the acquisition.
- Decline the acquisition.
- Direct the acquirer to give the ICCC a notice seeking authorisation for the acquisition (if the ICCC reasonably believes the proposed acquisition requires it).
The changes to the law also give the ICCC power to impose conditions on clearance or authorisation, and to revoke clearance or authorisation if a condition is not complied with.
Failure to notify the ICCC of an acquisition results in a default penalty of PGK750,000.
Anti-Bribery and Corruption
The Anti- Money Laundering and Counter Terrorist Financing Act established the Financial Analysis and Supervision Unit, which is an operationally independent unit within the Bank of PNG. Its functions include carrying out financial intelligence and analysis on suspected money laundering, terrorist financing, proceeds of crime and associated offences, supervising financial institutions, developing risk assessments and enforcing compliance.
Intellectual Property
Patents
Definition and legal requirements. A patent is a form of protection that is granted to the owner of an invention to prevent the public from using, making and marketing it. Patent protection prevents the registered patent from being manufactured, distributed, exported or sold without the patent owner's consent. During the term of protection, the patent owner can obtain economic benefit through private sales or licensed agreements with commercial entities.
A patent application must be made to the Intellectual Property Office of Papua New Guinea (IPOPNG) (a division of the IPA) and include the following:
- Title of invention.
- Indication of its technical field.
- Description of the invention.
- Drawings, plans or diagrams (optional).
- Claims (extent of protection sought).
- An abstract of technical information.
Registration. A patent application must be filed with the IPOPNG.
Enforcement and remedies. Intellectual property is considered to be a private right, so it is the responsibility of the patent owner to enforce the patent. Patent owners are expected to monitor (using the IPOPNG) journal publications, current news and commercial conduct of business houses and individuals within Papua New Guinea.
Where an infringement of a patent right occurs, the National Court may be able to prevent or remedy it. On application from the patent owner, the court can:
- Grant an injunction.
- Make an order for an inspection.
- Award damages.
- Order an account of profits.
The National Court can also declare a patent invalid if a third party successfully challenges the patent owner over it.
Length of protection. A patent will expire 20 years after the filing date of the application.
Trade marks
Definition and legal requirements. A trade mark refers to a mark used in relation to goods or services for the purpose of indicating a connection in the course of trade between the goods or services and the person who has the right to use the mark. The term "mark" in this context includes a device, brand, heading, label, name, signature, word, letter or numeral, or any combination of them.
Registering a trade mark will provide the proprietor, or registered user, with the legal title to exclusive use of the trade mark for the goods and services for which it is registered. Registration of a trade mark must be done through an application to the IPA.
Protection. Once the trade mark is approved by the IPA, it will be registered with the Registrar of Trade Marks. The Registrar then regulates the use and renewal of the trade marks. If a trade mark is not registered, it does not benefit from any protections under the legislation.
Enforcement and remedies. Only the registered proprietor of the trade mark has the right to its exclusive use and to obtain relief in respect of infringement. Where several parties claim to be the registered proprietor of the trade mark, the Registrar can refuse to accept an application for registration by any of them until their respective rights have been determined by the National Court. In an action for infringement of a registered trade mark the National Court can either grant an injunction or award damages.
Length of protection and renewability. The protection term for a trade mark is ten years, renewable from time to time in accordance with the Trade Marks Act 1978.
Registered Designs
Definition. Registered designs are called industrial designs in PNG and include designs of products in industry and handicrafts that are primarily aesthetic in nature. By protecting the design, the owner is assured an exclusive right against unauthorised copying or imitation of the design by third parties. Registered industrial designs do not protect any technical features of the product.
PNG is not a member of the WIPO Hague Agreement Concerning the International Deposit of Industrial Designs 1925, therefore any registration sought is enforceable only within the national boundaries of PNG.
Registration. A patent application must be filed with the IPOPNG.
Enforcement and remedies. Only the registered owner of an industrial design can exploit it. If a person exploits a registered industrial design without consent from the registered owner, the owner can institute a court action against that person. If the court finds in favour of the registered owner, it can:
- Grant an injunction.
- Make an order for an inspection.
- Award damages.
- Order an account of profits.
Length of protection and renewability. The term of protection for a design is five years, renewable for two further consecutive periods of five years.
Unregistered Designs
Definition and legal requirements. Unregistered designs can be protected by copyright laws.
Enforcement and remedies. See below, Copyright.
Length of protection. See below, Copyright.
Copyright
Definition and legal requirements. Copyright subsists in literary and artistic works of original intellectual creations in the literary and artistic domain including:
- Books, pamphlets, articles, computer programs and other writings.
- Speeches, lectures, addresses, sermons and other oral works.
- Dramatic, dramatic-musical works, pantomimes, choreographic works and other works created for stage productions.
- Musical works, with or without accompanying words.
- Audio-visual works.
- Works of architecture.
- Works of drawing, painting, sculpture, engraving, lithography, tapestry and other works of fine art.
- Photographic works.
- Works of applied art.
- Illustrations, maps, plans, sketches and three-dimensional works relative to geography, topography, architecture or science.
Protection. Copyright protection subsists in a work on creation without the need for registration.
Enforcement and remedies. Where there is an infringement of copyright, the National Court (both under civil and criminal jurisdiction) can grant the following remedies:
- An injunction to prohibit any further infringement of the copyright.
- Impounding of copied works.
- Impounding of implements that could be used to copy work.
- Damages.
- Criminal sanctions on the infringer with penalties of imprisonment or fines.
Length of protection and renewability. The economic and moral rights in respect of copyright work will be protected during the life of the author, and for a period of 50 years from the date of death.
Advertising
Digital Advertising
The ICCC regulates the use of commercial advertising and enforces the conditions set out in the Commercial Advertisement (Protection of the Public) Act 1985. The purpose of the Act is to protect the general public from any commercial advertisement containing untrue, inaccurate, misleading, misrepresentative or unreasonable statements used when describing the size, quality, quantity, or nature of goods or services.
Other legislation protects local industry by prohibiting the filming of commercial advertisements outside Papua New Guinea unless absolutely necessary and limits their production to resident people or companies.
Direct Marketing
The ICCC is guided by Market Conduct Rules under the Independent Consumer and Competition Commission Act 2002. They apply to commercial dealings by all individuals and businesses including government-owned and operated businesses.
In particular, the Market Conduct Rules prohibit engaging in business conduct or behaviour that has, or is likely to have, the effect of substantially lessening competition in a market, as well as engaging in trade practices that prevent fair trade among market participants.
Data Protection
37. Are there specific data protection laws? If not, are there laws providing equivalent protection?
Data Protection Laws
The statutory framework protecting data is made up of the:
- National Information and Communication Technology Act 2009.
- Protection of Private Communications Act 1973.
The main protections granted under these Acts prevent the following:
- Information and communications technology (ICT) service people from intercepting, modifying or recording any communications.
- Any person from damaging or tampering with network services.
- Obstruction of the transmission or delivery of communications sent via an ICT service.
- Infringement of personal privacy by one person of another.
Breaching any of the statues is a criminal offence punishable with large fines or imprisonment.
Consumer Privacy Laws
Central to the ICCC's core functions and objectives is the protection of consumer interests. Additionally, the National Information and Communications Technology Authority, under the National Information and Communications Technology Act 2009, is a government agency responsible for regulating and licensing information communications and technology.
Both regulatory authorities independently oversee consumer privacy in PNG.
Product Liability
The ICCC aims to protect consumers and works to reduce the sale of unsafe consumer products that may cause injury, harm or death to consumers (particularly children). Safety surveys are conducted regularly throughout PNG to remove potentially harmful products. Surveys are conducted during October/November each year to identify and remove potentially dangerous toys that may be bought as Christmas gifts. Consumers can report concerns about products to the ICCC for them to review and potentially remove from the market.
The ICCC has entered into a Memorandum of Understanding with customs authorities to inform them about unsafe products so they can be monitored and confiscated at points of entry into the country. The ICCC also consults with other international agency partners such as the Australian Consumer and Competition Commission, the Product Safety Consultative Committee (of the states, territories and Commonwealth of Australia and New Zealand) and other regulatory bodies and organisations in other countries on product safety issues, and other matters affecting consumers.
Regulatory Authorities
39. What are some of the key regulatory authorities relevant to doing business in your jurisdiction?
Independent Consumer and Competition Commission
Main activities. The ICCC is a principal economic regulator and consumer watchdog. Its primary role is to administer and implement the Independent Consumer & Competition Act and other related legislations. It performs a number of functions including administration of price regulation, licensing, industry regulation and other matters under its duty. Its primary objective is to enhance welfare of consumers in PNG, promote industry conduct and standards, and protect consumers' interests with regards to the price, quality and reliability of goods and services.
The Conservation and Environment Protection Authority (CEPA)
Main activities. CEPA is responsible for environment management policy development, biodiversity protection policy development, pollution control and regulation of hazardous substances, management of water resources and Environmental Impact Assessments of major projects including infrastructure, forestry, agriculture, mining and petroleum proposals.
Internal Revenue Commission
Main activities.
The IRC is PNG's tax administrator and oversees the regulation of the tax system in Papua New Guinea.
Investment Promotion Authority
Main activities. The main powers and functions of the IPA are: to promote and facilitate investment in the country by citizens and foreign investors, provide for the grant of a certificate to a foreign enterprise, define activities open to a foreign investor, provide a register of foreign investment opportunities and promote investments that will materially benefit the country and its people.
Contributor profiles
Stephen Massa, Head of PNG Office
Dentons PNG
T +675 308 4616
F +675 308 4699
E [email protected]
W www.dentons.com
Professional qualifications. Papua New Guinea, Solicitor; New South Wales, Solicitor; England and Wales, Solicitor
Areas of practice. Finance; corporate; energy; government.
Steve Patrick, Partner
Dentons PNG
T +675 308 4643
F +675 308 4699
E [email protected]
W www.dentons.com
Professional qualifications. High Court of Australia, Barrister; Supreme Court of Queensland, Solicitor; Solomon Islands, Solicitor; Papua New Guinea, Solicitor
Areas of practice. Corporate; construction; employment and labour; energy; mergers and acquisitions; mining; real estate; forest products and agribusiness; infrastructure and PPP; government.
Deborah Edo, Solicitor
Dentons PNG
T +675 308 4650
F +675 308 4699
E [email protected]
W www.dentons.com
Professional qualifications. Papua New Guinea, Solicitor
Areas of practice. Corporate; real estate; banking and finance.