Media Statement – 17 JULY 2-24
Today, during a breakfast meeting with the Lae Chamber of Commerce, Commissioner General of the Internal Revenue Commission, Sam Koim, while addressing other aspects of taxation, commented on the critical issue of foreign currency (FX) shortages affecting businesses in Papua New Guinea.
“One of the significant challenges facing businesses is the shortage of foreign curren-cy,”Koim observed. The Government, through the Central Bank, has recently removed the trading band on the kina, allowing it to depreciate to achieve market convertibility. The underlying assumption for this intervention is that exporters would be incentivized to repa-triate their export earnings back into the country, thereby obtaining more kina for every dollar”
Koim pointed out that while this intervention could potentially alleviate FX shortages, it hinges on the cooperation of exporters. “There is no compelling mechanism enforcing exporters to bring their earnings back. The Central Bank had FX regulations, but we are unsure of its enforcement. This intervention will only work if exporters actually repatriate their earnings. Otherwise, the FX challenges will persist, and we will continue to double the kina for imports, exacerbating the cost of living for ordinary citizens.”
Making a direct appeal, Koim said, “I urge PNG resident exporters to repatriate their proceeds. One commendable example is Ok Tedi Mining, which brings all its proceeds back into the country, in US dollars. They then settle overseas obligations from PNG”.
He emphasized the broader benefits of repatriation. “Bringing export earnings back into the country will alleviate FX shortages, stabilize the exchange rate, and create a healthier, more resilient, and conducive business environment for all stakeholders”.
Addressing the audience, Koim noted, “I see that most of you rely heavily on imports for your business operations. I believe I am speaking on behalf of all of us. Some of you supply goods and services to exporters and in order to do that you need have access to FX; hence we need each other for this to work”
He concluded by highlighting the current imbalance. “While everyone on the demand side is queuing up for access to FX, those who are supposed to supply FX are not doing so, opting instead to hoard their earnings in overseas bank accounts and bringing only opera-tional funds into the country. Exporters have a moral obligation to repatriate their export earnings back into the country hence this call”.
Koim’s candid observations and heartfelt appeal underscore the urgency of addressing FX shortages to support Papua New Guinea’s economic stability and growth.
