Prime Minister James Marape today inaugurated Papua New Guinea’s long-awaited Sovereign Wealth Fund with a dividend payment from Kumul Consolidated Holdings.
“This is an historic day for Papua New Guinea citizens and for our generations to come,” the Prime Minister declared.
“My government is setting aside seeds to sustain our children and our children’s children, rather than harvesting and eating everything we have planted as soon as it grows.
“My government is placing dividend proceeds from KCH investments into a Sovereign Wealth Fund Trust Account, which has been established by Treasury and Finance and will be transitioned into the SWF.
“The SWF is designed to provide stabilisation against potential volatility in the domestic economy and external economic shocks, and encourage much-needed savings for the future.
“This will be the first of many contributions to the country’s SWF, made possible by the prudent economic and financial management of my government.
“The course set for this country by my government is directionally correct and needs energetic and ethically based leaders to overcome the many challenges that global forces throw our way.
“Previous governments made unfulfilled promises to implement the SWF legislation. SWF plans were left unexecuted, and accounts were dormant. There are no savings from investment dividends from our past since the Mineral Resources Stabilisation Fund days.
“However, that is about to change, as I can report that your government has taken a bold, decisive step toward future-proofing our economy.”
KCH is paying 50 percent of its profits as a dividend to the State, and seven percent of the dividend, or K5.6 million, will go into the SWF trust account.
The Prime Minister took the opportunity to commend Minister Duma and the KCH Board and Management for not only declaring a dividend, but also for successfully progressing the SWF facility. “This is KCH’s first dividend declaration under my watch,” he said.
“The SOE reform agenda is seeing success in various forms due to the commitment and hard work of SOEs and the oversight provided by KCH.
“I recognise that we still have many challenges to work through, in service quality and performance, accessibility and affordability. However, we are making good ground, where others have fallen short.
“These are not just empty promises, but an accelerated strategy supported by real actions and properly executed plans.”
The KCH dividend is driven by the results of a well implemented SOE reform program that targets business performance improvement, increased productivity and efficiency, freedom from political interference, independent board selection processes and greater gender equality (14 percent of SOE directors are women).
KCH’s Reform Agenda success can be gauged by the fact that PNG Ports, MVIL, Water PNG, Telikom and DataCo have all paid dividends this year. As well, the decline in value of the General Business Trust, which became apparent when the Marape Government took office, has been arrested.
The Reform Agenda became critical to SOE survival during the global pandemic and then the war in Ukraine, which led to an energy cost surge, labor shortages and supply chain interruptions throughout the world.
The earthquake in September affected power and communications infrastructure, which also required KCH to step in with support for the relevant SOEs.
Mr Marape has also directed KCH to work closely with agriculture, forestry, fisheries and manufacturing to bring state entities under its wing to achieve desired national outcomes in those sectors.
He said the upward investment trajectory demonstrated by KCH and its SOEs was further evidence of the success of its efforts to re-establish good governance across the SOE system
“The fact that both KCH and its SOEs can pay dividends after reporting a loss of K335 million in 2019, the last year of the O’Neill Government, is a remarkable achievement. Given where we began at the end of 2019, these are significant improvements,” Mr Marape said.
The government’s endorsement of a comprehensive SOE reform and restructure program, together with the support of an Asian Development Bank policy-based loan facility and Australian Government capacity support, delivered results almost immediately.
“Every great outcome commences with a single step,” the Prime Minister said.
“We have begun building our seed nursery within our SWF. These seeds will form the forests for our future generations. And in that future, when we are long gone, those generations of prosperous Papua New Guineans will thank us for finally taking this first giant leap forward – for thinking of their time, and not just our own.”
