An online registry launched today will allow Papua New Guinea lenders to readily accept moveable property such as vehicles, machinery, or stock as collateral for loans, making it easier for many businesses to access credit.
“Access to credit allows new businesses to be formed and existing businesses to innovate and expand, spurring the creation of jobs and wealth,” said Andrea Iffland, Regional Director of the Asian Development Bank (ADB)’s Pacific Liaison and Coordination Office in Sydney. “The registry is the final step in the creation of a new legal framework designed to promote commerce within PNG by simplifying and safeguarding lending processes.”
The business registry was launched by Minister for Treasury Patrick Pruaitch at a breakfast hosted by the PNG Chamber of Commerce and Industry at the Crown Plaza Hotel.
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The framework, Iffland added, will advance PNG’s economic development by allowing business people and entrepreneurs to unlock the value of ‘dead capital’ and use it in ways that will help grow the private sector. It is underpinned by the Personal Property and Security Act, which was passed by the PNG Parliament in 2011. This important reform was led by the PNG Department of Treasury with support from ADB’s Pacific Private Sector Development Initiative (PSDI).
Through the online registry, lenders can secure their claim on assets borrowers have pleaded as collateral and verify the same asset has not been pledged elsewhere. Moreover, under the new framework lenders will often not require the services of a lawyer and a court order to repossess a pledged asset in the event of non-repayment.
The convenience and accessibility of the registry will also encourage non-bank suppliers, such as wholesalers, agricultural stores and vehicle dealerships, to extend credit, as this can now be secured against their customers’ business assets or outputs.
PSDI is now assisting the government to raise awareness of the new system among both lenders and potential borrowers.
PSDI works with ADB’s 14 Pacific developing member countries to improve the enabling environment for business and to support inclusive, private sector-led economic growth. It is cofinanced by ADB and the governments of Australia and New Zealand.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region.