Papua New Guinea
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Review of RAL to commence

The review of the Reserved Activities List or RAL is set to begin soon, according to the 6th Edition of the IPA ‘Opportunity Newsletter’.

The Investment Promotion Authority (IPA) was tasked by the Government to undertake the review of the RAL in accordance with the amended Investment Promotion Act (IP Act).

The National Parliament passed the Investment Promotion (Amendment) Act 2023 on 11th of January 2023 which was certified on the 29th May 2023.

The amendments, among other reforms, introduced a more structured approach to the determination of the Reserved Activities List (RAL) and introduces the new concept of the Restricted Activities List.

The IPA undertook a rapid review of the prior Cottage Business Activities List (CBAL) in late 2021 and a revised RAL was promulgated in the Investment Promotion (Amendment) Regulation 2021.

The RAL is essentially a total exclusion of foreign participation in defined economic activities. It should be noted that reserving economic activities should not be a primary tool used by governments.

However, if they are to be used they should be done so judiciously, preferably with a strong policy justification and criteria for periodically determining whether the reservation has achieved the intended purposes.

These exclusive business operations intended for Papua New Guineans only include, bakery, sewing, poultry, to name a few.

The Minister for Commerce and Industry is the primary political authority for the review of the RAL. The Minister’s powers in relation to the review are identified in the amendments to the IP Act.

Given the crosscutting nature of foreign investment in the PNG economy, the IPA is in the process of creating a broad-based Investment Policy Reference Group (IPRG) to be constituted to assist with investment policy generally.

This will provide advice regarding the compilation of the long list of the RAL, consultation on the application of the exclusion factors, and management of consultation inputs from their respective organizations.

The IPRG has no official status under the review process mandated by the IP Act and, accordingly, its functions would be strictly advisory. To strike a balance between inclusiveness and workability, the proposed IPRG will consist of permanent members and consultation members.

Permanent members would be expected to attend all meetings whereas consultation members would be included on an ‘as needs’ basis. IPA would provide secretariat services to the IPRG.

The day-to-day running and management of the RAL review will be undertaken by IPA RAL Review Project Team responsible for investment policy, certification, and investment promotion.

The project team would have the following responsibilities; secretariat for IPRG; compilation of long list, including gathering of necessary data and application of the exclusion criteria in consultation with the IPRG; organisation, presentation, and management of in-person and offline consultation activities, including necessary consultation materials; compilation of consultation feedback; and application of review principles in consultation with the IPRG and finalisation of draft report for consideration by the IPA Board.

The IPA Project team had its first meeting on the 23rd June 2023 to start the process of the formation of the Investment Policy Reference Group (IPRG) and the IPA RAL Review Project team.

After the formation of the IPRG and the IPA team the consultation process will begin in the coming months.

For now, any contributions on proposed activities to be reserved should be communicated to the IPA including justification/reasoning as to why a particular business activity must be reserved can be emailed to ipa@ipa.gov.pg or cedrickp@ipa.gov.pg