SME Goods Supply Chain Dominance By Foreign Owned Businesses in PNG

Photo by Franki Chamaki on Unsplash

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The National Government, Provincial Government and local district Member Of Parliament (MPS) are encouraging Papua New Guineans to become business entrepreneurs in the Small and Medium Enterprise (SME) sectors. One of the key National Government’s SMEs support policy initiative was the  Papua New Guinea National Financial Inclusion And Financial Literacy strategy 2014-2015 under the Bank of Papua New Guinea.

The main objective was to improve the financial ecosystems in the country so that SMEs and individuals can have access to financial services through various mediums, whether through physical brick-and-mortar financial services like the Bank branches, agents as well as electronic services like Mobile-Banking, Internet banking and etc.  Under the strategy the Centre for Excellence in Financial Inclusion (CEFI) was established.

Centre for Excellence in Financial Inclusion (CEFI).

CEFI was official launched on April 23rd 2013 by then Prime Minister of PNG-Hon Peter Onie. It is the main body coordinating the strategic activities of the strategy under  various Working Groups, each dealing with different aspects of the whole financial eco systems in the country.

Currently publicity around the Financial Literacy program implemented by and backing of the Bank of Papua New Guinea is creating hype among many Papua New Guineans to try their luck in owning and operating a small business.

Implementation of the strategic activities

The implementing agencies includes the following;

  • Financial service providers-banks, insurance companies, private money lending companies and etc
  • Government Departments
  • Industry Bodies like the ICCC
  • Financial Literacy Providers
  • Others identified in the plan.

Funding and Technical Support

The funding and technical support were to be provided by the Government of PNG (GOPNG), Bank of Papua New and Donor Agencies.

Financial Literacy Program. 

One activity that has gained momentum under this strategy is the Financial Literacy Training Program. According to the CEFI website, it is working with over 32 financial literacy organizations and 4 trainers to roll out the program in all the provinces. These trainings were targeted towards local women, youth, church and members of various association groups members. Empowering with basic financial management skills with can then be applied in their SMEs finances and personal money management process. Then they can fully participate well in the economic actives.

This has resulted in many individuals starting going into SMES both in the informal and formal sectors. This will continue as more and more Papua New Guineans become engaged in SMES activities.

Supply Chain Issues with Local PNG SME Owners.

What remains in policy terms to support the local PNGean owned SMES is the supply chain of stock and input materials. PNG imports almost everything from overseas countries. From simple items such kitchen fork and spoon to motor vehicle and anything in between , more than 90% of products are imported from overseas. As such, much of the supply chain of stock and input materials in still in the hands of foreign owned businesses which have supplier contacts in their home country which ships the supplies and when goods arrive in PNG, they distribute to their outlet shops. Then from these shops local SMEs and individuals source their supplies. This is evident in any local street shops with their quantity of items on sale. Particularly, in sectors such as retail, tourism & hospitality, construction and et.  Foreign owned shops have wider variety of items than the local PNGean owned shops. As a result, more and more of local property owners of properties (mainly shops) within the main shopping areas in all the suburbs in the capital city, major towns and districts are leasing their properties to foreign owned business owners to earn rental income than themselves running their business.

Another trending issue is that foreign businesses owners of Asian origins are forming their business associations and business activities within the supply chains are channelled through their member’s businesses. His completely shuts out PNG Local SMEs in the loop. Because of cultural and language differences, business interests and etc, opportunity for local SME owners to join this associations are rare.

Three (3) Ways Local PNG SMEs Can Break the Supply Chain Dominance by Foreign Businesses.

1 Use of Internet

PNG’s location in close proximity to Asia is an asset. This means that Papua New Guinea SME can source their supplies direct from suppliers and it will take short time to reach PNG. In the past, it was difficult to do direct business with suppliers in Asian countries in the likes of Japan, South Korea, Singapore, Indonesia, Malaysia, China and etc. But today’s it possible because of the internet. Internet access, slowing improving and also the cost getting lower. What is required is bit of research, on ecommerce, ICT Literacy training, business cultural aspects of these countries, any SME owner can source supplies from these countries direct from the supplier.

In addition, PNG is closer to the two the most closest political allies of PNG, Australia and New Zealand. As more PNGeans move up to middle class, the demand for quality products will also rise. So PNG SME’s might also consider making contacts with suppliers in Australia or New Zealand. Traditionally, they might be considered as expensive but are worth considering depending on the type of SME’s business supply needs.

How to order things online from Papua new Guinea is covered on this article. How To Order Products Online from Papua New Guinea

2. ICT Literacy

In order to participate or do business in an inter connected society, it is important for every SME owner to consider investing in basic ICT or Computer literacy training. A lot of the Financial Literacy training is based on money management side of things. It is understandable because the participants will include mothers and individuals who may have not attended a secondary, college or tertiary institution. However, the current reality for most SMEs whether  the informal or formal sector, ICT literacy is key.  In the past, someone who has not attended school is labeled as illiterate-meaning he or she doesn’t know how to read and write. Today, someone who doesn’t have the functional or survival ICT or computer skills to function as a human being in society is facing the same situation. The situation is not quiet a problem in PNG but as more and more digital technologies are introduced into the financial ecosystem in PNG, more SME owners and individuals need to adapt to will be forced to learn ICT skills.

Computer literacy is not the same as getting a formal qualification for a ICT related course or program. It refers to the learning and the ability to use technology a more functional level. the following list are some of the skills regarded as part of computer literacy.

  • How to operate a mobile phone  (access internet, send and receive sms, call people)
  • Type documents, send and receive email
  • Interact with people social media platforms like Facebook, LinkeIn
  • Use office equipment like photocopying machines, printers, scanners, Laptops, Desktops etc

People don’t need to enroll in a formal education program to learn these skills. They can learn though experience, short courses, taking online courses, watching youtube videos and allowing others to teach them. All that is required is a desire to learn and willing to invest in time and money if it quires bit of payment.

3. Use of Local Embassy Offices of This Countries in PNG

The main reason why Foreign Governments have offices in PNG is for political and trade relationships. Lot of people think that Embassy or High Commission office of a foreign country in PNG deal with only high-level politics and trade matters between their country and PNG. However, they do provide information services which could very vital to SMEs owners in PNG.

Try seek information through email, phone call visiting their  png office website or Facebook page will  provide some key pieces of information.Examples of diplomatic office websites and facebook pages.

Australian High Commission in PNG

Australian High Commission in PNG website: https://png.embassy.gov.au/

Australian High Commission in PNG Facebook Page: https://www.facebook.com/AusHCPNG

Japanese Embassy in Papua New Guinea.

Japanese Embassy in PNG website : https://www.png.emb-japan.go.jp/itprtop_en/index.html

South Korean Embassy in Papua New Guinea

South Korea Embassy in PNG Website. https://overseas.mofa.go.kr/pg-en/index.do

Summary

Internet is connecting people and business by breaking the barriers of time, distance and transaction. With a little of online research, assistance from the foreign country diplomatic office in PNG and determination, PNG owners can go as far as their goals can take them to without heavily depending on middle man in the supply chain. Business need money but also it must be supplied with the right resource inputs. Internet play a crucial role in getting the right supply for the business for local PNG SMEs than relying on middleman suppliers.

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