Papua New Guinea Market Entry

Subchapters:

Market entry
Forms and conditions of operation on the market
Marketing and Communications
Issues of intellectual property protection
Public procurement market
Payment terms, payment ethics and resolution of commercial disputes
Visas, fees, specific conditions of travel to the territory
Employment of citizens from the Czech Republic
Fairs and events

Market entry

According to the latest World Bank “Doing Business 2020” report, PNG ranked 120th out of 190, down from previous years (108th position 2019). PNG is a developing country with large disparities between regions, often lacking basic infrastructure. Some places are only accessible by air. It is therefore advisable to find a trusted local partner. The Czech Honorary Consul Mr. Robert Wong can also be of assistance in this. Due to cultural differences and geographical distance, penetrating the local market is highly difficult without a local representative. Entering the PNG market should be thought out, backed by a detailed study. The most efficient form of distribution is sales through local sales representatives, often specialized in multiple commodities. You cannot expect to establish business contacts or implement business cases simply by sending an offer and company presentation to selected companies from the field. In case of interest, it is necessary to expect a considerable initial investment and long-term effort. In terms of import conditions, PNG generally applies bans and restrictions on weapons, drugs, pornographic material and goods infringing intellectual property rights. Currently, the process of computerization of the customs administration is underway, which is gradually modernizing import procedures. After its introduction, up to 80% of imports should take place without the physical handover of documents. So far, the electronic system has only been implemented in Port Moresby. When importing into the country, standard documents are required (customs declaration, bills of lading, invoices and, in special cases, permits and licenses according to special regulations). When clearing goods, it is necessary to use the services of a customs agent. The Customs Act 2010 is still in force, further information on customs procedures can be found on the PNG Customs website (http://customs.gov.pg/)

Exports of protected animal and plant species, objects of historical heritage, weapons, drugs, pornography and objects infringing intellectual property rights are prohibited. A special permit or export license must be submitted for the export of fish products, alluvial gold, timber, precious metals and their products. (More on customs tariffs can be found here: http://customs.gov.pg/trade-facilitation/tariff-valuation/tariff/

In order to protect the country’s domestic market, the so-called Cottage Business Activities List defines a list of activities in which a foreign entity may not do business. These are small-scale agricultural activities, hunting and its promotion, obtaining some products in the field of forestry, fishing in coastal waters, some non-ecological methods of mining, some ways of selling goods, jewelry and also, for example, sewing, weaving and other textile-oriented crafts.

Forms and conditions of operation on the market

Local market risks are typical of developing countries. First of all, the legal framework regulating trade is not fully completed, so law enforceability is at a relatively low level. Insufficient infrastructure then makes deliveries difficult. The relatively high level of corruption represents another obstacle in the market. It is advisable to find a trustworthy partner. Conditions for establishing an office, representative office, joint venture: Companies in PNG can be established under the following legal standards: 1/ Sole trader, 2/ Partnership, 3/ Private company, 4/ Public company, 5/ Branch of a foreign company, 6/ Joint- venture. Foreign entities are required to register, for which it is recommended to use the services of consulting firms. A company registered in PNG is governed by the laws of PNG. A foreign company registered in PNG must appoint its agent who is resident in PNG.

Marketing and communication

To ensure marketing and promotion, it is recommended to use the services of the PNG Chamber of Commerce and Industry (PNGCCI) or Port Moresby Chambers of Commerce and Industry (POMCCI). The Czech Honorary Consul Mr. Robert Wong can also be of assistance in this.

Issues of intellectual property protection

PNG has had a fairly standard legal framework for intellectual property protection since 2002. Copyright, patent, trademark, industrial design and computer program are recognized. Current legislation should comply with TRIPS standards. More information is available on the PNG Intellectual Property Office website. Nevertheless, law enforcement is still not entirely effective, and there are many counterfeit goods of well-known brands of all kinds in the country. This is primarily due to the low number of relevant agencies (especially the Customs Administration and the Office for Intellectual Property).

Public procurement market

The Central Public Supplies and Tenders Commission is authorized to enter into public procurement contracts on behalf of the PNG Government up to PGK 10 million and above this amount the approval of the Governor-General must be obtained. All contracts with a value higher than PGK 300,000 must be submitted to the Commission and concluded in the form of a public tender. However, the number of tenders announced on the Commission’s website is very low. It is possible that the legislation is circumvented due to the high autonomy of some regions.

Payment terms, payment ethics and resolution of commercial disputes

Payment morality in the country is standard. However, it cannot be ruled out that the exporter will come into confrontation with Asian cultural specifics during collection. When making deliveries of machinery and equipment, it is customary to require an advance payment. When importing to the Czech Republic, it is recommended to provide advance payments only after consultation with the bank. PNG still belongs to the countries with a very high credit risk and it is generally recommended to choose a good security of claims and payments with suitable payment instruments, e.g. in the form of irrevocable letters of credit, bank guarantees from reputable banking houses, etc. The legal system is based on the Australian system. However, legal custom is also used in some cases. Governing law is determined by the court, and its choice can be particularly significant when it involves claims to land or natural resources. Court proceedings are conducted in English.

Visas, fees, specific conditions for traveling to the territory

In general, the Czech Republic is a country whose citizens can obtain visas at the airport. In PNG there is no obligation to report to the police, but tourists are advised in their own interest to notify the police of their planned stay outside the cities. The visa fee for a tourist visa on arrival is zero. For business purposes, the fee for a single-entry visa is 500 PGK, for a multiple-entry visa, 1000 PGK. More information can be found at: https://ica.gov.pg/visa-information/visa-on-arrival

Mandatory vaccination: Vaccination against yellow fever is required for persons older than 1 year who arrive from countries with endemic occurrence of yellow fever (see WHO list). Vaccination should take place at least 10 days before entering the country. Recommended vaccinations: Hepatitis A and typhoid vaccinations are strongly recommended. In the case of a long-term stay, vaccination against viral hepatitis B and Japanese encephalitis is recommended. Vaccination against Japanese encephalitis is recommended for travelers who will be staying in rural locations and humid areas where there is a risk of mosquito bites. Check your diphtheria, tetanus and measles vaccinations. Other possible risks of infection: malaria, dengue fever, Murray Valley encephalitis, lymphatic filariasis, spotted typhus, (fleas, lice), hepatitis C, venereal infections. The risk of malaria exists throughout the country, including urban areas. The incidence of malaria is mainly at altitudes up to 2000 m. The Zika virus is also recorded in the country. Therefore, it is strongly recommended to protect yourself from mosquito bites by frequent use of repellents, wearing long sleeves and pants, especially at dusk and dawn, drinking only bottled or boiled water, all vegetables should be boiled before consumption and fruits should be peeled.

Above all, in large cities and some parts of the Highlands, you can encounter high crime rates (rather than armed robberies, these are more or less thefts). Everywhere in PNG, wherever you go, you are on private land, and you can get into an awkward situation. It is therefore necessary to know very well where you are going and to have a reliable escort with you. Your guide will also fulfill the role of a mediator, a rapprochement with the local population. In general, it is recommended to move around PNG only during the day. To travel from the airport to the honorary consulate, you can use a taxi. The journey takes approximately 50 minutes in normal traffic.

PNG has no functioning infrastructure – except around the capital Port Moresby. Renting a car is not recommended, it is not possible to move around the country normally between individual provinces. The easiest form of transport is domestic air transport, while a cheaper option is also PMV – public land transport (minivans, trucks, buses). However, it is absolutely necessary to choose a reliable carrier on recommendation (e.g. the Czech honorary consul). Booking accommodation and other services in the cities can be done without major problems, in Port Moresby cashless transactions are common, in the more remote areas of PNG, sufficient cash in the local currency is a must (Papuan cinemas). We recommend using one of the local exchange offices.

Employment of citizens from the Czech Republic

In the case of employment of foreign labor in PNG, it is necessary to obtain a work visa and work permit, which is often a lengthy process and even the IPA (Investment Promotion Authority) recommends using an official (and properly registered) employment agent to handle these formalities, although it is not an obligation from the point of view of legal regulations. Information and contact for work permits can also be found on the official website of the PNG Immigration Office (https://ica.gov.pg/visa/work) The Czech Republic does not have any bilateral agreement with Papua New Guinea on the mutual provision of health services. Local medical care is not at a good level and prices for routine procedures and medicines are generally very high. It is therefore a good idea to secure quality health insurance before your trip.