Papua New Guinea (PNG), with its vast natural resources from gold and copper to untapped agricultural potential, stands on the cusp of economic transformation. Yet, despite these riches, the nation grapples with persistent poverty, high unemployment, and sluggish growth.
In 2024, PNG's GDP expanded by 3.8%, driven largely by non-resource sectors like agriculture, but core inflation lingered at 3.3%, and institutional fragilities continue to stifle progress. Enter the Dubai model: a desert entrepôt turned global hub, guided by the unapologetic motto, "If it's good for business, it's good for Dubai." This philosophy has propelled Dubai's economy to diversify beyond oil, attracting foreign direct investment (FDI) through deregulation, tax incentives, and 100% foreign ownership in free zones.
For PNG, adopting a similar ethos could dismantle barriers to employment growth, fostering a virtuous cycle of investment, job creation, and prosperity. This article explores PNG's institutional roadblocks, financial, technological, and regulatory, and builds a compelling case for bold deregulation, including tax-free zones, to supercharge the economy.
Institutional Barriers: The Silent Saboteurs of PNG's Potential
PNG's economy is hamstrung by deep-rooted institutional challenges that erode investor confidence and limit domestic resource mobilization. Corruption permeates governance, introducing insecurity into economic dealings and scoring PNG a dismal ranking in global indices of economic freedom. Unstable regulations, poor infrastructure, and a lack of stakeholder consultation exacerbate these issues, while security concerns and skill shortages deter business expansion. The result? A formal sector where productivity lags, particularly in agriculture, leaving workers behind without reforms.
These barriers manifest as direct impediments to employment growth, trapping PNG in a low-wage, informal economy. With youth unemployment hovering high and formal jobs scarce, deregulation isn't a luxury; it's an imperative. By prioritizing business ease, as Dubai does, PNG could channel its resource wealth into sustainable job creation.
Financial Barriers: Starving Businesses of Capital
Access to finance remains a cornerstone obstacle for micro, small, and medium-sized enterprises (MSMEs) in PNG, which form the backbone of potential employment. Foreign exchange shortages cripple imports and investments, while high inflation and low purchasing power erode savings. Banks hesitate to lend due to remoteness, limited collateral (like land access), and perceived risks, leaving 75% of Papua New Guineans excluded from formal financial systems.
This credit drought stifles hiring: SMEs can't scale operations without loans for equipment or payroll, perpetuating a cycle where informal trading dominates and formal jobs evaporate. Deregulating financial markets, easing foreign exchange controls and incentivizing microfinance, could mirror Dubai's approach, where streamlined banking and zero corporate taxes in free zones have drawn billions in FDI, creating over 1 million jobs in logistics and tech alone. For PNG, tax-free financial hubs could attract offshore banking, injecting liquidity and spurring employment in underserved provinces.
Technology and Communications Barriers: Isolating the Economy
PNG's digital divide is a chasm: Rural areas, home to 85% of the population, suffer from patchy connectivity, with internet penetration below 20%. Capital-intensive ICT infrastructure demands investment that low incomes can't sustain, while affordability and accessibility barriers, especially for women, limit mobile adoption. Regulatory hurdles, like outdated spectrum allocation, further delay upgrades, keeping businesses offline and unable to tap e-commerce or remote work.
Without reliable tech, employment growth stalls; agri-tech for farmers or digital skills training for youth remain pipe dreams, confining workers to subsistence roles. Dubai's deregulation playbook offers a blueprint: By slashing red tape on telecom licensing and fostering free zones with subsidized broadband, Dubai achieved near-universal 5G coverage, fueling a tech sector that employs thousands in AI and fintech. PNG could fast-track similar gains by declaring tech-focused SEZs tax-free, luring providers like Starlink and creating jobs in digital services.
Licensing and Regulation Barriers: A Bureaucratic Maze
PNG's regulatory labyrinth is notoriously inefficient, with a business freedom score well below global averages. Lengthy licensing processes, coupled with corruption and inconsistent enforcement, burden SMEs and deter expansion. Professional associations block skilled foreign labor visas, exacerbating skill gaps and slowing project timelines. The Reserved Activities List (RAL) reserves dozens of sectors like retail and transport for citizens only, barring foreign equity and innovation.
These hurdles directly curb employment: Businesses delay hiring amid paperwork woes, while law-and-order issues compound risks, limiting productive investment. Streamlining licenses, as in Dubai's one-stop-shop portals, could unlock this; there, permit approvals take days, not months, enabling rapid scaling and job booms in construction and hospitality.
Spotlight on Key Examples: Foreign Ownership and Expat Taxation
Two stark illustrations underscore the urgency: Foreign ownership restrictions and punitive taxes on expatriates.
Foreigners can't own land outright, relying on 99-year leases, and the RAL excludes them from citizen-reserved activities, including joint ventures. This deters FDI in mining services or agribusiness, where expat expertise could train locals and multiply jobs. Meanwhile, non-resident workers face 48% corporate withholding on PNG-sourced income, plus salary taxes on all remuneration, far steeper than residents' 30% rate, discouraging skilled inflows.
Contrast this with Dubai: Zero personal income tax and full ownership rights have magnetized talent, transforming it into a jobs powerhouse. For PNG, easing these, perhaps via blanket exemptions in SEZs, could repatriate skills and spark employment surges.
The Dubai-Inspired Prescription: Go Boldly Tax-Free
PNG isn't starting from scratch. The 2019 Special Economic Zone (SEZ) Authority Act designates 22 tax-free zones with 5-20-year holidays on corporate income and levies, targeting exports and FDI. The 2025-2032 SEZ Foundation Policy elevates these as engines for transformation, but past efforts faltered on weak frameworks. To succeed, PNG must amplify: Expand SEZs nationwide, fully deregulate foreign ownership and expat taxes within them, and embed Dubai's motto into policy. Recent tax reforms lowering corporate rates signal momentum, but going fully tax-free like Dubai's zones would turbocharge it.
Imagine Port Moresby or Lae as tax havens: Mining firms flood in, hiring thousands; tech enclaves bridge the digital divide, employing youth; agribusiness booms, lifting rural wages. Productivity would soar, as seen in Dubai's services sector outpacing peers. Risks like revenue shortfalls? Offset via transaction fees and spillover growth, as Dubai proves.
Conclusion: If It's Good for Business, It's Good for PNG
Deregulation isn't about ceding control; it's about harnessing markets to serve people. By slashing financial chokepoints, wiring up communications, and pruning regulatory overgrowth, PNG can convert barriers into bridges to employment. Emulating Dubai's audacious, business-centric vision, capped by tax-free expansion, promises not just growth, but inclusive prosperity. The time is now: In PNG's 50th independence year, let "If it's good for business, it's good for PNG" ignite a new economic dawn.