11-02-2013, 12:35 AM
As this article better explains, this move by PNG is not much different than other countries do. In fact it's very similar to laws in Australia, as you would expect. The US and Canada have recently used this type of law to prevent Chinese buyouts of strategically important companies. Gives a government the ability to protect national interests if necessary.
"Presenter: Geraldine Coutts
Speaker: Professor Stephen Howes from the Australian National University
HOWES: It has been reported in PNG but I guess it just shows there's not that much reporting of what goes on in PNG here in Australia, and in the rest of the region. And so it was the article in The Australian yesterday I guess that's given it a much higher profile.
COUTTS: And can you explain the significance of the law changes that came about in August?
HOWES: I think the law change itself is not that controversial or surprising. Australia has a similar provision that if there's a takeover by a foreign company of a big Australian business then the government has to apply a national interest test to prove or reject the takeover, which is the change that PNG's introduced. So I think it's not the law change itself that's so surprising, but it's more the context in which it's occurred and the fact that it goes together with a number of other recent moves which do suggest policy in PNG is becoming more nationalistic and sort of less favourably disposed to foreign investment.
COUTTS: That's good for PNG?
HOWES: I'm not saying it's good for PNG, no, I think of course PNG needs foreign investment. So it needs to be very careful about discouraging foreign investment. I guess my point is that the change itself I think without knowing all the details, but simply introducing a national interest test on foreign takeovers, that it itself I think is not that controversial. A number of other countries have a similar provision. But what is worrying is the context in which it's occurred, which is that there was already a takeover offer on the table. It was by the Malaysian company Kulim for the New Britain Palm Oil corporation, which is PNG's biggest employer, and they already had 49 per cent of the shares, in the past they've actually had more than 50 per cent, in fact for quite a long time. So it's not clear why PNG government's decided that it doesn't want it again to go above 50 per cent. It was a controversial bid, it was one that actually the board had rejected, and it was one that had very few takers. So it would have been quite easy for the PNG government just to leave this to commercial means to resolve, but some for reason they decided they needed to intervene. And that seems to have been the motive for passing this act and then making this decision that it wasn't in the national interest."
Since this is a recent thing and in light of the OK Tedi situation there is concern, but O'Neill is a smart guy and he is pro-business and knnows foreign investment is hugely important. He's doing the wise thing; lay down a heavy line, then deal with situations as they come.
"Presenter: Geraldine Coutts
Speaker: Professor Stephen Howes from the Australian National University
HOWES: It has been reported in PNG but I guess it just shows there's not that much reporting of what goes on in PNG here in Australia, and in the rest of the region. And so it was the article in The Australian yesterday I guess that's given it a much higher profile.
COUTTS: And can you explain the significance of the law changes that came about in August?
HOWES: I think the law change itself is not that controversial or surprising. Australia has a similar provision that if there's a takeover by a foreign company of a big Australian business then the government has to apply a national interest test to prove or reject the takeover, which is the change that PNG's introduced. So I think it's not the law change itself that's so surprising, but it's more the context in which it's occurred and the fact that it goes together with a number of other recent moves which do suggest policy in PNG is becoming more nationalistic and sort of less favourably disposed to foreign investment.
COUTTS: That's good for PNG?
HOWES: I'm not saying it's good for PNG, no, I think of course PNG needs foreign investment. So it needs to be very careful about discouraging foreign investment. I guess my point is that the change itself I think without knowing all the details, but simply introducing a national interest test on foreign takeovers, that it itself I think is not that controversial. A number of other countries have a similar provision. But what is worrying is the context in which it's occurred, which is that there was already a takeover offer on the table. It was by the Malaysian company Kulim for the New Britain Palm Oil corporation, which is PNG's biggest employer, and they already had 49 per cent of the shares, in the past they've actually had more than 50 per cent, in fact for quite a long time. So it's not clear why PNG government's decided that it doesn't want it again to go above 50 per cent. It was a controversial bid, it was one that actually the board had rejected, and it was one that had very few takers. So it would have been quite easy for the PNG government just to leave this to commercial means to resolve, but some for reason they decided they needed to intervene. And that seems to have been the motive for passing this act and then making this decision that it wasn't in the national interest."
Since this is a recent thing and in light of the OK Tedi situation there is concern, but O'Neill is a smart guy and he is pro-business and knnows foreign investment is hugely important. He's doing the wise thing; lay down a heavy line, then deal with situations as they come.