In brief 9 min read
PNG Parliament convened urgent session and passed K5.6 billion stimulus package; 14-day state of emergency extended by another two months, to June 2020; new emergency laws enacted; Bank of PNG announced new monetary and fiscal measures; IRC granted tax exemptions; IPA waived certain company statutory obligations; superannuation funds announced proposed amendments to superannuation law; PNG Government refused extension of Barrick special mining lease; and proposed plan for freight subsidies for air and sea transport.
On 2 April 2020, the PNG Government had a special sitting to discuss and implement measures to safeguard the PNG economy and people from the COVID-19 pandemic. Three significant resolutions approved in this special sitting were: the passing of an urgent K5.6 billion economic stimulus package; a two-month extension of the state of emergency; and the introduction of new emergency Acts, to address the effects of COVID-19 in PNG.
K5.6 billion stimulus package for PNG economy and extension of state of emergency
The PNG Parliament unanimously passed a new K5.6 billion economic stimulus package that would be split into six priority areas:
- 2.5 billion would be used to raise extra domestic funding through a Treasury Bond;
- K600 million will be issued to banks and financial institutions to relax loan repayments for individuals and businesses, for a term of up to three months on all interests and principal payments;
- 1.5 billion to come from the IMF, World Bank and Asian Development Bank to be used in priority health sectors;
- K500 million will be issued to superannuation funds to allow employees to access their savings during the economic downturn;
- K500 million will be provided as additional support for smaller heath sectors, security and economic sectors such as small-to-medium enterprises; and
- an early release of the supplementary budget by July, to reassess those sectors in the economy that require more support.
Parliament also extended the initial two-week state of emergency that ended on 6 April 2020, for another two months to June, after which Parliament will convene and determine the status of the state of emergency.
New emergency legislation
Several new emergency Acts and amendments were passed by Parliament as part of its response to the COVID-19 pandemic. The following Acts were certified on 9 April 2020 and are now in operation:
Emergency (General Provisions) (COVID-19) Act 2020
This Act creates the office of the Emergency Controller and vests in the Emergency Controller broad powers to prevent and mitigate the effects of COVID-19 in PNG. The Emergency Controller's powers include to issue Emergency Orders (EOs), restrict the movement of persons, regulate business activities, procure goods and services, and such other directions needed to deal with the COVID-19 and its effects. The Emergency Controller also has the power to enter premises, aircraft, vehicles and vessels without a warrant or the consent of the owner.
The Act also prescribes general offences for non-compliance, and obstructing compliance of EOs or other directions given by the Emergency Controller. Bodies corporate who breach any of the general offences are liable to a fine of up to K500,000, and natural persons for a fine of up to K50,000.
It is also an offence under the Act for persons who test positive to COVID-19 to knowingly disobey a direction made under the Act. If found guilty, the person will be liable for a fine of up to K10,000 or imprisonment of up to nine months. Furthermore, where the disobedience of the person leads to the infection or death of another person, the disobedient person is liable to punishment under the provisions of the Criminal Code.
Emergency (Defence Force) (COVID-19) Act 2020
The Act empowers the Emergency Controller to lawfully order or direct designated defence force personnel for the purpose of dealing with the state of emergency.
Public Health (Amendment) Act 2020
The Public Health (Amendment) Act 2020 (the Amendment Act) was passed to update the penalty provisions of the Principal Act.
Furthermore, the Local Medical Authority (the LMA) must immediately report any case of infectious diseases as declared by the Health Minister. The LMA must also remove that reported case to a place specified by the Health Minister until they are allowed to be released.
A new provision (section 11A) has been introduced, directing individuals executing or issuing directions under the Amendment Act to ensure human rights and dignity are maintained.
Quarantine (Amendment) Act 2020
The Quarantine (Amendment) Act 2020 (the Amendment Act) was passed mainly to update penalty provisions of the Principal Act that have become outdated.
Previously, goods imported into PNG by the Government were not subject to the provisions of the Principal Act. However, the Government and its institutions are now subject to the terms of the Amendment Act.
The powers of delegation of authority to deal with particular matters in a province or port under the Principal Act now reside with the Health Minister and not the Head of State.
A new provision (section 10A) has been introduced, directing individuals executing or issuing directions under the Amendment Act to ensure human rights and dignity are maintained.
The Emergency Controller has released several new Emergency Orders that revoke or amend current existing Emergency Orders (see our PNG's response to COVID-19 for a summary of these existing Emergency Orders):
- Emergency Order 24 amends Emergency Order 2, by allowing venues for sports clubs to reopen.
- Emergency Order 25 revokes Emergency Orders 7 and 22, and now sets out new rules for international and domestic travel.
- The significant new rules for international travel to PNG include:
- every person, including PNG residents and citizens, is only permitted to enter PNG by aircraft;
- every person shall only board an aircraft bound for PNG if they are employed by an approved organisation, or if they are permitted to by the Emergency Controller;
- PNG citizens and permanent residents returning to PNG on aircraft are required to undergo quarantine at a designated facility in Port Moresby at the PNG Government's expense; and
- non-PNG citizens and non-permanent residents returning to PNG by aircraft must be quarantined at an approved hotel in Port Moresby at the individual's own expense. However, an individual may be exempted from being quarantined at a place of residence, other than at an approved hotel, if authorised by the Emergency Controller.
- New rules for domestic travel in PNG include:
- all travels to Western province and Sandaun province are prohibited unless authorised by the Emergency Controller;
- all flights to and from all airports within all PNG provinces, except for Western province and Sandaun province, are allowed;
- however, passengers must comply with certain conditions to travel domestically, including practising social distancing on flights, having valid reasons for travel and completing an Air Passenger Travel Form. Failure to comply with these new conditions will result in a penalty fine of PGK10,000.00.
- Emergency Order 28 now:
- revokes all curfews for the National Capital District and Central province;
- allows the sale of alcohol at all restaurants, hotels and major supermarkets in NCDC and the Central Province; and
- permits all sports and physical activities but they are restricted to only four persons.
All previous Emergency Orders continue to apply until such time as the Emergency Controller issues new Emergency Orders to amend or vary existing ones.
Bank of Papua New Guinea's new monetary and prudential measures
The Bank of Papua New Guinea has announced new monetary, financial and payment systems measures to make available sufficient liquidity to individuals and businesses for them to adjust to the impact of COVID-19.
Significant aspects of these new measures include:
- reducing the kina facility rate by 200 basis points to 3%, from the current 5%. This is intended to lower costs of funds and make liquidity available to commercial banks;
- reducing the cash reserves requirement to 7% from the current level of 10%, to provide additional liquidity to the banking sector;
- increasing foreign exchange interventions in the domestic economy by directing all authorised foreign exchange dealers to give priority to retailers and wholesalers within the medical sectors who import products related to COVID-19;
- relaxing the requirements of all prudential standards relating to asset quality, capital adequacy and loan loss provisioning; and
- maintaining normal operations of the kina automated transfer system and retail electronic payment systems, with contingency plans for system downtime and on-site support.
IRC's new administrative tax relief measures
On 1 April 2020, the Internal Revenue Commission (the IRC) released a three-phase tax relief package as part of the PNG Government's response to the COVID-19 pandemic.
Phase 1 of these new tax measures is:
- granting an extension of amnesty for all current salary wages tax that expired on 31 March 2020, to 30 April 2020;
- general postponement of filing tax returns and tax payments to 30 June 2020, for corporate income tax and personal income tax;
- deferring imposition of tax penalties for withholding tax to 30 June 2020; and
- priority for refunds of goods and services tax will be given to those sectors that have been impacted by or involved in COVID-19. These include medical services, hospitality, tourism, manufacturing, air transport and agriculture sectors.
The IRC has advised that phases 2 and 3 of these tax administrative relief measures will be implemented according to how the COVID-19 pandemic develops in PNG.
Waiver of company statutory requirements
The Investment Promotion Authority (the IPA) has issued exemptions for certain statutory obligations under the Companies Act 1997.
Companies are now exempted from strict compliance with:
- the time limitations to hold annual shareholders meetings and annual general meetings;
- the time limitations for preparation and presentation of financial statements by directors; and
- penalty fees for late or outstanding annual returns.
The IPA has advised that these exemptions will be in place for the duration of the state of emergency.
Superannuation assistance for all employees
Four of PNG's superannuation funds have announced assistance to all their members in PNG.
The National Superannuation Fund, Nambawan Super Limited, Comrade Trustees Services Limited, and Aon Master Trust have jointly agreed to provide all their members with a tax-free one-off payment of up to 20% or K10,000, whichever is greater, of a member's contribution whose employment is terminated as a result of COVID-19.
This will become effective once legislative amendments to the Superannuation (General Provisions) Act 2000 are approved.
Freight subsidies planned for sea and air transport
On 17 April 2020, the Minister for National Planning and Monitoring, Mr Sam Basil, stated that his department had been directed by the Emergency Controller to address concerns about the supply of fresh food and vegetables in PNG.
Mr Basil advised that they were currently in discussions with service providers in the air and sea transport sectors, to develop a stimulus package that would cater for the potential loss of business and jobs, including food scarcity, as a result of the impact of COVID-19 on PNG's economy.
Non-renewal of Barrick's special mining lease
The PNG Government announced on 24 April 2020 that it would not be renewing Barrick Niugini Limited's special mining lease.
According to a statement by Prime Minister James Marape, the decision not to extend the special mining lease was due to, among other reasons, the fair equity participation for landowners and environmental impacts of the mine.
Barrick has declared that it will take the matter to the courts for review of the PNG Government's decision, and seek relief for any damages caused to the company as a result of the decision.