Thursday, July 1, 2010

PMIZ hits a legal hurdle

Source: Act Now PNG

Controversial plans for PNG’s first Special Economic Zone, the Pacific Marine Industrial Zone in Madang, have hit a legal hurdle.
Although the government had negotiated a $180 million loan from the Chinese government to fund the building of the industrial park, that loan is in breach of PNG law. This is because under the loan agreement one particular Chinese company will get to build the park and 70% of the loan monies have to be spent on Chinese goods and services. This breaches PNG laws that require open and competitive bidding process that includes at least 3 companies.
Of course the government is attempting to use its tried and  tested approach to inconvenient legal hurdles by drafting emergency legislation that it will bulldoze through Parliament to secure an exemption from the competitive bid requirement.
It is also understood that the wider Special Economic Zone law that the International Finance Corpoartion (part of the World Bank) is writing is close to finalized and will be presented to PNG government in the coming week or so.
The law will be based on Yemmen's SEZ law, which is reportedly the most 'efficient' and based on what the World Bank regards as 'global best practices'.
The SEZ law will allow companies to operate tax free within the zones, avoid any import or export duties and ignore PNGs minimum wage regulations.

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