Using an Agent or Distributor

U.S. products are well-represented in the PNG market, often via Australian distributors.  Caterpillar, John Deere, Mercury Marine, 3M, Dell, Ford, Cummins, Boeing, General Electric, and Otis Elevator have all enjoyed recent and/or ongoing export successes, as have Parker Drilling and Columbia Helicopters.  Hertz and Avis are the leading rental car companies.  In addition to U.S. Commercial Service assistance, having contact with major industry/sectoral companies, Papua New Guinea’s Investment Promotion Authority, professional bodies, peak industry associations, and local business chambers can also be good sources of information for identifying potential partners through their membership networks.

Establishing an Office

If an overseas company chooses to establish a PNG branch, the company is required to prepare and file specific forms with the Registrar of Companies a branch of Papua New Guinea’s Investment Promotion Authority.  This can now be done online at PNG IPA

Applicants are required to provide the following:

• Full name of the company as registered overseas.
• Principal activities of the business.
• The address of the overseas company’s principal place of business in Papua New Guinea.
• Details of directors, i.e., residential, and postal addresses, date of birth and nationality.
• Copy of certificate of incorporation for the overseas company and change of name certificate if any, and.
• Certificate of a Memorandum of Articles for the overseas company.

It should be noted that an overseas company registered in PNG is required to appoint a “resident agent”.  A resident agent is a “person or a resident company incorporated in the country who is authorized to accept documents in-country on behalf of the overseas company and who is responsible for submitting all documents required by the Companies Act 1997 in respect of the overseas company.”

Timeframe for registration: Three – Four weeks.  However, with the new online lodgment process it is anticipated that registration can take less than a week.

The State Department’s Investment Climate Statement also provides information on investment and business environment in PNG and information on establishing and operating an office in PNG.

For the latest Investment Climate Statement (ICS) which includes information on investment and business environments in foreign economies pertinent to establishing and operating an office and to hiring employees, visit the U.S. Department of Department of State’s Investment Climate Statement

Franchising

‘Fast’ food chains, restaurants, ice creameries, coffee shops, personal care, and retail clothing all offer opportunities in Port Moresby, and possibly Lae in Morobe Province.  Hertz and Avis already operate in multiple cities in PNG, and other Pacific Island Countries.  Quality-controlled food preparation can be a success story.  With a modest but growing regional tourism industry, a variant of Hawaii’s ABC stores could also succeed as a professional interface between local craftspeople, industries, and inbound air and cruise visitors.

Direct Marketing

Given PNG’s difficult geographical conditions, and with a growing mobile phone communication network, direct marketing can be a reliably accessible and affordable advertising platform in the country.  In addition, PNG’s Investment Promotion Authority, professional bodies, industry peak associations, and local business chamber, and commercial banks all offer wide networks of customers.

Joint Ventures/Licensing

A joint venture (JV) is a contractual arrangement between two or more entities to carry out a business undertaking in common, otherwise than as partners.  A JV in PNG may be incorporated or unincorporated and is usually entered to undertake a specific business activity.  An unincorporated JV is often appropriate for mining, oil, and gas projects, which generally involve high preproduction costs.

The Morobe Mining Joint Ventures (MMJV) is an example of the unincorporate JV.  MMJ was formed as a partnership between Harmony Gold and Newmont (formerly Newcrest) to explore and develop mines in the Morobe Province of PNG.  Another large mine in PNG, Porgera Joint Venture in Enga province is operated by Barrick (Niugini) Limited (“BNL”) which owns 95 percent participating interest in PJV.  The remaining 5 percent is owned by Mineral Resources Enga (MRE) Limited.

Generally, a JV is not required to file a separate tax return and every participant may immediately incorporate its share of the costs of the project into its general income-producing expenses for tax purposes (other than mining and petroleum development projects, for which such costs must be incorporated into project income-producing expenses).  Furthermore, each participant is free to treat its share of the cost of the project independently of the other participants, thereby offering greater tax and accounting flexibility than a partnership.

It is common for an unincorporated joint venture to be formed and managed so that each participant’s liability is limited to its agreed interest in the project.

Express Delivery

Several internationally recognized express delivery and courier services are available and have agents in PNG. Worldwide express delivery services in PNG include.

• DHL (Express & Global)
• FedEx
• UPS
• TNT

Clearance & delivery time is generally between 3 to 5 working days from time shipment is received at a Customs Bonded warehouse.

Due Diligence

U.S. firms should exercise normal commercial prudence when doing business in PNG and are advised to perform due diligence on likely business partners and customers.

The U.S. Commercial Service provides the International Company Profile (ICP) service, giving useful background information on a PNG company.  The ICP is a background check service that verifies the authenticity/legitimacy of non-American companies.  Its objective is to provide U.S. firms with appropriate information to help them identify potential local business partners to engage in private commercial activities – as either potential distributors or customers for U.S. companies.  The ICP is critical for U.S. companies to perform when considering investment opportunities with business partners and agents.

Investors and businesses can also engage an accounting firm to undertake due diligence on local companies that they are looking to work with in PNG.