AUTONOMOUS REGION OF

BOUGAINVILLE
PAPUA NEW GUINEA
ECONOMIC DEVELOPMENT
AND INVESTMENT
GUIDELINE

1. BACKGROUND

An internal conflict sparked by inequities surrounding development of the

Panguna Copper Mine was brought to a close by the Bougainville Peace
Agreement
Many Bougainvilleans were traumatised by the conflict
The economy was greatly damaged. Mining ceased, agriculture, forestry,
fisheries and service delivery all shrank greatly

2. PROFILE OF REGION

Autonomous Region of Bougainville has population of about 200 000

Geographically located at latitude 6.20 degrees south & longitude 155.50
degrees east. Total land area of 10,111.3 sq.km. High rainfall 2 500mm - 7
500mm
Natural climate endowment with fertile volcanic and lime stone soils results
in green vegetation reflected in its beach and mountains

3. AUTONOMY

The Autonomous Bougainville Government (ABG) has just celebrated four

years of operation
To access a referendum on further autonomy, independence or integration into
Papua New Guinea ABG must deliver security, demonstrate capacity to
implement drawn down powers and reach fiscal self reliance
The referendum must be held by 2015 at the earliest 2020 at the latest

4. SECURITY

Security is greatly improved

Weapons disposal and reducing insecure activities have been shown to
correlate with economic development and profitable employment availability
This gives further impetus to promoting rapid, broad based, sustainable
economic development

5. INVESTMENT SECURITY

Investment in Bougainville falls under the same legal framework as

investment in Papua New Guinea

The National Investment Policy applies to Bougainville as elsewhere, plus

some additions
Locally registered Joint Ventures are the preferred approach where natural
resources are involved to ensure that natural resources stay in control of local
citizens and organisations

6. ECONOMIC DEVELOPMENT GUIDELINES

AIM
To develop a prosperous, broad based, inclusive, sustainable economy in the
Autonomous Region of Bougainville which conserves and develops the natural
resources upon which it is based

7. OBJECTIVES

The highest rate of development of the economy compatible with the Aim
stated above, and the following objectives guided by the economic
development framework and the investment guidelines
To achieve fiscal self reliance for AROB in good time for the implementation
of the referendum prescribed in the Bougainville Constitution
To develop the sustainable growth capacity of the Bougainville economy and
Bougainvilleans to actively participate in its development

8. THROUGH THIS TO

Seek to foster development in all geographical areas of Bougainville giving

due consideration to the circumstances of each area in determining the
emphasis to be placed there, for instance in deciding to promote food security
or promoting import substitution
Seek to achieve fiscal self reliance through promoting swift, broad based,
inclusive, sustainable economic development throughout Bougainville

9. USING THIS

Overarching Issues For Economic Development

M
A
T
U
R
I
T
Y

Economic & Social Environment

T
I
M
E

No. of People Involved

10. GUIDING THIS INVESTMENT POLICY

PURPOSE
The PNG investment policy applies to AROB as much as it does to all
other parts of the country and must, therefore, be the starting point for the
Bougainville policy.
The Bougainville Investment Policy is supplementary guidance to the
National Investment Policy to ensure that the needs arising from the
unique status of the AROB are taken into account in all investment
decisions.
The Bougainville Investment Policy, therefore, clearly sets out the rules
and parameters under which investment will be welcomed

11. ALL WELCOME

OPEN DOOR

Bougainville concurs with the PNG National Investment Policy in having an

open door to investors with the caveat that their proposals and projects must
assist in achieving the objective stated above, and comply with the following
rules and parameters

12. NATURAL RESOURCES

NATURAL RESOURCES
Where natural resources of Bougainville (land, sea, minerals, flora and fauna,
scenery, etc) are involved in an investment proposal, investment will be in the
form of a joint venture limited liability company registered in PNG whereby
the investor will contribute technology, management, access to markets and
so on and the Bougainville partners will contribute the natural resources

13. ABG AS A REGULATOR

ABG AND INVESTMENT

The ABG shall not take up equity in any development project or investment.
If State land is required for the investment in question the ABG shall facilitate
its sale at open market commercial rates to Bougainvilleans for the specific
purpose of its investment into the particular joint venture company

14. HUMAN RESOURCES

HUMAN RESOURCES
Investment enterprises established in Bougainville shall formally agree to
employ as many suitably skilled, experienced and trained Bougainvilleans at
open market competitive rates of remuneration amongst their staff
complement as possible, and to actively promote the skills, education and
advancement of staff on merit throughout their business

15. SCALE

SCALE OF BUSINESS
Only businesses requiring an initial cash capital investment of greater than
Kina 500 000 shall be eligible for investment from without PNG. This may
be relaxed to Kina 350 000 where the proposal introduces a technology not
already available to Bougainville

16. PROCESSING OF PROPOSALS

All proposals submitted to the PNG Investment Promotion Authority relating

directly or indirectly to Bougainville shall be forwarded to the ABG for
consultation within two weeks of receipt. IPA shall place suitable emphasis
on the views expressed by the ABG in its deliberations
All investment proposals shall contain a full business case for the proposed
enterprises including the economic analysis of the anticipated rate of return on
capital invested and best, median and worst case scenarios regarding changes

in world market conditions and other factors over which the company has
limited or no control, over the proposed life span of the enterprise

17. IN ADDITION TO WHICH

Proposals must show how much land labour and capital will be deployed in
the venture and when they will become actively utilised.
Any licences, permits or other technology or market access requirements must
be clearly stated and costed in the proposal.
Proposals shall show how they comply with the PNG and ABG investment
policies, the local and imported resources which will be mobilised in the
venture and include a detailed environmental impact analysis.
Proposals must show what arrangements are made for disposal of any waste of
what ever kind may arise from the venture.
Provision must be made for environmental restoration of the natural resources
to be employed during the operation of the business such that by the end of
the enterprise sufficient resources are on hand to undertake the restoration in
an escrow account over which ABG shall have supervisory oversight through
the mechanism of the appointment of an independent trustee. The business
proposal must show how these conditions will be complied with

18. FORESTRY

No log exports will be considered

A significant element of down stream processing must be included in
proposals
Which must show what value added products will be exported
Must include detailed plans for replanting at least the hectarage logged with
the same or equivalent species
Must make good the area logged, eg roads etc

19. FISHERIES

Fishing by foreign investors may only occur outside the three mile limit
Within the three mile limit is reserved for domestic fishermen
Investors are welcome on a joint venture basis with local fishermen to
undertake processing and marketing of marine species

20. OTHER CONDITIONS

INSURANCE
The ABG will take all possible steps within its power to enable insurance cover to
be made available by commercial companies throughout the AROB.

REPATRIATION OF CAPITAL AND PROFITS

The repatriation of profits and capital shall be subject to the same laws, policies,
taxes and procedures as obtained throughout PNG.
TAX INCENTIVES
The same regime of tax incentives shall apply to AROB as apply elsewhere in
PNG.
LICENCES
Having given its approval of any proposal the ABG shall supply the necessary
licences and permissions if the proposal meets the technical requirements, once
IPA have also approved the proposal, but will not countenance the establishment
of or recognise any monopolies in any sector of the Bougainville economy.
ENVIRONMENTAL IMPACT
All proposals shall be accompanied by an environmental impact study covering
the anticipated life of the project and showing the means by which any negative
impacts will be restored and the mechanism by which that work will be provided
for financially as the enterprise progresses.

21. ENDOWMENT FUND

The ABG shall establish an endowment fund to be managed by independent

managing agents not associated with the ABG administratively or politically,
reporting to A Board of Trustees which shall be the repository of all revenue,
other than ordinary tax revenue, accruing to the ABG from the activities of natural
resource based investment enterprises

The capital of the endowment fund shall be held in perpetuity by the endowment
fund and be invested to best advantage taking account of returns and their
attendant risk quotients but excluding investment in ABG or PNG Government
stocks or bonds

The endowment capital shall be invested no more than 20% in equities (none of
which shall be companies based in the AROB) 30% in Gilts and the balance in
real property of which no more than 10% of the total by current (as opposed to
historical or purchase price) value shall be in Bougainville
22. RESERVED ACTIVITIES

The PNG Reserved Activities list shall apply according to the scale criteria to;
Agriculture; Forestry; Wildlife; Fishing; Mining; Catering; Wholesale and retail
trade; Weaving; Bilum making; Knitting; Arts and Crafts; Carving; Pottery;

Painting; Screen Printing; Sewing; Jewellery Making; Baking; Coffee Pulping;

Hunting Crocodiles; Tyre Repairs

23. APPROVAL

Approval of any proposal by ABG may only be given by a positive vote of

the House of Representatives on a proposal recommended to it by the
Bougainville Executive Council duly recorded and published in Hansard.
BEC will only consider proposals which have been formally endorsed in
writing by the PNG Investment Promotion Authority. No individual
Member or Minister, the President or Vice President of the ABG or House
of Representatives shall have authority delegated to them by the House of
Representatives to give approval or disapproval of any investment
proposal

24. INVESTOR PROFILE

INFORMATION REQUIRED FROM POTENTIAL INVESTORS AS A

MINIMUM INCLUDES;
Company name, Directors names and addresses
Company shareholders and paid up shares
Present business activities and locations
Audited financial statements for the most recent financial year
Bank references
Business Registration
Due Diligence report
Proposed business activities in Bougainville
Proposed business locations in Bougainville

25. CONTACTS
Office of the Chief Administrator
Autonomous Region of Bougainville
Po Box 322, Buka
Autonomous Region of Bougainville
Papua New Guinea
Telephone:
Fax:
Mobile:

+675 973 9798

+675 973 9797
+ 675 762 2697
Or

Chief Executive Officer

Division of Commerce Trade and Industry
PO Box 3, Buka
Autonomous Region of Bougainville
Papua New Guinea
Telephone:
+675 9739613
Fax:
+675 9739613
Email:
commerce.dib@global.net.pg

Investment Promotion Authority Buka

PO Box Private Mail Bag
Phone:
+675 973 9344
Fax:
+675 973 9344
Email:
ipa_buka@ipa.gov.pg
Website:
www.ipa.gov.pg