Can a SWF propel PNG into a wealthy, developed nation?
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| Image is for illustration only. For image text, go to https://www.weforum.org/agenda/2017/10/what-you-need-to-know-about-sovereign-wealth-funds/ (What is a sovereign wealth fund?) |
Can a SWF propel PNG into a wealthy, developed nation?
PORT MORESBY: It is not surprising that Papua New Guinea (PNG)’s government has set the wheels in motion to establish a resource-based Sovereign Wealth Fund (SWF) to steer its people and country into a developed nation in the 21st Century digital era.
After all, SWFs from all over the world manage a total of US$7.45 trillion (K25.18 trillion) in assets, up 13% from last year, according to a new report from research firm Preqin.
And in a matter of only five years of setting up the Timor-Leste Petroleum Fund (TLPF), the tiny state's SWF ballooned from US$205 million (K692.9 million) to US$6.9 billion (K23.3 billion).
That means Timor-Leste’s 1.4 million nationals have K23.3 billion in SWF assets, and still growing, to serve their socio-economic development needs and interests.
Like Timor-Leste’s TLPF, PNG is also taking the same road to set up a SWF that’s managed according to the Santiago Principles on best practices for governing SWFs.
With the Santiago Principles' good governance policy adhered to strictly, can resource-rich PNG be propelled into a wealthy and developed nation in this Century?
PNG Cyber Monitor reproduces the following reports published by The National for the details:
SWF to grow beyond K3bil
DEPUTY Prime Minister and Treasurer Charles Abel says the Papua New Guinea Sovereign Wealth Fund (SWF) board is expected to be set up by the middle of this year.
“The legislations for the establishment of a SWF are in place, we just need to kick-start the operations of the fund with the establishment of a board. That’s the process we’re going through now for Papua New Guineans and our country,” he told The National in a special interview.
He also revealed that the target was for the SWF to grow beyond US$1 billion (K3.38 billion).
“The legislations for the establishment of a SWF are in place, we just need to kick-start the operations of the fund with the establishment of a board. That’s the process we’re going through now for Papua New Guineans and our country,” he told The National in a special interview.
He also revealed that the target was for the SWF to grow beyond US$1 billion (K3.38 billion).
Crown millionaires in PNG?
WHAT is a Sovereign Wealth Fund (SWF)? Do Papua New Guineans know or understand the works of such a state fund? Do they know how a SWF can impact their lives and the future of PNG? In the first part of this special news reports, The National’s senior reporter MALUM NALU takes an in-depth look into this for the benefit of our readers.
Did you know that everyone in Norway became a theoretical crown millionaire in January 2014? And Norway is also the first and only country in the world to date to achieve such a status.
In simple terms, the total wealth of Norway divided by its population equals every Norwegian becoming a millionaire.
And, it is all due to its oil-based Sovereign Wealth Fund (SWF). This is also why healthcare and medical treatment are almost free for Norwegians, and education is free at all its 40 public institutions of higher learning.
While Norway’s US$1 trillion SWF is the world’s biggest, the zero-resources island republic Singapore has two SWFs listed in the world’s Top 10.
Singapore’s Government of Singapore Investment Corporation with an estimated wealth of US$390 billion is at No.8 and Temasek Holdings is at No.9 with US$375 billion.
Last month, Deputy Prime Minister and Treasurer Charles Abel, announced that the legislative framework was in place to establish a SWF for Papua New Guineans and their country.
He said the Government would appoint a board in the middle of this year.
Abel also told the Petroleum and Energy Summit that properly managed resources, through the SWF, would enable a sustainable economy (and stable economic growth).
“Responsible management of natural resources (or country’s wealth) will ensure sustainable socio-economic growth for the people,” he added.
At the April 9 historic US$13 billion (K44 billion) Papua LNG project gas agreement signing, both Abel and secretary Dairi Vele told The National that the wheels had been set in motion for the SWF.
There is, however, no confirmed date for the SWF and no money to start it, though the government is looking at a double digit billion injection to kick-start the SWF.
However, Kumul Petroleum Holdings Ltd managing-director Wapu Sonk, says the financial status quo of the country does not allow for the establishment of the SWF right now.
A SWF, according to the SWF Institute, is a state-owned investment fund or entity that is commonly established from:
In simple terms, the total wealth of Norway divided by its population equals every Norwegian becoming a millionaire.
And, it is all due to its oil-based Sovereign Wealth Fund (SWF). This is also why healthcare and medical treatment are almost free for Norwegians, and education is free at all its 40 public institutions of higher learning.
While Norway’s US$1 trillion SWF is the world’s biggest, the zero-resources island republic Singapore has two SWFs listed in the world’s Top 10.
Singapore’s Government of Singapore Investment Corporation with an estimated wealth of US$390 billion is at No.8 and Temasek Holdings is at No.9 with US$375 billion.
Last month, Deputy Prime Minister and Treasurer Charles Abel, announced that the legislative framework was in place to establish a SWF for Papua New Guineans and their country.
He said the Government would appoint a board in the middle of this year.
Abel also told the Petroleum and Energy Summit that properly managed resources, through the SWF, would enable a sustainable economy (and stable economic growth).
“Responsible management of natural resources (or country’s wealth) will ensure sustainable socio-economic growth for the people,” he added.
At the April 9 historic US$13 billion (K44 billion) Papua LNG project gas agreement signing, both Abel and secretary Dairi Vele told The National that the wheels had been set in motion for the SWF.
There is, however, no confirmed date for the SWF and no money to start it, though the government is looking at a double digit billion injection to kick-start the SWF.
However, Kumul Petroleum Holdings Ltd managing-director Wapu Sonk, says the financial status quo of the country does not allow for the establishment of the SWF right now.
A SWF, according to the SWF Institute, is a state-owned investment fund or entity that is commonly established from:
- BALANCE of payments surpluses;
- OFFICIAL foreign currency operations;
- PROCEEDS of privatisations;
- GOVERNMENTALtransfer payments;
- FISCAL surpluses; and/or
- RECEIPTS resulting from resource exports.
The idea of the SWF was mooted in Papua New Guinea as early as 2011, amidst much optimism, as the PNG LNG project in Hela was about to begin.
The government then started working on the Organic Law on the Sovereign Wealth Fund (OLSWF) Organic Law, and in August 2012, the PNG government set up the SWF Implementation Secretariat, located in the Treasury and staffed with officials from the Treasury, the Bank of PNG, the Department of National Planning and Monitoring, and the Department of Justice and Attorney-General.
The secretariat’s work stalled in late 2012 after questions were raised regarding the legal validity of the OLSWF.
Institute of National Affairs (INA) executive-director Paul Barker says the secretariat’s work stalled in 2012 because of political interference.
“There was a lot of work that was done before LNG, even during the time of the gas to Queensland pipeline and before,” he told The National.
Barker said: “There were discussions about the SWF. The International Monetary Fund (IMF) and other parties came in, there were a lot of discussions on what it will be like.
“The central bank was very much taking a lead role in steering some of those consultations, together with the Treasury and some other agencies like us in the think-tank, particularly the INA and NRI (National Research Institute).
“The design work was done and the first draft of the legislation was prepared.”
He added: “Then came the crunch. In fact, the legislation was passed in the first instance, but then it was all put on hold. There were discussions going on between the Treasury and politicians over the balance that they wanted: whether it should be more emphasis on stabilisation, or should it be a fund for investment into other domestic industries.
“It came from almost a cargo-cultish concept. The purpose of the SWF around the world is really to stabilise, to sanitise some of the revenue and to provide smooth revenue and expenditure, and to save for the future.
“But, at the same time, you had a number of politicians who had that almost cargo cult perspective of big revenues, so they can spend in different ways.
“That exactly runs counter to the concept of the stabilisation fund.”
Managing a SWF is akin to managing a corporate investment company. In this case, the Government is the “manager”.
And, whether a SWF can grow successfully, it depends on the efficiency and competency of the Government.
A fine example to look at is the young and tiny nation of Timor-Leste (East Timor) that gained Independence from the Portuguese on Nov 28, 1975, and from Indonesia on May 20, 2002.
The new sovereign state, with a population of only 1.4 million today, set up its SWF named Timor-Leste Petroleum Fund (TLPF) into which surplus petroleum and gas income is deposited by the government of the day.
The TLPF, kicked off with an opening balance of US$205 million. In just five years, as at Dec 31, 2010, TLPF’s capital ballooned to US$6.9 billion for the benefit of the people and country of Timor-Leste.
TLPF’s earnings were about 4 per cent for the five years, as of July 2011. And a key milestone was achieved in June 2014 when the equity allocation reached 40 per cent.
TLPF returned 3.3 per cent in 2014, or 2.5 per cent after inflation, and its end-of-year balance in 2015 was US$16.9 billion!
TLPF is today ranked No. 35 in Sovereign Wealth Fund Institute’s Top 81 largest SWF by total assets
Like all SWFs worldwide, TLPF signed up to the Santiago Principles on best practices for managing SWFs and joined the International Forum of Sovereign Wealth Funds. As a member, it publishes how it adopts and implements the principles within its governance procedures.
Governance TLPF focuses on transparency and disclosure of pertinent information that can foster public support for the sustainable management of the nation’s petroleum revenues. It also focuses on strategies to reduce the risk of poor governance and to continually assess the fund’s methodologies.
The Ministry of Finance is responsible for overall management of the fund; it is the ministry’s responsibility to act on behalf of the people of Timor-Leste.
Various reporting requirements, outlined under the Petroleum Fund Law, make the government accountable to Parliament.
Operational management is the responsibility of the Central Bank of Timor-Leste, which invests the fund’s capital according to guidelines established by the Ministry of Finance and mandates developed by the Investment Advisory Board.
The ministry must consult with the board before making decisions on any matter relating to the investment strategy or fund management.
PNG is also taking the same road and guidelines in setting up its resource-based SWF to help fast track the country’s socio-economic development. And there is no reason for the SWF to fail if management competency and transparency are strictly adhered to benefit people and country.
The government then started working on the Organic Law on the Sovereign Wealth Fund (OLSWF) Organic Law, and in August 2012, the PNG government set up the SWF Implementation Secretariat, located in the Treasury and staffed with officials from the Treasury, the Bank of PNG, the Department of National Planning and Monitoring, and the Department of Justice and Attorney-General.
The secretariat’s work stalled in late 2012 after questions were raised regarding the legal validity of the OLSWF.
Institute of National Affairs (INA) executive-director Paul Barker says the secretariat’s work stalled in 2012 because of political interference.
“There was a lot of work that was done before LNG, even during the time of the gas to Queensland pipeline and before,” he told The National.
Barker said: “There were discussions about the SWF. The International Monetary Fund (IMF) and other parties came in, there were a lot of discussions on what it will be like.
“The central bank was very much taking a lead role in steering some of those consultations, together with the Treasury and some other agencies like us in the think-tank, particularly the INA and NRI (National Research Institute).
“The design work was done and the first draft of the legislation was prepared.”
He added: “Then came the crunch. In fact, the legislation was passed in the first instance, but then it was all put on hold. There were discussions going on between the Treasury and politicians over the balance that they wanted: whether it should be more emphasis on stabilisation, or should it be a fund for investment into other domestic industries.
“It came from almost a cargo-cultish concept. The purpose of the SWF around the world is really to stabilise, to sanitise some of the revenue and to provide smooth revenue and expenditure, and to save for the future.
“But, at the same time, you had a number of politicians who had that almost cargo cult perspective of big revenues, so they can spend in different ways.
“That exactly runs counter to the concept of the stabilisation fund.”
Managing a SWF is akin to managing a corporate investment company. In this case, the Government is the “manager”.
And, whether a SWF can grow successfully, it depends on the efficiency and competency of the Government.
A fine example to look at is the young and tiny nation of Timor-Leste (East Timor) that gained Independence from the Portuguese on Nov 28, 1975, and from Indonesia on May 20, 2002.
The new sovereign state, with a population of only 1.4 million today, set up its SWF named Timor-Leste Petroleum Fund (TLPF) into which surplus petroleum and gas income is deposited by the government of the day.
The TLPF, kicked off with an opening balance of US$205 million. In just five years, as at Dec 31, 2010, TLPF’s capital ballooned to US$6.9 billion for the benefit of the people and country of Timor-Leste.
TLPF’s earnings were about 4 per cent for the five years, as of July 2011. And a key milestone was achieved in June 2014 when the equity allocation reached 40 per cent.
TLPF returned 3.3 per cent in 2014, or 2.5 per cent after inflation, and its end-of-year balance in 2015 was US$16.9 billion!
TLPF is today ranked No. 35 in Sovereign Wealth Fund Institute’s Top 81 largest SWF by total assets
Like all SWFs worldwide, TLPF signed up to the Santiago Principles on best practices for managing SWFs and joined the International Forum of Sovereign Wealth Funds. As a member, it publishes how it adopts and implements the principles within its governance procedures.
Governance TLPF focuses on transparency and disclosure of pertinent information that can foster public support for the sustainable management of the nation’s petroleum revenues. It also focuses on strategies to reduce the risk of poor governance and to continually assess the fund’s methodologies.
The Ministry of Finance is responsible for overall management of the fund; it is the ministry’s responsibility to act on behalf of the people of Timor-Leste.
Various reporting requirements, outlined under the Petroleum Fund Law, make the government accountable to Parliament.
Operational management is the responsibility of the Central Bank of Timor-Leste, which invests the fund’s capital according to guidelines established by the Ministry of Finance and mandates developed by the Investment Advisory Board.
The ministry must consult with the board before making decisions on any matter relating to the investment strategy or fund management.
PNG is also taking the same road and guidelines in setting up its resource-based SWF to help fast track the country’s socio-economic development. And there is no reason for the SWF to fail if management competency and transparency are strictly adhered to benefit people and country.
SWF plan derailed by falling oil prices
ON the night of Aug 15, 2014, Prime Minister Peter O’Neill addressed guests at the PNG LNG Project dinner in Port Moresby. The event was to celebrate the completion of the construction phase and the commencement of production and exports of the project.
O’Neill assured that all wealth generated from the project would be well managed in a Sovereign Wealth Fund (SWF).
“Discussions for the establishment of the SWF is nearing conclusion and we will be able to take it to Parliament very soon. That will ensure that we are able to secure and stabilise our nation’s fiscal future and the future of our country,” he said.
In a special and exclusive interview with The National, Deputy Prime Minister and Treasurer Charles Abel said the collapse of world crude oil prices derailed the SWF plan.
“Part of the reason (for not setting up the SWF) is that we never got much revenue. We were short of revenue.
“The momentum behind the SWF weakened because both oil and gas prices dived significantly. There wasn’t (enough) revenue to (back a SWF) anyway, except into our budget.
“In fact, we found ourselves a little bit short of funds because of all the commitments to the landowners and equity rights to the project. We didn’t have the corresponding income (to continue with the SWF plan).”
Abel adds: “The biggest part of it was the oil price, and the other part was that the project was structured in a manner that didn’t float to the State.
“The Organic Law on the SWF 2016 was passed by Parliament on July 30, 2015 and gazetted on Jan 20, 2016.
“It will establish a SWF together with a board/corporate to manage it.
“The SWF will comprise two distinct sub-funds called the stabilisation fund and the savings fund. The SWF’s objectives are macro-economic stabilisation and inter-generational equity.
“The treasury minister determines the investment mandate, subject to the law. Investments are only to be in foreign assets, and the fund may not be used as collateral for borrowing or otherwise.”
Abel stressed that SWF board members are to be appointed by a committee comprising the prime minister, the opposition leader, the Governor of Bank of PNG, the auditor-general and the president of the PNG Chamber of Commerce and Industry.
He said withdrawals from the stabilisation fund could only be made through the National Budget.
Abel said: “We just need to operationalise it now with the establishment of a board. That’s the process we’re going through now.
“There is a bipartisan committee that we have to bring some names forward to, and then we’ll sit and appoint that board.
“I’ve always made a commitment that by the middle of this year, we’ll have a board in place.
“At the same time, I’m aware that we don’t want to create unnecessary structures and expenses, particularly when we’re not in a position yet to actually put any funds into the SWF.”
Abel said the most-important thing was to ensure that the funds were in place for the setting up of the SWF, comprising a stabilisation fund and a long-term fund.
He explained: “Money initially goes into the stabilisation fund, of up to US$1 billion (K3.3 billion), which is still accessible for budget purposes.
“Once the SWF grows beyond US$1 billion, it spills into the long-term fund. It is difficult to access the long-term fund, which goes into long-term investments, and we should only be drawing from the earnings.
“Those are the two basic mechanisms behind the SWF.”
Abel said he had even invited expressions of interest from countries like Chile, where the Santiago Principles were developed around how SWFs were run.
The Santiago Principles consist of 24 generally accepted principles and practices voluntarily endorsed by International Forum of Sovereign Wealth Fund members.
The Santiago Principles promote transparency, good governance, accountability and prudent investment practices whilst encouraging a more open dialogue and deeper understanding of SWF activities.
SWF benefits expected to flow to people, country
Treasury secretary Dairi Vele, pictured, says Papua New Guinea’s Sovereign Wealth Fund (SWF) board selection process is now underway.
“What’s been slow, of course, is there’s no money in the SWF as yet. Hopefully, if things turn around, we will be looking at putting in some money in (the SWF) over the next couple of years.
“We’re just careful about building a big organisation when there’s nothing to pay for it at this stage. I understand the treasurer’s view is that we should get a board in place, probably just after the third quarter, so that we go through the process,” he added.
Vele said: “We ran a process with KPMG professional auditors cum consultants, who conducted the interviews and selection process, and they’ve submitted a shortlist that the government is now processing.
“Because it’s been a while ago, some of those people have dropped out, including the late Sir Brown Bai, who was one of the candidates to be the chairman.
“We expect that in the third quarter of this year, hopefully, we can announce a small board to get things moving. Obviously, as the oil prices get better and we get a little bit more money, there’s some more momentum.
“Hopefully, we will then have the premier SWF in the Pacific, and in the southern hemisphere.”
State-owned Kumul Petroleum Holdings Ltd managing-director Wapu Sonk tells The National it is supposed to be contributing to the SWF, but oil prices are still low.
“The structure is there, the legislation was passed, it’s just ready to go. As soon as oil prices go up, and revenue to the State and Kumul improves, I think the Government will start to think about putting funds for the SWF. At the moment, there is not enough cash to do that.”
University of PNG’s school of business and public policy senior lecturer Panditha Bandara, pictured, says the SWF is crucial to the country’s future.
“It will be a huge asset for the country in foreign exchange,” he tells The National.
“Once the revenue of the investments flow into the fund, the fund will expand significantly. If you look at the other funds, the biggest SWF in the world is the Norway SWF. It invests heavily in the US market and earns good annual returns.
“PNG is listed among the countries with SWFs, however, it has no assets to its name,” he said.
But from the country’s point of view, Bandara said: “Although PNG is late (in setting up a SWF), we can’t say it is very late because there were only initial discussions in 2009/2010.
“There were many discussions and finally, the World Bank, IMF (International Monetary Fund), ADB (Asian Development Bank) also intervened in the process.
“In 2011, there were many legal criticisms. The laws were very strong, addressing wide issues but, maybe, because they consulted many other funds and also the Santiago Principles.
“It is not that easy to manage a SWF because it is mandatory to follow the generally-accepted principles outlined by the 31-member International Forum of SWFs.
“This is the organisation that came up with generally-accepted principles and practices for governing SWFs.
“I believe that PNG will be a member once this (SWF) is established.
“That means governance will improve, transparency will improve, bad investments will not be undertaken. The benefits will be flowing to the people, I think, in the long run.”
Bandara said: “The first thing is that the SWF must accumulate US$1 billion. It will take some time.
“The government is willing, and there are provisions to allocate some money from government annual budgets to this fund, so that’s also a possibility.”
Meanwhile, the SWFs of the global players continue to grow as PNG strives to kick-start its maiden fund for the future of Papua New Guineans and PNG.
O’Neill assured that all wealth generated from the project would be well managed in a Sovereign Wealth Fund (SWF).
“Discussions for the establishment of the SWF is nearing conclusion and we will be able to take it to Parliament very soon. That will ensure that we are able to secure and stabilise our nation’s fiscal future and the future of our country,” he said.
In a special and exclusive interview with The National, Deputy Prime Minister and Treasurer Charles Abel said the collapse of world crude oil prices derailed the SWF plan.
“Part of the reason (for not setting up the SWF) is that we never got much revenue. We were short of revenue.
“The momentum behind the SWF weakened because both oil and gas prices dived significantly. There wasn’t (enough) revenue to (back a SWF) anyway, except into our budget.
“In fact, we found ourselves a little bit short of funds because of all the commitments to the landowners and equity rights to the project. We didn’t have the corresponding income (to continue with the SWF plan).”
Abel adds: “The biggest part of it was the oil price, and the other part was that the project was structured in a manner that didn’t float to the State.
“The Organic Law on the SWF 2016 was passed by Parliament on July 30, 2015 and gazetted on Jan 20, 2016.
“It will establish a SWF together with a board/corporate to manage it.
“The SWF will comprise two distinct sub-funds called the stabilisation fund and the savings fund. The SWF’s objectives are macro-economic stabilisation and inter-generational equity.
“The treasury minister determines the investment mandate, subject to the law. Investments are only to be in foreign assets, and the fund may not be used as collateral for borrowing or otherwise.”
Abel stressed that SWF board members are to be appointed by a committee comprising the prime minister, the opposition leader, the Governor of Bank of PNG, the auditor-general and the president of the PNG Chamber of Commerce and Industry.
He said withdrawals from the stabilisation fund could only be made through the National Budget.
Abel said: “We just need to operationalise it now with the establishment of a board. That’s the process we’re going through now.
“There is a bipartisan committee that we have to bring some names forward to, and then we’ll sit and appoint that board.
“I’ve always made a commitment that by the middle of this year, we’ll have a board in place.
“At the same time, I’m aware that we don’t want to create unnecessary structures and expenses, particularly when we’re not in a position yet to actually put any funds into the SWF.”
Abel said the most-important thing was to ensure that the funds were in place for the setting up of the SWF, comprising a stabilisation fund and a long-term fund.
He explained: “Money initially goes into the stabilisation fund, of up to US$1 billion (K3.3 billion), which is still accessible for budget purposes.
“Once the SWF grows beyond US$1 billion, it spills into the long-term fund. It is difficult to access the long-term fund, which goes into long-term investments, and we should only be drawing from the earnings.
“Those are the two basic mechanisms behind the SWF.”
Abel said he had even invited expressions of interest from countries like Chile, where the Santiago Principles were developed around how SWFs were run.
The Santiago Principles consist of 24 generally accepted principles and practices voluntarily endorsed by International Forum of Sovereign Wealth Fund members.
The Santiago Principles promote transparency, good governance, accountability and prudent investment practices whilst encouraging a more open dialogue and deeper understanding of SWF activities.
SWF benefits expected to flow to people, country
Treasury secretary Dairi Vele, pictured, says Papua New Guinea’s Sovereign Wealth Fund (SWF) board selection process is now underway.
“What’s been slow, of course, is there’s no money in the SWF as yet. Hopefully, if things turn around, we will be looking at putting in some money in (the SWF) over the next couple of years.
“We’re just careful about building a big organisation when there’s nothing to pay for it at this stage. I understand the treasurer’s view is that we should get a board in place, probably just after the third quarter, so that we go through the process,” he added.
Vele said: “We ran a process with KPMG professional auditors cum consultants, who conducted the interviews and selection process, and they’ve submitted a shortlist that the government is now processing.
“Because it’s been a while ago, some of those people have dropped out, including the late Sir Brown Bai, who was one of the candidates to be the chairman.
“We expect that in the third quarter of this year, hopefully, we can announce a small board to get things moving. Obviously, as the oil prices get better and we get a little bit more money, there’s some more momentum.
“Hopefully, we will then have the premier SWF in the Pacific, and in the southern hemisphere.”
State-owned Kumul Petroleum Holdings Ltd managing-director Wapu Sonk tells The National it is supposed to be contributing to the SWF, but oil prices are still low.
“The structure is there, the legislation was passed, it’s just ready to go. As soon as oil prices go up, and revenue to the State and Kumul improves, I think the Government will start to think about putting funds for the SWF. At the moment, there is not enough cash to do that.”
University of PNG’s school of business and public policy senior lecturer Panditha Bandara, pictured, says the SWF is crucial to the country’s future.
“It will be a huge asset for the country in foreign exchange,” he tells The National.
“Once the revenue of the investments flow into the fund, the fund will expand significantly. If you look at the other funds, the biggest SWF in the world is the Norway SWF. It invests heavily in the US market and earns good annual returns.
“PNG is listed among the countries with SWFs, however, it has no assets to its name,” he said.
But from the country’s point of view, Bandara said: “Although PNG is late (in setting up a SWF), we can’t say it is very late because there were only initial discussions in 2009/2010.
“There were many discussions and finally, the World Bank, IMF (International Monetary Fund), ADB (Asian Development Bank) also intervened in the process.
“In 2011, there were many legal criticisms. The laws were very strong, addressing wide issues but, maybe, because they consulted many other funds and also the Santiago Principles.
“It is not that easy to manage a SWF because it is mandatory to follow the generally-accepted principles outlined by the 31-member International Forum of SWFs.
“This is the organisation that came up with generally-accepted principles and practices for governing SWFs.
“I believe that PNG will be a member once this (SWF) is established.
“That means governance will improve, transparency will improve, bad investments will not be undertaken. The benefits will be flowing to the people, I think, in the long run.”
Bandara said: “The first thing is that the SWF must accumulate US$1 billion. It will take some time.
“The government is willing, and there are provisions to allocate some money from government annual budgets to this fund, so that’s also a possibility.”
Meanwhile, the SWFs of the global players continue to grow as PNG strives to kick-start its maiden fund for the future of Papua New Guineans and PNG.
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