New regulations and ICT solutions to spur e-business in Papua New Guinea

Paperless transactions are gaining ground in Papua New Guinea thanks to the promise of new central bank regulations and the arrival of a satellite internet services provider.

In early February Ellison Pidik, assistant governor of the Bank of PNG (BPNG), announced the bank was drafting a new regulatory framework to support e-business.

While the groundwork for a sustainable e-business environment has already been laid under the Nation Payment System Act, ratified by the Parliament in 2013, Pidik said the new regulations under consideration would further facilitate the digital economy and allow commerce to prosper.

Push for paperless

The central bank will be working in collaboration with stakeholders in the financial services sector to provide the required support for digital financial services, Pidik told an e-business seminar in Port Moresby.

“BPNG will continue to ensure that all key aspects of [the] digital financial services framework are in place to support all payments either through mobile phones or electronic cards,” he said.

Earlier reforms have already benefitted the sector, with the Kina Automated Transfer System (KATS), the bank’s real-time gross settlement system introduced in 2013 and made fully operational in 2015, cutting payment processing times and ushering in a transition from physical cheques to direct credits and debits.

By early 2017 cheque clearing time was down to two days, compared to as many as 10 previously.

“This is an important phase, and we eventually will get rid of the physical cheques,” Pidik said. “I think that is the way forward.”

Enabling technology

While BPNG is looking to strengthen the regulatory framework for e-business, the enabling technology for conducting commerce online is increasingly in place in urban centres.

Mobile penetration rates reached around 50% by the end of 2016, with established 3G services in built-up areas and 4G LTE coverage to be rolled out in some regions in 2017. In total, mobile phone accessibility has risen to 80% of the country, with connectivity continuing to rise as infrastructure, including a fibre-optic network, is expanded.

Though mobile phone ownership in rural areas has also reached high levels, most of these regions only have 2G coverage, which does not support internet and data transfer. This limits the opportunities for e-business outside of the country’s urban centres, where around 88% of the population of 7m lives.

Despite recent advances in telecoms coverage and access to handsets, overall internet penetration remains low, at around 11.7% as of early last year, according to data issued by the National Information and Communications Technology Authority (NICTA). Although this rate effectively tripled between 2011 and 2014, it nonetheless highlights scope for growth.

Among the reasons cited by the agency for this low level of take-up were the high costs associated with last-mile connectivity – the result of difficult topography and isolated communities.

Satellite offers solutions

Some of these barriers could be eased with the NICTA granting Bermuda-headquartered satellite services company ABS the right to provide data and internet services in PNG in mid-January.

The company, which will operate locally as ABS Global Satellite, will also be licensed to provide cellular services, which it says it could consider offering in the future.

By utilising satellite-based or satellite-supported technology, along with additional fibre-optic or microwave technology as needed, ABS aims to boost internet reach and affordability, especially in rural areas, according to Tom Choi, the company’s CEO.

Business boost

A stronger ICT backbone will serve to support the expansion of e-commerce activities in PNG, providing a solid platform for businesses to connect with clients.

That platform also offers a gateway to key demographics in the market. A recent study of PNG Facebook users showed that roughly half of the 600,000-700,000 users of the social media site were aged between 18 and 24, with some 80% being in the 18-to-34-year-old age bracket – a prime target for retailers.

Although the hospitality, travel and financial services sectors are already pursuing e-business, electronic trading in its various forms is less prevalent in other segments of the PNG economy.

Reforms that further open up the e-business environment to smaller operators, improve the reach and speed of mobile and broadband internet services, and lower costs to make these services more accessible – all developments set to gain momentum this year – should help promote the growth of online commerce.

Copyright © 2017 Oxford Business Group

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1 comment

ori sapuluke hokolo 29/03/2017 at 17:42

more news updates

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