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  • The National Informal Economy Policy 2011-2015

    Published: 2011

    Co-published by: the Department for Community Development Sambra HausP. O. Box 7354BorokoNCDTel: (675) 325 5827Fax: (675) 325 0133Website: www.dfcd.gov.pg

    with the Institute of National AffairsIPA Haus, KonedobuPO Box 1530Port MoresbyNCDPapua New GuineaTel: (675) 3211044Website: www.inapng.com

    ISBN 9980-77-175-5National Library Service - Papua New Guinea

    ii

  • The National Informal Economy Policy 2011-2015

    PAPUA NEW GUINEA

    NATIONAL INFORMAL ECONOMY POLICY (2011-2015)

    FOREWORD................................................................................................................................vSECRETARY'S STATEMENT..................................................................................................viABBREVIATIONS AND ACRONYMS.................................................................................viiiEXECUTIVE SUMMARY.........................................................................................................ixINTRODUCTION TO THE POLICY........................................................................................11.0 Policy background and approach..........................................................................................11.1 Constitutional grounds for supporting the informal economy...............................................11.2 The policy approach..............................................................................................................21.3 Policy development process..................................................................................................5POLICY VISION, MISSION STATEMENT, OBJECTIVES..................................................7AND GUIDING PRINCIPLES....................................................................................................72.0 Policy vision......................................................................................................................... 72.1 Policy mission statement.......................................................................................................72.2 Policy objectives................................................................................................................... 72.3 Starting points for the policy.................................................................................................7POLICY STRATEGIES AND PRIORITY ACTION AREAS...............................................133.1 The two arms of a strategy to support the informal economy.............................................133.2 The first policy arm: financial inclusion.............................................................................133.2.1 Microfinance as the tool to increase financial inclusion.....................................................143.2.2 Prioritisation of deposit, remittance and payments services...............................................143.3 The second policy arm: the provision of public goods and services...................................153.3.1 Government provision of services necessary to the informal economy..............................16POLICY STRATEGY AND ACTION ON KEY POLICY....................................18AREAS........................................................................................................................................184.0 Achieving increased financial inclusion to strengthen the informal economy....................184.0.1 General economic policies to increase financial inclusion.................................................194.0.2 Policies for financial inclusion in rural PNG.......................................................................204.0.3 Financial system innovations to increase financial inclusion.............................................214.0.4 Regulatory and governance issues affecting financial inclusion.........................................224.1 The enhanced delivery of public goods to strengthen the informal economy.....................234.1.1 Provision of intangible public goods ('regimes' or 'supportive environments')...................234.1.2 Creation of an enabling regulatory environment for the economy......................................244.1.3 Provision of 'physical' public goods (infrastructure)...........................................................254.1.4 Provision of complementary government services.............................................................254.1.5 Prioritised public goods and associated government services.............................................29INFORMAL ECONOMY POLICY IMPLEMENTATION...................................................305.0 Introduction.........................................................................................................................305.1 Department for Community Development..........................................................................315.2 Department of Treasury and Finance..................................................................................315.3 Department of National Planning and Monitoring..............................................................325.4 Department of Agriculture & Livestock and the National Agriculture Research Institute..325.5 Provincial Departments of Primary Industries....................................................................335.6 Department of Health..........................................................................................................335.7 Department of Education.....................................................................................................33

    iii

  • 5.8 Department of Commerce and Industry..............................................................................335.9 Department of Labour and Industrial Relations.................................................................345.10 Police Department...............................................................................................................345.11 National Statistical Office..................................................................................................345.12 Local Level Governments...................................................................................................355.13 Town Authorities.................................................................................................................355.14 Bank of Papua New Guinea................................................................................................365.15 Independent Consumer & Competition Commission (ICCC)............................................365.16 Consultative Implementation and Monitoring Council......................................................375.17 Private sector.......................................................................................................................375.18 Collaborating and supporting agencies...............................................................................37 6.0 APPENDICES...................................................................................................................386.1 Implementation & Performance Framework......................................................................386.2 Focus Area 1: To facilitate sustained increases in the level of 'financial inclusion' in PNG......386.3 Focus Area 2: To facilitate provision of "public goods" and public services to support the

    development of the informal economy................................................................................456.4 Focus Area 3: Institutional framework for the implementation of the Informal Economy

    Policy...................................................................................................................................48

    ivThe National Informal Economy Policy 2011-2015

  • FOREWORD

    Since 1975, the Preamble to our national Constitution has acknowl-edged informal economic activity as being one of the 'Papua NewGuinean ways' of achieving development. However, until the passingof the Informal Sector Development and Control Act 2004 there wasno further legislative expression of this basic principle. In addition,the 2004 legislation has until now lacked a concrete policy frame-work and clear guidelines for action. This document is designed tofill that gap and is the product of an extensive process of consultationand research.

    This Informal Economy Policy makes a compelling case for government to recognise the impor-tance and monetary value of informal economic activities. Government should acknowledge theimportance of informal production by adopting the name 'the informal economy,' which shouldreplace the inadequate term 'informal sector' in all government statements and documents. Byusing the name 'informal economy', government will also acknowledge its importance to thebroader macro-economy, of which it is an essential part. The informal economy is the grassrootselement in the private enterprise system that PNG needs to build.

    The policy will set out to achieve the maximum participation of citizens, rural and urban, maleand female, in the economic opportunities offered by a dynamic and diversified informal econo-my. It will do so by creating an enabling policy and regulatory environment where the informaleconomy can grow and flourish, while negative aspects of informality are minimised.

    The policy aims to have the informal economy grow in size, and in the diversity and quality ofthe goods and services it produces. It will embrace an increasing proportion of the population asproducers, and yield to them higher cash incomes. It will supply a growing proportion of the con-sumption and investment needs of the low- and middle-income population, leading to the pro-gressive 'nationalisation' of produc

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