Canberra, 17 July 1968
Confidential
Review of policy on Asian investment in Papua and New Guinea
Background
In Submission No. 320 on Policies for Private Investment in Papua and New Guinea of 30th June, 1967,1 I recommended that in view of the need for a substantial increase in private investment in the Territory consideration be given to easing the existing Commonwealth Government restrictions in Asian investment.
2. In Decision No. 418(M) of 19th July, 1967,2 Cabinet agreed that arrangements relating to Asian investment should be reviewed with a view to easing the restraints on investment from that source. Cabinet directed that the review should be undertaken by a Committee consisting of Prime Minister’s, Trade and Industry, Treasury, External Affairs and Territories Departments, consulting other Departments as necessary.
3. The findings and recommendations of the Committee are set out in the attached report.3 The recommendations are supported by all the Departments represented on the Committee. I am in full agreement with these recommendations.
Committees recommendations
4. The Committee recommends that existing Commonwealth Government restrictions on Asian investment in the Territory should be removed and that such investment should be treated in the same way and subject to the same guidelines and safeguards as investment from other foreign countries (paragraphs 11 to 17). I consider this recommendation soundly based in view of the political and economic developments that have taken place in Papua and New Guinea since the present policy on Asian investment was formulated in 1963/64. Private investment has a rapidly growing part to play in the development of the Territory. The proposed removal of restrictions will make it somewhat easier for the Territory to attract Asian investment, and in view of the tighter capital supply position in the leading capital exporting countries such as Britain and the United States of America this will be helpful in promoting the economic development of the Territory.
5. I endorse the Committee’s view (paragraphs 24 to 27) that removal of the existing restraints is unlikely to lead to excessive Asian dominance in the Territory economy or to a large inflow of Asian nationals. There are adequate controls and safeguards at the disposal of the Administration to ensure that this situation does not arise. The main safeguards are provided by the Territory immigration laws and by the Administration’s control over the transfer of land and over timber and mineral leases. Additional safeguards exist through the Commonwealth Government’s continuing control over banking, currency and foreign exchange matters and over defence and security matters in the Territory.
6. The Committee recommends that the imposition of any special restrictions on conditions on Asian investment should be left to the discretion of the Minister for External Territories who would have regard to any views expressed by the Administrator’s Executive Council and the House of Assembly.
7. In the case of major investment projects which in the view of the Minister for External Territories are of economic or political significance the Committee recommends that the Minister for External Territories should consult other Ministers and as necessary submit the matter to Cabinet for decision. Such projects would include all those involving investment by foreign governments or their agencies. Investment proposals involving capital from Communist countries, both Asian and non-Asian, would be considered by the Interdepartmental Committee on East European investment which would report on such proposals to Cabinet through the Minister for External Territories and the Treasurer.
8. For various reasons some Departments may wish to be kept informed of trends in Asian investment in Territory industries and the Committee proposes (paragraph 29) that interested Departments be informed of all Asian investment proposals.
9. If Cabinet approves this submission I would arrange, in consultation with the Minister for External Affairs, for representatives of selected Asian countries to be informed of the change in the Government’s policy on Asian investment in the Territory.
Recommendation
10. I support the recommendations of the Interdepartmental Committee as set out in paragraph 31 of the attached report 4 and submit them for Cabinet’s approval.
[NAA: A5868, 242]
1 Document 130.
2 Document 136.
3 Not printed.
4 These recommendations were substantively those set out above.