Canberra, 15 October 1968
Confidential
Submission no. 242—Review of policy on Asian investment in Papua and New Guinea1
The Cabinet agreed that a relaxation of the present restrictions on Asian investment in Papua and New Guinea would be appropriate, and it therefore adopted the recommendation that the present restrictions be removed and that investment from Asian countries be treated in the same way as investment from other foreign countries— i.e. in accordance with the guidelines set out in paragraph 8 of the Inter-departmental Committee’s report attached to the Submission. 2
2. However, the Cabinet indicated that it wished, as an extension of the policy now being pursued in respect of investment from foreign sources (again, see paragraph 8 of the Inter–departmental Committee’s report), to accord emphasis in the following fashion:—
(a) Investment proposals should be devised to afford an opportunity for Papuans and New Guineans, if they so choose, to acquire, either now or later, including through the Papua and New Guinea Development Bank, a significant equity participation in the enterprise. Furthermore, to the extent that the people of the Territory do not avail themselves, or do not avail themselves fully, of this opportunity, it should to that extent be open also to Australian investors;
(b) Each investment proposal would be carefully scrutinised by the Minister for External Territories so as to identify any which might give rise to unacceptable ultimate results, e.g. to undue economic influence in the hands of foreign investors or to a level or type of immigration liable to generate undue problems for the future. (In discussing this aspect, the Cabinet put the view that results of the kind mentioned are to be avoided even at the cost of foregoing economic advantage. This is not to relegate the importance of economic development to the Territory, which the Cabinet continues to rate very high, but it reflects a view that it is of first importance that such investment proposals as are approved should fit into the pattern and stage of social and political development of the Territory.)
3. As regards propositions concerning equity participation and also as regards the risks envisaged in 2(b) above, the Cabinet understood that the Minister would refer particular cases to the Prime Minister and the Treasurer and, if the matter was then felt to be one of sufficient importance, it would be brought forward for the Cabinet’s consideration.
4. The Cabinet indicated that in the selection processes the Minister would seek and have regard to the views of the Administrator’s Executive Council and the House of Assembly.
5. It was decided that investment proposals involving Communist countries would not be admitted.
6. The Cabinet noted that Departments associated with the Inter-departmental Committee’s report and, as required other Departments, would be kept informed about all Asian investment proposals for Papua and New Guinea.
[NAA: A5868, 242]
1 Document 211.
2 Paragraph 8 of the report, under the sub-heading ‘Policy on Investment from Other Countries’, reads: ‘The restrictions imposed on investments from Asian sources do not apply to investments from non-Asian sources. However the Department of External Territories and the Territory Administration seek to encourage investment proposals which will:— (a) assist developing the Territory on a sound and balanced basis; (b) provide opportunities for local equity participation particularly in projects which involve the exploitation of the Territory’s natural resources; (c) make provision for employment and training opportunities for local people; (d) involve maximum processing of products in the Territory; (e) involve the enterprise in the provision of maximum common user facilities (e.g. roads, wharves, etc)’.