ACCEPTANCE SPEECH Hon. Charles Able 24th January 2019
…my fellow State Ministers and Members of Parliament, Ambassadors, High Commissioners and members of the Diplomatic Corps; Secretaries and Senior Government Officials, Members of Partner Organizations, Members of Industry Players and Regulators, Friends from the Media; Ladies and Gentlemen.
I am honored and pleased to be here this evening to deliver the keynote address at the launching of what is perhaps the Country’s first development white paper for the Financial Services Sector.
1. At this occasion of the “Launching of the Financial Sector Development Strategy and the National Financial Inclusion Policy”, I would like to start my speech by first emphasizing a bit on the importance of the Financial Sector, something I believe will try to reflect on the purpose of this occasion and why we are gathered here to launch these two documents.
2. Ladies and gentlemen, the financial sector as we all know, is more like the human body’s cardiovascular system. For the benefit of those who do not know what a cardiovascular or circulatory system is, it is the system that circulates blood into and around the human body. In the same way, and in any economy, it is the financial system that enables trade in goods and services, and that enables savings to flow to where investments are needed.
3. The impact of financial markets and institutions on economic performance is exceedingly crucial. Because an efficient financial sector reduces not only the costs and risks of producing goods and services, but also reduces the costs and risks of trading goods and services, therefore it makes an important contribution to raising the standard of living.
4. But on the other end, shortcomings in the financial system are the equivalent of cardiovascular diseases, such as heart failure or strokes. And in no circumstances would a country want its economy to face a situation like that, why because the effects can be very devastating.
5. Given a system like that, I am pleased to say that we are very observant and attentive as a responsible government to ensure that our financial sector continues to develop and grow healthy in a way that it keeps pace with the changes happening around us.
6. One thing I find interesting but also worrying at the same time, is the level of technology being applied in the financial services sector. The speed at which technology has advanced within the financial services industry just in last 10 years is incredibly unprecedented.
7. Some of us, apparently, are just beginning to hear new concepts and terms being introduced into the business world; such as BlockChain, Cripto Currency, Bitcoin, etc. and most often we seem quite frightened about how these innovations are going to affect our existing systems and structures. But given the style at which technology in this area is evolving, we cannot ignore and deny the inevitability, but to embrace those changes so that we do not find ourselves running behind the rest of the world trying to catch up with them.
8. Ladies and Gentlemen, as you may have heard, between the periods 2010 to 2011, the World Bank and IMF subjected the PNG’s financial sector to a comprehensive health check. Further diagnostic work was carried out through the Financial Services Sector Review (FSSR) by a joint working group consisting of officers from the Department of Treasury and Bank of PNG between periods 2014 to 2016.
9. This diagnosis work, while unveiling some of the negative features, also pointed out some achievements and positive developments in our financial services sector that we should be proud of.
a) A strong core banking system
b) Already installed automations and infrastructure for digital banking
c) Well established framework for superannuation
d) Sizable primary markets for government inscribed stocks and equities
e) A good progress made in the Financial Inclusion effort. And I acknowledge the tremendous efforts put in by the Bank of PNG and our development partners over the years in these areas.
10.However, while we command those achievements, the diagnosis also pointed out a significant number of gaps and opportunities for further developments; such as:
a) Week competition among financial service providers
b) High level use of cash as a means of payment
c) Non-availability of secondary markets for government bond and equities
d) Limited financial services to the financially underserved
e) High exposure of consumers to the damaging conduct of financial service providers
f) And more importantly, the lack of coordination and information sharing by financial sector regulators, thus regulators inability to taking a holistic view and silo approaches are currently not in the society’s best interests.
11.Based on the diagnosis, it was recommended that an urgent intervention was needed to address them progressively. Obviously, I don’t have the time this evening to go through with you step-by-step how these issues will be addressed, but all I can say is that the way forward is carefully laid out in front of you; the “Financial Sector Development Strategy”.
12.So ladies and Gentlemen, I now have the privilege to tell you that the Financial Sector Development Strategy is the Country’s road map to addressing these weaknesses and gaps, and to propel the financial sector to a next stage of developments.
13.The Strategy, in addition to providing strategic direction for the long-term, identifies specific projects to be commissioned and implemented in the short-term, that is, within the next two to three years.
14.It provides for a review of progress to be undertaken in 2022. This review will provide an opportunity to refresh the strategy in the light of progress to that point, and also to specify a further sets of projects then to be undertaken.
15.This approach reflects an underlying philosophy that what matters for financial sector development is that plans are effectively implemented. That is better achieved by adopting a phased approach, rather than by trying to do everything at once.
16.Co-ordination and collaboration amongst PNG’s financial sector policy and regulatory agencies is also important when it comes to implementation. Therefore, on behalf of the Government, I encourage all stakeholders to work together during the implementation phase to deliver the targets.
17.One good thing about this particular Strategy document, is that it contains the views of all the stakeholders, the fact that there has been considerable input from both public and private sector stakeholders, including views from the service providers, service users and even the regulators of financial services.
18.Workshops were held in Port Moresby and across PNG’s four regions between July and August 2016, and the draft Strategy was presented again to stakeholders in a next lots of regional stakeholder consultation around October 2016.
19.As part of effective governance, implementation of the Strategy is to be overseen by a newly established Council, to be known as the Financial Services Council (FSC). This body will comprise the Governor of the Bank of PNG, the Secretary of Treasury, the Chairman of the PNG Securities Commission, and of course the PNG Insurance Commissioner.
20.However, while we look forward to officially kick off implementation in the new year, I am also pleased to inform you that we have already gone ahead in progressing much of the work; especially in the area of national payments system development, development of the government bond and equities market, and of course the Financial Inclusion space.
21.One of the evidence we have now to prove that work has already progressed is the National Financial Inclusion Policy that is also before you now. Quite interestingly, the National Financial Inclusion Policy is an outcome of the Financial Sector Development Strategy. The Strategy recommended for the establishment of a National Policy to drive financial inclusion efforts in PNG so the government immediately acted on it. And so by having the policy before us means we have already progressed the implementation of the Financial Sector Development Strategy.
22.The existence of a National Policy on Financial Inclusion means that our Government recognizes that financial inclusion is a fundamental building block of inclusive growth and that our government remains committed to securing PNG’s future through inclusive and sustainable economic growth of our people.
23.Therefore, with effective implementation of the Strategy and the Policy, I am confident that the PNG financial sector will continue to prosper and, at the same time, make a strengthened contribution to PNG’s economic and social development.
24.On behalf of the Government of Papua New Guinea, I would like to thank all our stakeholders who have contributed to the Financial Services Sector Review, the Department of Treasury, the Bank of PNG, the hard working Review team, and the World Bank Group for their continued technical support leading to these two important government documents
25.Finally, while I officially launch the Financial Sector Development Strategy and the National Financial Inclusion Policy this evening for implementation, I also urge the continuity for the same level of support and collaborations from our stakeholders and development partners to ensure that these plans are fully implemented to achieve the targets set.