Home > Corruption > World Bank pushing to allow sweat shops in PNG

World Bank pushing to allow sweat shops in PNG

September 7, 2010 Leave a comment Go to comments

The World Bank is pushing the government of Papua New Guinea to open tax free zones across the country where foreign companies can operate duty free and ignore labour and health and safety laws.

Special Economic Zones, as they will be called, are common cross Asia where in fenced enclosures companies operate sweat shop factoies producing cheap manufactored goods for export.

The Zones are notorious for low wages, inhuman living and working conditions and other human rights violations. They also contribute little to local economies as most raw materials are imported and finished goods exported duty free.

The private business arm of the World Bank, the International Finance Corporation, has drafted legislation for PNG that will allow the declaration of Special Economic Zones (SEZ).

The World Bank wants the PNG government to introduce the legislation in  Parliament when it re-sits in November. Before then, the World Bank is financing a on-day seminar in Port Moresby for ‘stake-holder consultation’.

The SEZ legislation is just one more example of the PNG government being co-opted by foreign business interests. While it is highly unusual for national legislation to be drafted outside the country and at the behest of foreign interests, their are similarities with recent changes to Forestry and Environmental laws.

SEZ legislation will completely ignore the spirit and intention of Papua New Guinea’s Constitution and its National Goals but will be heavily backed by all PNGs major trading partners including Australia, Europe, the US and China.

The first SEZ in PNG will be the Pacific Marine Industrial Zone in Madang which will be financed by a loan from the Chinese government. In return 70% of the construction contracts will be handed to Chinese companies with a guaranteed 20% profit margin.

  1. Robin Lillicrapp
    September 9, 2010 at 8:22 am

    The PNG Government’s recent Vision 2050 Medium-term Development Strategy
    2005 to 2010 (MTDS) seeks to promote robust and broad-based economic growth.

    In the World Bank report No: 53718-PG (June 2010) focus is placed on a loan of SDR 10 MILLION (US$15 MILLION EQUIVALENT) TO PNG FOR A RURAL COMMUNICATIONS PROJECT.

    The Bank’s Rationale for involvement in supporting this Project, includes continued engagement in policy dialogue on the broader telecommunications reform and sector institutional development agenda.

    Two Demonstration Projects for telecommunications services worth US$13.5 million are proposed in two geographically distinct locations,
    namely Chimbu and East Sepik. (surprise, surprise)

    An earlier post asked the question, “Is the World Bank strong-arming PNG?”

    Perhaps not in a malevolent sense but certainly in a policy-directive one. The bank shows similar traits in a kindred article concerning Australia’s proposed Broadband initiative.

    Dr Tim Kelly, The World Bank’s lead ICT policy specialist has cautioned against pulling back on infrastructure spending like Australia’s National Broadband Network (NBN). Dr Kelly told Computerworld Australia ( July 2010) it would be prudent economic policy to forge ahead with expensive infrastructure spending like that of Australia’s broadband plan.

    In Essence,the World Bank is a principle policy and planning directorate with a purvey that includes not only developing but developed nations as well.
    That policy making has influenced PNG to establish Special Economic Zones around the nation where public- private- partnerships between government and regional and foreign investment projects are seen to operate outside the provenance of national standards already established as guides to business and HR planners concerning their operational strategy.

    The existence and exercise of this “double-mindedness” is increasingly reducing the viability of business growth along historic pathways; instead, propelling future investment into the SEZ areas.

    Therein lies the fallacy of growth and prosperity for PNG’s “human capital.” Instead, the emphasis is placed on a wave of neo-colonialism on a grand commercial scale which effectively locks out local and individual interests to the benefit of the major investor funds.

    Surely this a causal link to the perpetuation of a poverty cycle for the indigenous societies of those regions.

    What steps are there to be taken to overturn this viral calumny?

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