loi m bakani : corporate governance speech by mr loi m bakani, governor of the bank of papua new guinea, at the png institute of directors workshop, port moresby, 16 – 17 july 2012. * * * introduction welcoming remarks • directors and official of png institute of directors ( pngid ), • facilitator of the workshop, mendhurst associates, mr. john mendzela • participants of licenced financial institutions • ladies and gentlemen before i begin, i would like to thank png institute of directors ( pngid ) for hosting this workshop and for the opportunity to address the participants on a common interest which is to enhance corporate governance in our institutions. corporate governance i know you all have now appreciated that good governance is important in every organizations and that the lack of it results in poor management and performance of institutions. we all should know ( because its public information ) the bad experiences in the recent past as a result of bad governance. for example, the demise of our former government bank, png banking corporation ( pngbc ) and three of our superannuation funds namely, defence force retirement benefit fund and former public officers superannuation fund ( posf ) and national provident fund ( npf ) were involved in bad management or questionable investments that resulted in three separate commission of inquiries. the financial sector reforms that took place in 2000 resulted in amendments to the central banking act and the bank and financial institutions act. this was followed by the enactment of the superannuation and life insurance act. these reforms established the independence of the central bank and enabled effective and stringent regulations. with greater independence comes greater accountability and transparency on the part of the central bank and the governor. in addition to the monetary policy responsibilities, regulatory and supervisory powers of the bank were also enhanced. the central bank now has powers to issue rules, regulations, directives and prudential standards and to take timely interventions to ensure that bad governance and unacceptable management practices are deterred. the new standard on corporate governance was drafted as a result of various onsite prudential reviews conducted by the bank since the financial sector reform in 2000. in all its findings, the lack of good corporate governance was the key central theme. the bank emphasizes that the board is ultimately responsible for governance of financial institutions, for employing the right persons in management positions and ensuring that the business functions and their risks are managed in line with board expectations and in such a

a sound and efficient system that will reduce costs to businesses and improve monetary policy transmission. the review will cover different forms of payments, clearing - house, and currency banknotes and coin distribution and withdrawal methods. papua new guinea is a predominantly cash economy and i want to see our people use clean banknotes and bright coins. i want to devise more efficient methods of withdrawing dirty and torn banknotes. in conclusion, these reforms are intended to sustain macroeconomic and price stability over the medium to longer term. with the stable macroeconomic environment, the private sector and members of the rural industries council should use this opportunity to enhance their activities and contribute towards generating economic growth. thank you for listening.