High levels of crime and violence in Papua New Guinea are causing substantial losses to 80 percent of businesses, hampering the nation's economic development, the World Bank said Friday.
A new report, "The Cost of Crime and Violence to Businesses", said security in particular represented a large and growing expense in the often lawless Pacific nation.
It said more than 80 percent of the 135 companies surveyed said their decisions were negatively influenced by the country's law and order situation, with crime significantly increasing the cost of doing business.
"Crime in Papua New Guinea constrains businesses and threatens to put the brakes on the economy," said Carolyn Blacklock, who works for an arm of the World Bank that focuses on private sector development in emerging markets.
"Local firms not only struggle to be competitive as they seek to manage crime, but they also pass on these costs to consumers via higher prices, less choice, and the absence of new products and services.
"This is bad not just for business, but the economy as a whole.”
Crime and lawlessness in the poverty-stricken nation is rampant although the World Bank said official police data and government statistics suggested it had stabilised over the last decade. However, there were significant disparities across regions.
Last year, PNG passed harsh new laws reviving the death penalty to tackle a wave of violent crime.
The study, the first in PNG to comprehensively assess the impact of crime and violence on local enterprise, showed companies were suffering direct losses averaging US$33,000 per year from stolen property and about US$26,000 to petty theft by employees.
Some 67 percent of businesses said crime was a major constraint on their operations. This is a higher rate than in El Salvador (51 percent), Venezuela (60 percent) and Democratic Republic of Congo (63 percent).
It added that 84 percent of the country's firms pay for security hardware, such as installing specialised gates and security alarms, while hiring private security consumes on average five percent of firms' annual operating costs.
The study concluded that the expense of avoiding criminal damage limits firms' ability to grow, deters start-ups, and imposes significant long-term social costs on the country.
"Everybody in PNG is losing money and time to crime," said Alys Willman, co-author of the report.
"While the report assesses direct losses from crime and violence, we can never calculate the investment foregone, the expansions to new products and areas that never happened, the number of businesses that never opened their doors, or the jobs that were never created because the costs of security were too high.
"These costs are all passed on to consumers -- and everybody suffers."