The wage subsidy promotes other objectives in addition to the pure development of new industries.

The wage subsidy, by subsidizing wages, promotes employment. However, the incentive is available only to those firms, which possess a new manufactured products certificate.

A firm producing a manufactured product never before manufactured in Papua New Guinea or a product which is manufactured but where import substitution is incomplete may apply for a new products manufacturing certificate from the Commissioner-General for Internal Revenue.

This certificate enables the firm to gain both the wage subsidy and the export income exemption subject to the fulfillment of certain other criteria.

To be eligible for the wage subsidy, a firm must not receive quota protection without import parity pricing or tariff protection such that the tariff on the final goods they produce exceeds the weighted average tariff on their imported inputs by more than 15 per cent.

The aim of these requirements is to prevent the establishment of inefficient industries, which survive due to a combination of a high level of subsidy and protection.

Wage subsidy payments last for five years from the commencement of operations. For each full-time citizen employee, a subsidy is paid which is a proportion of the minimum wage relevant to that area. In the first year the subsidy is equal to 40 per cent of the prevailing minimum wage. This declines to 30 per cent, 20 per cent, 15 per cent and 10 per cent in subsequent years.

The incentives targeted on capital investment are depreciation allowances and include:

Initial year accelerated depreciation provision

Flexible depreciation for agriculture and fishing

Additional depreciation of industrial plant

There are other depreciation allowances but these are more targeted on fuel conservation and environmental protection.