The Asian Development Bank says eight years of remarkable economic growth in Papua New Guinea will only be sustained if there are policies in place to help the private sector.
A lead economist with the bank Paul Holden says the environment for private business is challenging even though it has benefitted from the mineral resources boom.
The ADB has issued a report recommending ways to improve the situation including reforming exchange rate policies, the unreliability of services and access to finance.
Mr Holden says firms contracted by the government face many constraints like long delays in getting paid.
"Smaller businesses simply can't get involved in supplying the public sector because they don't have sufficient access to finance to be able to wait months, sometimes even years to be paid."
Mr Holden says reforming the police force and improving the court system would help make the country a safer place to do business.