The Asian Development Bank is concerned that measures to reserve certain activities for Papua New Guinea nationals could stunt economic growth.
Survey results just released by the ADB found there's been steady improvement in the business environment in PNG.
An ADB economist Paul Holden says one of the reasons for the country's stellar growth over the past 10 years is the enormous amount of foreign investment in the natural resource sector.
Some ventures though like the LNG Gas project have been unpopular and the government ordered an inquiry into the loss of land to foreign companies under a controversial lease system.
Mr Holden says introducing greater regulation including setting up foreign investment review boards could hurt a major growth driver.
"So we view this as a potential problem area although a policy has not yet been finalised, but we're very much cautioning against expanding reserve activity lists and making it more difficult for foreign investors."
Paul Holden says the government has recognised the issue but is under pressure from some sources to reserve certain activities for locals.
