Prime Minister James Marape told a small and medium business breakfast recently that investors would have to pay K20 million to the Bank of PNG if they wanted to business in the country.
Responding to queries from The National newspaper, Chamber president John Leahy said: "Local businesses already have a competitive advantage just by being here, so if they are unable to compete effectively that must be for other reasons and making it harder for other people just impedes development and adds to costs for everyone, including local businesses.
"The idea of earmarking an amount to be deposited with the central bank makes no sense at all except, of course, in the context of the prudential regulation of the financial sector.
"Even for large investors, it adds to the capital requirements for any particular project and therefore to the cost of investing here.
"For smaller and knowledge-intensive and service sector businesses, it would be completely prohibitive.
"We should be encouraging capital investment and skills transfer and this measure would have exactly the opposite effect," he said.
"If the objective is to improve the foreign exchange position then this will make it worse.
"If the objective is to secure legal obligations of foreign investors, this is a terrible way of doing it, very much a blunt and unsophisticated instrument," Leahy said.