Cutting Papua New Guinea’s (PNG) reliance on natural resources has been a government focus for nearly a decade. Under prime minister James Marape’s administration, which took office in 2019, special economic zones (SEZs) have become a pillar of that strategy. 

To date, the country has licensed one SEZ: the lifestyle-focused Paga Hill precinct, which is still under construction. On May 14, minister for international trade and investment Richard Maru announced his target to license six more by the end of 2023. He spoke with fDi about his drive to diversify the economy via SEZs, and the socioeconomic issues holding the country back. 

Q: Why are you pushing the SEZ concept? 

A: Currently PNG has eight mining and petroleum projects. And yet we have high unemployment, high national debt, a high crime rate and difficulties finding US dollars to buy imported goods. These are all related to our economy not developing to the point where we are able to find jobs for our young people. 

PNG’s decision to go into SEZs is probably the most important economic decision any government has made since independence in 1975. We have now recognised that SEZs helped many countries, including China, transition from a poor-country status into industrialised countries. They packaged land, gave incentives and attracted many foreign companies to come in and develop industries. We think SEZs will be the biggest driver of sustainable and inclusive economic growth going into the future.

Q: Which industries do you hope to develop via SEZs?

A: Our non-resource industries with the most promise are agriculture, forestry, fisheries and energy. So we are targeting all subsectors of agriculture, the downstream processing of logs, processing all fish caught in PNG waters, and green energy projects. At the moment we export basically all our round logs. We want to move to a point where all our logs are processed in PNG by 2025. Another example is that 90% of fish caught in PNG waters is exported in an unprocessed form. We want to process all our fish in PNG so we can create thousands of new jobs in processing plants. 

We want to move from an exporter of raw materials to an exporter of manufactured, finished goods across all our key resource sectors. We also want to replace imports. Anything to do with final products, we will be able to offer incentives to come in and do that.

Q: What incentives will be offered? 

A: First, the government will assist them in getting state titles to the land. Tax incentives will include duty-free access for construction materials and corporate tax holidays. In the future there will be a one-stop shop on site at SEZs where we can issue work permits and visas. Once the SEZs are identified, the government will assist by providing enabling infrastructure like roads, bridges, police stations and everything that needs to be done to make the environment conducive for investment.

Q: You said PNG has a high crime rate. What would you say to investors worried about this?

A: I admit we have a high level of crime compared with other countries, but crime can be managed and mitigated. It’s better for people to come and have a look for themselves. Despite how we are perceived, PNG is a highly attractive destination. We have vast amounts of land; mining, petroleum and other resources; and we have the world’s third largest forest [after the Amazon and Congo]. So we have the raw materials, we want the investors to come in and help us with technology and markets to process our resources, add value to the country and for themselves. 

This interview has been edited for clarity and brevity.

This article first appeared in the June/July 2023 print edition of fDi Intelligence