PAPUA New Guinea is set to improve its border facilities with Papua province in Indonesia in a bid to tap trade and investment opportunities that can benefit some of its poorest provinces.
To help achieve this goal, the Asian Development Bank (ADB) will provide a US$25 million (K70 million) loan and a technical assistance grant of US$900,000 (K2.5 million) for the pilot border trade and investment development project.
It will remove infrastructure bottlenecks between Sandaun and Papua province, and help develop institutions conducive to private sector investment – a first step by the Government and ADB to strengthen economic co-operation between PNG and Asia.
“The project is the first by ADB to assist one of the least-developed provinces in PNG to benefit from Asia’s dynamic growth. It has the potential to create an economic corridor and business growth centre for the country, benefiting not just Sandaun but neighbouring provinces as well,” S Hafeez Rahman, director general of ADB’s Pacific department, said.
West Sepik is one of PNG’s poorest, but has potential for development by strengthening economic ties with its neighbour, which offers products and services at prices well below those offered in PNG.
The project will refurbish or build new border facilities, provide business skills training, and implement a social development program which includes education and health support and HIV/AIDS prevention for border communities.
The technical assistance will help government policy makers draw up an investment law and develop a telecommunications strategy for the province.
“Expanding cross-border trade with Indonesia will provide people in West Sepik province with a wider choice of products at lower cost, improve market access for PNG exports, increase business opportunities, stimulate investment, create jobs, boost productivity and encourage sustainable growth and poverty reduction,” Cai Li, infrastructure specialist in ADB’s Pacific department, said.
The project complements the efforts of the Australian Agency for International Development (AusAID) in West Sepik province in strengthening the administrative capacity for basic service delivery, maintenance of critical national roads, and fighting HIV/AIDS.
ADB’s loan, from its concessional Asian Development Fund, will make up 83% of the total project cost of US$30 million (K84 million).
The loan has a 32-year term, including a grace period of eight years with interest charged at 1% per annum during the grace period, and 1.5% for the rest of the term.
The PNG Government is providing the balance of the cost.
The technical assistance is from ADB’s grant funds and will be provided to the government on a grant basis. It will finance 85% of the total cost of US$1.06 million, with the Government providing the balance in kind.
The Border Development Authority (BDA) is the executing agency for the loan project, which is due for completion around December 2017.
The Department of Commerce and Industry is the main executing agency for the technical assistance.