Maru looks to bolster PNG’s trade potential
Minister for International Trade and Investment Richard Maru says his vision as then Minister for Trade, Commerce and Industry, to stabilise the country’s trade function, and put a stop to it becoming a ‘football organisation’ between the Ministries of Foreign Affairs and International Trade, and Commerce and Industry, is finally realised as he becomes the first minister to head this area as a separate ministry. Business Editor SHIRLEY MAULUDU writes in detail specific projects and areas that Maru says will become his responsibility from now on.
Introduction
The Ministry is responsible for all the matters related to the Port Moresby Stock Exchange, Security Commissions of PNG, Special Economic Zone Authority, Pacific Marine Industrial Zone (PMIZ), Konebada Petroleum Park and the National Trade Office.
Economic Security
The Government is committed to partnering with the public and private sectors to improve public safety, border security and digital security. For far too long, our economy has been reliant on the extractive sector. We have not been able to successfully restructure our economy. We continue to export raw materials and import finished manufactured products when we could be transforming some of our own natural resources into finished products for domestic consumption and for export.
International Trade
The exchange of goods and services determines the economic fortunes of nations, corporations and individuals. To date, a new paradigm of international trade is being characterised by globalisation of production, global distribution chains, high volatility of foreign direct investment flows, and increased liberalisation of traditional border measures. Countries both developed and developing have established dedicated trade institutions with sufficient resources to secure the best deals for their exports and also attract lucrative investments into their countries.
Free Trade Agreement with Indonesia
The first priority will be to launch a free trade agreement negotiation with Indonesia, PNG’s closest neighbour. As per 2021 estimates, it is the world’s 16th largest economy by nominal GDP estimated to be worth around US$1.159 trillion and growing at a rate of five per cent annually. Indonesia has a population of more than 275 million. Our downstream and value added products can then be exported to Indonesia and the rest of Asia to meet their increasing demand for food and other industrial needs. This is a huge potential that PNG can take advantage of.
Also, Indonesia has the technical expertise in hydrocarbon, mining and petroleum, agriculture, textile, and industrial technology and other sectors. We need their companies to come and invest in those sectors. I have instructed the National Trade Office to prepare a Terms of Reference for a full feasibility study for me to take to the National Executive Council for endorsement which will commence immediately.
Deepen Trade and Investment Relations with Australia
The second priority will be to deepen trade and investment relations with Australia which is also PNG’s closest neighbour and trading partner. PNG and Australia have trading arrangements going back to the 1970s under PNG-Australia trade and commercial agreements, as well as a regional arrangement under the South Pacific agreement on regional trade.
Despite the number of trading arrangements in place between the two countries, they have not served to increase trade in favour of PNG. We boost the trade balance in PNG’s favour, but to me personally, the present trade relationship is heavily skewed in favour of Australia. In 2020, PNG’s total exports to Australia was worth A$2.39 billion (about K5.66b), of which, gold was $2.21 billion (about K5.23b). So gold constitutes 92.47 per cent of these exports. The biggest challenge takes the form of non-tariff measures that are applied by Australia in respect of these products entering the market.
The other challenge is the supply side capacity related to PNG which includes the products that are in strong demand in Australia.
Free Trade Agreement with China
The other priority will be to accelerate work on a possible free trade agreement with China. China has become a global super power and the trade and investment relations between PNG and China has grown from strength to strength and formal trade relation between the two countries is inevitable.
I therefore, will be looking at fast tracking the joint feasibility study for a possible PNG/China free trade agreement. On this note, let me thank the Chinese Government for providing a grant assistance of K1 million to assist PNG to meet the cost of the feasibility study. We will also be entering into discussions with the Philippines, Malaysia, and other countries of interest for possible free trade agreements that we think are potential markets for PNG exports.
Establishment of Trade Missions
I am looking at establishing trade missions in countries that PNG has specific market interest. They will be on the ground providing market intelligence through market research, provide information to potential exporters on market requirements, promote PNG’s products through trade expositions and exhibitions and provide other necessary market information. Due to funding constraints, I am looking at establishing six trade missions immediately. They are Brisbane, Jakarta, Manila, Singapore, Brussels and Dubai.
Pacific Marine Industrial Zone
THE Pacific Marine Industrial Zone (PMIZ) project in Madang may cost around K1 billion to build. Government has allocated about K70 million, but that might not be enough to fully establish the project. We are going to make sure that PMIZ is going to be constructed as soon as possible.
We will shortly be calling a meeting with the Fisheries and Marine Resources Minister Jelta Wong, PNG Ports, Kumul Consolidated Holdings, on how we can raise K1 billion to build the park. I’m talking wharves, I’m talking sewerage systems, I’m talking water, I’m talking power. We need to raise the funds internally if we can, and get on with the construction of PMIZ as soon as possible.
Ministry Structure
My sixth priority will be to look at the internal structure of the newly created International Trade and Investment Ministry. This will include creation of a department that will provide the policy oversight over the several functions that come under the Ministry which includes the National Trade office, The Fee Trade Zone Authority, The PNG Securities Commission and the Konebada Petroleum Park Authority.
Private Sector Investment
Another priority will be to encourage private sector investment in the agricultural sector including encouraging super funds and state owned enterprises such as Kumul Holding s Ltd to invest in the agriculture sector.
Conclusion
The Government has set the target for PNG to become economically independent by 2032. This target is ambitious but I believe we can achieve this if we invest in the agriculture and manufacturing sectors. The Ministry of International Trade and Investment will advance this Government agenda through the implementation of the priorities outlined.