Photo: Prime Minister Hon. James Marape, speaking during the recent PNG Special Economic Zone (SEZ) Summit 2023. Photo credits: International Trade and Investment Ministry of PNG
Ways to increase competitiveness through global best practices and drive economic growth were the main high in Papua New Guinea's Special Economic Zones (SEZs) Summit as well as key challenges in PNG and around the world which were discussed by policy makers, industry players, and experts when the Summit was held at the Stanley Hotel in Port Moresby on May 7th-9th 2023.
The impetus in hosting Papua New Guinea's first ever historical Special Economic Zone (SEZ) Summit started on a high note and progressed well as the country played host to this very important international summit when the Prime Minister James Marape, officially opened the summit on, Sunday May 7, 2023. [1]
The summit was hosted by the Marape Government through the Department of International Trade and Investment under the Coordination of PNG's Trade and Investment Minister Richard Maru, highlighting the importance of economic growth at the forefront of the country's SEZs development to enhance PNG’s competitiveness to drive more investment, increase economic growth and achieve the country’s sustainability commitments in line with the Sustainable Development Goals and the Nationally Determined Contribution.[1]
Governmental representatives and special economic zone (SEZ) leaders from different countries gathered in Port Moresby for the Summit as Speakers stressed the significance of SEZs in catalysing a country’s economic growth through attracting Foreign Direct Investments (FDI).
During the Summit, the country's officials were keen to promote the development of the country's identified SEZs, and also had significant panel discussions on how the SEZs development may attribute to the growth in PNG's economy.
The two-day summit included definition of SEZs, update on global performance of SEZs right across the world as well as country presentation by countries who have successfully transformed their economies through SEZs, how they were successful, and what SEZs have failed and why. [1]
The summit learned from the experiences of the countries who have tapped into SEZs, such as China, Singapore, Thailand, Bangladesh, Cambodia, Indonesia, Malaysia, Gabon, Vietnam, and the Philippines.
The summit featured keynote speeches, panel discussions, and interactive sessions covering various topics such as SEZ policies, investment opportunities, and infrastructure development.
It also provided a platform to discuss best practices and key lessons learned from international policy makers and expert practitioners including from India, China, Indonesia, Japan, Philippines, Bangladesh, and International Finance Corporation (IFC)
The country's business sector also was a huge inclusion as the event provided a medium for businesses to showcase their products and services to a diverse audience of investors, government officials, and industry professionals with a total of over 400 delegates all over the country including international speakers as well as 50 booths for the summit sponsors that were setup inside the Stanley Hotel for the sponsors to showcase their brands and merchandises during the course of the summit to serve as information booths for the participating delegates. [1]
Day-one brief of SEZ Summit
On the first day of the summit on Monday 08 May 2023, the summit defined and learned about countries who have gone into SEZ and the key factors that have made them to be successful and why many others have not succeeded so Papua New Guinea (PNG) can learn from the experience of the other countries who have succeeded.
Minister Maru alluded that “SEZ started in PNG at Malahang Industrial Park - Lae, Free Trade Zone (FTZ) - Vanimo, Pacific Maritime Industrial Zone (PMIZ) – Madang and Konebada Petroleum Park have not been successfully developed. SEZs have been here in PNG for over 30 years, and we have failed. PNG has to learn from our own mistakes and also the mistakes of other countries and also learn from the success of this time under the Marape Government’s drive to give SEZs a new lease of life following the successful enactment of the 2019 SEZ legislation, we need to now make it work."
"Despite the legislation and the establishment of the Special Economic Zone Authority (SEZA), we still don’t have a Policy, we don’t have a Master plan and Development plans for SEZs. With this summit now, it will help us learn from other countries on how they have made theirs work, the benefits of SEZs including creation of thousands and millions of new jobs and billions and trillions of new foreign direct investments and how PNG must now follow a new road map to successfully develop SEZs in PNG and enjoy similar benefits."
"The Marape Government has given one (1) SEZ license already to Paga Hill SEZ and we are hoping that after the summit another four (4) or five (5) more would be identified and developed. We don’t want this SEZ Summit to be another talk feast, we want to learn and start working on more and more SEZs as the key driver for economic growth," Minister Maru added. [1]
Overall, we all agreed that despite our failures over the past 30 years, with the support from our many partners including the Japanese Development Institute, and the SEZ Authority of the Philippines, PNG can build more SEZs and succeed with the lessons learned from the other very successful countries.
Significant Expertise Insight
Among the dignitaries in attendance at the summit was the Japanese Development Institute (JDI), a think tank with more than 40 years of experience in the development of Special Economic Zones (SEZ) around the world, who shared their evaluation on what went wrong and what must be done in creating a pathway for SEZ Development in Papua New Guinea. [2]
JDI Chairman and Chief Executive Officer, Dr Shoichi Kobayashi said PNG’s attempt to developed SEZs failed due to a lack of a proper regulatory framework, including an SEZ policy to guide its development.
"There was no technical capacity to implement SEZ programs with qualified management and staffs to operate,” Dr Kobayashi noted, and “No SEZ Master Plan and no road map to follow,"
PNG’s experience in SEZs include the ‘industrial centers’ concept – Malahang in Lae, Morobe province and Ulaveo in Kokopo, East New Britain province; Free Trade Zone Act 2000 for West Sepik, Western, Gulf, Bougainville; Pacific Maritime Industrial Zone (PMIZ) and Konebada Petroleum Park.
The JDI last year visited more than 15 of the proposed Special Economic Zones in the country assessing and evaluated their potential and will be presenting to the government the country’s first draft master plan, which will be used as a roadmap for PNG going into the SEZ concept of economic development. [2]
Dr Kobayashi also highlighted the strengths and weaknesses and where PNG as a country can improve. [2]
Meanwhile, Papua New Guinea will commence the Special Economic Zone journey with six urgent potential zones in the country. Chairman of Japan Development Institute Dr. Shoichi Kobayashi announced this during the third day of the SEZ Summit 2023. [1]
Dr. Kobayashi said the top six potential Special Economic Zones will come into effect soon once the Master Plan is complete. They are the Central Industrial Park, Paga Hill Waterfront Tourism SEZ, Central Province Rice SEZ, Sepik Plain Agro Special Economic Zone, Pomio Special Agro Economic Zone, and Central Logging SEZ. [1]
Dr. Kobayashi said land and infrastructure, like roads and electricity, are crucial to delivering SEZs in the county. [1]
Day-two brief of SEZ Summit
On the second day of the summit PNG presented its drafts of policy framework SEZ Masterplan, SEZ development Strategy, revised SEZ legislation, and amendments to the current SEZ Act. [1]
"Everything that we will present will be draft versions. We will workshop these drafts so everyone who attends the Summit will have the chance to provide their input," Minister for International Trade and Investment, Richard Maru said.
“Our people and all the delegates were educated on what SEZs are and the fact that this is a development vehicle that has worked in many developing countries in creating millions of jobs and bringing billions and trillions in foreign direct investments. Papua New Guinea is such a blessed nation where we have so much potential as confirmed by the various speakers during the summit.” [1]
“We are working to finalise the PNG SEZ policy, a comprehensive revised regulatory framework, and the 10-year SEZ Development Plan. We will conclude these three key policy documents and present it to the Government by June 2023.”
“We still need a lot of help from international partners like the SEZ Authorities in Philippines, China, Indonesia, and others whom we have already started critical relationships with during the summit. We are already in negotiations with countries for possible grant aid to assist the Ministry of International Trade and Investment and the SEZ Authority to develop the technical capacity to drive the SEZ agenda and deliver no less than 6 licensed SEZs and get them operational by the end of 2023.”
“One key immediate challenge is the mobilization of our customary land, and we need the Department of Lands and Physical Planning to have an office and structure set up to support landowners to get bankable state titles of their own land using the successful Tuhava Town model, so the landowners can be partners in the SEZ development.”
The Marape-Rosso Government, through the Ministry of International Trade and Investment is targeting to deliver 6 SEZs this year who must secure licensee from the SEZ Authority on merit. The “lowest hanging fruits” are Rigo Rice, Central Manufacturing Zone, which is being developed by KPHL, Lae Port SEZ which is being developed by PNG Ports, PMIZ in Madang and the log processing SEZ in the Central Province. We are also keen to see the Central Limestone SEZ project start this year. We will focus on these, and we will also work to progress other SEZs around the country.
Now that everyone has been educated during the summit on the licensing conditions to obtain an SEZ Licenses from the regulator, the SEZ Authority, we will work with the potential SEZs to meet the license conditions.
SEZ's MASTER PLAN IN MOTION
A Master Plan for Special Economic Zones in Papua New Guinea will be drafted in the next four weeks. Minister for International Trade and Investment Richard Maru said this during the close of the Special Economic Zone Summit
He said this will include identifying necessary amendments to the Special Economic Zone Act 2019. As much as the Government wants to see the SEZ concept be market driven and not politically influenced, Minister Maru said a wider consultation will be carried out with people, especially landowners.
The SEZ Summit 2023 ended with presentations of crucial enablers in the areas of land, law and order, infrastructure like roads, telecommunications, and ports, among others, that will assist in the success of SEZs going forward.
Deputy Prime Minister and Minister for Lands, Physical Planning and Urbanization Hon. John Rosso said there is potential for customary land to be mobilized for Special Economic Zones (SEZ) in the country. [3]
Speaking during the closing ceremony of the two-day SEZ Summit in Port Moresby, Mr Rosso said SEZ’s "are a great way to attract direct foreign investments and also create job opportunities for the people."
"SEZ provides a platform for businesses to operate in a more efficient and cost-effective manner and also provide a great opportunity for our citizens to benefit from the economic growth that comes with foreign investment, and it has to be done properly, learning from other experiences and failures," Hon. Rosso said.
Highlights of Minister Maru's speech
In his keynote address, PNG’s minister of international trade and industry, Richard Maru stressed the necessity of effectively managing an SEZ to boost a country’s competitiveness. Citing PNG’s ambitions to become a mature economy by 2050, Mr Maru said:
"The past couple of years have been challenging, [however] PNG has done well. We are now on a very exciting journey, and SEZs will play a very important role. The setting up of an SEZ is a much-contested model. While there may be differing views on what are the key drivers in the sustainability of SEZs, to succeed there must be political stability in the overall operating environment, consistency in the regulatory environment, and a sound infrastructure. These [are] the basic templates that SEZs require."
Alluding to the 16 SEZs identified in PNG, Mr Maru said: "We have been working hard to improve the business environment and we are in the midst of implementing our economic programme. It is important that we succeed in services and in the knowledge-based sector. The SEZs of South-east Asian Nations are some of the fastest growing SEZs in the world.
"The policy of the government is to spread out development to cover every [region] and going forward we are going to be more aggressive in attracting investments, in line with our objective of ensuring dynamic socio-economic development across provinces."
ICTs role in SEZs
The Information and Communications Technology Minister, Hon Timothy Masiu, and Department of Information and Communications Technology (DICT) Secretary, Mr Steven Matainaho, also attended the Special Economic Zone (SEZ) summit.
They met and sat with the host Minister, Hon. Richard Maru, and participated in discussions about the development of SEZs in Papua New Guinea (PNG).
The presence of Minister Masiu and Secretary Matainaho at the SEZ Summit demonstrates the government's commitment to promoting economic growth and development using Information and Communications Technology. [3]
The officials' attendance at the event provided them with an opportunity to engage with industry experts, network with peers, and explore potential business partnerships.
The attendance of Minister Masiu and Secretary Matainaho at the summit is an indication of the government's commitment to utilizing the power of ICT to drive economic growth and development in PNG. [3]
Expected outcomes
The delegates who attended the summit will have a unique opportunity to contribute to the SEZ Policy, the Master Plan, the Legal Framework and gain insights on the speeches not only from international speakers but also on potential SEZs in Papua New Guinea and important local SEZ development partners.
Papua New Guinea's new journey to achieve economic transformation has started and the country is looking forward to successfully delivering the outcomes of the summit and importantly to see a new wave of billions of kina of new investments from both local and international investors.
The conference concluded that a committed focus on the quality of economic growth is fundamental to drive investment and to fully realize a country’s economic potential.
References:
1) Published presentations given during the SEZ summit on the Ministry of International trade and Investment Website....| Website: www.miti.gov.pg
FB Page : https://www.facebook.com/Ministry Of International Trade And Investment PNG
2) Wohi. L | Post Courier May 9th 2023 Publication. BUSINESS, Expert Explains Why SEZs In PNG Fail....| https://postcourier.com.pg/expert-explains-why-sezs-in-png-fail/
3) Department of Information and Communications Technology Press Releases from SEZ summit..| https://www.ict.gov.pg/
