The Minister for International Trade and Investment, Hon. Richard Maru, has highlighted Papua New Guinea's (PNG) new focus on attracting Indonesian investments following recent high-level engagements between the two nations. These include State Visits by the Heads of both countries, a trade and investment mission led by Deputy Prime Minister Hon. John Rosso, and the signing of a Joint Declaration establishing a high-level Dialogue and Cooperation Mechanism.
Minister Maru remarked, “Indonesia's economy has grown tenfold over the last 20 years, driven in part by the government’s policy of banning raw material exports. This policy, announced three years in advance, has been strictly implemented.”
Indonesia is the largest economy in Southeast Asia, the world’s fourth most populous nation, and ranks as the 16th largest economy globally by nominal GDP, as well as the seventh largest in terms of purchasing power parity.
Minister Maru added, “While Indonesia has historically relied on imports of manufactured goods, advanced technology, and technical skills, it has successfully transitioned from a primary sector economy to one focused on secondary and tertiary industries. This shift, supported by the creation of numerous economic zones, has strengthened Indonesia’s downstream processing and value addition in manufacturing, trade, and services.”
Indonesia currently has 118 industrial parks, 15 Special Economic Zones (SEZs), four Free Trade Zones, and 10 Tourism Zones, all of which have contributed significantly to the country’s policy of downstream processing of natural resources.
“Downstream processing has been highly successful in Indonesia, creating thousands of jobs, transferring higher-value skills, and introducing advanced technological processes. The nickel SEZ at Weda Bay alone created 80,000 direct jobs and 12,000 indirect jobs—more jobs than PNG's entire mining and petroleum industries combined. In 2022, investment in downstream mining surged to almost US$9.2 billion, compared to US$4.1 billion in 2019,” Maru noted, emphasising the significant role these investments have played in Indonesia's mining industry.
The Indonesian Government has recommended that PNG adopt a similar approach and implement a ban on raw material exports.
“Our government has already declared its intention to pursue downstream processing, and we don't have to reinvent the wheel. Indonesia is right next door, ready to share its experience and offer support,” said Minister Maru.
He continued, “For nearly five decades, PNG's engagement with Indonesia has largely focused on border and security talks, which have not resulted in improved border facilities, direct shipping links, job creation, or significant trade between our countries. It's time for PNG to establish a robust trade and investment relationship with Indonesia, which has already mastered downstream processing and value addition. PNG has immense potential in mining, petroleum, agriculture, fisheries, forestry, and services, and we can learn valuable lessons from Indonesia’s success.”
Minister Maru stressed that PNG must move beyond being a primary exporter of raw materials and focus on value addition through downstream processing to create more jobs and increase the value of its exports. “Under the Marape-Rosso Government, PNG must shift away from being a mere exporter of raw materials. As we approach our 50th anniversary, it is imperative that we make a decisive change. Indonesia, our closest neighbour, has successfully navigated this path and is now a formidable player on the global stage. They are willing to share their experience and expertise, and we must stand ready to learn and collaborate.”
Minister Maru also extended an invitation to Indonesian companies in sectors such as manufacturing, mining, petroleum, agriculture, fisheries, tourism, and Special Economic Zones to invest in PNG. He revealed that two Indonesian companies have expressed interest in multi-billion kina rice and recycling projects in PNG, with proposals under review for approval by the National Executive Council (NEC). “This marks the beginning of a new era for PNG as we shift our trade and investment focus to Indonesia,” Minister Maru concluded.
