The recent visit by Indonesian President Joko Widodo to Papua New Guinea is a sign of increased interest in boosting the trade relationship with PNG’s closest neighbour. Business Advantage PNG examines the business case.

Prime Minister James Marape and Indonesian President Joko Widodo during the President’s one-day visit to Papua New Guinea on 5 July 2023. Credit: PMNEC

Commerce and trade relations were front and centre of discussions between when Prime Minister James Marape and his Indonesian counterpart, Joko Widodo, met in Port Moresby on 5 July.

Underpinning Widodo’s visit was a consensus by both leaders that more should be done to formalise bilateral trade, which has struggled since initial links were established in 1975.

Bank of PNG data says import/exports between the two countries totalled K255 million in 2022.

Indonesia’s scale

In his address to an inaugural Indonesia-PNG Business Forum in Port Moresby, which was attended by Widodo and a delegation of Indonesian business leaders, Marape noted that business relations between both countries have reached unprecedented levels.

With Indonesia opening up its market to agriculture produce, notably palm oil and livestock, Marape urged PNG’s commodity boards and farmers to increase production to meet the country’s huge demand.

‘PNG and Indonesia are economic giants in their respective regions… just imagine the enormous impact if these two potentials are combined.’

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‘We are privileged to have such an economic giant as our neighbour… and have opened the doors for increased business-to-business engagements between our two countries,’ said Marape, who noted that Indonesia is set to become the world’s fifth largest economy within 20 years.

Tap into our expertise: Widodo

Indonesian President, Joko Widodo

In addition to Indonesia representing a market for PNG producers, Widodo, replying to Marape’s comments, reminded forum delegates that his country also has the business capabilities to assist with downstream processing, especially in mining and petroleum.

PNG sectors where Indonesian expertise could assist include electricity, agriculture and forestry.

In addition to committing Indonesia’s support to the Connect PNG program, through the involvement of Indonesian state-owned (BUMN) construction companies, Widodo also talked about turning border areas into centres of new economic activity.

‘PNG and Indonesia are economic giants in their respective regions… just imagine the enormous impact if these two potentials are combined,’ said Widodo.

New initiatives

As a follow-up to Widodo’s visit, Deputy Prime Minister John Rosso, together with International Trade and Investment Minister Richard Maru in­ partnership with their Indonesian counterparts ­were tasked with reviewing future opportunities and preparing a feasibility study on an Indonesia-PNG Preferential Trade Agreement (PTA).

To advance these discussions, both ministers will lead a delegation to Indonesia in August.

Meanwhile, business councils from both countries were tasked with establishing an Indonesia–PNG Business Council.

New routes

As an early indicator of the new relationship, early July marked the launch of a twice-weekly, Port Moresby–Denpasar–Jakarta air service by Garuda Airlines subsidiary, Citilink.

Air Niugini’s CEO, Gary Seddon, tells Business Advantage PNG the airline is also considering the resumption of flights between Port Moresby and Denpasar, which ceased operating in 2019.

‘We’re considering options between PNG and other Indonesian centres, including Jakarta… there’s ample passenger and freight traffic to justify business cases,’ he notes.

Key announcements from Widodo visit

• Indonesian scholarships for 2,000 Papua New Guineans at its universities and colleges.
• Feasibility study into an Indo-PNG Preferential Trade Agreement (PTA).
• Indonesian SOEs to participate in Connect PNG program.
• Indonesia grants K55 million for Port Moresby General Hospital.
• Indonesia grants K5 million for the West Sepik Integrated Development Project.
• Power Purchase Agreement between Indonesia PLN and PNG Power to supply electricity from Jayapura to Vanimo.

International Trade and Investment Minister Richard Maru will address the 2023 Business Advantage Papua New Guinea Investment Conference, taking place in Brisbane on 10 and 11 August. To register to attend, visit www.pnginvestmentconference.com.