Business ties between Papua New Guinea and Japan have strengthened following last week’s visit to the country by Japanese Prime Minister Shinzo Abe. Business Advantage PNG discusses the significance of the visit with the Lowy Institute’s Jenny Haywood-Jones.

Japan’s ongoing commitment to invest in the development of industry in Papua New Guinea was reaffirmed last week during a two-day visit to the country by Japanese Prime Minister Shinzo Abe.

Joined by an extensive 18-person business delegation for the first visit to PNG by a Japanese Prime Minister in 29 years, Abe welcomed the relationship that has emerged between the two countries through development of PNG’s liquefied natural gas (LNG) industry.

Japanese companies represented in the delegation included Osaka Gas, JX Nippon Oil and Gas Exploration, Mitsubishi Corporation, Chiyoda Corporation and Marubeni.

Broader implications

Abe’s visit has broader implications for the Pacific region, according to Jenny Hayward-Jones, Director of the Melanesia Program at the Sydney-based Lowy Institute.

‘We should also see it as sending a signal to China, and also to others, that Japan has a significant interest in the Pacific Islands, and particularly PNG.’

She believes it not only strengthened bilateral relations between the two countries, but also sent a message across the Pacific region about Japan’s future intentions.

The Lowy Institute’s Jenny Hayward-Jones

‘Certainly the visit is around Japanese trade and investment, securing the LNG market, energy security, and we shouldn’t forget the wartime history,’ Hayward-Jones told Business Advantage PNG.

‘But we should also see it as sending a signal to China, and also to others, that Japan has a significant interest in the Pacific Islands, and particularly PNG. It has an interest and is not going away.’

Trade and aid

In May, the maiden cargo of LNG was exported from the PNG LNG project, with the first shipment arriving in Japan the following month.

Abe added to Japan’s commitment to PNG during the visit by pledging to provide ¥20 billion (K478 million) in official development assistance over the next three years.

In addition to the continuing investment into the LNG industry, he said Japan was willing to help PNG develop human resources and improve infrastructure for disaster prevention.

Hayward-Jones believes reports of Japan’s intention to double imports of LNG from producers in the region were ‘very positive’ for PNG.

‘Japan is looking to increase its Asian market share generally and already has a long standing relationship with PNG—to expand that can only be a good thing,’ Hayward-Jones said.

‘Presumably they will have worked out what their LNG need is and how much they are looking to diversify their market away from the Middle East. The demand is very high, so it would seem that doubling of imports is what Japan will need to do.

‘With a second LNG development in the wings I would assume that PNG will be capable of stepping up to the demand Japan will have.’

Hearts and minds

PNG was the final stop on Abe’s three nation tour in the region, having earlier visited Australia and New Zealand.

He also travelled to the northern town of Wewak where he honoured the 200,000 Japanese soldiers who died in the country during World War II.

PNG Prime Minister Peter O’Neill said Abe’s visit was another step in the ongoing strengthening of relations between the two countries.

‘Our bilateral engagement is important for ongoing economic growth in both economies and is delivering business opportunities and jobs,’ Mr O’Neill said in a statement.

‘PNG’s first LNG export was delivered to Japan in June, and future shipments will continue to be a source of power for Japanese economic activity for many years into the future.’