The relationship between Japan and Papua New Guinea has developed to the point where—thanks to liquefied natural gas—Japan is expected to be PNG’s largest export destination this year. Business Advantage PNG asks Katsuo Yamashita, the Chairman of the Japan PNG Association, about the growing links between the two countries.

The Japan PNG Association’s Katsuo Yamashita

Business Advantage PNG (BAPNG): How would you describe the relationship between PNG and Japan?

Katsuo Yamashita: We have achieved a close relationship because of various efforts by the two governments and missions.

PNG Prime Minister, Peter O’Neill, has visited Japan four times since 2012, and in July 2014, Japanese Prime Minster Shinzo Abe made the first visit to PNG by a Japanese Prime Minister in 29 years.

Those events were most important and significant for deepening further a friendly relationship between both countries.

At the same time, we must not forget the role of private organisations and private persons.

‘There is no doubt that as regards trade volume and value, LNG-related business occupies first priority.’

In 2014, an investment agreement between PNG and Japan took effect, which supports more active investments by Japanese companies in PNG.

Last year PNG’s LNG shipment to Japan started successfully, which may encourage Japanese business circles to invest in PNG in the energy sector and other areas.

The Japan PNG Association, a non-government, voluntary organisation, was established in 2002. It now has about 200 individuals and company members.

The Association is mainly engaged in a grass-roots exchange program, running seminars and promoting facts about PNG to corporates and the Japanese people.

BAPNG: Japan is expected to become PNG’s largest export destination in 2016. Most of that is based on the sale of LNG and is expected to be worth about US$6 billion next year. Apart from energy, what other areas of business could be developed?

Katsuo Yamashita: There is no doubt that as regards trade volume and value, LNG-related business occupies first priority.

An LNG shipment

Because of that, people in other fields are now focusing on utilising Japanese modern technology to develop PNG.

As well as some traditional business areas such as replanting trees, tuna and shrimp exports, and coffee bean exports, there are new interests in other fields. The Japan PNG Association recently received a lot of inquiries about areas such as rural electrification, renewable energy development, fresh water supply, modern housing, IT systems etc.

What impresses me is that these companies want to contribute to the development of PNG, sometimes more so than creating business profits.

BAPNG: Sojitz Corporation and Kumul Petroleum are to examine developing a methanol manufacturing business using natural gas. When will that begin?

Katsuo Yamashita: They need a few years to start operating. According to Sojitz, they expect to finalise their investment framework in 2017.

BAPNG: Air Niugini is about to begin a second weekly service to Japan to boost tourism (from 6 July 2016), although it has been difficult to attract huge numbers of Japanese to PNG. How will this extra flight benefit tourism to PNG?

Katsuo Yamashita: We think that returning to a twice weekly flight schedule is really worthwhile.

In terms of the tourism from Japan, there are several challenges, such as

• Law and order in PNG;
• Hotels becoming extremely costly;
• Not enough tourism facilities in PNG to meet the needs of mass tourism.

Air Niugini is about to begin twice weekly flights to Japan

However, it is a good challenge and having two weekly flights can lead to many options for tourists.

The benefits of two weekly flights (and eventually three weekly flights) make it possible to select various travel days for both business and tourism.

Japanese tourists would prefer tours of five to six days’ duration when the flight duration is six-seven hours. When there is only the once-a-week flight, the travel time becomes eight days. So it has failed to capture the interest of the Japanese market.

‘This is quite a challenging plan but, once it happens, it would allow PNG to be a hub for Japanese visitors’

It makes sense to have two or three weekly flights. But also, having twice-weekly flights makes it possible to create day tours to Fiji and some Australian cities—by making Port Moresby a hub.

Moreover, I hear that Air Niugini is further expected to increase its flights to three-per-week in the near future.

I know this is quite a challenging plan but, once it happens, it would allow PNG to be a hub for Japanese visitors heading to Solomon Islands, Vanuatu, and other countries in the South Pacific.

BAPNG: The Japan International Cooperation Agency (JICA) has signed a K578 million loan to redevelop Nadzab Airport in Lae. It is also upgrading Port Moresby’s sewerage system at a cost of K183 million. And Japan is funding the Ramu power upgrade at a cost of K183 million. How important are economic development projects such as these to Japan?

Katsuo Yamashita: As far as I understand, these major projects are not for any immediate Japanese benefit.

The Japanese Government considers PNG an economic partner and the leader in the Pacific Islands. So they wish to contribute to the development of PNG, based on PNG’s national development plans, such as Vision 2050.

BAPNG: Where would you like to see the relationship between Japan and PNG ten years from now?

Katsuo Yamashita: I hope further strong bilateral relations, as economic partners, will be developed. The friendship between the two countries has been maintained and expanded during the last 70 years.

Besides business, cultural exchanges and people-to-people exchanges could be deepened and expanded. That will progress mutual understanding.

Our Japan PNG Association would like to contribute to enhancing such future relations.