Monday, 6 October 2008 12:44 PM

PNG to Improve Trans-Border Economic Links with Indonesia

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is helping Papua New Guinea (PNG) explore ways to improve trade and investment relations with Indonesia through its border town of Vanimo in West Sepik province.

The Japan Special Fund, administered by ADB, is providing a $900,000 grant for PNG to prepare the Pilot Border Trade and Investment Development Project. PNG Government will contribute another $90,000 to the project.

The project preparatory technical assistance (PPTA) will design an assistance package for PNG to develop West Sepik province, one of its least developed provinces.

The province's population of about 185,000 mostly live in remote mountainous areas with no road access. Government revenues can barely meet 50% of the costs in delivering basic services. Consequently, life expectancy is only 45.5 years, significantly shorter than the national average of 57.4 years. Infant mortality rate is 110 per 1,000 live births, well above the national figure of 70 per 1,000 live births. Malnutrition rate is around 40%.

West Sepik province borders Papua, Indonesia's second richest province. Its capital Vanimo has been declared a free trade zone by the PNG Government. However, the zone lacks management, organization, and entrepreneurial expertise, and a business-friendly environment.

The project will focus on creating a business environment conducive to trade and investment for the border town of Vanimo. Key activities include identifying and designing vital border facilities, preparing roadmaps for trade and investment, developing a one-stop-shop to promote trade and investment, and building capacity.

"Improving trade links between PNG and Indonesia will contribute to poverty reduction in PNG," said Cai Li, an Infrastructure Specialist at ADB's Pacific Department. "Trade and investment promote economic growth, create job opportunities, and develop human capital."

The Pilot Border Trade and Investment Development Project is the first initiative promoting regional cooperation between PNG and Indonesia, in line with ADB's Long-Term Strategy Framework (2008-2020) which recognizes regional cooperation and integration as critical ingredients for development and poverty reduction.

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