China’s strategic land acquisition right on our border

While the Australian Government prepares to give the Papua New Guinea Government yet another cash "loan" (One PNG has zero capacity to repay in the immediate future) China has skilfully and rather cheaply make a strategic acquisition right on our northern border.

For several years a proposed Ihu Special Economic Zone, including Kikori, in the Gulf Province has been promoted by various interests, including the Member for Kikori in the PNG National Parliament, Soroi Eoe, who is the Foreign Affairs and Trade Minister in the Marape Government – and has been Acting Prime Minister while Marape has been in the United States.

The project has been heavily criticised on social media in the Papua New Guinea, but it has been endorsed by the PNG Cabinet, and the Gulf Provincial Government.

Kikori-Ihu is located on the Gulf of Papua and is the closest medium size community to Daru which is in the adjoining Western Province. There is no road connection between the two, but I would estimate the distance between them is between 300km and 350km.

The Kikori-Ihu area is very strategically located – for Australia and for Papua New Guinea. It is relatively close to Cape York and for Papua New Guinea it is strategically located near the offshore gas fields which are close to development. The important pipeline linking the PNG Gas Project to the coast, and then on to Port Moresby, passes through the Gulf Province, and the Kikori electorate.

The Kikori-Ihu area is underdeveloped. Living standards are low, agriculture is limited, and there are no substantial industry projects in existence.

It is therefore hardly surprising that the powerful local MP, and his community, want substantial investment. The Special Economic Zone legislation passed by the PNG National Parliament provides massive taxation, import duty exemptions, foreign worker approvals and other benefits that may run for 10 year periods.

The Ihu Special Economic Zone was approved by the National Government last year under the SEP legislation and there has been speculation ever since how it would be progressed.

One assumes, or hopes, that the Australian High Commission in PNG, and the Department of Foreign Affairs and Trade, have had a watching brief on this proposal given its strategic location to Australia.

Well if it hadn't it would now be more than watching as last Friday a part of the puzzle when it came to how the proposal would gain some substance was revealed.

When the PNG Foreign Minister, and Kikori MP, visited China as guest of his PRC counterpart several months ago he raised the Ihu Special Economic Zone in discussions. It was not formally mentioned in the communique issued after his talks with China's Foreign Minister.

Late last week, while Mr Eoe was Acting Prime Minister, he announced that China had "generously" given Papua New Guinea a grant (not a loan) of K80 million (about $A35 million) for the Ihu Special Economic Zone Project. In accepting the grant Mr Eoe was fulsome in his praise of China, and of course the PRC Ambassador in Port Moresby who has been actively promoting it.