NOOSA - The Australian government has announced it will provide K1.5 billion in loans and grants to Papua New Guinea to upgrade its ports facilities.
Australia says the funds will strengthen trade ties between the two countries and encourage PNG to decline investment from other nations including China.
The surprise announcement came on Friday during a short virtual meeting between prime ministers James Marape and Scott Morrison.
The funding has been made available as part of Australia’s on again-off again relationship with Pacific Island nations to counter the influence of China in the region.
China has been accused of deliberately lending Pacific Islands countries money to create a ‘debt trap’ which these economically struggling nations will find difficult repay leaving them in the clutches of China.
But a number of expert studies of Chinese lending to the Pacific has called the debt-trap this a ‘myth’, saying that available evidence challenges this assertion.
Announcing the funding arrangement, Morrison said it would “support the sovereignty, the independence and the self-sufficiency of Papua New Guinea.
“That has always been our absolute goal with all of our support interventions and assistance,” he said.
“This investment will improve trade and connectivity in the region, support economic recovery from Covid-19 and help safeguard the development of critical infrastructure in PNG.”
The grants and loans will be used to improve port facilities at Kimbe, Lorengau, Kavieng, Vanimo and Wewak.
It will also develop PNG’s biggest port, Lae, as a regional hub by improving its capacity to service dedicated container ships from southeast Asia.
“Upgrades to these key ports will facilitate trade and investment opportunities for PNG local products to reach designated domestic and international markets,” Marape said.
“The projects will also create local employment, stimulate economies of scale and build business confidence to grow our economy.”
Dr Anthony Bergin, a senior fellow at the Australian Strategic Policy Institute, told the Sydney Morning Herald that the deal makes strategic sense because “because the Chinese have been trying to get into the PNG ports.
“So I think this is a good geopolitical move to ensure the Chinese don’t dominate PNG port development.”