Ministers sign seven submissions for Forestry SEZs
The Minister for Forest Salio Waipo and the Minister for International Trade and Investment Richard Maru today jointly signed seven submissions to go before the National Executive Council [NEC].
The submissions seek NEC’s consideration and approval for the establishment of seven Special Economic Zones [SEZs] for the forestry sector in East and West Sepik, Madang, Morobe, Gulf, Central, and East New Britain provinces.
Prime Minister James Marape last year, upon his return from COP30, announced that round log exports would be banned in PNG by December 2025. However, this has not yet been implemented.
The submissions are the first step toward gradually phasing out round log exports and promoting downstream processing in the country.
Mr Waipo described the joint signing as the way forward to establish all forestry SEZs.
He said, together with the PNG Forest Authority’s business arm, PNG Diwai Holdings Limited, he looks forward to working closely with foreign investors, Minister Maru, and the seven respective provincial governors to advance downstream processing in the country.
“We will have a lot of negativities for what we are doing, but we have to start somewhere. There will always be criticisms, but our government policy says to ban round logs, so we must find a way to deliver on this but ensure our people benefit fully from their resources," he added.
Minister Maru said, "We are now taking the first serious step toward putting an end to round log exports. Under this partnership, we are looking at giving incentives to companies that will downstream process all our logs through a joint venture with PNGDHL. We will do individual instead of blanket arrangement because each project will have different tree species, area size, product types, etc.
“For Minister Waipo and I, the priority now is to get NEC to approve each of the projects, including Finschhafen in Morobe Province. I am happy that seven provinces are proposed and not just one, because as a government, we want to be fair.
“I am also happy that Morobe Governor Renbo Paita is here today because he is one of the champions of the SEZ Movement. When he was Minister, he enacted the legislation in 2019 and left it, and I got it from him. I’m happy that he is taking part in this kind of exciting investment.
“Despite the criticisms we are going to get, our challenge is to get first one up and running and of course get the government to revisit the current tax regime for the forestry industry. We can’t kill the industry. We need to grow it. Many parts of our country would not have roads without forestry. Forestry has a very important role to play and can be a major contributor to the economy,” Minister Maru said.
The PNGFA acting managing director, John Mosoro, in his opening remarks, said, "This is a very unique and important signing ceremony which begins the implementation of the MOU signed earlier on between PNGDHL and the Department of Trade and Investment for the establishment of the SEZs for forestry.
"The SEZs will result in the establishment of Forestry Industrial Parks. Once NEC approves the submissions, project specific agreements for each project will then be developed, where incentives such as tax exemptions, amongst other benefits, will be considered.
“Forestry is trialing out the SEZ and is taking the lead as a pioneer,” Mr Mosoro said.
He commended the two Ministers for their leadership, saying: “The submission will allow the Foreign Direct Investment [FDI] to come in when we sign these and show them that the government is serious about going into downstream processing in the forestry sector.
“We will face challenges in the process. However, let’s not wait but trial it out. We will gradually phase out round logs exports and go into downstream processing. We will also acquire land for forest plantation establishment to feed these downstream processing facilities that we will have.
Both Minister for Forests and Minister for International Trade and Investment commended Mr Mosoro for his foresight and leadership in making the commitment during the SEZ Conference, and it is becoming a reality in sectoral, that is Forestry SEZ declared as Forestry Industrial Parks.
Governor Paita also commended the acting Managing Director for the strategic alignment in SEZ under Forest Management Agreement areas for the first time in the country. The Governor vowed to work closely with PNGFA to establish a first downstream processing facility in Finschhafen District.