Pacific Maritime Industrial Zone (PMIZ)

Many key stakeholders from both the government and the private sector are directly involved in the planning and implementation of the PMIZ project. The key bilateral partners involved in the financing and implementation of the PMIZ are the People’s Republic of China, the EXIM Bank of China, and the Government of PNG, with the Department of Commerce and Industry (DCI) and National Fisheries Authority (NFA) as the implementing agencies. The main contractor is China Shenyang International Economic & Technical Cooperation Corporation (CSYIC), with other subcontractors involved in providing various specialized services. The primary subcontractor, Aces Ventures, is partly owned and managed by former Minister of Commerce and Industry Minister Gabriel Kapris, who was also behind securing the project’s original loan and a key force behind the PMIZ project.

Non-competitive procurement and loan conditionalities

The contract for Phase 1 of the project, construction of the base infrastructure, was not processed through the PNG National Procurement System (NPS), then called the Central Supply & Tenders Board (CSTB). Instead, the contract was awarded directly to the Chinese contractor, CSYIC, as a condition of the $74 million loan from EXIM Bank. ACT NOW, a Madang-based civil society organization, claims that 70 percent of the project’s funds are required to go to the main Chinese contractor, in this case, the China Shenyang International Economic and Technical Cooperation Corporation (CSYIC), both of which use Chinese equipment, labor, and technology. The terms of the loan also allow the Chinese contractor CSYIC to operate exempt from any “rate, charge, duty or imposition of any kind under PNG laws.” In addition, the government “irrevocably waived ” sovereign immunity for PNG in any dispute over the loan.

Lack of government coordination

There is a lack of clear government leadership of the project in terms of designating one lead agency to be responsible for project planning and implementation. Management of the PMIZ project has been transferred multiple times between several government departments and agencies. This contributed to confusion and delay in implementing the project. Initially, the project was under the control and management of DCI, but was moved to Kumul Consolidated Holdings in 2016. In early 2019, it was announced that the project would be moved again to MPG. As of August 21, 2020, the project is with the Department of Finance, the government agency responsible for overseeing operationalization of the Special Economic Zone Act of 2019

Management of project fund allocation

In 2017, the Ministry of Trade, Commerce, and industry instituted a review of the management and expenditures of the PMIZ project. The review revealed that K30 million or US$10 million had already been used for the project. Despite this, the Minister claimed that: “despite sufficient funding, the status of the 2.47km access road is unsatisfactory, including, a 400m segment of the road for which PGK5.5 million (US$1.65 million) was already paid. PGK4 million (US$1.2 million) was paid for only one item, the main gate. Survey and physical zoning remain incomplete, despite PGK2.25 million (US$0.675 million) paid to landmark valuers eight years ago.” The review further revealed that the expenses were “unjustifiable and excessive expenses.”

Lacking local stakeholder consultation and shutdown of local concerns

Since 2009, the PMIZ project has been disrupted by stakeholder protests over many issues, which has resulted in project delays. Generally, the protests stem from PNG’s lack of meaningful consultation with landowners and impacted community members. The announcement of the PMIZ project reportedly went forward without notification or consent of those living on the land and in surrounding communities. In addition, there is the issue of compensation for those living on the land and the reported forcible eviction of remaining residents on October 21, 2011, an issue later raised before the National Court, which was found in favor of the evicted residents. In 2015, the Department of Commerce and Industry (DCI) secretary attempted to gag some of the most vocal opponents of the PMIZ project. The DCI obtained court summons to restrain eleven of the most vocal PMIZ project opponents from organizing meetings, visiting the project site and publicly opposing the project. In July 2015, the DCI decided against further pursuing the court case and withdrew the lawsuit.