Fifty years after independence, Papua New Guinea (PNG) is pursuing one of its boldest economic transformation plans yet—a Special Economic Zones (SEZ) initiative designed to attract K20 billion (about $6 billion) in new investments. The aim: to unlock economic diversification, create jobs, and chart a pathway toward economic independence by 2032.

This ambitious drive is unfolding in a context marked by persistent structural challenges including crumbling infrastructure, weak governance, and widespread poverty that have stymied PNG’s development since independence.

A New SEZ Foundation Policy: The Roadmap for Change

On June 15, 2025, PNG officially launched its highly anticipated Special Economic Zone Foundation Policy (2025–2032), a seven-year roadmap positioning SEZs as the centerpiece of its long-term development strategy. The policy, introduced at a high-profile ceremony in Port Moresby attended by the Prime Minister James Marape and Minister for International Trade and Investment Richard Maru, represents a decisive shift away from PNG’s historic over-reliance on extractive industries towards industrialization, rural development, and sustainable economic diversification.

Prime Minister Marape described the policy as “the most important since independence,” emphasizing a vision of self-reliance and economic independence. Minister Maru reinforced this by pledging a stop to foreign borrowing by 2027 and generation of sufficient domestic revenue to sustain development, with SEZs as the critical vehicle.

The policy defines different types of SEZs, clarifies licensing and regulatory processes, details investor incentives, and outlines fee structures under the newly established SEZ Authority (SEZA). The Ministry of International Trade and Investment, alongside SEZA, is charged with policy oversight, regulatory alignment, and investor facilitation.

Seven Licensed SEZs with Diverse Economic Focuses

This year, PNG has licensed or advanced the development of seven SEZs, each targeting sectors aligned with the country’s natural resources and comparative advantages. These zones include:

• Karamui Agricultural SEZ in Simbu Province focusing on cocoa, coffee, and cash crop development despite challenging geographic access;

• Central Province SEZs centered on rice, cotton, and agro-processing to bolster food security and export potential;

• Pacific Maritime Industrial Zone (PMIZ) in Madang, aimed at fisheries, energy-related industries, and proposed canning operations poised to create over 100,000 jobs;

• Log processing and manufacturing SEZs near the strategic Lae Port to leverage logistics infrastructure;

• Paga Hill Urban Development SEZ, PNG’s flagship zone aimed at tourism, retail, and urban services, including plans for shopping malls and private healthcare facilities.

Minister Maru cited international examples, particularly the Philippines, which has developed 420 SEZs employing approximately four million workers and generating USD 68 billion in annual exports as a model PNG aspires to emulate.

Urgency Driven by Demographic and Economic Realities

PNG’s rapidly growing population—expanding at 4.8 percent annually to surpass 11 million today from just 2 million at independence—fuels an urgent need for expansive job creation and economic transformation. The government recognizes that industrialization through SEZs is a strategic imperative to absorb tens of thousands of young job seekers entering the labor market annually.

“As a country, we missed earlier opportunities, but now we reset and press forward,” Maru told investors and officials at the summit. “We envision over one million jobs created by committed SEZ developments within the next decade.”

Infrastructure and Governance: The Biggest Hurdles

Yet, the government’s vision is tempered by daunting infrastructure deficits: poor roads, unreliable electricity, inadequate air and maritime transport, and fragile telecommunications networks persistently raise the cost and risk of business operations across the country.

Compounding these challenges are complex land ownership arrangements and bureaucratic inefficiencies that frequently delay critical approvals and suppress investor confidence. PNG’s ranking on the World Bank’s Ease of Doing Business Index remains below regional peers.

To address these systemic issues, the government has empowered SEZA to serve as a one-stop shop streamlining licensing and providing regulatory certainty and investor incentives tailored to the SEZ framework. Ongoing legislative reforms seek to enhance the legal environment governing SEZs, aligning it with international best practices.

Learning From the Past to Build the Future

Special economic zones are not new to PNG—pilot initiatives like Malahang Industrial Park in Lae and the Pacific Marine Industrial Zone in Madang date back decades. However, most prior efforts failed to deliver significant sustained economic transformation beyond isolated successes.

Minister Maru acknowledged these shortcomings, stressing the necessity to learn from past mistakes and implement a “world-class” approach founded on global best practices to ensure SEZs fulfill their development promise.

Broader Government Commitment and Private Sector Engagement

Prime Minister Marape underscored the government’s determination to transform aspirations into action, urging all government agencies and private stakeholders to cooperate for expeditious implementation. Since taking office in 2019, his administration has invested in improved port infrastructure and rural connectivity programs, complementing SEZ development efforts.

The recent SEZ Summit also attracted strong support and sponsorship from domestic enterprises like Kumul Petroleum Holdings and Teachers Savings and Loan Society, signaling increasing private sector commitment to the country’s industrialization agenda.

The Challenge Ahead: Turning Promise into Progress

While the commitment to attract K20 billion in investments is a hopeful milestone, unlocks vast economic potential and promises a pathway to economic independence, the challenge remains immense. The success of PNG’s SEZ vision hinges on overcoming entrenched infrastructure bottlenecks, governance deficiencies, investor risks, and socio-political complexities.

Furthermore, ensuring that economic growth translates into meaningful social progress—reducing rampant poverty, improving public services, and creating shared prosperity—remains paramount.

Prime Minister Marape summed up the challenge and opportunity: “We have the natural resources, the young people, and a plan. Now, it is time to get to work—not just talk—and build the future Papua New Guinea deserves.”

As PNG embarks on its next 50 years and pursues economic independence, the SEZ initiative represents both its greatest hope and toughest test. The country’s development trajectory will depend not just on attracting capital but on institutional resolve and inclusive governance that can turn vision into reality.