Special Economic Zones
Special Economic Zone (SEZ) is an enclosed area inside a country that offers investment incentives that are designed to lower the price of products and making local products competitive at the global markets. The purpose of the SEZ is to increase investment, raise trading level and create employment for citizens. SEZ therefore has to be equipped with critical infrastructure to enable trade and investment.
Sepik Plains has huge potentials for agricultural activities. At its raw form and its fragmentation from the mainstream economy, the Sepik Plains is not an investment drawing card. It is devoid of roads and bridges, utilities, and port facilities for export, in which Sepik Plains in its natural form is a disincentive for investment as is seen in the reluctance of potential investors to locate and operate in Plains in the passing years.
Land tenure system in Papua New Guinea is an hindrance to investment where it involves a lengthy and costly process of incorporating land groups before customary land can be assessable for development. The ILG registration process is an additional cost to investors and the inaccessibility of the land for development is a deterrent to potential investors who desire to invest.
Hence, to simultaneously address the forgone, Department of Commerce & Industry viewed the Special Economic Zone (SEZ) as relevant development concept for application in the Sepik Plains, and has been championing its development in Yangoru-Saussia, East Sepik Province since 2014.
B. SEPIK PLAINS SPECIAL ECONOMIC ZONE
Sepik Plain Special Economic Zone is a tailored Special Economic Zone designed specifically to raise investment in the Sepik Plains. As Sepik Plains in Yangoru-Saussia is vast and stretches from Turubu in Wewak to Burui Kunai in Wosera-Gawi, the plain has been divided into five (5) zones in which the Sepik Plains SEZ will be developed along the framework of a big city comprising five (5) suburbs.
Each zone in the Sepik Plains SEZ will initially command a minimum of 10, 000 ha and it is aspired that one agriculture activity shall be developed at each of the five zones to set in the motion of triggering further agricultural activities in the Sepik plains. At the full operation phase of Sepik Plains SEZ, it is anticipated that each zone should have at least two agricultural projects in which people will be engaged full time to grow, harvest and process agriculture products.
Thus the above provide justifications as to why it is critical to establish economic and social infrastructure in each zone to lure investment into the respective zone. As villagers as well as migrants will be residing and working in the industries, social infrastructure such as schools and aids post, are equally important to establish to serve the social needs of Sepik Plains populace.
Very critical now to the development of SEZ is the free up of customary land which the Department of Commerce & Industry has expedited monies on requisite processes and is adamant to deliver Incorporated Land Groups registration in 2018.
C. MAIN ROLES AND RESPONSIBILITIES
In 2013, the Cabinet in its NEC Decision No.349/2013 approved the Proposed Sepik Oil Palm Project with a JV Company that should comprise State & landowners and Wilmar Plantation Limited, in which the mobilized customary and State land should be the equity contribution of the State and landowners respectively.
The Cabinet also approved for the K100 million support pledge of the Government of PNG to the project which was to be factored in the 2014 National Budget. However, in 2014 K50 million was allocated for the development of Sepik Plain Oil Palm Project in the National Budget and was parked in the Sepik Plains Special Economic Zone Trust Fund for draw down.
Further K5 million was allocated in 2018 and the drawn down was effected in August 2018. Explicit from the draw down is the K1 million which is to be used specifically to develop the Yangoru Mobile Police Barracks. Another K4 million is to be used in completing all the pending project activities implemented since 2014.
2. Sepik Plains SEZ Project Management Structure
The Sepik Plains SEZ Project implementation is being coordinated by a Project Management Unit in Waigani, and implemented by the Sepik Plains SEZ Project Office in Wewak.
The Project Steering Committee is the decision making body and make decisions which are implemented by the Project Management Unit and Project Office. The Secretary Department of Commerce and Industry is the Chairman of the Project Steering Committee.
3. Sepik Plains SEZ Project Steering Committee
The Sepik Plains SEZ Project Steering Committee comprises Department of Treasury, Department of Commerce & Industry, Department of Agriculture & Livestock, Department of lands & Physical Planning and Office of State Solicitor.
This committee will convene on quarterly basis to:
a) Deliberate and endorse the project work plan and budget;
b) Make or review financial decisions;
c) Monitor the project expenditure;
d) Evaluate the progress of the project; and
e) Make recommendations on the overall implementation of the project.
The Project Steering Committee will ensure that the Sepik Plains SEZ Project is coordinated and implemented transparently by the Department of Commerce & Industry with least influence from third parties and their agents.
4. Sepik Plains SEZ Project Management Unit
The Sepik Plains SEZ Project Management Unit is the coordinating unit located in Waigani. Its establishment has its essence in the public investment fund being allocated and used in the development of Special Economic Zone in the Sepik Plains.
The role of the Project Management Unit is to:
a) Ensure that the project is implemented as per the decisions and recommendations of the Project Steering Committee;
b) Coordinate with inter-Department and Private Sector to implement the project;
c) Vet and facilitate payments;
d) Keep Project Expenditure Ledger and perform monthly Bank Reconciliation;
e) Monitor & evaluate project implementation; and
f) Support Project Office to implement the work plans.
The Project Management Unit will be fully resourced with vehicle(s), stationeries and equipment, shall be manned by a Project Coordinator and a Project Officer.
The Project Coordinator and Project Officer will be remunerated from the Government Alesco System and their employment terms and conditions shall be specified in the General Orders.
i. Verify quotations and approve requisition
ii. Maintain a General Expenditure Ledger
iii. Coordinate with Line Agencies to conduct ILG registration and land surveying
iv. Coordinate with Line Agencies to promote Sepik Plains SEZ
v. Conduct monitoring & evaluation
vi. Develop and maintain an Asset Registry
i. Obtain quotes and raise claims
ii. Do deposits/payments to service/good providers
iii. Ensure funds are acquitted
iv. Keep a stock inventory for stationeries, equipment & supplies, and keep monitor their usage
5. Sepik Plains SEZ Project Office
The Sepik Plains SEZ Project Office is the project implementing unit located in Wewak, and reports directly to the Project Management Unit in Waigani. The Project Office will:
a) Scope project activities
b) Formulate work plans and budgets
c) Implement work plans
d) Furnish fortnightly report on project implementation to Project Management Unit.
The Project Office will be fully resourced with vehicles, stationeries and equipment, shall be manned by a Project Manager and a Project Officer.
The Project Manager and Project Officer will be remunerated from the project fund and their employment terms and conditions shall be specified in their employment contracts.
C PROCUREMENT PROCESS
1. Trust Deed
The Trust Deed of the SPSEZ Trust Account date 24/04/2015 is very specific on how the money allocated for Sepik Plain SEZ development should be expanded. That is, the money should be used on developing enabling infrastructure, capital formation, customary land mobilization, travels, feasibility studies, technical consultancies, administrative and relevant goods & services to develop the SEZ.
These trust Deed ensures that government funding allocation is protected and only spent in the areas aforementioned.
The goods and services that are required by the project are procured as stipulated by the Public Finance Management Act. For procurements that are valued from K500, 000 and below is being authorised by the Department of Commerce & Industry Secretary. Any procurement that is K500,000 and above goes before the Suppliers & Tenders Board for approval, and The Department of Finance Secretary who has no limits effect the payment for the procurement when approved by the CSTB.
Hence, all procurements for the project have been subjected to the Financial Management Act and claims for payments have been approved via a vigorous compliance process administered by the Department of Finance.