By PMIZ Watcher

The loan agreement signed between the Papua New Guinea government and China's Eximbank, to fund development of the Pacific Marine Industrial Zone is a terrible deal for PNG.

Putting aside the fact that PMIZ promises to be a disaster for Madang, repeating and expanding all the terrible social and environmental impacts of the existing RD Tuna fishing project, the US$70 million loan agreement signed with China means PNG will be paying for China's continued economic expansion and business profits.

Interest and repayments

Like any loan, the PMIZ loan will have to be paid back and with interest added. Although the loan agreement gives PNG a five-year grace period before loan repayments start, that only adds to the length of the loan and the amount of interest that will ultimately accrue. 

If PNG was serious about finding the money to pay for the PMIZ why not just plug a few of the holes in the Department of Finance through which billions of dollars of public money are being lost every year?

PNG doesn't need to be borrowing more money and we shouldn't be saddling the next generation with more debt to repay.

Loan conditions

The loan conditions are where the real devil lies in this agreement.

The contract stipulates that 70 percent of the project (worth US$35 million) must go exclusively to a Chinese developer using Chinese technology, labour and equipment.

So the people of PNG will be paying for a Chinese company to come and build the Pacific Marine Industrial loan using Chinese labour and Chinese equipment and Chinese supplies.

Where is the benefit here for PNG?

What about all the local people who would like the opportunity to be employed? What about all our college and university graduates without jobs? What about all the PNG based companies who could supply goods and equipment?

But that is not all.

Under the loan agreement the Chinese developer is guaranteed a profit of 20% - at least US$7 million!

Why are people of PNG being forced to pay a guaranteed profit to a Chinese company?

It seems the PNG government have signed a loan agreement under which all the benefits will flow back to China and it is the people of PNG who are going to be paying to increase China's economic wealth!