PNG pledges AU$42 million to Solomon Islands and agrees to lift work permit restrictions

06/10/2011 21:00

Solomon Islands central bank in Honiara, Solomo Islands. The Solomon Islands

government is hoping the lifting of work permit restrictions could lead to long

term benefits for its economy.


Papua New Guinea (PNG) has pledged K100 million (AU$42 million) in development grants to the Solomon Islands and agreed to lift work permit restrictions between the two neighbours.

PNG Prime Minister Peter O’Neill and his Solomon Islands counterpart Danny Philip agreed on this during bilateral discussions in Port Moresby.

The Solomon Islands PM is on a three-day visit to PNG, less than a week after Australian Foreign Minister Kevin Rudd made a surprise visit to Port Moresby.

Solomon Islanders currently studying in PNG higher education institutions will benefit from the five-year funding program, as portions of it will be used to support the continuation of the PNG-Solomon Islands tertiary education grant. There were 304 Solomon Islanders studying in PNG last year who were supported under the grant.

The grant was initially created in 1997 by the former PNG Prime Minister, late Sir William Skate but was not implemented until 2006 when the Somare government handed over K20 million. The next lot of funding is an increase of K80 million.

The talks between the two neighbours in the PNG capital comes two weeks after their Melanesian Spearhead Group (MSG) colleague and Vanuatu Prime Minister Sato Kilman made a private visit.

Mr Kilman was reportedly invited by PNG-based tea and coffee exporters WR Carpenters Group to visit its agriculture business. The company currently employs over 4000 people and also has interests in trading, manufacturing and information technology.

PNG’s booming economy is making the country an attractive destination for its MSG neighbours, who are keen on capitalising either through investments in their own economies by PNG-based companies or bilateral assistance.

The lifting of work permit restrictions to encourage labour mobility is part of attempts by MSG member states to open up their economies to inter-island trade. Mr O’Neill said officials from PNG and the Solomon Islands will begin work to formalise the agreements between the two neighbours as well as with Vanuatu and Fiji.