PAPUA New Guinea's trade minister Richard Maru warned the government that its proposed rice policy could have a drastic impact on PNG in terms of its trade ties with Australia.
Mr Maru (pictured) was responding to questions from Rabaul MP Dr Allan Marat, who asked if a policy which will give a single company a monopoly will strain ties with Australia.
PNG imports K700 million worth of rice annually and Australian company Trukai is the major importer.
The government has recently decided to implement an import substitution policy and awarded a tender for a K4.8 billion project in Central Province to Naima Agroindustry, against competitors including Trukai.
Naima’s principal is the colourful entrepreneur Djoko Tjandra and it wants a 20-year tax holiday and the imposition of an 80% duty on all rice that it does not import.
This will hike the price of rice by 60% and lock Trukai and the other major suppliers out of the market.
Last year Tjandra was given PNG citizenship (he now calls himself Joe Chan) at a secret ceremony after fleeing by private jet from Jakarta after being sentenced to two years gaol in a corruption case.
His project is supported by agriculture minister Puka Temu and transport minister Ano Pala but Maru said he had sought technical and legal advice that revealed the policy would be in serious breach of PNG's obligation as a member of the World Trade Organisation.
It would also be illegal because PNG has entered into a bilateral agreement to protect Australian investments in PNG.
Naru said there are other options the government can take and that he is providing a formal letter of advice to the prime minister.