THE ECONOMY OF PROVINCE OF PAPUA

Some 40 years after formally becoming a province of Indonesia in 1969, this eastern most part of the country remains largely virgin territory. Extremely rich in forests, oil and gas, minerals and other natural resources; rich in tribal cultures, endemic flora and fauna; endowed with unsurpassed natural beauties-Papua still ranks as one of the world’s last frontiers. Unquestionably it offers wide investment opportunities for those of truly entrepreneurial spirit.

 Resources

Land and Water

More than 75 percent of the province is covered by dense forest and woodland, ranging from lowland tropical rain forest to dry evergreen, medium, and high-altitude alpine trees. Of the more than 1,000 species of trees, some 150 varieties are commercially viable.

The next largest tracts of land consist of grassland and fallow land, followed by small-holder estates and crop fields-rice, sago, corn, cassava, sweet potato, nutmeg, cloves, fruit and vegetables, etc. A significant percentage of arable land is also used to cultivate commercial crops such as palm oil, coconuts, cocoa, soybeans and rubber.

With a 3,500 km coastline and numerous large rivers and lakes, Papua’s estimated 970.000sq. km.of territorlal and inland waters have a potential yield of over 1.5 million tons of fish annually, including various species of tuna, marlin, sailflsh, swordfish, baramundi, shark, and sole. Other important marine resources are crab, seaweed, sea cucumber, and pearls.

The province’s reserve of mangrove swamps is the largest of its kind in Indonesia, comprising a vast natural environment for the spawning of shrimp. Numerous rivers, lakes and ponds provide further extensive resources for fish breeding and farming.

Minerals

Papua is rich in oil and natural gas resources. Oil has been drilled in the province since the 1930s but while exploration continues and new discoveries have been made, many known basins have yet to be exploited.

Geologically, Papua lies in a unique position between two giant plates-the oceanic crust of the Pacific Plate and the continental crust of the Australian Plate. Tectonic movement of the plates for over millions of years has resulted in Papua being squeezed between the two. The result is the limestone mountain range in the middle of the province. In the process of its formation, the intrusion of acidic rocks caused a mineralization of base metals, from which copper and other mineral reserves are derived. PT Freeport .Indonesia’s mine in the Timika Regency contains the largest copper reserves in the world, along with gold and silver concentrates. Other fossil fuels and mineral ores include coal, peat, aluminum, nickel, chromium, cobalt, iron, lead, manganese, mercury, tin, tungsten and zinc, while industrial minerals include asbestos, graphite, marble, mica, opal, phosphate, quartz and talc.

Population and Manpower

In contrast to Papua comprising 22 percent of Indonesia’s land mass, the province’s population represents only around one percent of the national population. Urbanization has proceeded very slowly, accounting for 26 percent of the population in 1995. In 1999, from a labor force or 925,123, 72 percent was occupied in agriculture, forestry and fishery, 4 percent in industrial processing and manufacturing, 6 percent in trade, hotels and restaurants, 15 percent in other services, and the remainder in mining.

Infrastructure

Roads

Roads are reasonably well developed in and around the main towns. It is hardly surprising, however, that in a province as remote as Papua, with sparse population and possessing rugged terrain throughout most of its interior, roads should be relatively few and far between. In the past, it was easier to travel by water and air than by road. However, the Government has recently completed a new 585-km road running from the city of Jayapura in the north to wamena in the heart of the Baliem Valley in the center of Papua. This was a project that took twelve years to complete due to the rough terrain and thick jungle.

The road, which forms an initial phase of what is planned to be an extended trans-Papua highway, will go a long way to help open up cultivable land along its route and connect agricultural producers,   through the gateways of Jayapura and Biak, to markets in all other parts of Indonesia and abroad. Data from 1999 shows that the Merauke Regency has the best network of roads with a total length of 2,287.18 km, from a total 15,845.83 km for the whole province.

Air Transportation

A number of airlines serve domestic flights from Jakarta, with stopovers at Ujung Pandang in Sulawesi, to an.international standard airport in Biak (6 hours plus 90 minutes stopover), Jayapura (7 hours with 45·minutes stopover), and Sarong (5 hours 35 minutes plus 1 hour 40 minutes stopover). Within Papua, many other airfields are capable of taking jet aircraft as well as smaller planes. The airport at Wamena in central Papua is to be upgraded to take large aircraft by 2004. Rendani airport in Manokwari Regency is also to be improved.

Sea Transportation

Sea transport provides a vital means for passenger and cargo transportation in this huge province. The main seaports serving the province are at Jayapura, Sarong, Biak and Merauke. Together they account for 62 percent of all port calls in Papua. A host of smaller ports of various sizes and facilities are scattered around the province (including inland river ports) to support intra­provincial sea and river trade.

Power

Although all major cities and many smaller towns have electricity, it is not yet available throughout the entire province. Huge potential exists in Papua’s rivers and lakes for the development of hydropower.

Water Supply

Investment has also been injected into developing water resources in the urban centers,.rural settlements and for agricultural irrigation. Again, however, further investment in water supply is needed.

Telecommunications

Indonesia’s domestic satellite system, with a number of earth stations in Papua, has improved both telecommunications and the reception of television programs. Long distance calls are possible from any district capital in Papua to other cities within the province or Indonesia, as well as overseas. 45 percent of all telephone connections in Papua are located in the Jayapura Municipality and Sorong Regency.

Financial Services

In 1999 there were 132 banks operating in various economic centers of the province.

 Production and Export

Papua’s economy is dominated by resource-based activities, from the extraction of minerals to foresty and wood products and the cultivation and processing of basic agricultural commodities and fish/marine products. This is reflected both in exports and in the structure of its economy.

Papua Regional Grass Domestic Product for the year 2000 is Rp. 20.71 trilion, a 14 percent increase from the previous year. Mining and extraction industries carved the lion’s share with 62.84 percent of the total RGDP. This is followed by agriculture (17 percent) and services (5 percent).

The province enjoyed 3.22 percent economic growth during the year 2000. Financial and service sectors contributed significantly with a 71.36 percent growth during that year.

Most of Papua’s products are exported to Japan, Taiwan, and South Korea and in 2000 it was valued at US$ 965 million. Europe and the United States rank as second and third largest buyers of the province’s products.

Raw materials and non-food products made up 81.16 percent of Papua’s international trade commodities. Mineral oil, vegetable oil and fats contributed to just a little over 15 percent of the province’s export.

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