Mr O'Neill told an audience at the Lowy Institute in Sydney that with strong economic growth and gowing trade with Asia, PNG is well placed to be part of the region's future.
Correspondent: Jemima Garrett
Speaker: Peter O'Neill, Prime Minister, Papua New Guinea
GARRETT: Just a month after the Australian Prime Minister Julia Gillard detailed her strategy for incresing links with Asia, the PNG Prime Minister has used the same venue to raise the profile of his claims for an Asian future.
PNG is a member of APEC and Mr o'Neill says its fast-growing resources trade with Asia will push its consistently robust economic growth even higher in the future.
In his address to the Lowy Institute, he stressed PNG's strong relationship with its southern neighbour but did not hestiate to chide his Australian counterpart for having a political blind spot about his countries role in the region.
O'NEILL: The Australian government recently released a comprehensive White Paper titled Australia in the Asian Century. Interestingly, it made no mention of Papua New Guinea, although we are very close neighbours, the closest neighbour you have got.
GARRETT: The PNG Prime minister says like Australia PNG is being increasingly drawn towards Asia.
O'NEILL: The opportunities for Papua New Guinea clearly differ from the opportunities Australia can take advantage of. Australia is very well placed to benefit from the growth of the middle class in the region, especially China, in the areas such as tertiary education, professional services and so on. For PNG, I see the opportunities as being an extension of the relationship with the region, more so in trade and investment but there are also new opportunities that will unfold as sections of our economy continues to develop. And we really need to be preparing our businesses and our economy generally for that.
GARRETT: PNG already has strong trade and economic links with Asia - Prime Minister O'Neill says its first natural gas project led by ExxonMobil has found all its customers in Asia
A second natural gas project was approved has just been approved and Mr O'Neill says 70 new exploration licences are being considered.
With abundant land and human resources and a population hungry for jobs, Mr O'neill says his country is well placed to provide food and energy to Asia in the future.
O'NEILL Helping to meet both the enrgy needs and the food needs of the region, I believe strongly that PNG has a unique opportunity. And an opportunity that I want to assure you we will not pass up. That brings me to perhaps the greatest challenge that we face as a nation in focussing of these opportunities that the Asian century offers. PNG has never really focussed on productivity and especially on government measures to improve productivity.
GARRETT: Mr O'Neill says that is set to change. PNG's latest budget aproved earlier this week calls for a 50% increase in spending on health, education and law and order and for more than 5.5 billion dollars to be spent on ailing infrastructure over the next 5 years.
O'NEILL: It is a massive commitment - one that has never been done in the history of our country.
GARRETT: Mr O'Neill says infrastructure has been a particular problem.
O'NEILL: One of the reasons agricultural production has been in decline and why our producers have seen their income decline in real terms is the poor state or our roads and ports. The second reason for massive investment in infrastructure is to grow our resource sector and give maximum possible benefits so we can take advantage of the benefits of growth in Asia. One of the reasons for cost blowout on first LNG project is because of the poor state of infrastucture, particularly the Highlands Highway. You simply cannot grow an economy in a first rate way with a third rate infrastructure.
GARRETT: PNG has strong trading relations with Malaysia, Singapore, South Korea and the Philippines and is spreading its wings to India and Russia but Mr O'Neill says its top priority is Indonesia, with which it shares a land border.
Mr O'Neill says China, with the major stake in the Ramu Nickel project and 2.7 billion dollars on offer in in concessional loans for infrastucture, is playing an incresasingly important role.
O'NEILL: Our fastest growing relationsdhip is with the People's Republic of China. People's Republic of China is destined to become our second largest trading partner other than Austrsalia and it is a growing one, in construction and resources particularly. We have a very strong relationaship with China only based on trade and investment.
GARRETT: With a solely commercial relationship Mr O'Neill believes security conerns about China's role in PNG are overblown.
O'NEILL: We are aware of the competing interests that is coming from our traditional partners, particularly the US increased interest in the Pacific region. We have continued to build that relationship on security, trust and investment over many, many years but we feel the security issues that have been expressed by our traditional partners is unnecessary. We are following the same path that Australia and New Zealand are taking by increasing our relationship with China on trade and investment.