Papua New Guinea is looking to forge stronger ties with its northern neighbours including Malaysia, Prime Minister Michael Somare said today, following sensitive talks with Australia last week.

PNG is serious about refining its relationship with Australia "whilst opening up and pursuing opportunities to the north", a statement from Somare's office said.

In recent days Port Moresby has approached several Asian countries about economic cooperation and Somare plans a series of official visits, it said.

Malaysian Prime Minister Mahathir Mohamad will visit the Pacific nation next month, while Somare has also been talking to Thailand, Laos, Indonesia, China and the Philippines.

Concrete proposals to develop ties have come from Japan and South Korea, the statement said.

The PNG leader said he hoped to pick up some tips from Mahathir on how to manage his nation's struggling economy.

Mahathir will visit from October 24-25, just days before he steps down after some two decades in office.

Second-largest investor

Malaysia is PNG's second largest foreign investor after Australia, which Somare has accused of using its bilateral aid programme as a tool of neo-colonialism.

"I want to leave behind a legacy of an economically independent country," said Somare, who was also PNG's independence leader and who plans to retire from politics at the next election in 2007.

"As I approach the end of my political career, I want to use the time remaining to transform PNG from a country dependent on aid into a country whose economy is reflective of its abundant resources.

"Prime Minister Mahathir is credited with having successfully gotten Malaysia out of the 1998 Asian financial crisis. Papua New Guinea certainly can learn a lot from Malaysia."

While on an official visit last week, Australian Foreign Minister Alexander Downer said Canberra wanted to send hundreds of Australian police to PNG to help restore order.

Canberra has rejected suggestions it was interfering in PNG's internal affairs, although Prime Minister John Howard hinted Australia's A$300 million (US$200 million) a year aid programme could be cut if Port Moresby refused.

Australian aid

PNG is the largest recipient of Australian aid, but Australian firms also play a major role in its economy, particularly mining.

In recent months Somare has criticised Canberra, accusing it of wanting to use its aid programme as a tool of neo-colonialism.

Australia led a regional intervention force to the neighbouring Solomon Islands in July and subsequently succeeded in getting its candidate elected to chair the Pacific Islands Forum, in a move regarded with suspicion among some of its Pacific neighbours.

Malaysian-owned operations in PNG include its biggest forestry concern, run by the Sibu-headquartered Rimbunan Hijau, and largest palm oil operations, owned and operated by the Kulim Plantation subsidiary, New Britain Palm Oil Ltd.

Malaysian companies also have interests in banking, finance, engineering and in supermarkets and restaurants. - AFP