Prime Minister Peter O'Neill approved the National Fisheries Authority removing rebates on the sale of fishing vessel days in 2018.
However, fleets or companies that process fish in PNG would still be eligible for the discount.
O'Neill said that due to PNG's increasing tuna processing capacity, it was in a stronger position to ensure more tuna came through PNG to be processed for sale to overseas markets.
"We will ensure that our people are able to value-add by processing tuna in PNG and earn more dollars from every fish that is caught in our waters," he said
"The new system will see rebates only given to companies for fish that is processed in PNG."
According to O'Neill, an independent report for the NFA found that less than 25% of fish caught in PNG's waters is processed there, representing a loss to PNG's economy of K350 million in direct income and K500 million in missed taxes.
The NFA has been instructed to finalise the plan for the sale of vessel days in 2018 by July this year.
O'Neill said all log exports from PNG would cease by 2020 to make sure the lumber would be locally processed.
"All timber cut in Papua New Guinea must be processed on-shore," he said.
"[We] will work closely with companies who are already operating in PNG in ensuring that this particular industry produces enough through the downstream processing opportunities that can enable the growth of the housing industry and construction industry in our country."