The deal reached last month by the PNG government of Prime Minister Peter O'Neill and Australia's Labor government means PNG takes in asylum seekers arriving in Australian waters in exchange for millions of dollars of development aid.
The controversial arrangement also means the asylum seekers, if successful in their asylum application, will be settled not in Australia, but in Papua. The 40 mostly Iranian and Afghan single men were flown from Australia's Indian Ocean territory Christmas Island to Manus Island Thursday.
Papua's Minster for Environment and Conservation John Pundari praised O'Neill for the agreement which has raised the profile of PNG within the international community, PNG's Post-Courier newspaper reported.
"PNG is no longer viewed as a small insignificant underdeveloped island nation, but has emerged as a bigger player in our region and the global stage," Pundari said. "This has all come about because we have the leadership that has been lacking in the past."
Pundari said O'Neill's agreement "must be commended rather than be challenged."
Pundari said O'Neill showed "our Pacific family of countries that Australia's problem mustn't be seen as only Australia's problem, but rather as a regional problem needing our concerted effort to find a solution."
But lawyers acting on behalf of PNG opposition leader Belden Namah filed a court challenge to the Manus Island center, Australia's Canberra Times reported.
"That is, that all persons coming into the country are guaranteed their personal liberty except in the case where they come to the country without a visa or proper work permit," Namah's lawyer, Loani Henao, told journalists.
"Now is the time for the battle to start."
Judges threw out Namah's first legal challenge on a technical issue.
"What we are doing is resurrecting what we filed previously," Henao said.
Papua New Guinea, with a population of fewer than 7 million, lies off Australia's northern coast and has close relations with Australia, which governed it until independence in 1975.
Papua New Guinea's detention center is on the rugged, jungle-covered Manus Island off its northern coast. Manus covers 800 square miles and has a population of 43,000, a 2002 census indicated.
Australian Immigration Minister Tony Burke said the first transfer of asylum seekers to Manus Island under the new policy has ended the people smugglers' business model.
People smugglers tell passengers if they reach Australian waters they would get asylum in Australia.
Thousands have been landing or been shipwrecked close to Australia's Indian Ocean territory Christmas Island where a detention center is operating.
More than 1,400 asylum seekers have arrived in Australian waters aboard 18 boats since the government of Kevin Rudd announced PNG agreement July 19.
Would-be passengers spending hundreds of dollars on a dangerous passage on unseaworthy vessels now know that people smugglers "no longer have a product to sell," Burke said.
"The promise of living and working in Australia, which is sold by people smugglers before they push people onto the high seas, is no longer a product available."
Australia's immigration department posted a video online of the 40 men being taken from the Christmas Island detention center and boarding the plane to Manus Island, the Canberra Times reported.