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THE PAPUA NEW GUINEA

The Papua New Guinea High Commission in Malaysia

Papua New Guinea’s manufacturing sector continues to grow due to a stronger domestic market and more export demand. PNG’s manufacturing sector has grown at about 6% per annum over the past decade. According to Chey Scovell, CEO of the Manufacturers Council of PNG, this is largely due to ‘major reform initiatives such as SME (small and medium enterprise) & friendly policies, tariff adjustments, as well as regional trade agreements.’

Broad-based Sector

Locally produced fast-moving consumer goods include noodles, beer, soft drinks, ice-cream, paint, toothpaste and soap, while PNG’s output also stretches to furniture, prefabricated buildings and cement. The country’s manufacturing centre is not the capital Port Moresby, but Lae, which is also home to the country’s largest port. Manufacturers based there include large international firms such as Nestle and Orica; as well as major local companies such as Trukai Industries, Laga Industries (part of the Steamships group) and Lae Builders and Contractors (furniture, including for export).

Incentives

There are certainly many incentives for foreign manufacturers to produce in-country in PNG, stemming from the Government’s desire to promote import substitution (the production of goods locally rather than relying on overseas supply). Whilst the duty on imports can be high, tax relief on inputs is often available to those who elect to manufacturer onshore.

Strong Domestic Market

PNG’s domestic market is large in South Pacific terms, which gives it a scale advantage and provides opportunities to export goods to smaller neighbouring markets. Japanese-owned PNG Taiheiyo Cement and Australia’s Orica (which manufactures paint under the ‘Dulux’ brand in PNG) both export elsewhere in the Pacific.

Local brewer SP Brewery (SPB) announced early in 2008 it would invest K90 million (US$31 million) in a staggered three-year project to expand production at its breweries in Port Moresby and Lae by about 50%. The company is owned by local investors, including Nambawan Super Ltd, and international stakeholders, including well-known brewer Asia Pacific Breweries (Tiger Beer/Heineken).