Papua New Guinea isn’t just a producer of mineral and agricultural commodities. As its economy grows, so does a substantial manufacturing sector.

Many PNG manufacturers are undergoing strong growth and expansion. South Pacific Brewery opened its new K8.6 million (US$4.1 million) raw material warehouse in Port Moresby in September 2011, the latest step in a series of investments in PNG.

‘The company’s three-year investment plan has resulted in the latest technology being installed. The upgrade of the current operations and expansion of the brewery capabilities is world class and will provide us the extra capacity needed to meet market demand and growth. This structure is part of that investment,’ said S P Brewery Chairman Sir Joseph Tauvasa at the time of the opening.

Australia-based Coca-Cola Amatil is banking on strong growth in Indonesia and Papua New Guinea to drive its business in 2012. The growth outlook for both these businesses continues to be very promising, said Coca-Cola Amatil’s Chief Executive Officer Terry Davis in a recent statement. Coca-Cola Amatil is building a CO2 plant in Lae and a plastic bottle production plant in Port Moresby for nearly K20 million (US$8 million).

Other manufacturers reporting growth in demand, product lines and investment include Paradise Foods, K K Kingston and the Lae Biscuit Company.

Investment and its challenges

Investment is being underwritten by a variety of institutions. The two leading superannuation funds have stakes in the sector. Nambawan Super owns shares in S P Brewery and 80% of Paradise Foods, while NASFUND owns a major stake in agribusiness firm, Mainland Holdings. The regional Kula Fund and the World Bank’s private sector arm, the International Finance Corporation, have invested in K K Kingston.

PNG’s rapidly growing domestic market is driving demand for locally produced products, from paint and printed goods to refined petroleum.

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Some logistical challenges faced by manufacturers include high start-up costs, high rents and reliable and cost-effective access to power and water. Skilled workers are often lost to the booming mining and petroleum sector. However infrastructure projects, including moves to increase port capacity in Lae, where the bulk of PNG’s manufacturing industries are based, are in train.

Wide range

PNG’s rapidly growing domestic market is driving demand for locally produced products, from paint and printed goods to refined petroleum. Local production also caters to the business-to-business market, especially in the mining, petroleum and construction sectors. And local producers are increasingly finding new markets, particularly in neighbouring Pacific Islands such as Solomon Islands, Australia and New Zealand.

PNG’s manufacturing sector employs around a quarter of the formal workforce, and contributes an estimated 6 to 11.5% of GDP. Downstream processing also plays an important role in the fishing, timber, coffee, petroleum and gold industries.

Local pride

The Manufacturers Council’s ‘PNG Made’ campaign encourages consumers to buy locally made products. The program enables locally-produced goods that meet with Council approval to display the ‘PNG Made’ logo.

‘There is support for what we are doing and the reasons behind it. Papua New Guineans are very proud of their country and what they have done over the years. They are quite parochial about “PNG Made”. I don’t think we realise how powerful the brand and logo really is,’ says Coca-Cola Amatil PNG’s General Manager Colin McVea.

Items manufactured in Papua New Guinea include

• Beverages: beer, soft drinks, vodka
• Building: pre-fabricated building (wood/steel), roofing materials, cement, plywood
• Food: biscuits, snacks, noodles, baking products, canned meat/fish, smallgoods
• Household items: furniture, beds, mattresses, cooking utensils
• Industrial products: chemicals, water tanks
• Packaging: aluminium cans, corrugated cardboard
• Paints
• Personal care products
• Printing: offset and digital
• Refined petroleum
• Textiles: footwear, school uniforms

For more information, read Made in PNG: Showcasing Papua New Guinea’s Produce and Producers, available at www.madeinpng.com

This article first published in Business Advantage PNG 2012/2013