MANUFACTURING
Making the right moves The manufacturing sector is on the rise and innovation is playing a huge part in its development. By David James and Sarah Byrne anufacturing in Papua New Guinea only contributes about three per cent of the country’s GDP, but it employs about half of the people employed in the country’s formal economy. It has developed on the back of the nation’s comparative advantage in agricultural and resource-based industries. The Marape–Steven government has adopted a strategy of broadening the industry base in an effort to reduce the impact of volatility in the resources sector. The aim is to move the economy from its dependence on primary industries into higher–value added processing industries. This includes an emphasis on downstream processing of natural resources. Prime Minister James Marape says that all companies who want to participate in the harvest of PNG’s resources will need to come up with clearer and quicker ways to do downstream processing.
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Expanding operations and facilities The lack of availability of foreign exchange has led to some import substitution by PNG manufacturers, especially in fast-moving consumer goods (FMCGs) and smallgoods manufacturing. In 2017, PNG’s Tariff Reduction Program was suspended and in accompanying legislation about 250 tariffs lines were increased while over 600 decreases were abandoned. Tariffs were increased on clothing, household and consumer items, and some processed food such as ice-cream. ‘Those tariff reforms have resulted in significant local investment, including re-capitalisation of existing manufacturers, like Coca-Cola, Pacific Industries and Paradise Foods,’ says Chey Scovell, CEO of the Manufacturers Council of PNG.
TARIFF REFORMS HAVE RESULTED IN SIGNIFICANT LOCAL INVESTMENT, INCLUDING RE-CAPITALISATION OF EXISTING MANUFACTURERS. Chey Scovell
‘There has been a whole number of new entrants. American Cola, the soft drink brand, took up a chunk of the market. They are building two manufacturing plants, one in Port Moresby and another in Lae.’ Lae Biscuits has plans for a noodle manufacturing line. Scovell says food company Goodman Fielder is also increasing its investments, including a new flour mill. 46 BUSINESS ADVANTAGE PAPUA NEW GUINEA
Credit: Manufacturing Council of PNG
Coca-Cola Amatil (CCA PNG) Limited has been expanding its operations to increase capacity, including a new can processing facility in Lae. Gigy Philip, CCA PNG’s General Manager, says the company is improving its power supply, developing a reverse osmosis system for water treatment, adding a warehouse, undertaking capital expenditure and planning a new head office. He says CCA PNG is seeking to accelerate its investment in staff by improving their capabilities through targeted interventions. This includes the company’s Supply Chain Academy, which focuses on technical skills, quality and lean manufacturing; the Sales Academy, which aims to help the sales teams drive sales and have commercial conversations with customers, and a leadership program.
