Manufacturing and Service Industries in Papua New Guinea

Before World War II manufacturing was confined to building construction and the first stage processing of primary products such as coconuts. There were basic services for the maintenance and repair of imported machinery. Manufacturing expanded slowly after the war. By the mid-1960s approximately 100 of the 400 factories were engaged in servicing the transport industry, 100 in building construction or the timber industry and most of the remainder in food processing or service industries such as power stations and printeries. Almost all factories were owned by expatriates or locally-born Chinese. One quarter were situated in Port Moresby and most of the others in Lae, Madang, Rabaul, Goroka and Mt Hagen.

At Independence in 1975 manufacturing accounted for only 5 percent of GDP. After 1975 manufacturing continued to be held back by the high cost of transport, power and labor, the lack of skilled labor and the size of the domestic market. In the 1980s and early 1990s law and order problems also discouraged investors. In 1992 manufacturing accounted for only 8.4 percent of GDP and 8 percent of employment. The main manufactures were food and wood products, including furniture, almost entirely for the domestic market. Government attempts to encourage PNGan involvement in manufacturing have included protectionist policies, the establishment of a Small Business Development Corporation and a 1992 budget allocation of K16 million to the Department of Trade and Industry.

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