PNG government takes steps to bring industrial parks on-line

The development of special economic zones (SEZs) in Papua New Guinea has been a topic of discussion and debate for quite some time, with critics voicing concerns over the planning and implementation of projects in the pipeline. However, large-scale industrial parks remain a priority for the country as they offer a boost to manufacturing and the economy, while attracting foreign investment through benefits such as access to necessary logistics and resources, tax benefits and a streamlined path through bureaucracy. With the government re-evaluating the progress of an SEZ that has been in development and cutting deals for several new projects, it is possible that the country will have a number of large industrial parks in the near future.

Marine Zone

The Pacific Marine Industrial Zone, envisioned to be a national fisheries hub and transform Madang into the tuna capital of the world, has generated excitement as well as seen its share of setbacks. The project, which was first announced in 2007 after the government repurchased land from RD Tuna Canneries for PGK4m ($1.3m), is being financed with a $156m loan from The Export–Import Bank of China. The zone has 100 ha earmarked for production, and 115 ha for residential and commercial purposes, with estimates that it will house up to 10 processing facilities and employ 30,000 people.

After a series of delays, the project broke ground in April 2016, signifying that it was seemingly back on track, though at the time critics were still expressing concerns over payments to landowners, the opaque use of funds and conflicts of interest. In December 2017 Wera Mori, minister of commerce and industry, visited the site and raised issues over the cost – a total of $10m had been spent at the site – and the resulting progress. The previous month the project had been transferred from Kumul Consolidated Holdings to the Department of Trade, Commerce and Industry, and the minister expressed hopes that under the body’s oversight, the zone would be fully operational in three to four years.

Other Sites

Plans are also in the works for two duty-free industrial parks in the Highlands. In January 2018 it was announced that the Integrated Agriculture Industrial Park – including a 130-ha site to be built in Korofeigu, outside Goroka, on the Highlands Highway and another 150-ha park in the Westerns Highlands at Hati in the Wahgi Valley – would be built as part of a larger deal with China. The total investment in the two zones, negotiated as part of a $4bn package in late 2017, is $330m.

As of mid-2018, discussions were ongoing between the governments of the two involved provinces, the Department of Agriculture and Livestock, and China Railway, the developer. While a basic agreement has already been negotiated with China Railway, there are some important details still to be finalised. Additionally, feasibility and commercial studies must be undertaken, and land must be acquired. The main contractor for the project is the Metallurgical Corporation of China, which built a $2bn nickel mine completed in 2012.

In East New Britain, there are also plans to establish a special economic zone of the Gazelle Peninsula, though few details have been made available.

Thinking Big

The largest project, however, is planned for the border with Indonesia in West Sepik Province. The vast complex spanning 250,000 ha forms part of China’s Belt and Road initiative, which envisions transforming the world’s trade and transport infrastructure. When the complex is complete, it will include two large-scale processing and manufacturing plants. One will handle timber, fish, cassava and spices, while the other will process products from Chinese-based companies, such as steel, cement and industrial goods. The main developers are China’s Vivafounder and the Metallurgical Corporation of China, with an investment of $3.8bn.

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The Report: Papua New Guinea 2018

Industry & Retail chapter from The Report: Papua New Guinea 2018

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