Papua New Guinea’s hosting of the 2018 APEC Leaders’ Summit proved to be something of a catalyst for the construction sector. Although the authorities had to mitigate the shortage of high-end hotels in the capital city by hiring cruise liners to accommodate international delegates attending the event, a host of construction projects were launched to meet the other infrastructure needs of the summit, such as the PGK120m ($36.4m) APEC Haus. Officially opened in October 2018, the modern glass and steel convention centre has become a city landmark with its unique lakatoi sails. It sits atop reclaimed land near Port Moresby’s Ela Beach.

Increased public spending on transport infrastructure has also helped boost the construction industry. In 2018 the government spent PGK356.6m ($108.2m), or about 27% of total capital expenditure of PGK1.3bn ($394.3m), on improvements to roads, airports and ports. This is projected to increase to PGK995.6m ($302m) in 2019. At its peak, the construction sector contributed 0.9 percentage points to real GDP growth in 2012; however, by 2018 this had fallen to 0.1 percentage points. Government figures forecast the sector to expand at an annual growth rate of 4% between 2018 and 2022.

Construction activity accelerated significantly in Port Moresby following the discovery of liquefied natural gas (LNG) at nearby Caution Bay. The flagship $19bn PNG LNG project helped transform the skyline of the capital, and construction still remains highly dependent on the extractive industries, as well as on transport infrastructure. To ensure more sustainable sector growth, greater demand must come from citizens for better housing, health care facilities, schools, shops and offices.


PNG operates under a very egalitarian landownership framework: approximately 97% of land is owned by the community, which is known as customary land. In general, customary land laws recognise community ownership and the traditional usage of land. A foreign person or company cannot purchase or lease customary land directly from the traditional owners. If an investor requires access to customary land, the government has to first acquire it from the traditional owners before leasing it to the foreign investor, turning it into so-called alienated land. Therefore, most foreign-owned establishments are located on alienated land.


Land use is regulated by the Land Act 1996, which sets the rules for acquiring customary land. A land title serves as a certificate of ownership. Any transaction involving the transfer of land to a foreign national or a corporate entity requires approval from the Department of Lands and Physical Planning (DLPP). Alienated land can be held either on a freehold or leasehold basis. Under the constitution, a non-citizen cannot own freehold land in PNG. However, certain types of freehold land can be converted to leasehold and can subsequently be leased to a non-citizen or a company for up to 99 years for a specific purpose. The Land Registration Act 1981 sets out the process in detail and lists the forms required for the registration of land.

Established under the Land Act 1996, the PNG Land Board deals with lease applications, while the Land Titles Commission ascertains who the customary owners of land are. It also determines whether a particular piece of land is alienated or not, a crucial determinant that can influence investment decisions. The Incorporated Land Group (ILG) represents the land rights of a group of customary landowners under the ILG Act 2009. Once traditional landowners get together and register themselves as an ILG, they have the legal right to engage the state or investors in a business transaction, or use the land for development. An ILG is therefore effectively a corporation under the law. The objective of establishing a land group was to unlock the economic potential of customary land and safeguard against land grabbing. In practice, however, there have been mixed results.

The DLPP administers all alienated land and handles issues related to customary land. Services within the DLPP include surveying, planning, valuation, land title registration and mapping. Investors need to consult the DLPP to determine which parcels of land are available for lease. The department is headed by a secretary and reports to the minister of lands and physical planning. Within the DLPP, the Land Information Division maintains records of alienated land and customary land, while the Office of the Registrar of Titles maintains all land title registries, which can be accessed over the counter for a nominal fee.

Growing Chinese Presence 

Leading the fray of foreign investors, China has emerged to occupy a significant position in the construction market over recent years. Chinese firms have secured some of the biggest and most lucrative infrastructure contracts, including the rehabilitation of the PGK3bn ($910m) 428-km stretch of the Highlands Highway, the contract for which was awarded to the Metallurgical Corporation of China, China Wu Yi and China Harbour Engineering Company. The latter also has plans to replace six bridges with a total length of 475 metres on the Hiritano and Magi Highways. Another contract for the replacement of a dozen bridges with a total length of 380 metres on the New Britain Highway was awarded to China Jiangsu Construction in June 2018. Meanwhile, work on the Highlands regional road network is being carried out by Chinese Overseas Engineering Group Company (COVEC) and China Harbour Engineering Company. COVEC is also building six bridges measuring a total of 476 metres on the Ramu Highway and three with total length of 80 metres on the Sepik Coastal Highway.

PNG has signed up to the Belt and Road Initiative (BRI), the flagship transnational infrastructure project initiated by Chinese President Xi Jinping, which aims to improve transport and trade links between China and BRI member countries. BRI projects in PNG include the Pacific Marine Industrial Zone in Madang, which is being executed by China Shenyang International Economic and Technical Cooperation.

In April 2019 a consortium of private Chinese investors held a ground-breaking ceremony for a $414m, 270,000-sq-metre mixed-use development dubbed Chinatown in the Port Moresby suburb of Five Mile. The sprawling neighbourhood will house shops, residential blocks and entertainment venues. Also under construction in Port Moresby is the PGK50m ($15.2m) Overseas Chinese Cultural House Project, which is designed to showcase Chinese culture in PNG. Meanwhile, the PGK250m ($75.8m) Noble Centre in downtown Port Moresby is being constructed by China Railway Construction Engineering Group and is expected to open by the end of 2019. The China Railway Construction Corporation was awarded a contract to rehabilitate the Sepik Coastal Highway, and construct a four-lane highway connecting Kagamuga Airport to Keltiga Junction. Asphalt pavement work on the highway connecting Keltiga to Mount Hagen is being carried out by China Harbour Engineering Company.

Regarding completed projects, China Construction Steel Structure Company won gold at the 2019 APEC Energy Smart Communities Initiative Best Practices Awards Programme in the smart buildings category for its construction of Butuka Academy in Port Moresby. The secondary school, which covers 48,000 sq metres and can accommodate up to 3000 students, was inaugurated by the then-Prime Minister Peter O’Neill and President Xi Jinping in late 2018.

While China is the dominant player when it comes to foreign investment in PNG’s construction sector, other countries are investing in strengthening diplomatic ties. For example, neighbouring Australia is helping to finance a PGK60m ($18.2m) cancer unit at Angau Hospital in Lae, while the Czech Republic is helping the government of PNG to fund the PGK300m ($91m) redevelopment of Boram General Hospital in Wewak. Meanwhile, plans for a new US embassy in Port Moresby were unveiled in 2017. Local contractors were hired to work on the project, which is expected to be completed by the end of 2019.


The sheer scale and size of infrastructure projects undertaken by Chinese firms is not only evident in PNG, but around the world. China’s capacity to carry out mega-projects is supported by the fact that most of the firms bidding for contracts are state-owned behemoths with strong financial backing and engineering expertise. Local firms and other foreign players have therefore found it difficult to outbid China on price and design. However, that does not mean they have not been active in the market. For example, local construction firm Dekenai Constructions successfully completed the upgrade and sealing of a 28-km stretch of the Boluminski Highway between Pinatgin and Soalaba Bridge in December 2018. It had also completed one-third of the reconstruction work on the Bougainville Coastal Trunk Road from Kieta to Toinamapu, before government funding problems forced them to suspend operations. As of early September 2019 Dekenai Constructions was developing a number of commercial streets in the suburb of Hohola in Port Moresby. The local firm is also working on the maintenance of the 112-km section between Vanapa Bridge and Bereina on the Hiritano Highway.

Building Materials

A key challenge facing domestic construction firms is access to foreign exchange, which is a concern because much of the required construction materials and equipment are not available in PNG and need to be imported, further giving foreign firms a leg up over local competition. This is likely to get tougher as the 2019 budget policy introduces further measures to protect domestic manufacturers from import competition. “Construction equipment – in particular, consumables – is often not available in PNG so you need foreign currency to import them from abroad,” Graeme Paine, director of Corman Contractors, a local construction and civil engineering company, told OBG. “With the foreign currency limitations, this can be a slow process and requires careful planning.”

Based in Port Moresby and employing over 350 people, Monier is the largest producer, supplier and distributor of construction materials in the country. Among the products it supplies are ready-mix concrete, aggregates for making asphalt and road sealing, precast concrete blocks, and drain covers. Another well-established local supplier is Lorma Constructions, which offers crushing and materials testing services. Though it started out as a small construction equipment provider in 1993, Lorma developed into a road contractor. Its road construction division is working to seal 24 km of Hula Road, 13.4 km of the Hiritano Highway from Veimauri Bridge to Wama Plantation and the road between Lame and Liagam in Enga Province. It has also won contracts for a number of public road works funded by the World Bank, the Asian Development Bank, Australia and the government of PNG.

Curtain Bros is another notable local contractor. It operates out of a 106-ha commercial property on Motukea Island, some 12 km from Port Moresby, which includes a steel fabrication facility, a dockyard and residential facilities. From the Poreporena Freeway, the first major freeway in the capital, to the Paga Hill Ring Road, which eased the flow of traffic through the city, Curtain Bros has been a major participant in the infrastructure development of Port Moresby. The contractor also carried out some early works as part of a joint venture on the PNG LNG project. More recently, they have built a number of significant marine structures, including the international wharves at Alotau and Port Moresby. The firm also built the container examination hall for PNG Customs and Bank South Pacific’s operations centre on Waigani Drive. Curtain Bros’ property developments include Harbour City, the Peninsula, Motukea Island and Motukea North. As of September 2019 the firm was sealing the 10-km Koroba Road.

Japanese-owned PNG Taiheiyo Cement is the country’s only cement manufacturer and produces general purpose Portland cement. The firm was sold to Japan’s Taiheiyo Cement in 2000 as part of a government privatisation programme. The company imports most of the raw materials from Japan, processes it locally and then distributes cement to customers in PNG and across the region. The plant has an annual production capacity of 200,000 tonnes of cement, and is equipped with its own wharf and jetty. The plant’s main equipment includes a cement grinding mill, with a capacity of churning out 35 tonnes of material per hour; a separator of a similar capacity; a silo that can store up to 6000 tonnes of cement; a clinker silo with capacity of 12,000 tonnes; a rotary packer; and an automatic palletiser and wrapping machine. Another Japanese firm, Dai Nippon Construction, successfully completed work on two bridges along the New Britain Highway in 2019 for a combined total of PGK88m ($26.7m).


Given the contentious issue of landownership, conducting business in PNG can be met with a lot of pushback. Indeed, a move by the government aimed at stimulating further economic activity has received ongoing criticism and is giving rise to concerns about traditional land rights. Under the Land Act 1996, the state can grant a company a long-term concession known as a special agriculture and business lease (SABL) for the development of land (see Agriculture chapter). Covering a period of up to 99 years, leases are officially granted to agri-business companies to build palm oil plantations; however, opponents claim that a majority of leaseholders are harvesting timber instead of developing palm oil. Furthermore, some landowners complained their land was taken without their agreement. As much as 5.2m ha of customary land was reportedly leased to foreigners between 2003 and 2011. The size of the alleged land grabbing covers more than 10% of PNG’s total land mass, which has caused public outrage.

To take a closer look into these issues, the Commission of Inquiry was established in 2011, which subsequently found widespread fraud, corruption and a lack of coordination among various government agencies in the granting of SABLs. Out of the 42 leases the commission reported on, only four cases showed evidence of genuine landowner consent. Critics argue that the introduction of SABLs effectively reduced customary ownership of land in PNG to 85%. As a result of its investigation, the Commission of Inquiry declared the contested leases invalid in 2013, but it took four more years before the government took action.

Subsequently, there are calls to suspend the SABL policy, with indications that current Prime Minister James Marape will take a tougher stance and defend customary rights, as his administration appears to be more willing to take on vested interest groups. He also signalled concern that a number of industries, including construction, are controlled largely by foreigners. The Small and Medium-Sized Enterprise (SME) Policy 2016 and SME Master Plan 2016-30 mandates foreign companies that win government tenders to subcontract half the work to local businesses. While the policy has not yet been vigorously imposed, it nevertheless has the potential to hobble the growth of the construction sector if Prime Minister Marape follows through on his intentions.

The absence of a competitive domestic manufacturing base for building materials means that the construction sector has had to depend on imports, which results in high procurement costs for contractors. Nevertheless, tariffs on building materials are not excessive. For example, building blocks and bricks have carried no tariff since 2011. Glass, and iron and steel carry an average ad valorem import duty of 2% and 0.1%, respectively. Duties on flat-rolled iron imports, however, are levied at an average of 15%.


Over the short term much of construction activity will continue to be driven by public works projects. Continued progress aimed at improving rural transport connectivity, and the rehabilitation and upgrading of provincial and district roads and airports is likely to keep the momentum in the sector steady. This includes the rehabilitation of the Highlands Highway; the redevelopment of the Lae Nadzab Airport terminal building; construction of new wharves at Wewak, Vanimo, Manus and Kikori; various works under the Civil Aviation Development Investment Programme; and the rehabilitation and maintenance of rural airstrips. The government expects the economy will grow by an average of 5% per annum in the 2019-23 period, largely driven by construction related to the planned mining and petroleum projects Wafi-Golpu and Papua LNG. Other notable gas and mining projects with the potential to boost the industry include Pasca A Gas, Stanley Gas, P’nyang Gas, Yandera and Woodlark.