Expanding in PNG and Exploring Africa & Indonesia
by PNG Business News - July 15, 2021
Photo Credit: Ark Pacific - Minimal freight footprints, quick and easy installation, high quality steel framing and design diversity characterise Ark’s flat pack building systems; making them perfect for resource projects not just in Papua New Guinea but also Africa and Indonesia.
Flat pack building specialist Ark Pacific is further expanding its business in Papua New Guinea while simultaneously exploring opportunities in both Africa and Indonesia. The company’s growth and international business development initiatives are on the back of 10+ years’ project delivery in Papua New Guinea, primarily in the resources sector.
The first half of 2021 has seen Ark Pacific continue to deliver a diverse range of buildings throughout PNG for multiple resource sector clients. Ark buildings (i.e., mining camps, office facilities, ablution blocks, workshops, senior staff housing, etc.,) are being assembled at both remote inland and island resource operations.
To date, there are thousands of Ark building modules – all assembled by local workforces – to be found across the country. General Manager, Cassius Ruka, who has over 10 years’ experience in PNG’s construction and mining sectors, describes Ark’s building systems as “perfectly suited” to the remote and challenging conditions of resource operations.
“Mining companies prefer our buildings for several reasons” said Ruka. “They are designed and engineered to minimise freight (which in turn reduces client costs and the environmental impact of transporting them), they’re super quick and easy to install even by unskilled workforces, we use high quality steel as opposed to wood which means less maintenance and greater durability, and there are almost endless design options because the modules can be put together in a multitude of configurations.”
Ark’s design team works closely with their clients. Most recently they’ve been collaborating with a major gold mining company on the design of a new minerals testing laboratory. “The client wanted us to do a few things differently and achieve even greater cost efficiencies through minimising the use of on-site concrete by utilising galvanised steel column footings instead which we manufacture ourselves and ship as part of the kit” said Ruka. “We can be very flexible with our designs and the design process and anticipate finalising the laboratory build early in 2022.”
The travel restrictions and cost cuttings brought about by the COVID-19 pandemic have resulted in construction clients all over the world needing to restructure their onsite requirements to accommodate more long term staff. Ark Pacific is responding to these changes by going back to the drawing board for some of its clients. An example of which involves redesigning senior management housing layouts; transforming them into high density accommodation blocks.
The popularity of Ark buildings in PNG’s resource sector inspired Ruka to look further afield to grow his business. “There are plenty of parallels between what PNG’s resource sector needs in its buildings and what’s required by resource operations in many African countries and Indonesia. In other words, our flat pack building systems which are perfect for PNG are equally suited to resource projects over there too.”
Ark Pacific are looking to penetrate the African and Indonesian market via partnerships with Australia’s Mincore and Lycopodium. The companies are working together on feasibility studies on several greenfield opportunities.
PNG Business News - April 21, 2021
Innovative Flat Pack Engineering – 75 % Freight Reduction’
Ark Pacific has cleverly engineered its flat pack buildings to guarantee a minimum freight footprint for its clients. Unlike competing products, six of Ark’s high quality flack pack units are equivalent to a single standard 20 foot shipping container when stacked together ready for transport. Not only are freight costs drastically reduced (by up to 75 percent) but so too are carbon emissions. Furthermore, the ease and speed with which the flat packed buildings can be transported to site is greatly improved. Land freight costs in particular, greatly add to the cost of building in PNG, especially in remote locations. Although Ark Pacific does not compete solely on price, the considerable freight savings associated with its flat pack systems enable it to be one of the lower cost building alternatives without compromising on quality. A recent mining client was able to transport all of the flat pack componentry required for five office blocks, one ablution block and one crib room on just one semi-trailer truck – competing modular products would have required up to eight trucks. In addition to reducing freight costs and therefore the overall cost of construction projects, building with Ark Pacific flat packs also help reduce a client’s environmental footprint. For example, one truck travelling between Lae and the Highlands obviously produces considerably less emissions than eight trucks. Moreover, fewer trucks have less negative impact on unsophisticated road infrastructure, including many of the unsealed and rough roads servicing mining sites. Popular with its resource clients, Ark Pacific products also have the advantage of quick assembly utilising local and unskilled workforces. A basic one-room accommodation unit can be installed in a single day. To date, all of the thousands of Ark modules across PNG have been installed by local content. Ark Pacific’s team of managers are available to oversee any construction project if required. With a 10 year presence in PNG, new resource client projects in 2021 include a Crusher Facility Office and Electrical & Instrumentation Building (both two-storey), as well as the project cited earlier. Ark Pacific is also halfway through constructing a 750 person mining camp (16 x two-storey buildings; 54 ensuited rooms per building). Initially having specialised in camp accommodation and office complexes for the resource sector, Ark Pacific has recently refined and expanded its residential housing product range. Durable and fit-for-purpose designs – ideal for community relocation projects as well as senior staff housing – are now available. Ark Pacific reports that it is not experiencing any supply chain difficulties due to COVID-19. Furthermore, given its reliance on local labour for installation (as opposed to expatriate personnel impacted by travel restrictions), clients have been able to commence their builds as soon as the flat packs arrive on site. To learn more about Ark Pacific, including how its flat pack systems can minimise your construction project’s freight footprint: www.arkpacific.net
PNG Business News - February 08, 2022
Ark Pacific’s Increased Production Capacity and Client Growth
The resource sector’s preferred prefabricated modular building supplier, Ark Pacific, commenced 2022 with numerous buildings for multiple clients in its design, engineer, supply and construction pipeline. The New Year also saw Ark’s production capacity increase by 100 percent, with its main factory now capable of producing 1,000 building modules per month due to enhanced automated technology. Ark modular building systems were introduced to PNG in 2010 during the LNG construction phase when they were used for a 1,000 person multi-storey accommodation complex and associated support buildings. There are now thousands of Ark building modules – all assembled by local workforces – to be found across the country. Impressively, the company grew its client base during the challenging business environment of COVID-19 impacted 2020 and 2021. An achievement due to its reputation for after sales service, as well as for its tough and easy-to-assemble buildings, ideal for remote operations where specialist construction skills are in short supply. General Manager Cass Ruka, who has nearly 20 years’ experience living and working in PNG, says that accommodation and administration buildings have long been the company’s ‘top sellers’ but that clients are also now sourcing more ‘technical’ and ‘specialist’ buildings from Ark. “Our modules have been engineered to suit almost infinite building types and configurations” says Ruka. “This is why we’ve been able to design, engineer, supply and help construct an increasingly broad spectrum of customised and fit for purpose buildings, many of which have been for PNG resource clients.” Ruka cites laboratories and specialist geology and crushing facilities as examples of the growing number of Ark building types to be found in PNG. A recent example of a customised building Ark designed, manufactured, and delivered for the PNG resources sector is a Minerals Laboratory Complex, comprising 11 separate labs, offices, crib room and ablution facilities. The project’s design phase took 12 months in partnership with the client, as well as laboratory equipment design specialists MARC, the result of which is a ‘gold standard’ testing facility. The modular componentry for the laboratory was manufactured in December 2021, shipped to the client in January, with construction scheduled to commence by the end of the first quarter. Like others in the construction sector, Ruka is positive about the predicted 2022 upswing in PNG’s resources sector. “The timing is pretty well perfect for us because of the increased capacity of our main factory, which we are working to increase further throughout 2022. A compounding advantage for us when we look at the inflated freight price increases over the last couple of years, is our very low freight footprint in comparison to our competitors.” Ruka says that clients can save up to 75 percent on their freight costs because Ark’s modular componentry is specifically engineered so that six of its flat pack units are equivalent to a single 20 foot shipping container when stacked together ready for transport. “Another way to look at this” explains Ruka “is that instead of using five, six or seven trucks to get our units to the job site, the client only needs one.” To learn more about Ark Pacific, including its diverse range of fit for purpose buildings and advantages of its unique building systems: www.arkpacific.net
PNG Business News - June 03, 2022
Resource Sector’s Preferred Camp Provider
Photo: Ark buildings are easily assembled by local workers, thus assisting developers achieve their local content objectives by providing training and employment for people in their footprint communities Prefabricated modular building supplier, Ark Pacific, continues to increase its market share in the provision of camps across PNG’s resource sector. With a low freight footprint (up to 75 percent less) and proven commitment to quality and after sales service, Ark’s fit-for-purpose buildings are perfect for camps and a multitude of other building types required by mining and oil and gas operations. Introduced to PNG during the LNG construction phase in 2010 for a 1,000 person multi-storey camp accommodation complex and office facilities, there are now thousands of Ark building modules around the country. Significantly, all of Ark’s buildings are assembled by local community workforces, thus helping developers achieve their local content objectives. Ark has long-term building supply partnerships with several of its resource clients. General Manager, Cassius Ruka, who spent his childhood in PNG as well as most of his working life, knows the importance of building genuine client partnerships. Central to these partnerships is Ark’s commitment to after sales service and continuous quality improvement. “We do whatever we can to make our buildings even better for our clients. Right now, Ark Pacific, is engaged in the process of working closely with one of PNG’s biggest mines to further improve the quality, design, constructability, and longevity of their buildings. This has involved carrying out inspections and conducting interviews with a range of stakeholders, including asset owners, construction project managers, maintenance coordinators, and facility end users. The data we’re gathering from this process will be used to develop an even better product, that is buildings that are increasingly fit for purpose, have enhanced longevity, and can accommodate the mine’s unique environmental factors and remoteness.” Ruka is well versed in the challenges remotely located resource operations face when it comes to procuring camp accommodation and other buildings. “Irrespective of whether you’re an island operation like Lihir or a highland operation like Porgera, you need to be 100 percent certain that your buildings – which represent a major capex investment – are durable and can withstand whatever nature throws at them. Sulphur and salt, as well as excessive rain and moisture will all reduce building longevity. You also need to be able to get the buildings to site as easily and cost-effectively as possible which is incredibly difficult given remoteness combined with the state of our road network and current freight prices.” Ark modular building units are engineered specifically for the harsh conditions of remote resource operations. Furthermore, clients can save up to 75 percent on their freight costs because Ark’s modular componentry is specifically engineered so that six of its flat pack units are equivalent to a single 20-foot shipping container when stacked together ready for transport. “In other words,” says Ruka, “instead of using five, six or seven trucks to get our units to the job site, the client only needs one.” In addition to the low freight costs and durability associated with Ark Pacific’s prefabricated modular building systems, Ruka says his resource clients also benefit from: After sales services: Regular follow up and ongoing communication (i.e., not just from design through to handover, but for years afterwards). Quality guarantee: Cost of any defects 100 percent covered by Ark. Multiple configurations: Modules can be utilised for a multitude of building types and layouts (i.e., a range of ancillary buildings in addition to camps, such as offices, laboratories, messes, etc.,) Furniture and equipment supply: From office and bedroom furniture to commercial laundry and kitchen equipment. Local workforce assembly: Developer achieves local content objectives and local workers secure training and employment. Repurposability: Unbolt and disconnect the modules from one another to transport to another site and bolt them back together in a similar or different configuration. Buildings that ‘Give Back to PNG’: The repurposability of Ark buildings mean that they can be donated to footprint communities after they’re no longer needed by the developer. To learn more about Ark Pacific, including its diverse range of fit for purpose camps and ancillary buildings, as well as the advantages of its unique building systems: www.arkpacific.net
Paul Oeka - September 29, 2022
AGRICULTURE HAS HUGE ECONOMIC POTENTIAL
Photo credit: Oxford Business Group The creation of the new ministries by the current government for both major agricultural commodities, Coffee and Oil Palm is a huge step forward in achieving the agriculture sectors economic potential. For the past years the agricultural sector had not been fully utilized by consecutive governments as the focus had mostly been centered on the extractive industry and Mining & Petroleum sector. This important and vital sector is eventually and currently being recognized as an economic pillar to boost the state coffers. Prime Minister Hon. James Marape said the allocation and restructure of the four newly created ministries concentrating on Horticulture (Fresh produce), Coffee, Oil Palm, and Livestock to the agricultural sector is a complete paradigm shift to get agriculture moving again. The focus of the Marape Government on ‘Taking Back PNG’ is deeply rooted and aligned with the mechanisms and functions of the agricultural sector as most of the country’s population are situated in rural settings and largely depend on subsistence agriculture to sustain themselves. Coffee, Cocoa, Oil palm and Fresh produce have been a mainstay that this rural population rely on for income for so many years. As far as many Papua new Guineans can recall and relate, Agriculture has always been the foundation and backbone of the country and it can surely drive the economy forward. Although the agricultural does not match in monetary turnovers for the country, it is an economic foundation and is here to stay. In comparison over monetary benefits with other sectors, Agriculture had not been performing to expectation due to so many underlying issues concerned and faced with the value chain of agricultural commodities prompting a decline in agricultural activities over the years. The Prime Minister said it was no secret that agriculture had declined since independence in 1975, and the current allocation of the four agricultural ministries was to revive the sector for it to be a major income generator for PNG. PM Marape said this when explaining the concept and rationale for his allocation of four ministries to the agricultural sector. This direction by the Marape/Rosso Government to emphasize more on agriculture will boost agricultural activities in and around the country. Mostly the sector had not been given proper recognition for decades and had been lacking government intervention from past successive governments. Now with the current Government’s backing, the respective agricultural ministries and its industries are expected to flourish dramatically and are likely to bring more benefits. The new ministries will also empower provinces that currently do not have mining and petroleum resources. This will certainly build stronger local economic activities for future generations. “We want to see import replacement and more exports within the agriculture sector, which is why we have allocated four separate ministries to agriculture,” PM Marape said. The recognition of this agricultural industries will also ease and slowdown rural-urban drift. The number of people migrating from rural areas into towns and cities in search for better opportunities have risen in the past couple of years due to inequality in the distribution of wealth and lack of government services. Thus, the governments focus on agriculture will encourage many unemployed Papua New Guineans living in urban areas to go back to their home Provinces or villages and be self-reliant. As economic opportunities arise in rural areas from vibrant and innovative policy interventions within these newly created agricultural ministries, it will attract many to contribute meaningfully and be productive on their own customary land. Prime Minister Marape said over the last three years prior to the creation of the new agricultural ministries, his government has given millions of kina to support agriculture through price and freight subsidies and SME support. “We are now targeting specific commodities through the establishment of the four ministries. Over the next term of government, we will give specific production targets for Coffee, Oil Palm and all other major agricultural Commodities” he said. The government also plans to revive and rehabilitate once thriving agricultural hubs in the country such as Cattle farming in the Central Province and the Coffee plantations of the Highlands region that produced quality organic Coffee and grew the fledgling industry pre-independence in the 1960’s. Now that the agricultural sector has been categorized into four industries, there will be room for much improvement in economic activity within the agricultural sector as people will start contributing meaningfully to the economy.
Paul Oeka - September 28, 2022
TREASURER WANTS REVIEW OF ELECTION FUNDS
Treasurer Ian Ling-Stuckey is dismayed at how the 2022 National Elections were conducted and is now looking forward to a complete review of the allocated funds that were spent on the elections. Ling-Stuckey recently stated in parliament that the government had allocated and funded enough money for the election process to be conducted this year. “We provided a further K50 million to cover the costs for the 2022 election, bringing the total funding for the election to nearly double the level of expenditure in the 2017 national elections. There was enough money to support a much better election this year, so I look forward to the proposed parliamentary committee examinations of what went wrong and what can be done better” he said. The Treasurer also expressed concern that there was a decrease in the public servants’ salaries. He explained that “Once again there is a salary cost overrun. This is K201 million much lower than in previous years, and out of this, over 70 percent is related to teacher wage overruns. We contributed to bring this area under control. After no pay increases during the latest part of the Covid-19 crisis, it is now time to start increasing some salary payments”. “There is also the need to provide additional funding for the seven new districts that have been created and K3 million each has been provided. There are also new members in existing electorates, and it is appropriate that they be given some funds for commencing programs through to the end of the year. For equity reasons all districts and provinces needed to benefit the same so an additional 2 million per district and province have been allocated bringing the funding back to 10 million per districts and provinces” he said. Meanwhile there was an announcement on Thursday last week that the Department of personnel management, Treasury and Finance are working together to ensure that there will be a three percent pay increment in the salary of public servants. This pay increment is to be adjusted and effective by December this year, the welcoming news for public servants was confirmed by the Secretary of the Department of Personnel Management, Taies Sansan.
PNG Business News - September 28, 2022
PNG’s minimum wage
Commentary by Stephen Howes, Kingtau Mambon and Kelly Samof The urban minimum wage has been an important part of Papua New Guinea’s economic history. In the last few years before independence (in 1975), it was greatly increased. In the decade or so after independence, it was widely regarded as too high. In 1992, it was slashed, merged with the rural minimum, and hardly increased again for more than a decade. We can compare the minimum wage in PNG today with other Asia and Pacific developing countries using International Labour Organization (ILO) data. As Figure 1 shows, PNG’s minimum wage is 18% below the average of the 19 countries shown if the market exchange rate is used to compare minimum wages. It is 37% below the average if differences in cost of living are also taken into account (with conversions made on the basis not of market exchange rates but so-called purchasing power parities or PPPs). The greater difference in terms of PPPs reflects PNG’s relatively high cost of living. Of the countries shown, only Samoa and Kiribati have a lower minimum wage than PNG when a PPP comparison is made. This is very different to the past. Raymond Goodman, Charles Lepani and David Morawetz in their 1985 report The economy of Papua New Guinea compared minimum wages in PNG with a subset of the countries above back in 1978. Then, the PNG minimum wage was about twice as big or more than the other comparators. Today (using market exchange rates, and the earlier authors do), PNG comes in the middle of the pack, as Figure 2 shows. So far, we have shown that around the time of independence minimum wages were very high in PNG by international standards, and that they no longer are. Figure 3 shows how this change came about – also, for interest, comparing trends in PNG with those in Australia. Both the PNG and Australian weekly minimum wages are shown in Figure 3 measured in Australian dollars. The PNG minimum wage is converted into Australian dollars using the current exchange rate. Both wages are then adjusted for inflation and expressed in 2021 prices. The two series follow diametrically opposed paths. The Australian minimum wage fell with the high inflation of the 1970s and industrial relations reforms of the 1980s, and by the early 1990s was little more than half its value in the 1970s. It then increased in the late 1990s and 2000s during the resource boom, and has continued to increase. Adjusting for inflation, it is now almost back to where it was in the early 1970s. The PNG minimum wage does the opposite. It increased in the 1970s and was then held stable due to indexation, until the big bang reforms of 1992. Adjusted for inflation, PNG’s minimum wage continued to fall until 2004. There have since been some significant increases, but today PNG’s minimum wage is only about one-third of its value at independence, and below its value even in 1972, which is when the steep minimum wage increases began. The Australian minimum wage has always been significantly higher than the PNG one, but the ratio has changed a lot over time. The lowest that ratio has ever been is 2.2 in 1986, the highest 45 in 2004. The gap between the two wages is much higher now than at independence: the ratio of the Australian to the PNG minimum wage was 14.5 in 2021, compared to only 3.2 at independence (1975). This reflects PNG’s 1992 deregulation, and the faster growth in the Australian economy, which has enabled an increase in the Australian minimum wage. The solution to low wages in PNG is not necessarily to increase the minimum. In some sectors, where there is a lot of international competition, a higher minimum wage might lead to job losses. For example, in tuna processing, one of PNG’s main competitors is the Philippines. From Figure 1, we can see that PNG’s minimum wage is lower than the Philippines' on the basis of PPPs, but actually higher on the basis of market exchange rates. While the former is what matters for the welfare of workers, the latter is what matters for international competitiveness. Whether PNG’s minimum wage should be increased will require a lot more analysis. The point of this blog is simply that PNG’s minimum wage does not look high any more by international comparisons, as it has fallen a lot since independence. PNG is often described as a high-cost economy, and this is a fair description. However, with regards to unskilled labour, it is no longer a high-wage economy. Data note: The PNG Economic Database provides the weekly minimum wage of PNG going back to 1972, and the PGK-AUD exchange rate. Wikipedia provides the Australian weekly minimum wage data (hourly and weekly, on the assumption of a 38-hour week) starting from 1966. The Australian CPI is from the Australian aid tracker. There are some years where Australian minimum wage rates change more than once in a year. For such cases, we took the average as annual minimum wage rate. The data for Asia-Pacific comparisons are from the International Labour Organization and the World Bank. The different frequencies of minimum wages for each country in 2019 in the ILO’s report are adjusted to convert to weekly rates. World Bank data is used to obtain market exchange rates and PPP conversion factors. For the Goodman, et al., data go to Table 3.6 on p.61 in their report.\ Disclosure: This research was undertaken with the support of the ANU-UPNG Partnership, an initiative of the PNG-Australia Partnership, funded by the Department of Foreign Affairs and Trade. The views are those of the authors only. This article appeared first on Devpolicy Blog (devpolicy.org), from the Development Policy Centre at The Australian National University. Stephen Howes is Director of the Development Policy Centre and Professor of Economics at the Crawford School of Public Policy, at The Australian National University. Kingtau Mambon is currently undertaking a Master of International and Development Economics at the ANU Crawford School of Public Policy, for which he was awarded a scholarship through the ANU-UPNG Partnership. Kelly Samof is a lecturer in economics at the School of Business and Public Policy, University of Papua New Guinea.