PNG’s Leading Business & Logistics Park

by PNG Business News - September 21, 2022

The PNG Business and Logistics Park is ideal for businesses wanting to establish a strategic operational base and capitalise on its privately owned port and container terminal within minutes of the Port Moresby CBD and expanding LNG plant.

Papua New Guinea is not known for its ease of doing business, especially for new market entrants.  However, the PNG Business and Logistics Park, strategically located in the growth corridor between the Port Moresby CBD and the expanding LNG plant is helping mitigate this.  Central to the attractiveness of the 94-hectare development, is its privately owned port and container terminal, complete with 540 metres of wharf and a full suite of on-site logistics services and infrastructure.  Tenants, including oil and gas majors, as well as diverse operators in their supply chains, enjoy purpose-built facilities and even on-site accommodation.

The PNG Business and Logistics Park is privately owned and operated by Avenell Engineering Systems (AES), a local company employing 450 staff (95 percent local content).  AES has nearly 70 years’ experience delivering large-scale engineering, civil, and construction projects throughout PNG. 

AES Principal, Dom Avenell, emphasises that there are several important drawcards to the business park but that its large, modern, and well-equipped port with more than 500 metres of berth is absolutely key.  “Many of our tenants have a port requirement, and we are the only industrial park in the country that has its own port.  We not only provide the full range of services you’d normally associate with a port and container terminal, but we’re also a project cargo specialist providing shore base logistics and staging.”

Avenell says that another key drawcard for the business park is AES’ proven capacity to provide tenants with just about any kind of facility, no matter how large or complex.  “Not only do we have the in-house expertise to do this, but we also have an enormous amount of space, ideal for when tenants need to scale up their operations.”

Examples of facilities AES has provided its tenants with, include dangerous goods storage, specialised workshops, cement silos and truck loading facilities, petroleum storage and bunkers.

“What really sets us apart, other than the fact we have our own port” says Avenell “is that we don’t just provide tenants with ‘bare’ buildings but all of the additional and necessary infrastructure specific to their industry and operational requirements.  This ‘complete package offering’ is highly valued and goes a long way towards improving the ease of doing business in PNG.”

Another feature of the PNG Business and Logistics Park that appeals to tenants, especially those in the safety vigilant resource and energy sectors, are its safety systems and credentials.  Avenell confirms that the business park meets PNG’s, as well as international safety standards, and that it complies with tenants’ industry-specific safety requirements.  Furthermore, AES is ISO certified (i.e., 45001 OH&S Management; 14001 Environmental Management; 9001 Quality Management.)

In addition to these certifications, the business park’s restaurant and mess facilities that support its 300-person camp, are HACCP (Hazard Analysis Critical Control Points) certified.  Residents that choose to live in the park’s leafy and secure housing estate (45 x 1-3 bedroom homes) are also able to enjoy these facilities, as well as a range of recreational facilities and private medical clinic.

While Avenell is quick to point out tenant benefits, he is equally keen to emphasise the ways in which the business and logistics park benefits his home country.  “In addition to the hundreds of PNG staff that we train and employ, are the thousands that our tenants collectively train and employ; and as the park fills up, these numbers will only increase. Furthermore, by making it easier for new operators, especially international operators, to launch or expand their businesses in PNG we’re playing an important role in attracting new investment and helping generate considerable tax revenue, all of which contributes to an improved economy and in turn, PNG’s development.”

To learn more about the PNG Business and Logistics Park, including its private port, infrastructure, purpose-built facilities, and accommodation: email inquiries to pom@aespng.com



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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. 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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.

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