F EATURE Lae Biscuit Company Ltd’s new factory in Kamkumung, Lae. The vacant lot adjacent will soon be occupied by another of PNG’s fast-growing manufacturers, K K Kingston. Credit: Lae Biscuit Co
PNG’s manufacturers seize the moment Business Advantage’s wide-ranging survey of PNG’s manufacturers found soaring domestic demand is boosting revenues and driving substantial new investment, in spite of operational challenges.
‘W
e have experienced a growth rate of about 15% per annum over the past five years,’ says Michael Kingston, General Manager of manufacturing firm K K Kingston. ‘As a result, we are now bursting at the seams and so have purchased 10 hectares of land to build a new production and distribution centre.’ K K Kingston may be one of the resounding success stories of PNG’s manufacturing sector, but in many ways it is also highly representative. The company, set up in 1972, shares traits with many of PNG’s larger manufacturers. It is based in PNG’s industrial capital of Lae (with a smaller production site in Port Moresby), is comparatively diversified and supplies predominantly the domestic market. The company is not unique in its commitment to a major expansion program. When it completes its relocation to Kamkumung on the outskirts of Lae, KK Kingston will become neighbours with the Lae Biscuit Company that inaugurated its new facility in April 2010.
Spreading their wings
Lae’s K65 million factory represents a landmark for the company. ‘It has enabled us to double our Lae workforce as well as improve the quality of our product,’ explains Chief Executive Officer Ian Chow. ‘We’re also planning to expand our Port Moresby facility where we currently employ another 200 or so people.’ PNG’s manufacturers are certainly spreading their wings. S P Brewery, which dominates the PNG beer market, is close to completing a K94 million expansion program, including a new brewing facility 14
in Lae, while Coca-Cola Amatil has invested more than K4 million in a CO2 plant in Lae and will be spending over K30 million on a state-of-the-art production facility and supporting renovations in Port Moresby. Paradise Foods has aggressive plans for further expansion and extensions to their wide product range. The manufacturer of biscuits, snack food, corn chips and noodles is PNG’s oldest food manufacturing business and is 100% nationally owned.
Wave of investment
This wave of investment is being underwritten by an array of blue-chip institutions. SP Brewery’s largest shareholder is multinational Asia Pacific Breweries, while its largest local shareholder is one of PNG’s two powerful superannuation funds, Nambawan Super, which also owns 80% of Paradise Foods. Meanwhile, major agribusiness company Mainland Holdings has just sold a substantial stake to PNG’s other superannuation company, NASFUND. As for K K Kingston, its growth is being underpinned by significant investments it recently received from the regional Kula Fund and the private sector arm of the World Bank (the IFC). Most remarkably of all, New Britain Palm Oil Limited, the star of PNG’s agribusiness sector, completed a suitably stellar IPO on the London Stock Exchange (it is also listed on Port Moresby’s stock exchange) in 2008 before acquiring a controlling stake in PNG’s major sugar and beef producer, Ramu Agri Industries. This kind of blue-chip international interest in PNG’s productive sectors could scarcely have been imagined even a decade ago. If it is a measure of how far the country in general and the sector in particular