Papua New Guinea - Industry

The industrial sector, constrained by the small domestic market and the population's low purchasing power, is largely undeveloped. Industries are concentrated in industrial metals, timber processing, machinery, food, drinks, and tobacco. Although industrial production, including construction and the provision of utilities, electricity and water, has increased to about 40% of GDP, the manufacturing component has been decreasing as a percent of GDP, from 9.5% in 1980 to 9% in 1990 to 8.2% in 2001, according to Asian Development Bank statistics. This relative decline is mainly due to double digit growth in the construction sector, a boom led by work on the Lihir gold mine and the Gobe petroleum project. The growth rate in construction peaked in 1997 and 1998, at 21.7% and 25.4%, respectively, but the sector continues strong. In 2002, a number of construction projects involving housing, airports, highways, disaster rehabilitation, and a petroleum refinery were planned or under way.

Handicraft and cottage industries have expanded. A government-sponsored program assists Papua New Guineans in setting up businesses and purchases equity in existing firms. It has also encouraged small-scale import-substitution operations.