The Island
pp. 59-61 · Read in the full issue
climate for investment
Australian companies have built up extensive business operations in rural commercial manufacturing fields in Papua New Guinea, taking full advantage of Australia’s past trusteeship and the long association of Australian-based island trading companies with the area.
The Australian Department of Overseas Trade, after a recent survey, reported that 10 of 20 multi national companies with headquar ters in Australia operated in PNG.
Their activities cover plantations, packaging, metal fabrication, glass manufacture, shipping, retail and wholesale distribution, new car sales, civil engineering, ready-mix ed concrete, etc.
By far the largest investment is in the primary sector copra, coffee, tea and cocoa plantations but there is a growing equity in manufacturing and it offers great potential. As long as the political climate remains stable, these sec ondary ventures are likely to attract Australian capital, even though there is a strongly nationalistic feel ing.
Large parcels of undeveloped plantation lands have been handed to local people. Several joint ven tures are performing satisfactorily.
A number of Australian companies give high priority to technical train ing for indigenous people, both in PNG and Australia. Foremost among these were W. R. Carpenter and Burns Philp, which have traded in PNG for many years, and which launched training schemes for local people before independence.
Rising wages in PNG should have a beneficial effect, at least in the short term, on consumer spending and Australian subsidiaries with in vestments in wholesale and retail trading, new car dealerships, packaging, engineering services, soft drink bottling and basic building materials are in a good position to take the best advantage of that situ ation.
The PNG economy will largely depend on satisfactory world com modity prices being received for copra, cocoa, coffee and copper, and much of the future development depends on a world economic re
covery, which will increase demand for those products. Duty-free access to the European Economic Com munity, through PNG joining the Lome Convention recently, will be a stabilising factor.
In other Pacific Islands, Australian companies, for many years, have held a strong position in a wide range of business activities.
Investments range from shipping to plantations and include nearly every aspect of trading and commerce.
Where products and services re quire manufacturing facilities, these have always been provided. Six of 20 multi-national companies have operations in the Pacific Islands.
Although the Pacific Islands cover thousands of square kilometres, trading is mostly centred around Fiji, from whence cargoes are trans-shipped to a num ber of other Island groups. Thus, business conditions in Fiji are im portant to the profitability of Island trading generally.
Economic aspects have been of concern to investors, because of price controls, coupled with union pressure on wages, increasing over head costs, fixed quotas on the im port of motor vehicles, stringent re strictions on lending to overseas controlled corporations, and lower prices for commodities, although the copra market is improving.