RESTRICTED  
  
WT/TPR/S/387  
3 April 2019 
(19-2099) Page: 1/87 
Trade Policy Review Body   
 
TRADE POLICY REVIEW  
REPORT BY THE SECRET ARIAT  
PAPUA NEW GUINEA 
This report, prepared for the third Trade Policy Review of Papua New Guinea, has been drawn up by 
the WTO Secretariat on its own responsibility. The Secretariat has, as required by the Agreement 
establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing 
the World Trade Organization), sought clarification from Papua New Guinea on its trade policies and 
practices.  
 
Any technical questions arising from t his report may be addressed to: Ricardo Barba -Viniegra 
(tel.: 022 739 5088); and Rosen Marinov (tel.: 022  739 6391).  
 
Document WT/TPR/G/387 contains the policy statement submitted by Papua New Guinea.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note:  This report is subject to restricted circulation and press embargo until the end of the 
first session of the meeting of the Trade Policy Review Body on Papua New Guinea. This report was 
drafted in English.  
  WT/TPR/S/ 387 • Papua New Guinea  
 
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  CONTENTS  
SUMMARY  ................................ ................................ ................................ .......................  6 
1   ECONOMIC ENVIRON MENT  ................................ ................................ .......................  10 
1.1   Main Features of the Economy  ................................ ................................ ....................  10 
1.2   Recent Economic Developments  ................................ ................................ ..................  11 
1.3   Developments in Trade and Investment  ................................ ................................ ....... 13 
1.3.1    Trends and patterns in merchandise and services trade  ................................ ...............  13 
1.3.2    Trends and patterns in FDI  ................................ ................................ ......................  16 
2   TRADE AND INVEST MENT REGIMES ................................ ................................ ..........  18 
2.1   General Framework  ................................ ................................ ................................ ... 18 
2.2   Trade Policy Formulation and Objectives  ................................ ................................ ....... 18 
2.3   Trade Agreements and Arrangements  ................................ ................................ ..........  22 
2.3.1    WTO ................................ ................................ ................................ .....................  22 
2.3.2    Regional and preferential agreements  ................................ ................................ ....... 23 
2.3.2.1    European Union –PNG/Fiji EPA  ................................ ................................ ................  25 
2.3.2.2    MSGTA  ................................ ................................ ................................ ...............  25 
2.3.2.3    PICTA  ................................ ................................ ................................ .................  26 
2.3.2.4    SPARTECA  ................................ ................................ ................................ ...........  26 
2.3.2.5    Other arrangements  ................................ ................................ .............................  26 
2.3.3    Investment regime  ................................ ................................ ................................ . 27 
3   TRADE POLICIES A ND PRACTICES BY MEAS URE ................................ .......................  30 
3.1   Measures Directly Affecting Imports  ................................ ................................ .............  30 
3.1.1    Customs procedures, valuation, and requirements  ................................ ......................  30 
3.1.2    Rules of origin  ................................ ................................ ................................ ........  31 
3.1.3    Tariffs  ................................ ................................ ................................ ...................  31 
3.1.4    Other charges affecting imports  ................................ ................................ ................  35 
3.1.4.1    Border levies  ................................ ................................ ................................ ....... 35 
3.1.4.2    Internal taxes  ................................ ................................ ................................ ...... 35 
3.1.5    Duty and tax concessions  ................................ ................................ ........................  36 
3.1.6    Import prohibitions, restrictions, and licensing  ................................ ...........................  36 
3.1.7    Anti-dumping, countervailing, and safeguard measures  ................................ ...............  36 
3.1.8    Other measures affecting imports  ................................ ................................ .............  36 
3.2   Measures Directly Affecting Exports  ................................ ................................ .............  37 
3.2.1    Customs procedures and requirements  ................................ ................................ ...... 37 
3.2.2    Taxes, charges, and levies  ................................ ................................ .......................  37 
3.2.3    Export prohibitions, restrictions, and licensing  ................................ ............................  37 
3.2.4    Export support and promotion  ................................ ................................ ..................  37 
3.2.5    Export finance, insurance, and guarantees  ................................ ................................ . 38 
3.3   Measures Affecting Production and Trade  ................................ ................................ ...... 38 
3.3.1    Incentives  ................................ ................................ ................................ ..............  38 WT/TPR/S/ 387 • Papua New Guinea  
 
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  3.3.2    Standards and other technical requirements  ................................ ..............................  38 
3.3.3    Sanitary and phytosanitary requirements  ................................ ................................ ... 39 
3.3.4    Competit ion policy and price controls  ................................ ................................ ........  40 
3.3.4.1    Competition policy  ................................ ................................ ...............................  40 
3.3.4.2    Price controls ................................ ................................ ................................ ....... 42 
3.3.5    State trading, SOEs, and privatization  ................................ ................................ ....... 42 
3.3.6    Government procurement  ................................ ................................ ........................  43 
3.3.7    Intellectual property rights (IPRs)  ................................ ................................ .............  44 
4   TRADE POLICIES B Y SECTOR  ................................ ................................ ....................  45 
4.1   Agriculture, Forestry, and Fisheries  ................................ ................................ ..............  45 
4.1.1    Agriculture  ................................ ................................ ................................ .............  45 
4.1.2    Forestry  ................................ ................................ ................................ .................  48 
4.1.3    Fisheries  ................................ ................................ ................................ ................  49 
4.2   Mining and Energy  ................................ ................................ ................................ ..... 51 
4.2.1    Mining  ................................ ................................ ................................ ...................  52 
4.2.2    Oil ................................ ................................ ................................ ........................  53 
4.2.3    Natural gas  ................................ ................................ ................................ ............  54 
4.2.4    Electricity  ................................ ................................ ................................ ..............  56 
4.3   Manufacturing  ................................ ................................ ................................ ...........  58 
4.4   Services  ................................ ................................ ................................ ...................  59 
4.4.1    Overview  ................................ ................................ ................................ ...............  59 
4.4.2    Financial services  ................................ ................................ ................................ .... 60 
4.4.2.1 Banking  ................................ ................................ ................................ ................  61 
4.4.2.2    Insurance  ................................ ................................ ................................ ...........  62 
4.4.3    Telecommunications and postal services  ................................ ................................ .... 62 
4.4.4    Transport  ................................ ................................ ................................ ...............  64 
4.4.4.1    Overview  ................................ ................................ ................................ ............  64 
4.4.4.2    Road transport  ................................ ................................ ................................ .... 65 
4.4.4.3    Maritime transport  ................................ ................................ ...............................  66 
4.4.4.4    Air transport  ................................ ................................ ................................ ........  67 
4.4.5    Tourism  ................................ ................................ ................................ .................  69 
5   APPENDIX TABLES  ................................ ................................ ................................ ... 71 
 
CHARTS  
 
Chart 1.1 GDP by economic activity (at basic prices), 2018  ................................ ...................  10 
Chart 1.2 Merchandise trade by main HS sections, 2012 and 2017  ................................ .........  14 
Chart 1.3 Direction of merchandise trade, 2012 and 2017  ................................ .....................  15 
Chart 3.1 Frequency distribution of MFN tariff rates, 2019  ................................ .....................  33 
Chart 3.2 Average applied MFN tariff rates by HS section, 2019  ................................ .............  35 
 WT/TPR/S/ 387 • Papua New Guinea  
 
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  TABLES  
 
Table 1.1 Selected economic indicators, 2013 -18 ................................ ................................ .. 12 
Table 1.2 Balance of payments, 2013 -18 ................................ ................................ .............  13 
Table 1.3 Services trade, 2012 -17 ................................ ................................ ......................  16 
Table 1.4 FDI, 2012 -17................................ ................................ ................................ ...... 16 
Table 1.5 FDI stock by sector, 2012 -17 ................................ ................................ ...............  17 
Table 1.6 FDI stock by source, 2012 -17 ................................ ................................ ...............  17 
Table 2.1 Main trade -related legislation, 2019  ................................ ................................ ...... 21 
Table 2.2 Notifications, 2010 -18 ................................ ................................ .........................  23 
Table 2.3 RTAs in force, 2019  ................................ ................................ .............................  24 
Table 2.4 Cottage business activities, 2019  ................................ ................................ ..........  27 
Table 2.5 IPA approvals by type, 2014 -18 ................................ ................................ ............  29 
Table 3.1 Distribution of declarations by selectivity lane, 20 12-17 ................................ ...........  30 
Table 3.2 Tax revenue, 2012 -18 ................................ ................................ .........................  32 
Table 3.3 Structure of MFN tariff, 2010 and 2019  ................................ ................................ .. 32 
Table 3.4 Summary analysis of MFN tariffs, 2019  ................................ ................................ .. 33 
Table 3.5 Forgone revenue from imports, 2012 -17 ................................ ................................  36 
Table 3.6 Competition enforcement, 2011 -17 ................................ ................................ ....... 41 
Table 3.7 State participation in the economy, 2019  ................................ ...............................  42 
Table 3.8 Procurement proceedings limits, 2019  ................................ ................................ ... 43 
Table 4.1 Main agriculture exports, 2012 -16 ................................ ................................ ........  45 
Table 4.2 Key agriculture targets for 2030  ................................ ................................ ...........  48 
Table 4.3 Key forestry targets for 2030  ................................ ................................ ...............  49 
Table 4.4 Key fisheries targets for 2030  ................................ ................................ ...............  51 
Table 4.5 Key mining targets for 2030  ................................ ................................ .................  53 
Table 4.6 Key oil, refining and LNG targets for 2030  ................................ ..............................  54 
Table 4.7 Key energy targets for 2030  ................................ ................................ .................  57 
Table 4.8 Key manufacturing targets by 2030  ................................ ................................ ....... 59 
Table 4.9 Total assets of banks and insurance companies, 2012 -17 ................................ ........  60 
Table 4.10 Financial soundness indicators, 2012 -17 ................................ ..............................  62 
Table 4.11 Telecommunications indicators, 2012 -17 ................................ ..............................  63 
Table 4.12 Key telecommunication targets by 2030  ................................ ...............................  64 
Table 4.13 Key road transport targets by 2030  ................................ ................................ ..... 66 
Table 4.14 Key water transport targets for 2030  ................................ ................................ ... 67 
Table 4.15 Key air transport targets for 2030  ................................ ................................ ....... 69 
Table 4.16 Selected tourism indicators, 2012 -17 ................................ ................................ ... 69 
Table 4.17 Key tourism targets for 2030  ................................ ................................ ..............  70 
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  APPENDIX TABLES  
 
Table A1.1 Merchandise exports by HS sections and major HS chapters/products, 2012 -17 ....... 71 
Table A1.2 Merchandise total exports by destination, 2012 -17 ................................ ...............  72 
Table A1.3 Merchandise imports by HS section and major HS chapters/subheadings, 2012 -17 .. 73 
Table A1.4 Merchandise total imports by origin, 2012 -17 ................................ ......................  74 
 
 
Table A2.1 Tax incentives, 2019  ................................ ................................ ........................  75 
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  SUMMARY  
1. This is the third Trade Policy Review of Papua New Guinea (PNG). Its macroeconomic 
perform ance has been broadly satisfactory , with the economy growing at an annual average rate of 
5.2% during 2010 -18. Real GDP growth peaked at 15.4% in 2014 but decelerated to an estimated 
zero in 2018. The recent slowdown was attributed to low commodity prices,  a major drought in 2017 
and a big earthquake in February 2018 which also weakened PNG's external position and created 
fiscal challenges.   
2. Notwithstanding the  increase in GDP per capita from USD 1,672 in 2009 to USD 2,556 in 2017 , 
poverty alleviation remains  one of PNG's major challenges. It is estimated that some 3  million 
people, about 40% of the population, live below the basic needs poverty line . 
3. In general, the Bank of Papua New Guinea  (BPNG)  maintained  a neutral monetary policy 
stance  during the review period,  with inflation averaging 5.5% in 2013 -18. PNG's f iscal deficit , as 
percentage of GDP, declined from 6.9% in 2013 to an estimated 2.9% for 2018. However, the 
government debt -to-GDP ratio  currently exceeds the target band of 30-35%, mainly bec ause tax 
revenues from LNG exports have been decreasing since 2015 . The Government aims to achieve 
fiscal consolidation  in the medium -term and reduce its debt to a level below 30% of GDP in 2021  
by, inter alia , increas ing revenues and widen ing the  tax base.  
4. Despite recording current account surpluses since 2014, PNG has been facing a shortage of 
foreign exchange, which has adversely affected activities dependent on imports and has dampened 
GDP growth. During 2012 -17, PNG's merchandise exports almost dou bled and their composition 
drastically shifted , with LNG and other mineral products accounting for about half of the total (up 
from 17% in 2012) . The composition of imports remained largely unchanged across commodity 
groups. Australia accounted for around 34% of imports and 28% of exports of goods  in 2017.  
5. PNG's investment  regime is generally open.  However, certain low -skilled economic activities 
continue to be reserved for PNG citizens and national entities . On average, FDI inward stock 
represented about 2 0% of GDP between 2012 and 2017. FDI inflows were negative in 2014 and 
2017 because  of LNG project -related debt repayments . Some legislative reforms and added stability 
in government helped PNG to improve its ranking in the World Bank's latest Ease of Doing Business 
report  to 109th (from 145th in 2016). Some of the reported challenges for doing business in PNG are 
enforcing contracts, starting a business, resolving insolvency, and trading across borders.  
6. In 201 7, PNG adopted  its first eve r National Trade Policy , covering the period  2017-2032. An 
institutional transformation is  currently  under way at the Department of Commerce and Industry , 
with a view to separat ing external trade from commerce and industry  functions. PNG still has no 
legal and institutional frameworks for the application of antidumping, countervailing, and safeguard 
measures. During the review period, the only significant legislative developments concerned the 
public -private partnership (PPP)  and government procurement fram ework s. Provisions stipulating 
local preference margins and reserving certain tenders for PNG nationals are being introduced.  
7. PNG is an original WTO Member; it remains a non -resident M ember, handling WTO matters 
through its mission in Brussels and the WTO  Pacific Islands Forum Representative Office in Geneva, 
established in 2004 . The absence of a Geneva mission continues to hamper its participation in the 
multilateral trading system.  PNG is not a party to the Information Technology Agreement, or to the 
plurilateral Agreements on Government Procurement and T rade in Civil Aircraft. It has not been 
involved in any formal WTO disputes, including as a third  party.  
8. PNG has made few notifications to the WTO; the authorities have requested technical 
assistance from  the Secretariat in this regard. PNG notified its Category A commitments under the 
Agreement on Trade Facilitation (TFA) on 8  June 2016, and deposited its instrument of acceptance 
of the TFA on 7 March 2018. PNG accepted the Protocol Amending the TRIPS Agr eement  in 
June 2016.   
9. PNG has four RTAs in force: Economic Partnership Agreement (EPA) EU –Papua New 
Guinea/ Fiji; Melanesian Spearhead Group Trade Agreement (MSG TA); Pacific Island Countries Trade 
Agreement (PICTA); and South Pacific Regional Trade and Eco nomic Cooperation Agreement 
(SPARTECA).  These RTAs encompass 41 partners (some of them are no t WTO Members) , and have WT/TPR/S/ 387 • Papua New Guinea  
 
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  been notified to the WTO. The four RTAs have membership overlap s, translating in complex trade 
regimes that pose risks of raising business  costs and thereby potentially result ing in more trade (and 
investment) diversion than creation.  
10. PNG's applied MFN tariff is now based on HS2017, with a s imple average (excluding 
non-ad valorem  rates) of  3.9%, down from 5.1% in 2010. Some 82 tariff lines (1.4% of all lines ), 
covering certain alcoholic beverages, tobacco, and poultry meat , carry specific rates . Ad valorem  
tariffs range from zero to 50%, with the highest rate s levied  on wood, pulp, paper and furniture 
products . There are no seasonal tariffs, or tariff quotas . PNG has bound its entire tariff; it has bound 
"other duties and charges" at zero.  On 23 tariff lines , applied rates exceed bound levels ; unit 
differences preclude meaningful comparison between applied and bound specific rates on 
34 additional tariff lines.  
11. PNG has not submitted any notifications to the Committee on Import Licensing since 1998. 
Prior authorization and/or licence requirements exist for certain imports mainly for security, public 
health and en vironmental reasons. Export controls and restrictions are also in place largely for the 
purpose of protecting wildlife, cultural heritage and the environment.  
12. PNG applies ad valorem  export taxes on crocodile skins (5%), jewellery and articles of gold or 
silver (5%), and certain ores and concentrates (5%). As from January 2018, unprocessed old -growth 
logs (except plantation logs) are subject to a progressive export tax, whose rates increase with the 
f.o.b. price.  A log export development levy of PGK  8 per m3 also remains in force.   
13. An amendment to the Income Tax Act, repealing an export subsidy provision , became effective  
as of 1 January 2015.  PNG maintains an income tax concession allowing for the double deduction of 
expenditure on export market development. The tax savings must not exceed 75% of incurred 
eligible expenditure, which includes that on overseas publicity and advertising, market research, 
tender preparation, samples, trade fairs and exhibitions, overseas sales offices, and certain tra vel. 
14. PNG's standards and technical re gulation s framework has been undermined by significant 
challenges regarding human and material resources.  The National Institute of Standards and 
Industrial Technology  (NISIT) has been suspended  from the International L aboratory Accreditation 
Cooperation Mutual Recognition Arrangement (ILAC MRA) since August 2017 . Although PNG has 
struggled to put in place an accreditation scheme , it recognizes certificates issued from signatories 
of the ILAC MRA.  In 2019, NISIT's  budget ary allocation was increased with a view to enhancing its 
personnel  and technical capacity . A state -owned building has also been designated  for the 
establishment of laboratories  and an office complex . 
15. There was little change to PNG's SPS regime during the period under review; the legislation 
in force remains outdated, and a range of capacity weaknesses are yet to be addressed.  PNG lacks 
legislation on genetically modified organisms;  such imports are cleared for entry without any specific 
controls.  A system of import permits , administered by  the National Agriculture Quarantine and 
Inspection Authority (NAQIA) , remains in place for: live animals, animal products, fish and fish 
products, plants, timber, plant products, biological organisms, sand, stone and grav el. An electronic 
platform for the issuance of import permits is being developed but progress is hampered by the lack 
of resources. In August 2015, PNG imposed a moratorium on the issuance of import permits for 
fresh foods, including fruit, vegetables and uncooked poultry, with the stated aim of fostering 
domestic production and further protecting biosecurity.  The import ban was lifted, at least partially, 
in January 2016.  
16. In principle, PNG's competition regime applies to all sector s of the economy , and to SOEs that 
engage in commercial activities in competition with private firms.  The mandate of the Independent 
Consumer and Competition Commission (ICCC)  comprises: competition and consumer protection 
enforcement; administering price controls; and regulating certain markets.  The ICCC has not yet 
entered into any formal international cooperation arrangements.  In July 2018, the National Executive 
Council (NEC) approved a switch from the voluntary to a compulsory pre -merger notification system, 
which is yet to  enter into force.   
17. PNG has not submitted to the WTO any notifications on state -trading entities. According to 
the authorities, no public entities or SOEs have any exclusive rights to import, export or supply in 
the domestic market a particular good or servic e. State involvement remains prevalent in many WT/TPR/S/ 387 • Papua New Guinea  
 
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  sectors of the economy and, in some cases, continues to crowd out private entrepreneurs.  A number 
of SOEs continue to benefit from soft budget constraints and access to concessional finance 
arrangements.  In Ju ne 2015, with a view to ensuring the efficient management of state -owned 
commercial assets, PNG established a framework that consolidated: all state interests in oil and gas 
projects under Kumul Petroleum Holdings (KPH); all state interests in mining proje cts under Kumul 
Minerals Holdings (KMH); and all remaining SOEs under Kumul Consolidated Holdings (KCH).  As at 
December 2018, the KCH portfolio of companies alone had combined assets of PGK  9 billion and 
7,117 employees.  
18. No changes to the legal and institu tional framework governing intellectual property  took place 
during the review period.  Enforcement of IPRs continues to face major challenges . The sale of 
counterfeit and pirated goods remains widespread . 
19. Agriculture and related activities account for 18% of PNG's GDP . Agricultural policy relies on 
a self -sufficiency -driven notion of food security using high tariff barriers at the border for the 
targeted products (e.g. pork, poultry, sugar).  The tariff is the main border measure assisting 
agriculture; the si mple average MFN applied tariff on agriculture (WTO definition) is 10.1%. 
Agriculture exports (e.g. palm oil, coffee, cocoa) have fallen in the last few years not only because 
of a major drought in 2016 -17 but also due to low productivity that reflects some of the key 
challenges facing the sector , notably poor application of technological improvements , and lack of 
scale economies inherent in smallholder farming .  
20. In July 2018, PNG submitted its first domestic support notification to the WTO. It  is the only 
Pacific Island country that has an Aggregate Measure of Support (AMS) entitlement, and is among 
the nine  Small and Vulnerable Economies who obtained the same treatment as LDCs and Net Food 
Importing Developing Countries in the 2015 Nairobi Ministerial Deci sion on Export Competition in 
export finance.   
21. In recent years, PNG's forests have been degraded and depleted due to excessive logging. 
The Government has decided to ban all round log exports by 2020. In addition, there is a moratorium 
on issuance of new l ogging permits. Regarding the fisheries sector, under the EPA, some fish 
canneries have been established to benefit from access to the EU market. However, PNG canneries 
are under threat of intensified competition following the inclu sion of  fish products un der the EU's 
GSP+ scheme.  
22. Since 2014 -15, the development of LNG projects  has propelled the gas industry to become 
the key driver of economic growth . Nonetheless, LNG output has mostly been used to repay 
project -related debt and has generated little employ ment or additional government revenues. Oil  
reserves are projected to be depleted by 2026 unless new discoveries are made. Mining remains an 
important contributor to the economy but very limited processing takes place in PNG and more could 
be done to encou rage further value addition and downstream processing onshore to create jobs. 
Although the sector has been opened to private participation, e lectricity supply remains unreliable 
and very expensive for the quality of service, thus raising the costs of doing  business in PNG.  
23. Manufacturing  has developed on the back of PNG's comparative advantage in agricultural and 
resource -based industries. PNG's largest manufacturing export commodities are palm oil, copra oil, 
processed timber and most recently refined petroleum. Processed tuna is another rapidly growing 
export industry. PNG imports most processed food, clothing and footwear , as well as i nputs to 
industry and commerce.  The tariff is the main border measure assisting the manufacturing sector; 
the simple average applied MFN tariff on manufacturing (major division 3 of ISIC) is  3.2%. Specific 
tax incentives are in place for manufacturing.  
24. The services sector is, increasingly, the largest contributor to PNG's GDP  (41.2 % in 201 8); 
wholesale and retail trade is the most important  subsector.  PNG's GATS commitments cover a limited 
number of sectors and remain unchanged since the Uruguay Round.  
25. While most financial services are available in PNG, their supply is limited. Overseas investors 
may not be able to secure substantial funds locally. New projects would normally need to bring funds 
from overseas to start operations. According to the IMF, PN G's banking system is sound, profitable, 
and well-capitalized . However, PNG remains among the most underbanked countries on several WT/TPR/S/ 387 • Papua New Guinea  
 
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  indicators (numbers of branches, ATMs, and loan penetration). BPNG is promot ing financial inclusion 
and deepening.   
26. Telecomm unications services have benefited from the introduction of private -sector 
competition in the mobile telephony segment in 2007 , which has resulted in a substantial upgrade 
in the quality and reach of services , and a significant decline in cost. However , broadband access 
remains expensive by international standards, access to the Internet at reasonable speeds remains 
difficult, and there are limitations on the international data gateway capacity, which also greatly 
reduces service quality . 
27. Inadequate public infrastructure, across all transport modes, impedes development and is a 
major barrier to domestic and international trade.  The coverage and quality of PNG's transport 
networks lag behind most other countries in Asia and the Pacific , mainly because of inadequate 
investment over the past 30 years. Travel by land between most provinces and to ports remains 
very difficult , and coastal shipping (restricted to domestic -flagged and licensed ships) and aviation 
services are not cost -effective.  To foster the  construction of transport infrastructure, the Government 
intends to establish PPP's as a means of harnessing private investment and management in major 
projects.  
28. PNG's vast potential for attracting foreign tourists and fostering employment and economic 
growth remains largely untapped. Indeed, tourism continues to face many of the same hurdles 
confronting other sectors, including expensive air travel, law and security concerns, poor quality and 
expensive utilities, inadequate infrastructure (e.g. roads, tou rism resorts), and insufficient foreign 
investment. To tackle these issues, the National Tourism Master Plan 2007 -17 (currently being 
updated) prioritized marketing, product development and investment, transport and infrastructure, 
human resource developme nt, and institution/industry partnerships.  
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  1  ECONOMIC ENVIRONMENT  
1.1  Main Features of the Economy  
1.1.  Papua New Guinea (PNG ) is rich in natural resources, including minerals, oil and gas, forests 
and fish eries. PNG's rugged terrain includes mountain ranges and dense rain forests, which limit the 
reach of transportation and communication links. The country has several active vo lcanoes, and is 
subject to frequent earthquakes, including a large one in February 2018 that killed nearly 
200 people, damaged infrastructure, and disrupted oil, gas, and minerals exports.   
1.2.  The services sector constitutes the backbone of the economy in ter ms of GDP share ( 41.2% 
in 2018), followed by mining and quarrying, notably oil and gas extraction (30.3%), agriculture and 
related activities (18.0%), construction (7.2%), and manufacturing (2.1%) (Chart  1.1). PNG 
remains a developing dualistic economy , heavily reliant on subsistence agriculture . 
Chart 1.1 GDP by economic activity (at basic prices), 2018  
 
Source:  Department of Treasury  online information . Viewed at: 
http://www.treasury.gov.pg/html/national_budget/2019.html . 
1.3.  The economy of PNG is highly trade -oriented , and is dependent on merchandise exports 
(42.0% of GDP in 2017), and travel and tourism (1.8% of GDP in 2017).1 PNG is a lso an important 
recipient of official development assistance (ODA) .2 Annual average ODA flows amounted to 
USD 510 million (over 2% of GDP per year) during 201 0-16.3 PNG has a narrow merchandise export 
basket, concentrated in a few countries (Section 1.3.1 ). 
1.4.  PNG has  a population of 8.3 million; they are predominantly rural, and many follow traditional 
lifestyles . The country  has made  development progress over the last few years, as  reflected in an 
increase in GDP per capita, from USD  1,672 in 2009 to USD 2,556 in 2017.4 However, the alleviation 
of poverty continues to be one of its major challenges. It is estimated that some 3  million people, 
about 40% of the population, live below the basic needs poverty line .5 Furthermore, part of the 
population cons idered vulnerable may have fallen back into poverty in the aftermath of the 
                                                
1 World Travel and Tourism Council online information. Viewed at:  
https://www.wttc.org/ -/media/files/reports/economic -impact -research/countries -2018/png2018.pdf . 
2 The main bilateral donors are Australia, New Zeal and, Japan and France . 
3 OECD online information. Viewed at: http://oecd.org/dac/financing -sustainable -development/ . 
4 World Bank online information. Viewed at: 
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=PG . 
5 The national poverty line established in 2010 -11 represents the expenditure required to meet minimum 
food and non -food needs . World Bank online information. Viewed at: 
http://databank.worldbank.org/data/download/poverty/33EF03BB -9722-4AE2-ABC7 -
AA2972D68A FE/Global_POVEQ_PNG.pdf . 
Chart 1.1 GDP by economic activity (at basic prices), 201?
Source: Data provided by the authoritiesAccommodation
& food  1.7%Real estate
5.6%Public
administration & 
defence  5.1%
Agriculture, 
forestry & fishing
18.0%Oil & gas 
extraction; mining 
& quarrying
30.3%Manufacturing
2.1%Electricity, gas & 
water 1.2%Construction
7.2%
Services
41.2%
Finance & insurance
2.5%
Transport &storage
2.1%Wholesale & 
retail trade
10.3%Education 
2.9%
Professional &
scientific  1.3%Administrative
& support activities 
7.4%
Information & 
communication
1.8%Health & social
0.8%WT/TPR/S/ 387 • Papua New Guinea  
 
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  catastrophic earthquake of 201 8. PNG ranks 153rd out of 189 countries in the latest UNDP Human 
Development Index.6 
1.5.  The national currency is the Kina (PGK). The Bank of Papua New Guinea (BPNG, the central 
bank) is, in principle, independent, and is responsible for monetary policy and price stability. PNG's 
de jure  exchange rate arrangement is floating. Since May 2016, the exchange rate has stabilized 
within a 2% b and against the U.S. dollar. Accordingly, the de facto  exchange rate arrangement has 
been reclassified to stabilized from a crawl -like arrangement, effective 22 August  2017.7  
1.6.  On 9 October 1975, PNG accepted Article  VIII, Sections 2, 3 and 4, of the IMF Ag reement.8 
PNG maintains the following exchange restrictions, subject to IMF approval under Article VIII: the 
requirement to obtain a tax clearance certificate evidencing the payment of all taxes , prior to making 
payments or transfers for certain current in ternational transactions; and the rationing of foreign 
exchange (FX) and its allocation by the BPNG to certain priority items, which results in undue delays 
and arrears in current international payments.9 
1.2  Recent Economic Developments  
1.7.  At the time of its pre vious TPR , held in 2010 , prudent macroeconomic policies and structural 
reforms , including trade liberalization, ha d helped  PNG achieve positive real GDP growth rates  
notwithstanding the global financial crisis  of 2007 -08. A major economic challenge confron ting PNG  
at the time , which had  wide trade policy implications, was how to manage the "Dutch disease " effects 
of the kina 's appreciation . It was feared that t he substantial foreign direct investment (FDI)  inflows 
from liquefied natural gas (LNG) and other projects from the expected mining boom would reduce 
competitiveness in the non-mining sectors  and might accentuat e the economy 's "dualistic " or 
"two-speed " nature.10 
1.8.  Since then, PNG's macroeconomic performance ha s been broadly satisfactory . Annual  real GDP 
growth averaged 5.2% during 2010 -18, fluctuating from 15.4% in 2014 to zero in 2018, mainly in 
response to changes in major export commodity prices and the LNG pipeline project coming on 
stream in 2014 -15. Increased LNG output , however,  has gener ated little direct increase in local 
employment, or additional government revenues to support spending. Rather, LNG earnings have 
mostly been used to repay project -related debt.   
1.9.  For 2018, PNG authorities expected 0.3% real GDP growth, while the IMF estima ted zero 
(Table  1.1), largely because of low commodity prices, a major drought in 2017, and the earthquake 
in February 2018. These factors have also weakened the external position, and created fiscal 
challenges.  For 2019, the IMF predicts the economy will recover to 3.8%, as resource output returns 
to normal.11  
1.10.   Key elements impeding higher rates of economic growth include supply -side constraints, 
notably  poor infrastructure, and other structural impediments, such as weak institutional capacity, 
a difficult business climate, and political instability.  To address some of these challenges, the National 
Trade Policy 2017 -32 was launched, with the aim of becoming " an internationally competitive 
export -driven economy that is built on and aided by an expa nding and efficient domestic market" 
(Section 2.2).  
                                                
6 UNDP online information. Viewed at: http://hdr.undp.org/en/countries/profiles/PNG# . 
7 IMF Country Report No. 18/352.  
8 Article VIII spells out the obligation s of the m embers in carrying out their monetary policy. Section 2 
prohibits members from imposing restriction s on making current  payments , and provides that governments must 
make foreign exchange available for goods, services, and invisibles ; Section 3 directs membe rs to avoid 
discriminatory currency practices ; and Section 4 enables the convertibility of foreign -held balances.   
9 PNG also maintains multiple currency practices (MCPs) , subject to IMF approval: a n MCP arising from 
the spread of more than 2% between the rates set by the BPNG for its FX allocations to authorized FX dealers 
(AFEDs), and the rates used by AFEDs in transactions with their clients; and an MCP arising from the potential 
spread deviation o f more than 2% between the rates set by the BPNG for its FX transactions with the 
Government and embassies, and the rates used by AFEDs in transactions with their clients.  IMF Country Report 
No. 17/411.  
10 WTO (2010), Trade Policy Review of Papua New Guinea , Geneva.  
11 IMF Country Report No. 18/352.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Table 1.1 Selected economic indicators, 2013 -18 
 2013  2014  2015  2016  2017  2018a 
Real sector        
Nominal GDP (US D million)  21,261  23,060  20,639  19,028  20,334  21,390  
Nominal GDP ( PGK billion)  47.7 56.8 57.1 59.6 65.5 70.8 
Real GDP growth (% change)  3.8 15.4 5.3 1.6 2.5 0.0 
Inflation (CPI average, % change)  5.0 5.2 6.0 6.7 5.4 4.8 
Money and banking (% change)        
Domestic credit  40.9 12.8 23.5 15.9 -1.0 10.5 
Credit to the private sector  17.5 3.5 3.4 7.2 -3.6 7.0 
Broad money  6.7 3.4 8.0 10.9 0.9 16.5 
Interest rate (182 -day T -bills; average)  5.0 5.3 7.1 7.4 7.1 7.0 
Central government operations (% GDP)        
Revenue and grants  20.7 20.9 19.3 17.6 17.6 17.9 
Expenditure and net lending  27.6 27.2 24.1 22.8 20.3 20.8 
Net lending (+)/borrowing ( -) -6.9 -6.3 -4.8 -5.2 -2.7 -2.9 
Government gross debt  24.9 27.1 32.3 37.8 37.5 36.8 
External sector        
PGK/USD  (end-of-period)  2.42 2.59 3.01 3.17 3.27 3.39 
NEER (2005=1200, end -of-period)  120.6  114.2  116.4  104.2  101.0  .. 
REER (2005=1200, end -of-period)  127.0  123.6  131.4  123.6  124.0  .. 
Terms of trade (2010=100, end -of-period)  99.3 97.4 102.0  93.4 85.0 84.8 
Current account (% GDP)  -30.8 1.3 12.0 24.1 24.5 23.4 
External debt (% GDP)b 6.4 6.2 7.9 10.2 11.3 14.1 
External debt service (% exports)b 1.4 1.1 1.1 1.3 1.4 1.8 
Gross official reserves (US D billion)  2.8 2.3 1.9 1.7 1.7 2.2 
 In months of goods and services imports)  4.3 5.9 6.0 4.4 4.9 5.6 
.. Not available.  
a Preliminary.  
b Public external debt includes external debt of the central Government, the BPNG , and statutory 
authorities.  
Source:  IMF Country Report No. 18/352 . 
1.11.   The inflation  rate, as measured by the Consumer Price Index (CPI) , averaged 5.7% during 
2013-17. For 201 8, the IMF e stimates  an easing of the average inflation rate to 4.8%, partly due to 
weak demand and improved agricultural supply . In general, during the review period , the BPNG 
adopted  a neutral monetary policy stance , with infl ation considered manageable. However, it is 
closely monitoring inflation trends , and will adjust monetary policy as necessary. It also continues 
to diffuse liquidity using a range of monetary instruments , including through  open market operations 
issuing Ce ntral Bank Bills and maintaining the cash reserve ratio at 10 % since 2014.12  
1.12.   PNG's f iscal deficit , as percentage of GDP, went down from 6.9% in 2013 to an estimated 
2.9% in 2018 (Table 1.1). During the boom years of 2013 -14, government spending was ramped 
up sharply, in anticipation of sustained increases in resource -based revenues.  The fall in oil and gas 
prices, together with very favourable tax terms for the LNG project, have meant that , since 2015, 
tax revenues from LNG exports have been very low, while revenues from other sectors were 
adversely affected by the drought and the weak tax administration. On the expenditure side, it has 
proven difficult to unwind earlier increases in governm ent spending.13  
1.13.   Fiscal deficits , together with slow economic growth , have pushed the government 
debt-to-GDP ratio over the band of 30-35% (estimated at 36.8% for 2018) . As a result, the 
authorities are taking steps to achieve fiscal consolidation , with the  2019 budget showing debt falling 
below 30% of GDP in 2021. Another  key target of the Medium -Term Fiscal Strategy 2018 -22 is to 
reach  an average annual non -resource primary fiscal balance of zero  by, inter alia , promot ing 
revenue mobiliz ation and spending reduction to manage public debt at prudent levels. The Strategy 
also includes longer -term aims of developing non -resource sectors by prioritizing spending and 
investment on education, health care, and key infrastructure projects ; new tariff and excise rate s; 
                                                
12 IMF Country Report No. 18/352.  
13 IMF Country Report No. 18/352.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  and legislative amendments and administrative initiatives to increase revenues and widen tax 
coverage.14 
1.14.   Despite a n increasing current account surplus  since 2014, P NG has been facing a shortage 
of FX, estimated at around USD 1 billion, which has adversely affected activities dependent on 
imports and has dampened GDP growth.  According to the IMF, the k ina is overvalued by 10.7%, 
and eliminating overvaluation will require a depreciation of 12 -15% in nominal terms. Overvaluation 
acts as a subsidy for  imports and dividends paid abroad, while taxing exports. The monetary 
authorities have begun to address the FX problem by facilitating exchange rate adjustment, 
increasing the supply of FX, and strengthening the monetary framework. In 2018, the Government  
issued a debut sovereign bond, to improve the domestic public debt profile and help resolve the FX 
and exchange rate conundrum.15  
1.15.   PNG's capital and financial account balance swung from a large surplus in 2013, reflecting 
inflows to finance the LNG project s (Section 4. 2.3)16, to a deficit estimated at US D 4.4  billion in 2018 
(Table 1.2) . Part of this swing in the capital and financial account has been financed by an increase 
in goods and services exports. The most important counterpart for the large increase  in capital and 
financial account outflows has been through reduced imports. Outflows have been partly financed, 
or imports supported, through the depletion of international reserves during 2013 -17. However, 
international reserves are estimated to have inc reased from USD  1.7 billion in 2017 to 
USD 2.2 billion at end -2018, equivalent to 5.6 months of imports  (Table 1.1) . 
Table 1.2 Balance of payments, 2013 -18 
(USD million)   
2013 2014 2015 2016  2017a 2018a 
Current account  balanceb -6,540  303 2,426  4,517  4,851  4,867  
 Trade balance  -516 4,248  5,150  6,715  7,203  6,837  
 Exports f.o.b.  5,951  8,758  7,800  8,683  9,710  9,576  
 Imports f.o.b.  -6,468  -4,510  -2,650  -1,968  -2,507  -2,739  
 Services (net)  -4,956  -3,104  -1,887  -1,648  -1,779  -1,293  
Income (net)  -1,200  -956 -944 -784 -820 -925 
Current t ransfers  132 115 106 234 247 247 
Capital and financial account balance  4,150  -883 -4,941  -4,485  -4,797  -4,390  
 Capital account balance  15 2 1 2 9 10 
Direct investment  904 864 584 602 591 606 
Portfolio investment  -116 373 274 -70 -335 788 
 Other investments  3,346  -2,122  -5,800  -5,019  -5,794  -6,356  
Net errors and omissions  -1,387  0 0 0 0 0 
Overall balance  -1,176  -520 -440 31 54 478 
a Estimates.  
b Includes IMF's estimates related to the PNG LNG project.  
Source:  IMF Country Report No. 18/352 . 
1.3  Developments in Trade and Investment  
1.3.1   Trends and patterns in merchandise and services trade  
1.16.   In 2017, PNG  ranked 64th among world merchandise exporters and 111th among importers  
(considering EU member States as one , and excluding intra -EU trade).17  
1.17.   During the review  period, PNG' s merchandise export s almost doubled from US D 5.5 billion  in 
2012 to USD 9.9 billion in 2017, driven by a surge in exports of mineral fuels and oils, mostly LNG 
(28.9% of total merchandise exports in 2017). As a result, t he export structure shifted drastically, 
with mineral products accounting for about half of total merchandise exports, compared with the 
17.3% share in 2012  (Chart 1.2  and Table A1.1).  Other top export products are precious stones and 
                                                
14 IMF Country Reports No. 17/411 and 18/352.  
15 The bond issue was for USD 500 million, with a 10 -year maturity and a yield of 8.375%. IMF Country 
Report No. 18/352.  
16 A large portion of this outflow consisted of construction loan repayments.  
17 WTO statistics database, Trade Profiles: Papua New Guinea . Viewed at: 
http://stat.wto.org/CountryProfiles/PG_e.htm . WT/TPR/S/ 387 • Papua New Guinea  
 
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  metals (23.2% in 2017), followed by palm oil, transport equipment, wood and articles of wood, and 
coffee . 
1.18.   Merchandise exports are also highly concentrated geographically . However, the share of 
Australia , PNG's single most important export market destination, decreased from 32.1% in 2012 to 
28.3% in 2017. Japan's participation in PNG's total merchandise exports doubled from 9.6% in 2012 
to 19.8% in 2017, while that of China also increased from 9.6% to 13.1% d uring the period. 
Noteworthy is the decrease in the share of the European Union in PNG's total exports to 11.9% 
in 2017, from 16.5% in 2012.  The participation of Singapore  in PNG 's total merchandise exports  
also went down significantly over the period (Chart 1.3 and Table  A1.2). 
Chart 1.2 Merchandise trade by main HS sections, 2012 and 2017  
Source:  WTO Secretariat calculations, based on data received by the authorities . 
Chart 1.[PNG]  Product composition of merchandise trade by HS main sections,
2012 and 2017
2012 2017
Base metals & 
articles thereof
3.8%
Precious stones & metals
23.2%Fats & oils
6.4%
Wood & articles
thereof 3.3%Mineral products
49.1%
(28.9% liquefied
natural gas)Prepared food, 
beverages & tobacco
3.0%
Other
3.9%
Total:  USD 5.5 billion Total:  USD 9.9 billion  
Other
11.0%
Machinery; 
electrical equipment
30.4%Machinery;
electrical equipment
27.2%
Transport equipment
12.1% Other
13.3%Plastics & rubber
4.7%Chemicals
6.9%Fats & oils
10.8%
Total:   USD 8.7 billion Total:   USD 5.0 billion 
Source:  WTO Secretariat calculations, based on data received by the authorities.Plastics & rubber
3.7%Base metals & 
articles thereof
2.2%Vegetable 
products 2.1%Wood & articles
thereof 5.0%
Chemicals
4.7%Prepared food, 
beverages & tobacco
3.6%
Other
9.1%
Vegetable products
4.0% 
Transport equipment
15.0%Base metals &
articles thereof
10.1%Precious stones
& metals 27.4%Vegetable 
products 4.9%Exports 
Imports Mineral products
17.3%
Vegetable products
5.4%Base metals &
articles thereof
8.3%Mineral products
17.2%
Prepared food, 
beverages & tobacco
6.8%Prepared food, 
beverages & tobacco
3.8%Mineral products
15.3%Transport equipment
19.5%Transport equip.
5.1%WT/TPR/S/ 387 • Papua New Guinea  
 
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  Chart 1.3 Direction of merchandise trade, 2012 and 2017  
 
Source:  WTO Secretariat calculations, based on data received by the authorities . 
1.19.   Merchandise imports have decreased considerably throughout the review period, from  
USD 8.7 billion  in 201 2 to US D 5.0 billion  in 201 7. As much as half may be attributable to the 
reduction of imports directly associated with the LNG project. In addition, FX restrictions are likely 
to have played an important part.  There is considerably more balance across commo dity groups in 
PNG's import structure (Chart  1.2 and Table A1. 3). The largest category is machinery and electrical  
equipment with a 27.2% share in 2017 ( 30.4%  in 201 2), followed by mineral products  (15.3%), 
and transport equipment (12.1%). Prepared food, b everages and tobacco, and cereals also represent 
a sizeable part of PNG's total merchandise imports.  
1.20.   Merchandise imports are also highly concentrated geographically  (Chart 1.3 and Table  A1.4) . 
Australia  continues to be PNG's largest source of merchandise imports with a 33.8 % share in 201 7 
(about the same as in 2012), followed by Singapore 12.4% (15.9% in 2012), Malaysia (11.2%), 
and China (10.8%). The participation of the European Union in PNG's total imports averaged 7% 
during the period, while that of th e United States was 3.5%.  
Chart 1.[PNG]  Direction of merchandise trade, 2012 and 2017
2012 2017
Philippines
2.9%
Australia
28.3%Singapore
5.2%
Japan
19.8%EU-28
11.9%
Hong Kong, China
3.6%
China
13.1%Other
8.4%
Total:  USD 5.5 billion Total:  USD 9.9 billion  
Singapore
15.9%
Australia
33.9%Australia
33.8%Indonesia 3.4%
Singapore
12.4% Malaysia
11.2%Thailand 2.9% United
States
3.4%
China
10.8%EU-28
3.4%Philippines  
3.2%
Total:   USD 8.7 billion Total:   USD 5.0 billion 
Source:  WTO Secretariat calculations, based on data received by the authorities.EU-28
8.3%Australia
32.1%Chinese Taipei
6.9%China
9.6%
United
States
5.9%India
3.7%Other
10.2%
Malaysia
6.3% Indonesia 3.0%
Japan
6.0%Japan
9.6%Singapore
15.1%Exports 
Imports EU-28
16.5%
China
6.7%Japan
3.8%Thailand 3.0%
New Zealand 3.0%New Zealand 2.7%Other
8.3%Other
11.9%WT/TPR/S/ 387 • Papua New Guinea  
 
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  1.21.   In services trade, PNG ranks 148th in the world (considering the EU member States as one , 
and excluding intra -EU trade)  as an exporter and 102nd as an importer.18 Largely because of 
transportation and other business services, PNG h as traditionally been a net importer  of services . 
However, PNG's services trade deficit decreased significantly, from PGK 6,784.3 million in 2012 to 
PGK 3,796.2 million in 2017 (Table 1. 3). 
Table 1.3 Services trade, 2012 -17 
(PGK million)  
 2012 2013 2014 2015 2016 2017a 
Service credits  993.7  937.3  515.7  404.3  518.9  800.9  
Transportation  146.6  137.6  48.6 47.4 53.7 132.3  
Travel (excluding transp.)  2.0 7.4 6.1 4.6 2.1 4.5 
Education  2.8 0.8 0.6 0.0 0.0 0.3 
Insurance  9.1 21.7 22.8 3.1 7.2 10.8 
Other financial services  16.8 10.8 17.6 16.9 8.4 25.9 
Computer and information  0.2 0.3 0.2 0.7 0.2 1.5 
Communications  3.3 36.2 25.0 12.0 4.9 13.8 
Other business services  266.8  136.7  119.2  61.1 188.7  92.7 
Cultural and recreational  1.5 0.6 0.7 0.1 0.4 0.3 
Government services  96.2 74.9 80.4 101.5  96.7 116.5  
Construction services  81.1 3.5 11.6 1.1 7.9 44.0 
Refining and smelting  0.0 0.0 0.0 0.0 0.0 0.0 
Other service receipts  367.3  506.8  182.9  155.8  148.7  358.2  
Service debits  7,778.0  8,725.7  5,626.9  3,690.8  2,962.8  4,597.1  
Transportation  1,619.9  1,684.7  1,303.3  1,118.5  749.5  1,062.5  
Travel (excluding transp.)  96.9 106.4  89,1 80.1 52.6 129.4  
Education  226.9  236.6  218,7  264.8  291.8  315.3  
Insurance  249.1  323.6  266.5  234.8  133.0  183.3  
Other financial services  225.9  217.8  135.2  96.1 58.7 110.7  
Computer and information  47.1 49.7 37.5 39.2 34.6 82.6 
Communications  71.5 88.2 71.9 155.0  179.8  250.0  
Other business services  1,977.4  2,015.6  1,301.4  933.1  879.7  1,301.2  
Cultural and recreational  1.3 1.0 0.6 0.3 3.1 0.1 
Government services  37.9 77.1 91.3 39.1 52.4 46.3 
Construction services  2,590.3  3,235,7  1,234.9  175.2  41.1 226.5  
Refining and smelting  209.3  178.6  236.3  197.1  256.7  412.7  
Other service payments  424.5  510.7  640.2  357.5  229.9  476.4  
a Preliminary . 
Note:  The services account is classified according to the Balance of Payments and International Investment 
Position Manual, Version 5.  
Source:  Information provided by the BPNG.  
1.3.2   Trends and patterns in FDI  
1.22.   PNG's FDI regime is generally open.  Under the Cottage Business Activities List , certain 
low-skilled economic activities continue to be reserved for PNG citizens and national entities 
(Table  2.4 and Section 2.3.3). T he National In vestment Policy contains guidelines for the pursuit of 
economic development through domestic and foreign -funded investment projects.  FDI inflows were 
negative in 2014 and 2017  because  of LNG project -related debt  repayments . On average, FDI inward 
stock rep resented about 20% of GDP over 2012 -17 (Table 1.4).  
Table 1.4 FDI, 2012 -17 
 2012  2013  2014  2015  2016  2017  
FDI inflows  25.0 18.2 -30.1 28.2 39.8 -200.5  
FDI inward stock  4,656.1  4,222.9  4,139.9  4,466.5  4,465.1  4,422.2  
FDI inward stock (% of GDP)  22.0 19.9 19.6 21.1 22.3 20.9 
Source:  UNCTAD (201 8), World Investment Report 201 8, Geneva.  
                                                
18 WTO statistics database, Trade Profiles: Papua New Guinea . Viewed at:  
http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?Language=E&Country=PG . WT/TPR/S/ 387 • Papua New Guinea  
 
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  1.23.   During the review period, PNG took measures to attract larger  FDI inflows and improve the 
business climate . Some legislative reforms and stability in government helped PNG to improve its 
ranking in the latest World Bank's Ease of Doing Business report , to 109th (from 145th in 2016)  
among 190 economies. According to the World Bank, some of the most problematic areas for doing 
business in PNG are enforcing contracts, starting a business, resolving insolvency, and trading across 
borders ( Section 3.1.1 ).19  
1.24.   Because of LNG and other projects , the mining sector is PNG's largest recipient of total FDI 
inflows, with an 86% share in 2017 (Table 1.5), followed by the financial sector (3.8%), 
manufacturing (2.8%), and agriculture (1.7%). Australia is the largest source of total FDI 
in PNG (58.7% in 2017), followed by Japan (12%), China (8.3%)20, and Malaysia (2.2%) 
(Table  1.6). 
Table 1.5 FDI stock by sector, 2012 -17 
(PGK million)  
Sector  2012  2013  2014  2015  2016  2017a 
Agriculture  219 219 219 219 219 237 
Mining  8,559  8,673  9,151  11,527  12,268  12,270  
Transportation  4 5 5 5 5 5 
Manufacturing  394 394 395 395 395 395 
Fisheries  52 52 52 52 52 52 
Banking/insurance/ finance  137 451 382 545 545 545 
Retail  44 44 48 48 48 48 
Forestry  134 134 134 134 134 212 
Hotels/ restaurants  10 10 10 10 10 10 
Communication  123 123 224 224 214 214 
Other  116 120 121 273 275 276 
Total  9,792  10,225  10,739  13,432  14,165  14,264  
a Preliminary.  
Note:  FDI = Foreign -equity holdings in PNG.  
Source:  Information provided by the BPNG.  
Table 1.6 FDI stock by source, 2012 -17 
(PGK million)  
Country  2012  2013  2014  2015  2016  2017a 
Australia  5,690  5,804  6,281  7,634  8,376  8,377  
Japan  1,717  1,717  1,717  1,717  1,717  1,717  
China  5 5 5 1,193  1,193  1,187  
Malaysia  164 164 164 288 288 308 
British Virgin Islands  141 141 219 219 219 264 
Cayman Islands  224 224  224 224  224  224 
Bahamas  189 189 189 189 189 189 
Isle of Man  170 170 170 170 170 170 
Singapore  165 165 168 168 168 168 
United Kingdom  206 206 136 136 136 175 
Hong Kong,  China  69 69 69 99 99 99 
Canada  98 98 98 98 98 98 
United States  50 50 0 50 50 50 
Total  9,792  10,225  10,739  13,432  14,165  14,264  
a Preliminary.  
Note:  FDI = Foreign -equity holdings in PNG.  
Source:  Information provided by the BPNG.  
 
 
                                                
19 World Bank online information. Viewed at:  
http://www.doingbusiness.org/content/dam/doingBusiness/country/p/papua -new-guinea/PNG.pdf . 
20 The significant increase in equity stock from China is attributed to investments in mining.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  2  TRADE AND INVESTMENT  REGIMES  
2.1  General Framework  
2.1.  PNG is a constitutional monarchy, with the British Sovereign, represented by a governor -
general approved by national Parliament, as ceremonial Head of State.1 The Government is elected 
for a maximum period of five years, by universal adult suffrage. Under the 1975 Constitution, 
legislative authority is vested in the unicameral  Parliament. This provides for the separation of 
powers between the executive, the legislature, and the judiciary.  
2.2.  The Prime Minister , elected by Parliament, heads the National Executive Counci l (NEC). There 
are 33 ministerial portfolios , headed by appointed ministers  from the ruling coalition , which 
collectively comprise  the Government . The NEC , with members from all ministries , can propose and 
draft new legislation, which can then be passed to  Parliament for review.  
2.3.  The Parliament  has 111 members , of which 89 represent regular constituencies and the other 
22 are occupied by the governors of the 21 provinces and the National Capital District of 
Port Moresby . Candidates for member of parliament are voted upon when the Prime Minister asks 
the Governor -General to call a national election, a maximum of five years after the previous national 
election.  Each of PNG's 21 provinces has its own unelected government, w hich may levy taxes to 
supplement grants received from the national Government.  
2.4.  Constitutional changes are rare, and require an absolute two -thirds or, in some cases, a 
three -quarters parliamentary majority.  Legislative proposals are presented to Parliamen t as bills. 
Multilateral agreements must be passed into domestic law, and all trade agreements are submitted 
to Parliament.  
2.5.  Provincial and national governments have concurrent powers in many key areas, including 
agriculture, commercial and industrial devel opment, forestry, fishing, transportation, labour, and 
mining. However, since national laws take precedence, provincial governments cannot pass 
trade -related laws which are inconsistent with national legislation.  
2.6.  PNG's independent judiciary consists of th e Supreme Court at the top, headed by the Chief 
Justice, and the National Court, which has unlimited jurisdiction in both civil and criminal matters. 
There are also district - and village -level courts , as well as specialized agencies handling customary 
land disputes and civil cases relating to mining; the legal system has adopted traditional local values, 
including communal land rights. Land courts also handle ownership disputes.  
2.2  Trade Policy Formulation and Objectives  
2.7.  The Ministry of Commerce and Industry  (MCI), through the Department of Commerce and 
Industry (DCI),  handles  external trade policy formulation and implementation.2 It negotiates and 
administers PNG 's multilateral, bilateral, and regional trade agreements  (RTAs) . Other ministries 
with trade -related responsibilities include: Treasury, Finance and Rural Development, and its 
Internal Revenue Commission (IRC) and the Customs Service; the Prime Minister's Office; 
Agriculture and Livestock; Forestry; Fisheries; Lands and Physical Planning; Petroleu m and Energy; 
Public Enterprises and State Investments; and Tourism and Culture.  
2.8.  Several statutory authorities have trade -related roles , e.g. the National Forest Authority, the 
National Fisheries Authority, the Minerals Resources Authority, the Tourism Pr omotion Authority, 
and the Independent Competition and Consumer Commission. Services trade involves line agencies , 
such as the Ministry of Communication and Information Technology , the Ministry of Transport , and 
the Ministry of  Civil Aviation. The DCI  handles internal trade, manufacturing, small and medium -
sized enterprises  (SMEs) , investment, and promoting commercial and industrial development. The 
Investment Promotion Authority (IPA) , under the MCI,  facilitates and certifies foreign investment.  
                                                
1 PNG gained internal self -government in December  1973, and political independence from Australia 
in September  1975.   
2 The DCI is currently in a transition to separate external trade from commerce and industry.  WT/TPR/S/ 387 • Papua New Guinea  
 
- 19 - 
 
  2.9.  The priva te sector and civil society continue to interact, formally and informally, with the 
Government. The former  is represented by the Chamber of Commerce and Industry, the 
Manufacturers Council, the Business Council, the Chamber of Mines and Petroleum, and the Rural 
Industries Council. The Consultative Implementation and Monitoring Council (CIMC) facilitates 
dialogue between the G overnment, the private sector, civil society, and the general community . No 
independent body publicly evaluates or advises the G overnm ent on trade policies. The privately -
funded Institute of National Affairs (INA) conducts research and provides independent public policy 
advice to the Government . The Government' s independent "think tank " on public policy and 
development -related issues, the National Research Institute, also plays a policy advisory role.  
2.10.   In 2009, the G overnment 's long -term vision  of a strong, dynamic and competitive economy 
by 2050  was outlined in the national development framework, Vision 2050.  It aims to ensure that 
economic growth by 2050 will be broad -based, less reliant on the mining and energy sectors, and 
conducive to creating new income -earning opportunities and improvements in human development 
outcomes.  The focus is to " develop manufacturing, agriculture, fore stry, fisheries and tourism 
ventures to generate 70% of GDP, with the balance coming from mining, petroleum and gas ventures 
in the non -renewable sector".3 
2.11.   In 2010, the Government launched the Development Strategic Plan (DSP), 2010 –30. It 
provides a strate gic planning framework to extend economic growth benefits to the most 
disadvantaged regions and communities through a more effective transport and utilities network, 
and quality education and health services.4 
2.12.   In 2014, an addendum to the DSP was launched, the National Strategy for Responsible 
Sustainable Development (NSRSD), 2010 –30. It emphasizes the Government 's desire to reduce the 
economy 's reliance on non -renewable resource extraction, and encourages the development of 
environmentally sustainable indus tries and low -carbon technologies in pursuing a more inclusive 
economic growth path.5 The DSP and the NSRSD guide all medium -term development and sector 
strategies. DSP implementation is based on four consecutive five-year M edium -Term Development 
Plans (M TDPs), each guided by an accompanying medium -term fiscal strategy to ensure ongoing 
confidence in the Government 's fiscal position. Currently, MTDP III 2018 -22 is being implemented.6 
2.13.   In 2015, the National Trade Policy (NTP) 2017 -32 was launched. PNG aims "to become an 
internationally competitive export -driven economy that is built on and aided by an expanding and 
efficient domestic market" . The following six principles guide the implementation of the NTP and 
PNG's overa ll trade orientation7:  
• PNG's national interests and development goals must take priority  in the conduct of 
domestic and international trade. Through its trade agreements , PNG will transform 
deficits into surpluses on both its merchandise and services acco unts;  
• PNG remains open to engag ing with any trade or investment party in priority sectors, 
where such engagements are beneficial to the country  and will contribute towards 
achieving its sustainable growth and development goals ; 
• PNG will engage all stakeho lders, especially the private sector, in the formulation, ongoing 
review, implementation and improvement of its N TP and in the development of its trading 
regime. To this end, the N TP encourages greater  participation of PNG businesses and 
workers i n strateg ic economic activities;  
• the Government is to provide oversight and coordination of the required policy and 
regulatory framework for trade, and create the necessary enabling environment for an 
efficient and viable trading system. It will also be involved in  strategic sectors of interest 
to PNG through public -private partnership ( PPP) arrangements , to promote public policy 
                                                
3 Government of PNG (2009), PNG Vision 2050 , p. 36,  Port Moresby.  
4 Government of PNG (2010), PNG DSP, 2010–30, Port Moresby.  
5 Government of PNG (2014), NSRSD , 2014–30, Port Moresby.   
6 Government online information. Viewed at: 
http://www.planning.gov.pg/images/dnpm/pdf/latest_pub/MTDP%20III%20Book%202_Final%20Proof(Web)_c
ompressed.pdf . 
7 DCI, PNG: NTP 2017-32, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  objectives. The role of the private sector is primarily to spearhead trade -related activities 
and export -led growth ; 
• PNG will respect and uphold its rights and obligations arising from existing and future trade 
arrangements ; and  
• PNG is committed to free -trade deals that gives it no less than fair and equitable benefits , 
in line with its national interests . 
2.14.   PNG aims to achieve th e following goals , through the NTP: 
• build a strong economy , based on production in competitive /sustainable sectors , especially 
manufacturing and services, inclusive of micro, small and medium -sized enterprises' 
(MSME ) participation in down -stream processin g and value -adding, to increase PNG 's 
export capacity and contribute towards a sustainable balance of payments. This will result 
in an annual average growth in both the manufacturing and services sectors of 5%; 
• establish a sound policy and regulatory frame work, conducive to doing business and 
promoting PNG's economic growth and development goals ; 
• improve  and develop PNG's physical infrastructure  (e.g. roads, transportation, logistics 
and communication ) to enhance  export competitiveness ; 
• align trade facilitation obligations and agreements , to ensure efficiency of customs and 
regulatory processes for outbound and inbound goods and services at the border ; 
• promote and implement rights, commitments and obligations arising from trade 
agreements , to attract investors  wishing to do business with PNG;  
• establish an effective mechanism for delivering international market  intelligence and 
targeting market access ;  
• establish capacity to negotiate and implement trade agreements . A pro -active approach 
in trade policy development, negotiation and implementation is critical to achieving 
beneficial outcomes from bilateral sub -regional, regional and multilateral agreements. It 
also impacts on FDI, labo ur mobility and trade  in services , at both the regional and globa l 
levels;  
• build trade -related institutional capacity . Strengthening and developing the capacity of 
trade -related institutions , and creating professional career paths for trade actors , is an 
essential strategy for ensuring the success of the tra de policy i n the very long term;  
• identify, support and involve other institutions and actors in trade policy for sustainable 
development . Issues such as environmental impact, gender and inclusiveness, safeguards 
for health and safety will be integral components of trade policy; and  
• establish a mechanism for the effective and efficient governance and implementation of 
the NTP . A National Trade Office shall be established to achiev e this goal.8 
2.15.   During the review period, PNG enacted the PPP Act, 2014 and the Nation al Procurement Act, 
2018, the only significant legislative developments since 2010  (Table  2.1). Laws are published in 
the National Gazette , and most departments have websites, albeit of varying usefulness.  
                                                
8 Over the long term , it will increase in professionalism, institutional competence and stability, and its 
outreach into the global market -place will be significant for PNG 's trade -led economic growth.  DCI, PNG: NTP 
2017-32, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Table 2.1 Main trade -related legislation, 2019  
Area Legislation  
Agriculture  Export (Desiccated Coconut) Act , 1956; Coffee Industry Corporation (Statutory 
Functions and Powers) Act , 1991; Kokonas Indastri Koporesen Act , 2002 
(coconut) ; Cocoa Act , 1991; Cocoa Regulation , 1982; Copra Act , 1953; Copra 
Inspection Regulation , 1982 
Aviation  Civil Aviation Act , 2000 
Banking and finance  Central Banking Act , 2000; Savings and Loan Societies (Amendment) Act , 1995; 
Life Insurance Act , 2000 (as amended) ; Superannuation (General Provisions) Act , 
2000 (as amended) ; Banks and Financial Institutions Act , 2000; Securities Act , 
1997; Criminal Code (Money Laundering and Terrorist Financing) (Amendment) 
Act, 2015; United Nations Financial Sanctions Act , 2015; Ant i‐Money Laundering 
and Counter Terrorist Financing Act , 2015 (AML/CTF Act); Proceeds of Crime 
(Amendment) Act , 2015; Mutual Assistance in Criminal Matters (Amendment) Act , 
2015; National Development Bank Act , 2007;  Saving s and Life Insurance Act, 
2000; Insurance (Miscellaneous Provisions) Act , 1975; Insurance Corporation Act , 
1977; Insurance Act , 1995;Motor Vehicles Act, 1995;  Proceeds of Crime Act , 2005 
Commerce  Trading Act , 1949; Trade Licensing Act , 1969; Discriminatory Practices Act , 1963; 
Free Trade Zones Act , 2000; Commerce (Trade Descriptions) Act , 1952; 
Companies Act , 1997; Takeovers Code , 1998; Industrial Centres Development 
Act, 1990; Small Medium Enterprise Corporation Act, 2014;  Cooperative Societies 
Act, 1985 (amended);  Goods Act , 1951; Arbitration Act , 1951; Investment 
Disputes Convention Act , 1978; Industry Assistance Board Act , 1985; Consumer 
Affairs Councils Act , 1993  
Competition and 
price regulation  Independent Consumer and Competition Commission Act , 2002; Price Regulation 
Act, 1949; Price Regulations , 1949 
Customs  Customs Tariff Act , 1990 (as amended) ; Export (Control and Valuation) Act , 
1973; Export (Control and Valuation) Regulation , 1973; Customs ( Ad valorem  
Duties) Regulation , 1987; Customs (Prohibite d Imports) Regulation , 1973; 
Customs (Prohibited Exports) Regulations , 1963; Customs Duty (Rebate) Act , 
1982 
Energy  Independent Consumer and Competition Commission , 2002; Electricity Industry 
Act, 2002  (Chapter 78) ; Electricity Commission Regulation , 1966; Electricity 
Supply (Government Power Station) Act , 1970; Electricity Supply (Government 
Power Station) Regulation , 1970; Electricity Commission (Privatization) Act , 2002  
Environment  International Trade (Flora and Fauna) Act , 1979; International Trade ( Flora and 
Fauna) Regulations , 1982; Crocodile Trade (Protection) Act , 1974; Crocodile Trade 
(Protection) Regulations , 1980; Environment Act , 2000; Environmental 
Contaminants Act , 1978; Environmental Planning Act , 1978; Environmental 
Planning Regulations , 1992; Water Resources Regulations , 1982 
Fisheries  Fisheries Management Act , 1998  (amended 2015);  Fisheries Management 
Regulations , 2000  (amended 2016);  Fisheries (Torres Strait Protected Zones) Act , 
1984; Fisheries (Torres Strait Protected Zones) Regulations , 1987; Export (Fish) 
Regulations , 1953 
Forestry  Forestry Act , 1991 (as amended) ; Forestry Regulations , 1996 
Government 
procurement  PPP Act , 2014; National Procurement Act , 2018 
Health and 
pharmaceuticals  Public Health Act , 1973; Tobacco Products (Health Control) Act , 1987; Drugs Act , 
1952; Drugs Regulation , 1952; Poisons and Dangerous Substances Act , 1952; 
Poisonous and Dangerous Substance Regulations , 1953; Dangerous Drugs Act , 
1952; Dange rous Drugs Regulation , 1955; Medicines and Cosmetics Act , 1999; 
Medicines and Cosmetics Regulation , 2002 
Intellectual property  Patents and Industrial Designs Act , 2000; Patents and Industrial Designs 
Regulation , 2002; Copyrights and Neighbouring Rights Act , 2000; Trademarks 
Act, 1978; Trademarks Regulation , 1979; Customs (Prohibited Imports) 
Regulation , 1973 
Investment  Investment Promotion Act , 1992; Investment Promotion Regulations , 1992 
Land transport  PNG Constitution,  1975;  Land Act , 1996; National Road Safety Council Act , 1997; 
Motor Dealers Act , 1976  
Mining  Mining Act , 1992; Mineral Resources Act , 2005; Oil and Gas Act , 1998; Oil and 
Gas Regulations , 1998 
Professional 
business and other 
services  Professional Conduct Rules , 1989; Lawyers Act , 1986; Lawyers Admission Rule , 
1990; Attorney Generals Act , 1989; Attorney Generals Regulations , 1990; 
Accountants Act , 1996; Architects Registration Act , 1989; Professional Engineers 
(Registration) Act , 1986; Professional Engineers (Registration) Regulation , 1988; 
Education Act , 1983; Education Regulation , 1983; Security (Protection) Industry 
Act, 2004  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Area Legislation  
Quarantine and SPS  Food Sanitation Act , 1991; Quarantine Act , 1953; National Agricultural Quarantine 
and Inspection Authority Act , 1997; Animal Disease and Control Act , 1952; Animal 
Disease and Control Regulation , 1952; Animal Act , 1952; Animal Regulation , 
1952; Plant Disease and Control Act, 1953; Plant Disease and Contr ol Regulation, 
1956 
Shipping  Shipping Act , 1951; Merchant Shipping Act , 1975; Independent Consumer and 
Competition Commission Act , 2002; Harbours Board Act , 1963 
Standards  National Institute of Standards and Industrial Technology Act , 1993; Trade 
Measurement Act , 1973; Building Act , 1971; Weights and Measurements 
Regulation , 1974 
Taxation  Income Tax Act and Regulations , 1959 (as amended) ; Goods and Services Tax 
Act, 2003 (as amended) ; Excise Tariff Act , 1956 (as amended) ; Goods and 
Services Tax Revenue Distribution Act , 2003; Goods and Services Tax Regulation , 
2005; Stamp Duties Act , 1952  (Chapter 117) ; Customs Tariff (PNG LNG Project) 
(Amendment) Act , 2008  
Telecommunications  Independent Consumer and Competition Commissi on Act , 2002; Post and 
Telecommunication Corporation (Home Ownership) Act , 1990; Postal Services Act , 
1996; National Information Communication Technology Act , 2009; Television 
(Prohibition and Control) Act , 1986; Cybercrimes Act, 2016  
Source:  Information provided by the authorities.  
2.3  Trade Agreements and Arrangements  
2.3.1   WTO  
2.16.   PNG became a GATT contracting party on 16  December 1994, and an original WTO Member 
on 9 June 1996.  It grants at least MFN treatment to all  trading partners, including non -WTO ones. 
It has bound its entire tariff; its services commitments have not changed from those scheduled in 
the Uruguay Round, which cover a limited number of sectors.  PNG is not a party to the Information 
Technology Agreement (ITA) , or to the plurilateral Agreements on Government Procurement (GPA) 
and Trade in Civil Aircraft.  It has not been involved in any formal WTO disputes, including as a 
third party. 
2.17.   PNG notified its Category A commitments under the Agreement on Trade Facilitation (TFA) on 
8 June 20169, and deposite d its instrument of acceptance of the TFA on 7 March 2018.10 No laws 
were introduced or amended to implement the Agreement.  In June 2016, PNG accepted the Protocol 
Amending the TRIPS Agreement, which took effect on 23 January 2017.  
2.18.   As a non -resident WTO M ember, the absence of a Geneva mission ma kes PNG's multilateral 
participation less effective. Such matters are handled part -time by its EU mission in Brussels and 
the WTO Pacific Islands Forum Representative Office in Geneva, established in 2004.  
2.19.   PNG fully supports the multilateral trading system.  In the WTO, PNG is part of the Small, 
Vulnerable Economies (SVEs) group, and is a member of the W52 Group , which propos es 
"modalities " in negotiations on geographical indications and "disclosure " by patent applican ts. 
PNG has requested the WTO to create a division to specifically implement the work programme on 
SVEs, and to establish a regional training institute on WTO agreements. It advocates the extension 
of special and differential treatment to SVEs regarding fisheries subsidies; meaningful market access 
commitments on the temporary movement of people; and binding agreements on technical 
assistance for trade facilitation, agriculture , and non-agricultural market access (NAMA).  
2.20.   To the detriment of transparency, PNG has made few WTO notifications during 2010 -18 
(Table  2.2). It has outstanding notifications in several areas, including agriculture, import licensing 
procedures, quantitative restrictions, customs valuation, rules of o rigin, state trading enterprises, 
intellectual property rights (IPRs), and GATS.  It has regularly submitted tariff data to the 
WTO Integrated Data Base (IDB).  
                                                
9 WTO document WT/PCTF/N/PNG/1, 8 June 2016.  
10 WTO online information. Viewed at : http://www.tfafacility.org/ratifications . WT/TPR/S/ 387 • Papua New Guinea  
 
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  Table 2.2 Notifications, 2010 -18 
Legal provision  Description of requirements  WTO document and date  
Agreement on Implementation of GATT Article VI of the GATT 1994 (Anti -dumping)  
Article 16.5  Competent authorities  G/ADP/N/193/PNG, 12 April 2016  
Agreement on Technical Barriers to Trade (TBT)  
Articles 10.1 and 10.3  National enquiry points  G/TBT/ENQ/3 8/Rev.1 , 8 July 2011 
Agreement on Subsidies and Countervailing Measures  
Article XVI:1 of GATT 1994 
and Article 25  
 
Article XVI:1 of GATT 1994 
and Article 25  
 
Articles 25.11 and 25.12  
 
Article 32.6  
 
Articles XVI:1 of GATT 1994, 
and Article s 25 and 27.4  
 
 
Article 27.4  New and full notification  
 
 
New and full notification  
 
 
Competent authorities  
 
Laws and regulations  
 
New and full notification, 
extension of transition period for 
elimination of export subsidies  
 
Extension of transition period for 
elimination of export subsidies  G/SCM/N/284/PNG; G/SCM/N/290/PNG; 
G/SCM/N/299/PNG, 21 November 2017  
 
G/SCM/N/315/PNG, 17 November 2017  
 
 
G/SCM/N/202/PNG, 14 April 2016  
 
G/SCM/N/1/PNG/1, 13 February 2014  
 
G/SCM/ N/253/PNG; G/SCM/N/260/PNG,  
26 July 2013  
 
 
G/SCM/N/ 226/PNG, 25 October 2011  
G/SCM/N/ 211/PNG, 7 October 2010  
RTAs  
Article XXIV:7 of GATT 1994 
and Article V:7 of GATS  Notification of the Interim 
Economic Partnership Agreement 
(IEPA) European Union – 
PNG/Fiji  WT/REG302/N/1, 19 October 2011  
WT/REG302/N/1/Add.1, 19 September 
2014 
TFA  
 Notification of Categor y A 
commitments  WT/PCTF/N/PNG/1, 8 June 2016  
Agreement on Agriculture   
Article 18.2  Domestic support  G/AG/N/PNG/, 30 April 2018  
Source:  WTO database .  
2.3.2   Regional and preferential agreements  
2.21.   PNG views regional integration as a key stepping stone towards fuller participation in the 
increasingly liberalized global economy. As an island country with a small market, PNG considers 
that its RTAs will help increase market access and investment inflows in support of its economic 
diversification efforts.11 
2.22.   PNG has four RTAs in force: (i) the European Union –PNG/Fiji Economic Partnership Agreement 
(EPA); (ii) the Melanesian Spearhead Group Trade Agreement (M SGTA); (iii) the Pacific Island 
Countries Trade Agreement (PICTA); and (iv) the South Pacific Regional Trade and Economic 
Cooperation Agreement (SPARTECA). Some of the main features are summarized in Table 2.3. As a 
signatory to these four RTAs, PNG applie s their respective preferential rules of origin  (Section 3.1.2 ). 
PNG also has one bilateral trade agreement in force, the PNG -Australia Trade and Commercial 
Relations Agreement.   
2.23.   Overall, PNG's RTAs in force encompass 41 partners (some of whom are non -WTO Members): 
Australia, Cook Islands, Fiji, the EU -28, Kiribati, Micronesia, Nauru, New Zealand, Niue, Samoa, 
Solomon Islands, Tonga, Tuvalu, and Vanuatu. PNG's RTAs have been notified to the WTO either 
under the Enabling Clause or under GATT Article XXIV. The four RTAs have membership overlap s, 
translating in complex trade regimes that pose risks of raising business costs and thereby potentially 
result ing in more trade (and investment) diversion than creation.  
                                                
11 DCI, Papua New Guinea: National Trade Policy 2017 -32, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Table 2.3 RTAs in force, 2019  
RTAs in force  
European Union –PNG/Fiji 
Title EPA European Union – PNG/Fiji  
Parties  European Union, PNG, and Fiji  
Date of 
signature /entry 
into force  European Union and PNG signed on 30 July 2009, Fiji on 11 December 2009 / 
Provisional application started 20 December 2009 for the European Union and PNG, 
and on 28 July 2014 for Fiji  
End of transition 
period  2023  
Services  Not included  
Selected features  Customs and trade facilitation; TBT; SPS; dispute settlement; and institutional 
provisions.  In 2017, the EU preferential purchase agreement on sugar from Fiji will 
expire  
WTO consideration 
status  Factual presentation not distributed  
WTO document 
series  WT/REG/302  
Fiji–PNG–Solomon Islands –Vanuatu  
Title MSGTAa 
Parties  Fiji, PNG, Solomon Islands, Vanuatu  
Date of 
signature/entry 
into force  22 July 1993/1 January 1994  
End of transition 
period  1994 
Services  While the MSGTA excludes services, it was agreed in 2005 to consider a multilateral air 
services agreement  
Selected features  Accession; anti -dumping and countervailing measures; competition; customs -related 
procedures; rules of origin; safeguard measures; subsidies and state aid; dispute 
settlement; general exceptions; and institutional provisions. The MSGTA3 was 
extended to cover trade in services, labour mobility, and cross -border investment  
WTO consideration 
status  Summary fact sheet (goods) distributed  
WTO documents  WT/COMTD/N/9, 3 August 1999; and WT/COMTD/21, 7 October 1999  
Cook Islands –Fiji–Kiribati –Micronesia –Nauru–Niue–PNG–Samoa –Solomon Islands –Tonga–
Tuvalu–Vanuatu  
Title PICTA  
Parties  Cook Islands, Fiji, Kiribati, Micronesia, Nauru, Niue, PNG, Samoa, Solomon Islands, 
Tonga, Tuvalu, and Vanuatu  
Date of 
signature/entry 
into fo rce 18 August 2001/13 April 2003 (although dates of signature and of entry into force are 
specific to each PICTA member)  
End of transition 
period  2021 
Services  Not included. However, it is expected that the coverage of PICTA will expand to include 
trade in services, movement of capital and labour  
Selected features  Covers trade in goods except trade in alcohol and tobacco products. Government 
procurement is also excluded. The Agreement also provides a list of exceptions to 
ensure that the Forum Island Cou ntries (FICs) can continue to restrict trade for the 
usual range of reasons generally allowed in international trade agreements. This 
includes the prohibition of dangerous goods (e.g. explosives, or the restriction of trade 
necessary to protect human or an imal health)  
WTO consideration 
status  Factual presentation not distributed  
WTO document 
series  WT/COMTD/N/29, 17 September 2008; and WT/COMTD/21, 7 October 1999  WT/TPR/S/ 387 • Papua New Guinea  
 
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  RTAs in force  
Australia –Cook Islands –Fiji–Kiribati –Marshall Islands –Micronesia –Nauru–New Zealand –Niue–
PNG–Samoa –Solomon Islands –Tonga–Tuvalu–Vanuatu  
Title SPARTECA  
Parties  Australia, Cook Islands, Fiji, Kiribati, Micronesia, Nauru, New Zealand, Niue, PNG, 
Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu  
Date of 
signature/entry 
into force  14 July 1980/1 January 1981  
End of transition 
period  1981  
Services  Not included  
Selected features  Accession; anti -dumping and countervailing measures; competition; customs -related 
procedures; rules of origin; safeguard measures; subsidies and state aid; dispute 
settlement; general exceptions; and institutional provisions  
WTO consideration 
status  Factual presentation not distributed  
GATT document  L/5100, 20 February 1981  
a MSG member countries are trading under the revised MSGTA, also known as MSGTA2, in force 
since 2004.  
Source:  WTO Secretariat, and information provided by the authorities.  
2.3.2.1   European U nion–PNG/Fiji EPA  
2.24.   The EPA represents the only new trade deal during the period under review. It has brought 
enhanced secure market access for PNG's exports in recen t times. It covers canned tuna with very 
flexible rules of origin, and has also resulted in significant FDI inflows into PNG, particularly in the 
energy sector. Through the EPA, PNG also enjoys technical assistance to build the capacity of its 
human resour ces in strategic sectors, including the provision of supporting infrastructure for the 
conduct of trade, notably in the area s of customs and trade facilitation, standards , and quality . 
2.25.   The EPA provides duty -free and quota -free market access to all products  from PNG except for 
sugar and rice, which are subject to longer transitional periods. It also provides for flexible rules of 
origin, especially in fisheries, allowing investors based in PNG to use fish caught using any boats 
(global sourcing) and to expor t it to the European Union, provided the fish is landed and processed 
(canned) in PNG. A  comprehensive EPA to deepen PNG's trade relationship with the European Union 
over time is also under negotiation.  
2.3.2.2   MSGTA  
2.26.   The MSGTA comprises four of the larger members of the Pacific region: Fiji, PNG, Solomon 
Islands , and  Vanuatu . In June 2015, Indonesia was recognized as an associate member. 
MSG member countries currently trade under the revised MSGTA (MSGTA2), in force si nce 2004. 
The most recent revision to the Agreement,  MSGTA3, was in 2016; it aims to establish a free trade 
area.12 MSGTA3 was extended from covering goods only, to covering trade in services, labour 
mobility, and cross -border investment.  
2.27.   The Melanesian Fr ee Trade Agreement and the MSG Private Sector Development Strategy, 
are two corner stones of the MSG 2038 Prosperity for All Plan. The Strategy aims at achieving higher, 
inclusive and sustainable growth through developing the private sector. Emphasis has b een placed 
on adopting an inclusive approach to private -sector development, unleashing rural entrepreneurship, 
and heightening the resilience of the private sector to the impact of climate change. Tariffs are 
eliminated on all products exported from other parties, except for  individual members' negative lists. 
PNG's negative list includes sugar, salt and mackerel .  
                                                
12 MSG press release of 26 May 2016. Viewed at: 
http://www.msgsec.info/index.php/publicationsdo cuments -a-downloads/press -release/1099 -26-may-2016-
msg-trade-ministers -approve -new-msg-trade-agreement . WT/TPR/S/ 387 • Papua New Guinea  
 
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  2.3.2.3   PICTA  
2.28.   PNG does not currently conduct any trade under the PICTA, as most of its market interests 
among the Pacific Island countries are covered w ithin the MSGTA.  
2.29.   The PICTA is a free trade agreement among the FICs, and is intended to gradually establish 
a free trade area among the 14 FICs,  which have a combined population of about 9 million people. 
PNG signed this Agreement in 2002 and ratified it in 2003. The PICTA entered into force in 2003, 
when six FICs ratified it.13 However, PNG does not trade under the PICTA, as it has not "announced 
its readiness to trade".14 The PICTA covers trade in goods except for alcohol and tobacco products, 
government p rocurement rules, and dangerous goods such as explosives or other restrictions to 
protect human or animal health.  
2.30.   The PICTA is scheduled to eliminate tariffs on intra -regional trade by 2021. Tariffs on 
"non-excepted" goods were removed by end -2017 (by 202 1 for LDC members); and tariffs on 
"excepted imports" (i.e. negative list) by 2021. PNG has listed the most number of tariff lines to be 
excepted, on its "negative list", with a total of 89 tariff lines, and tariffs ranging from 20% to 76% 
(on cane and bee t sugar and chemically pure sucrose).  
2.31.   FICs are encouraged to convert specific tariffs to ad valorem  rates by the start of the 
scheduled reductions. Any remaining non -ad valorem  duties were to be reduced by 80% by 2009, 
and be phased out by 2017. Trade barr iers other than tariffs, such as quotas, must be eliminated 
immediately on trade between the FICs.15  
2.32.   The PICTA Trade in Services Protocol was opened for signature on 28 August 2012. 
Ten countries have signed it16; PNG is not one of them. To date, Samoa and Nauru have ratified it; 
it will enter into force once six countries have ratified it. The Protocol stipulates that parties will 
provide each other preferential treatment in trade in services (professional, telecoms, construction, 
financial, tourism and tra nsport).  
2.3.2.4   SPARTECA  
2.33.   Very little trade is taking place under SPARTECA. It is a non -reciprocal and non -discriminatory 
trade agreement whereby Australia and New Zealand provide duty -free access to all products 
originating in the 14 FICs, except sugar in the ca se of Australia. SPARTECA has played an integral 
part in PNG's development.  
2.3.2.5   Other arrangements  
2.34.   PNG is also a member of the Pacific Islands Forum (PIF).17 It aims to increase sustainable 
regional trade (including in services) and investment to promote econo mic growth by lowering trade 
barriers among members, including physical (e.g. borders) and technical (e.g. quarantine, import 
taxes and passport requirements) measures.  
2.35.   As a developing APEC member, PNG is committed to voluntary non -discriminatory (i.e. 
most-favoured nation ( MFN)) liberalization to achieve the Bogor Goals of "free and open trade and 
investment " by 2020.  
                                                
13 WTO document WT/COMTD/N/29 , 17 September 2008.  
14 Following ratification, all PICTA parties are required to declare their readiness to trade under the 
Agreement. Parties must also incorporate PICTA preferential tariffs into their customs tariff, establish all 
necessary procedures for entry of goods under  PICTA preferences including ASYCUDA, and confirm their 
acceptance of form FIC -1 as the standard certificate of origin to be used for all preferential trade under the 
PICTA.  
15 Pacific Islands Forum Secretariat online information. Viewed at: 
http://www.forumsec.org/resources/uploads/attachments/documents/PICTA_FAQ_Jun2012.pdf . 
16 These are: Cook Islands, the Federated States of Micronesia, Kiribati, Nauru, th e Republic of the 
Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu.  
17 PIF includes Australia, New Zealand and the 14 FICs. French Polynesia, New Caledonia and Tokelau 
are associate members, while American Samoa, Guam, Timor -Leste, and Wallis and Futuna are special 
observers. PIC Secretariat online information. Viewed at: http://www.forumsec.org.fj . WT/TPR/S/ 387 • Papua New Guinea  
 
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  2.36.   Signed in September 2000 and ratified in October 2001, the PNG/Indonesia Agreement is 
inactive. It provides the basis for preferential tr ading arrangements between PNG and Indonesian 
border provinces.  
2.37.   PNG has special observer status in ASEAN, and has indicated its intention to become a 
member. This would imply joining the ASEAN Free Trade Agreement (AFTA) and the various ASEAN 
FTAs.  
2.38.   General ized system of preference ( GSP) schemes provide preferential t ariffs to PNG exports.18 
However, only a small share of exports depend s on GSP benefits , since almost all enter major 
markets (Australia, New Zealand,  and the European Union) under more generous preferential 
arrangements; statistics on PNG exports under GSP provisions were not available.  
2.39.   PNG is not a member of the Global System of Trade Preferences (GSTP) , and provides no 
preferential tariff treatment to developing countries or least developed cou ntries  (LDCs) . 
2.3.3   Investment regime  
2.40.   PNG's FDI regime is generally open. There were no significant changes to the investment 
regime during the review period. The Investment Promotion Act , 1992, which established the 
Investment Promotion Authority (IPA), and the supporting Investment Promotion Regulations 
provide a comprehensive legal framework. The Act provid es the general guiding framework for all 
investment in PNG, while investment in some key sectors is handled by other bodies under specific 
sectoral legislation , e.g. investment in fisheries is administered under the Fisheries Management 
Act, 1998; investment in banking and financial services , under the Banks and Financial Institutions 
Act, 2000; forestry under the Forestry Act ,1991; mining under the Mining Act , 1992; petroleum 
under the Oil and Gas Act , 1998; and telecommunications under the National Information 
Communication Technology Authority Act , 2009 (NICTA). These sectoral laws also take into account 
the provisions of the Investment Promotion A ct, 1992 (IP Act) . 
2.41.   The National Investment Policy (NIP) contains guidelines for the pursuit of economic 
development through domestic and foreign -funded investment projects.  Under the Cottage Business 
Activities List , certain low -skilled economic activities  continue to be reserved for PNG  citizens and 
national entities (Table 2.4); the List is currently being revised.  
Table 2.4 Cottage business activities, 2019  
Cottage business activities  
Agriculture  - Vegetables and other market produce, animals with annual sales of PGK 50,000 or less  
- Hunting, trapping and game propagation , including related services activities  
Forestry, 
logging and 
related 
activities  - Gathering of wild -growing forest materials , including balata and other rubber -like gums; 
cork; lac, resins and balsams; rattan; vegetable hair and eel grass; acorns and horse -
chestnuts; mosses, lichens and cut evergreen trees used for festive occasions; sap; bark; 
herbs; wild fruits; flowers and plants; leaves; needles; reeds; roots; or other wild -
growing materials  
- Walk-about (mobile) sawmill s 
Wildlife  - Hunting or collecting of non -protected fauna, including insects, shells, animal teeth, tusks, 
feathers, declared sedentary organisms and similar products , and living or dead fauna  
Fishing  - Commercially , in coastal (within three miles off the shoreline) and inland waters  
- Taking of marine or fresh water crustaceans and molluscs  
- Hunting of aquatic animals , e.g. turtles, sea squirts and other tunicates, sea urchins or 
other echinoderms , and other aquatic invertebrates  
- Gathering of marine materials , e.g. natural pearls, sponges, coral and algae  
Mining  - Alluvial mining according to the definition of the Department of Mining  
Catering  - Mobile food delivery service s 
                                                
18 Australia, Belarus, Canada, the European Union, Japan, New Zealand, Norway, the Russian 
Federati on, Switzerland, Turkey, and the United States . WT/TPR/S/ 387 • Papua New Guinea  
 
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  Cottage business activities  
Wholesale 
and retail 
trade - Wholesale and retail sale of wild -growing materials , e.g. balata and other rubber -like 
gums; cork; resins; balsams; rattan; vegetable hair and eel grass; acorns and horse 
chestnuts; mosses, lichen s and cut evergreen trees used for festive occasions; sap; bark; 
herbs; wild fruits; flowers and plants; leaves; needles; reeds; roots; or other wild -
growing materials  
- Retail sales through stalls, tucker shops, markets, or carried out from a car or motor cycle 
- Wholesale and retail sale of second -hand clothing and footwear, handicrafts and artefacts  
- Footwear repairs when not done in combination with manufacture or wholesale or retail  
Weaving  - Cane products, textiles, baskets, nets, dishes, ropes and bags, saleable at home, in street 
markets or in retail outlets , for a fee  
Bilum 
making  - String bags from traditional bush ropes and cotton stacking using traditional and 
contemporary designs , saleable at home, in street markets or in retail outlets , for a fee 
Knitting  - Textiles, wearing apparel, cloth, garment, designs, fabrics and decorations, etc. , saleable 
at home, in street markets or in retail outlets , for a fee  
Art and craft - Handicrafts and artistic designs , saleable at home, in street markets or in retail outlets , 
for a fee  
Wood 
carving  - Sculptures , on contract , or assorted carvings , saleable at home, in street markets or in 
retail outlets , for a fee  
Pottery 
making  - Clay pots, cups, mugs, dishes, plates,  sculptures and other art forms , saleable at home, in 
street markets or in retail outlet , for a fee 
Painting  - Portrait and oil paintings, etc. , saleable at home, in street markets or in retail outlets , for 
a fee 
Screen 
printing  - Designs , including embl ems, logos, traditional and contemporary art forms, 
commemorations and special events on apparel , including shirts, T -shirts and other 
garments and textile materials, suited to the event, situation or purpose, saleable at 
home, in street markets or in retail outlets , for a fee  
Sewing  - Garments, textiles, cloth and fabrics , saleable at home, in street markets or in retail 
outlets , for a fee  
Jewellery 
making  - Simple jewellery products , e.g. necklaces, earrings, rings, and bracelets , primarily from 
sea shells, tusks and beads , saleable at home, in street markets or in retail outlets , for a 
fee 
Baking  - Fresh bakery products , e.g. bread loaves, cakes, pies, cookies and scones , saleable at 
home, in street markets or  in retail outlets , for a fee  
Coffee 
pulping  - Using manual pulping machine with beans , saleable at buying points or at coffee depots  
Small tyre 
repair s -  Where not done as incidental to the core business of maintenance and repairs  
Source:  WTO Secretariat, and information provided by the authorities.  
2.42.   The IPA certifies foreign investors (50 % or more owne rship or control and manage ment by 
non-PNG citizens) as bona fide investors to conduct business in PNG, and screens FDI proposals to 
ensure that investors are of "good standing ". Joint  ventures are encouraged but are not mandatory , 
and no foreign equity caps exist, although different requirements apply in the resource sectors. For 
example, the Government can take equity of up to 30 % in mining development projects ( Mining Act , 
1992) and 22.5 % in petroleum projects (Oil and Gas Act , 1998). If it elects not to , and there is 
100% foreign equity, 2 % will be negotiated for the landowners ' benefit (negotiated at 7 % for the 
LNG project).  
2.43.   The PPP Act, 2014 came into force on  1 January 2018 to create a transparent, rigorous and 
competitive process for preparing and tendering PPP projects , boost state-owned enterprises' ( SOEs) 
performance , and increase efficient delivery for projects and services  (Section 3.3.5 ). 
2.44.   Under the Comp anies Act, 1997 (amended in 2014), b efore commencing operations, foreign 
and domestic investors must register with the IPA . Foreign firms can either incorporate as a new 
PNG entity or register as an overseas company. They must apply for certification withi n one  month, 
and approval is decided within 35 days; most applications take about two weeks (down from three 
weeks). If approved, the IPA issues a certificate of incorporation , showing the entity or firm 's 
corporate status , and a certificate of foreign ent erprise, permitting foreign enterprises to carry on 
business in PNG and displaying the firm 's business activity, its principal location, and other terms 
and conditions.  The IPA must be notified of s ubstantial foreign equity changes, and investors wishing 
to expand, diversify or change location must obtain approval. Firms must meet six -monthly reporting 
requirements, and the IPA conducts annual provincial database surveys. Foreign enterprises carrying  
out business without IPA certification will be asked to comply and, failing that, will be prosecuted. 
Table 2.5 shows IPA approvals during 2014 -18.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Table 2.5 IPA approvals by type, 2014 -18 
Type  2014  2015  2016  2017  2018  
Certification  147 443 470 407 194 
Re-certification  9 60 79 73 44 
Expansion  36 23 0 101 94 
Diversification  18 11 0 137 54 
Others  8 2 0 52 22 
Total  218 539 549 770 408 
Source:  Information provided by the authorities.  
2.45.   Legislati on guarantees the security of foreign investors, including against expropriation, 
cancellation of contracts and discrimination, through MFN treatment,  and through PNG's membership 
of the Multilateral Investment Guarantee Agency (MIGA ). Bilateral investment t reaties (BITs) can 
also be agreed upon, to guarantee investments of bilateral partners. Investment disputes can be 
settled through diplomatic channels, or through domestic/international courts, or adjudicated at the 
International Centre for the Settlement of Investment Disputes (ICSID)  or other international 
adjudication mechanisms/courts, and/or other alternate dispute resolution mechanisms as agreed 
by the disputing parties . 
2.46.   Non-PNG citizens may not own land (Land (Ownership of Freehold) Act , 1976 ). Some 97% of 
land is customary -owned , and the need to negotiat e with traditional owners to use rural land has 
discouraged FDI , as it is expensive and creat es uncertainty. The Government assists investors in 
large projects considered essential for economic growth  in these negotiations.  Foreigners may lease 
government -owned land, usually for 99 years, for specified purposes , e.g. residential, business or 
for "special purposes ". All leasehold and freehold land is registered, and leasehold land is 
transferable. The Government has tried to reduc e land tenure problems by forming industrial and 
rural development centres and free-trade zones to grant leasehold land to exporters.  
2.47.   PNG grants various tax incentives to both local and foreign investors. General tax incentives  
apply across all sectors but there are also sector -specific incentives ( Table A2.1 ); these incentives 
are currently being revised , with World Bank support. PNG has no investment performance 
requirements.   
2.48.   PNG is a member of the MIGA and the ICSID , and is in the process of acceding to the 
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York 
Convention) . It is also considering alternate arbitration and conciliation rules in line with the 
UNCITRAL Model Law on International C ommercial Arbitration.  
2.49.   PNG has double taxation treaties with Australia, Canada, China, Fiji, Germany, Malaysia, 
Singapore, and the United Kingdom. Agreements with Indonesia  and Thailand are pending signing 
and ratification by Parliament , to be incorporated  into domestic legislation (PNG Income Tax 
(International Agreements) ). 
2.50.   PNG has negotiated no BITs, but has investment promotion and protection agreements 
(IPPAs) with the United Kingdom, Australia, Malaysia, and China.  
2.51.   In general, PNG's RTAs in force do n ot currently have investment provisions. However, t he 
MSG was recently extended to cover cross -border investment (Table 2.3).  
 WT/TPR/S/ 387 • Papua New Guinea  
 
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  3  TRADE POLICIES AND P RACTICES BY MEASURE  
3.1  Measures Directly Affecting Imports  
3.1.1   Customs procedures, valuation, and requirements  
3.1.  The legal and institutional framework governing the customs clearance of imports and exports 
has remained broadly unchanged since the separation of the PNG Customs Service and the Internal 
Revenue Commission (IRC) in 2009. Anyone wishing to import or export goods for co mmercial 
purposes must obtain a taxpayer identification number (TIN) from the IRC and register with the PNG 
Customs Service. No fees are levied for the registration procedure.  
3.2.  Unless they have duly licensed in -house personnel, importers are required to eng age the 
services of professional customs brokers. To obtain a licence, customs brokers must successfully 
undergo technical training by the PNG Customs Service. Customs brokers must pay an annual licence 
fee of PGK  1,000 and provide a bond of PGK  20,000 to be allowed to lodge import/export 
declarations. In February 2019, there were 141 licensed customs brokers in PNG. According to the 
authorities, customs brokers compete freely; their fees are not regulated and there are no 
geographic restrictions on their o perations within the country . 
3.3.  Commercial imports are cleared on the basis of: a declaration; suppliers' invoices; a packing 
list; and a bill of lading (or air waybill). Where applicable, the supporting documentation must also 
include: an import licence and/or permit; a certificate of origin; or a n SPS certificate. Consignments 
valued at less than PGK  1,000 may be cleared by direct payment at a Customs counter, without 
lodging a declaration through a customs broker.  
3.4.  Import and export declarations are assi gned to one of four selectivity lanes: green (immediate 
release), blue (post -clearance audit), yellow (documentary check) and red (documentary and 
physical checks). The assessment methodology is based on a matrix of risk indicators , comprising 
the importer 's and the customs broker's characteristics and prior record, as well as the 
consignment's nature and origin. During 2012 -17, the share of import declarations assigned to the 
red lane fluctuated between 10.9% and 28.2%, whereas  post-clearance audits were r are 
(Table  3.1). 
Table 3.1 Distribution of declarations by selectivity lane, 2012 -17 
Year Type  Selectivity lanes  Total 
declarations  Green (%)  Red (%)  Yellow (%)  Blue (%)  Unassigned 
(%) 
2012 Import  80.32  10.89  8.62 0.11 0.06 122,541   
Export  1.08 10.15  88.66  - 0.10 13,630  
2013 Import  75.70  13.17  11.12  - 0.01 130,493   
Export  1.01 10.41  88.58  - 0.01 13,406  
2014 Import  60.38  28.24  11.38  - - 271,884   
Export  0.97 10.28  88.75  - - 13,699  
2015 Import  72.42  15.32  12.24  - 0.03 129,391   
Export  1.49 10.44  88.07  - 0.01 13,128  
2016 Import  72.78  14.68  12.54  - - 56,032   
Export  2.00 10.34  87.66  - - 14,716  
2017 Import  79.84  11.07  8.82 0.11 - 115,622  
 Export  6.90 9.82 83.20  0.11 0.01 18,042  
Source:  PNG Customs  Service . 
3.5.  PNG ratified the WTO Agreement on Trade Facilitation (TFA) on 7 March 2018. In 2016, it 
notified its category A commitments1 under the TFA, which cover some 21% of all notifiable items.2 
The PNG Customs Service has also implemented a procedure for the pre-arrival processing of cargo 
manifests. According to the authorities, the main challenges faced in implementing the TFA relate 
to the establishment of mechanisms for the processing and pa perless exchange of supporting 
                                                
1 WTO document WT/PCTF/N/PNG/1, 8 June 2016 . 
2 TFA database. Viewed at: https://www.tfadatabase.org/members/papua -new-guinea . WT/TPR/S/ 387 • Papua New Guinea  
 
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  documentation (licences, permits, and certificates) with other competent authorities involved in 
trade.  
3.6.  The PNG Customs Service migrated its automated customs system to ASYCUDA++ during 
2005-14, and launched an upgrade to the  Internet -based version, ASYCUDA World, in April 2018. 
Due to connectivity challenges, the roll -out of ASYCUDA has not yet reached four of PNG's 22 entry 
ports. As at February 2019, the electronic and manual channels for the submission and processing 
of customs declarations operated in parallel. Plans for a single window system remained at the 
conceptual stage.  
3.7.  The 2019 World Bank Doing Business  survey ranks PNG 140th out of 190 economies on the 
trading across borders indicator. On average, importing mercha ndise is estimated to require 
72 hours and US D 790 for "border compliance", and 120 hours and US D 85 for "documentary 
compliance". On exportation, the corresponding figures are 42 hours and US D 660, and 96 hours 
and US D 75, respectively.3 Although no time -release studies have been carried out to date, the PNG 
Customs Service estimates the average import clearance time at 42 hours.  
3.8.  According to the authorities, PNG applies the WTO Customs Valuation Agreement , and uses 
the transaction value of goods as the pr imary method  of calculation . However, it is unclear what 
legal provisions on customs valuation are currently in force. In principle, the dutiable value of all 
imports is the sum of the purchase cost and all expenses incurred for insurance and freight up to  
the point of entry. In the absence of satisfactory proof of insurance, the cost of insurance is 
calculated as 0.5% of the cost of freight. Consignments can be released under bond prior to the final 
determination of duties.  
3.9.  In case of disagreement with cus toms decisions, importers must first lodge an appeal at the 
port of entry, which could subsequently be escalated to the Customs Service headquarters. Once 
the avenues of redress within the PNG Customs Service have been exhausted, traders may appeal 
to the  courts. A Customs Review Tribunal, foreseen in a 2007 amendment of the Customs Act, has 
not yet been assigned any personnel. According to the authorities, appeals are generally resolved 
within the PNG Customs Service. Most appeals relate to classification matters, followed by valuation 
disputes and rejected refund requests.  
3.1.2   Rules of origin  
3.10.   PNG does not maintain rules of origin for non -preferential purposes.4 As a signatory to 
four RTAs, it applies their respective preferential rules of origin.5 Whenever mem bership overlaps 
give rise to parallel sets of rules of origin, preferential treatment is applied on the basis of the 
documentation provided for customs clearance. No certificate of non -manipulation is required to 
confer originating status to imports that reach PNG after transit or transhipment through a 
third country.  
3.1.3   Tariffs  
3.11.   According to the available data, taxes on international trade accounted for approximately 20% 
of fiscal revenue during the period under review. Import and export duties' joint contrib ution to total 
tax revenue increased from 4.9% in 2012 to 7.2% in 2018, with the latter component becoming 
increasingly important (Table  3.2).  
3.12.   In 1999, PNG embarked on a path of autonomous tariff liberalization , through the 
implementation of a Tariff Redu ction Programme (TRP) in several phases. However, in the 
2018 National Budget, the authorities announced the suspension of the TRP's last phase, pending a 
review by the Department of Treasury as to whether greater exposure to international competition 
had indeed fostered a more efficient and productive private sector. In 2017 -18, the tariff rates on 
certain imports were already revised upwards , with a view to protecting domestic manufacturers 
                                                
3 Data for Doing Business 201 9 are current as of May  2018. For PNG's country profile, as well as notes 
on the methodology and its limitations, see:  
http://www.do ingbusiness.org/content/dam/doingBusiness/country/p/papua -new-guinea/PNG.pdf .  
4 WTO document G/RO/N/32, 30 April 2001.  
5 WTO document WT/TPR/S/239/Rev.1, 8 February 2011 . WT/TPR/S/ 387 • Papua New Guinea  
 
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  and the local oil refinery, and discouraging the consumption of g oods that may pose significant 
health risks.  
Table 3.2 Tax revenue, 2012 -18 
  2012  2013  2014  2015  2016  2017  2018a 
Total tax revenue (PGK million)  8,148.3  8,588.5  9,596.0  8,804.6  8,421.6  9,141.4  9,956.5  
Taxes  on income, profits and 
capital gains  5,875.1  6,081.3  7,107.3  5,894.2  5,286.2  5,317.4  5,691.9  
Taxes on goods and services  2,183.1  2,549.2  2,883.6  2,941.1  2,584.1  3,255.1  3,542.3  
 GST  1,236.0  1,217.2  1,668.8  1,567.0  1,442.6  1,868.8  2,086.6  
   Imports  .. 1,065.0  1,077.1  1,220.7  1,001.6  .. .. 
   Domestic  .. 152.2  591.7  346.3  441.0  .. .. 
 Excise tax  855.3  814.4  889.2  802.0  875.9  1,105.0  1,091.2  
   Imports  294.8  272.5  250.6  298.7  272.2  347.8  297.3  
   Domestic  560.5  541.9  638.6  503.3  603.7  757.2  793.9  
Import duties  223.0  257.2  273.2  249.1  242.9  260.3  321.7  
Export taxes  179.9  211.7  274.5  316.2  294.0  297.3  390.6  
.. Not available.  
a Estimates.  
Source:  Department of Treasury, National Budget (various issues) and PNG Customs Service, Annual Report 
(various issues).  
3.13.   PNG grants at least most favoured nation (MFN) status to all its trading partners, including 
those that are not WTO Members. Its 2019 applied MFN customs tariff is based on the 2017  version 
of the Harmonized Commodity Description and Codi ng System (HS), and comprises 5,830  lines at 
the eight-digit level. Some 98.6% of all tariff lines, including duty -free ones, have ad valorem  rates 
(Table  3.3); 82 lines carry specific rates. Most non -ad valorem  import duties apply to certain 
alcoholic bev erages, tobacco, and poultry meat. There are no seasonal tariffs, or tariff quotas.  
Table 3.3 Structure of MFN tariff, 2010 and 2019  
  MFN applied  Final bounda   2010  2019  
Bound tariff lines (% of total lines)  100.0  100.0  100.0  
Simple average rate (%)  5.1 3.9 (4.0)  33.6 (34.0)  
  WTO agricultural products  12.5 10.1 (11.0)  44.0 (45.7)  
  WTO non -agricultural products  3.9 2.8 31.9 
Duty free tariff lines (% of all tariff lines)  76.7 74.0 0.0 
Simple average of dutiable lines only  22.6 15.6 (16.0)  33.6 (33.9)  
Tariff quotas (% of all tariff lines)  0.0 0.0 0.0 
Non-ad valorem  tariffs (% of all tariff lines)  1.0 1.4 1.6 
Domestic tariff "peaks" (% of all tariff lines)b 14.4 17.0 (17.2)  0.0 (0.2)  
International tariff "peaks" (% of all tariff lines)c 14.4 3.3 (3.5)  71.9 (72.5)  
Nuisance applied rates (% of all tariff lines)d 0.0 0.0 (0.1)  0.03 
Standard deviation  10.1 7.6 (8.9)  18.9 (21.2)  
Total number of tariff lines  5,447  5,830  5,830e 
  Ad valorem  rates (> than 0%)  1,212  1,431  5,737  
  Duty free rates  4,178  4,317  0 
  Specific rates  57 82 89 
a Based on 2019 tariff schedule.  
b Domestic tariff peaks are defined as those exceeding three times the overall simple average applied 
rate. 
c International tariff peaks are defined as those exceeding 15%.  
d Nuisance rates are those greater than zero, but less than or equal to 2%.  
e Four tariff lines consist partly of an ad valorem  rate and a specific rate.  
Note:  Calculations of averages are base d on national tariff lines at the 8-digit level, excluding specific 
rates. The 2010 tariff is based on HS07 and the 2019 tariff is based on HS17 nomenclature.  
Figures in brackets include AVEs for specific rates, as available, based on 2017 import values an d 
volumes provided by the authorities.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
3.14.   The computed average tariff rates for PNG are biased downwards, due to the lack of 
ad valorem  equivalents (AVEs) to most non -ad valorem  duties. Excluding AVEs, the simple average 
applied MFN tariff is 3.9%, down from 5.1% in 2010. Over the same period, the simple average rate WT/TPR/S/ 387 • Papua New Guinea  
 
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  on dutiable lines decreased from 22.6% to 15.6%. Some 74% of tariff lines are duty free (down 
from 76.7% in 2010) , and 3% of all lines carry rates of 25% or higher (Chart  3.1). Overall tariff 
dispersion remains relatively wide, with ad valorem  rates ranging from zero to 50% (Table  3.4). 
Tariff protection remains most pronounced in agriculture: the average applied rate  on agricultural 
products (WTO definition) is 10.1% (down from 12.5% in 2010), whereas the corresponding average 
for non -agricultural products stands at 2.8% (down from 3.9% in 2010).  
Chart 3.1 Frequency distr ibution of MFN tariff rates, 2019  
 
Note:  Figures in parentheses denote the share of total lines.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
Table 3.4 Summary analysis of  MFN tariff s, 2019  
 Number of 
linesa Average 
(%) Range 
(%) Standard 
deviation  Duty 
free 
(%) Range 
of 
bound 
rates 
(%) 
Total  5,830 (82)  3.9 0-50 7.6 74 11-100 
HS 01 -24 1,128 (79)  11.9 0-40 10.7 31.6 11-100 
HS 25 -97 4,702 (3)  2.1 0-50 5.2 84.5 11-100 
By WTO category        
WTO agricultural products  899 (79)  10.1 0-40 1.2 45.7 11-100 
  Animals and products thereof  125 (19)  5.8 0-20 1.3 52.8 11-55 
  Dairy products  23 0.0 0 0.0 100.0  11-45 
  Fruit, vegetables, and plants  224 19.9 0-40 0.7 18.8 11-100 
  Coffee and tea  32 18.9 0-25 0.4 6.3 45-100 
  Cereals and preparations  114 (6)  5.3 0-25 1.4 61.4 11-55 
  Oil seeds, fats, oil s and their products  117 6.6 0-25 1.6 68.4 11-55 
  Sugars and confectionary  25 12.0 0-30 1.0 44.0 75 
  Beverages, spirits and tobacco  87 (52)  8.9 0-25 0.9 17.2 11-55 
  Cotton  5 0.0 0 0.0 100.0  11 
  Other agricultural products, n.e.s.  147 (2)  4.3 0-25 1.6 66.0 11-55 
WTO non -agricultural products  4,931 (3)  2.8 0-50 2.1 79.2 11-100 
  Fish and fishery products  298 14.1 0-25 0.2 4.4 11-55 
  Minerals and metals  941 1.4 0-30 3.5 90.5 11-90 
  Chemicals and photographic supplies  983 0.9 0-15 3.5 92.4 11-55 
  Wood, pulp, paper and furniture  311 7.5 0-50 1.2 41.2 11-100 
  Textiles  602 1.5 0-15 2.6 86.9 11-75 
  Clothing  238 14.3 0-15 0.2 3.8 35 
  Leather, rubber, footwear and travel goods  167 2.3 0-15 2.2 82.0 30-55 
  Non-electric machinery  535 0.1 0-15 8.9 98.7 11-55 
  Electric machinery  261 0.0 0 0.0 100.0  11-55 
  Transport equipment  189 0.3 0-10 6.1 97.4 11-75 
WT/TPR/S/ 387 • Papua New Guinea  
 
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   Number of 
linesa Average 
(%) Range 
(%) Standard 
deviation  Duty 
free 
(%) Range 
of 
bound 
rates 
(%) 
  Non-agricultural products, n.e.s.  389 (1)  1.4 0-30 3.2 89.5 11-100 
  Petroleum  17 (2)  0.0 0 0.0 88.2 30-40 
By ISIC sector        
ISIC 1 - Agriculture, hunting and fishing  419 (8)  12.9 0-40 13.2 36.3 11-100 
ISIC 2 - Mining  99 0.1 0-15 0.5 99.0 11-75 
ISIC 3 - Manufacturing  5,311 (74)  3.2 0-50 6.5 76.6 11-100 
   Manufacturing excluding food processing  4,552 (3)  2.1 0-50 5.3 84.2 11-100 
  Electrical energy  1 0.0 0 0.0 100.0  30 
By stage of processing        
First stage of processing  819 (8)  9.2 0-40 11.9 51.8 11-100 
Semi-processed products  1,845  1.4 0-50 5.1 90.8 11-100 
Fully processed products  3,166 (74)  3.9 0-30 6.6 70.0 11-100 
By HS section        
01 Live animals and products  420 (24)  11.0 0-25 6.8 25.0 11-55 
02 Vegetable products  323 15.0 0-40 15.0 38.1 11-100 
03 Fats and oils  81 8.2 0-25 11.0 60.5 11-55 
04 Prepared food, beverages and tobacco  304 (55)  10.3 0-30 7.7 26.0 11-100 
05 Mineral products  163 (2)  0.2 0-10 1.2 96.9 11-90 
06 Chemicals and products thereof  892 (1)  0.5 0-15 2.5 95.3 11-55 
07 Plastics, rubber, and articles thereof  247 1.5 0-15 3.9 85.8 30-55 
08 Raw hides and skins, leather, and their products  73 5.6 0-15 6.9 58.9 30-55 
09 Wood and articles of wood  133 12.5 0-50 9.9 6.8 90-100 
10 Pulp of wood, paper and paperboard  159 3.0 0-15 4.6 70.4 11-55 
11 Textiles and textile articles  834 4.9 0-15 6.8 64.7 11-55 
12 Footwear, headgear, etc.  52 4.8 0-15 5.3 53.8 40-55 
13 Articles of stone, plaster, cement  149 1.7 0-15 4.1 85.2 30-75 
14 Precious stones and metals, pearls  55 7.6 0-30 13.1 74.5 11-55 
15 Base metals and articles thereof  583 1.0 0-30 3.5 91.3 11-55 
16 Machinery, electrical equipment, etc.  798 0.1 0-15 1.1 99.1 11-55 
17 Transport equipment  200 0.3 0-10 1.6 97.5 11-75 
18 Precision equipment  212 0.0 0 0.0 100.0  11-55 
19 Arms and ammunition  18 0.0 0 0.0 100.0  30 
20 Miscellaneous manufactured articles  127 4.8 0-30 7.4 67.7 30-75 
21 Works of art, etc.  7 0.0 0 0.0 100.0  30 
a Figures in brackets refer to number of tariff lines with a specific rate.  
Note:  Calculations exclude non -ad valorem  rates. The 2019 tariff schedule is based on the HS17 
nomenclature.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
3.15.   PNG has bound 100% of its tariff lines. Some 98.4% of all tariff lines are bound at ad valorem  
rates ranging from 11% to 100%. Non -ad valorem  bindings apply to certain poultry items, tobacco 
products, alcoholic beverages, mineral waters, and matches. The s imple average bound rate on 
agricultural products (WTO definition) is 44%, whereas the average on non -agricultural products is 
31.9%. On average, the gap between the bound and applied rates stands at some 29.7 percentage 
points (up from 27.7 percentage poi nts6 in 2010), affording PNG considerable scope to increase 
applied tariffs (Chart  3.2). 
3.16.   On 23 tariff lines (up from 14 in 2010), applied rates exceed PNG's bindings. In addition, unit 
differences preclude meaningful comparison between applied and bound no n-ad valorem  rates on 
34 additional tariff lines. PNG has bound "other duties and charges" at zero.  
                                                
6 The percentage point difference was calculated on the basis of the 2010  version  of the 
HS nomenclature . WT/TPR/S/ 387 • Papua New Guinea  
 
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  Chart 3.2 Average applied MFN tariff rates by HS section, 2019  
 
Note:  Calculations exclude non -ad valorem  rates. Figures in parentheses denote the respective HS 
section's average bound rate.  
Source:  WTO Secretariat calculations, based on data provided by the authorities.  
3.1.4   Other charges affecting imports  
3.1.4.1   Border levies  
3.17.   Every declaration entry lodged into the customs system is subject to a processing fee of 
PGK 30. The fee does not apply to low -value consignments cleared by direct payment at a PNG 
Customs counter ( Section  3.1.1). A fee of PGK  300 is levied whenever an importer requests an 
advance ruling.  
3.1.4.2   Intern al taxes  
3.18.   Excise taxes are levied on a range of products, whether imported or manufactured 
domestically , including alcoholic beverages, tobacco, perfumes, pearls, precious stones and metals, 
certain consumer electronics, gaming equipment, arms and ammunitio n, petroleum products, and 
motor vehicles.7 Most excise tax rates are ad valorem , ranging from 10% to 150%. The tax base for 
imports is the c.i.f. value. Locally -manufactured products are taxed on the basis of the ex -factory 
price, which is adjusted every six months to reflect changes in the CPI. Specific rates apply to 
alcoholic beverages, tobacco, and petroleum products.  
3.19.   PNG introduced  a value added tax, called the Goods and Services Tax (GST), in 2004.  The 
GST is levied at the rate of 10% on the supply of goods and services, including on their importation.  
The tax base for the GST on imports is  the c.i.f . value plus any import and excise duties . For 
domestically -supplied goods and services,  the tax base is the sale price.   
3.20.   Zero-rated supplies, eligible for refund of the GST paid on inputs, include: all exports; 
prescription drugs and medical equipment;  goods (excluding cars) and services used solely by a 
mining, petroleum or gas company; and crude oil. The supply of financia l, educational, and medical 
services, as well as the provision of housing or a motor vehicle as part of an employment contract, 
are GST -exempt.  
                                                
7 The PNG Customs Service is responsible for the licensing and control of local manufacturers of 
excisable goods. In addition to obtaining an annual licence, these manufacturers must provide a bank 
guarantee in an amount determined by  the Commissioner of Customs.  
WT/TPR/S/ 387 • Papua New Guinea  
 
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  3.1.5   Duty and tax concessions  
3.21.   PNG grants tariff preferences in the framework of the RTAs to which it is a party 
(Section 2.3.2). Duty and tax concessions are also granted under various initiatives aimed at 
promoting investment or achieving social objectives ( Section  2.3.3). During 2012 -17, forgone 
revenue from concessions on imports ranged between 15.5% and 68.4% of rev enue collections by 
the PNG Customs Service, and between 4.6% and 18% of total tax revenue (Table  3.5).  
Table 3.5 Forgone revenue from imports, 2012 -17 
  2012  2013  2014  2015  2016  2017  
Total concessions on imports (PGK million)  633.4  434.4  1,727.1  400.8  425.9  553.2  
 Import duty  27.5 30.7 30.0 25.2 27.6 24.1 
 GST on imports  588.8  384.4  1,687.2  364.1  370.8  489.0  
 Excise tax on imports  17.2 19.3 9.9 11.5 27.4 40.2 
Memo:        
Import concessions/total fiscal revenue (%)  7.8 5.1 18.0 4.6 5.1 6.1 
Import concessions/fiscal revenue from customs (%)  25.3 18.4 68.4 15.5 17.6 33.1 
Source:  PNG Customs Service Annual Report (various issues), and data provided by the authorities.  
3.1.6   Import prohibitions, restrictions, and licensing  
3.22.   PNG has not submitted any notifications to the Committee on Import Licensing since 1998. 
At that time, it had affirmed the absence of procedures relevant to the Agreement on Import 
Licensing Procedures.8 Nevertheless, prior authorization and/or licence requirements remain in place 
for certain imports, mainly for security, public health and environmental reasons. For example, 
medicines may only be imported by a practitioner certified by the National Depart ment of Health.  
3.23.   Prohibited imports include pornographic materials, counterfeit bank notes or coins, 
recreational drugs, narcotics, certain weapons, matches containing white or yellow phosphorus, non -
biodegradable plastic shopping bags, and machines for gam es of chance.9  
3.24.   In August 2015, PNG imposed a moratorium on the issuance of import permits for fresh foods, 
including fruit, vegetables and  uncooked poultry, with the stated aim of fostering domestic 
production and further protecting biosecurity. In Novemb er 2015, the moratorium was revised to 
allow one company to import bulb onions, capsicum and tomatoes. The import ban was lifted, at 
least partially, in January 2016.10 
3.1.7   Anti-dumping, countervailing, and safeguard measures  
3.25.   PNG has no legal and institutional frameworks for the application of anti-dumping, 
countervailing, and safeguard measures. According to the authorities, a draft Anti -dumping and 
Countervailing Measures Act and a draft Safeguards Measures Act are undergoing legislative 
approval. To date, no contingency actions have been taken .  
3.1.8   Other measures affecting imports  
3.26.   PNG applies the trade sanctions adopted by the United Nations. According to the authorities, 
it is not a party to any countertrade or offsetting arrangements, or agreements aimed at influencing 
the quantity or value of goods or services exported to its market.  
                                                
8 WTO document G/LIC/N/2/PNG/1, 17 February 1998 . 
9 PNG Customs Service online information. Viewed at: http://customs.gov.pg/wp -
content/uploads/2018/06/pages_05_commercial_trade_and_compliance_2_prohibitions_1_prohibited_imports.
pdf. 
10 Papua New Guinea Today, Tomscoll opens PNG Market on Bulb Onion, uncooked poultry . Viewed at: 
https://news.pngfacts.com/2016/01/tomscoll -opens -png-market -on-bulb-onion.html . WT/TPR/S/ 387 • Papua New Guinea  
 
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  3.2  Measures Directly Affecting Exports  
3.2.1   Customs procedures and requirements  
3.27.   The registration and customs clearance procedures for e xports are similar to those for imports 
(Section 3.1.1), requiring notably a declaration, a commercial invoice, a packing list, a bill of 
lading/airway bill and, where applicable, original export permits and/or licences.  
3.28.   Exporters wishing to benefit from preferential access to foreign markets may obtain the 
necessary certificate of origin from the PNG Customs Service. The Department of Commerce and 
Industry  (DCI)  issues certificates of origin for trading partners' GSP schemes.  
3.2.2   Taxes, charges, and levies  
3.29.   PNG applies ad valorem  export taxes on crocodile skins (5%), jewellery and articles of gold 
or silver (5%), and certain ores and concentrates (5%). Since  January 2018, unprocessed 
old-growth logs (except plantation logs) are subject to a progressive export tax, whose rates 
increase with the f.o.b. price.11 Previously, exports of unprocessed logs were taxed at an ad valorem  
rate of 32.5%. A log export development levy of PGK  8 per m3 also remains in force.  
3.30.   In principle, export taxes are applied on the relevan t exports' f.o.b. value. However , a 
provision in the Customs Tariff Act stipulates that a different export value may be set by ministerial 
decision, published in the National Gazette.12 According to the authorities, this provision has never 
been used.  
3.2.3   Expor t prohibitions, restrictions, and licensing  
3.31.   PNG maintains export prohibitions on illicit drugs. In addition, a ban on exports of round logs 
is scheduled to come into effect in 2020. Export controls and restrictions are also in place, largely 
for the purpos es of protecting wildlife, cultural heritage, and the environment. Controlled exports 
require a prior authorization or a permit issued by the respective competent authority.13  
3.2.4   Export support and promotion  
3.32.   During the period under review, PNG notified to the  WTO Committee on Subsidies and 
Countervailing Measures an amendment to the Income Tax Act , repealing an export subsidy 
provision as of 1 January 2015. Several updates on implementation  were also submitted .14 In a 
separate notification, PNG affirmed that, d uring 2015 -16, it did not grant or maintain any export 
subsidy which operates to increase exports from , or to reduce imports into , its territory.15  
3.33.   PNG maintains an income tax concession allowing for the double deduction of expenditure on 
export market development. The tax savings must not exceed 75% of incurred eligible expenditure, 
which includes that on overseas publicity and advertising, market research, tender preparation, 
samples, trade fairs and exh ibitions, overseas sales offices, and certain travel.  
3.34.   Although the relevant legislation dates from 2000 (Table  2.1), there are no free zones in 
operation in PNG.  
                                                
11 National Budget  (2018), Volume 1 : Economic and Development Policies . Viewed at: 
http://www.treasury.gov.pg/html/national_budget/2018.html . 
12 PNG Customs Service online information. Viewed at: http://customs.gov.pg/wp -
content/uploads/2018/09/PNG -Customs -Tariffs -HS-2017-version.pdf .  
13 PNG Customs Service online information. Viewed at: http://customs.gov.pg/wp -
content/uploads/2018/06/pages_05_commercial_trade_and_compliance_2_prohibitions_2_prohibited_exports.
pdf. 
14 WTO documents G/SCM/N/243/PNG , 3 August 2012; G/SCM/N/253/PNG  and G/SCM/N/260/PNG , 
26 July 2013 ; and G/SCM/N/284/PNG, G/SCM/N/290/PNG, G/SCM/N/299/PNG , 21 November 2017.  
15 WTO document G/SCM/N/315/PNG, 17 November 2017.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  3.2.5   Export finance, insurance, and guarantees  
3.35.   According to the authorities, no export finance or risk mitigation facilities  with state 
involvement exist at the national level.  
3.3  Measures Affecting Production and Trade  
3.3.1   Incentives  
3.36.   PNG maintains a range of tax and tariff concessions under various initiatives aimed at 
promoting investment or achieving soci al objectives ( Section  2.3.3). In principle, fiscal incentives 
apply equally to domestic and foreign -owned businesses. Some of these may be granted by industry, 
type of activity, or on a company -specific basis. Statistics on forgone revenue from fiscal con cessions 
applied domestically were not available.  
3.37.   The Industrial Centres Development Corporation (ICDC), established in 1990, is in charge of 
setting up and managing industrial centres (ICs) , with a view to fostering private -sector investment, 
employment a nd income generation, economic diversification, and the development of secondary 
economic centres. Intended as incubation spaces for small to medium -sized companies, ICs offer 
their users (resident companies) access to serviced land and facilities, and a s treamlined framework 
for doing business.  
3.38.   In February 2019, there was one operational IC in PNG, the Malahang Industrial Centre in Lae 
(Morobe Province) , and another three were in different stages of deployment. IC performance 
indicators were not available . 
3.3.2   Standards and other technical requirements  
3.39.   The National Institute of Standards and Industrial Technology (NISIT) remains in charge of 
standards development, conformity assessment, accreditation,  and metrology services. According 
to the authorities, NISIT carries out the testing and certification of imports and goods in the domestic 
market  on an ad hoc  basis, typically when requested by government agencies or consumer protection 
organizations.  
3.40.   Lacking sustainable financing and long -term premises for the establishment of its facilities, 
NISIT has been facing significant challenges regarding  human and material resources, which have 
undermined its ability to deliver on its mandate. The 2019 National B udget has set aside additional 
resources, which should enable NISIT to restructure, grow its personnel (from 27 to 117 staff 
members within three years), and build capacity. A state -owned building has also been allocated for 
NISIT labs and an office comple x, with relocation to the new premises expected by April 2019. The 
authorities would welcome additional trade -related technical assistance for a review of the existing 
quality infrastructure, and the elaboration of a national quality policy and its impleme ntation.  
3.41.   NISIT represents PNG in relevant activities at the regional level, including in the framework 
of the Asia -Pacific Economic Cooperation (APEC) , the Pacific Area Standards Congress (PASC), the 
Asia Pacific Metrology Programme (APMP), the Asia-Pacifi c Legal Metrology Forum (APLMF), and the 
Asia Pacific Laboratory Accreditation Cooperation (APLAC). It is a correspondent member of the 
International Organization for Standardization (ISO), the International Bureau of Weights and 
Measures (BIPM), and the I nternational Organization of Legal Metrology (OIML). NISIT is signatory 
to the International Laboratory Accreditation Cooperation Mutual Recognition Arrangement (ILAC 
MRA), but its status has been suspended since August 2017 due to underperformance stemmin g 
from inadequate resources and facilities for the carrying out of its work.  
3.42.   NISIT serves as the national TBT enquiry point on standards and conformity assessment. PNG 
has not made any TBT notifications nor has it been the object of any TBT -related specif ic trade 
concerns since its last Review.  
3.43.   NISIT is a signatory to the WTO Code of Good Practice for the Preparation, Adoption and 
Application of Standards.16 Standards development is a demand -driven process that commences 
                                                
16 WTO document G/TBT/CS/N/170, 29 September 2006.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  with the submission of a proposal t o NISIT by any interested party . Seven technical committees, 
with broad stakeholder representation, consider the adequacy of international norms or the need for 
PNG to develop its own standards. In principle, draft standards are made available for public 
comment for 60 days. The final d raft is endorsed by the NISIT Council  and approved by the line 
minister before publication. While the mechanism for the elaboration and adoption of national 
standards has not changed during the review period, the authorities have indicated that the NISIT 
Council had not been operational for several years.  
3.44.   National standards may be declared as technical regulations by the competent line ministries 
and departments, generally following a public consultation process. Notices of adopted technical 
regulations, st andards and conformity assessment procedures are published in the National Gazette . 
NISIT is also responsible for  maintain ing a comprehensive database of standards, technical 
regulations and conformity assessment procedures in force in PNG. According to th e authorities, the 
database's implementation is underway. Relevant statistics were not available.  
3.45.   In principle, an accreditation division within NISIT operates the PNG Laboratory Accreditation 
Scheme (PNGLAS) and is responsible for the accreditation of tes ting and calibration laboratories, 
and certification bodies. However, the authorities have indicated that NISIT's accreditation functions 
have not been operationalized. PNG recognizes certificates issued from signatories of the ILAC MRA.  
3.3.3   Sanitary and phyto sanitary requirements  
3.46.   There was little change to PNG's SPS regime during the period under review; the legislation 
in force remains outdated , and a range of capacity weaknesses are yet to be addressed. The National 
Agriculture Quarantine and Inspection Auth ority (NAQIA) remains in charge of animal health and 
plant protection, including veterinary drugs and organic fertili zers. Biosecurity aspects of fish and 
fish products are the joint responsibility of NAQIA and the National Fisheries Authority. The Nationa l 
Department of Health is responsible for food safety and pharmaceutical products . The Conservation 
and Environment Protection Authority (CEPA), restructured in 2016, is in charge of wildlife and 
biodiversity protection, and the control of pesticides and i norganic fertili zers. 
3.47.   The D CI remains PNG's SPS notification authority, and the Department of Foreign Affairs and 
Immigration maintains the only enquiry point. PNG has not made any SPS notifications nor has it 
been the object of any SPS -related specific tr ade concerns since its last Review. According to the 
authorities, PNG observes the standards, guidelines, and protocols of the International Plant 
Protection Convention (IPPC), the World Organisation for Animal Health (OIE), and the Codex 
Alimentarius Comm ission (CAC).  
3.48.   A system of import permits issued by NAQIA remains in place for: live animals, animal 
products, fish and fish products, plants, timber, plant products, biological organisms,  sand, stone 
and gravel. Import permit applications must be lodged a t NAQIA's head office in Port Moresby, either 
by post or over the counter. The typical processing time is four to five working days.17 In some 
cases, prior approvals by other competent authorities are also required.18 Import permits are valid 
for three months , and specify the quantity and country of origin of the authorized good . According 
to the authorities, an electronic system for the issuance of import permits is being developed but 
progress is hampered by the lack  of a sustainable funding arrangement.  
3.49.   NAQIA conducts a risk assessment whenever an import or transhipment permit application 
concerns a good or a supplier which has not been previously analysed. The assessment may involve 
an evaluation visit by a NAQIA o fficer to the overseas authority in charge of SPS control and the 
exporter's production facilities. The import risk assessment process may take from 6 to 18  months 
to complete. In most cases, the assessment costs, including travel and accommodation of the officer 
sent on an overseas inspection, are met by the applicant. In case of a favo urable risk assessment, 
NAQIA issues a protocol setting out the product -specific import requirements.  
                                                
17 A fast-track procedure for t he issuance of import permits within 24 hours is in place for consignments 
that require urgent clearance.  
18 Examples of authorities involved in the approval process include: CEPA  (wildlife species,  
micro -organisms and biological control agents ); the Nation al Fisheries Authority  (aquatic species ); and the 
National Department of Health  (rice). WT/TPR/S/ 387 • Papua New Guinea  
 
- 40 - 
 
  3.50.   The original import permit and the requisite exporting -country document ation stipulated 
therein must be presented upon the consignment's arrival at the point of entry into PNG for 
documentary checks.19 NAQIA may carry out quarantine inspection of certain consignments before 
they are cleared for entry, based on the country of o rigin and the importer's past biosecurity 
compliance record. According to the authorities, approximately 30% of import consignments are 
subject to biosecurity inspections before clearance.  
3.51.   PNG has not enacted any legislation on genetically modified organi sms (GMO s). According to 
the authorities, GMO imports are cleared for entry without any specific controls. PNG maintains 
import bans on: fresh poultry products and semi -cooked pork products from several Asian countries; 
bananas from Australia; and potatoes  from New Zealand and certain Australian states. The issuance 
of import permits for barracuda fil lets from Australia and New Zealand has been suspended.  
3.52.   NAQIA carries out the optional certification of exports' pest and disease status, and certifies 
the qu ality of exported cocoa beans under a long -standing arrangement with the Cocoa Board. 
Exporters must make their own arrangements to obtain information on the import requirements of 
the destination market , and communicate them to NAQIA for the purposes of t he certification 
process.  
3.53.   According to the authorities, plant and animal health surveillance activities on the domestic 
market have been hampered by resource constraints and statutory limitations to NAQIA 's 
enforcement powers. PNG's laboratory diagnostics  capacity is limited to highly pathogenic avian 
influenza, Newcastle disease and histamine (fish and fishery products). All other diagnostics are 
performed at overseas laboratories.  
3.3.4   Competition policy and price controls  
3.54.   The Independent Consumer and Competi tion Commission Act (ICCC Act), enacted in 
March  2002, has the primary objectives of: enhancing welfare through the promotion of competition, 
fair trading and consumer protection; promoting economic efficiency in terms of industry structure, 
investment and  conduct; and protecting the nation's long -term interests  with regard to the price, 
quality and reliability of significant goods and services. Application of the Act commenced in January 
2003, with the establishment of the Independent Consumer and Competit ion Commission (ICCC), a 
statutory body. The ICCC's mandate comprises: competition and consumer protection enforcement; 
administering price controls; and regulating certain markets.  
3.55.   The Treasury Minister may declare certain goods, services, entities, and i ndustries to be 
regulated by the ICCC. The ICCC can adopt different approaches, depending on the regulatory needs. 
Several SOEs in monopoly or market dominance positions have been declared regulated entities and 
remain subject to regulatory contracts, whic h stipulate prices and quality standards for a period of 
up to ten years. As at February 2019, such entities comprised PNG Ports Corporation Ltd20, Post PNG 
Ltd, Motor Vehicle Insurance Ltd, and PNG Power Ltd.21 In 2015, the ICCC switched from using 
regulato ry contracts to applying a maximum average price for the supply of water and sewerage 
services by two SOEs with regional monopolies (Water PNG Ltd and Eda  Ranu Ltd). 
3.3.4.1   Competition policy  
3.56.   In principle,  no sector of the economy is exempted from the application  of the ICCC Act, which 
also applies to SOEs that engage in commercial activities in competition with private firms. As in 
other jurisdictions, export -oriented anti -competitive practices (including cartels) that have no effect 
on the domestic market are exempted from the Act's application.  
3.57.   The ICCC  Act prohibits conduct or arrangements that would harm competition in PNG. 
Price-fixing (including collusive tendering) and resale price maintenance arrangements are 
                                                
19 Processed goods originating from third countries /territories  that have been  re‐exported from Australia 
to PNG do not need SPS certification , if they are  accompanied by a protocol certifying that the consignment 
had been cleared for entry into Australia .  
20 Some services provided by PNG Ports Corporation Ltd , including  pilotage  and storage  facilities, are 
not covered by the regulatory contract.  
21 New entra nts in the electricity industry  must apply for a licence from the ICCC , but may set their 
prices independently . As at February 2019, nine licences  had been issued . WT/TPR/S/ 387 • Papua New Guinea  
 
- 41 - 
 
  prohibited per se . Other anti -competitive conduct (including exclusionary practices and ab use of 
market power) and economic concentrations (mergers or acquisitions) are prohibited if deemed, in 
an effects -based assessment, to substantially lessen competition in the relevant market.22 The ICCC 
may authorize certain conduct (unless prohibited per se) or an economic concentration if it deems 
that the generated public benefits would outweigh the anti -competitive effects.  
3.58.   PNG maintains a voluntary notification system for economic concentrations. If in doubt about 
a proposed transaction's likelihood to  substantially lessen competition, the merging parties can apply 
to the ICCC for an assessment. Mergers completed without notifying the  ICCC could be investigated 
ex post . According to the available enforcement activity statistics, during 2011 -17 merger co ntrol 
accounted for a significant share of the ICCC's workload (Table  3.6). 
Table 3.6 Competition enforcement, 2011 -17 
 2011  2012  2013  2014  2015  2016  2017  
Total complaints/requests received  6 1 5 3 6 4 4 
Inquiries concluded 6 1 5 3 6 4 4 
Abuse of market power  3 0 3 1 2 1 1 
Other anti -competitive practices  3 1 2 2 4 3 3 
   Authorization granted  1 0 0 0 0 0 0 
Mergers  4 4 2 4 8 3 8 
   Authorization granted  1 1 1 2 0 0 3 
   Clearance granted  1 2 1 1 5 2 5 
   Blocked  0 0 0 0 0 0 0 
Market studies  0 0 0 0 1 1 3 
Note:  An authorization is granted whenever the ICCC finds a substantial lessening of competition, but 
deems that its effects are outweighed by public benefits. Clearance is granted whenever the ICCC 
assessment finds that a proposed merger would not result in a substantial lessening of competition.  
Source:  ICCC. 
3.59.   In July 2018, the National Executive Council (NEC) approved a switch from the voluntary to 
a compulsory pre -merger notification system, which will enter into force following publication in the 
National Gazette. The amendment will require prior notification of any concentration that either 
exceeds the transaction value threshold of PGK  50 million, or would likely result in the acquirer's 
market share increasing by 50% or more.23 According to the authorities, a recent a competition and 
consumer protection review by the Department of Treasury has recommended further improvements 
to the existing legal and institutional framework; their implement ation is forthcoming.  
3.60.   The ICCC investigates alleged contraventions of the ICCC Act (fact -finding and analysis) but 
must bring any cases that raise competition concerns before the National Court for adjudication.24 
Decisions on both liability and any remedi es are taken by the National Court. Remedies include: 
injunctions to suspend conduct until the case is adjudicated; pecuniary penalties of up to 
PGK 10 million per firm and PGK  500,000 per individual; orders for divestiture of assets; and 
banning individua ls from managerial posts for up to five years. Decisions of the National Court may 
be appealed to the Supreme Court.25  
3.61.   The ICCC can undertake studies of economic competition in a particular sector, either 
ex officio  or at the Department of Treasury's reque st. Typically, such studies are intended to provide 
the Government with evidence -based policy options, or to assess the need for a change of regulatory 
approach. When a market study identifies obstacles or restrictions to competition, it also formulates 
recommendations for their removal. However, the Government is not required to act on the ICCC's  
recommendations.  
                                                
22 The ICCC Act does not explicitly define "substantial lessening of competition" and "substa ntial market 
power" .  
23 Failure to compl y with the pre -merger notification requirement will be liable to a fine of PGK  750,000.   
24 Failure to comply with an ICCC investigation is considered a summary offence , carrying a maximum 
penalty of PGK 50,000 or imprisonment for up to six months.  
25 According to the authorities, once the court has found an infringement of the ICCC Act, it is , in 
principle , possible for private parties to initiate legal proceedings for the recovery of damages. However, no 
party has initiated such proceedings to date.  WT/TPR/S/ 387 • Papua New Guinea  
 
- 42 - 
 
  3.62.   According to the authorities, the ICCC has developed a cooperation agreement template but 
has not yet entered into any formal international coope ration arrangements. It is also struggling  to 
participate in the work of the International Competition Network.  
3.3.4.2   Price controls  
3.63.   Pursuant to the Price Regulation Act 1949 , PNG maintains price controls on several goods and 
services, as declared by the Treasur y Minister. The ICCC sets: maximum wholesale and retail mark -
ups for certain fuels (petrol, diesel, kerosene, and Jet A1); maximum rates for water and sewerage 
services; and maximum public motor vehicle and taxi fares. It monitors the prices of rice, flour  and 
sugar, as well as stevedoring and handling charges (only at the ports controlled by PNG Ports 
Corporation Ltd), without regulating them.  
3.3.5   State trading, SOEs , and privatization  
3.64.   PNG has not submitted to the WTO any notifications on state -trading entiti es. According to 
the authorities, no public entities or SOEs have any exclusive rights to import, export or supply on 
the domestic market a particular good or service.  
3.65.   In June 2015, with a view to ensuring the efficient management of state -owned commercial 
assets, PNG established a framework that consolidated: all state interests in oil and gas projects 
under Kumul Petroleum Holdings (KPH); all state interests in mining projects under Kumul Minerals 
Holdings (KMH); and all remaining SOEs under Kumul Consolidated Holdings (KCH). As at 
December  2018, the KCH portfolio of companies alone had combined assets of PGK  9 billion 
and 7,117 employees.26  
3.66.   State involvement remains pr evalent in many sectors of the economy and, in some cases, 
continues to crowd out private entrepreneurs. SOEs have commercial operations in, inter alia , 
energy, mining, water and sewerage, telecommunications, aviation, harbour facilities, financial 
service s, and agriculture and food processing (Table  3.7). The authorities have taken some steps to 
encourage PPPs and to facilitate the entry of private suppliers in power generation and 
telecommunications. Nevertheless, a number of SOEs continue to benefit from  soft budget 
constraints and access to concessional finance arrangements.  
Table 3.7 State participation in the economy, 2019  
Enterprise  State participation  
(%) 2019  Area(s) of activity  
KCH   
Air Niugini Ltd  100 Air transport  
Water PNG Ltd (Eda Ranu Ltd)  100 Water supply and sewerage services  
Motor Vehicle Insurance Ltd  100 Compulsory third-party motor vehicle 
insurance  
National Development Bank (NDB 
Investment, People's Micro Bank)  100 Development finance (credit and guarantees); 
commercial banking services  
PNG Ports Corporation Ltd  100 Harbour management and maritime 
compliance authority; port operator 
(Section  4.4.4.3 ); harbour pilotage services  
PNG Power Ltd  100 Electricity generation, transmission, retail and 
distribution; technical regulatory functions 
(licensing electrical contractors, certifying 
electrical equipment, installation safety 
checks)  
Post PNG Ltd  100 Postal services; logistics and financial services  
Kumul Telikom Holdings Ltd 
(Telikom  PNG, Bmobile, PNG 
DataCo)  100 Fixed -line and mobile telecommunications 
(wholesale and retail); fibre -optic and satellite 
infrastructure  
Kumul Agriculture Ltd (National 
Plantation Management Agency, 
Sepik Agro Industries, Central 
Dairy, Livestock Development 
Corporation)  100 Agri-business  
Pacific International Hospital  11.5 Healthcare services  
                                                
26 KCH, Transforming today for a stronger PNG tomorrow, A year in review  (2018).  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Enterprise  State participation  
(%) 2019  Area(s) of activity  
Bank of South Pacific  18.2 Financial services  
PNG Dams  .. .. 
Kumul Technology Dev Corp  .. .. 
Government Stores   .. 
Kumul Property  .. .. 
KPH   
PNG LNG  16.57  LNG production, transportation and supply  
.. .. .. 
KMH   
.. .. .. 
.. Not available.  
Note:  Known subsidiaries of main entities are listed in parentheses. Details on the portfolios of KPH and 
KMH were not available.  
Source:  Information provided by  the authorities.  
3.3.6   Government procurement  
3.67.   PNG is not a party or an observer to the plurilateral Agreement on Government Procurement.  
3.68.   PNG's public procurement framework is being revamped following the adoption  of a new 
National Procurement Act and an amendm ent to the Public Finance Management Act  in 
September  2018. In January 2019, the Central Supply and Tenders Board (CSTB) became the 
National Procurement Commission (NPC) , with authority to undertake procurement on behalf of all 
central, provincial and dist rict government divisions, as well as previously -excluded SOEs and 
statutory bodies. To fulfil its mandate, the NPC is to establish a country -wide network of committees 
at the provincial and district levels. Entities with demonstrated in -house capacity may  obtain 
certification to conduct procurement on their own behalf, subject to certain contract value thresholds 
(Table  3.8). All procurement contracts must be drawn, approved and cleared by the State Solicitor.  
The authorities expect the transition to the n ew public procurement framework to take approximately 
three  years.  
Table 3.8 Procurement proceedings  limits, 2019  
Entity type  Maximum contract value  
Public and statutory bodies  PGK 500,000, with a simplified system for contracts below 
PGK 5,000  
NPC District Committee  PGK 2.5 million  
NPC Provincial Committee  PGK 5 million  
NPC Unlimited, but contracts over PGK  10 million  must be approved the 
NEC and be signed by the Head of State  
Source:  Information provided by the authorities.  
3.69.   In principle,  open tender ing remains the main procurement method. The scope for exemptions 
via a certificate of inexpediency  to tender  has been reduced. Statutory provisions empowering the 
Minister for Finance or th e NEC to issue such certificates have been repealed. Furthermore, the 
circumstances in which the NPC may grant certificate s of inexpediency to tender  (subject to 
ratification by the NEC ) have been limited to: an emergency declared by the NEC; or negotiatio ns 
for a loan  to a public or statutory body . Summary  statistics  of contracts awarded  during the review 
period and the procurement methods used were not available.  
3.70.   The National Procurement Act formally introduces provisions stipulating local preference 
margins and reserving certain tenders for PNG nationals. Bids by national suppliers with the 
appropriate capacity to fulfil the contract are eligible for a price preference of 15% for goods and 
7% for works or services. A preference margin of 4% applies to all joint ventures that are majority -
owned by national suppliers. In addition, contracts worth up to PGK  10 million can only be awarded 
to PNG citizens or 100% nationally -owned companies; those with a value greater than  PGK 10 million 
but less than PGK  30 million are reserved for partnerships with at least 50% national  participation .  WT/TPR/S/ 387 • Papua New Guinea  
 
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  3.3.7   Intellectual property rights  (IPRs)  
3.71.   In June 2016, PNG accepted the Protocol Amending the TRIPS Agreement, which took effect 
on 23 January 2017.27 No changes to the legal and institutional framework  governing IP took place 
during the  review period . The authorities are aware of the need to review the current outdated laws, 
to take account of technological change and align them with internationa l treaties. This has prompted 
the drafting of a National IP Plan, with the aim of enhancing the utilization of IP and enabling PNG 
to meet its relevant international obligations.   
3.72.   The Intellectual Property Office of PNG (IPOPNG), within the Investment Prom otion Authority 
(IPA), remains responsible for industrial property administration. IP Australia helps IPOPNG in the 
search and substantive examination of patent applications , under a cooperative arrangement 
renewed in 2017. Compulsory licensing provisions are set out in  the Patents and Industrial Designs 
Act, 2000. There are no legal provisions on exhaustion of rights . A unit of IPOPNG  also handles 
issues related to copyright and related rights . No provisions regarding the collective management of 
such righ ts are contained in the legislation.  
3.73.   In 2016, with the assistance of WIPO, IPOPNG completed an upgrade of its IP automation 
system, thereby eliminating the manual processing of patent and industrial design applications. 
Statistics on the various types of IP protection sought and granted during 2011 -18 were not 
available.  
3.74.   Right holders may ask the PNG Customs Service to seize imports suspected of IPR 
infringement, subject to the provision of prima facie  evidence. Ex officio  action  may also be taken , 
provide d the right holder has registered with the PNG Customs Service and has signed a waiver 
protecting it from future court action resulting from any such seizure.  According to the authorities, 
the duplication of IPR registration fees at IPOPNG and the PNG Customs Service acts as a disincentive 
to most right holders .  
3.75.   IP enforcement continues to face major challenges, including lack of human resources and 
funding; inadequate infrastructure for managing and administering IPRs; absence of IPR -related 
training and educational institutions and services; and lack of awareness among major stakeholders. 
The sale of counterfeit and pirated goods remains widespread.  
 
 
                                                
27 WTO document WT/Let/1173, 29 November 2016.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  4  TRADE POLICIES BY SE CTOR  
4.1  Agriculture, Forestry, and Fisheries  
4.1.1   Agriculture  
4.1.  PNG has abundant but underutilized agriculture land. An estimated 30% of PNG 's land has 
moderate to very high agricultural potential. However, less than 4% of it is currently used for 
commercial agricultural production. Agriculture and related activities account ed for 18.0% of GDP 
in 2018 (Chart 1.1), and around 80% of the population farm for food or cash. The sector is 
dominated by small farms , averaging about one hectare. Subsistence or semi -subsistence farmers 
grow mostly sweet potato es, banana s, yam s, cassava, taro, cocon uts, sugar cane, maize, and 
peanuts. Labour -intensive plantation estates  and smallholders produce almost all the food consumed 
in PNG and over 80% of exported crops, mostly palm oil , coffee, tea, cocoa, copra, and rubber . Most 
cash crops are exported in ra w form , and are transformed abroad into finished products for final 
consumption, which are then re -imported.  
4.2.  PNG's agricultural sector is generally much less productive, and therefore much less profitable, 
than agricultural sectors in many similar countrie s. For example, the current stocks of coffee and 
cocoa trees are old , and are therefore low -yielding. There is, therefore, considerable scope for  
expansion of PNG 's agricultural output.1 
4.3.  During the review period, agriculture exports generally have fallen  (Table 4. 1), mainly as a 
result of a major drought in 2016 -17 but also due to low productivity that reflects some of the key 
challenges facing the sector: inadequate R&D; poor application of technological improvements; lack 
of scale economies inherent in smallholder farming; and other major constraints, such as deficient 
transport facilities, unreliable and expensive utilities, prevalent crime and lawlessness, and insecurity 
of land ownership and tenure. Modernization of the agriculture sector could see a fundamental 
transformation , as millions of people would move from the informal subsistence sector to the formal 
economy.2 
Table 4.1 Main agriculture exports, 2012 -16 
('000 tonnes and PGK million)  
 2012  2013  2014  2015  2016  
Palm oil       
  Volume  483.0  487.2  514.8  486.9  147.2  
  Value  1,009.9  903.5  1,086.4  837.6  254.3  
Coffee       
  Volume  55.5 48.5 48.4 42.8 6.6 
  Value  478.5  336.7  450.3  393.5  60.1 
Cocoa       
  Volume  38.1 38.7 33.6 30.9 3.1 
  Value  182.6  206.0  243.1  255.7  26.0 
Copra       
  Volume  32.9 15.8 48.2 33.6 11.4 
  Value 33.1 13.2 63.7 45.0 15.2 
Tea      
  Volume  3.8 2.9 2.1 1.3 0.2 
  Value  11.7 10.4 8.4 4.9 0.9 
Rubber       
  Volume  5.1 3.4 3.2 2.2 0.2 
  Value  33.1 19.4 13.8 7.9 0.5 
Copra oil      
  Volume  22.0 13.5 11.1 14.6 6.4 
  Value  56.1 24.5 28.7 39.3 15.9 
Source:  Data provided by the authorities . 
                                                
1 Department of National Planning and Monitoring (2010), Papua New Guinea Developmen t Strategic 
Plan (DSP) 2010-30, Port Moresby.  
2 Department of Commerce and Industry (DCI) (2017), Papua New Guinea: National Trade Policy (NTP) 
2017-32, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  4.4.  The Department of Agriculture and Livestock (DAL) is responsible for the sector. The principal 
agricultural R&D agency is the state -owned National Agricultural Research Institute (NARI), which 
focuses on general activities and semi -subsistence smallholders. Crop -specific R&D and extension 
services are provided by non -profit statutory r esearch institutions, i.e. the PNG Cocoa and Coconut 
Research Institute (CCI), the Coffee Research Institute (CRI), and the Oil Palm Research Association 
(OPRA)3, which are funded mainly by commodity levies. Governance issues have adversely affected 
R&D institutions (and commodity boards), largely due to political appointments of directors and 
politicization, making them almost dysfunctional. According to the authorities, the roles and 
functions of the DAL  and other agencies within the sector need to be c larified in order to improve 
the delivery of the essential support functions of providing extension services, credit services and 
training.4  
4.5.  Major export tree crops are administered by statutory marketing boards, which report to the 
Government through the  Minister for Agriculture and Livestock but maintain their autonomy through 
grower -controlled boards.5 The main boards are the Cocoa Board6, the Coconut Industry 
Corporation7, the Coffee Industry Corporation  (CIC)8, the Spice Industry Board9, the Oil Palm 
Industry Corporation  (OPIC)10, and the PNG Rubber Industry Corporation .11 The boards are 
established by legislation that provides broad powers, including: collecting levies from growers, 
exporters and importers to fund operations, including controlling sales , including exports, and 
associated licensing of traders and sellers; setting quality standards, conducting inspections, and 
certifying exports; providing farm extension services; and financially assisting growers, for example, 
to rehabilitate crops. Marke ting functions are provided by licensed private operators, except for 
rubber, which remains the only state -controlled and managed industry.12 The efficiency and rationale 
for such marketing boards is questionable, and they may be impeding agricultural devel opment.  
4.6.  All state interests in the agriculture sector are under Kumul Agriculture Limited (KAL), a 
subsidiary of Kumul Consolidated Holdings (KCH) ( Section 3.3.5). All legal titles of agricultural 
assets, whether held directly or indirectly, are currently being transferred to KAL. These include: 
National Plantation Management Agency Limited, Sepik Agro Industries Limited, Central Dairy  
Limited, and the Livestock Development Corporation.13 
4.7.  Some of PNG's main laws and regulations regarding the agriculture sect or are: the Export 
(Desiccated Coconut) Act , 1956; the Coffee Industry Corporation (Statutory Functions and Powers) 
Act, 1991; the Kokonas Indastri Koporesen Act , 2002 (coconut) ; the Cocoa Act 1991 ; the Cocoa 
Regulation , 1982; the Copra Act , 1953; and the Copra Inspection Regulation , 1982 (Table 2.1) . 
4.8.  PNG's key policy objective for the sector is "to promote a vibrant and competitive integrated 
agriculture and food sector able to compete evenly against imports to promote food security, rural 
                                                
3 The non -profit OPRA is privately funded by New Britain Palm Oil Ltd (NBPOL)  and other palm 
oil-growing firms paying a per -tonne production levy.  
4 Department of National Planning and Monitoring (2010), Papua New Guinea DSP 2010-30, Port 
Moresby.  
5 The Minister of the DAL is the Chair of all the Commodity Boards.  
6 The Cocoa Board , funded by an industry levy, regulates the growing, processing, marketing, and 
export of cacao, cacao beans, cocoa beans and cocoa products through licensing. The Board is undertaking a 
review of the cocoa industry legislative framework. There have been s uggestions for better sectoral 
representation on the Board, particularly concerning the private sector. The Board of Directors currently has 
four representatives , while it should have seven.  
7 The Coconut Industry Corporation (Kokonas Indastri Koporesen, o r KIK) licen ses buyers, 
manufacturers, processors, and exporters of coconut products. It also inspects and certifies exports of copra 
and coconut products for PNG quality standards. It is funded by an export levy, initially set at PGK 60 per 
tonne on copra , PGK 80 on coconut oil, and PGK 30 on other coconut products.  
8 The CIC licenses coffee dealers (exporters, processors, and manufacturers) and inspects all premises, 
including roadside coffee buyers. Nationally owned firms, especially with broad -based gro wer shareholdings, 
receive preference regarding the  issuance of  manufacturing and processor licen ces. Licensed processors must 
sell to licensed exporters and meet the PNG Standards for Green Coffee and the Minimum Quality Standards 
for Unprocessed Coffee.  
9 Exporters of processed and unprocessed spices, including vanilla, must be licensed by the Spice 
Industry Board (Spice Industry Act , 1989).  
10 The OPIC provides extension services to smallholders, and is 50% -funded by  NBPOL . 
11 Rubber  remains the only state -controlled and -managed  industry, and is the responsibility of the 
Rubber Industry Board.  
12 Government representatives also sit on these boards.  
13 KCH (2018), Transforming today for a stronger PNG tomorrow: A year in review 2019 , Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  development and poverty alleviation". The National Trade Policy (NTP) 2017-32 calls for the following 
measures: support and grow the local stock -feed industry to supply the poultry and livestock 
industries; develop a list and/or guidelines to designate agriculture goods a s "special products" 
and/or "sensitive products" which will be exempt from any tariff reduction commitments in PNG 's 
various RTAs; establish adequate national standards for production and processing to maintain food 
quality and safety along the supply chai n (including testing and verifying that imports meet national 
standards) and progressively implement these standards; establish clear criteria to use contingency 
trade measures to protect local agri -food industries against unfair trade practices and import  surges 
if required; create special economic zones (SEZs) to promote the development of agri -manufacturing 
industries; simplify administrative processes and procedures to obtain export approvals and permits 
for agriculture products of export interest; and reintroduce price stabilization funds to protect 
farmers against agriculture commodity price downturns.14 
4.9.  The tariff is the main border measure assisting agriculture. On average, the MFN tariff on 
agriculture (WTO definition) is 10.1% , ranging from zero to 40%. Some 46%  of the total agricultural 
products are duty -free. Applied tariffs are generally much lower than the corresponding bound rates, 
with an average applied tariff rate of 3.9%. PNG bound around one third of all its agricultural items 
at 45%; bindi ngs for fruits and vegetables are high, up to 100%. The agricultural policy relies on 
the self -sufficiency -driven notion of food security, using high tariff barriers at the border for the 
targeted products (e.g. pork, poultry, and sugar).  
4.10.   Considering the p olicy emphasis on agriculture for export -driven growth (through exports of 
palm oil, coffee, cocoa, coconut, etc.), market access reforms through tariff reductions (including 
addressing tariff escalation) should assist economic development.  
4.11.   PNG is the only  Pacific Island that has an aggregate measure of support (AMS) entitlement 
(its final bound total AMS is USD 34.2 million). Recently, it submitted its first domestic support 
notification to the WTO, covering the years 2013, 2014, 2016 and 2017. Its total A MS was 
USD 34.2 million in each of those years. Measures exempt from reduction commitments ("Green 
Box") were general services, mostly on cocoa - and coconut -related projects.15  
4.12.   PNG is still to submit other notifications to the Committee on Agriculture. It has not submitted 
any SPS notifications to date.  
4.13.   PNG is among the nine  small and vulnerable economies (SVEs) who obtained the same 
treatment as LDCs and Net Food -Importing Developing Countries in the December 2015 Nairobi 
Ministerial Decision on Export Com petition in the areas  of export finance (allowance for a repayment 
term of between 36 and 54 months for export finance scheme s covering products imported by these 
countries) and international food aid ( the possibility of monetiz ing international food aid b eyond the 
mere funding of transportation and delivery of food aid).  
4.14.   The National Agricultural Development Plan aims to develop a well -coordinated planning and 
implementation strategy , centred on research and extension, training and information, industrial 
tree crops, food and horticulture, spices and minor crops, livestock, apiculture and aquaculture, and 
regulatory and technical services. Transport infrastructure, a major impediment to agriculture, is 
being improved. Roads are critical to connect fertile r egions of PNG with markets.16 
4.15.   General tax incentives apply across all sectors but there are also specific incentives for 
agriculture (Table A2.1 ). 
4.16.   Table 4. 2 provides some of the key agriculture targets to be reached by 2030. PNG aims to 
achieve a five -fold increase in agricultural production between 2010 and 2030, create an estimated 
267,400  additional jobs , and earn PG K 7.2 billion in additional national income by 2030. The 
substantial increase in agriculture is derived from a 180% rise in the use of land b y agriculture , and 
from a 60% improvement in agricultural productivity.  
                                                
14 DCI, Papua New Guinea: NTP 2017-32, Port Moresby.  
15 No data was available for 2015. WTO document G/AG/N/PNG/1, 25 July 2018.  
16 Without roads, fertile land will remain idle or underutilized, despite extension services. The better the 
roads, the  easier it would  be for farmers to supply markets , and the more profitable farmers  would become . WT/TPR/S/ 387 • Papua New Guinea  
 
- 48 - 
 
  Table 4.2 Key agriculture targets for 2030  
Indicator  Baseline  2030 target s/objective s 
Meat production, including 
organic  407,000 tonnes  in 
2007 4 million tonnes  
Coffee production  63,000 tonnes in 2008  500,000 tonnes  
Palm oil production  556,000 tonnes in 
2007 1.6 million tonnes  
Cocoa production  56,000 tonnes in 2008  310,000 tonnes (minimum of 100,000 tonnes 
required to allow the development of a local 
processing industry)  
Copra production  110,000 tonnes in 
2007 440,000 tonnes  
Horticultural production, 
including organic  .. Multiply  by 5  
Rice production  Domestic market 
dominated by foreign 
entities  Strengthen the bargaining power of local 
growers , and encourage local processing  
Sago production  .. Establish 2 large -scale sago plantations by 
2030, and venture into full commercialization  
Staples (sweet potatoes, 
cassava, taro, banana s) 
production  .. Increase production to levels sufficient to feed 
the population , and supply downstream 
industries  
Subsistence agriculture  Most people in rural 
areas depend on 
subsistence  farming  70% of subsistence farmers to expand into 
small and medium primary agricultural 
enterprises  
.. Not available.  
Source:  Department of National Planning and Monitoring (2010), Papua New Guinea DSP 2010-30, p. 90, 
Port Moresby.  
4.17.   According to the authorities, to achieve these targets , land reform will be necessary to provide 
the incentive to landowners to release their land for agricultural development. At the same time, 
extension services will assist land holders to replant with new, high -yielding varieties of coffee, cocoa 
and copra.  Given that the yield of these new varieties will be at least twice that of current crops, 
extension services can be expected to yield a return of more than 100%. Implementing the 
international Codex food safety and fair trade standards will support the ma rketing of PNG 's food 
exports, opening up profitable export opportunities for the agriculture and food sectors.17 
Interventions that are non -discriminatory, transparent and cost effective will also be an important 
strategy over the next 20 years. For exampl e, with the Government 's support, the NARI has 
established  that PNG 's vanilla beans are high in vanilla content, despite being too short for export, 
thereby raising the possibility  of domestic processing.18 
4.1.2   Forestry  
4.18.   Forests cover approximately  25.8 million hectares, almost two thirds of PNG 's total land 
area.19 Round logs are the main export , other exports include timber, plywood, and woodchip. Log 
exports account for 3% of total merchandise exports. PNG logging costs are reportedly higher than 
in other count ries in the region , mainly due to difficult terrain and large distances from forests to log 
export centres. Forests are traditionally on customary owned land.  
4.19.   Logging is regulated by the PNG Forest Authority (the Forestry Act , 1991) , in line with the 
Natio nal Forest Policy. In addition to annual royalties of some USD 6 million paid to landowners, and 
the provision of services and infrastructure in remote areas, the sector contributes substantially to 
government revenue through income tax and a progressive e xport tax on unprocessed old -growth 
logs (except plantation logs) (Section 3.2.2) . 
4.20.   The Medium -term Development Plan 2016 -17 indicate d that, in the preceding  years, forests 
had been degraded and depleted due to excessive logging , and call ed for this practice to be stopped. 
                                                
17 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
18 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
19 Between 1977 and 2002, 15% of the natural rainforest was cleared , with 8% degraded to secondary 
forest. However, PNG still ranks among the top 20 nations in the world for forest cover.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  The Government decided to ban all round -log exports by 2020. In addition, a moratorium on the 
issuance of new logging permits  is in place.20 
4.21.   An average MFN tariff of 7.5% is levied on wood, pulp, paper and furniture , with r ates ranging 
up to 50% (Table 3.4) .  
4.22.   PNG's key policy objective for the sector is "to promote a financially and economically 
sustainable forest industry through improved international market visibility ". The NTP 2017-32 calls 
for: increase d connectivity wi th the private sector, other government agencies, civil society and 
international organizations to encourage information linkages and transparency on international 
trade of forest and wood products; the marketing and promotion of wood products to maximize 
returns and minimize transfer pricing in the log export trade; and the encourag ement of  domestic 
processing of forest products wherever this is  economically and financially viable.21 
4.23.   Table 4. 3 provides some of the key forestry targets to be attained by 2030. PNG aims to 
achieve a forestry sector that is both sustainable and profitable for current and future generations 
through the following measures: establish a forest resource inventory to ensure policy decisions are 
well-informed; promote sustainabl e forest management through reforestation and afforestation 
program mes; prevent the felling of virgin forests unless the land is developed to provide sustainable 
jobs and income, whether through agriculture, plantation or other profitable land uses; pursue  
downstream processing of forest products such that 80% of PNG timbers are processed in PNG 
by 203022; strengthen the regulatory and policy framework, including ensuring compliance , to give 
full effect to government policy; and enhance the research and exte nsion services of the forest 
industry to make it profitable and sustainable .23 
Table 4.3 Key forestry targets for 2030  
Key indicators  Baseline 
information  Issues  2030 
target s/objective s 
Share of processed 
timber in the value 
of total timber 
exports  21% in 2007; 
processed 
exports of 
PGK 106 million  The share of processed timber in total 
timber exports is very low  (e.g. i n 
Indonesia,  the share rose from 10% to 
90% between 1978 and 1996 ). 80% 
Share of log harvest 
coming from virgin 
forest  .. A sustainable approach to forestry will 
ensure that the benefits of investment in 
the forestry sector continue into the 
future, and will help realize 
environmental benefits.  Logs will be 
provided by 
plantations and 
managed forests  
Area of plantation 
forests  62,000 ha Insecure land tenure currently constrains 
investment in the plantation sector.  Substantial increase 
in plantation forests  
.. Not available.  
Source:  Department of National Planning and Monitoring (2010), PNG DSP 2010-30, p. 94, Port Moresby.  
4.1.3   Fisheries  
4.24.   PNG has extensive and valuable fisheries  resources, ranging from inland river fisheries, 
aquaculture, coastal b êche-de-mer and reef fisheries to prawn tr awling and large -scale deep -water 
tuna fishing (mainly skipjack and yellowfin) . Tuna remains the main product of substantial 
commercial value. PNG's exclusive economic zone (EEZ) , covering  2.4 million km2, is the 
second -largest in the South Pacific. Around  15% of the world 's total tuna stock is found there.  
Seventy percent  of the 550,000 ton nes of tuna caught annually is exported  for processing. The 
average annual market value of the fisheries catch is estimated at PGK 790 million ( 2.3% of GDP). 
In 2017, marine product  exports amounted to PGK 1.3 billion (6%  of total merchandise exports ). 
4.25.   The fishing sector currently provides around 10,000 jobs.24 Fishing is mainly conducted by 
artisanal communities in inland and shallow coastal waters, medium -sized domesti c prawn and 
                                                
20 DCI, PNG: NTP 2017-32, Port Moresby.  
21 DCI, PNG: NTP 2017-32, Port Moresby.  
22 Compared with the current situation where most exports are raw timbers, this strategy will create 
more than 10,000 jobs , and generat e an additional PGK 300 million of national income.  
23 Department of National Planning and  Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
24 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
- 50 - 
 
  long-line boats, and foreign purse -seine tuna operators. Commercial fishing is carried out by licensed 
medium -sized domestic prawn and tuna long -line operators, and large international purse -seine 
fleets in the deep -water tuna fishery.  
4.26.   The Nat ional Fisheries Authority (NFA), overseen by the National Fisheries Board, a 
non-commercial statutory body, is responsible , under the Ministry of Fisheries , for regulating and 
developing the sector (Fisheries Management Act , 2015, as amended,  and related r egulations , e.g. 
the Fisheries Management Regulation , 2016, as amended ). It is self -financed, mainly from access 
fees from distant water fishing nation (DWFN) vessels.  
4.27.   Coastal fisheries contribute significantly to food security and community incomes. Small -scale 
non-commercial harvesting is an important activity. Around one quarter of households engage in 
fishing, 60% of which is on a subsistence basis. Some reef fish are exported, either frozen or chilled. 
While still relatively new , aquaculture , especiall y in barramundi and prawn s, is developing, and a 
National Aquaculture Policy has been adopted. A pearl hatchery is also in operation.  
4.28.   Fish and fishery products  are subject to an average MFN tariff rate of 14.1%, with rates 
ranging up to 25% (Table 3.4) . 
4.29.   Fisheries management consists of several Fisheries Management Plans , designed to manage 
the main fisheries sustainably, based on estimates of total allowable catch (TAC). The regulatory 
instrument is vessel licen ces issued by the NFA. Fish exports must be l icensed and quality inspected 
(PNG Standards of Fish and Fishery Products Regulation , 2009).  
4.30.   PNG signed the Interim Economic Partnership Agreement (IEPA) with the E uropean Union 
in 2009. Under the global sourcing requirement  of the IEPA rules of origin, PN G may catch fish 
anywhere in the world and export it to the E uropean Union duty-free and quota -free, on the condition 
that it is substantially transformed in PNG. As a result , a number of fish canneries were established 
to benefit from the EU market , and about 10,000 new jobs were created. However, the canneries 
are under threat of scaling down their market share because the E uropean Union has included fish 
products under its GSP+ scheme. According to the authorities, PNG will not be able to compete with 
its Asian competitors in the EU market because cost of production is much lower in Asia.25 
4.31.   General tax incentives apply across all sectors but there are also specific incentives for 
fisheries (Table A2.1 ). 
4.32.   PNG's key policy objective for the sector is "to support  further growth and development of 
fisheries industry to maximize the returns on its resource, in terms of jobs and export earnings" . 
The NTP calls for the following measures: establish marine industrial zones, including expediting the 
establishment  and operation of the Pacific Marine Industrial Zone (PMIZ) in Madang and of the 
Wagang Dedicated Fish Port in Lae, to maintain its competitive position in current and future export 
markets; maintain export restrictions to encourage downstream processing a nd value adding 
onshore, wherever necessary; and identify and conclude RTAs to gain competitive advantages for 
fish exports.26 
4.33.   Table 4. 4 provides some of the key fisheries targets to be attained by 2030. According to the 
authorities, to achieve these target s, maritime surveillance capacities need to be enhanced to 
oversee the sector ; notably , the lack of policy enforcement is resulting  in the loss of millions of  Kina 
in illegal or under -reported fishing activities. Research, extension services and marketing capacities 
also need to be developed to support the industry in managing risks and in providing direction.27 
                                                
25 DCI, PNG: NTP 2017-32, Port Moresby.  
26 DCI, PNG: NTP 2017-32, Port Moresby.  
27 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Table 4.4 Key fisheries targets for 2030  
Key indicators  Baseline 
information  Issues  2030 
target s/objective s 
Stock 
assessment of 
prawn fisheries  Under -exploited  A key constraint in Gulf fishery is the use 
of annual licences instead of long -term 
licences. Fishers have little incentive to 
invest unless they can purchase long -term 
licences.  Increase cat ch by 
25%, and raise 
stock assessment to 
fully-exploited  
Licence fees 
generated from 
tuna fisheries  PGK 60 million in 
2008 Licence fees are low , and create an 
incentive to overfish. Raising fees will 
benefit PNG. Taxing catch or profit will 
help sustain the fishery by reducing the 
incentive to overfish.  PGK 600 million in 
2008 prices  through 
the introduction of 
the Parties to the 
Nauru Agreement 
(PNA) Vessel Day 
Scheme  
PNG-processed 
fisheries exports  PGK 189 million, 
21,940 tonnes in 
2007, comprising 
34% of total exports  Most fish caught in PNG waters are 
handled or processed outside the country . 
As a result, PNG 's fish -processing industry 
misses out on income and jobs.  Triple the volume 
and real value of 
processed fisheries 
exports  
Quantity share 
of catch caught 
by PNG vessels  Less than 1% in 
2007 The majority of the catch is caught by 
foreign vessels. For PNG to benefit more 
from its fisheries, the share of catch from 
locally -operated fishing operations will 
need to increase.  Increase to at least 
20% by 2030  
Source:  Department of National Planning and Monitoring (2010), PNG DSP 2010-30, p. 92, Port Moresby ; and 
information provided by the authorities . 
4.34.   Licence fees, excise and other revenue -raising arrangements will also be revised to ensure 
that PNG is raising revenue  efficiently but without discouraging domestic production.28 "Should PNG 
take the option of, for example, doubling revenues taken from the foreign tuna fleet, the Government 
would earn an additional PGK 60 million. By reinvesting this revenue, for example, in implementing 
the coastal fishers program, the gains would accumulate. A further PGK 10 million in other taxation 
revenues is anticipated by 2030, together with an additional PGK 80 million in real na tional income 
and almost 700 extra jobs".29 
4.35.   PNG local fishermen have exclusive rights to fish the 3 -12 nautical mile -zone set aside for 
traditional fishing grounds. To assist fishers to profit  from their traditional fishing grounds, fishing 
cooperatives can  be set up that have responsibility for administration, marketing of local catches, 
providing cold storage and processing facilities, granting credit , and arranging the acquisition of 
pump boats and other equipment for its members.30 
4.36.   Marine industrial parks  will be established  to provid e an outlet for local fishers that will support 
fishing incomes. The parks will also support the development of onshore processing, adding to PNG 's 
manufacturing capacity. The PMIZ is the first such development. PNG aims to be come the tuna 
capital of the world by taking the lead in the profitable production and the export of processed tuna.31 
4.2  Mining and Energy  
4.37.   Although the Government 's overarching goal is to encourage growth in the non -extractive 
sectors, mining, petroleum and g as continue to underpin PNG's economy. The main policy objective 
for the sector is to ensure the maximum benefit for current and future generations , and encourage 
downstream processing and value adding of mineral and petroleum resources. Mining remains an 
                                                
28 More revenue could be obtained, for example, from Pacific tuna fishery by increasing the licen ce fees 
for foreign vessels.  
29 Department of National Planning and Monito ring (2010), PNG DSP 2010-30, Port Moresby.  
30 The Government can facilitate such developments by encouraging joint  ventures and by providing key 
port and jetty infrastructure. Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port 
Moresby.  
31 Located north of Madang, it is envisaged the Zone will include several tuna factories, which will 
purchase fish from fishers, contributing to the incomes of local fishers. Other Pacific Island countries could also 
benefit , with the right to invest and operate in the PMIZ. Department of National Planning and Monitoring 
(2010), PNG DSP 2010-30, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  important contributor to the economy but very limited processing takes place in  PNG, and more 
could be done to encourage further value adding and downstream processing onshore to create jobs.   
4.38.   The gas industry has recently become the key driver of growth i n the economy , with the 
development of LNG projects, whereas  oil reserves are projected to be depleted by 2026 unless new 
discoveries are made .32  
4.39.   All state interests in mining projects are under Kumul Minerals Holdings (KMH) , and in oil and 
gas projects are under Kumul Petroleum Holdings (KPH) ( Section 3.3.5).  
4.40.   General tax incentives apply across all sectors but there are also specific incentives for mining, 
petroleum and gas (Table A2.1 ). 
4.2.1   Mining  
4.41.   PNG has been implementing the Extra ctive Industries Transparency Initiative (EITI) Global 
Standard since 2014.33 The statutory Mineral Resources Authority (MRA) aims to promote 
sustainable mining , and to regulate the industry to maximize opportunities ( Mineral Resources 
Authority Act , 2005) . It is largely funded by a levy of 0.25% on producer's assessable minerals 
income, including exports of alluvial gold (levied on the f.o.b. value). The MRA's Mining Advisory 
Council processes tenement applications for exploration and mining, and makes reco mmendations 
to the Minister of Mining. Applications for exploration licences require work programmes to be 
submitted , and a minimum annual expenditure.  
4.42.   Tenements are issued by the Mining Minister on recommendations from the Mining Advisory 
Council (MAC) (M ining Act , 1992), except for special mining licen ces, which are issued by the Head 
of State based on advice from the NEC. The types of tenements are:  
• exploration licen ce – may be granted for up to two years , and extended for periods not 
exceeding two  years;  
• mining lease  – usually issued for small to medium -scale alluvial and hard rock mining 
operation s for up to 20  years, and may be extended for periods not exceeding ten years;  
• special mining lease  – generall y issued to the h older of the exploration licenc e for large -scale 
operations for up to 40 years, and may be extended for periods not exceeding 20  years34;  
• alluvial mining lease  – only granted to a PNG citizen or a land group in respect of land owned 
by tha t person or land group for up to five years, and may be extended for periods not 
exceeding five years35;  
• lease for mining purpose s – granted to mining operations for constructing buildings and 
other improvements, or for buying operating plant, machinery, a nd equipment; installing 
mineral -treatment plant s; the deposit of tailings or waste; constructing housing and other 
infrastructure required in connection with mining or treatment operations; transport 
facilities , including roads, airstrips a nd ports; or any other purpose ancillary to mining or 
treatment operations or to any of the preceding purposes approved by the Minister36; and  
• mining easement  – granted in connection with mining, treatment or ancillary operations 
conducted to construct and operate road s, aerial ropeway s, power transmission line s, 
pipeline s, conveyor system s, bridge s or tunnel s, waterway s, or any other facility ancillary to 
                                                
32 DCI, PNG: NTP 2017-32, Port Moresby.  
33 PNG EITI online information. Viewed at: www.pngeiti.org.p og. 
34 The exploration licen ce holder must also have a Mining Development Contract with the Government. 
Before granting the lease, the Minister must convene a development forum of stakeholders , e.g. lease 
applicant, landowners, and national and provincial govern ments.  
35 A lease will not be granted over land already subject to another tenement (other than an exploration 
licence or a mining easement). The land must be a riverbed or be located within 20 met res of a riverbed , and 
must cover a maximum area of 5 ha. 
36 The lease term will coincide with that of the special mining lease or mining lease covered by the lease 
for mining purposes.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  mining or treatment , or ancillary operations in connection with any of the preceding purposes 
approved by the Ministe r.37 
4.43.   PNG's key policy objective for the sector is "to double mineral exports, while minimizing the 
adverse impact on the environment".  Table 4. 5 shows some of the key mining targets to be achieved 
by 2030.  Doubling mineral exports between 2010 and 2030 would lead to an increase in the national 
economic welfare in 2030 of PGK 1.9 billion, including PGK 790 million of extra tax revenues.38 
4.44.   The following strategies have been proposed to achieve such targets : strengthen the capacity 
of state institutions to administer and enforce mining regulations to ensure the Government 's policy 
is implemented effectively; provide a simple and effective regulatory and policy framework to keep 
industry compliance costs to a min imum , to protect the environment and to ensure landowners and 
other stakeholders benefit; facilitate further exploration by simplifying and speeding up regulatory 
procedures; promote an integrated approach to mine development rather than an enclave approac h, 
with the use of economic corridor zones to direct project revenues into areas with the greatest 
potential for sustainable development; develop and review appropriate mechanisms to address 
landowner participation39; and pursue manufacturing and SME strate gies that encourage 
downstream processing for the smelting of minerals onshore , to add value to the natural resources.40 
4.45.   The MFN tariffs on mining products (major division 2 of ISIC) average 0.1%, with rates 
ranging up to 15% (Table 3.4).  
Table 4.5 Key mining targets for 2030  
Key indicators  Baseline 
information  Issues  2030 
target s/objective s 
The value of 
mineral exports  PGK 9.2 billion in 
2007 Mining has been a principal source of 
government revenue since independence.  At least PGK 18 
billion  
Exploration 
expenditure  PGK 213 million in 
2008 Reserves at existing minerals projects are 
being depleted. Exploration and investment 
in new projects will be required to expand 
the sector.  Sufficient 
exploration to reach 
production target  
Exploration 
licences  241 exploration 
licences in 2009  The degree of exploration activity will 
determine future production.  Ongoing high level 
of exploration 
activity  
Number of mine 
sites  9 in operation, 4 
under 
development, 11 
at advanced stage 
of exploration  To expand the sector, the number of mine 
sites will also need to grow.  Around 20 in 
operation  
Government 
revenues from 
mineral projects  PGK 2.2 billion in 
2007 The Government needs to balance the 
objective of securing maximum revenues 
from mineral projects with the need to 
maintain incentives for business es to invest 
in the industry.  At least PGK 3 billion 
a year  
Sustainable 
deep-sea 
mining in PNG 
waters  .. Commercial deep -sea mining may 
commence in PNG waters within the next 
decade.  A number of 
projects to have 
commenced  
.. Not available.  
Source:  Department of National Planning and Monitoring (2010), PNG DSP 2010-30, p. 98, Port Moresby.  
4.2.2   Oil 
4.46.   In 2005, PNG 's first oil refinery commenced production, sourcing crude oil from both local oil 
fields and externally . The Napa refinery (foreign -owned, by Puma Energy ) refines light "sweet" crude 
oil from Kutubu. PNG is self -sufficient in petrol, diesel, and kerosene. InterOil's 30 -year government 
                                                
37 The term will coincide with the term of the tenement covered by the mining easement.  
38 Department of National Planning and Monito ring (2010), PNG DSP 2010-30, Port Moresby.  
39 According to the authorities, t hese issues are best resolved before the private sector becomes 
involved , to reduce the costs of investment and thereby attract more investors.  
40 Department of National Planning a nd Monitoring (2010), PNG DSP 2010-30, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  agreement, expiring in 2035, pro vides a monopoly, as distributors must purchase refined petroleum 
products from the refinery at import parity.  
4.47.   PNG's policy is based on the Oil and Gas Act , 1998, and is administered by the Department 
of Petroleum and Energy. Standard exploration licen ces are granted for an initial period of six years , 
followed by a five -year extension for half of the area.  Three  major distributors (Mobil, Total, and 
Puma Energy)  sell to retailers, with Puma Energy  being the dominant player. They distribute 
products from th e refinery, either by ship for storage at smaller ports or direct to retail outlets by 
road, either themselves or using contract road or shipping companies. Most distributors own retail 
sites, operated on commission or as franchise outlets.  
4.48.   The Independent  Consumer and Competition Commission (ICCC) monitors prices of petrol, 
diesel, and kerosene, and aviation fuel under the Government's import parity pricing agreement. It 
determines the selling prices of petroleum products ex -refinery, in consultation with the refinery's 
owner, and is currently reviewing the arrangements for the next five years. It publishes "indicative" 
maximum retail prices for petrol, diesel, and kerosene based on import parity prices and regulated 
margins.  
4.49.   Table 4. 6 provides some of the key oil, refining and LNG targets to be achieved by 2030.  By 
encouraging exploration and investment, the target is for 2009 levels of crude oil production to be 
maintained through to 2030, and for at least three  large gas projects to be in operation . Susta ining 
production levels of crude oil at the 2009 level would result in further gains of PGK 0.8 billion in 
national income and PGK 0.5 billion in tax revenue by 2030. The need for specialized expertise and 
considerable resources means that the private sect or will need to lead exploration and investment 
in the industry. The Government will work with landowners and other stakeholders to help break 
down barriers and pave the way for private -sector exploration and development of oil reserves.41 
Table 4.6 Key oil, refining and LNG targets for 2030  
Key indicators  Baseline 
information  Issues  2030 
target s/objective s 
Volume of crude 
oil production 
and exports  16.8 million 
barrels produced , 
and 14.4 million 
barrels exported in 
2007 Production has been declining , as proven 
reserves become depleted. Preventing 
further decline will require significant 
investment in exploration.  Sustain crude oil 
production and 
exports at 2009 
levels  
Remaining  oil 
reserves  859.5 million 
barrels in 2006  Remaining reserves are depleting , and 
there is  insufficient investment in 
exploration.  Increase proven 
reserves by 60%  
Refinery 
production  5.8 million barrels 
of crude oil 
processed in 2008  The capacity of the existing refinery is not 
fully utilized. Future demand will rise rapidly 
as PNG  DSP implementation brings strong 
growth.  9 million barrels 
processed  
Number of LNG 
projects  Nil There is considerable potential for LNG 
projects and potential for processing,  
including fertilizer production and LPG.  At least 3  
Revenues 
received from 
petroleum 
projects  .. It is crucial to ensure that the Government 
secures the maximum revenues from the 
gas projects, but not to the detriment of  
incentives for business es to invest.  At least PGK 5 billion 
a year  
.. Not available.  
Source:  Department of National Planning and Monitoring (2010), PNG DSP 2010-30, p. 9 6, Port Moresby.  
4.2.3   Natural gas 
4.50.   PNG has substantial natural gas reserves . In addition to the LNG project headed by  Exxon 
Mobil , two other projects are at an advanced planning stage: the  Papua LNG project, headed by 
Total E&P from their Elk -Antelope gas fields; and the Pasca A offshore gas field, headed by Twinza 
                                                
41 Careful management of the revenue flows will be required. Industry partners are to be strategically 
selected , based, inter alia , on proven performance, financial strength, and optimal investment return s to PNG. 
The Government will also need to work with provincial governments and landowners to assist them in planning 
for the prudent and productive use of the revenue proceeds. Department of National Planning and Monitoring 
(2010), PNG DSP 2010-30, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Oil. These projects are not just about extracting natura l gas; it is anticipated that substantial 
downstream processing will be developed to convert the natural gas into processed petrochemical 
products, including liquefied petroleum gas (LPG). If these three major gas projects alone proceed, 
by 2030, PNG's nat ional income would be expected to i ncrease by PGK 9.7 billion , with  
PGK 5.1 billion in additional tax revenue.42 Moreover , there is strong potential for the development 
of many more gas projects, both upstream and downstream.43 
4.51.   The project headed by Exxon Mo bil is expected to generate over PGK 5 billion a year in export 
revenues .44 It will pipe gas from the Western  Province to an onshore LNG processing plant in Port 
Moresby  within the PNG LNG Plant Site , for export to Asia, especially Japan, India, and China, from 
2024. The project includes gas production and processing, onshore and offshore pipelines, and 
liquefaction facilities with an annual capacity of 2.7 million tonnes . It is estimated to cost 
USD 8 billion , and have  a projected life of 20 years. The tax rate for the project is 30%, and the 
Government's expected maximum capital funding requirement is USD1.6 billion, which is expected 
to be in the form of 30% equity and 70% debt  (as was the case with the PNG LNG project) . 
4.52.   The Papua LNG  project is a joint venture45 between Total E&P as the operator with 40.13%, 
ExxonMobil with 36.54% , Oil Search with 22.84%, and others with 0.5%. As permitted by the Oil 
and Gas Act, 1998, the State, through its nominee,  is required to take up to 22.5% in any petroleum 
projects. Total E&P will be submitting a Field Development Plan, and  is proposing to build 
two separate pipelines for the dry gas and the condensate. The  condensate refining unit and the 
two LNG trains will be located in Central Province, adjacent to the P NG LNG Processing Plant, to 
export gas piped from the Elk-Antelope natural gas fields at an estimated cost of USD 9.3 billion. 
Construction is scheduled to start in 2021, with Front End Engineering Design (FEED) entry in 2019 
and Flame Ionization Detection  (FID) in 2020 , and production is due to begin in 2024. The Gas 
Agreement is currently under negotiation between Total E&P on behalf of the Joint Venture Partner 
and the Government of PNG, represented by the State Negotiation Team led by the Chief Secretar y 
to Government. The fiscal terms will be set for 20  years, including a company tax rate of 30% and 
certain exemptions applicable to large -scale projects. The Plant will expand to an annual capacity of 
5.4 million tonnes. The LNG project may contribute som e 15-20% of GDP by 202 4. 
4.53.   The first offshore petroleum development in PNG by Twinza Oil, an oil and gas company based 
in Singapore. Twinza Oil is the operator for the Pasca Gas Field, discovered offshore in the Gulf of 
Papua. The initial development concept  is to strip condensate and LPG from the gas -rich carbonate 
reservoir, and Phase 2 is to accelerate gas production based on a small -scale floating LNG concept. 
The project development cost is estimated at USD  1.5 billion, and will generate an estimated rev enue 
of PGK 1 billion annually for the State. This project alone will de -risk the opportunity to development 
other offshore gas discoveries, including Flinders, Hagana and Pandora, all in the Gulf of Papua.  
4.54.   Revenues from the LNG sector are composed of royalties, corporate income tax, additional 
profits tax (APT) , development levies, dividends, and various tax concessions aimed for investment 
incentives. Tax concessions granted to the PNG LNG project include:  ten-year depreciation allowance 
from 2015 until 2024; additional capital uplift provisions from 2025 until 2029; exemption from GST, 
import duties, and export levies; if the development levy (which is tax deductible) is paid, then the 
royalty becomes credi table for corporate income tax purposes (i.e. it becomes an advance payment 
of future corporate income tax); calculation of royalties and development levies are based on a net 
concept (both are calculated at 2% of the wellhead value); infrastructure tax cr edit, through which 
petroleum firms can charge a 100% deduction on capital expenditure on infrastructure projects, to 
a maximum of 2% of the assessable income.46 
4.55.   According to the IMF, the current fiscal arrangements also include equity participation by PNG 
through the national oil company, which holds a 16.6% stake in PNG LNG . At the same time, the 
                                                
42 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
43 For example, gas was discovered in Maruk, in the Fold Belt, in 2017, proving the petroleum potential 
of the region. Most discoveries are in the Fold Belt, wi th a few in the Foreland Basin and the off -shore shallow 
waters of the Gulf of PNG. Recently, Exxon Mobil and Total E&P have also been exploring in deep waters, after 
acquiring large blocks with completed 3D seismic data.  
44 This is expected  to attract new revenue flows to the State (taxes and dividends), to provincial 
governments, and to the traditional owners of the resource (royalties, dividends, and development levies). 
Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
45 The State, through Petromin Holdings Ltd, has a 20.5% equity, and the landowners a 2% equity.  
46 IMF Country Report 17/411.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  project enjoys a concessional APT, which has high thresholds and low tax rates by international 
standards. The 2015 Taxation Review Committee (TRC) recommended th at, for future projects, a 
revamped APT be applied with a single threshold and a higher tax rate. It also recommended 
reducing the government equity participation in future projects. These changes were introduced in 
the 2017 budget.47 
4.56.   Also, according to the  IMF, t he current royalty and development levy scheme has yielded 
quite limited benefits; future agreements should apply specific levies based on volume or ad valorem  
levies. Average monthly royalty payments have been around USD 1 million and , as of 
September  2017, PGK 150 million had been received in trust accounts for each of the royalty and 
development levies. This is quite low , and reflects the method of determining levies in the PNG LNG 
project. Levies are based on wellhead value, allowing  generous deduction s of various costs in the 
calculation s. This significantly reduces the value of the royalties, especially in the early years of the 
project, partly defeating one of the normal purposes of royalties, which is to ensure that the 
Government  receives some benefits from the project from day one. With future LNG projects, it 
would  be preferable to modify the royalty scheme to use a volume -based levy  or a "field-gate"-based 
value , allowing fewer deductions.48 
4.57.   Since the petroleum industry is not a big employer and does not integrate well with the 
broader economy, the Government is to build the Petroleum Resource Area Economic Corridor. 
Through this Corridor, project -related infrastructure will be connected to th e wider region , to provide 
access and opportunities to agricultural, manufacturing and tourism industries. A downstream 
petrochemical industry within the Corridor will be promoted, including the production of fertilizers 
and LPG for domestic use and export .49 
4.58.   Excise taxes of PGK 0.61 and PGK 0.06 per litre apply to petrol and diesel, respectively. No 
excise tax is levied on kerosene. All products are subject to 10% GST. Petroleum products and 
minerals, if imported, are duty-free.  
4.2.4   Electricity  
4.59.   PNG has 503  MW of electricity generation capacity, about half of which is provided by the 
private sector. Hydropower generates just under half of all electricity, followed by diesel generators 
with around one  third50, and the rest comes from  gas and geothermal sources.51 Electricity supply 
is unreliable and is very expensive for the quality of service, thus raising the costs of doing business 
in PNG.  
4.60.   The a verage daily peak load demand for electricity is estimated at 290  MW. A buffer between 
this demand and total capacity is  needed to ensure sufficient supply when there are demand spikes, 
when supply is compromised due to maintenance, or when capacity is reduced by cyclical events 
such as reduced water flows in dry seasons. Currently, o ver 80% of households use primitive ener gy 
sources , such as wood.52 
4.61.   Electricity is supplied by the SOE PNG Power Ltd (PPL) (Electricity Commission (Privatization) 
Act, 2002). PPL , a subsidiary of KCH , owns and operates 27 distribution systems, of which 10 are 
part of the inter -provincial power gr id (the Ramu system), and the remainder are independent. While 
PPL has been corporatized and prepared for privatization , this has yet to happen. PPL has been under 
financial stress, and has had difficulties in servicing government loans and overseas borrow ings. A 
foreign -owned independent power producer (IPP), Hanjung Power Ltd , generates about 4% of PNG's 
electricity from its Kanudi thermal plant. It supplies power to PPL under a  power  purchase 
agreement.  
                                                
47 IMF Country Report 17/411.  
48 IMF Country Report 17/411.  
49 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
50 Diesel is dominant in off -grid applications.  
51 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
52 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  4.62.   As a service provider in the generation, transmissi on, distribution, and retailing of electricity, 
PPL is regulated by the ICCC.53 The ICCC has issued licences to PPL to sell, generate, transmit, and 
distribute (Electricity Industry Act). Maximum average electricity tariffs are set on a "bundle" basis , 
using a formula that adjusts for changes to variables such as the local, Australian, and U.S. CPI, fuel 
prices, Kina to Australian dollar  and U.S. dollar  exchange rates, and the cost of purchased power 
from the  IPP. PPL uses some 70  million litres of fuel annually, and fuel price movements have a 
strong effect on its costs. PPL also performs the technical regulatory role on behalf of the ICCC, 
including ap proving licences for electrical contractors, and certifying electrical equipment and 
appliances for sale.  
4.63.   The Electricity Management Committee (EMC) was established , under the Electricit y Industry 
Policy, 2015, as the overarching coordinating body. It has  the objectives  of improving access, 
reliability , and affordability of power for the population . It covers  the Rural Electrification Programme 
and the National Electrification Roll -Out Programme (NEROP).54  
4.64.   PNG's key policy objective s for the sector are "for all households to have access to a reliable 
and affordable energy supply, and sufficient power is generated and distributed to meet future 
energy requirements and demands ". Table 4. 7 provides some of the key energy targets by 2030.  
Table 4.7 Key energy targets for 2030  
Key indic ators Baseline information  2030 target s/objective s 
Access to electricity  12.4% of households  At least 70% of households  
Gas, hydro and other renewable 
generation capacity  Gas: 72 MW  
Hydro: 217 MW  
Other  renewable : 56 MW  Gas: 390 MW  
Hydro: 1 ,020 MW  
Other renewable: 500 MW  
Diesel and coal generation 
capacity  158 MW grid connected by 
diesel generation  Less than 40 MW capacity through 
diesel generation and 30 MW through 
coal generation  
National grid  Does not exist  All major towns and cities to be on the 
national grid , which will feed off an 
electricity super corridor  
Easipay domestic customers 
(prepaid power)  4% of households (51,000 
households)  Most households to have access to 
Easipay  
Source:  Department of National Planning and Monitoring (2010), PNG DSP 2010-30, p. 77, Port Moresby.  
4.65.   By 2030, energy demand is estimated at five times current levels: 52% of electricity is 
expected to be generated using PNG's considerable potential for hydro schemes55; around 25% will 
come from  renewable sources (e.g. geothermal, wind, and biomass)56; the use of gas for electricity 
generation will significantly rise57; and diesel will account for only 2% of the generating capacity.58 
4.66.   By 2030, a key target is that over 70% of households and 100% of  businesses will have 
access to reliable, affordable and clean modern energy sources. This will require the expansion of 
electricity services to households at an average annual rate of 10.5%. In most places, access to 
electricity will be through the grid but , for some remote areas, off -grid electricity systems will need 
                                                
53 The ICCC  has issued electricity undertaker licen ces to PNG Sustainable Energy Ltd and PNG Forest 
Products Ltd. While the latter has a generation, distribution, and retail licen ce, it may operate only in the 
Western Province , in the area designated in each licen ce. 
54 Membership of the EMC comprises the Secretaries, or their respective senior delegates, of the 
Departments of Communication, Information Technology and Energy; Finance; Treasury; National Planning; 
and the President of the Chamber of Commerce and Industr y. 
55 PNG expects to build a 60  MW hydro facility , together with its transmission infrastructure , at a cost of 
over PGK 1.5 billion in 2009 prices , with key private -sector participation. In five phases, 800  MW of hydro 
electricity generating capacity will b e either built or upgraded. Department of National Planning and Monitoring 
(2010), PNG DSP 2010-30, Port Moresby.  
56 In addition, biofuels will be developed as a n alternative energy  source  to fossil fuels for transport.  
57 Gas is a cheap energy source , and is easier and cheaper to install than other technologies such as 
hydro.  
58 Diesel - and heavy fuel generated -electricity is expensive , and has been one of the  main reason s for 
the high cost of energy. By 2030, diesel generators will be phased out and retaine d mainly for back -up 
purposes.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  to be developed.59 Strong private -sector participation through PPPs will be promoted to construct 
transmission lines and to bui ld electricity generation capacity. The benefits of achieving the 
70% electricity coverage target will be the creation of over 100,000 additional jobs and a rise in 
national income of more than PGK 2.9 billion.60 
4.67.   The MFN tariff on imports of electricity is zero (Table 3.4).  
4.3  Manufacturing  
4.68.   The m anufacturing  sector has developed on the back of PNG's comparative advantage in 
agricultural and resource -based industries. In particular, the largest manufacturing export 
commodities are palm oil, copra oil, processed timber and , most recently , refined petroleum. 
Processed tuna is another rapidly -growing export industry.61 PNG imports most processed food, 
clothing and footwear , and most of the inputs to industry and commerce.  
4.69.   The DCI is responsible for the sector.62 The Manufacturers Council (a private -sector 
organi zation) promotes manufacturing and downstream processing. Some of the main problems 
facing the sector include a small, fragmented domestic market; short supply of skilled labour and 
high labour costs; expe nsive land, housing, transport and utilities; and inappropriate technology.63 
4.70.   The tariff is the main border measure assisting the manufacturing sector. On average, the 
MFN tariff on manufacturing (major division 3 of ISIC) is 3.2% (2.1% excluding food proce ssing) , 
with rates ranging up to 50% (Table 3.4) . The manufacturing industry has been urged to adopt cost -
reducing, efficient techniques on the factory floor and within management , to prepare for foreign 
competition when protective tariffs are phased out.  
4.71.   General tax incentives apply across all sectors but there are also specific incentives for 
manufacturing (Table A2.1 ). 
4.72.   PNG's key policy objective s for the sector are "to double the manufacturing sector 's 
contribution to the GDP by 2025 and to generate sig nificantly more employment" . The NTP calls for 
the following measures: reintroduce the trade defen ce legislation to protect local manufacturing 
industry against unfair trade practices; develop a clear policy stance on "parallel imports" to support 
the grow th and development of the domestic industry; the Intellectual Property Office  (IPO)  and 
PNG Customs will acquire appropriate external technical assistance and capacity building to 
strengthen enforcement of intellectual property rights ( IPRs) under the Aid for Trade Initiative and 
other program mes; the National Institute of Standards and Industrial Technology (NISIT) will 
develop national standards and technical regulations for locally -manufactured products , to promote 
consumer health and safety; support the  Buy PNG -made Initiative; the Department of Treasury will 
address PNG's high cost of production by attracting private investment in key infrastructural 
services; and PNG Customs, the manufacturing industry and other relevant agencies will expedite 
the clea rance of imports of basic inputs into production , by simplifying, streamlining and automating 
the administrative requirements to obtain import permits.64 
4.73.   Table 4. 8 provides some of the key manufacturing targets to be achieved by 2030. It is 
estimated that manufacturing production will treble by 2030. In particular, export -led manufacturing 
growth is expected to create 177,500 additional jobs and PGK 5.8 billion of additional real national 
income.  
                                                
59 An electricity super -corridor will be built that passes through the areas where electricity can be 
generated at lowest cost, with a national grid feeding off it , and transmission lines passing through each of the 
economic corridors.  
60 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
61 Each of these key export products relies on PNG 's large agricultural and resource base, and s hows the 
importance of manufacturing exports in moving the economy from primary industries into higher value -added 
processing industries.  
62 DCI online information. Viewed at: http://www.destinationpng.com/section -4/department -of-
commerce -and-industry/ . 
63 DCI online information. Viewed at: http://www.destinationpng.com/section -4/department -of-
commerce -and-industry/ . 
64 DCI, PNG: NTP 2017-32, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Table 4.8 Key manufacturing targets by 2030  
Key indicators  Baseline 
information  Issues  2030 
target s/objective s 
Value of 
manufacturing 
production  Estimated at 
PGK 4 billion in 
2009 Some of the key impediments are A ccess to 
land; law and order ; and inefficient 
regulations. Dealing with these will attract 
investment to manufacturing . PGK 12 billion in 
2009 prices  
Value of 
manufacturing 
exports  PGK 1.6 billion in 
2007 Manufactured exports are narrow but 
expanding. They are dominated by 
downstream  processing of oil, fisheries and 
agriculture.  PGK 5 billion in 2009 
prices  
Investment in 
manufacturing  .. The Government needs to promote a 
conducive business environment, enabling 
the growth of manufacturing industries.  Triple current  
investment  
.. Not available.  
Source:  Department of National Planning and Monitoring (2010), PNG DSP 2010-30, p. 102, Port Moresby.  
4.74.   To achieve such targets, a central strategy will be to encourage exports by allowing local 
producers to specialize in those industries where they have a comparative advantage. Addressing 
land and law and order issues, and facilitating development in the informal sector and of SMEs, will 
also be crucial , as these will lower the cost of doing business. It will also be necessary to remove 
regulato ry constraints, particularly for export -oriented businesses. Joint  ventures between foreign 
and local investors will also be encouraged as a means of combining local knowledge with foreign 
capacity.  
4.75.   The manufacturing sector will continue to be based on PNG 's comparative advantage in 
agricultural and resource commodities. However , the sector is to be transformed from current light 
manufacturing industries into higher value production.65 The Government is to assist in this process 
by improving infrastructure, reducing regulatory costs, and giving incentives to attract larger 
FDI inflows, particularly within economic corridors and special areas such as the PMIZ.66 
4.4  Services  
4.4.1   Overview  
4.76.   The services sector is, increasingly, the largest contributor to GDP , with a 41.2 % share 
in 2018 (33.3% in 2008). Wholesale and retail trade is the most important  subsector , followed by 
administrative and support activities (Chart 1.1) . In 2017, PNG ranked 148th among world exporters 
of commercial services , and 102nd among  world importe rs of commercial services  (considering EU 
member States as one , and excluding intra -EU trade) .67  
4.77.   PNG is a net importer of services , with a deficit of USD 1.3 b illion in 2018 (Table 1.2) . It has 
been estimated that t he reduction of services imports could  save USD 5-10 billion within ten years. 
Since this new wealth would hinge on new economic activity in PNG, more than 100,000 jobs could  
be created over that same period  through the SME Policy .68 
4.78.   In general, services are not covered in PNG's RTAs. However , it is expected that the coverage 
of the PICTA  will expand to include trade in services  and, while the MSGTA  excludes services , it has 
been agreed to consider a multilateral air services agreement  (Table 2.3) . 
4.79.   PNG's has identifie d the following services to be prioritized , to maximize job creation  and GDP 
growth : utility services (electricity, gas, water and waste service s); construction and infrastructure 
                                                
65 Expansion of cocoa production will allow a domestic processing industry to be developed. PNG 's vast 
natural gas resources will be used to produce LNG and other petrochemical by -products from the LNG process 
(e.g. fertilizers and LPG). Department of National Planning and Monitoring (2010), PNG DSP 2010-30, 
Port Moresby.  
66 As PNG develops its electri city super -corridor, powered by clean renewable energy, it will become an 
attractive destination for electricity -intensive industries such as aluminium smelting.  Department of National 
Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
67 WTO on line information. Viewed at: http://stat.wto.org/CountryProfile/PG_E.htm . 
68 DCI, PNG: NTP 2017-32, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  services; wholesale and retail services; hotel and food services; tourism and hospitality services; 
transport, postal and warehousing services; financial and insurance services; rental, hiring and real 
estate services; professional, scientific and technical services; administrative and support services; 
public administration and safety; education and trainin g services; health care and social assistance 
services; and arts and recreational services.  The Government will  assist such activities by : ensur ing 
that trade in services commitments in current/future trade agreements reflect the market access 
and national  treatment limitations in the specific sectors identified in the SME Policy; support ing the 
creation of a consultative mechanism for the services industry; improv ing data on trade in services; 
and establish ing mutual recognition agreements (MRAs) with its trading partners for the recognition 
of qualifications of professionals.69 
4.80.   PNG has not submitted GATS offers on services in the Doha negotiations. Its commitments 
have not changed from those scheduled in the Uruguay Round, which covered a limited number of 
sectors.  
4.4.2   Financial services  
4.81.   The BPNG , the central bank,  is the prudential regulator of the financial sector, and is 
responsible for the financial system's stability (Central Banking Act , 2000). It regulates banks and 
finance companies (Banks and Financial Institutions Act , 2000), life insurance companies (Life 
Insurance Act , 2000), superannuation funds (the Superannuation (General Provisions) Act , 2000), 
and savings and loan societies (Sa vings and Loan Society Act , 1995). Government policy is to 
maintain an "open" regime for establishing banks and other financial institutions that meet the 
licensing criteria.  
4.82.   BPNG's prudential supervision aims to minimize bad loans and to protect depositor s from poor 
financial practices and management. Its supervisory framework includes strict entry criteria, off -site 
surveillance, on -site examinations, and enforcement and compliance. Off -site supervision covers 
analysis to ensure specific requirements are met on capital levels, large exposures, and 
concentration; provisioning of asset quality and classification; foreign exchange and single currency 
exposure; and diversification of investments. On -site verification , involving reviewing the 
institution's oper ations, policies, and procedures , is performed if problems are detected. External 
auditors must submit reports to the BPNG on the institution's financial performance and adherence 
to prudential standards, directives and guidelines. According to the BPNG, this is  consistent with 
international best practice . 
4.83.   PNG's financial sector comprises 4  commercial banks ; 12 licensed financial institutions (LFIs)  
(i.e. finance companies) , including 5 micro banks; 22 savings and loan societies; 5 life insurance 
companies,  1 reinsurer  and 5 life insurance brokers; and various superannuation funds, trustees of 
superannuation funds,  investment managers, and fund administrators. Commercial banks continue 
to dominate the sector in terms of total assets, with 92.4% of the total in 2017 (91.8% in 2012).  
Life insurance companies had only 1.3% of total assets in 2017 (Table  4.9). 
Table 4.9 Total assets of banks and insurance companies, 2012 -17 
(PGK million)  
 2012  2013  2014  2015  2016  2017  
Banking industry  26,175.7  29,146.3  30,307.6  33,490.7  36,546.3  37,538.6  
Commercial b anks 24,033.8  26,813.5  27,797.4  30,892.4  33,984.5  34,675.0  
 LFIs 1,110.0  1,237.3  1,316.0  1,373.0  1,231.0  1,454.2  
Micro banks 147.5  156.1  216.8  220.8  264.2  270.7  
 Savings and loan societies  884.4  939.4  977.4  1,004.5  1,066.6  1,138.7  
Life insurance companies  444.1  441.0  464.1  408.9  377.0  496.0  
Source:  Data provided by the authorities . 
4.84.   There are no restrictions on foreign ownership of financial institutions , as long as they are 
registered and incorporated with the Investment Promotion Authority  (IPA). However, any ownership 
above 15% must meet the fit and proper requirements of the BPNG . At the time of licensing , all 
proposed shareholders are subject to the f it and proper requirements.  
                                                
69 DCI, PNG: NTP 2017-32, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  4.85.   While most financial services are available, their supply is limited. Overseas investors may 
not be able to secure substantial funds locally. New operations would normally need to bring funds 
from overseas to establish projects.  
4.86.   The depth of services remains thin and underdeveloped in rural areas , where the financial 
sector has failed to reach the majority of the population. Microfinance has been growing rapidly to 
bridge this gap, but much remains to be done. The capital market,  including the Port Moresby Stock 
Exchange, is small but growing.  According to the DSP  2010-30, significant progress is needed to 
extend the availability of low -cost financial services to the general population. Informal financial 
institutions (e.g. inform al microfinance societies) that operate savings, credit and other financial 
services are relied upon to extend financial services to the grassroots economy. To this end, a 
suitable regulatory framework will need to be designed and implemented.70 
4.87.   In 2015, th e Financial Analysis and Supervision Unit (FASU) was established under  the 
Anti-Money Laundering and Counter Terrorist Financing (AML/CTF) Act , 2015. The FASU has the 
primary responsibilit y for the collection of financial intelligence and information, and the analysis, 
dissemination, and exchange of such financial intelligence with law enforcement and regulatory 
authorities , both at home and abroad .71  
4.88.   General tax incentives apply across all sectors but there are also specific incentives for 
financial services (Table A2.1 ). 
4.4.2.1 Banking  
4.89.   PNG has four commercial banks: t he locally -owned Bank South Pacific Limited remains the 
largest in terms of assets, while the other three, Westpac (PNG) Limited, ANZ (PNG) Limited and 
Maybank (PNG) Limit ed, are subsidiaries of international banks. The National Development Bank 
(NDB) is the development finance institution of PNG .72  
4.90.   According to the IMF, PNG's banking system is sound , profitable, and well-capitalized 
(Table  4.10). Banks continue to hold excess liquidity  because of weak demand for loans.  Three  banks 
(two Australian and one domestic) dominate the financial system, and have maintained high capital 
adequacy, a healthy return on assets, and moderate non -performing loan  (NPL)  ratios, despite th e 
weak economy.  However , there is need to enhance the quality of supervision, notably in risk 
identification and assessment.73  
4.91.   PNG remains among the most underbanked countries on several indicators (numbers of 
branches, ATMs, and loan penetration). BPNG is  actively engaged in a program me to strengthen 
financial inclusion , education , and improvement in the capital market . Banks hold only around half 
of their assets as loans, with the rest held largely as short -term securities and cash. A new Treasury 
bill and Treasury bond ( TAP) facility by BPNG was introduced in April 2016 to help promote financial 
inclusion and deepening.74 
4.92.   The minimum paid -up equity capital of banks is PGK 15 million. The minimum paid -up equity 
capital for finance companies is PGK 1.5 mil lion. All banks must maintain minimum capital adequacy 
ratios of 6% for leverage capital, 8% for Tier 1 risk -based capital, and 12% for total risk -based 
capital. Only PNG -incorporated entities may hold a bank licen ce, i.e. foreign branches are not 
allowed.  Applicants must submit a viable business plan, and an institution will generally not be 
considered to be in PNG's best interests if it hold s over 40% of all bank and finance company 
deposits. A business plan must also be submitted when opening a branch or  significantly changing 
operation s, such as an amalgamation. Licen ces must be renewed annually. There are no 
                                                
70 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
71 The FASU is also responsib le for developing and maintaining PNG 's AML/CTF supervision and 
compliance framework for all financial institutions and designated non -financ ial business es or professions.  
BPNG online information. Viewed at: https://www.bankpng.gov.pg/wp -content/up loads/2014/06/External -
Advertisement_Analysts -AML-CTF-Supervision -Compliance -Division_wo.pdf . 
72 Since its establishment in 1967, the NDB has provided up to 31% of loans to the agriculture sector 
and 69% to SMEs. KCH (2018), Transforming today for a stronge r PNG tomorrow: A year in review 2019 , 
Port Moresby.  
73 IMF Country Report 1 8/352. 
74 IMF Country Report 17/411.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  joint-venture or foreign ownership control s. While the number of bank licen ces is not limited, in 
principle, it appears that obtaining one may not be free of political influence.  
Table 4.10 Financial soundness indicators, 2012 -17 
(%) 
 2012  2013  2014  2015  2016  2017  
Capital adequacy        
 Capital to risk -weighted assetsa 28.0 27.9 34.5 33.4 37.0 38.1 
  Tier 1 capital to risk -weighted assets 20.1 21.0 27.2 27.6 29.8 30.8 
Asset quality        
 NPLs to total loans  
 Past-due loans to total loans  
 Provision for losses to NPL s 2.0 
2.8 
170.9  1.2 
2.2 
288.0  1.4 
2.7 
240.9  2.6 
3.9 
143.8  2.7 
6.7 
164.5  2.6 
5.0 
183.2  
Earnings and profitability  
 Return on assets  
 Return on equityb  
2.3 
23.7  
2.4 
21.2  
2.0 
26.2  
1.7 
21.4  
2.2 
16.7  
2.2 
24.3 
Liquidity  
 Liquid assets to total assets  
 Loan-to-deposit ratio   
56.6 
46.9  
55.2 
50.3  
51.5 
57.2  
49.0 
60.5  
46.9 
63.3  
46.1 
65.6 
Other  
 Capital to total assetsa 
 Risk-weighted assets to total ass ets  
13.6 
48.7  
15.2 
54.5  
16.1 
46.8  
15.4 
46.2  
16.3 
43.9  
17.9 
47.0 
a Capital base includes Tier 1 and 2 capital.  
b Return on equity is calculated with Tier 1 capital.  
Note:  Fourth  quarter data for each year . 
Source:  IMF Country Report 1 8/352. 
4.4.2.2   Insurance  
4.93.   There are 14 insurance companies (though some are inactive) and 1 reinsurer (Pacific 
Reinsurance Ltd) registered with the IPA .75 They are predominantly subsidiaries or branches of 
foreign insurance companies.  
4.94.   The Office of Insurance Commissioner , under the Department of Treasury,  regulates non-life 
insurance, while life insurance is regulated by the BPNG. The Insurance Act , 1995 governs the 
non-life sector, and the life sector is covered by the Life Insurance Act, 2000. Under the Insurance 
Act, general insurers and brokers pay a levy to the Insurance Commissioner's Fund (capped at 1% 
of total premiums), but this requirement does no t apply to life insurance companies. Only 
PNG-incorporated firms may sell life insurance policies or act as insurance brokers; foreign branches 
cannot be licensed. Licen ces must be renewed annually.  Licence holders must maintain statutory 
funds that ensure  adequate capital to support solvency.  Minimum capital is set at PGK  2 million for 
general insurers and PGK 4 million for life insurers.  
4.95.   Risks must be insured with PNG insurers , unless local insurers have insufficient capacity, 
e.g. PNG airline carriers m ust use local underwriters, which allegedly raises insurance costs. 
Brokering services are provided by international groups and local firms. Most high -risk insurance is 
placed offshore. Reinsurance must be placed through Pacific Reinsurance Ltd, unless rej ected, when 
it can be placed overseas.  
4.96.   The state -owned Motor Vehicle Insurance Ltd (MVIL) , a subsidiary of KCH , has statutory 
monopoly for the supply of compulsory third -part motor -vehicle insurance (Motor Vehicles 
(Third  Party Insurance) Act , 1995 , Chapte r 295). It is regulated by a regulatory contract that 
controls premiums , using a maximum average net premium set by the ICCC.  
4.4.3   Telecommunications and postal services  
4.97.   Overall, PNG's telecommunications market has grown during the last few years . The number 
of subscribers in the mobile market increased from 2.7 million in 2012 to over 4.0  million in 201 7 
(Table 4.1 1). The percentage of individuals using the Internet also rose,  from 3.5 % to 11.2%  
                                                
75 Pacific Reinsurance Ltd is 52% state -owned through the Motor Vehicle Insurance Ltd (MVIL), with the 
remaining equity held by foreign PNG  subsidiaries.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  during  2012-17. While the provision of O3b medium orbit satellite infrastructure has significantly 
improved the quality of services, a ccess to the Internet remains difficult  at reasonable speeds, and 
there are limitations on the international data gateway capacity, which also greatly reduces service 
quality.   
Table 4.11 Telecommunications indicators, 2012 -17 
  2012  2013  2014  2015  2016  2017  
Subscribers        
Fixed telephony ('000)  139.0  140.0  145.1  150.0  154.0  158.0  
  Per 100 inhabitants  1.87 1.84 1.87 1.89 1.90 1.91 
Fixed broadband ('000)  9.2 11.3 13.2 15.0 17.0 18.0 
  Per 100 inhabitants  0.12 0.15 0.17 0.19 0.21 0.22 
Cellular mobile telephony ('000)  2,709  3,000  3,358  3,560  3,782  4,018  
  Per 100 inhabitants  36.46  39.51  43.31  44.45  46.78  48.70  
Internet (% of people)  3.50 5.10 6.50 7.90 9.60 11.21  
Source:  World Telecommunications/ICT Indicators.  
4.98.   Kumul Telikom Holdings (KTH), a subsidiary of KCH , oversees all state interests in the 
information and telecommunication (ICT) sector. KCH is currently  restructuring the three telecom 
entities (Telikom, Bmobile, and PNG DataCo) into one communications service provider, from 
wholesale services to retail mobile and fixed -line services.76  
4.99.   Telikom , a subsidiary of KTH, had the monopoly in local, national, and international mobile 
and fixed -line services until July 2007. Plans to privatize 51% of equity in Telikom to an overseas 
company were abandoned by the Government in the early 2000s. Telecommunications services have 
benefited from the introduction of private -sector competition in the mobile phone network since 
2007, resulting in a substantial upgrade in the quality and reach of services and a significant decline 
in cost. However, broadband access remains expensive by international standards , given that the 
majority of Internet capacity consumed is delivered by satellite.77  
4.100.   On 3 March 2010, the National Information and Communications Technology Authority 
(NICTA) became the regulator for the sector (NICTA  Act, 2009).78 NICTA  has a three -tier horizontal 
licensing regime , based on the categorization of operator licensees as network licensees, 
applications -service licensees, and content -service licensees. It also regulate s the radiofrequency 
spectrum, involving spectrum, ap paratus, and class licen ces, and a mechanism for allocating the 
spectrum adopted. Interconnection charges are based on internationally accepted costing 
methodologies to achieve full cost recovery, with NICTA arbitrating on access disputes. Access 
providers  may submit binding reference interconnection offers to NICTA for pre -approval for an 
appropriate time period ( three to five years). The Reference Paper adopted by PNG in its GATS 
schedule requires the Government to publish interconnection or reference int erconnection 
agreements.  
4.101.   NICTA grants four types of telecommunications licen ces, all valid for ten -year periods: 
General Telecommunications Carrier Licen ce (GL); Public Mobile Telecommunications Licen ce (MC); 
Value -added Services (carrier grade and ISP gr ade) Licence ; and Restricted General Licen ce/Private 
Network Licen ce (RGC). No new GL or MC licences were issued in the review period .  
4.102.   Telikom's fixed -line services are regulated by a price cap arrangement that sets a future 
price path, minimum service st andards, and future capital expenditure requirements. NICTA is to 
review whether the ongoing price regulation of Telikom's fixed network services is required.  Based 
on proposals submitted by the mobile service providers, tariffs are approved by NICTA. Tariffs for 
mobile telephone services are revised continuously , for balancing.  
4.103.   The Universal Access Scheme , retaining mandatory roll -out obligations , was established to 
meet the Government's Community Service Obligations of providing Internet access and Voice over 
                                                
76 KCH (2018), Transforming today for a stronger PNG tomorrow: A year in review 2019 , Port Moresby.  
77 Department of National Planning and Monitoring (2010), PNG DAP 2010-30, Port Moresby.  
78 NICTA replaced the PNG Radio and Telecom Technical A uthority ( PANGTEL ), and took over the 
relevant regulatory functions of the ICCC . WT/TPR/S/ 387 • Papua New Guinea  
 
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  Internet Protocol ( VOIP) access to other areas, with all telecom operators to be eligible for funding. 
It is partially funded by an ad valorem  levy on net revenues of licensed operators.  
4.104.   NICTA is implementing the following projects: expansion of m obile telephony and broadband 
services (3G or higher) to the widest population; expansion of access to (fixed) high -speed 
broadband Internet connectivity; ensuring the security of PNG cyber space (or Internet space); and 
laying of a new international subma rine cable.79  
4.105.   PNG's key policy goal for the sector is  to achieve  "a modern and affordable ICT that reaches 
all parts of the country ".80 Table 4. 12 provides some of the key telecom targets to be achieved 
by 2030.  
Table 4.12 Key telecommunication targets by 2030  
Key 
indicators  Baseline 
information  Issues  2030 
target s/objective s 
Access to a 
telephone  150 mobile 
subscribers 
per 1,000 
people  Mobile phone technology is superseding the land -
line network and , within a very short period of 
time, has connected over 1 million subscribers. 
This has had a very positive effect on the 
economy and on welfare.  800 mobile 
subscribers per 1,000 
people  
Access to the 
Internet  2.3% of the 
population use 
Internet  Access to quality Internet services is very low , 
and this limits access to information, financial 
services, business , and education. Providing 
Internet access to the rural population is 
necessary to spur development.  70% of people use the 
Internet  
Media coverage  55% access to 
radio; 26% 
access to 
television  Many rural areas do not have media access , and 
poor literacy levels further constrain access to 
information through the print media. Media access 
is vital to ensure the population is kept informed.  100% access to radio 
and television  
Source:  Department of National Planning and Monitoring (2010), PNG DSP 2010-30, p. 75, Port Moresby.  
4.106.   PNG aims to roll out the benefits of competition throughout the telecommunications sector, 
including all forms of Internet access, access to the international gate way, and the fixed -line phone 
service. Wherever the extension of phone, Internet and media services is less viable, PPPs will be 
encouraged. An important initiative for the extension of services into rural areas will be to secure 
satellite access. Addition al strategies include:  ensuring compliance with international ICT 
conventions, standards and practices; and promoting the expansion of a range of government 
services to rural communities using mobile phone and Internet technology (e -services).81 
4.107.   Post PNG Li mited (Post PNG), created under the Postal Services Act, 1996 and  a subsidiary 
of KCH , is responsible for providing postal services, including domestic money order (money 
remittances). It is subject to price control by the ICCC under the Price Regulation A ct, 1949.  
4.4.4   Transport  
4.4.4.1   Overview  
4.108.   Inadequate public infrastructure, including regarding  transport, impedes development and 
is a major barrier to trade, both domestic and international.  Geography and poor transport 
infrastructure networks isolate large segments of the population from social services, regional 
markets, and income -earning opportunities. The coverage and quality of the transport networks lag 
behind most other countries in As ia and the Pacific , mainly because of a lack of sufficient investment 
over the past 30 years, which is compromising safety and security. It is very difficult to travel by 
                                                
79 The Government is also discussing over a major undersea cable project from Sydney to Port Moresby, 
which would significantly improve connectivity and bandwidth. ADB online information. Viewed at: 
https://www.adb.org/sites/default/files/linked -documents/cps -png-2016-2020-ssa-01.pdf . 
80 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
81 Department of National Planning and M onitoring (2010), PNG DSP 2010-30, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  land between most provinces and to ports. In general, c oastal shipping and aviation s ervices are not 
cost-effective.82 
4.109.   The key policy goal for the sector is  to "establish a transportation network that links all of 
PNG".83 In 2013, the Department of Transport published the National Transport Strategy84, which is  
to be implemented through mediu m-term transport plans ; the current one is the Corporate Plan 
2016-20. To assist construction of transport infrastructure, the Government intends to establish 
PPPs as a means of harnessing private investment and management in major projects. The new Plan 
aims for an effective transport system , where the modes of transport work in unison and the system 
connects all people in all parts of PNG by 20 30.85 
4.110.   There are several agencies within the transport sector, including  the Department of 
Transport , which has policy, planning and coordination roles; and the Department of Works and 
Implementation and the National Roads Authority , which are responsible for managing the 
construction and maintenance of the national road infrastructure. There are also sta tutory authorities 
(the National Road Safety Council, the National Maritime Safety Authority, the Civil Aviation Safety 
Authority , and the Accident Investigation Commission) , which have key regulatory roles in managing 
safety; commercial government entitie s (PNG Ports Corporation Ltd, PNG Air Services Ltd, National 
Airports Corporation Ltd) that provide services and/or operate infrastructure on behalf of PNG; and 
other agencies , such as the ICCC in price and competition regulation, the MVIL which provides 
vehicle registration and insurance, and the PNG Royal Constabulary which enforces road rules.  The 
Transport Sector Coordination, Monitoring and Implementation Committee (TSCMIC) co ordinates 
transport planning and investment in the sector.86  
4.4.4.2   Road transport  
4.111.   With about 8,460 km of national roads, PNG has one of the lowest road densities in the 
world. Only 28.7% of the roads are in good condition. Rural accessibility is low, with just 68% of the 
rural population living within 2 km of access to an all -season road . Moreover, the road transport 
infrastructure is inadequate both in terms of maintenance and nationwide connectivity.87  
4.112.   The National Transport Strategy considers the maintenance of roads to be the transport 
sector 's greatest priority. Table 4.1 3 provides some of the key targets to be achieved by 2030. A 
comprehensive program me of rehabilitation and construction is envisaged , that will expand the 
national road network that is in good condition to 25,000 km by 2030. This is expected to directly 
contribute PGK 2.2 billion to PNG 's income in 2030 , and to create nearly 120,000 jobs. To finance 
the expansion and maintenance of the national road network, the Government will engage the 
private sector through PPPs.88 
                                                
82 ADB online information. Viewed at: https://www.adb.org/sites/default/files/linked -documents/cps -
png-2016-2020-ssa-01.pdf . 
83 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
84 Department of Transport online information. Viewed at: 
http://www.transport.go v.pg/images/pdf/NTSThemes.pdf . 
85 Department of Transport online information. Viewed  at: 
http://www.transport.gov.pg/images/pdf/DoTCorporatePlan2016 -2020.compres sed.pdf . 
86 The TS CMIC is chaired by the Secretary of the  Department of Transport, with Secretary/CEO -level 
representation from transport sector agencies and the Departments of National Planning and Monitoring , 
Finance , and Treasury.  
87 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
88 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Table 4.13 Key road transport targets by 2030  
Key indicators  Baseline 
information  Issues  2030 
target s/objective s 
Road network  8,460 km of 
national roads (total 
network : 30,000 
km) PNG has one of the lowest road densities 
in the world.  The road transport network is 
the lifeline of most rural communities , 
providing people with access to markets 
and services.  Triple national roads 
to 25,000 km  
Percentage of 
national roads 
in good 
condition  28.7% (2,512 km)  Thousands of kilometres of roads have not 
been maintained.  100%  
Source:  Department of National Planning and Monitoring (2010), PNG DSP 2010-30, p. 66, Port Moresby.  
4.4.4.3   Maritime transport  
4.113.   Approximately 60% of the population resides on 6,500 km of coastline and waterways, often 
without access to roads  or air transport . These communities , therefore , rely on water transportation, 
including for the delivery of goods and services.  
4.114.   Maritime shipping is regulated by the  Department of Transport (Merchant Shipping Act 
(Chapter 242) consolidated to No. 11 , 2003). The National Maritime Safety Authority (NMSA) 
handles safety ( NMSA  Act, 2003), and is responsible for the registration of domestic merchant 
vessels, and for contro lling shipping pollution in PNG waters. The NMSA  is a member of the 
International Maritime Organization.  
4.115.   Coastal shipping has been restricted to domestic -flagged and licensed ships since the 
early 1960s , to protect local shipping: i.e. cabotage is not perm itted, as foreign vessels may unload 
cargo only in certain ports (e.g. Lae and Port Moresby) ; local freighters then distribute this cargo to 
other feeder ports. This is implemented by restricting the issuance of licen ces and permits to local 
shipping compa nies to operate on certain routes e.g. Laurabada Shipping for the Southern  Region 
and Luther an Shipping for the Northern Region. Temporary permits are issued to foreign firms to 
ferry overseas cargo directly to feeder ports under charter arrangements.  
4.116.   A licence is required to operate in the coastal shipping market. The licen ce is issued by the 
Minister for Works, Transport and Civil Aviation , based on the advice of the Coastal Trade Committee. 
Any foreign firm registered with the IPA that is competent and knowledgeable in shipping and has a 
registered office in PNG can be licensed. Licen ces are generally not restricted to routes. Consort 
provides most cargo services to the northern ports , and Laurabada Shipping Services (Steamships) 
to the ports in the Central, Western, and Gulf provinces. Rabual and Lutheran Shipping provide 
passenger services to regional ports. Maximum rates for coastal freight are set by the Department 
of Transport.  
4.117.   PNG Ports89, a subsidiary of KCH , operates 15 of PN G's 23 ports, including the three  largest 
in Lae, Port Moresby and Kimbe.  A few private ports are operated by companies for their own needs, 
and are regulated by the Department of Transport.  Ports operated by PNG Ports  have generally low 
cargo processing c osts, and the national shipping market is competitive. However, international 
shipping is among the most expensive in the Pacific region, with low levels of competition. It takes 
23 days to export goods from PNG (the same as the regional average).90 
4.118.   The ICC C regulates PNG  Ports under a Regulatory Contract that sets the maximum prices 
PNG Ports can charge for essential port services (berth reservation, wharfage, and berthage) and 
stevedoring, and stipulates minimum service standards. The ICCC is also the lice nsing authority for 
essential port services, and such charges are reviewed annually based on CPI changes. Under the 
tariff structure , there are two tiers: tier 1 ports include the ports of Lae, Port Moresby, Kimbe, 
Samarai, and Aitape ; and tier 2 ports com prise all other declared ports. PNG  Ports performs the 
                                                
89 PNG Ports is licensed as an essential port services operator , to provide wharfa ge, berthage, berth 
reservation services, and stevedoring services in declared ports. It also provides container storage and pilotage 
services as the sole declared Pilotage Authority by instrument of delegation under the Harbours Act,  1963. 
90 ADB online in formation. Viewed at: https://www.adb.org/sites/default/files/linked -documents/cps -
png-2016-2020-ssa-01.pdf . WT/TPR/S/ 387 • Papua New Guinea  
 
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  harbour management functions for declared ports, and administers stevedoring licen ces by issuing 
five-year licen ces to private operators. Terminal handling and equipment handling are out -sourced 
to pri vate operators. At the port of Port Moresby, licensed firms must use labourers from PNG  Ports 
registered labour pool; the labourers are paid a minimum wage funded from a cargo levy of 
PGK 1.70 per tonne administered by PNG  Ports. 
4.119.   Table 4.1 4 provides some o f the key water  transport targets to be achieved by 2030.  
Between 2010 and 2030 , it is projected that cargo throughput at all of the ports will increase 
five-fold. This growth will be in both international cargoes and in domestic coastal cargoes. Assuming 
that the efficiency of port and other marine services improves by around 2% a year, it is estimated 
that marine infrastructure, including ports, will need to expand at least three -fold to support the 
growth in cargo throughput. Failure to expand port capac ity will constrain export and import potential 
and increase costs throughout the country, thereby undermining economic development.91 
Table 4.14 Key water transport targets for 2030  
Key indicators  Baseline 
information  Issues  2030 
target s/objective s 
Domestic water 
transport 
capacity  .. Water transport services provide the highways for  
communities who live on islands and in remote  
coastal and river locations. The water transport  
system is inadequate and requires more vessels,  
more transport routes, more frequent services on  
existing routes , and better ports and jetties.   Triple the number of  
routes serviced  and 
the number of  
vessels, and  
upgrade the ports 
International 
port turnaround 
times  3 days  The two principal ports are at Port Moresby and  
Lae. Handling times at these ports are slow by  
international standards.   1 day  
.. Not available.  
Source:  Department of National Planning and Monitoring (2010), PNG DSP 2010-30, p. 70, Port Moresby.  
4.120.   Investment is needed throughout PNG to rehabilitate and upgrade major ports. In Lae, work 
was completed in 2017  to expand the port 's capacity , with the addition of an industrial trade facility 
currently in design. P ort operations in Port Moresby have been relocated to Motukea Island to make 
way for the city's development. Madang 's port also needs to be relocated, because its capacity is 
being constrained by its shallow waters. It is also important to strengthen the capacity of customs 
to inspect cargo , and stop illegal and contraband goods from entering PNG. Container scanning 
equipment is needed at the busiest ports , to speed up the flow of traffic through the m, while at the 
same time improving the effectiveness of customs operations.92 
4.121.   For the purposes of p assenger and local freight transport in maritime provinces, drive -on 
passenger vessels will be central for interconnection , as these enable the road and water transport 
networks to operate smoothly with one another. New transport routes will , therefore , need to be 
opened up , and more frequent services provided on existing routes. Partnership with the private 
sector will be crucial in raising the capacity of shipping services , as the private sector will be relied 
upon for much of the investment.  There may be  a case for introducing government -funded shipping 
services to facilitate the flow of people and cargo, particularly in remote regions of the 14  maritime 
provinces and the islands. To minimize the impact on the budget, the Government will pursue PPPs. 
It is expected that between 15 and 20 ships will be required over the next 20  years to serve the 
coastal regions.93 
4.4.4.4   Air transport  
4.122.   Given the complexity of the topography and terrain, air transport for many remote areas  will 
continue to be the only possible mean s to link to the main parts of the country. PNG has 
22 international and regional airports (14 jet airports and 8 non -jet airports) , owned and managed 
by the National Airports Corporation (NAC), and hundreds of rural airstrips. The overall condition of 
the NAC's airports has deteriorated over time , and they are beginning to pose a threat to safety.94 
                                                
91 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
92 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
93 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Mo resby.  
94 This situation was made worse by the introduction of Fokker 100 aircraft, which are much too heavy 
for the runways  of most airports. Remedial action is needed to reverse the current situation and avoid WT/TPR/S/ 387 • Papua New Guinea  
 
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  PNG Air Services Limited (PNGASL) provides navigation services. International air traffic serving the 
international gateway (Port Moresby 's Jacksons Internation al Airport) is very expensive , with unit 
costs (per passenger, per nautical mile) on flights to Australia the most expensive in the Pacific.95  
4.123.   The Secretary of the Department of Transport is the licensing authority for foreign 
international airlines, as pr ovided for under Section 186  of the Civil Aviation Act, 2000 (as amended) . 
Two companies, the national carrier Air Niugini (National Airline Commission Act , 1973) , which is a 
subsidiary of KCH , and the privately -listed carrier Airlines PNG , provide international services. Air 
Niugini96 and Qantas provide code -share services between PNG and Australia. During the last few 
years, increased c ompetition has reduced airfares and freight charges  across most sectors.97  
4.124.   The ICCC must approve code -share arrangements. National carriers providing international 
services must be majority PNG -owned and be less than 25% owned by a single foreign airline. 
International charter passenger, freight, and cargo air services are licensed on a case -by-case basis, 
to balance the commercial interests of existing operators for users and the economy generally. 
Majority -foreign -owned operators will not be licensed unless authorized by law or permitted under 
a state agreement.  
4.125.   Domestic aviation services are open to any lic ensed carrier on all routes. While several firms 
service more profitable routes (e.g. Port Moresby to Lae , and Port Moresby to Mount Hagen), Air 
Niugini is the dominant domestic carrier, with some 60 -70% market share, especially on the major 
routes. Airlin es PNG operates in competition with Air Niugini on most routes, and provides charter 
services to the mining sector. Foreign -owned companies may operate domestic services , provided 
they divest to majority -PNG equity within five years. Contracted charter ser vices, including by mining 
companies, are only allowed as joint  ventures , with a majority PNG -owned air service operator.  
4.126.   At many airports, Air Niugini and Airlines PNG operate their own terminal building s, paying 
nominal leasing charges to the NAC. Elsew here, the NAC provides the terminal space. Air Niugini 
has long -term leases at three terminal facilities owned by the NAC. Terminal space is allocated based 
on historical arrangements, seemingly at uneconomic charges that do not recover the NAC's costs 
of providing services at most airports.  
4.127.   The operation of international scheduled services is governed by bilateral air service 
agreements. These agreements set out the agreed routes and capacity entitlements that designated 
airlines are allowed to operate. Regulation of capacity entitlements and agreed routes are established 
through negotiations for designated airlines of bilateral partners to implement through memoranda 
of understanding ( MOUs ) reached , as opposed to having an open -ended agreement (open skies) . 
The conduct of international non -scheduled air transport operations entering and departing PNG is 
approved by  the Secretary of Transport pursuant to  Section 201 of the Civil Aviation Act.98  
4.128.   Table 4.1 5 provides some of the key air transport targets to be achieved by 2030.  With the 
support of the Asian Development Bank (ADB), the Government is investing close to PGK 2 billion 
in upgrading the 22 airports to comply with international safety and security standards and to serve 
future needs. Maintenance contracts will also be put in place to ensure the airports remain in good 
condition. The investment program me will initially concentrate on the five national airports of Port 
Moresby, M ount Hagen, Wewak, Hoskins and Gurney.99  
                                                
accumulated cost implications.  Department of National Planning and Monitoring (2010), PNG DSP 2010-30, 
Port Moresby.  
95 ADB online information. Viewed at: https://www.adb.org/sites/default/files/linke d-documents/cps -
png-2016-2020-ssa-01.pdf . 
96 Air Niugini's international destinations include  Australia, Singapore, Japan, the Philippines, China,  
Malaysia , Fiji, and the Solomon Islands.  
97 Significant airfare reductions have resulted from increased competition by Philippine Airlines and 
China Air Southern.  
98 Department of Transport online information. Viewed at: http://www.transport.gov.pg/index.php/air -
transport/international -air-transport -operations .  
99 This investment is timely , as Jacksons Airport, for example, needs to be expanded to cater for the 
expected growth in domestic and in ternational travel. Alternatives to Jacksons Airport are required in the 
region , with the capacity to handle large jets and international flights.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Table 4.15 Key air transport targets for 2030  
Key indicators  Baseline 
information  Issues  2030 
target s/objective s 
Share of regional 
airports meeting 
international 
certification  7 out of 22 in 
2008 (32%)  Safety standards at 70% of the regional 
airports do not meet international 
certification standards.  100%  
Airports upgraded 
for higher seating 
capacity  Only Port 
Moresby handles 
large jets  Regional airports do not have the 
capacity to handle larger planes and the 
increased passenger numbers expected.  10 airports 
upgraded to handle  
larger jets  
Number of unused 
airstrips 
rehabilitated  .. Most airstrips located in remote areas are 
not in use. These will be rehabilitated 
according to their economic viability, 
taking into account alternative options for 
access provided by improving road and 
water transport.  Up to 50  
.. Not available.  
Source:  Department of National Planning and Monitoring (2010), PNG DSP 2010-30, p. 7 2, Port Moresby.  
4.129.   The growth of tourism will require new international routes and appropriate airport 
infrastructure at key tourist destinations , including Alotau, Rabaul, Madang and Manus. International 
airports may also be required near cities , such as Lae , that are important hub s for international 
business. Regional airlines amongst Pacific Island countries should be encouraged , as they promote 
closer regional integration.  The liberalization of PNG 's air space and the promotion of a competitive 
airline market are vital for reducing the cost of travel and for improving service on domestic flights.  
4.4.5   Tourism  
4.130.   The total contribution of travel and touri sm to GDP was estimated at 1.8%  for 2017, while 
total employment in the sector (including jobs indirectly supported by the industry) accounted for 
1.6% of the total.100 In 2017, PNG earned USD 204.8  million in tourism receipts (up from 
USD 127.6  million in 2 012), from 86,403 visitors  (Table 4. 16); some 48% arrived by air . In 2017, 
the average length of stay of a tourist was 10.3 days, while t he average visitor spent USD 231  per 
day. The number of licensed beds rose from around 3,000  in 2012 to an estimated 6,500  in 2017.  
Tourists are predominantly from Australia  (52%) , followed by South East Asia (10%), North East 
Asia (9%) , Europe (8%), North America (6%), and New Zealand (5%) . 
Table 4.16 Selected tourism indic ators, 2012 -17 
 
2012  2013   2014  2015  2016  2017  
Tourist arrivals  80,203  85,149  97,164  110,597  131,161  86,403  
Per day expenditure ( USD) 244 238 213 198 172 231 
Tourist receipts ( USD million)  127.6  138.0  153.3  180.0  216.7  204.8  
Accommodation  50.0 54.1 60.1 70.6 85.0 80.3 
Airfares  38.1 41.2 45.8 53.8 64.8 61.2 
Food and beverages  12.7 13.7 15.3 17.9 21.6 20.4 
Local transport  6.7 7.3 8.1 9.5 11.4 10.8 
Domestic travel  6.0 6.5 7.2 8.4 10.2 9.6 
Tours  4.5 4.9 5.5 6.4 7.7 7.3 
Retail  4.2 4.6 5.1 6.0 7.2 6.8 
Souvenirs  1.9 2.1 2.3 2.7 3.3 3.1 
Other  1.6 1.8 1.9 2.3 2.8 2.6 
Source:  Information provided by the authorities.  
4.131.   The Ministry of Culture and Tourism is in charge of the sector. In addition, the statutory PNG 
Tourism Promotion Authority (PNGTPA) conducts the overseas promotion and marketing of tourism. 
Tour operators are mostly locally -owned. Foreign -managed operators must be registered with the 
Investment Promotion Authority ( IPA). Some have Australian offices to service customers directly, 
                                                
100 World Travel and Tourism Council online information. Viewed at: https://www.wttc.org/ -
/media/files/reports/economic -impact -research/countries -2018/papuanewguinea2018.pdf . WT/TPR/S/ 387 • Papua New Guinea  
 
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  and a  growing number are also operating from Australia without a PNG partner and contracting 
services to PNG firms.  
4.132.   PNG is the largest island nation in the Pacific,  with more than 600 islands,  and is one of the 
most naturally beautiful countries in the world. It has over 700 bird  species  and 200 species of 
mammals, many of which  are endemic to PNG . Moreover, it has an estimated 9,000 species of higher 
plants , and as many as 1,500 species of forest trees. The rich diversity also extends to the people , 
with over 8 00 indigenous  languages and cultures.101 However, t ourism remains very small by 
international standards. In fact, the country  receives the second -lowest tourist numbers per head of 
population in the entire Asia -Pacific region.  
4.133.   Tourism continues to face many  of the same hurdles confronting other sectors, including 
expensive air travel, law and order and security concerns, poor quality and expensive utilities, 
inadequate infrastructure (e.g. roads, tourism resorts), and insufficient foreign investment. To tack le 
these issues, the National Tourism Master Plan 2007 -17 prioritized marketing, product development 
and investment, transport and infrastructure, human resource development, and institution/industry 
partnerships.  
4.134.   General tax incentives apply across all s ectors but there are also specific incentives for 
tourism (Table A2.1 ). 
4.135.   The key policy objective for the sector is to " build a strong, vibrant, world class tourism 
sector ". Table 4. 17 provides some of the key tourism targets to be achieved by 2030.  The tar get of 
1.5 million  visitors per year could  be achieved by increasing both the capacity of the infrastructure 
and facilities to cope with the rise in tourists, and the appeal of the PNG experience for the visitor 
so that more visitors will want to come.102 
Table 4.17 Key tourism targets for 2030  
Key indicators  Baseline 
information  Issues  2030 
target s/objective s 
Number of 
international 
visitors  121,000 in 
2008 This target is modest in view of the tourism 
potential of PNG. Cambodia,  for example , 
increased tourist arrivals from 220,000 in 1995 
to 1.7 million in 2006.  1.5 million  
Source:  Department of National Planning and Monitoring (2010), PNG DSP 2010-30, p. 103, Port Moresby.  
4.136.   Transport and accommodation represent the core infrastructure needs of tourists. Airports 
and airlines will need significant upgrading to cope with the influx of tourists. In addition, new 
international airport facilities will be needed for key tourist destinations. To visit places of interest, 
road and water transport will also need to be upgraded. The development of the accommodation 
infrastructure will be private -sector -led. This will require improving  investment conditions for the 
private sector , including addressing law and order, energy , and land issues. Joint  ventures between 
local and foreign stakeholders will be encouraged , in order to marry local understanding of culture 
and business conditions with foreign expertise and capital.  In addition, proactive initiatives and 
incentives to attract global hotel chains to PNG will be needed.103 
4.137.   An additional concern for the Government is to ensure that the benefits of tourism reach the 
poor. This requires an additional strategy to facilitate local market chains , so that sectors like 
agriculture, fishing and artefacts link to the tourism industry.104 
                                                
101 PNG is full of interesting attractions, including trekking , cruising , surfing , fishing , birdwatching  the 
world -famous birds of paradise, and diving  in the coral reef coastline . 
102 Department of National Planning and Monitorin g (2010), PNG DSP 2010-30, Port Moresby.  
103 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  
104 Department of National Planning and Monitoring (2010), PNG DSP 2010-30, Port Moresby.  WT/TPR/S/ 387 • Papua New Guinea  
 
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  5  APPENDIX TABLES  
Table A1. 1 Merchandise exports by HS sections and major HS chapters/products, 
2012 -17 
HS section/chapters/subheadings  2012  2013  2014  2015  2016  2017  
Total exports (PGK million)  11,436.0  12,174.7  22,432.6  25,745.6  34,353.2  31,512.7  
Total exports (USD million)  5,488.5  5,424.2  9,113.8  9,299.8  10,964.8  9,882.4    
(% of total)  
01 Live animals and products  2.5 3.2 2.1 1.4 20.4 2.3  
030342 Yellowfin tuna, frozen  0.6 1.1 0.7 0.6 19.3 0.7 
02 Vegetable products  4.9 2.6 2.0 2.0 2.4 2.1  
0901 Coffee  4.2 2.3 1.7 1.8 2.1 1.5 
03 Fats and oils  10.8 9.4 5.9 5.2 4.3 6.4  
1511 Palm oil and its fractions  9.4 8.5 5.2 4.2 3.5 5.3 
04 Prepared food, beverages and tobacco  3.6 3.9 2.1 2.1 2.4 3.0  
1604 Prepared or preserved fish  1.8 2.1 1.0 0.9 1.1 1.8 
05 Mineral products  17.3 9.9 50.3 52.1 33.1 49.1  
26 Ores, slag and ash  12.3 8.1 16.1 4.8 5.1 8.5  
260300 Copper ores and concentrates  6.9 5.5 13.7 4.8 4.8 6.3  
27 Mineral fuels and oils  2.5 1.8 33.7 47.0 27.6 40.3  
270900 Petroleum oils, crude  0.0 0.0 0.8 0.0 0.3 8.1  
271111 LNG 0.0 0.0 30.6 45.9 24.2 28.9 
06 Chemicals and products thereof  3.2 5.8 3.3 0.7 0.0 0.1 
07 Plastics and rubber  1.2 0.3 0.1 0.1 0.1 0.1 
08 Raw hides and skins; leather, furskins  0.0 0.0 0.0 0.0 0.0 0.0 
09 Wood, cork, straw  5.0 5.1 3.3 4.0 3.3 3.3  
44 Wood and articles of wood  5.0 5.1 3.3 4.0 3.3 3.3 
10 Pulp of wood; paper and paperboard  0.1 0.0 0.0 0.0 0.0 0.0 
11 Textiles and textile articles  0.0 0.0 0.0 0.0 0.0 0.0 
12 Footwear, headgear, etc.  0.0 0.0 0.0 0.0 0.0 0.0 
13 Articles of stone, plaster, cement  0.0 0.0 0.0 0.0 0.0 0.0 
14 Precious stones and metals, pearls  27.4 33.5 20.0 17.1 19.0 23.2  
7111 Base metals, silver or gold, clad 
with platinum, not further worked 
than semi -manuf actured  27.2 29.4 15.2 17.0 19.0 23.1 
15 Base metals and articles thereof  2.2 3.3 3.1 2.8 1.8 3.8  
75 Nickel and articles thereof  0.1 2.7 2.5 2.5 1.6 3.5 
16 Machinery, electrical equipment  1.7 2.6 2.1 1.4 1.0 1.3 
17 Transport equipment  19.5 20.0 5.4 10.8 12.0 5.1  
88 Aircraft and parts thereof  7.6 8.5 4.8 10.2 10.8 4.6  
89 Ships and other floating structures  11.7 10.8 0.3 0.5 1.1 0.4 
18 Precision instruments  0.2 0.2 0.1 0.1 0.1 0.1 
19 Arms and ammunition  0.0 0.0 0.0 0.0 0.0 0.0 
20 Miscellaneous manufactured articles  0.0 0.0 0.0 0.0 0.0 0.0 
21 Works of art, collectors' pieces and 
antiques  0.0 0.0 0.0 0.1 0.0 0.0 
Not classified  0.1 0.1 0.0 0.0 0.0 0.0 
Source:  WTO calculations based on data received by the authorities . 
  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Table A1. 2 Merchandise total exports by destination , 2012 -17 
  2012  2013  2014  2015  2016  2017  
Total exports (PGK million)  11,436.0  12,174.7  22,432.6  25,745.6  34,353.2  31,512.7  
Total exports (USD million)  5,488.5  5,424.2  9,113.8  9,299.8  10,964.8  9,882.4  
  (% of total exports)  
Americas  3.4 3.0 1.2 1.0 1.2 1.2 
 United States  1.4 2.3 1.0 0.9 1.1 1.1 
 Other America  2.0 0.7 0.2 0.1 0.1 0.1 
Europe  16.9 20.2 13.2 15.9 14.3 12.1 
 EU-28 16.5 18.4 12.3 15.7 14.2 11.9 
     Netherlands  4.3 2.2 2.6 1.8 1.8 3.2 
     Italy 1.1 1.6 1.2 0.8 0.9 2.3 
     United Kingdom  2.5 6.6 2.2 1.1 1.1 1.8 
     Germany  5.5 2.9 3.2 1.8 1.4 1.7 
     Spain  2.0 1.8 0.7 1.0 0.9 1.4 
     Belgium  0.6 1.8 1.4 1.2 0.9 1.2 
     France  0.1 0.7 0.4 0.1 0.1 0.2 
 EFTA 0.4 1.8 0.9 0.2 0.1 0.2 
     Switzerland  0.4 0.4 0.1 0.0 0.1 0.2 
 Other Europe  0.0 0.0 0.0 0.0 0.0 0.0 
CIS 0.1 0.1 0.1 0.1 0.1 0.0 
Africa  0.0 0.2 0.1 0.1 0.3 0.0 
Middle East  0.5 0.7 0.1 0.5 0.0 0.1 
Asia 79.1 75.9 85.3 82.5 84.1 86.6 
 China  9.6 7.7 8.6 13.9 13.0 13.1 
 Japan  9.6 12.1 30.6 28.5 17.0 19.8 
 Other Asia  59.9 56.1 46.1 40.1 54.1 53.7 
     Australia  32.1 44.5 24.1 19.0 21.9 28.3 
     Chinese Taipei  0.3 0.5 8.9 6.3 4.0 6.9 
     Singapore  15.1 2.2 2.2 3.1 3.1 5.2 
     Hong Kong, China  0.3 0.2 1.2 4.9 0.4 3.6 
     Philippines  3.2 3.0 4.4 1.8 20.9 2.9 
     Malaysia  1.9 1.5 0.4 1.0 1.0 1.7 
     India 3.7 1.4 1.7 1.3 0.7 1.7 
     Korea, Republic of  1.3 1.5 1.5 1.4 1.3 1.4 
     Thailand  0.5 0.4 0.3 0.1 0.3 1.2 
     Indonesia  0.8 0.2 0.9 0.5 0.1 0.3 
     Solomon Islands  0.2 0.2 0.1 0.1 0.1 0.2 
     Viet Nam  0.2 0.1 0.1 0.0 0.1 0.1 
Source:  WTO calculations, based on data provided by the authorities.  
  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Table A1. 3 Merchandise imports by HS section and major HS chapters/subheadings, 
2012 -17 
HS section/chapters/subheadings  2012  2013  2014  2015  2016  2017  
Total imports (PGK million)  18,225.9  16,880.5  70,303.4  15,362.0  17,452.1  15,892.6  
Total imports (USD million)  8,747.1  7,520.8  28,562.5  5,549.0  5,570.3  4,983.9    
(% of total)  
01 Live animals and products  2.3 2.9 0.6 3.1 3.1 3.2  
02 Meat and edible meat offal  1.6 2.0 0.5 2.1 2.1 2.3 
02 Vegetable products  4.0 4.7 1.2 6.2 5.9 5.4  
10 Cereals  3.3 3.9 1.0 5.3 4.9 4.4 
03 Fats and oils  0.6 0.5 0.2 0.8 0.8 0.8 
04 Prepared food, beverages and tobacco  3.8 4.7 1.1 5.7 5.9 6.8 
05 Mineral products  17.2 10.1 66.3 13.4 14.1 15.3  
27 Mineral fuels and oils  16.6 9.1 65.8 11.6 12.7 14.0  
271000 Petroleum oils, other than crude  6.5 7.9 2.6 10.3 6.4 9.0  
270900 Petroleum oils, crude  5.1 0.9 63.2 0.8 5.9 4.7 
06 Chemicals and products thereof  4.7 5.3 12.4 7.8 5.4 6.9 
07 Plastics and rubber  3.7 4.1 0.8 4.2 3.9 4.7 
08 Raw hides and skins; leather, furskins and 
articles thereof  0.1 0.1 0.0 0.1 0.1 0.1 
09 Wood, cork, straw  0.2 0.2 0.0 0.2 0.1 0.1 
10 Pulp of wood; paper and paperboard  1.9 2.4 0.5 2.3 2.0 2.0 
11 Textiles and textile articles  1.6 1.8 0.5 3.1 2.4 2.3 
12 Footwear, headgear, etc.  0.5 0.5 0.1 0.6 0.5 0.6 
13 Articles of stone, plaster, cement  0.7 0.8 0.3 1.0 0.8 0.8 
14 Precious stones and metals, pearls  0.0 0.0 0.0 0.0 0.0 0.0 
15 Base metals and articles thereof  10.1 7.9 1.8 7.7 7.1 8.3  
73 Articles of iron and steel  7.1 4.6 1.0 4.0 3.9 4.4 
16 Machinery, electrical equipment  30.4 24.2 5.6 26.1 19.9 27.2  
84 Machinery and mechanical appliances  23.9 17.8 3.6 18.5 14.3 21.3  
85 Electrical machinery  6.6 6.4 2.0 7.6 5.6 5.9 
17 Transport equipment  15.0 26.6 7.9 13.5 24.5 12.1  
87 Vehicles  8.2 6.7 1.2 6.2 4.9 5.9  
88 Aircraft and parts thereof  2.9 13.8 5.7 2.9 17.0 1.2  
89 Ships and other floating structures  3.6 5.9 0.9 4.2 2.5 4.9 
18 Precision instruments  1.5 1.4 0.3 1.7 1.4 1.7 
19 Arms and ammunition  0.0 0.0 0.0 0.0 0.0 0.0 
20 Miscellaneous manufactured articles  1.4 1.6 0.3 2.0 1.9 1.3 
21 Works of art, collectors' pieces and 
antiques  0.0 0.0 0.0 0.0 0.0 0.0 
Not classified  0.1 0.1 0.0 0.4 0.1 0.2 
Source:  WTO calculations , based on data received by the authorities . 
 
  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Table A1. 4 Merchandise total imports by origin , 2012 -17 
  2012  2013  2014  2015  2016  2017  
Total imports (PGK million)   18,225.9   16,880.5   70,303.4   15,362.0   17,452.1   15,892.6  
Total imports (USD million)   8,747.1   7,520.8   28,562.5   5,549.0   5,570.3   4,983.9  
  (% of total imports)  
Americas  6.6 4.4 1.3 4.6 3.3 4.1 
 United States  5.9 3.4 1.1 4.0 2.9 3.4 
 Other America  0.8 1.0 0.2 0.6 0.4 0.7 
Europe  8.6 15.6 6.0 4.5 17.4 3.7 
 EU-28 8.3 5.3 3.4 4.3 17.0 3.4 
     Germany  0.8 0.7 0.2 0.6 0.4 0.7 
     Italy 3.7 1.0 0.1 0.3 0.2 0.7 
     France  0.9 0.6 0.1 0.7 1.4 0.6 
     United Kingdom  1.0 1.3 0.2 0.7 0.3 0.5 
     Netherlands  0.4 0.3 0.1 0.6 0.4 0.4 
 EFTA 0.3 10.3 2.6 0.1 0.3 0.2 
 Other Europe  0.0 0.1 0.0 0.1 0.1 0.1 
CIS 0.1 0.7 0.0 0.1 0.0 0.1 
Africa  0.1 0.2 0.0 0.1 0.1 0.1 
Middle East  0.8 0.7 0.1 0.9 0.5 1.6 
     Oman  0.0 0.0 0.0 0.0 0.0 1.1 
Asia 83.7 78.4 92.5 89.9 78.7 90.4 
 China  6.7 8.4 2.4 12.6 10.4 10.8 
 Japan  6.0 5.1 0.8 3.6 3.4 3.8 
 Other Asia  71.1 64.9 89.3 73.6 64.8 75.8 
     Australia  33.9 34.0 18.6 32.2 30.6 33.8 
     Singapore  15.9 11.7 2.8 12.0 10.6 12.4 
     Malaysia  6.3 4.8 1.2 5.7 5.8 11.2 
     Indonesia  3.0 2.1 0.5 2.8 2.9 3.4 
     New Zealand  2.7 3.2 0.8 3.7 2.8 3.0 
     Thailand  3.0 2.5 0.4 2.6 2.9 2.9 
     Viet Nam  0.5 0.3 0.2 1.6 1.5 2.2 
     Hong Kong, China  1.3 1.6 0.6 1.7 1.4 1.5 
     Korea, Republic of  1.6 1.3 0.3 3.2 2.0 0.9 
     India 0.5 0.8 0.2 1.8 0.8 0.9 
     Pakistan  0.0 0.0 0.0 0.3 0.0 0.8 
     Philippines  0.7 0.5 0.1 0.6 0.9 0.8 
     Chinese Taipei  1.0 1.7 0.4 3.6 1.6 0.6 
     Papua New Guinea  0.2 0.0 62.8 0.4 0.1 0.6 
Source:  WTO calculations, based on data provided by the authorities.  
  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Table A2. 1 Tax incentives, 2019  
Name  Description  Condition(s)  Provision(s)  
1. General tax incentives applied across all sectors  
Reduction in effective 
income tax rates 
payable by residents  The part of taxable income that:  
does not exceed PGK  10,000 is taxed 
at 0%;  
exceeds PGK  10,000 but does not 
exceed PGK  18,000 is taxed at 22%;  
exceeds PGK  18,000 but does not 
exceed PGK  33,000 is taxed at 30%;  
exceeds PGK  33,000 but does not  
exceed PGK  70,000 is taxed at 35%;  
exceeds P GK 70,000 but does not 
exceed PGK  250,000 is taxed at 40%; 
and 
exceeds PGK  250,000 is taxed at 42%   Schedule 1 of the 
Income Tax,  
Dividend 
(Withholding) Tax 
and Interest 
(Withholding) Tax 
Rates (2012 Budget) 
(Amendment) Act, 
2011  
Reduction in effective 
income tax rates 
payable by non -
residents  The part of taxable income 
derived in PNG that:  
does not exceed PGK  18,000 is 
taxed at 22%;  
exceeds PGK  18,000 but does not 
exceed PGK  33,000 is taxed at 30%;  
exceeds PGK  33,000 but does not 
exceed PGK  70,000 is taxed at 35%;  
exceeds PGK  70,000 but does not 
exceed PGK  250,000 is taxed at 40%; 
and 
exceeds PGK  250,000 is taxed at 42%   Schedule 1A of the 
Income Tax and 
Dividend 
(Withholding) Tax 
Rates, 1984  
Accelerated and 
flexible depreciation  Capital assets can be written off at a 
faster rate than would otherwise be 
possible.  
Depreciation is normally calculated 
using the straight -line method based 
on effective life but:  
• using a diminishing -value method, 
the percentage rate of 
depreciation can  optionally be 
accelerated to 1.5 times that 
under ordinary effective life;  
• depreciation deductions may be an 
extra 20% of the cost price for 
new capital plant or articles, being 
eligible property, acquired in the 
year of income. In the case of 
tourism, t he depreciation 
deduction may be an extra 55% of 
the cost price for new capital plant 
or articles, being eligible property, 
acquired in the year of income;  
• depreciation methods can be 
switched to maximize amounts to 
be depreciated;  
• taxpayers acquiring indu strial 
plant may elect in any year to 
increase the amount of 
depreciation deductions by the 
lesser of the amount of the 
taxpayer's income remaining after 
all other deductions, or the 
remaining depreciable value of the 
plant;  
• for taxpayers in the tourism 
industry, this initial year additional 
depreciation was increased to 55% 
from 1  January 2007;  
• in the year of income in which 
expenditure is incurred, an extra 
20% depreciation deduction is 
available for expenditure on 
existing plant for the purpose of 
fuel conservation; and  Comments: mining, 
petroleum and gas 
companies – the 
taxpayer must elect to 
depreciate plant and 
equipment with an 
effective useful life of 
less than 10 years 
under the normal 
depreciation provision.  
 
In the case of 
additional depreciation 
for industrial plant:  
(1) effective life must 
be more than 
5 years; and  
(2) the plant should be 
used in the 
manufacturing 
process.  S. (Section(s)) 73-78 
of the Income Tax Act  
 
S. 155F of the 
Income Tax Act   WT/TPR/S/ 387 • Papua New Guinea  
 
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  Name  Description  Condition(s)  Provision(s)  
• expenditure on acquiring the 
following types of new plant or 
articles is given a 100% 
deduction:  
- property used directly for 
agriculture production; and  
- property used for fishing by 
residents engaged in commercial 
fishing.  
Boats or sh ips and ancillary 
equipment used as dive boats by an 
accredited scuba diving/snorkelling 
operator  
The Rural Development 
Incentive  An income tax exemption is provided 
on the net income of new businesses 
that are not dependent on the 
exploitation of natural resources, that 
are set up in speci fically designated 
underdeveloped areas  
 
Income earned by "rural development 
industries" (as defined under the 
Income Tax Act) is exempt from 
income tax for ten years from the 
year the business commences 
operation  
 
Losses arising from exempt activities 
may be deducted against taxable 
income from other activities  
 
The scheme is only available to new 
businesses in the specific rural 
districts listed in the Regulations  Districts holding 
Petroleum 
Development Licences 
or Special Mining 
Leases are ineligible 
for the Incentive. 
Industries extracting, 
processing or 
transporting PNG non -
renewable resources 
are ineligible for the 
Incentive.  
 
The income to be 
exempted must be 
derived in that district.  
 
Regulation S. 6AA of 
the Income Tax 
Regulations prescribes 
the industries and 
districts eligible for the 
Incentive:  
(i) agriculture 
production;  
(ii) manufacturing;  
(iii) construction;  
(iv) hotels and 
restaurants;  
(v) transport storage 
and 
communication;  
(vi) financial 
intermediation;  
(vii) real estate, 
renting and 
business 
activities; and  
(viii) other 
community, 
social and 
personal service 
activities.  S. 45I–45M (Part III, 
Division 1B) of the 
Income Tax Act, 1959  
 
Income Tax 
Regulation S. 6AA 
Research and 
development (R&D)  150% income tax  deduction for 
expenditure on R&D  undertaken 
under an approved R&D plan. The 
R&D incentive was phased out in 
the 2014 Budget. However, as at 
December 2014, a large contingent 
liability of unprocessed claims 
remained.  
The Income Tax Regulations specify 
the types of activities that are eligible   S. 95 of the Income 
Tax Act  
Income Tax 
Regulation 5L  
Infrastructure Tax 
Credit  An income tax credit (i.e. an offset to 
income tax payable, rather than a 
deduction) is available up to the 
value of 0.75% of assessable  income 
derived in the year of income  for 
expenditure on prescribed 
infrastructure for mining, petroleum The Tax Credit 
allowable cannot 
exceed the tax payable 
in any one year.  
 
Expenditure on 
prescribed S. 219C of the 
Income Tax Act  
 
Income Tax 
Regulation 10F  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Name  Description  Condition(s)  Provision(s)  
and gas operations. For primary 
production and large -scale tourist 
facility operations, the tax credit 
available is up to 1.5% of assessable 
income. Un used credits can be 
carried forward for two years. 
Expenditure in excess of the 0.75% 
and 1.5% limits can be carried 
forward to the following year  
 
Expenditure incurred on the Tax 
Credit Scheme project in a year 
should not exceed these limits. 
Excess tax c redit not allowed in the 
year due to credit exceeding tax 
payable is carried forward to following 
year infrastructure must 
first be approved by 
the Departme nt of 
National Planning 
and Monitoring.  
Goods and Services 
Tax (GST) - Zero 
Rating of Exports  Exported goods are not subject to 
GST. Exporters receive a full refund of 
GST paid on all inputs to production 
of exported goods or services  All sectors.  Division 6 of the GST 
Act  
2. Fishing sector  
Exemption from 
income/salary and 
wages tax of certain 
income from fishing 
operations  Fishing operations carried out by non -
resident companies and their 
employees are exempt from income 
tax/salary and wages tax.  
This applies only to fishing operations 
under an agreement with the State   S. 35A of the Income 
Tax Act  
3. Financial sector  
Tax credit regarding 
banks' community 
service obligations  The c ost of expenditure for providing 
extended or new banking facilities or 
services in areas not adequately 
supplied with bank services can be 
offset against the income tax liability 
for the year the cost was incurred. 
Any excess is carried forward to be 
offset against the following year's tax 
liability   S. 219D of the 
Income Tax Act  
Non–resident income 
from the sale of shares  Income earned by a non -resident who 
sells shares on the Port Moresby stock 
exchange is exempt from income tax   S. 36B of the Income 
Tax Act  
4. Manufacturing sector  
Wage subsidy for new 
manufactured products  Taxpayers who manufacture new 
products may receive a monthly wage 
subsidy, for five years from the 
commencement of operations. For 
each citizen employee, a subsidy is 
paid which i s a proportion of the 
minimum wage relevant to that area.  
 
The subsidy is phased out over the 
five-year period:  
 
Year 1: 40% of relevant minimum 
wage for each employee  
Year 2: 30%  
Year 3: 20%  
Year 4: 15%  
Year 5: 10%  The Commissioner 
General must first 
agree to list the 
product as a "new 
manufactured 
product".  
 
Goods to be imported 
which form the main 
components used to 
manufacture the 
proposed new product 
which are already 
subject to Customs 
tariff protection are 
specifically excluded 
in the legislation from 
being listed as new 
manufactured 
products, and the 
Commissioner 
General cannot legally 
list such products for 
the subsidy.  Industrial 
Development (Wage 
Subsidy) Act, 1984  
Export Sales Incentive  Offers exemption of income tax from 
the sale of qualifying export goods 
prescribed under the Income Tax 
Regulation (Regulation 10A)   S. 45A-Ha of the 
Income Tax Act  
Double deduction for 
export market 
development costs  Provides for double deduction for 
export market develo pment  S. 72C of the Income 
Tax Act  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Name  Description  Condition(s)  Provision(s)  
expenditure regarding the export of 
goods manufactured in PNG.  
 
The Commissioner General can limit 
deductions considered to be 
excessive. The tax saving from the 
double deduction cannot exceed 75% 
of the actual costs incurred.  
 
Reimbursements to the  taxpayer are 
not included  
5. Agriculture sector  
Tax deductibility of 
certain agricultural 
development expenses  A 100% deduction is provided for 
expenditure by a PNG taxpayer 
engaged in primary production on:  
(a) eradicating  animal or vegetable 
pests;  
(b) destroying and removing 
indigenous wood, scrub or 
undergrowth;  
(c) destroying weeds or plants 
detrimental to the land;  
(d) preparing the land for 
agriculture;  
(e) ploughing and grassing the land 
for grazing purposes;  
(f) draining swamps or low -lying 
lands where this improves the 
agricultural or grazing value of 
the land;  
(g) preventing or combating soil 
erosion, other than by erecting 
fences;  
(h) constructing dams, tanks, 
irrigation channels, bores, wells 
or similar structura l 
improvements to conserve or 
convey water for use in primary 
production on the land;  
(i) constructing levee banks or 
similar improvements;  
(j) constructing roads, including 
bridges, culverts or similar works 
forming part of a road;  
(k) planting trees, inc luding the 
purchase of seeds, seedlings, 
cuttings and similar material;  
(l) constructing or altering fences 
with the sole purpose of 
preventing animal pests coming 
onto the land; or  
(m) constructing or improving 
plantation employees' 
accommodation (subject  to 
certain conditions)  The deduction is 
reduced by the amount 
of expenditure that the 
taxpayer has recouped 
from the Government, 
an authority or any 
other person  S. 97 of the Income 
Tax Act  
Passing through to 
shareholders of tax 
deductions for 
agricultural companies  Tax deductions available to 
agricultural companies for 
expenditure on agricultural 
development under S.  97 of the 
Income Tax Act and for depreciation 
of agricultural plant and equipment 
can be passed through directly to 
shareholders for deduction at 
shareholders' marginal tax rates  The company must 
make a declaration to 
the Commissioner 
General that it is 
relinquishing 
deductions in favour of 
its shareholders.  S. 97A of the Income 
Tax Act  
Agricultural extension 
services  150% deductio n for expenditure on 
agricultural extension services 
undertaken under an approved plan  Extension services 
must be undertaken 
under a plan approved 
by a committee chaired 
by the Department of 
Agriculture and 
Livestock.  
The Income Tax 
Regulations specify the  S. 97B of the Income 
Tax Act  
 
Income Tax 
Regulation 5M  WT/TPR/S/ 387 • Papua New Guinea  
 
- 79 - 
 
  Name  Description  Condition(s)  Provision(s)  
types of activities that 
are eligible. Detailed 
guidelines on the types 
of expenditure that can 
be undertaken are 
available from the 
Department of 
Agriculture and 
Livestock.  
Concessional tax rate 
on income from new 
agricultural activities  A 20% income tax rate was provided 
for ten years for new primary 
production projects that commenced 
construction, clearing or planting 
between 1  January 2004 and 
31 December 2006  (a) The capital cost 
was to be at least 
PGK 5 million;  
(b) The project was to 
be in an area 
where production 
of the 
crop/livestock had 
not previously 
occurred (or had 
not been carried 
out on a large 
scale); and  
(c) The project must 
not have been an 
extension or 
development of an 
existing p rimary 
production project.  S. 1 and Schedule 4.9 
of the Income Tax, 
Dividend 
(Withholding) Tax and 
Interest (Withholding) 
Tax Rates Act  
6. Tourism sector  
Concessional tax rate 
for new or 
substantially improved 
large-scale tourist 
accommodation 
facilities  Provides for a tax rate of 20% to 
taxpayers whole sole income is 
derived from the operation of such 
facilities and who are registered for 
such purposes with the IRC.  
 
Large -scale tourist accommodation 
facilities are for the provision of 
temporary accommo dation in PNG, 
and:  
(a) construction must have 
commenced between 1 January 
2007 and 31 December 2011;  
(b) must involve expenditure of 
USD 10 million or more; and  
(c) must provide 150 rooms or more 
for such accommodation  This tax rate is only 
applied for  10 years 
from the time income 
is first derived, and is 
for the provision of 
temporary 
accommodation in PNG  S. 154E-154G of the 
Income Tax Act  
Zero-rated customs 
tariff duties on 
products imported by 
tourism sector  Zero-rated customs tariff duties on 
interior furnishings, wetsuits, 
photography film and photography 
stock  Customs Act, 1990  
Accelerated 
depreciation  
 
 
 
 
Zero-rated airfares  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Provides for accelerated depreciation 
for the purchase of new capital assets 
in the tourism sector, and boats and 
ships used by an accredited dive or 
snorkelling operator  
 
International air fares and ship fares, 
including travel into and out of PNG, 
are zero -rated. The GST Act zero -
rates domestic air travel within PNG, 
where that travel is taken as part of 
an international air service. For 
example, if a foreign tourist 
purchases a holiday to PNG from Air 
Niugini which includes international 
and domestic fares as part of his/her 
visit to PNG, all the airfares (including 
those for domestic flights i nside PNG) 
are zero -rated. The GST Law is 
consistent with common international 
practice in this regard.  
  S. 73–78 of the 
Income Tax Act  WT/TPR/S/ 387 • Papua New Guinea  
 
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  Name  Description  Condition(s)  Provision(s)  
Duty-free shops  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GST-free shopping 
from retailers (not 
duty-free shops)  
 
 
 
 
 
 
 
 
Tax-free importation of 
goods by tourists  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GST exemption for any 
purchase made by a 
foreign tourist prior to 
arrival in PNG  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 The GST Act zero -rates goods sold by 
an incoming or outgoing duty -free 
shop to inbound or outbound air 
travelers. The shops must be licensed 
under the  Customs Act to operate as 
duty-free shops. Items bought at the 
outgoing (only one in PNG) duty -free 
stores must be exported by the 
purchaser. In PNG, this can only be 
done in the passenger's carry -on 
baggage as the only duty -free store 
in PNG is located i n Jacksons Airport 
(i.e. after passing through outgoing 
immigration). Items bought at the 
incoming (only one in PNG) duty -free 
store must fall within the duty -free 
concession or passenger allowance, 
otherwise duty will be calculated on 
the excess. There is  no facility for 
sending packages, etc.  
 
Goods purchased by a tourist from a 
retailer (not a duty -free shop) and 
sent directly by the retailer to the 
overseas address are zero -rated. The 
retailer must provide evidence of 
export. Duty, however, cannot be 
refunded to the consumer, as it would 
already have been paid by the 
importer or manufacturer of the 
goods.  
 
Goods imported by travelers as part 
of their accompanied baggage are 
exempted from GST and duty, as 
prescribed in the Customs Personal 
Effects Rules . The allowances provide 
for GST and duty concession on all 
new goods (excluding tobacco, 
alcohol and perfumes) to a total value 
of PGK  1,000 per traveler over the 
age of 18 and PGK  500 for those 
under 18.  
 
A traveller of any age may import, 
free of GST and duty, among other 
things, a personal computer, a still or 
video camera and work tools, 
provided they are not new or in 
commercial quantity and are intended 
for the traveller's own use. Crews of 
vessels and  aircraft have slightly 
different allowances.  
 
International travel in and out of PNG, 
domestic travel (within PNG by air or 
sea) and temporary accommodation 
are exempt from GST, provided that 
the passenger benefiting from the 
zero-rating is not a residen t of PNG 
and the purchase of the travel or 
accommodation was made prior to 
the visitor's arrival in PNG.  
 
Purchase through a travel agent of 
travel or accommodation by non -
residents intending to visit PNG is 
treated as being made by the visitor 
directly f rom the airline or hotel 
operator. Such purchases are zero -
rated (GST -free) if made before the 
visitor reaches PNG.  
 WT/TPR/S/ 387 • Papua New Guinea  
 
- 81 - 
 
  Name  Description  Condition(s)  Provision(s)  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Special concessions for 
ship and aircraft stores  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Special concessions for 
boats imported by 
visiting yacht 
enthusiasts  
 
 
 Accommodation or travel can include 
incidentals, such as insurance, food, 
beverages, tours, activities and 
airport transfers, which are pr ovided 
"inclusive" of the accommodation or 
travel package price. Where the 
incidentals are sold by the 
accommodation or travel provider to 
the intended visitor (prior to their 
arrival in PNG), their value will not be 
subject to GST. These package items 
are incidental if their total value is 
less than half the total package price. 
If the incidentals are sold separately 
to the visitor by someone other than 
the accommodation or travel 
provider, they will remain subject to 
GST. It is emphasized that GST is 
applied in all cases where the visitor 
purchases accommodation or travel 
after arriving in PNG.  
 
"Unstructured arrivals" refers to 
independent travellers, who fly in to 
PNG and then purchase 
accommodation and sea or air travel 
within PNG. Their domestic trave l and 
accommodation is subject to GST.  
 
A GST and duty zero -rating is 
extended for goods for use in ship or 
aircraft stores for consumption 
outside PNG on an aircraft or ship 
travelling to a destination outside 
PNG (this covers fuel, food, 
beverages and ot her consumables). 
Ship and aircraft stores include all the 
goods necessary to maintain the ship 
and the aircraft, and to sustain their 
crew and passengers. They should 
not be confused with duty -free shops 
on the ships or aircrafts.  
 
Stores that sell consu mables (alcohol, 
cigarettes, perfumes, jewellery, 
clothes, etc.) to passengers are only 
duty-free as long as they have not 
landed. Once they have landed, the 
goods are subject to duty and GST if 
they exceed the limits allowed under 
the concessions of the C ustom 
Regulations mentioned previously. For 
example, if a travel ler purchases 
three litres of alcohol duty -free on an 
aircraft, Customs will charge duty on 
the one litre purchased in excess of 
the two litres allowed if they are 
brought on -shore.  
 
These sh ops cannot trade while the 
ship or aircraft is in port or at the 
airport. They may only operate when 
the ship or aircraft has cleared the port 
or the airport and is on an international 
voyage.  
 
Yachts and other small craft that 
arrive in PNG but are not i ntended for 
import are treated as any other 
commercial vessel or aircraft. No duty 
is charged, and the vessel is allowed 
to travel between Customs ports on 
what is called an inter -port clearance. WT/TPR/S/ 387 • Papua New Guinea  
 
- 82 - 
 
  Name  Description  Condition(s)  Provision(s)  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowances for cruise 
vessels and charter 
flights  Yachts may visit non -Customs ports 
only with the permission of the 
principal officer at the port of entry 
(the Collector), and must abide by 
any conditions attached to that 
permission.  
 
If a vessel has entered PNG 
temporarily but, after such enquiries 
as he thinks appropriate, the Collector 
has reason to believe t hat the vessel 
might have been imported, he may 
serve a notice requiring the owner or 
operator to either export the vessel or 
enter it for home consumption and 
pay the duty and GST owed, within 
30 days. If the vessel remains in PNG 
after this time without being entered, 
it shall be forfeited to the State.  
 
The Collector may issue permission 
for a charter vessel or aircraft to 
arrive or depart from PNG using non -
Customs ports or airports. S/he may 
impose any conditions to the 
permission that s/he thinks are  
appropriate, in order to protect 
revenue and ensure compliance with 
Border Security and Customs -related 
legislation.  
 
Examples of conditions may include 
the vessel or aircraft operator paying 
appropriate costs for the services of 
Customs officers or empl oying 
security personnel to ensure no 
unauthorized activities occur at the 
non-Customs ports or airports  
7. Petroleum, gas and mining sector  
Additional deduction 
for exploration 
expenditure  Expenditure incurred by a taxpayer 
for the purpose of exploration in PNG 
for minerals, petroleum or gas can be 
deducted from the income of the 
development project derived from 
that exploration licence area during 
the course of the life of the project, 
for a period of 20 years pursuant to 
the issue of a Resource Development 
License.  
 
Expenditure incurred in relation to 
other exploration areas which have 
been surrendered can also be 
claimed.  
 
This deduction is in addition to the 
normal business deductions  Expenses which have 
been transferred to 
another taxpayer, or 
amounts recovered, 
are excluded from the 
allowable deduction  S. 155A and S. 155C 
of the  
Income Tax Act  
Tax losses  
 
 
 
 
 
Additional deduction 
for exploration 
expenditure  Taxpayers involved in mining, 
petroleum and gas operations can 
now carry forward tax losses 
indefinitely. Other companies are 
subject to a 20 -year limitation  
 
Mining, petroleum and gas 
companies may claim a deduction for 
exploration expenditure. Explorati on 
expenses for a project other than the 
resource project may be deducted 
from income of the project   S. 101(3) of the 
Income Tax Act  
 
 
 
 
S. 155N of the 
Income Tax Act  
Fiscal stability 
provision  The fiscal stability provision allows 
the State to enter into an agreement 
with the resource company which 
guarantees the fiscal stability of the Mining and petroleum 
companies have the 
option of applying for 
fiscal stability for the Resource Contracts 
Fiscal  
Stabilization Act, 
2000  WT/TPR/S/ 387 • Papua New Guinea  
 
- 83 - 
 
  Name  Description  Condition(s)  Provision(s)  
project in respect of duplicable taxes, 
duties, fees and other fiscal imposts, 
the rates at which such taxes, duties, 
fees and other fiscal imposts will be 
charged, and the manner in which 
liability in respect thereof will be 
calculated in the event of a change in 
the applicable law after the effective 
date of the agreement  original financing 
period or 20 years, 
whichever is less.  
 
Gas companies can 
apply for a period of 
time necessary to 
produce a volume or 
quantity of resource 
as defined in the 
relevant gas 
agreement to be a 
foundation volume or 
quantity for that long -
term gas project. 
Where such a 
provision applies, a 
2% premium applies 
to the income and 
profit tax rates.   
Income Tax, 
Dividend 
(Withholding) 
Tax and Interest 
(Withholding) 
Tax Rates Act  
Exemption from 
Income Tax/Salaries 
and Wages Tax of 
certain travel benefits  In addition to the exemption from 
Income Tax/Salaries and Wages Tax 
of one annual leave fare from the 
place of employment to the place of 
origin or recruitment, employees of 
resource companies are entitled to:  
(1) Exemption from said taxes on 
their domest ic fares within PNG; 
and  
(2) An additional exemption on their 
international fares  Additional exemption 
on international fares 
is granted if the 
hardship and 
remoteness of the 
employment location 
from urban centres 
can be demonstrated.  
 
Apply to petroleum  
and gas and mining 
companies.  S. 40AA of the 
Income Tax Act  
Amortization – 
allowable capital 
expenditure  Provides for allowable capital 
expenditure for taxpayers in the LNG 
Project Company  Applies only to the LNG 
Project.  S. 158J of the Income 
Tax Act  
Tax holiday for the 
Ramu Nickel Project  Provides for a 0% tax rate for the 
Ramu Nickel Project for the period of 
the tax holiday   S. 6C of the Income 
Tax, Dividend 
Withholding and 
Interest (Withholding) 
Tax Act, 1984  
Import duty 
exemptions for the 
LNG Pro ject Provides for an exemption from 
import duties for LNG Project 
companies, with a broad -ranging 
exemption for any of their affiliates or 
any person engaged by an LNG 
Project Company, where the goods 
are to be used in, or consumed for, 
the initial constru ction of the Project, 
and any subsequent phase of the 
Project whose total cost exceeds 
USD 50 million   S. 9B of the Customs 
Tariff Act  
Stamp duty concession 
on transfer of mining 
information  The stamp duty on the transfer of 
mining information for both 
exploration and development licences 
has been limited to PGK  10,000.  
 
This was designed to encourage 
mining, petroleum and gas 
exploration  Applies to the mining, 
petroleum and gas 
sectors  Stamp Duties Act 
schedule  
Stamp duties 
concession on transfer 
of exploration licences   If an exploration 
licence is transferred 
for the historical cost 
of obtaining the mining 
information, total 
stamp duties to be 
paid will be:  
(1) a PGK  10,000 
incentive rate for 
the mining 
information 
transfer; and  
(2) an incentive 
rate of Stamp Duty Act 
schedule  WT/TPR/S/ 387 • Papua New Guinea  
 
- 84 - 
 
  Name  Description  Condition(s)  Provision(s)  
PGK 10,000 
for the 
transfer of 
the licence; 
or 
(3) a total of 
PGK 20,000.  
 
If an exploration 
licence is transferred 
for more than the 
historical cost of 
obtaining the mining 
information, total 
stamp duties to be 
paid will be:  
(1) a PGK  10,000 
incentive rate for 
the mining 
information 
transfer: and  
(2) an incentive charge 
of 2% applied on 
the excess 
between the price 
charged and the 
historical cost 
(instead of 5% 
previously).  
Stamp duties 
concession on transfer 
of development 
licences   If a development 
licence is transferred, 
total stamp duties to 
be paid will be:  
(1) a PGK  10,000 
incentive rate for 
the mining 
information 
transfer; and  
(2) an incentive rate of 
2% of the licence 
value, instead of 
the 5% usually 
charged on 
transfers of real 
property valued at 
over PGK  140,000.  Stamp Duties Act 
schedule  
Stamp duties 
concession for intra -
company transfers  Transfers resulting from company 
reorganization, or what is known as 
"intra -group" transfers, attract  a 
concessional stamp duty that is 
limited to PGK  600 per transaction up 
to a maximum of PGK  12,500  The parent company 
must own at least 95% 
of the subsidiary(ies).  
 
At least 20% of the 
issued capital or voting 
rights of the ultimate 
parent company must 
have held a minimum 
of 20% of the issued 
capital or voting rights 
for at least three years 
prior to the date of the 
application for 
exemption.  
 
The conveyance must 
not have the purpose 
or effect of avoiding or 
delaying the payment 
of any tax under the 
Income Tax Act, 1959.  
 
The companies must 
operate as an intra -
group operation for a 
period of 5 years, Stamp Duties Act  WT/TPR/S/ 387 • Papua New Guinea  
 
- 85 - 
 
  Name  Description  Condition(s)  Provision(s)  
otherwise the full 
stamp duty and 
penalties will apply.  
Stamp duties 
concession  This provides for various available 
concessions on the transfer of mining 
information of exploration licences 
and of development licences  Applies to the mining, 
petroleum and gas 
sectors.  Stamp Duty Ac t 
schedule  
Zero-rating of GST on 
goods supplied to 
resource companies  Goods or services, other than cars, 
supplied to a resource company for 
use in resource operations are zero -
rated for GST  Applies to registered 
holders of mining, 
petroleum or gas 
tenements. The goods 
must be used for the 
resource operations.  
 
Applies to the mining 
and petroleum 
sectors.  S. 7(f) and 20(d) of 
the Goods and 
Services Tax Act  
8. Personal income tax exemptions  
Exemption of certain 
income/allowance from 
Salaries and Wa ges 
Tax  An exemption from the general rule 
that the value of all benefits of a 
taxpayer be subject to the Salaries 
and Wages Tax ( S. 65E). These 
include:  
- various allowance pensions paid 
under various pre -independence 
acts; 
- allowances provided by the State for 
the education of dependents;  
- allowances otherwise paid to help 
meet the cost of educating an 
employee's child (not including 
tertiary study);  
- the retirement benefits of Members 
of Parliament; and  
- subsidies provided by an employer 
to assist an employee to buy their 
first home  Exemption from 
various taxes. Applies 
across all sectors.  S. 29 of the Income 
Tax Act  
Exemption of certain 
scholarship income  Exemption on income received by 
way of scholarship, bursary or other 
educational allowance  Exempt from various 
taxes. Applies across 
all sectors.  S. 40 of the Income 
Tax Act  
Exemption of certain 
travel benefits  As with S. 29 of the Income Tax Act, 
provides an exception to the general 
rule that benefits are included in an 
individual's assessabl e income where 
an individual is provided with:  
- one annual leave fare (for an 
employee and their family) from 
his/her place of employment to 
their place of origin or recruitment;  
- additional leave fares for workers in 
the mining and petroleum sector;  
- additional leave fares for those, to 
the satisfaction of the 
Commissioner, are working in 
remote and/or hostile conditions; 
and 
- recreational fares and 
accommodation not exceeding the 
value of those above   S. 40AA of the 
Income Tax Act  
9. Incentives for  public good purposes. Including exemptions for international organizations/aid –
related exemptions  
Exemption for non -
residents assisting a 
Commission of Inquiry  Exemption from various taxes.  
 
Exemption from Salaries and Wages 
Tax on income earned by a foreign 
resident in PNG in assisting a 
Commission of Inquiry   S. 20 of the Income 
Tax Act  
Exemption for 2015 
Pacific Games  Exemption from income tax on the 
2015 Pacific Games Limited and 
exemption on the income of 
competitors.  
 
Exemptions from various t axes  S. 22B of the Income 
Tax Act  WT/TPR/S/ 387 • Papua New Guinea  
 
- 86 - 
 
  Name  Description  Condition(s)  Provision(s)  
Income tax exemption 
for religious, scientific 
or public educational 
institutions, hospitals 
and charitable bodies  Exemption on income tax for 
religious, scientific or public 
educational institutes, public hospitals 
and approved charitable bodies   S. 25 and S. 25A of 
the Income Tax Act  
Exemption of trade 
unions  Exemption from income taxes for 
employees of trade unions or similar 
associations.  
 
Exemptions from various taxes   S. 26 of the Income 
Tax Act  
Exemption of certain 
non-profit bodies 
(taken straight from 
Australian tax 
legislation in 1959)  Provides for an exemption from 
income tax for a society, association 
or club that is not carried on for the 
purposes of profit or gain to its 
individual member s.  
 
Exemptions from various taxes   S. 27 of the Income 
Tax Act  
Exemption for scientific 
research funds  Exemption from income tax for funds 
that are established to assist public 
universities or hospitals to undertake 
scientific research   S. 28 of the Income 
Tax Act  
Exemption for certain 
international trade 
financial institutions  Exemption from income tax on the 
income of:  
- the Multilateral Investment 
Guarantee Agency (WB group);  
- the Export Finance Insurance 
Corporation of Australia; and  
- the Europ ean Investment Bank   S. 31 of the Income 
Tax Act  
Exemption of saving 
and loans societies  Exemption from income tax on the 
income of savings and loans societies.  
 
Exemptions from various taxes   S. 40A of the Income 
Tax Act  
Exemption to facilitate 
loan or assistance 
agreements  Administered by the Treasurer. 
Provides for an exemption from any 
rate, charge, tax, duty, levy, fee or 
imposition where provided for under a 
loan agreement.  
 
Exemptions from various taxes  
Administered by the Treasurer. 
Provides for an exemption from any 
rate, charge, tax, duty, levy, fee or 
imposition where provided for under a 
loan or assistance agreement   S. 6 of the Loans 
(Overseas Borrowing) 
Act, 1973; and S. 6 of 
the Loans (Overseas 
Borrowing) (No. 2) 
Act, 1976  
S. 8 of the Loans and 
Assistance 
(International 
Agencies) Act, 1971  
Exemption for the 
United Nations  Administered by the Minister for 
Foreign Affairs and Immigration, 
provides for the exemption of the 
United Nations, and its property, from 
direct taxes, import taxes, and taxes 
on the sale of property in certain 
circumstances   S. 7 and 8 of the 
United Nations and 
Specialized Agencies 
(Privileges and 
Immunities) 
Act, 1975 
Exemption for the 
Asian Development 
Bank Incorporates the Agreement to 
Establish ADB into PN G law. This 
includes broad exemption from 
taxation under Article 56:  
- exemption for the Bank from all 
taxation and customs duties;  
- exemption from taxation on the 
salaries of ADB employees; and  
- exemption from taxes on any 
obligations and securities issued or 
guaranteed by the Bank, and on 
interest and dividends on those 
obligations and securities   S. 4 of the Asian 
Development Bank 
Act, 1971  
 
Asian Development 
Bank (Privileges and 
Immunities) 
Regulation, 1976  
Exemption for IMF  Incorporates the IMF A greement into 
PNG law. Article IX includes the 
Fund's immunities from taxation. This 
includes:  
- exemption for the Fund from all 
taxation and customs duties;  
- exemption from taxation on the 
salaries of Fund employees;   S. 8 of the 
International Financial 
Organization Act, 
1975  WT/TPR/S/ 387 • Papua New Guinea  
 
- 87 - 
 
  Name  Description  Condition(s)  Provision(s)  
- exemption from taxes on any 
obligat ions and securities issued or 
guaranteed by the Fund, and on 
interest and dividends on those 
obligations and securities  
Exemption for 
designated aid 
organizations  Administered by the Minister for 
Foreign Affairs and Immigration. S . 2 
gives the Head of State the power to 
grant an organization "designated aid 
status". This provides a range of 
exemptions, including;  
- exemption from taxation on 
salaries, and the right to bring in 
goods import duty -free when first 
arriving (S . 4); and  
- exemption from import duty, excise 
and GST on the importation of a 
motor vehicle (S . 5) For an organization 
granted designated aid 
status, an exemption 
from import duty, 
excise and GST is 
available on the 
importation  or 
purchase of vehicles, 
plant and equipment to 
be used for performing 
functions under aid 
with the State.  S. 2, 4, 5 and  6 of the 
Aid Status (Privileges 
and Immunities) Act, 
1977 
Exemption of 
international 
organizations  Exemption on the income of 
prescr ibed organizations of which PNG 
is a member, along with the salary 
and allowances of officers of those 
organizations working in PNG   S. 39 of the Income 
Tax Act  
Exemption for certain 
visiting defence forces  Administered by the Minister for 
Defence. Provid es for the exemption 
from import duties or taxes 
associated with the importation of any 
goods required by a friendly visiting 
force ( S. 32) This may be limited 
under an agreement with the 
Minister.  
 
S. 44 also gives the Minister the 
power to enter into an  agreement 
with the visiting force to exempt the 
members of the force from income 
tax and import duties/excise/GST 
associated with the importation of 
personal goods and motor vehicles   Defence (Visiting 
Force) Act, 1975  
Other exemptions for 
visiting defen ce 
personal  Exemptions from income tax, 
including Salary and Wages Tax, on 
the pay and allowances paid to 
certain defence force personal   S. 37 and 38 of the 
Income Tax Act  
Exemption for Peace 
Corps volunteers  Exemption from income tax on the 
salary and  wages paid to Peace Corp 
volunteers in PNG.  
 
Exemptions from various taxes   S. 19B of the Income 
Tax Act  
Exemption of certain 
providers of technical 
assistance  Exemptions from income tax and  
Salary and Wages Tax on income 
derived under prescribed techn ical 
assistance agreements   S. 22 of the Income 
Tax Act  
a Part B of S.  45 was eliminated as from January 2015.  
Source:  Information provided by the authorities.  
 
__________