Papua New Guinea's rainforests cover about 75 per cent, approximately 340,000 square kilometres of the country's total land area. That abundance of high forest area contains 35 million hectares of closed forest.

The Government's recognition of the value of rare and magnificent natural forest has resulted in major policy changes aimed at creating an environment for sustainable downstream processing activities.

The Papua New Guinea Forest Authority was formed in 1993, as a statutory corporation, to lead the forestry reform process and devise a programme to manage the tropical rainforests.

The desire to achieve a balance between the use of forests for both conservation and industrial wood production, is evidenced in an initiative in which the Government invited the World Bank to lead a review of the sector with the assistance of a number of other donor countries and organisations.

The review established a number of guidelines which included the need to ensure that when the forest is to be used for industrial wood production, it is managed for sustained yield and harvested to prescribed environmental standards.

The commercial development of the forest resource has so far been largely concentrated on clear felling of virgin forest for logs. By volume, about 85 per cent of Papua New Guinea's annual harvest is exported as logs.

This practice will be banned from the Year 2000. Contractors have been encouraged to conduct feasibility studies into various processing activities for the export market.

Papua New Guinea has shown the global community that it is prepared to balance international requirements for sustainable development with its own need for the contribution currently made by the forestry industry.

With this balance in the forefront of policy making, it is intended to conserve and preserve the natural forest for future generations. Furthermore, it will allow for selective logging on a sustainable basis to meet the Government's development needs.

There are some prime opportunities for development of downstream activities which the Government expects to rival that of the logging trade.

The potential for converting some of Papua New Guinea's premium species, such as rosewood, kwila, blackbean and taun, into high-quality furniture and other wood products, is an investment opportunity with a growing market. Stocks of premium wood species will be maintained for wood products manufacturers, so the markets they establish in the near future can be guaranteed of a continued supply.

International markets are establishing requirements for all tropical wood products to come from forest plantations and afforested sourced areas. With Papua New Guinea reforming its forestry policy and creating such areas in already clear felled areas and savanna grasslands, it will be well-equipped to provide sound and rewarding investment opportunities.

Forestry Subsectors

Products made of tropical hardwood attract top prices. Although markets do exist, few are efficiently supplied at present, so the ability to establish a constant customer supply will guarantee a permanent and high demand.

The present timber industry in Papua New Guinea consists of more than 40 sawmills, a plywood factory, a woodchip mill and more than 25 furniture-making factories and joinery shops. Many of the existing mills are small and out-dated, but if they were all fully-operational they would have an annual output capacity of about 210,000 cubic meters of sawn timber.

Currently, downstream processing activities include furniture making, plywood, flooring and other building products.

Potential investment opportunities in forestry can be obtained through the Forestry Sector Manual and the project profiles being promoted by the Investment Promotion Authority.

Copyright © 2004 Embassy of Papua New Guinea to the Americas and Globescope, Inc.
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