Papua New Guinea: Netting fisheries investment

As Papua New Guinea (PNG) seeks to diversify its economy to avoid over-reliance on gas and mineral resources, its nascent fishing and fish-processing industry is rising in potential.

Boosted by trade agreements and strong catch figures, the canning industry is attracting players from Europe to Asia. Boasting the largest fisheries zone in the Pacific at an area of 2.4m sq km, the country landed 749,000 tonnes of tuna in 2010, some 17% of the world’s catch.

An economic partnership agreement with the EU signed in 2009 has proved a clarion call for foreign investors, with plans for the Pacific Marine Industrial Zone (PMIZ) to be built in the northwest and funded by a $71m concessional loan from China.

The PMIZ is expected to host 10 large tuna plants and employ some 30,000 people, easily boosting PNG’s production capacity to more than 2000 tonnes per day. Chinese firm Zhoushan Zhenyang Deep-Sea Fishing Company plans to build a $20m plant in the PMIZ, and Spanish and Thai firms also have projects underway.

Under the EU deal, PNG’s canned tuna has been granted permission to enter the EU market duty free, and imports to the continent − which reached 15,600 tonnes in 2010 − are expected to double in 2012. PNG has also been permitted to export fish to the EU from outside its own territorial waters, allowing investors to source fish elsewhere and process it in PNG.

At last November’s Asia-Pacific Economic Corporation conference, Prime Minister Peter O’Neill also lobbied for duty-free access to the US tuna market. However, fisheries ties with the US are somewhat problematic. PNG has threatened to revoke the US-Pacific Islands Multilateral Tuna Fisheries Treaty unless Washington grants better terms. The US currently grants just $18m per year to Pacific Island parties for access for its fishing vessels, and the deal is due to expire in 2013.

Two Philippines-based firms, RD Tuna Canners and Frabelle-Frescomar, currently lead the canning industry in PNG. Both operate multi-million dollar plants in the Lae and Madang areas on the island. While RD Tuna Canners has a production capacity of 200 tonnes per day, Frabelle-Frescomar produces about 130 tonnes per day.

According to the Pacific Tuna Forum, the estimated raw value of the annual tuna catch in PNG is about $1.35bn, and if the industry explored value-added initiatives, this could reach up to $2.7bn. The tuna industry is currently the third largest in Asia after Thailand and the Philippines, which PNG expects to overtake soon.

Despite the abundance of tuna in PNG’s waters, officials complain that the country’s fishing industry faces competition from encroaching US boats and that currently only 20% of the catch is processed on the island.

“80% of our tuna is taken away by distant water-fishing nations and processed in Thailand, the Philippines, South Korea, the US and Japan,” said Sylvester Pokajam, the managing director of the National Fisheries Authority (NFA), when speaking with Atuna, a leading website that reports on the tuna industry. “We are looking at 30-40% more tuna canning production. Maybe in 10 to 15 years, we will be processing 100% of our tuna. That is our final goal.”

In February, the European parliament announced a study that would determine the impact the fisheries agreement with PNG might possibly have on the tuna-canning industry in Europe, following complaints from major producer Spain. This could prove to be a major obstacle moving forward.

PNG officials have rejected Madrid’s accusations that the country fishes irresponsibly. “We have started a monitoring system with satellites and observers on-board every vessel, which is managed through the Western and Central Pacific Fisheries Convention (WCPFC), in which the EU is actually a member,” said Wayne Golding, the chief negotiator of the PNG delegation currently in talks with the EU.

“We have to grow up economically and try to financial independence by creating our own industry. It is all about diversification of our economy,” he added.

While the island works on access to the US market, another potential source of sales is the market for tuna that have been caught in a humane and sustainable fashion. In July 2011, the Marine Stewardship Council awarded the Parties to the Nauru Agreement (which includes PNG) a certificate of approval for catching tuna in free schools, rather than using fish-aggregating devices (FADs), which attract sea life to nets, no matter the species.

In November, Fair Well Investment, a long-line tuna fishing company based in Port Moresby, also signed a memorandum of understanding with the NFA and the World Wildlife Fund (WWF) that will see the introduction of a trial period to initiate the use of circle hooks in its long-line tuna fleet.

“The NFA is among the Pacific’s most progressive, sustainably minded fisheries agencies,” said Daniel Navin, the director of aquarium fish exporter, EcoAquariums, when speaking with Coral Magazine in August 2011, pointing to PNG’s tuna fishery as an example. “The NFA has poured millions into tagging programmes and establishing one of the Pacific’s largest no-take zones.”

The government’s environmental efforts in this regard are to be lauded, as the country prepares to become a centre of tuna production in the Pacific. Opening trade agreements with the US and developing its domestic processing facilities would ensure that potential profits stay in PNG.