How e-commerce is changing Papua New Guinea’s retail sector


As has been the case worldwide, in the first half of 2020 Papua New Guinea’s retail sector had to contend with the impact of the Covid-19 pandemic. In early February the government began imposing measures to limit the spread of the virus, while simultaneously introducing significant macroeconomic initiatives to support the economy and cushion business owners from challenges resulting from the lockdown measures. However, prospects for retail in the country continue to appear strong over the longer term. The sector has expanded steadily over recent years, guided by government policy and long-term plans including the Small and Medium-Sized Enterprise (SME) Master Plan 2016-30, which was established by the Department of Commerce and Industry (DCI).

Meanwhile, the June 2020 inauguration of the 4700-km Coral Sea Cable System is set to be a gamechanger for the retail sector and the wider economy, with faster internet speeds expected to fuel the rapid growth of online activity. E-commerce, in particular, will likely benefit from this development. Although PNG currently lags behind a number of other countries in the region when it comes to the online segment, Covid-19 has funnelled many consumers towards online shopping. Businesses have also re-evaluated how they connect with their customers and with each other. As such, the rollout of the new cable will likely bolster PNG’s ICT infrastructure at a time when retail and many other sectors must increasingly rely on technology and digital tools to buttress growth.

Structure & Oversight

The DCI is tasked with overseeing and regulating the retail sector. Its wide array of responsibilities include researching and coordinating policies relevant to the sector’s ongoing development, helping to diversify PNG’s economic base and export partners. The DCI also plays a major role in expanding the presence of SMEs across the country. A key pillar of its corporate strategy 2018-30 is aimed at increasing the total number of SMEs and creating more job opportunities in the segment. The DCI works in close partnership with a number of key industry players – such as the SME Corporation – to achieve these goals. Meanwhile, the DCI’s SME Master Plan comprehensively lays out various targets envisioned for the segment. These include growing the number of SMEs operating in the country from 49,500 to nearly 451,000; increasing the total number of jobs associated with SMEs from almost 300,000 to 2m; and raising the GDP contribution of SMEs from 6% to 50%.

The Independent Consumer and Competition Commission (ICCC) is PNG’s main regulator and consumer watchdog, tasked with overseeing licensing, corporate governance and retail industry regulation. Its main objective is to enhance the welfare of consumers, promote industry conduct and standards, and protect consumers’ interests when it comes to the price, quality and reliability of goods and services. The ICCC is also charged with administering and implementing the ICCC Act of 2002 and other related legislation. In addition, it carries out duties such as the administration of price regulation, licensing and industry supervision in general.

Key non-state entities include the PNG Chamber of Commerce and Industry, which plays an important role in representing business communities. It works to foster links between business and state actors, and is committed to the development of the country through business growth. The Business Council of PNG is another non-state entity that represents the interests of the local private sector at the governmental level, chiefly through initiatives focused on improving law and order, technology infrastructure, and trade and investment opportunities.

Performance & Size

In 2019 PNG’s overall economy grew by 4.8%. However, as a result of the Covid-19 pandemic, in June 2020 the Asian Development Bank forecast full-year growth of -1.5%, before rebounding to 2.9% in 2021. According to the 2020 budget, the retail and wholesale trade sector accounted for 0.4% of GDP growth in 2019.

Prior to the onset of the pandemic, which significantly impacted economic activity, the Department of Treasury put PNG’s retail sector on a strong growth trajectory between 2020 and 2024, with projected expansion of approximately 3.7% in 2020. According to the budget, the sector has expanded steadily in recent years, with growth of 1.2% recorded in 2017, and estimated growth of 3.5% and 3.2% for 2018 and 2019, respectively.

Employment in the retail sector grew by around 4.2% in the year to June 2019. This represents the third-highest level of employment growth in non-mining sectors, after financial, business and other services (8.5%), and manufacturing (4.6%). According to the 2019 Treasury Business Survey, growth in PNG’s retail and manufacturing sectors was largely driven by recruitment to cater to new product lines and supermarkets, and the ongoing need to re-hire employees who were laid off as a result of the economic headwinds in 2018.

Meanwhile, inflation has gradually decreased, falling from 6.7% in 2016 to 4.7% in 2018 and dipping further to an estimated 4.4% in 2019. Lower international food and fuel prices contributed to this decline, as well as the lower price of the country’s seasonal items including fruit, vegetables and betelnut as infrastructure upgrades led to improved supply conditions and increased competition in the retail and wholesale sector.


Retail sector growth is spurred by increasing rates of urbanisation across PNG. Recently, major cities in the country have seen an increase in the number of retail businesses offering groceries, hardware, automotive, and home and industrial products. Meanwhile, greater levels of employment and higher incomes are helping to expand the middle class and drive investment in the sector.

Due to such changes, purchasing trends and habits are largely moving away from traditional open-air markets to more established outlets such as shopping centres. Therefore, it is an important moment for local brands as they work to successfully capture a share of the growing market. “Brand loyalty tends to be high in PNG, but consumers are also very price conscious,” Ravendren Kanniah, country manager of paint manufacturer AkzoNobel PNG, told OBG.

An additional factor driving the trend towards shopping centres is the increased access to private vehicles across the country, which makes trips to large shopping areas increasingly convenient for locals. In early July 2020 local retail chain Brian Bell Group announced that it had opened its PGK30m ($8.9m) shopping centre, which features 24 shops on the site of one of its former warehouses.


Like other countries around the world, in early 2020 PNG had to adapt quickly to the health risks presented by the growing Covid-19 pandemic. In early February the government began imposing a number of measures to curb the spread of the virus, including banning travellers from Asian countries, reducing international flights, and enhancing screening and mandatory health declaration measures for all incoming travellers. In early April the government voted to extend the state of emergency – first put in place at end-March – for another two months. It also announced significant macroeconomic measures to support the local economy and ensure small businesses were in a better position to weather the ongoing challenges. These measures included a PGK5.7bn ($1.7bn) economic stimulus package, and a PGK600m ($176.9m) credit line to support businesses and individuals in coordination with local banks. It also contained approximately PGK500m ($147.5m) in support from superannuation savings for employees who were likely to be most impacted by the country’s economic slowdown.

Retail is one of the sectors hit hardest by the global pandemic. While the e-commerce and groceries segments have benefitted, many other areas have experienced the opposite effect. For example, open-air markets were closed quickly, which placed added pressure on farmers who would ordinarily rely on such methods to sell their produce.

Larger supermarket chains – such as PNG-based grocery company Papindo – have established measures to ensure the health of both workers and customers, such as signs and markers reminding people to social distance, as well as providing hand sanitiser and wash basins at the entrance to shops. Opening hours have also been reduced due to the paring back of bus services. “Given that many of our staff use public transport to get to work, we shortened opening hours to allow sufficient time for them to travel on the limited public transport options,” Alfred Yau, director of Papindo, told OBG. “Another option would be to lay on shuttle services, but that could create additional health and safety concerns.” According to Yau, the effect on local supply chains has not been overly adverse. “Manufacturers have been able to transport their goods; however, internationally there have been delays, as cargo ships must isolate for 14 days after they arrive in PNG.”

Brian Bell Group has also experienced lower foot traffic and reduced trading as a result of the pandemic. In April 2020 Cameron Mackellar, CEO of Brian Bell Group, told local media that domestic supply chains were helping to compensate for some of the disruption to overseas shipments. “We have procured some significant furniture from local suppliers in recent weeks, as a result of Malaysian and Indonesian retailers closing down,” he said.

Local Growth

The pivot towards locally sourced goods and food produce is a continuation of the policy Brian Bell Group has pursued for some time. In a bid to source more goods locally, the retailer has invested heavily in PNG’s market and sought to establish more local partnerships. In recent years the group – which includes the Brian Bell Home Centre, Trade Electrical, Chemicals, Agriculture and Property divisions – has overhauled many areas of its business, investing in new systems, infrastructure and operations. In 2017 a new Home Centre was constructed in Lae, and as of July 2020 a complex comprising 39 units was being built on Ela Beach.

The group has also increasingly focused on using more local suppliers across its retail portfolio. Currently it purchases around 15% of its needs from local suppliers – a trend that the company is hoping to continue in the future. Locally sourced materials are largely concentrated in furniture, timberware and hardware equipment, although the group is looking at sourcing more arts and crafts from local businesses once the pandemic subsides and demand picks back up. To ensure these partnerships can be scaled up, Mackellar has underlined the importance of reliable supply when it comes to dealing with small local businesses, emphasising that long-term supply relationships are key to success on both sides.


One notable theme of the global Covid-19 pandemic has been the sharp surge in digital activity that occurred as people migrated online – not only to communicate but increasingly to do business. E-commerce activity, in particular, spiked, with traditionally brick-and-mortar shops turning to online services and digital technology in response to lockdown restrictions. For example, local bakery and catering company Tapioca Delight become the first SME in PNG to accept online credit and debit card payments through the Bank South Pacific online payment gateway.

While e-commerce activity in PNG has been fairly limited compared to some other markets in the Asia-Pacific region, the segment is on the cusp of receiving a major boost – as is the whole of the country’s digital economy. In June 2020 Prime Minister James Marape inaugurated the $222m Coral Sea Cable System at a ceremony in Port Moresby. The project connects Sydney to Port Moresby, with a separate 730-km submarine cable system linking the islands of Malaita, New Georgia and Taro (see ICT chapter). The system, which was completed in December 2019 and began operation in February 2020, will boost the country’s ICT infrastructure as digital services ramp up to meet increased demand during the pandemic. In mid-2020 Prime Minister Marape told local media that the Coral Sea Cable System is expected to help PNG’s faltering ICT infrastructure and assist the country in successfully adapting to the changing global circumstances brought about by Covid-19.

The project was majority funded by the Australian government, with contributions from PNG and the Solomon Islands. It has a total capacity of 40 Tbps, divided equally between PNG and the Solomon Islands. Upon final completion of the cable, PNG and the Solomon Islands were transferred majority ownership and will receive all revenue generated moving forwards. Furthermore, the project is expected to provide a major boost to PNG’s overall economic development, with the World Bank estimating that improved internet access could translate into additional GDP of $5bn and 300,000 more jobs across the Pacific Islands by 2040. Most of these gains are expected to take place in PNG, where the relatively large gaps in mobile penetration – coupled with the territorial size of the country – present significant room for digital expansion.

Digital Infrastructure

The e-commerce segment, in particular, is poised to benefit from the enhanced digital infrastructure provided by the new cable. The segment will also receive a boost from the EU’s Trade Related Assistance Programme, which is providing PNG’s government with technical assistance to develop electronic transaction legislation. The first workshop took place in 2018, and the new legislation will draw on models of best practices from around the world. It will touch on topics such as the use of internet technology, mobile commerce, electronic funds transfers, escrowing services, electronic data interchange, supply chain management, inventory management systems, internet marketing, data collection systems, and a number of other technologies and innovative business systems.

The year 2018 also saw related development with regard to the Bank of PNG’s work on the legal, commercial, operational and technical frameworks for a retail payment system. The Retail Electronic Payments System enables all providers, including mobile banking service providers, to exchange and utilise information across the national payment system. Despite these advancements, the country’s e-commerce segment remains in the nascent stage. In addition to the ongoing expansion of internet access and payment systems, further work is required in terms of transport infrastructure and logistics to ensure that efficient last-mile delivery services can be achieved in a cost-efficient manner (see Transport & Logistics chapter).


As of July 2020 it is too early to fully assess the overall impact that the Covid-19 pandemic will have on global, regional and national economies. However, it is clear that the measures put in place to mitigate the spread of the virus are set to have far-reaching – and arguably fairly disruptive – effects on the various sectors of PNG’s economy. The retail sector, specifically, has been heavily impacted, and key players will need to adapt quickly to meet the challenges presented by local and international lockdown measures. In many cases, responses have come in the form of accelerated digital transitions as brands pivot from the model of brick-and-mortar stores to online shopping platforms in order to effectively reach their customers.

Although it is still a burgeoning segment in PNG, the official inauguration of the Coral Sea Cable in mid-2020 is anticipated to provide a major boost to the country’s digital expansion plans, with the country’s retailers in particular set to benefit as online shopping comes increasingly to the fore. Furthermore, supply chains have remained relatively resilient throughout the crisis, indicating that once the immediate challenges of Covid-19 have been navigated, PNG’s retail sector can expect to return to the growth trajectory witnessed over recent years, with expansion fuelled by rising rates of urbanisation and a rapidly growing middle class.

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