At last: Inroads are finally being made on land reform and ownership

Although it has 470,000 sq km of territory, just 5% of Papua New Guinea’s land is available for economic development, according to the National Research Institute (NRI). This long-standing paradox has impeded economic progress. However, a recent amendment issued in 2012 to the 2009 Incorporated Land Group (Amendment) Act (ILGA) provided the catalyst for an urgently needed national land reform programme. Only 3% of PNG’s land is currently under formal tenure. Customary land, a category under which 97% of the country’s territory falls, is land that is officially recognised as belonging to original inhabitants, and similar customary land stipulations are found throughout the Pacific Island rim. Customary land plots are not held by individuals, rather they are the recognised property of collective groups. Yet even within this structure, there are sub-groups that may claim greater controlling shares of the land by right of birth or marriage; in the purest custom, there is no facility for the transfer or transaction of land to outsiders. The question of with whom to negotiate the sale or lease of this land has been a perennial issue for PNG’s governments, both colonial and national. The 3% of formal land was forcibly acquired by PNG’s former German and Australian colonial rulers for towns, ports and “in the public interest”, most notably in what is today Port Moresby’s (POM) National Capital District.

PIECEMEAL PROGRESS: It is not impossible to obtain land. Papua New Guineans have maintained the right to sell, lease or dispose of land in accordance with native customs under Section 81 of the Land Ordinance (1961), but this has not ensured transparency in negotiations nor equal distribution of benefits and revenue. As such, some developers and investors have been able to acquire tracts of land, but these acquisitions remain technically illegal. The government is still the only body permitted to negotiate the sale or lease of land from traditional landowning groups. While acquisitions have been made, these are typically small freeholds negotiated individually through informal land tenure agreements. Obtaining the large tracts necessary for PNG’s resource extraction projects has been possible thanks to the large economies of scale.

The government and investors have been unable to guarantee that all land negotiations and transfers are conducted between legitimate group representatives and that the benefits of such agreements are fairly distributed. Despite government efforts to assist, the lack of clarity serves to derail some negotiations between relevant landowning groups and foreign and domestic firms, and this has had financial implications and resulted in potential revenue loss for all parties. The legal framework in the 2009 ILGA was intended to resolve the issue and strengthen investors’ security.

A LEGAL FRAMEWORK: The 2009 ILGA established a legal framework for land negotiations, providing an incentive-based system in which the collective land rights of the group are deposited with the government, which then undertakes negotiations on behalf of the registered group and its members, ensuring the fair distribution of revenues. “The ILGA is about recognising people’s ties to their customary land and giving them a legal body under which to identify and where traditional land-owning groups can conduct commercial transactions, such as doing business with banks,” Sheila Sukwianamb, head of policy and planning division at the Department of Land and Physical Planning, told OBG. “The amendment complements the Land Registration (Amendment) Act 2009 and enables customary landowners, after the registration of their land, to participate in business and the economy.”

By enabling customary landowners to register their land, the groups are thereby entitled to leverage these allotments for loans or sale. The ILGA is also meant to provide recourse for landowners, according to Max Kep, director and chairman of the Office of Urbanisation (OU). “Once land is formally recognised and titled, it is given to the Incorporated Land Group; everyone and every developer within the boundaries are subject to the ILGA and governance. If someone has already purchased land and made investments, then they will still be required to answer to the ILGA,” Kep told OBG. Yet the legislation needs some adjustments so that it may be in line with PNG’s practical realities. In order to register territory, landholders are required to conduct surveys and are responsible for proving they have a legitimate claim to the land by demonstrating birth certificate registrations for all group members involved in the transaction. While this ensures the fair treatment and participation of all parties involved, it places the burden of accountability on the communities, where birth certificates are not commonly issued, Roughly 85% of PNG’s population resides in rural areas, and this remains an obstacle for the legislation’s effective implementation. Moreover, the Land Registrar still lacks executive powers to enforce rulings or pursue court actions against infringements, further weakening oversight. However, the 2012 ILGA amendment does rectify a constitutional contradiction by which land entered in the register was no longer subject to customary law, voiding the group’s ownership.

ECONOMIC IMPERATIVES: Demand for an effective mechanism to harness PNG’s customary land has become strong, and the ILGA was issued in a timely manner to address this. Post-independence land held by the government or freeholders has been subject to claims by the original inhabitants for its return, notably from the Motu and Koita tribes in POM and Ahi in Lae.

Poor administration and an inadequate legal framework have prevented the productive use of land. The 1966 Land Act, which previously dictated the sale and lease of customary land, was an incomplete guide of shallow legal standing, and unclear regulations that were open to exploitation. Accordingly, PNG’s courts remain clogged with ongoing land disputes.

Across the country there is increasing movement to urban centres by those in search of work and services such as health care and education. However, as this trend picks up speed, it is becoming clear that urban areas are not suffering from a shortage of land, but rather obstructions to the access of the limited available government land. PNG’s housing crisis and the spread of illegal, semi-permanent squatter settlements has been fuelled by poor record-keeping at the Land Registry, convoluted bureaucratic processes and weak government institutions. Moreover, municipalities’ efforts to clear illegal settlements by using bulldozers and burning techniques have backfired. Housing shortages have not only pushed civil servants and the urban workforces into these settlements, but using physical means to expel illegal occupants in Madang in 2009 and 2010 led to a successful legal campaign against the provincial government, against which large compensation claims were levied. According to the government’s fledgling OU, these issues are now growing more acute.

Urban migration continues in an environment where 80% of land under formal tenure is tied up in red tape and belongs to the government, and customary land groups possess 90% of the best land for development. In the past, the absence of legal frameworks severely reduced confidence in the security of tenure, investment and economic development. Unsurprisingly, the PNG Development Strategic Plan 2010-30 (PNGDSP) targets land reform as one of its main focuses and a key feature of its four five-year plans.

ECONOMIC PROJECTIONS: In 2010 the average annual investment in land was calculated to be just 0.4%; with land reform, this is expected to rise to 1.4%, according to the National Research Institute. If the PNGDSP can reach its goal of releasing 20% of PNG’s customary land for economic development by 2030, growth equivalent to 57.3% of GDP and 52.2% of GNI can be achieved. Reform would also create 680,000 jobs across the formal and informal economies in both urban and rural environments by 2030. These growth indicators, in accordance with the government’s 2030 goals, could be achieved by registering just 60% of the integrated landowner groups, underscoring the potentially lucrative returns on reform. However, with 1408 identified groups as of 2008, the complexities of the task will require substantial investments in the administrative capacities of government institutions.

Nevertheless, the government is committed to making reforms. “The ILGA is a way to give power to landowners who have been marginalised in the past when their land was purchased outright by the state and they were made to sit on the side lines. Hopefully, this will provide them with economic power to ensure that they become part of the formal economy,” Kep told OBG.

With approximately 79% of the population living at subsistence level, according to the NRI, land reform is the catalyst through which money earned from resource extraction can be injected into the economy. The development of 10 economic corridors in the nation’s poorest areas, as proposed by the PNGDSP, depends on accessibility to land for construction. The rural service centres alone can provide 23% of GDP growth, according to PNGDSP projections, as well as slowing urban migration. The ILGA has provided a catalyst for reform, and hopes are high, as the NRI cited the success of similar initiatives in South-east Asia and Latin America.

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The Report: Papua New Guinea 2012

Construction & Real Estate chapter from The Report: Papua New Guinea 2012

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