Land ownership

LAND in Papua New Guinea is communally owned and is utilised for both communal and individual benefits from farming, fishing, hunting, building, and other usages.
Communal land ownership provides a strong social security system by ensuring that basic human needs, such as food, shelter, clothing, family bondage, and security are satisfied.
This social security system prevents mass migration of people into towns and cities, which are now havens for serious law and order problems in PNG.
The law and order problems are costing PNG too much money and other resources to contain.
Two successful business models used in PNG are worth noting.
First, large mineral, petroleum, and gas projects use the communal ownership model.
Project physical infrastructure is communally owned by project partners, while the land on which the infrastructure sits on is communally owed by the landowners on a commercial lease arrangement.
Second, the New Britain Palm Oil Ltd (NBPOL) Integrated Estate model.
This model uses communal land owned by landowners on long-term lease for palm oil production, and sub-lease for palm oil production and other usage by the estate’s labourers.
Landowners outside the estate use their communal land to produce and sell palm oil to the NBPOL, with agricultural extension services support provided by the company.
Cash flow after expenses are paid, receivables from sales, and insurance policy covering the physical infrastructure, are used as security to cover bank loans under the two business models.
The two business models demonstrate that land tenure security is not a primary issue hindering bank lending for business and development in PNG.
Rather, it is the management of an enterprise and how it relates to the communal landowners as stakeholders is the key.
The banking system in PNG is driven by short-term lending and profit motivation.
In the last one hundred years, banks have failed to expand and provide much needed financial services to the majority of the population.
Instead, they charge high account and transaction fees and interest rates on loans to remain very profitable.
Some banks have scaled down their operations to concentrate on more profitable parts of their asset portfolio.
Government support in terms of providing appropriate education and training on enterprise establishment, management, extension services, marketing, financial management, research and development, transportation, and infrastructure development and maintenance, are critical for businesses development in PNG.
Land reform and registration in PNG is not necessary for business and development, as demonstrated by the two business models above.
Instead, government support, electricity and communication development, and expansion of the banking services and insurance market, are critical for supporting business and development in PNG.

Concerned Citizen,
POM