Country Profile

Papua New Guinea (PNG) lies just below the equator in the South Pacific. It shares its main island with Indonesia, and comprises more than 600 islands, covers a total surface area of 474,000 square kilometers and has a population of 5.2 million people. More than 800 languages are spoken in PNG with Tok Pisin (Pidgin English) being the common conversation language. Rainforests and woodlands cover 80% of the land area. Its exclusive economic zone covers 2.4 million square kilometers of coastal and offshore waters.

The country is divided into 19 provinces and one autonomous region (Bougainville), each with a Governor and Provincial Government structures and offices. (Bougainville has a president and an autonomous government). The country is divided into four regions - Southern, Highlands, Islands and Momase regions. In terms of the Organic Law currently being implemented, a large degree of Provincial autonomy is envisaged. Central Government is the sole collector of revenue and makes allocations to Provinces.

A key “obstacle” to economic development is land ownership where 97% of the land is owned by customary landowners (most of it on a collective basis) and 3% by the State. By “land” is meant what grows on it, what lies underneath it as well as the surface itself. Acquisition of land for economic development purposes can only happen with permission from the collective landowners and with exorbitant “compensation” prices for the land.

More than 80% of private sector jobs are in rural areas, mainly non-wage agricultural activities. About 35 percent of these jobs involve subsistence non-cash farming and fishing activities and, to a smaller extent, trading activities. Wage employment accounts for just 12–13 percent of total employment. Of this, the private sector accounts for about 64 percent. Within the private sector more than 50 percent of wage employment is in agriculture, while construction, trading and manufacturing each account for about 14 percent. Most wage employment is in small enterprises.

Unemployment in the urban centres is estimated in the region of between 40% and 50%. This has resulted in increased crime rates. Violent and white-collar crimes are on the increase.

Government of PNG (GoPNG) has approved a SME Policy during 1998 and a Micro-credit Policy in 2001. SME development remains a declared priority of GoPNG, yet very little direct tangible support has been provided.

A strong Labour movement exists, although much politicized.

Infrastructure is generally in a very poor state with roads linking major centers basically non-existent. The two alternatives of sea and air transport are very expensive. This has resulted in small and fragmented local market conditions.

In general an entrepreneurial culture is absent, mainly attributable to the Melanesian lifestyle and culture of extended families depending on each other for their well-being (“wantok” system in PNG)

PNG has abundant natural resources but very little exploration and value addition takes place.