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Fact Summary

PNG is a constitutional monarchy with the Queen of England as Head of State. The government is elected every 5 years.

Geography, Climate and Population

Papua New Guinea lies just south of the equator approximately 150 kilometres north of Australia. The country is mountainous with high ridges and deep valleys. PNG's climate is hot and humid except in the highlands (above 2,000 m). The temperature remains constant year round in all areas.

The population in 1994 was 4.2 million and is projected to rise to 6 million by 2010. The doubling time is estimated to be 30 years.


The economy of PNG has in recent years been on something of a roller coaster ride. The "rebellion" in Bougainville in the early 1990s caused considerable upheaval in economic terms but by the mid-1990s this had reversed. Late 1996 and early 1997 have seen another reversal in fortunes with the strong calls for the government to resign and real fears of civil war. The outcome of this latest unrest is likely to have significant long term consequences for the economy as foreign investment becomes increasingly nervous.

Mineral and oil exports contribute significantly to the income of the country. Recent moves to loosen fiscal policy have made the environment for mineral and petroleum investment considerably less certain. Mining and petroleum sectors contribute 20% of GDP, with this figure continuing to rise.

Broadening the base of the economy and encouraging continued investment in resource developments requires maintenance of sound macro-economic management, upskilling of the labour force and maintenance of law and order.


Virtually all forest land is owned by clan or tribal groups under customary law.

Approximately 80% (37 million hectares) of the total land area are classified as forest. However logging over the past 20 years has reduced the forest area, and is also likely to have reduced the quality of the remaining forests.

Of the total forest area, about 20% (7 million hectares) has the potential to supply wood on a sustained yield basis. It should be noted that this takes into account the production of wood on a sustained yield basis, which may be different to sustainable management of the forest resource. The increasing population and demand for agricultural land is placing pressure on the forest resource with as much as 4 million hectares of the productive capacity forest predicted to be converted to other uses. Unlike the tropical forests of Indonesia and Malaysia, these forests are comprised of a large number of diverse, less desirable species and as a result, have had a limited market acceptance to date.

Plantations are being developed to an altitude of about 1,000 metres above sea level. By the 1990s these consisted of some 40,000 hectares of mostly fast growing hardwood species. In general these plantations are scattered and will not form the basis of a processing industry for some years yet.

To date a number of logging concessions have been let with much of the production going to the north Asian market. Average volume of merchantable species is low at around 23 m3 per hectare, and growth rates are low.

The activities of concession holders have caused concern in the past and in 1990 a two year moratorium was placed on the issue of new licenses. In spite of this new operations have commenced.

The rapid decline in the ability of other Asia-Pacific countries to supply the market with tropical hardwoods will result in increased pressure being placed on PNG's forests to supply raw material to new and established processing operations. However, there remain considerable political and logistical problems to overcome in order for the trade to really develop. This may in fact be something of a blessing, as if managed properly, there exists the opportunity to develop a sustainable forest management system, to the benefit of the people, while there still exists a significant viable forest resource. However, the opportunity must be grasped, as it will not be available indefinitely.

Fuelwood consumption is rising with predictions it will reach 7.5 million m3 by 2000. These are not expected to have significant influence on the potential harvest of commercial forests over the next decade.

Forest Policy

Papua New Guinea ranks with Indonesia, Malaysia and the Philippines as one of the four major tropical timber producers of the region. Unlike the other three however, Papua New Guinea's timber industry may be characterised as being in a sunrise phase, with the others being close to a sunset phase. The extensive forests of the country are to date, largely untapped, with little even known about much of them.

The small population and lack of any significant timber industry until the late 1960s meant that little need was seen for a forestry policy until that time. As the harvest from the natural forests started to increase, planning in any meaningful sense was abandoned, politicians and officials were corrupted, landowners and public revenues cheated, and the social and physical environment devastated.

Pressure from the loggers resulted in rapid deregulation of any controls mat existed. In particular, in 1971 the Forests (Private Dealings) Act was passed allowing timber companies to negotiate to purchase forest blocks direct with the landowner, rather than through the government as had been the case previously. This removed any protection the local (often tribal) landowners may have had from the activities of the less scrupulous timber companies, even though the protection afforded by the government in many cases was found to be wanting.

This is an important consideration, as about 98 % of the land area of the country is held as customary land, hence the government does not own the resources. Any moves the government makes must be on behalf of the owners rather than as an owner in its own right.

In 1979 a Revised National Forestry Policy, known as the 1979 White Paper, focused on the development of a forest industry and the export of logs. The Policy sought to have the forest industry make a significant contribution to national development objectives, especially by way of revenue generation, employment creation, and regional development.

The Policy also sought to have the development of the forest industry occur in an orderly fashion and provided for a National Forest Development Plan. The Plan was to resolve the competing needs of various provinces. There was recognition that the experience of other log exporting countries was often not entirely satisfactory and that there was the opportunity to improve on this.

The White Paper also noted that unless land was made available for follow up development, the goal of sustainable forest management was unattainable. The Constitution required that management was to provide for the needs of both current and future generations, thus requiring a long term focus.

While well intentioned, the reality of the White Paper's goals were not realised to a large extent. In particular, the problems of decentralised control, and the major issue of enforcing the requirements of the Policy were not recognised until later. Illegal activities on the part of timber companies became widespread with the government either unable or unwilling to do anything to halt the practices.

After a period of review and redevelopment of the White Paper during the late 1980s, the National Forestry Act was passed into law in 1991 with effect from 1992. The objectives of the new Policy stem from the Act and the Constitution. Broadly they cover such matters as:

· management and protection of the nations forest resources as a renewable natural asset;

· utilisation of the nation's forest assets to achieve economic growth, employment creation and increased onshore processing;

· collection of data and the advancement of knowledge relating to the utilisation and management of the forest resources through research;

· improved training and education in forestry;

· effective strategies to administer and maintain the forest resource.

The Policy also calls for the preparation of a National Forest Plan. This Plan, based on a national forest inventory, will include a statement of the annual allowable cut for each of the 19 provinces. This does not remove the rights of customary landowners to deal directly with timber companies but does give them the option to sell their timber through the government forest corporation. However the National Forest Plan will define the scope of permissible forestry operations in each province.

The major features of the new Policy cover areas of forest management, resource acquisition and tenure, and development of the economy and the country's infrastructure.

Forest Management recognises that the State, in acquiring the rights to manage forest resources must take overall responsibility to replenish the resource and must always recognise the rights of customary owners. Sustained yield is to be the guiding principle for production forests, with various provincial forest plans being amalgamated to form a National Forest Development Programme.

A new National Forest Plan, as required under the Policy, was approved by the National Forest Board in mid-1996, setting out the plan for:

· downstream processing;

· the annual allowable cut for the country to be set at 4.9 million m3;

· ongoing log exports at current levels;

· definition of land use categories identifying reserves and protection forest, as well as production forest;

· programmes for sustainable forest management;

· a national forest inventory to improve resource information;

· emphasis on resource replacement or reafforestation to ensure ongoing wood supplies;

· acquisition of forest resources from customary owners to be made under forest management agreements;

· staff recruitment to accompany development.

On the surface, the Plan confronts some of the key issues facing the country and its forest resources. The matter is unfortunately not that simple as there is considerable concern from several quarters about the composition of the board. In particular, in the second half of 1996 the Forest Act (1991) was amended giving the Minister of Forests absolute power to select, appoint and dismiss members of the Board. This resulted in the removal of NGO representatives, and their replacement with timber interests.

This action was deemed serious enough for the World Bank to cancel its Structural Adjustment Programme (SAP) loan to the country.

By late 1996, the government had backtracked on the amendments, saying they were void as they had not been certified by the Speaker or published in the Gazette. Thus the earlier 1991 Act remains in force.

However, the new Plan confirms the intention to proceed with the acquisition of forest resources and their long term management. This acquisition will be by way of a Forest Management Agreement (FMA). The owners will guarantee rights of access to the Forest Authority for the management of the forest, including harvest and the construction of infrastructure. The FMA would also set out the returns due to the landowners.

Forest resources on state land or under an FMA have strict guidelines before any permit can be granted for the harvest of timber, including feasibility studies and expressions of interest from potential investors.

The new Policy emphasises that no permit will be granted until an environmental plan has been prepared and approved by the Minister for Environment and Conservation. Previous policies did not require this and to date many companies continue to operate as though nothing has changed.

A key aim of the Policy is to maximise the amount of onshore processing, and to develop the forest industry into a major source of regional development. To this end, the Policy includes the State Purchase Option, and the establishment of a separate State Marketing Agency, which producers can also access. The State Purchase Option allows the State to purchase up to 25 % of annual log export quota.

The Policy allows for the setting of royalties and taxes. To date this has also been a cause of unrest. In early 1996 the government introduced a system of royalties and taxes. The government was to receive the taxes and the landowners the royalties. The objective was to increase the returns to the country as a whole from its forest resources whether sold as logs or otherwise. The result was for both parties to receive significantly higher returns, particularly when log prices are high. The tax part was duly imposed, but the royalty component of the package was not implemented.

There is suggestion that the delay in imposing the royalty payment has been due to pressure from the timber industry.

In spite of rhetoric from the timber industries that the new taxes and royalties would cripple the industry, log export volumes were increasing in 1996 compared to 1995.

The new Policy provided for the development of research and training for the forestry sector. The development of the research technology and the human resources are essential if Papua New Guinea is to be successful in its goal of achieving sustainable forest management.

Priorities for research include management of the existing forest resource, harvesting techniques, the ecology and management of the forests, downstream processing of forest produce, and the management of minor forest produce.

Key constraints which must be considered when initiating development programmes include the rugged nature of the land with considerable areas at high altitude and remote from existing infrastructure; cultural and language diversity; skilled labour shortages; limited infrastructural development to date; and the customary ownership of the land and forest resources.

In spite of these constraints, progress is being made and must continue. In particular, there is a need to focus on resource assessment, improving returns from the existing harvest from the forest including a greater focus on downstream processing, identification and protection of conservation areas and developing the human capital required for this work.

PNG - Summary

The new Forest Policy is a major improvement over the policies it replaced. It takes a more comprehensive view of the forest resource than was previously the case.

In particular it now comes from a position of considering a sustained yield from the forest, and to a lesser extent considering sustainable forest management in the full sense of the concept.

However, there are concerns about how the Policy is implemented, and the ability of government to work in the best interests of the country and the people who own the resources. The fact that there are a large number of tribal groups and that the forest resource is almost entirely owned by those tribal groups does not make the task of achieving sustainable forest management any easier.

Papua New Guinea could be considered to be in a fortunate position in regard to its forests. While there has been, and continues to be unsustainable harvesting of timber, the extent of the resource still remaining is such that there is a very real potential to have a significant, sustainable forestry sector into the future. Whether this comes to pass will depend upon not only the rhetoric contained within the Forest Policy, but more importantly the commitment of government to implementing and improving on the principles of the Policy.

The new Policy has been active for several years now and the results are mixed. The difficulty of dealing with the complicated institutional framework set out in the Policy is showing in some situations. Of greater significance is the indifferent signals coming from government as to how important they consider the whole issue of the long term sustainable management of the nation's forest resource.

Towards 2010

In looking ahead one of the key issues to be considered is the difference between sustainable yield and sustainable forest management. In the past the forestry sector internationally has focused on the long term flow of wood from the forest resource. This concept has been encapsulated in the Forest Policy of Papua New Guinea, rather than the more holistic (and more vital) concept of sustainable forest management, which considers wood as only one of the products the forest provides. The others include water supplies, non-wood forest products, environmental and social benefits, wildlife habitat and an existence for some tribal people.

In today's world it is essential that forest policies take this more holistic view if they are to be successful in the long term.

In addition to this important structural matter, there is a need to implement many of the components of the Policy. As has been seen recently there is are major problems in implementing even basic reforms. Reforms and improvements in the areas of research, training and enforcement are required so that Papua New Guinea controls the future of its forest resources, rather than having their future decided by outsiders with vested commercial interests.

In particular, the country needs to examine ways of increasing the value of its exported forest products - not simply be a log exporter. As has been demonstrated elsewhere in the region, the expediency of a log export ban does not necessarily provide the desired result.

The current political problems within the country are simply a manifestation of a system that is fraught with internal problems. While the state of the nation remains in doubt, it is naive to think there will be substantial changes in forest policy.

Implications of Inappropriate Action

Of the countries considered in this study, Papua New Guinea possibly has the greatest opportunity to develop a long term, sustainable forest industry based on its still considerable natural forests. Failure to grasp the opportunity in the short term will see the potential evaporate rapidly, as the quantity and quality of remaining forests decline.

Involvement and education of local people as owners and beneficiaries of the forest resource is central to sustainability. The population is small relative to the size of the country. This provides a window of opportunity to develop sustainable forest management practices, without the pressures faced by many of the other countries, resulting from large populations.

The interests of the country are not well served by short term strategies that over-cut or degrade the forest as a whole. A long term view must be taken, with special emphasis placed on the accountability of government, and protection of local peoples' rights. If this does not occur, people take the short term view to maximise their short term gains at the expense of long term opportunities.

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