Warnings that proposed changes to Papua New Guinea’s Land Act could harm economy

During May, forums were run in Port Moresby, Lae, Mt Hagen and Kokopo to solicit public responses to the Papua New Guinea government’s new land bill. The intent of the new bill is to protect the rights of customary landowners, by extinguishing any State leases, mortgages or sub-leases that are held by non-citizens. But the consequences for PNG industry and the economy could be dire, some observers are saying.

Land in Papua New Guinea Source: BAI

Land reform in Papua New Guinea is considered overdue. Source: Business Advantage PNG

The draft bill, called the Land (Amendment) Bill, applies to all companies with foreign shareholders, not just those defined as ‘foreign enterprises’, according to a report issued by lawyers, Allens.

‘This may include companies which are not considered to be ‘foreign enterprises’ but which may still be caught by the provisions of the Draft Bill because of their foreign shareholders.’

‘Titles to state leases held by non-citizens will be extinguished and the Minister for Lands will advertise them for tender.’

Under the proposed law, Allens advise that non-citizens would be prevented from acquiring freehold land and customary landowners would be barred from selling or leasing their customary land to non-citizens:

‘Non-citizens, whether individuals or corporations, will only be able take sub-leases of freehold or state land, in Papua New Guinea.’

Motivation behind reform

The review of the Land Act 1996, which began in 2005 when the PNG Government embarked on the National Land Development Program (NLDP), was sparked by concerns to protect the rights of customary landowners. In PNG, approximately 97% of land is still customarily owned.

Story continues after advertisment...

‘Rapidly changing socio-economic forces are challenging the ability of customary systems of tenure to provide security for members of customary groups and its viability,’ noted a 2012 Constitutional and Law Reform Commission resource manual on land reform.

A major problem in recent years has also been the administration and insurance of Special Agricultural Business Leases (SABLs), which allow customary landowners to lease land to developers on a 99-year lease. A 2013 investigation commissioned by the PNG Government found widespread corruption and mismanagement regarding these leases.

‘We will repeal SABLs so that SABLs will no longer be in the Act,’ Minister for Lands and Physical Planning Benny Allan told broadcaster EMTV last month. The draft bill also proposes the repeal of Urban Development Lease provisions.

Compensation

According to Allens, the draft bill makes no reference to a proposed method of compensation for extinguishing title to state leases currently held by non-citizens. But there is a defined time limit of 30 years, the lawyers say, at which point titles to state leases held by non-citizens will be extinguished and the Minister for Lands will advertise them for tender.

‘It is a great concern—not having security on title any more, or access to secure title.’

Neither will foreign land owners be protected if they have companies domiciled in PNG. The Allens report says PNG-incorporated companies that are wholly or partially owned by a foreign national or entity, ‘will not be eligible to be granted state leases.’

Concerns

The Manufacturers Council's Chey Scovell

The Manufacturers Council’s Chey Scovell

Chey Scovell, Chief Executive of the Manufacturing Council of PNG says the proposed changes are one of ‘the biggest concerns for business going to the wall at the moment … With the Land Bill, foreigners and foreign companies will no longer be able to hold a state or head lease, effectively meaning they cannot hold a secure title. That will really frighten off new investors.

‘Anybody who has got an existing lease will only have 30 years left,’ he told Business Advantage PNG. ‘When you are talking about manufacturing, 30 years is far too small a timeframe for anybody to really make a serious capital investment. It will be quite a detraction.

‘It is a great concern—not having security on title any more, or access to secure title and then no longer being able to be foreign-owned or a joint venture.’

Property prices

LCCI President, Alan McLay. Credit: The Loop

LCCI President, Alan McLay. Credit: The Loop

Alan McLay, President of the Lae Chamber of Commerce, says the Chamber has put in a paper to the Lands Minister Benny Allan requesting that the proposed changes be reviewed, or revised.

‘The section to stop any foreign participation in land, and the loss of titles in 30 years—all that is a disincentive to the right kind investment,’ he says.  ‘It probably won’t stop some of the doubtful investments that we are seeing today, which will be even harder to track down.’

‘On one hand the government is saying: “Yes, yes, we want to open up investment for the betterment of the economy” but at the same time they are saying we can’t have any land. So you won’t get any investors. We believe this will cause a drop in land prices and ultimately negatively affect the economy of the country.’

McLay says the private sector has compiled  a combined paper, as well as the papers that have gone in from each individual group, outlining the general sentiments. He says the industry groups are against this.

‘We just hope that the government will take notice, both the Minister and the Prime Minister. It is a disincentive for investment and we feel that the bottom would drop out of the land prices. If land prices go down—it is the basis for your economy.’

EMTV’s Resource PNG interviews Land Minister Benny Allan about the reforms:

Comments

  1. Paul Edwin says:

    Simply how long are we going to be spectators on our own land, all foreigners must have a joint venture contract mou to state lease and operate in this country.

  2. Roland Kwimberi says:

    Proper forum regarding the new Land Act Bill must be conducted in all 22 provinces and just in the major centers to equal opportunity for every one to contributes.

  3. Esekia Warvi says:

    What are we talking about? Are people awsre of the fact thst the proposed amendments to the Land Act had already been passed by Parliament in Novemver 2016 and Gazetted along with amendments to the Valuation Act, Surveyor General abd Survey Coordination Act, and Physical Planning Act?

  4. Peter Paul Ali says:

    pls it’s about time we clean up our acts for the betterment of all PNG citizens…

  5. OSOS BAURIAWA says:

    In this country, Land remains a most valuable and central asset at the very core of the traditional societies. Without land, societies perish as people become poor and landless. Rural communities survive and tribe despite very little government and private sector services reaching them because they have land to live for their substance and this is a reality. As the country moves forward, these traditional societies must also change. But one thing that has not been too helpful for many customary landowners in this country is that Governments have not taken necessary steps to review existing Laws to allow local landowners opportunities for equal participation in business investment. The way it has been from the past is that customary land cannot be used as collateral and if unregistered does not have any bankable value in any investment opportunity. Hence, there has been wide spread abuse, land grabbing, cheating, ownership transfer etc. involving land deals by local and foreigners alike. The very people who originally owned the land that was taken away from them see no benefit in return and seemly have lost their traditional rights to the land. Yes, the current proposal it is a issue and concern for business investment, but interest of those whose forefathers settled and use those land must also be taken into consideration. Otherwise, population n cities and towns will continue to grow as more landless people start migrating in. When this happens, its adds to the law & order situation and the very people who are now concerned because of business interest will start complaining about escalation in law and order problems. Please let this government decide what it see is best and fit for the majority of people especially the customary landowners. The review and changes in some provisions of the land law must be made to suit needs of local people to meaningfully and equally participate.

  6. Jacob Herd says:

    With reference to the above comment Losia Mesa needs to understand that PNG operates in a global economy and needs global investment. Is it ok for PNG people and PNG corporations to own land in Australia, New Zealand and Fiji but not OK for people of those countries to own land in PNG? Is that what you are saying?
    If PNG wants foreign investment but wont offer security of land title then that foreign investment will find another place to go and PNG will be sadly the poorer for it.

  7. M r Ministet you represent PNG. All the Land owners want is equal participation in business. Land is all we have and foreigners have money. Land shall remain in the hands of PNG customary owners. Fair deals can still be done according to law of contracts and company and. other enabling laws. Foreign investers should have no fear. Todayforeigners own land and have money to manipulate PNGns. Unfair. Remember Libya’s case. Remember what happened in Siara Leon. They are big lessons for us

Speak Your Mind

*