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The Challenges to the Logistics Sector

The stagnation in logistics activities can be explained by the high costs of services in PNG, which are attributable to the following factors:

Infrastructure - Electricity is cheap by regional standards, but is available to only 60% of urban households. Many businesses are forced to run their own generators. Telecommunication services are costly and unreliable and are also restricted to urban areas. Only 11% of the national roads and 14% of provincial roads are in good condition. Half of the feeder roads are often impassable. Wharves, jetties, and airstrips have fallen into disuse. Some 60% of maritime navigation aids need replacement.

Institutional capacity - There is a shortage of skills in almost all professions. Labor productivity is low across all economic sectors outside mining and oil.

Land ownership - The PNG landmass of about 462,000 square kilometers accounts for more than 80% of the land area in the South Pacific. However, mobilizing land for development purposes is very risky, costly, and time-consuming because more than 90% of the land in PNG is customarily owned, and land ownership is complex and has led to a vast amount of unused land. In the city of Lae, where there seems to be a severe shortage of commercial and residential land, idle land is common and shows little sign of development.