2 Papua New Guinea Logistics Infrastructure

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.