Part 2 and Conclusion of "Creation of Melanesian Property Rights – Building Bridges between Custom and Commerce"

by A.P. Power, Wewak, Papua New Guinea 07/2003

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Table No. 3 Property effects in the Papua New Guinea context

Property Effect

Direction for the future

No. 1

Fixing the economic potential of assets

Alienated land:

  1. The full gamut of representations is available to reap the benefits of capital.

  1. Systems and legislation OK

  2. Administration and monitoring needs improvement

Customary land:

  1. Over 90% of the country is undifferentiated ownership in common

  2. Little or no “property” value

  3. Some under Clan Land Usage Agreements (CLUA); Lease lease-back (LLB); plus limited Land Tenure Conversion (LTC)

  1. Land registered under Land Registration Act.  (To be enacted)

  2. Head title issued to Incorporated Land Group

  3. Land surveyed and mapped

  4. Fungible instruments include

  5. Group land title

  6. Lease issued by ILG

  7. Mortgages and liens

  8. Forest Resource Inventory

  9. Equitable forest development agreement

No. 2

Integrating dispersed information into one system

Alienated Land:

  1. Land Registration Act

  2. Full registry of land parcels

  3. Town plans, zoning, building codes

Customary land:

  1. Country wide maps of various dimensions

  2. Resource mapping, geology, mining and petroleum

  3. Land use studies of many provinces (CSIRO)


  5. Forest resource mapping; Forest Management Agreements

NB Information available only to experts and indirectly to land owners.

  1. Full land parcel identification following registration of total group land holdings.

  2. Fungible instruments include:

  3. Cadastral maps of identified and measured land parcels

  4. Classification of land parcels following land use studies


Making people accountable

Alienated land:

  1. Formal lease holding with full accountability

  2. Growing unaccountable squatter settlements on alienated land

  1. Government controls squatters

  2. Fungible instruments include:

  3. Leases to tenured blocks

  4. Mortgages on domestic and commercial buildings

Customary land:

  1. Undifferentiated “villagers”

  2. Clinic “baby books”; few birth certificates; fewer passports; inaccurate common roll

  3. Groups and individuals known to neighbours only

  4. Very little accountability other than CLUA and LLB plus some LTC

  5. Growing unaccountable squatter settlements on customary land

  1. Full civil registration

  2. Full active and effective nationwide implementation of the Land Dispute Settlement Act and the Land Groups Incorporation Act.

  3. Fungible instruments include:

Incorporated Land Group Certificates

Natiowide birth certificates

Adult ID “smart” cards

Squatters become tenants with ILG issued lease title

Mortgages on “public clan land”

Liens on “private" clan land


Making assets fungible

Alienated land:

  1. Full gamut of fungible instruments available

  1. Once Melanesian property rights have been created there will be a need to integrate fully the manipulation of the fungible instruments into one system.

Customary land:

  1. Little available for customary land holders.

  2. Enclave development on customary land for mining, petroleum and forestry all fungible instruments are in favour of the investors and the landholders are minor players or bystanders.

  3. Creation of fungible instruments for enclave development on customary land is fraught with difficulties, land disputes and aggravation and interference by outsiders.

  1. Once Melanesian property rights have been created there will be a need to integrate fully the manipulation of the fungible instruments into one system.

  2. Clear possession of property rights will pave the way for unhindered resource development without the unnecessary angst presently promoted by marginalized landholders.


Networking people

Alienated land:

  1. Networking between investors in the modern sector is adequate

  2. This continues over to access to information about customary land involved in enclave development.

  1. Once Melanesian property rights have been created there will be a need to integrate fully the manipulation of the fungible instruments into one system. This will include vast amount of information available from the now mobilized customary land sector.

Customary land:

  1. Information is available only to near neighbours, both friends and enemies

  2. Enclave development information available to non-land holders much of it proprietary.

  1. Nationwide implementation of the Land Groups Incorporation Act and Civil Registration Act

  2. Information available for networking includes:

  3.  ILG constitutions; genealogies; list of named land parcels and description; ILG Management Committees; bank accounts; Dispute Settlement Authorities; address; written history (tumbuna stories)

No 6

Protecting transactions

Alienated land:

  1. The systems and the legislation are in place for full coverage

  2. Weak and corrupt administration is placing stress on the system (e.g. mal-administration of the Land Board jeopardizing indefeasible title to government leases).

  1. The Holy Grail of an effective honest Department of Lands and physical Planning MUST be pursued.

Customary land:

  1. Little protection available other than traditional sanctions watered down by ban on tribal fighting.

  2. Access to the Land Court is available by law but difficult and ineffective in practice.

  1. Norm Oliver’s recommendations relating to the assumption by the Justice Department of full responsibility for implementation of land laws MUST be given attention by the Chief Justice.

Do we really need to go to all this trouble?

Certain groups are lobbying against land registration using a variety of half-truths and some outright lies cranking up a scare mongering campaign manipulating NGOs and students. Over the years not one iota of understanding of the full depth of the problems we are facing has emerged from this lobby. Not one idea to assist PNG go forward. The evident fact that for 27 years the owners of the country are being left behind seems to be an acceptable price to pay for their view of what it takes to protect customary land ownership. The increasing level of angst and aggravation round the country; the move to oust “squatters” from urban centers by ol asples frustrated by the rising tide of urban migration; increasing tribal fighting; the unsatisfactory management of landowner participation in exploitation of forests; can all be related to poor participation in “development”.

We desperately need to move to create Melanesian property rights for several reasons.

  1. The majority of people in the country are in the traditional extralegal situation on immobilized customary land, thereby not reaping the benefits that would be available to them in a formal property regime.

  2. Failure to act will give us a modern version of extralegals on informal developments on customary land.

  3. Population growth will inevitably produce masses of landless people that will have to spill over to urban centers or to immobilized areas of low population thereby creating conflict.

The problems are real and the need to act is urgent. Landholders are frustrated.

Land holding angst

Whenever there is talk of a new project even a new road project the landholders ramp up anxiety. A lot of outside people come into their land. They are exposed directly to the capitalist system with money flowing like water. They have no idea where this money is coming from.

Angst arises because of lack of definition, lack of security and creeping incursions into their land that was dealt with in the past by warfare. Recall property effect No.6, “the right to security.” Under the imposed state, Papua New Guinea today, the obligation of the provision of security assumed at Independence is not guaranteed. The concept of eminent domain that “nationalists” react to so forcibly is of course a foreign concept as it is part and parcel of statehood. The problem is that the state assumes the rights but does not accept the obligations.

There is a relationship between corruption and the frustration of the movers and shakers, entrepreneurs, leaders, ol bigman. They can’t be accommodated within the moribund customary system so they feed on the wealth created in and on the modern sector. Any wealth in the modern sector is fair game be it government revenue, foreign aid, savings by the workers, accumulated landowner money in escrow or future generations - any pool of money belonging to anyone at all!

The dual economy

From time to time we have complaints made relating to the so-called dual economy operating in the country. Usually the complaints come from workers in the modern economy complaining about a dual wage structure, comparing local to expatriate wages. The dual economy really refers to the fact that only a small portion of the wealth of this country is participating in the modern capitalist open market economy and that the vast majority of the country is only marginally involved. Economists also refer to this situation as enclave development. The capitalist enclaves are surrounded by a gigantic barricade of sharpened yar tree posts woven with kanda and bamboo. Inside the barricade capitalist business drives up to the barrier and turns back on itself. On the other side of the barrier the village man walks up to the barrier and is turned back often mystified and frustrated.

The capitalist then seeks to create a new enclave where there is access to the land and resources facilitated by our existing mining, petroleum, forest and fishing laws. There is nothing evil or underhand about this. It is simply the operation of capitalist free market economic activity. Our challenge is to pull down the yar pole barrier to allow the people to access the benefits of modern commerce on their terms and allow modern commerce to facilitate expansion to embrace the entire country.

Landowner problems and compensation demands

There is a great deal of angst among landowners today because they see themselves as being impotent in the face of any modern development. They are outside the yar pole banis. Whenever there is a new banis round a new enclave they agitate to try to get themselves included. This is entirely understandable. Because there is no clear direction and policy and programme to empower the resource owners and surrounding landowners to participate in the development they tend to develop unrealistic expectations. These are incorrectly called “landowner problems”. The are really development problems associated with unsuitable or missing legislation and ill informed economic policies.

The response to these problems differs from industry to industry. But at the centre of it all is a total lack of understanding of what is really happening with a corresponding lack of direction towards trying to remedy the situation. The mining and petroleum industries try to develop landowner capability as contractors and service providers in the non-core side of their business. They employ business development officers, establish and support landowner companies and over time some of the landowners develop into businessmen. The forest sector does practically nothing so the LANCOs fail to deliver benefits to the landowners and no real empowerment of potential partners occurs.

Property rights at the time of the exhaustion of the clan commons

Landless people already exist. Many land groups round the country have already reached the stage where the clan commons is exhausted or where the remaining mountainous land is unsuitable for subsistence. Such land groups exist in Mt Hagen, almost certainly in Chimbu, probably in Tari, and probably in Gazelle Peninsular. Already there are landless people overflowing to other parts of the country. As the above graph illustrates this phenomenon is inevitable for many parts of the country. Of course there are other parts of the country that have vast areas of land and smaller population. Failure to create formal property rights will have significant results.

  1. The dispossessed clan members will be treated unfairly with the “survival of the fittest” where those presently in possession of the land at the time of the exhaustion of clan commons will fight to retain their land. Unfortunately for them their sons will have to face the new world also.

  2. The landless will lose their identity with their natal group that had to “let them go”.

  3. The spillover of landless people will result in squatting round the country on customary land and government land in both rural and urban settings.

  4. Land groups with surplus land will suffer encroachment that threatens their identity and their own survival.

Creation of property rights for a land group that has already exhausted its clan commons will be a very challenging operation. It is incumbent on the land groups that still have adequate land to begin now to create property rights that will facilitate the development of a modern commons that will facilitate benefits to all members of the land group regardless of where they reside.

The first steps would involve the following:

  1. The incorporation of the land group

  2. The conversion of the total land assets of the land group into property that is owned by the incorporated entity.

  3. Devising some kind of valuation of the ILG assets.

  4. Translating clan membership into ILG shareholding.

  5. Is it too late to create some form of modern clan commons (business)?

  6. Identification of the basis of the residual landholding pattern within the ILG.

  7. What rights are exercised by the individual landholders? What rights reside with the ILG? (See the eleven layers)

  8. What obligations do the residual resident landholders have to the group, the ILG, the other shareholders?

    1. Are they to get a lease from the ILG?

    2. How much do they pay the corporation for this?

    3. Have they right to sub-lease, mortgage etc?

  9. What rights do the non-resident shareholders have? What does their being an absentee shareholder represent?

  10. What obligations do the non-resident shareholders have to the ILG in exchange for maintaining their membership/shareholding?

    1. Can they be taxed by the ILG?

This problem has been addressed by me several times before.4 The following diagrams explain the inevitable exhaustion of the clan commons in high-density areas and the eventual situation all over the country. Unless the land group work hard to convert some of their assets into property and then business to produce a modern commons not curtailed by the physical dimension of the group land holding, then the group will be under great stress and may collapse.

From custom to commerce

Asset development – how to bring out the surplus value in assets by representations of capital? The following table illustrates the restricted options that are now available to customary owners and what will become available under a formal property system.


Capital representation

Business options

A clan owns one thousand hectares of forested land

  1. “Bush graun bilong mipela”, “finim kai kai tasol”, “laif belong mipela”

  2. Capital value nil – no loans, no business

  1. Individuals can make gardens, hunt and gather and sell surplus in market.

  2. Individuals can alienate land from the commons in order to plant tree crops. Some cash generation but no capital representation.

  1. An individual is given a lease from his titled ILG over a named 2 hectare parcel of land. He and his wife plant and harvest 1000 vanilla plants.

  1. With upwards of K300,000 annual income, and a registered block the family has the basis for expanding into business options both on their block and elsewhere.

  2. The block cannot be alienated but could support a lien against borrowings

  1. Professional foresters evaluate the forest and produce a report that says the forest has 30m3/ha merchantable timber.

  1. Report is interesting but who owns the forest?

  1. Forest Authority carries our land investigation and establishes the clan as undisputed owner of the land.

  2. Thence a land group is incorporated and issued with an ILG certificate.

  1. The Forest Authority “negotiates” a Forest Management Agreement with the landowner ILGs

  2. The Forest Authority negotiates a “development” agreement with a logger.

  3. The logger is given the licence on the basis of the project agreement. In effect he has just been given the surplus value of the forest almost gratis. He has to make some token payments and build some infrastructure.

  4. The logger goes to a bank and borrows some millions of kina for equipment and then proceeds to harvest the standing crop of trees that belong to the clan members.

  5. The landowners have no direct business opportunities but look forward to some royalty and premium payments.

Another clan with private legal, technical and financial advice negotiates the development of 100 hectares of forest plantation as part of the deal with the loggers

  1. The clan is incorporated and receives an ILG certificate

  2. The clan has title to the land

  3. Twenty years after logging begins a professional forester values the plantation. (100 ha @150 m3 @K100/m3 = K1,500,000 and produces a certified valuation report.)

  4. It may be necessary to insure the plantation giving insurance certificates.

  5. Business activities will be conducted by individual entrepreneurs and corporate entities related to the ILG. Success in the market place will open up credit ratings for further diversification.

  1. Based on the land title, the ILG certificate and the forester’s report the ILG can approach the bank and borrow say K200,000 against the value of the plantation.

  2. With the K200,000 the ILG buys a tractor trailer and wokabaut somil and begins to process the thinnings from the plantation getting the added value.

  3. The ability to process the lumber from the plantation gives the ILG added commercial strength as the return for lumber is much greater @ about K500 per m3.

  4. Regular supply of lumber will open up the opportunity for joinery products such as furniture, tool handles etc.

  5. The business diversification creates employment in the village

Two clans own 140 hectares of land within the town boundary of a provincial capital.

  1. Squatters (Settlers) occupy most of the land with no formal lease agreements

  1. Intermittent income by agreement or by threat. Business opportunities nil.

The clans incorporate and register their land and obtain titles

  1. The ILGs form a company to manage the land

  2. ILG certificates and management committees

  3. Company certificate

  4. Joint Venture agreement between the two ILGs

  5. Hundreds of land parcels with lot and section, named streets, named tenants and regular income for the long term

  1. With a regular income and substantial assets the ILGs can diversify into other business opportunities either on their own land or elsewhere.

  2. Unnecessary people are weeded out of the settlements increasing the value of the land and the opportunities of the tenured residents for the long term

  3. Tenured residents can borrow money to develop their homes with a mortgage.

  4. Governments and utilities suppliers earn income from supply of services.


De Soto, H. 2000 The Mystery of Capital Black Swan Book

Honore. A.M. 1961 “Ownership” in A G Guest (Ed) Oxford Essays in Jurisprudence, London, Oxford University Press pp. 112-128

Lea, D. 1997 Melanesian Land Tenure in a Contemporary and Philosophical Context

University Press of America

Power, A. P. 1986 "The Future of Clans in Papua New Guinea in the 21st Century". In Ethics of Development: Choices in Development Planning, eds. C. Thirwall and P. Hughes, Port Moresby, UPNG Press 1988.

Power, A. P. 2001 “Land Mobilization Programme in Papua New Guinea”, Valuers Conference Lae 2001

1 A.P.Power Executive Director Ivin Enterprises Ltd PO Box 772 Wewak

2 A.P.Power Executive Director Ivin Enterprises Ltd PO Box 772 Wewak

3 Honore as quoted by David Lea

4 See Power

Please note:  other articles on Land Development [by A.P. Power and others] can be found at Papua New Guinea's web site for research level PNG Books, Useful Articles & Information published by John Evans, PNG

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