A guide to Papua New Guinea’s land ownership rules for foreign investors.

Construction work in Port Moresby. Credit: BAI

Customary land

Approximately 97 per cent of land in Papua New Guinea is held by its traditional owners under customary principles of landownership. The specific elements and rules of the system of customary land tenure vary from place to place. However, customary landownership generally recognises the traditional users of land and their personal and clan arrangements for land use.

A foreign investor cannot purchase or lease customary land directly from its traditional owners. If a foreign investor requires access to customary land, it is the government that has to acquire the land from its traditional owners and then lease it to the foreign investor.

Alienated land

The balance of the land in PNG is known as alienated land.

Alienated land is land that has been acquired from customary owners by the government either for its own use or for private development. However, some alienated land is held as freehold other than by the government. Most enterprises in which foreign investors are involved are located on alienated land.

Alienated land in PNG can be held either as freehold or leasehold from the State. However, freehold land makes up a small proportion of alienated land in PNG. Both freehold land and leasehold land are registered by the Registrar of Titles under a Torrens-type system of land registration. Under this system, an original certificate of title (for freehold land) or State lease (for leasehold land) are kept on a register maintained at the Titles Office. Dealings with land are carried out by means of instruments that are perfected upon registration. A certificate of title or State lease kept on the register maintained by the Titles Office should reveal at anytime the exact location of the land in question, its dimensions, the present owner or lessee and may also reveal sub-leases and mortgages to which the title may be subject. Certain dealings in land may also require the approval of the Minister for Lands. For instance, foreign companies and individuals involved in any land dealing for the grant or transfer of a leasehold, must obtain ministerial approval from the Minister for Lands prior to registration.

Land Board and Land Titles Commission

The Land Act establishes a Land Board which is the instrumentality vested with the power to hear all applications for state leases except where the Minister for Lands is empowered by a law to make a direct grant of a state lease. The Land Titles Commission administers the Land (Tenure Conversion) Act. The key functions of the Land Titles Commission include: authorising registration of customary land, determining whether land is alienated land and ascertaining who the customary owners of land are.

The last of these functions can be critical for a foreign investor whose development proposal involves business activities on land which a variety of clans claim to own or to have the right to use.

In recent years the importance of landowner issues has been highlighted at a number of resource projects, public highways, educational facilities and other business operations in different parts of the country. These incidents have reinforced the need for a developer to establish and maintain a sound relationship with landowners in the vicinity of any proposed project.

Freehold land

Under the Constitution of the Independent State of Papua New Guinea and the Land (Ownership of Freeholds) Act, a non-citizen is precluded from owning freehold land in PNG. Certain types of freehold land can be converted to leasehold land so that it may be used and owned by a non-citizen.

Leasehold land

Leasehold land can be more freely dealt with than freehold land. Leasehold land is land which the government has acquired from its customary owners and leased to a person or company for a term of up to 99 years for a specific purpose.

The Land Act provides for: agricultural leases, pastoral leases, business leases, residential leases, Mission leases, Special Purpose leases and Urban development leases.

Applications for leases over state land are processed for a maximum term of 99 years except for Urban Development Leases which are processed for duration of five years.

The Land Act also deals with the granting of licences, disposal and acquisition of customary land, and regulates compensation payments. Papua New Guinea has a Torrens-style system of land registration, and a land title serves as a certificate of full, indefeasible, and valid ownership and the Act also specifies which dealings in land require ministerial approval..

Under the Land Act, although subject to Ministerial approval and other exceptions, State Leases may be granted or transferred to a foreigner or foreign enterprise.

The Land Registration Act set out the processes involved and provides forms required for the registration of any dealings of land.

Dealings include transfer, lease, surrender, mortgage, charge, discharge, easement, and nomination of trustees.

This section was provided by Dentons PNG for Business Advantage PNG.