PAPUA NEW GUINEA

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Independent State of Papua New Guinea

CAPITAL: Port Moresby

FLAG: The flag is a rectangle, divided diagonally. The upper segment is scarlet with a yellow bird of paradise; the lower segment is black with five white stars representing the Southern Cross.

ANTHEM: O, Arise All You Sons.

MONETARY UNIT: The kina (k) of 100 toea is linked with the Australian dollar. There are coins of 1, 2, 5, 10, 20, and 50 toea and 1 kina, and notes of 2, 5, 10, 20, and 50 kina. k1=us$0.32468 (or us$1=k3.08) as of 2005.

WEIGHTS AND MEASURES: The metric system is the legal standard.

HOLIDAYS: New Year's Day, 1 January; Queen's Birthday, 1st Monday in June; Remembrance Day, 23 July; Independence Day, 16 September; Christmas, 25 December; Boxing Day, 26 December. Movable religious holidays include Good Friday and Easter Monday.

TIME: 10 pm=noon GMT.

LOCATION, SIZE, AND EXTENT

Situated to the north of Australia, Papua New Guinea has a total land area of 462,840 sq km (178,704 sq mi), including the large islands of New Britain, New Ireland, and Bougainville and hundreds of smaller islands. Comparatively, the area occupied by PNG is slightly larger than the state of California. The country extends 2,082 km (1,294 mi) nne – ssw and 1,156 km (718 mi) ese – wnw. Mainland Papua New Guinea shares the island of New Guinea, the second-largest island in the world, with Irian Jaya, a province of Indonesia. To the n is the US Trust Territory of the Pacific Islands; to the e, the Solomon Islands; to the w, Irian Jaya; and about 160 km (100 mi) to the s, the nearest neighbor, Australia. Papua New Guinea has a total boundary length of 5,972 km (3,711 mi), of which 5,152 km (3,201 mi) is coastline.

Papa New Guinea's capital city, Port Moresby, is located on the country's southern coast.

TOPOGRAPHY

Papua New Guinea is situated between the stable continental mass of Australia and the deep ocean basin of the Pacific. The largest section is the eastern half of the island of New Guinea, which is dominated by a massive central cordillera, or system of mountain ranges, extending from Indonesia's Irian Jaya to East Cape in Papua New Guinea at the termination of the Owen Stanley Range, and including the nation's highest peak, Mt. Wilhelm (4,509 m/14,793 ft). A second mountain chain fringes the north coast and runs parallel to the central cordillera. In the lowlands are many swamps and floodplains. Important rivers are the Sepik, flowing about 1,130 km (700 mi) to the north coast, and the Fly, which is navigable for 800 km (500 mi) in the southwest. The Bougainville – New Ireland area comprises Bougainville and Buka islands, the Gazelle Peninsula of New Britain, New Ireland, New Hanover, the St. Matthias group, and the Admiralty Islands.

The smaller islands of Papua New Guinea are also areas of extreme topographic contrast and generally feature mountain ranges rising directly from the sea or from narrow coastal plains. Volcanic landforms dominate the northern part of New Britain and Bougainville, and some of the smaller islands are extremely volcanic. An eruption in September 1994 of two volcanoes caused the destruction of half of the town of Rabaul on New Britain Island. The country also experiences periodic high-magnitude earthquakes. On 16 November 2000, the New Ireland region experienced a quake that hit 8.0 on the Richter scale. It was recorded as the largest earthquake of the year worldwide, but fatalities were limited to two people. On 11 March 2003, a 6.8 magnitude earthquake hit the same region, and on 9 September 2005, a 7.7 magnitude quake occurred; both quakes caused some damage but no reported deaths.

CLIMATE

The climate of Papua New Guinea is chiefly influenced by altitude and by the monsoons. The northwest or wet monsoon prevails from December to March, and the southeast or dry trade winds from May to October. Annual rainfall varies widely with the monsoon pattern, ranging from as little as 127 cm (50 in) at Port Moresby to an average of 584 cm (230 in) in the western river basin. Most of the lowland and island areas have daily mean temperatures of about 27 ° c (81 ° f), while in the highlands temperatures may fall to 4 ° c (39 ° f) at night and rise to 32 ° c (90 ° f) in the day-time. Relative humidity is uniformly high in the lowlands at about 80% and averages between 65 and 80% in the highlands.

FLORA AND FAUNA

The flora of Papua New Guinea is rich and varied, with habitats ranging from tidal swamps at sea level to alpine conditions. In low-lying coastal areas, various species of mangroves form the main vegetation, together with the beautiful casuarina, sago, and palm. Most of the country is covered by tropical and savanna rain forest, in which valuable trees such as kwila and cedar are found. Orchids, lilies, ferns, and creepers abound in the rain forests. There are large stands of pine at elevations of 910 – 1,220 m (3,000 – 4,000 ft). At the highest altitudes, mosses, lichens, and other alpine flora prevail. There are over 11,500 species of plant throughout the country.

Papua New Guinea supports a great diversity of bird life. About 400 species have been recognized. Papua New Guinea is the major center for a number of bird families, particularly the bird of paradise, bower bird, cassowary, kingfisher, and parrot. There are about 214 species of mammals, many nocturnal, of which rodent and marsupial orders predominate. Butterflies of Papua New Guinea are world famous for their size and vivid coloring.

ENVIRONMENT

Papua New Guinea's environmental concern includes pollution, global warming, and the loss of the nation's forests. Coastal waters are polluted with sewage and residue from oil spills. The nation has 801 cu km of renewable water resources, of which 49% of the annual withdrawal is used to support farming and 22% for industrial activity. Only 88% of the nation's city dwellers and 32% of the rural population have access to improved water sources. Another significant source of pollution is open-pit mining. The country's cities have produced an average of 0.1 million tons of solid waste per year. Global warming and the resulting rise in sea level are a threat to Papua New Guinea's coastal vegetation and water supply.

The Department of Physical Planning and Environment is responsible for integrating environmental planning and conserving natural resources. In 2003, only about 2.3% of the total land area was protected. According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 58 types of mammals, 33 species of birds, 9 types of reptiles, 10 species of amphibians, 31 species of fish, 2 types of mollusks, 10 species of other invertebrates, and 142 species of plants. Threatened species in Papua New Guinea included four species of turtle (green sea, hawksbill, olive ridley, and leatherback) and Queen Alexandra's birdwing butterfly.

POPULATION

The population of Papua New Guinea in 2005 was estimated by the United Nations (UN) at 5,887,000, which placed it at number 103 in population among the 193 nations of the world. In 2005, approximately 2% of the population was over 65 years of age, with another 40% of the population under 15 years of age. There were 106 males for every 100 females in the country. According to the UN, the annual population rate of change for 2005 – 10 was expected to be 2.1%, a rate the government viewed as too high, although the fertility rate declined from 5.1 births per woman in 1990 to 4.4 births per woman in 2005. The projected population for the year 2025 was 8,205,000. The population density was 13 per sq km (33 per sq mi), with major concentrations of population in the high-lands and eastern coastal areas of the island of New Guinea.

The UN estimated that 13% of the population lived in urban areas in 2005, and that urban areas were growing at an annual rate of 2.56%. The capital city, Port Moresby, had a population of 275,000 in that year. Other large cities and their estimated populations include Lae, 120,000; Madang, 35,300; Wewak, 25,143; Goroka, 25,000; and Rabaul, on New Britain, 17,855.

MIGRATION

The numbers of emigrants and immigrants have been roughly equal. In the 1980s, many came as refugees from Irian Jaya. In 1993, some 3,750 such immigrants were living in a camp in Western Province, while another 6,000 or so had land or kinship ties with Papuan New Guineans and were living near the border. In earlier years, emigration of nonindigenous residents may have been influenced by constitutional provisions that restricted eligibility for naturalization to those with eight years' residency, but limited their tax and business rights to the same status as those of aliens. Many rural dwellers migrated to Port Moresby and other urban centers during the 1970s and 1980s. The number of migrants in 2000 totaled 23,000, including 5,900 refugees. By the end of 2004, there were 7,627 refugees (all of whom were Indonesians), 198 asylum seekers, and 135 others of concern to the United Nations High Commissioner for Refugees (UNHCR).

From 1999 – 2005, the net migration rate was zero. The government views the migration levels as satisfactory. In 2002 residents of Papua New Guinea received $65 million in remittances.

ETHNIC GROUPS

Papua New Guinea has more than 1,000 different ethnic groups. Indigenous Papua New Guineans vary considerably in ethnic origins, physical appearance, and spoken languages. The indigenous people are Melanesians. They are usually classified by language group, with Papuans representing the descendants of the original Australoid migration and Austronesian speakers descended from later migrants. The former are generally found in the highlands and the latter in coastal areas and on the islands other than New Guinea. Other groups with significant populations include Negritos, Micronesians, and Polynesians.

LANGUAGES

Under the Australian administration of the former Territory of Papua and New Guinea, English became the official language; however, it is only spoken by 1 – 2% of the population. More widely spoken, there are now two other official languages: Pidgin, a Melanesian lingua franca with roots primarily in English and German, and Hiri Motu, another lingua franca of Papuan derivation. In all, there are more than 700 indigenous languages, most of them spoken by a few hundred to a few thousand people.

RELIGIONS

Indigenous religions, varying widely in ritual and belief, remain important in tribal societies in Papua New Guinea, with about 34% of the population practicing some form of traditional belief either exclusively or in conjunction with another faith. However, most of the population is nominally Christian. Of these, about 22% are Roman Catholics; 16% are Lutheran; another 8% are Presbyterian, Methodist, or of the London Missionary Society; 5% are Anglican; 4% from the Evangelical Alliance; and 1% Seventh-Day Adventist. Other Protestant sects account for 10% of the population. There are about 40,000 Baha'is and less than 2,000 Muslims. Certain Christian holidays are recognized as national holidays. There is a Council of Churches that serves to promote interfaith dialogue and understanding; members are primarily Christians.

TRANSPORTATION

Transportation is a major problem in Papua New Guinea because of the difficult terrain. Major population centers are linked chiefly by air and sea, although road construction has increased to supplement these expensive means of transport. Of some 19,600 km (12,179 mi) of roads in 2002, only 686 km (426 mi) were paved. In 2003, there were 34,468 passenger vehicles and 89,215 commercial vehicles. Papua New Guinea has no railroads. However, there are 10,940 km (6,798 mi) of waterways.

The government operates a fleet of coastal work boats, none more than 9 m (30 ft) long. The principal harbors are Madang, Port Moresby, Lae, and Rabaul. There are international shipping services by refrigerated container ships, other cargo vessels, and some passenger service to Australia, Southeast Asian and Pacific island countries, the US west coast, and Europe. The main shipping lines are government owned. In 2005, the merchant fleet was comprised of 22 ships of 1,000 GRT or more, totaling 47,586 GRT.

Papua New Guinea had an estimated 571 airports in 2004. As of 2005 only 21 were principal airports with paved runways, and there were 2 heliports. Papua New Guinea's national air carrier, Air Niugini, established in 1973, has undertaken most of the services previously provided by Australian lines. In 2003, about 691,000 passengers were carried on scheduled domestic and international flights.

HISTORY

Papua New Guinea appears to have been settled by 14,000 bc, with migrations first of hunters and later of agriculturists probably coming from the Asian mainland by way of Indonesia. Early communities had little contact with each other because of rough terrain and so maintained their autonomy, as well as their distinct languages and customs.

New Guinea was first sighted by Spanish and Portuguese sailors in the early 16th century and was known prophetically as Isla del Oro (Island of Gold). The western part of the island was claimed by Spain in 1545 and named New Guinea for a fancied resemblance of the people to those on the West African coast. ("Papua" is a Malay word for the typically frizzled quality of Melanesian hair.) Traders began to appear in the islands in the 1850s, and the Germans sought coconut oil available in northern New Guinea about that time. The Dutch and the British had earlier agreed on a division of their interests in the island, and from 1828, the Dutch began to colonize the western portion.

Although the British flag was hoisted on various parts of eastern New Guinea, the British government did not ratify annexation. Some Australian colonists were eager to see New Guinea become a British possession, for trade, labor, gold mining, and missionary reasons. However, it was not until 1884, after an abortive Australian annexation attempt and under fear of German ambitions in the area, that Britain established a protectorate over the southern coast of New Guinea and adjacent islands. The Germans followed by laying claim to three different parts of northern New Guinea. British and German spheres of influence were delineated by the Anglo-German Agreement of 1885. Germany took control of the northeastern portion of the island, as well as New Britain, New Ireland, and Bougainville, while Britain took possession of the southern portion and the adjacent islands.

British New Guinea passed to Australian control in 1902 and was renamed the Territory of Papua in 1906. German New Guinea remained intact until the outbreak of war in 1914, when Australian forces seized it. Although the territories retained their separate identities and status, they were administered jointly by Australia from headquarters at Port Moresby. In 1921, the former German New Guinea was placed under a League of Nations mandate administered by Australia; in 1947, it became the Trust Territory of New Guinea, still administered by Australia but now subject to the surveillance of the UN Trusteeship Council.

Both territories were merged into the Territory of Papua and New Guinea in 1949. A Legislative Council, established in 1953, was replaced by the House of Assembly in 1964. Eight years later, the territory was renamed Papua New Guinea, and on 1 December 1973, it was granted self-government. Separatist movements in Papua in 1973 and secessionist activities on the island of Bougainville in 1975 flared briefly and then subsided, though debates over citizenship and land-reform provisions were vigorous until the passage of a constitution in 1975. Papua New Guinea achieved complete independence on 16 September 1975, with Michael Somare as prime minister of a coalition government.

Somare was voted out of office in 1980 but reelected in 1982; subsequently, he put through a constitutional change giving the central government increased authority over the provincial governments. In November 1985, Somare was again voted out of office on a no confidence motion, and replaced by his previous deputy, Paias Wingti. Elections in mid-1987 returned Wingti to office at the head of a shaky five-party coalition, but his government was defeated in a no confidence vote in July 1988, and a coalition government led by Rabbie Namaliu replaced the PDM government.

A secessionist crisis on Bougainville dominated domestic politics during 1990 – 91. The Bougainville Revolutionary Army (BRA) declared the island of Bougainville to be independent from Papua New Guinea in May 1990, and in response government forces landed on the north of Bougainville in April 1991. Paias Wingti, the leader of the People's Democratic Movement (PDM), was reelected prime minister in July 1992 as the leader of a new coalition government with the support of the People's Progress Party, and the League for National Advancement. During 1993 the government continued to extend its control over Bougainville, partly because of popular revulsion against human rights violations by members of the BRA. In September 1994, rebel troops withdrew to the surrounding hills of the Bougainville copper mine allowing government forces to reclaim it. In 1995, the prime minister halted cease-fire talks.

Julius Chan was elected prime minister on 30 August 1994, but stepped aside pending a judicial inquiry into his hiring a group of mercenaries to put down the rebellion in Bougainville. In 1997, reformist premier Bill Skate, governor of Port Moresby, was elected by members of PNG's 109-seat parliament, defeating Michael Somare. Skate represented Julius Chan who lost his seat in the elections but who supported Skate's selection as premier.

Resolution to the Bougainville problem remained elusive until the government of Bill Skate reached a truce with the rebels in 1998. In April 1998, a permanent cease-fire agreement was signed and the reconstruction of war-torn Bougainville commenced. Up to 20,000 people had been killed during nine years of conflict. In 1999, the rebel leaders and the PNG government signed an agreement known as the Matakana and Okataina Understanding which established an agreement to continue discussions about the island's political future. In August 2001, the Bougainville Peace Agreement was signed, which would provide for an autonomous Bougainville government and secure a plan of disarmament. A referendum on independence would be conducted in 10 to 15 years' time.

In July 1999, Bill Skate resigned as prime minister as allegations regarding the misappropriation of development funds arose. On 14 July 1999, the national assembly chose Sir Mekere Morauta as prime minister in a 99 to 5 vote. Morauta sought to restore damaged relations with the People's Republic of China, which was angered by the Skate government's decision to accept normal relations with Taiwan in return for economic assistance. The Morauta government engaged in a privatization program, and successfully negotiated with the IMF and World Bank for an aid package in 2000. On 14 March 2001, hundreds of soldiers led a mutiny against Morauta's government in protest of a proposed defense force restructuring plan. They seized an armory, and only relinquished their weapons a week later when Morauta promised a full amnesty for the soldiers involved in the revolt and a withdrawal of the controversial military restructuring plan.

Former Prime Minister Michael Somare became prime minister once again on 5 August 2002 when his National Alliance won the parliamentary elections in June that year. The elections were marked by violence and widespread irregularities, including vote-rigging. Somare was elected unopposed by a vote of 88 to 0, with members from Morauta's People's Democratic Movement and a section of the PANGU Party abstaining. Somare immediately set out to halt Morauta's privatization program, stating that the government would need more time to assess state assets. Somare headed a coalition of 13 parties and 20 independent members of parliament. He named a 28-member cabinet, including 19 new members of parliament.

In 2003, the PNG government formally began planning for setting up an autonomous government in Bougainville, with a

multinational team in place to monitor the effort. In December 2004, the cabinet gave formal approval to a draft constitution granting the province of Bougainville free elections and an autonomous government. The cabinet also requested the United Nations Security Council to keep its mission in place in Bougainville 6 – 12 months to oversee elections. In May 2005, elections took place, with 293 candidates competing for 40 assembly seats. One month later, Bougainville elected Joseph Kabui president. Kabui named a caretaker cabinet comprising 10 members, with 8 of the ministries going to members of the ruling Bougainville People's Congress Party.

Following the deadly tsunamis of December 2004, in 2005 the Japanese Meteorological Agency was to begin providing PNG and 5 other western Pacific nations alerts of any tsunamis following earthquakes of 6.5 or greater on the Richter scale.

GOVERNMENT

Papua New Guinea is an independent, parliamentary democracy in the Commonwealth of Nations, with a governor-general representing the British crown.

Under the 1975 constitution, legislative power is vested in the national parliament (formerly the house of assembly) of 109 members, including 20 representing provincial electorates and 89 from open electorates, serving a term of up to five years. Suffrage is universal and voting compulsory for adults at age 18. The government is formed by the party or coalition of parties, that has a majority in the national parliament, and executive power is undertaken by the national executive council, selected from the government parties and chaired by the prime minister.

The government has constitutional authority over the defense force, the Royal Papua New Guinea Constabulary, and intelligence organizations.

POLITICAL PARTIES

Political parties in PNG lack ideological conviction and rely almost exclusively on patronage politics, personalism, and regional bases. Generally, party allegiances have been fluid, with regional and tribal politics impacting greatly on political events. More than 40 parties registered to participate in the June 2002 elections. In those elections, Michael Somare's National Alliance Party (NA) took 19 seats, and formed a 13-party coalition. Former Prime Minister Mekere Morauta's People's Democratic Movement (PDM) took 13 seats. Other parties winning seats included the United Resources Party (URP), the People's Progressive Party (PPP), the Papua and Niugini Union (PANGU), the People's Action Party (PAP), and the People's Labor Party (PLP). Next elections were to be held no later than June 2007.

LOCAL GOVERNMENT

Papua New Guinea is divided into 20 provinces, including the National Capital District. Each province has its own government, headed by a premier. In addition, there are more than 160 locally elected government councils. The local government system went through a process of reform in 1995, when the then-19 provincial governments were replaced by regional authorities. Bougainville presently exercises significant autonomy in its administrative affairs.

JUDICIAL SYSTEM

The legal system is based on English common law. The Supreme Court is the nation's highest judicial authority and final court of appeal. Other courts are the National Court; district courts, which deal with summary and nonindictable offenses; and local courts, established to deal with minor offenses, including matters regulated by local customs.

The Papua New Guinea government has undertaken a process of legal reform under which village courts have been established to conserve and reactivate traditional legal methods. Special tribunals deal with land titles and with cases involving minors. An Ombudsman Commission has been established to investigate and refer to the public prosecutor cases involving abuse of official authority.

The constitution declares the judiciary independent of executive, political, or military authority. It also provides a number of procedural due process protections including the right to legal counsel for criminal defendants. The chief justice of the Supreme Court is appointed by the governor-general upon nomination by the national executive council in consultation with the minister for justice. The Judicial and Legal Services Commission appoint other judges.

ARMED FORCES

Papua New Guinea's armed forces in 2005 had a total of 3,100 active personnel. The Army had an estimated 2,500 personnel that consisted of two infantry battalions and one engineering battalion. The country's maritime forces (400) were equipped with four patrol and coastal vessels and two amphibious landing craft. The Air Force (200) had no armed aircraft, only six fixed wing transports, and four utility helicopters. Australia provides a 38-member training unit. The defense budget totaled $26.7 million in 2005.

INTERNATIONAL COOPERATION

Papua New Guinea became a member of the United Nations on 10 October 1975 and participates in ESCAP and several UN nonregional specialized agencies, such as the FAO, the World Bank, ILO, UNESCO, UNIDO, and the WHO. It also belongs to the WTO, the ASEAN Regional Forum, APEC, the Colombo Plan, the ACP Group, the Asian Development Bank, the Alliance of Small Island States (AOSIS), the Commonwealth of Nations, G-77, the Pacific Island Forum, the South Pacific Commission, and the South Pacific Regional Trade and Economic Cooperation Agreement (Sparteca).The country is part of the Nonaligned Movement.

In environmental cooperation, Papua New Guinea is part of the South Pacific Regional Environmental Program, the Antarctic Treaty, the Basel Convention, the Convention on Biological Diversity, Ramsar, CITES, the London Convention, International Tropical Timber Agreements, the Kyoto Protocol, the Montr é al Protocol, MARPOL, the Nuclear Test Ban Treaty, and the UN Conventions on the Law of the Sea, Climate Change and Desertification.

ECONOMY

Economic activity is concentrated in two sectors, agriculture and mining. The subsistence sector, which occupies more than two-thirds of the working population, produces livestock, fruit, and vegetables for local consumption; agricultural products for export include copra, palm oil, coffee, cocoa, and tea. Rubber production has declined, and in the mid-1980s, coffee crops were threatened by the spread of coffee rust fungus through Western Highlands Province. New mining operations have compensated for the 1989 closure of the Bougainville mine, which had been a chief foreign exchange earner since the early 1970s. The main gold and silver mines are located at Ok Tedi in the Star Mountains, on Misima Island, and at Porgera. Oil and natural gas have been discovered in Southern Highlands Province. Forestry and fishing hold increasing importance.

Economic growth, which averaged 3.7% in the late 1980s, rose to 9% in 1991, 11.8% in 1992, and 16.6% in 1993. The growth was driven by a mineral and petroleum boom centered in the Highlands region. Growth slowed to 3% in 1994, 2.9% in 1995, and 1.6% in 1996 and 1997 due to an anticipated drop in production from Papua New Guinea's aging mines and oil fields, and a 1997 drought that cut the coffee crop in half. To halt the economic decline, the government awarded a lease to private developers for the $800 million Lihir gold project. In addition, construction projects involving airports, highways, disaster rehabilitation, development of the Gobe oil field, and a petroleum refinery are planned or being implemented. These projects, together with the onset of new production at the mine, generated a slightly improved GDP growth rate of 1.6% in 1998. The economy did not reach the expected 4.5% increase in part because of the Asian financial crisis, and recurring drought. Growth in 1999 was 3.6%, and in 2000 and 2001, the economy experienced small contractions of -0.8% and -3.3%, respectively. Inflation persisted in double digits, averaging just over 10%. In 2002, positive growth returned, but at an anemic 1.2%, while the annual inflation rate rose to 12%.

In 2004, the economy expanded by 2.5%, down from 2.7% in 2003; in 2005, the GDP growth rate was estimated at 2.8%. The inflation rate has decreased from 14.7% in 2003, to 2.1% in 2004, and is not posing problems to the economy anymore. The unemployment rate has been fairly stable, hovering at around 3.3%. Although the country is endowed with natural resources, the poor infrastructure, and the difficult nature of the terrain, hamper exploitation efforts. Subsistence agriculture continues to provide a livelihood for 85% of the population.

INCOME

The US Central Intelligence Agency (CIA) reports that in 2005 Papua New Guinea's gross domestic product (GDP) was estimated at $13.3 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $2,400. The annual growth rate of GDP was estimated at 1.1%. The average inflation rate in 2005 was 1.7%. It was estimated that agriculture accounted for 35.2% of GDP, industry 38.3%, and services 26.4%.

According to the World Bank, in 2003 remittances from citizens working abroad totaled $6 million or about $1 per capita and accounted for approximately 0.2% of GDP. Foreign aid receipts amounted to $221 million or about $40 per capita and accounted for approximately 8.1% of the gross national income (GNI).

The World Bank reports that in 1990 household consumption in Papua New Guinea totaled $1.9 billion or about $346 per capita based on a GDP of $3.4 billion, measured in current dollars rather than PPP. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings. It was estimated that for the period 1990 to 2003 household consumption grew at an average annual rate of 5.6%. It was estimated that in 2002 about 37% of the population had incomes below the poverty line.

LABOR

The Papua New Guinea labor force numbered an estimated 3.4 million in 2005. Agriculture accounted for 85% of the workforce, particularly in small farming communities and isolated villages. There is no data available on the country's unemployment rate. Legislation covers working conditions and wages, and provides for collective bargaining. The Papua New Guinea Trade Union Congress is the main union federation. About one-half of the wage earners were unionized, and there were about 50 trade unions. Unions have the right to organize and bargain collectively but the government may cancel wage agreements if they are deemed to be against "public policy." The right to strike is protected, and it is prohibited to discriminate against union activity. However, there have been some reports of retaliation against union members. Approximately half of the 250,000 wage earners are union members.

The minimum working age is 18, although children may be employed in family-related work as young as 11. However, few children work in any capacity outside of subsistence farming. The minimum weekly wage in urban areas was $9.87 as of 2001. The law provides for minimum occupational health and safety standards; however, due to a shortage of inspectors, workplaces are not inspected regularly but only when a union or worker requests.

AGRICULTURE

Agriculture in Papua New Guinea is divided into a large subsistence sector and a smaller monetary sector for export. Agriculture's importance has steadily declined since 1985, when it made up 34% of GDP — in 2003, agriculture only contributed about 26% to GDP. About 74% of the population engages in subsistence agriculture. Subsistence crops include yams, taro, and other staple vegetables. Cash crops are increasing in rural areas, stimulated by government-financed development programs. Production by small farmers of coffee, copra, cocoa, tea, rubber, and oil palm is important for export, although production on plantations, which are usually foreign owned, is also significant. Such plantations are gradually being sold back to nationals. Principal crops and 2004 output (in tons) included sweet potatoes, 520,000; sugarcane, 442,000; palm oil, 345,000; coconuts, 650,000; coffee, 60,000; cocoa, 42,500; rubber, 4,000; and pyrethrum, 1,000. Papua New Guinea grows very little rice, the staple food for many of its inhabitants. A single Australian company imports over 150,000 tons per year to satisfy demand.

ANIMAL HUSBANDRY

Livestock in 2005 included an estimated 1,750,000 hogs, 7,500 sheep, and 4 million chickens. That same year there were 91,500 head of cattle, and production was being encouraged with the aim of achieving self-sufficiency in meat supplies. Local poultry and beef production is sufficient to almost meet domestic demand. Beef imports are subject to quota controls. The farming of crocodiles, whose hides are exported, has also been expanded. Total crocodile production in 2003 was 27,000 tons.

FISHING

In many coastal parts of Papua New Guinea, fishing is of great economic importance. The government is involved in the development of fishing through supply of freezers and of transport and research facilities. The total catch in 2003 was 188,217 tons, 7% from inland fishing. Fish exports in 2003 were valued at $98.7 million.

FORESTRY

Forests and woodlands covered about 67% of the land area in 2000. Exploitable forests account for roughly 40% of the total land area and include a great variety of hardwood and softwood species. The total roundwood production in 2004 was 7.241 million cu m (255.6 million cu ft), as compared with about 7.06 million cu m (249 million cu ft) in 1981. About 76% of all the timber cut in 2004 was used for fuel; production of sawn timber was estimated at 70,000 cu m (2.5 million cu ft). Plywood, hardwoods, and logs are regularly exported to Japan, New Zealand, Australia, and Europe.

MINING

The mining of gold, silver, and copper were leading industries in Papua New Guinea. The country also produced cement, common clays, sand and gravel, stone, natural gas, natural gas liquids, and crude petroleum.

Gold output in 2003 was estimated at 70,000 kg, unchanged from 2002. In 1888, gold was discovered on Misima Island, marking the start of mining on Papua New Guinea. Prior to World War II, gold mining contributed 75% of export earnings. This proportion declined greatly in subsequent years, reaching 40% in 1995. Reserves on Lihir Island have been estimated to contain 613 tons of recoverable gold, and deposits at Porgera, near Ok Tedi, in the Star Mountains, were considered to hold another 470 tons. Production of silver in 2003 was estimated at 73,000 kg, unchanged from 2002.

Copper output (metal content) in 2003 was estimated at 204,000 metric tons. All copper came from the Ok Tedi mine, near the Indonesian border. In 1971/72, the Bougainville copper mine, one of the richest in the world, began to export copper ores and concentrates, which totaled 220,000 tons in 1988 and accounted for 44% of all exports in the years the mine operated. The mine closed in 1989 because of civil unrest caused by Bougainville Revolutionary Army militants. Nine years of civil unrest were temporarily halted by a cease-fire in 1997.

Mineral exploration was being expanded. Bauxite was known to exist on Manus Island, in the Admiralty Islands, and on New Ireland Island. Additionally, lead, manganese, molybdenum, zinc, limestone, and phosphate guano and rock deposits were present. Major deposits of chromite, cobalt, and nickel were believed to be recoverable at a site on the Ramu River, northeast of Ok Tedi. Mineral resources in Papua New Guinea were difficult and expensive to mine, and exploration and mining were hampered by rugged terrain, the nation's poor road infrastructure, and the high cost of developing infrastructure. Ethnic strife has become commonplace, and has had a negative impact on mining exploration and investment. Land disputes have become common as well, because land was communally held and there was no real system of land registration. To revive waning mineral exploration interest, the government announced a major overhaul of the tax system, which has been criticized for making investment in mining too expensive. The new tax regime was applicable only when a project was under way, and included guaranteed fiscal stability for the financing period of a project, the lowering of corporate tax rates, and the reduction of dividend holding tax. Companies were also able to deduct 25% of exploration expenditure against income, and were required to pay an additional profit tax. The mining levy would be phased out within a four-year period.

ENERGY AND POWER

As of 2002, Papua New Guinea had a total installed electrical capacity of 0.542 million kW, of which conventional thermal plants accounted for 59% of capacity and hydroelectric plants the remainder. Electricity generated in 2002 was 1.538 billion kWh. Of this total, 44% came from fossil fuels and the rest from hydroelectric facilities. Consumption of electricity in 2002 was 1.538 billion kWh.

Papua New Guinea had proven oil reserves estimated at 170 million barrels, as of 2004. In that same year, oil production was estimated at 46,200 barrels per day. However, the country has no refining capacity and in 2002, its production was totally exported. In 2002, imports and domestic demand for refined oil products each averaged 22,040 barrels per day. Proven reserves of natural gas totaled 385.5 billion cu m in 2004. In 2002, the country's gross production of natural gas totaled 4.24 billion cu ft, of which 0.35 billion cubic feet was re-injected. Dry consumption that year totaled 3.88 billion cu ft. The country also imported 1,000 short tons of hard coal in 2002.

INDUSTRY

The industrial sector, constrained by the small domestic market and the population's low purchasing power, is largely undeveloped. Industries are concentrated in industrial metals, timber processing, machinery, food, drinks, and tobacco. Although industrial production, including construction and the provision of utilities, electricity and water, has increased to about 40% of GDP, the manufacturing component has been decreasing as a percent of GDP, from 9.5% in 1980 to 9% in 1990 to 8.2% in 2001, according to Asian Development Bank statistics. This relative decline is mainly due to double digit growth in the construction sector, a boom led by work on the Lihir gold mine and the Gobe petroleum project. The growth rate in construction peaked in 1997 and 1998, at 21.7% and 25.4%, respectively, but the sector continues strong.

In 2002, a number of construction projects involving housing, airports, highways, disaster rehabilitation, and a petroleum refinery were planned or under way. Handicraft and cottage industries have expanded. A government-sponsored program assists Papua New Guineans in setting up businesses and purchases equity in existing firms. It has also encouraged small-scale import-substitution operations.

In 2005, industry accounted for 38.3% of the GDP, and was seconded by agriculture with 35.2%, and services, with 26.4%. However, 85% of the 3.4 million labor force continues to be engaged in subsistence agriculture.

SCIENCE AND TECHNOLOGY

The Papua New Guinea Scientific Society, founded in 1949 at Boroko, promotes the sciences, exchanges scientific information, preserves scientific collections, and establishes museums. The University of Papua New Guinea, founded in 1965 at Waigani, and the Papua New Guinea University of Technology, founded in 1965 at Lae, provide scientific and technical training. The Lowlands Agricultural Experiment Station, founded in 1928, is in Kerevat. The Papua New Guinea Institute of Medical Research was founded in 1968. In 1987 – 97, science and engineering students accounted for 10% of college enrollments.

In 2002, Papua New Guinea has high technology exports totaling $11 million, or 195 of its manufactured exports.

DOMESTIC TRADE

Trade in rural areas is mostly informal and cash is used in transactions. The local market, particularly in fruit and vegetables, is an important feature of economic and social life. Domestic trade in urban centers is primarily through modern supermarket chains and independent stores. The companies sponsoring supermarkets tend to be in both the importing and wholesale businesses and take responsibility for distribution of goods to outlying villages, which are generally somewhat isolated. Domestic trade is hampered by street gangs that terrorize local and foreign residents and merchants. There are a few Australian-based franchises within the country.

Most stores are open weekdays from 8 am to 5 pm and until noon on Saturdays. Banks are open from 9 am to 2 pm Monday through Thursday and from 9 am to 5 pm on Fridays. Other businesses operate from 8 am to 4:30 pm weekdays. Most businesses and government offices do not open on the weekends.

Source: www.encyclopedia.com

Category: Forex

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