Contribution of Forestry to Poverty Alleviation - APFNet

National Economic Development
PNG has an estimated population of 6.7 million people in 2009 and a population density of 14.5 people
per km 2 . The total gross domestic product or GDP (nominal) in 2009 was estimated to be US$ 7.9
billion with a per capita income of US$ 1,247 (IMF 2010). The 1996 Gini coefficient was 50.9, which
reflects a relatively high inequality in income distribution in the country. The human development
index (HDI) in 2010 of 0.431 was rated medium and ranked PNG at 137th place out of 169 countries in
the world (UN 2010).
PNG’s economic development is predominantly dependent on natural resources and the export of raw
materials. The main natural resources are in agriculture, forestry, fisheries, minerals, and petroleum.
Currently, the economy is dominated by non-renewable resource sectors contributing approximately
80% of the total GDP while renewable resource sectors contribute about 20% (MTDSP 2010). The
forestry sector contributes about 8.5% (ITS 2006). The economic growth in 2011 is 8.5% (ADB 2011)
with an average population growth of 2.7% (AusAid 2009).
The forestry sector is ranked 3rd after mining and agriculture but its contribution to the rural economy
and poverty alleviation is crucial. The sector provided approximately a net of US$ 10.3-13.5 million
between 2007 and 2010 in timber royalties to landowners, with an average of US$ 17 million per annum,
an increase of 4% from 2007 to 16% in 2010 (PNGFA 2007-2010). This was a result of the increase in
timber royalties from US$ 4 per m3 for all species to US$ 14 per m 3 for kwila (Intsia bijuga), US$ 10
for group one species 3 and others at US$ 6 per m 3 (PNGFA 2008).
However, poverty indicators of the provinces with major forest areas do not really reflect the magnitude
of revenues generated from timber projects. There is a strong suggestion of poor financial management
by forest owners and a lack of fair distribution of generated revenues back to the provinces where
the forest resources came from. Recent reports by National Economic and Fiscal Commission (2011)
revealed that some provinces with huge fiscal capacities spent less on basic services, and the trend is
that these are the provinces rich in natural resources.
Poverty Reduction and Forestry in National Policy
The GoPNG does not have a National Poverty Reduction Strategy (NPRS) for the country. Instead, the
national poverty reduction strategies were integrated into medium-term and long-term development
strategies to eradicate poverty and may not necessarily meet the global targets set for 2015.
National Poverty Reduction Strategy
The NPRS was incorporated in the MTDS 2005-2010. The Department of National Planning and
Monitoring (DNPM), responsible for MDG compliance, decided to have one document, instead of
two. The reason was partly because the National Poverty Reduction Strategic Plan (NPRSP) concept
of the World Bank did not align with the government’s definition of poverty and therefore, the DNPM
produced the MTDS in the context of the PNG situation (Lina,4 personal communication). These
NPRSP views are further translated into PNG’s Vision 2050, a long-term strategy supported by PNG’s
Development Strategic Plan (PNGDSP) 2010-2030. The PNGDSP 2010-2030 will be implemented
through four rolling Medium Term Development Plans (MTDP) and the first one is MTDP 2011-2015.
MTDS 2005-2010 was based on the government’s program for recovery and development, and its three
interrelated objectives of good governance, export-driven economic growth, and rural development,
poverty reduction and empowerment through human resource development were also the basis for its
development strategy, including good governance, and the promotion of agriculture, forestry, fisheries,
and tourism on a sustainable basis. The strategy was to be realized by empowering people, especially
3 Species groupings by international log exports markets.
4 An officer with the Department of National Planning and Monitoring (DNPM).
247