Develop Customary Land

Past attempts to improve access to land for development have failed. However, the good news for customary landowners is that recently passed legislations provide optimism for a better future for those who want to mobilise their land for development.

By KATHRYN APELIS

PAST attempts to improve access to land for development have failed. Remnants of these attempts reveal a series of laws that purportedly tried to empower customary landowners to mobilise land held under customary tenure for development.
Unfortunately, the application of these laws has proven difficult for many customary landowners throughout the country.

There are existing legal frameworks but these have some limitations. Recent amendments to the Land Groups Incorporation Act (LGIA) 1974, and Land Registration Act 1981 passed by Parliament on March 19 have made considerable improvements to the legal framework.

Existing laws to develop customary land

The Land (Tenure Conversion) Act 1963 and the Lease-leaseback provision in s.11 of the Land Act 1996 purportedly deal with making land available for development. The Land Groups Incorporation Act 1974 and the Business Groups Incorporation Act 1974 exist to formalise customary land owning social units, be it at a clan or tribe level.

The Land (Tenure Conversion) Act (LTCA) was enacted in 1963 and later amended in 1987 to enable the conversion of customary land tenureship into a freehold land title issued in the name of the applicant. Its main objectives are to:

PROMOTE agricultural development in PNG and economic well-being of Papua New Guineans by having a secure freehold title;

RECOGNISE that Papua New Guineans own their customary land in accordance with custom and that this law was provided for the customary landowners who wished to legitimise these interests; and

ENABLE customary landowners to freely exchange these rights with other PNG citizens.

The LTCA is administered by the Land Titles Commission (LTC); a legal entity established in the early sixties.
When an application is submitted for land to be registered under the LTCA, the LTC is required to investigate, to verify ownership of the subject land.

Once a piece of land is registered under the LTCA, all customary land rights and interests are abolished. The new rights created under this law restrict ownership of the registered portion to the titleholders. Given the permanent termination of customary rights, the LTC is required to ensure that all parties understand and are clear about the legal implications of their decision to have customary land tenure converted to formal tenure over the identified portion through the LTCA.

If there are no disputes and the requirements of the LTCA are complied with, the LTC issues a Decision Conversion order. This order declares that the applicant is the owner of an ‘estate in fee simple’; that is, a person has full ownership over the subject land but is bound to the laws of Papua New Guinea. It also directs the Registrar of Titles at the Department of Lands and Physical Planning (DLPP) to issue a certificate of title in the name of the applicant.

This title is subject to several limitations, which include:

TITLES can only be transferred to Papua New Guinea citizens, therefore non-citizens are not eligible to acquire a freehold title;

TITLES can be transferred or leased out for more than 25 years only with the consent of the Land Board;

THE land may be mortgaged up to only 25 years; and

THE lender is not entitled to lease that land to a third party for more than 25 years.

However, s.26 contains provisions for the applicant to apply to the Attorney-General to have these limitations cancelled. The cancellation is in the form of a directive from the Attorney-General to the Registrar of Titles. A specific requirement of this order is that, the Attorney-General must be satisfied, after the completion of investigations that the proposed dealing will not affect the interests of the registered owners.

Application of the LTCA

NRI research examining the application of the LTCA in urban case study areas has identified some practical difficulties for customary landowners using the LTCA provisions to develop their land to aid urban expansion. For example, the process of converting land tenure under the LTCA has been found to be lengthy and costly to landowners. In addition, commercial banks have been reluctant to accept the converted titles as collateral for investments such as housing.

The Lease-leaseback (LLB) provision dates back to the late 1970s. Its main objective was to provide a secure lease for individual customary landowners or a group of landowners to develop their customary land and access credit facilities to undertake commercial activities on their land.

Lease-leaseback provision

The legal framework is defined in ss.11 and 102 of the Land Act 1996 and is administered by the DLPP. In a lease-leaseback arrangement, the State issues a lease title over the defined land for a specified period to any one entity that the customary landowners have agreed that the lease should be granted to.

Examples include individuals, land groups and, or other incorporated bodies. The State then leases that land to the titleholder, who is at liberty to lease the defined portion to any investor who wishes to deal on the land.

At the expiry of the lease period, the land reverts back to customary tenure. Customary land tenure is suspended for the duration of the lease-period.
Land with LLB titles is exempt from annual land rental payments to the State and dealings through the Land Board. Unlike the LTCA, anyone, either citizens or non-citizens can lease registered land parcels under the Lease-leaseback system.

Application of the LLB

The Lease-leaseback option has been successfully applied in the agricultural sector in Papua New Guiena. The oil palm industry, such as in the West New Britain Province is widely acclaimed for this.

Application of LLB in the real estate sector can be best described as at an infant stage.
Recent information from public forums reveals a dismal trend of abuse and fraudulent transactions using the lease-lease-back system. Section 102(2)(b) has been identified as a potential loophole creating opportunities for abuse by some members of landowning units to obtain LLB titles and subleasing to large businesses, often foreign-owned, for lease periods of up to 99 years. Substantial hectares of land from Oro, Western, East Sepik, West Sepik and New Ireland provinces have been leased out through these fraudulent transactions. This is a major concern that warrants urgent intervention by the DLPP, the NGO community and landowners from these provinces.

Prospects for a better future

The preceding analysis depicts significant limitations, restricting effective mobilisation of land currently held under customary tenure. The LTCA, LLB and the legal instruments for mobilising customary land owning social units have significant deficiencies.

The good news for customary landowners is that the recently passed legislations – Land Groups Incorporation (Amendment) Act 2009, and Land Registration (Customary Land) Amendment Act 2009 provide optimism for a better future for those that want to mobilise their customary land for development.

Further, the Papua New Guinea Government’s Land Reform Program seeks to improve deficiencies within the system of land administration, land dispute settlement, and provide institutional arrangements for a viable land and properties market.

Full implementation of the Papua New Guinea National Land Reform Program is envisaged to deliver benefits for customary land owners, investors and the national economy.

– Kathryn Apelis is a research fellow in the economic studies division at the National Research Institute.

This article was published with permission from National Research Institute of Papua New Guinea. NRI website can be accessed at www.nri.org.pg

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Rosa Koian - Develop Customary Land

|2010-03-31 10:03:21

Great article by Kathryn. Very clear and to the point.

Tom Diwai - Mister

|2011-01-18 11:45:04

Can anyone explain the origin and legal status of the Clan land Usage Agreement
(CLUA) for agriculutral developments such as VOP?

I would love to be
enlightend

stap gut,
Tdy

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