The Morobe region is PNG's industrial heartland

Across its four regions and 22 provinces, Papua New Guinea contains an impressive diversity of linguistic, ethnic and cultural groups. From the coasts of autonomous Bougainville to the rocky peaks of the Bismarck range in the highlands, and from the dense quarters of the National Capital District to the remote and less-inhabited tributaries of Western Fly Province, these areas – even within themselves – show a high degree of geographical, cultural and political variety.

Among the most dynamic patches is the province of Morobe, on the north-east coast, due north of Port Moresby. This region is PNG’s industrial heartland, as well as a thriving commercial hub. Its capital, Lae, is also an educational centre and the staging point for transport into the highlands and beyond. Through its port, Lae connects the farm and mineral produce of the interior with the busy sea-lanes of the South Pacific.

Local Affairs

Under the country’s political system, Morobe is one of four provinces in the Momase Region, alongside East Sepik, Madang and Sandaun (West Sepik). Regions in PNG have no specific political or administrative structure; instead, local government begins at the provincial level. Morobe has its own provincial assembly known as the Tutumang, or “coming together” in the widespread local Kote language. The Tutumang has 47 members: nine local MPs, one elected regional member (who is automatically governor) 33 presidents of local government councils and four appointed members (one each to represent business, the church, community and women). The provincial government’s executive arm is the 18-member Provincial Executive Council, known as Sam Sewein Kote, with current governor Kelly Naru serving as chairperson. Governors function as heads of state for each province, while since 1995, they have also served as members of the national parliament, a role that for Morobe went to Kasiga Kelly Naru at the last elections, in 2011.

For all provinces, a key national figure is the Minister for Provincial and Local Government Affairs, whose ministry has statutory oversight of all areas of local government. The Morobe Provincial Administration (MPA), in turn, is led by a provincial administrator – currently Patilias Gamato – who was appointed by the National Executive Council in Port Moresby. The MPA itself has divisions dealing with specific areas like education, mining, agriculture and policy planning.

Districts

Morobe has nine districts, each of them further divided into 33 areas with local level governments (LLGs). Districts in PNG have administrative functions only, while the LLGs are also political subdivisions. LLGs are divided more along urban-rural lines than by number of inhabitants: most of them (275 out of the country’s 315) are rural, as are most PNG inhabitants. Because rural areas are often quite isolated from each other and contain different ethnicities and languages, LLGs tend to be very numerous, keeping government close to community needs. LLGs are elected bodies of varying size, headed by a president. In Morobe, the average is 19 members. The three urban LLGs – Lae, Wau/Bulolo and Finschhafen – can appoint three members, one each from the PNG Trade Union Congress, the Employers Federation and women’s organisations. Elections are held every five years, with members standing in local wards – the lowest political subdivision. At least two women must be on the ballot in each LLG.

Morobe’s most populous district is Lae, whose two LLGs – Ahi Rural and Lae Urban – had 148,934 inhabitants at the 2011 census. The least populous is Kabwum, with four LLGs and 43,472 inhabitants. The others are Finschhafen, formerly a key port under German colonial rule; Bulolo, the second most populous with 101,568 inhabitants; and six others – Huon, Markham, Menyamya, Nawae and Tewae-Siassi. Each of these districts has distinct geographical, cultural and ethno-graphical features. Lae is a busy coastal port region, the hub for the province and a melting pot of many different groups. Other districts, such as Huon, Tewae-Siassi and Finschhafen, are on the Huon Peninsula, with its steep, razorback mountains and unique raised-beach coastal terraces, lately the subject of UNESCO interest.

Geography 

Another major feature of the province is the 180-km long Markham River and its delta, which flows from the PNG Highlands into the Huon Gulf at the city of Lae. Within the province’s 34,472 sq km of land and 719 sq km of territorial waters, there is also a wide variety of flora and fauna, including some 100-odd species of bird and mammal, and over 15,000 indigenous species of plant. Among the former group are the Matschie’s tree kangaroo, an endangered species, and the emperor bird-of-paradise. These natural wonders are a major resource for the province’s ecotourism industry. To preserve them, the government has established the YUS Conservation Area (named for the Yopno, Uruwa and Som rivers that flow through it) to protect habitats that stretch from the coral reefs on the coast to alpine ecospheres in the area’s 4000-metre-high Saruwaged Mountains.

Language & Ethnicity

Morobe has many linguistic and ethnic divisions. Up to 100 languages from 27 linguistic families are spoken in the province, the two main tongues being Kote and English – including Pidgin. Broadly speaking, the mountainous interior is home to more Papuan languages and ethnic groups, while the coast and Markham River valley are home to more Austronesian peoples. Indeed, the two most widely spoken native languages follow a similar pattern: Kote in the interior, Yabem on the coast. In urban centres such as Lae, there is a diverse mixture of ethnicities and languages, along with a significant expatriate population.

In Morobe, as in PNG in general, no single ethnic group has a clear majority. The province is home to ethnicities including Bukawa, Wampar, Labu, Musom, Guwot, Mesem, Burum-Mindik, Tami, Mape, Yabem, Kote, Kosorong, Mongi, Dedua, Sene and Momare. Clan and family loyalties remain strong – particularly in the interior – with these often being the foundations of political, economic and business arrangements.

The church also has a wide reach in Morobe, with Christianity in the province stretching back to the days of European missionaries. From 1884 until 1918, Morobe was part of German Neu Guinea, a protectorate of the German Empire (though from 1914 it came under British-Australian occupation). During this period, Lutheran and Catholic congregations sent missionaries to the territory, and their influence is still noticeable today. Many other, traditionally animist, religious practices are also widespread in the region.

Purse Strings

In terms of budgetary powers, the province is able to levy taxes and is responsible for education at the local level, along with business and industrial development. LLGs, too, have the power to raise revenue through local taxes and fees, as well as receive grants from the central government. They are also responsible for some road maintenance works, as well as for waste collection and disposal.

In recent times, grants from the central government have become the subject of some controversy, with the allocation to each LLG slashed by as much as half in many cases between the 2014 and 2015 budgets. The government has said this was the result of a central budget squeeze, but has also pointed out a PGK5m ($1.9m) increase in funding at the district level. This has led to some conjecture that the district may in time take on a greater role in local government functions.

Doing Business

As PNG’s largest province – the 2011 census showed a population of 674,810, or 9.3% of the total – Morobe has long been accustomed to a leading role in the country’s economy. The province has an abundance of natural resources, which have formed the traditional basis for its economy, including mining, coffee, cocoa, livestock, poultry, forest fruits and fisheries – some 12-14% of the world’s tuna is caught in PNG’s territorial waters (see analysis). This has also given rise to a major food processing industry: Morobe is now PNG’s manufacturing centre. Logistics and transport, centred on Lae, is also a major sector.

Coffee

According to the Lae Chamber of Commerce Incorporated (LCCI), Morobe is one of PNG’s key coffee-producing regions. Together with the provinces of Western Highlands, Eastern Highlands and Simbu, it produces some 80% of the country’s entire crop; Morobe itself is responsible for about a third of the total. The most common type of bean grown there is Arabica, which thrives in the cooler highlands, though some Robusta is also grown in Morobe’s lowland areas.

As elsewhere in PNG, coffee in Morobe is typically grown by smallholders, on plots with an average of about 20 trees. This model – a result of land ownership patterns that have largely evolved piecemeal, without large plantations – has helped PNG establish itself as a source of high-grade, organic coffee, which can be sold at a premium in developed markets.

Morobe’s coffee industry has grown rapidly in PNG, hitting a high in 1998, when coffee accounted for some 13% of the country’s total exports and 38% of its non-mineral exports despite negative GDP growth that year. The subsequent boom in Brazilian coffee production and collapse in world coffee prices, however, soon forced many farmers out of business, and output shrank.

According to the most recent statistics from the UN Food and Agriculture Organisation (up-to-date data was unavailable as of mid-2015) by 2011 the country’s green coffee exports were worth $317.7m, with roasted coffee adding another $572,000. This made coffee PNG’s second-largest agricultural export, at 30.5%. The LCCI figure for that year was higher, with coffee exports worth $433m – a big leap on 2010 – and with PNG exporting around 1m bags of green coffee beans each year, mainly to Germany, the US, Japan and Australia.

Livestock & Poultry

Livestock and poultry is another major sector in Morobe, with PNG’s two largest chicken producers – Niugini Tablebirds and Zenag – both based in Lae. Besides fresh and frozen poultry, Tablebirds produces eggs, flour, stock feed, and crocodile meat, all produced under the ownership of Lae-based Mainland Holdings, the largest diversified agri-business in the South-west Pacific. The widespread expectation is that rising incomes, due to economic growth and new revenue from PNG’s liquefied natural gas (LNG) plant, will see a surge in demand for poultry over the next few years. “The table eggs segment is the fastest-growing part of the PNG poultry industry,” Stanley Leahy, CEO of Zenag Chicken, told OBG. “The entry of new commercial egg producers fuelled production growth of 23% a year between 2009 and 2013.”

In livestock, Morobe’s main cattle business is Ramu Agri Industries, the largest such venture in PNG. Located in the Markham Valley 200-odd km from Lae, Ramu’s ranch grazes some 20,000 head, and the company puts out more than 1500 tonnes of beef per year, according to the LCCI. Additionally, Ramu is PNG’s only commercial sugar producer, and it also produces palm oil.

Mining

While PNG has long had a mining sector, the industry has only recently become a major part of Morobe’s economy. This is largely thanks to the Hidden Valley gold and silver mine, an open-pit operation first developed by South Africa’s Harmony Gold Mining, which was joined by Australia’s Newcrest Mining in 2008. The two now run a 50:50 partnership as Morobe Mining Joint Ventures (MMJV). According to Harmony Gold’s 2014 annual report, gold output was up 25% up that year, yielding a production profit of $33m.

MMJV is also developing the Wafi-Golpu project, a deposit of high-grade copper-gold porphyries, in a two-stage plan. A feasibility study for stage one and a prefeasibility study for stage two were approved in December 2014. The mine will have a 27-year lifespan and total capital expenditure of $3.1bn, with production to start in 2020 and peak in 2025 at 320,000 troy ounces of gold and 150,000 tonnes of copper. Within the MMJV, Harmony also carries out its own exploration work.

Port

The port of Lae is PNG’s largest and busiest, with up to 60% of the country’s total annual import and export cargo passing through it, according to the LCCI. One reason for this is its location at the end of the Highlands Highway, the main route to the seven highland provinces in the interior. Another is its status as the gateway for machinery and equipment bound for PNG’s LNG projects in the interior (though the transport activity tied to these is now tailing off). A slew of logistics operators are therefore based in Lae, such as Express Freight Management, East West Transport, Mapai Transport, Traisa Transport, Kutubu Transport and Michaels & Michaels Hauliers. Shipping and stevedore firms include Consort Express Lines, Steamships Trading, Lae Port Services and Riback Stevedores.

Run by PNG Ports Corporation, Lae port has been undergoing a major upgrade. The centrepiece is a PGK700m ($265m) tidal basin project finished in December 2014 that enables the port to cater to much larger vessels, thus becoming a competitor for north-south and east-west trade in the Asia Pacific. Managed by the Independent Public Business Corporation and built by China Harbour Engineering Company, the project added three new container berths, dramatically increasing the port’s capacity. Further components include expansion of storage and warehousing areas, improved electricity, sewerage, water and drainage, dredging, and crane improvements. As of June 2015, the new facility had not yet opened, as a new management structure was being organised, but there are plans to add a dedicated fisheries wharf, relieving congestion between fishing boats and commercial vessels. The new wharf would form the centre of a marine industries area, encouraging boat-building and related trades.

Airport

The city’s Nadzab Airport is receiving its own upgrade with the help of the Japanese International Cooperation Agency. The goal is to make Nadzab an international destination by the end of 2016, with links to China and Australia. The expansion, which includes a new runway and terminal, is also being linked to a new road upgrade, connecting the airport to the city, 40 km away. Construction began in 2013 with a completion date of 2016 and a cost of PGK470m ($177.8m). The operator, the National Airports Corporation, has also proposed commercial development opportunities around the airport, including business parks, warehousing, accommodation and storage.

Roads

Road upgrades have been going on elsewhere in the province, too, with the national government disbursing some PGK250m ($94.6m) for this purpose over the last three years, according to the LCCI. A major ongoing scheme to upgrade the Highlands Highway will also benefit the province, easing the flow of goods, especially into Lae (see Transport chapter).

One difficulty in developing infrastructure has been the absence of an authority that transcends municipal boundaries, which has led to uncoordinated development, and the airport area is no exception. To solve this, a new Lae City Authority has been formed, which will administer the urban area as far as Nadzab Airport. Many hope this will ease planning in future.

Health & Education

Lae is also the centre for PNG’s top two technical training institutes, the PNG University of Technology (UNITECH) and the National Polytechnic College. In recent years, the LCCI has been working with education authorities to make Lae a centre for educational excellence. Australia-Pacific Technical College began welding courses in Lae in 2014, with plans to expand. UNITECH has the largest technological library in the South Pacific. In health, Lae is home to the Angau Memorial Hospital, a joint operation of PNG and Australia. In 2013, the two countries agreed on a PGK300m ($114m) upgrade, with master-planning on-going and construction set to start in 2016-17.

Outlook

With abundant natural resources and a strategic location, Morobe is likely to benefit considerably from PNG’s economic growth in the near to medium term. Steep challenges remain as the province seeks to ensure sustainable distribution of the benefits of this growth. Many of its inhabitants remain poor, with rural areas, especially, in need of the social infrastructure now generally available in Lae. Addressing issues like crime and corruption are also vital, as are coordinating development plans and delivering projects on time. However, policymakers, business leaders and ordinary citizens do not underestimate the challenges, and Morobe presents many investment opportunities in farming, mining, fishing and transport. In this light, the province looks likely to continue setting the pace for much of the country in the years ahead.