The forestry sector has a high cost structure associated with both the technical nature of operations and administration of industry associated with the administration regime under the current legislation.

The cost structure associated with the technical aspects of forest relate to the vast land areas that are required to be covered with diverse terrain, weather pattern, ecological systems, type and quality of timber resources, and the highly depreciable nature of plants and equipment used to harvest the forest resources.  The technical issues provide significant business cost changes to the industry.

Coupled with the above technical challenges the administration of the industry requires constant consultation with the various levels of Governments, non Government organizations and most importantly the customary landowners.  The lengthy consultation coupled with diverse and often opposing views of how the forest resources should be developed and managed by the stakeholders further compound costs of doing business in the industry.

The PNG Government is faced with limited development capacities and resources in bringing economic and social development to the rural areas of the country.  It also recognizes the urgency to integrate subsistence based rural communities into the monetary system in the 21^st century.

Faced with these twin problems the PNG Government appreciates the important role that forest resource development can play, and hence, delegated the industry to assume part of the responsibility.  These further add to the cost of business in the industry.

However, a well developed forest sector policy together with specific forest development plans would ensure a competitive industry with all the stakeholders earning fair share of the forest resource development benefits.