Hitherto, Papua remains one of the least developed regions in the country, with high levels of poverty and inequality. In 2022 the poverty rate in Papua and West Papua provinces reached 26.6 and 21.3 percent respectively, much higher than the national average of 9.5 percent.

Despite abundant natural resources, Papua continues to struggle with persistent economic and security challenges and political instability. The region has been “cursed” by its rich natural resources. Escaping the resource curse in Papua requires a comprehensive approach that addresses the region's social, economic and political problems.

Papua is home to several large drilling and mining operations, including one of the world’s largest copper and gold mines, PT Freeport Indonesia. These natural resource extraction industries have become important assets bringing significant revenue to the region, but they have also created a range of problems, including economic disruption, bad governance and corruption, social conflicts and environmental degradation.

This phenomenon of the “resource curse” refers to the paradoxical situation where countries or regions rich in natural resources experience poor economic performance and political instability.

The Papuan economy’s heavy reliance on the natural resource extraction industries has made it vulnerable to fluctuations in global commodity prices and has discouraged the development of other economic sectors. A substantial increase in the price of minerals and revenue has caused resource misallocation, as increasing domestic prices crowded out the traditional agricultural and manufacturing sector.

The Jakarta-based Centre for Strategic and International Studies’ (CSIS) ongoing study on the development-conflict nexus held in Mimika Regency found that in addition to marginalization and other limitations affecting indigenous Papuans, a “weak entrepreneurial spirit” has contributed to the dominant roles of migrants in economic sectors in the region.

Despite affirmative policies and economic empowerment programs in agriculture, animal husbandry and small and medium enterprises provided by local government and PT Freeport Indonesia, only a few indigenous Papuans have successfully become entrepreneurs and run businesses, while many others are lulled by money from resource extraction projects.

The majority of the population is still engaged in hunting and gathering or subsistence agricultural activities and those who have received better education prefer to work as local public servants. Some even choose to become corrupt rent-seekers rather than engaged in ordinary business productions.

The abundance of natural resources in Papua has also impeded its institutional development, reflected in bad governance and corruption, which in turn weaken its socioeconomic outcomes. The negative government responses to the windfall profits from resources have caused institutional failures as the lion’s share of natural resources revenues in government budgets, together with the Noken system and lack of capacity of local communities, lead to low representations and low accountability.  

In Mimika Regency, for example, poor governance and corruption have undermined economic development efforts and have hindered the delivery of public services, which has further exacerbated poverty and inequality in the region. Despite a gigantic local government budget accounting for about Rp 5.2 trillion (US$351.56 million), more than 14 percent of the 330,000 total population in the region remains poor in 2022.

Moreover, less than 82 percent of households have access to safe water in 2020 and many households of the Kamoro people, one of the indigenous tribes of Mimika, are still living in makeshift and slum shacks around Pomako Port. The last two Mimika regents are currently suspected of corruption.

Lastly, the extraction of natural resources has significant impacts on environmental degradation and has been a key driver of social conflicts in Papua. The large-scale mining and drilling operations in the region have caused deforestation, water pollution and habitat destruction, severely damaging local communities’ livelihoods and aggravating social conflicts in Papua.

Papua has long been a site of conflicts, not only between the Indonesian government and local separatist movements, or Papuans and migrants, but also among Papuan indigenous ethnic groups themselves. These conflicts have been further complicated by the region’s cultural and historical marginalization and political instability, creating a challenging business environment and hindering investment and a sustainable economy to grow.

For example, the presence of Freeport mining sites near Timika, a capital city of Mimika Regency, has made it a melting pot of people from various cultures and customs, where disputes and frictions due to trivial issues, such as personal affairs and drink, can escalate to become long and widespread intertribal wars.  

Meanwhile, the high intensity of separatist conflicts in Mimika’s mountainous areas, along with the rugged terrain, dense forest and low population density, has made the provision of health and educational infrastructures and services costly and challenging, leading to high absenteeism of medical personnel and teachers and exacerbating the sectoral long-standing poor outcomes.

These various conflicts continue to be nourished not only by the culture of grudges held within local tribes but also by interest groups within politics and the military, both at the local and national levels.

How to escape from Papua’s resource curse? Are there any ways out of these complex and multifaceted problems? There is no single solution to solve them and solving their needs to be sustained, through comprehensive, and coordinated efforts from all stakeholders. Among other methods, here are some key strategies that should be prioritized.

First, the government should increase investment in infrastructure, skills training and education to build a more diversified and resilient economy, reducing Papua’s dependence on extractive industries. This could involve providing incentives for businesses to operate in the region and supporting local entrepreneurs to start new ventures that have the potential to generate jobs and income for local communities.

Second, the government should improve transparency and accountability in the management of natural resources to reduce corruption and ensure that the resource wealth benefits the local population and the environmental and social impacts of resource extraction are monitored and mitigated.

This could be done through increasing public participation in decision-making processes, improving the monitoring of resource extraction and revenue flows and strengthening regulatory frameworks and institutions, including the judiciary and policies, civil society organizations and the media.

Finally, the government should address political marginalization, resolve social conflicts and pursue sustainable and inclusive development policies and practices in Papua to mitigate the negative social and environmental effects of resource extraction.

They involve dialogues and conflict resolution mechanisms, increasing autonomy and promoting greater representation of local people in government, addressing historical grievances, addressing land rights, creating economic opportunities, improving access to basic services and promoting social cohesion, as well as prioritizing the conservation and management of natural resources and promoting inclusive and equitable economic growth.

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The writer is a researcher at the Economics Department, the Centre for Strategic and International Studies (CSIS), Jakarta.