After a commission of inquiry had identified widespread corruption and resource destruction in the forestry sector, a new National Forest Policy was introduced in Papua New Guinea in 1991, but had failed to be fully implemented by the time this paper was written. Based on a detailed analysis of customary land tenure and stakeholders' interests, the author predicted the likely responses by resource owners, logging companies, NGOs and the state to various forest policy options, in the context of broader societal changes. The already existing legal recognition of local resource user groups provided a good foundation for communal forest management, but so far the state had failed its citizens through weak policy.