Papua New Guinea occupies the eastern half of New Guinea, the second largest island in the world (after Greenland), and includes several smaller islands. It's located in the southwestern Pacific Ocean just north of Australia. (The western half of the island is a province of Indonesia called Irian Jaya.) Papua New Guinea (PNG) is a rugged country, much of which is mountainous and largely inaccessible. Most of the indigenous people--Melanesians, Negritos, and Papuans--live in small villages in the rain forest, where they practice subsistence farming.