The Governor of Port Moresby has welcomed signs that the Australian government's plans to re-open an asylum seeker detention centre in Papua New Guinea may not proceed.
Australia's government is reviewing its plans for offshore processing of refugee claimants.
This follows the High Court ruling last week that the government's plan to send 800 asylum-seekers to Malaysia in return for 4,000 refugees over four years was unlawful.
Last month, Australia signed a memorandum of understanding to re-open Manus Island detention centre in PNG.
The Governor of the National Capital District, Powes Parkop, says it is better for PNG to have the facility used in such a way.
"It means that the Australian government will have to find a more moral way of dealing with this dilemma than transferring it to other countries in the region."
Mr Parkop says the economic impact on Manus province will be minimal if the centre doesn't re-open.