Australia flew in its first group of asylum-seekers to the Manus Island detention centre on Wednesday but locals are threatening court action.
Mary Handen from the Los Negros Landowner Group told Pacific correspondent Sean Dorney Australia has neglected to involve Manus Island residents in the running of the detention centre.
"We're not happy at all," she said.
"We wanted a chance to be given some of these contracts so that we're able to provide services and benefits from the economic spinoff of the processing centre."
She says the landowners had agreed to give the government two weeks, which ends on Tuesday, November 27.
"But in the meantime we're looking at our legal options, get a court injunction," she said.
Earlier this month, landowners shut down the airport on Manus Island over their demands for work.
Pacific correspondent Sean Dorney told Australia Network opinion about the processing centre on Manus Island is divided.
"People who are going to benefit economically are rather welcoming of having the asylum seeker processing centre there," he said.
He says groups like Los Negros do not oppose the asylum seeker processing centre but they are upset at being left out of negotiations completely.
"Mary Handen's objections was that they're constantly hearing from Australia that Australia is supporting economic empowerment of people and trying to get economic development going in Papua New Guinea but something like this comes along and all the contracts seem to be going to companies based outside," he said.
Dorney says Los Negros would be open to going into joint ventures with outside companies as well.
There are, however, Manus Island residents who oppose the existence of the asylum seeker processing centre in the country.
"There is a certain body of opinion on Manus - my wife is from there - that feels this is vey much Australia's problem and it's been dumped on Papua New Guinea and they don't think it should be happening," he said.