The Administrator for Papua New Guinea's Sandaun province is calling on the government to move Papuan bordercrossers out of Vanimo.
Joe Sungi says those Papuans who've been denied refugee status are a security threat because of their links with Free Papua or OPM rebels.
About 400 Papuans fled Indonesia in 2000 because of a military crackdown against separatist supporters and since then they've been cared for by the Catholic church.
The PNG government granted 30 of the bordercrossers refugee status earlier this year.
Mr Sungi says the others are a drain on provincial resources and their presence in Vanimo is causing fear among locals.
"It puts a lot of burden on us to have to get police to stay here and look after our citizens. Having them stay longer here, it will have an impact on our citizens and the province also has close links with opium activities......that causes a lot of fears on our citizens. Our citizens are our priority."
Last month the PNG government postponed the repatriation of the Papuans indefinitely after pressure from the UNHCR and the Catholic Bishop in Vanimo.