PORT MORESBY - Two Papua New Guineans are dead with at least 40 missing, feared drowned, after an overloaded boat capsized in rough seas off PNG's northeast coast.

Authorities say several survivors from Tuesday's tragedy are recovering in hospital in Madang, while the search for more continues.

"The vessel was roughly 30km off Singor village in Rai Coast when it capsized and, at the moment, it is believed that overloading and technical problem were the cause," said Madang's disaster and emergency co-ordinator, Pius Ikuma .

PNG's National newspaper reports that 60 people - double its normal capacity - were on board the MV Nara when it foundered.Two bodies have been recovered and another 18 people accounted for.

A survivor, Elep Gaulick, told the newspaper some men had forced their way onto the boat, threatening the skipper with a knife.

"Men produced knives and used threatening language ... staff had no option but to load their bags of copra, cocoa and betelnut," he said.

Most of the missing are from Tep Tep village on Madang's Rai Coast. These villagers have no road access to Madang and rely solely on boats to get their produce to market.