According to Bintang regency police chief Michael Mumbunan, villagers in Okatem reported that they heard a loud roar from the plane followed by a big explosion.
Search and rescue teams have been deployed but it will take them up to three hours to reach the suspected crash site by foot, he added.
The plane belongs to Dimonim Air, a private company operating charter flights in and around Papua province.
Indonesia relies heavily on air transport to connect its thousands of islands but has a poor aviation safety record and has suffered several fatal crashes in recent years.
Papua is a particularly difficult area to reach.
Five people died after a small plane crashed near Wamena in Papua province in July last year.
In August 2015, a commercial passenger aircraft operated by Indonesian carrier Trigana crashed in Papua due to bad weather, killing all 54 people on board.-VNA
