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PAPUA NEW GUINEA RAINFOREST CAMPAIGN NEWS

PNG Log Exports Rising Again

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Forest Networking a Project of Ecological Enterprises

http://forests.org/

12/28/96

OVERVIEW, SOURCE & COMMENTARY by EE

The National, the multi-national logger owned PNG daily, reports on

rising log exports from PNG. The industrial forestry perspective is

presented, and efforts to increase in country benefits through

progressive taxation and increased landowner royalties are rallied

against. Think of the development that could occur if 2,000,000+

cubic meters of timber was processed and crafted within PNG into

finished, high quality products (such as furniture, handicrafts, etc.)

rather than being exported. PNG is receiving a small portion of their

forest resource's value while efforts to rationalize forest management

are condemned and obstructed by the multi-national timber barons. The

planet's demise is being carried out in the name of industrial

development and unsustainable economic growth. The PNG timber

onslaught is a case study in unsustainable development and economic

activity.

g.b.

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RELAYED TEXT STARTS HERE:

Log exports recovering after sharp fall in 1995

By PHILIP KEPSON

PORT MORESBY (Dec 17): Log export statistics released by the national

forest services show that the timber industry in Papua New Guinea is

making a slow recovery from the sharp decline in export activities in

1995, according to Forest Industry Association executive officer Jim

Belford.

Mr Belford also claimed that the Government's "discouraging excessive

tax measures" on downstream products had become an additional problem

for timber industry.

He said that export volume declined by 21 per cent in 1995 to 2.4

cubic metres (sic) compared to the 1994 figure of 3.1 million cu m.

Foreign exchange earnings fell sharply by 32 per cent last year to

US$324.8 million (K433 million) compared to US$478.7 million in 1994.

He said in the first six months to June 1996, export volume had

recovered slightly to 1.4 million cubic metres, an increase of seven

per cent on 1995 level, but still 18 per cent less than 1994, adding

that the value of exports was US$190.8 million.

"This was eight per cent better than 1995 but remains 30 per cent less

than 1994," said Mr Belford.

He said the Government had been informed of unfavorable conditions of

the timber industry, particularly a weak international market but the

Government position was discouraging.

Mr Belford said: "For instance, competition from softwood producing

countries such as United States, Canada, and New Zealand, and

substitution of other materials for tropical hardwoods in PNG's

traditional export markets are keeping prices down and demand for PNG

timber depressed.

"Added to these problems was the uncertainly created by current

Government policy, as directed by the World Bank's Structural

Adjustment Program and the exporters' ability to meet orders.

"The excessive level of taxes imposed on the industry based on the

high market prices of 1993 have forced many operations to scale back

production or to cease altogether. This has resulted in the loss of

jobs and cash incomes in the rural areas."

He said that "further proposals under the SAP to impose processing

taxes on the downstream processing industry has caused investment in

processing facilities to stagnate".

"Plans for new factories are on hold and existing factories are not

expanding," Mr Belford said.

"When PNG needs more jobs and investment than ever before, the

proposed proceeding tax is the wrong approach and will be counter

productive."

Mr Belford said that what was needed now was for the Government to

immediately review the level of taxes charged, adding that the

Government must also define its long term goals in order to bring

confidence to investors, resource operators, and resource owners.

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