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PAPUA NEW GUINEA RAINFOREST CAMPAIGN NEWS

Short PNG Forest Crisis Update

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Forest Networking a Project of Ecological Enterprises

7/19/96

OVERVIEW & SOURCE by EE

Brian Brunton of Greenpeace and the Individual and Community Rights

Advocacy Forum in PNG provides an update on the recent forest upheavals in

Papua New Guinea. The short forest update illustrates that on paper the

PNG government is in compliance with the Structural Adjustment Programs

conditionality; though in very serious manners, including actually getting

the timber companies to pay the higher roytalties and levies, as well as

having stable NGO representation on the forest board, the conditions have

not been met. In addition to flatly stating that the foreign timber

industry would not pay the new royalties and levies, the word on the street

is that numerous officials in positions to force timber industry compliance

have been threatened. Ah yes, business as usual in the Malaysian colony of

PNG, oops, I mean the PNG industrial timber industry (this is meant as a

joke; however, the dominance of Asian, mostly Malaysian, timber interests

in economics and politics in PNG has grown to such an extent, the latest

raw power play being the latest example, that describing the power dynamics

in terms of neo-colonialism is not that farfetched). This item was posted

in econet's rainfor.general conference.

g.b.

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RELAYED TEXT STARTS HERE:

/* Written 11:19 PM Jul 18, 1996 by bbrunton@pactok.peg.apc.org in

igc:rainfor.

genera */

/* ---------- "PNG Forest Update" ---------- */

On the 8th of July 1996 Forest Minister Andrew Baing signed notices under

section 120 of the Forestry Act, instituting an increase in royalty rate to

be paid to all forest landholders. The rate was set at kina 10 per m3. This

is a significant increase for some landholders, who were receiving K2 or K3

m3. Some landholders would get royalties of K8 m3 under exisiting

agreements (for example the Vanimo landholders under WTK). This rate was to

apply to all projects, existing and new. The Minister would have had to

send a notice of his determination to all timber permit holders.

On the same day, the Minister issued a Notice of Levy under section 121 of

the Forestry Act, which was published in the national Gazette No.G57 11th

July 1996. [ I am not going to copy all of this notice in this message

because it would take my two fingers too long; but I will fax a copy to

anyone who would like to see it.]

In the noice the Minister fixed the rates of a "levy" to be paid by the

holders of timber permits, that is all existing and new timber permits. [ a

"levy" under PNG law, is a tax]. The levy is to be paid to the National

Forest Authority, and will placed in a trust account administered by the

Authority.

The Authority will pay 40% of the levy money to the land groups in the

timber permit area.

[ the problem here is that the surplus from one groups trees, is to be

distributed amongst all groups in the timber permit area, which is

altruistic, but rather unfair on the actual owners of the trees who have to

share the surplus with others. Imagine a law which said that when a farmer

sold a cow, she/he could only receive 6.25% from the sale, and the

Government would levy a tax which would be returned to the geographic

locality of the farmer and shared with all other farmers in the area. And

you may still have to pay log export tax, and income tax ]

The Minster the establishes a Project Development Committee comprising

representatives of the Authority, the Provincial government, and the Timber

Permit Holder, who will get the other 60% of the levy "for infrastructure

development in the timber permit area as it determines as being fair and

equitable" The rules of this committee are to be determined by the

Authority.

The levy is on a sliding scale, and on current average prices it should be

K13m3.

But there is more...."where the value of exisitng landowner benefits (

other than roylaties ) exceeds the project Development Levy, then [ there

is an exemption from having to pay the levy ]." "benefits" is not defined

in the notice. Also there does not appear to be power under the Act to

enable the Minister to set up the committee and distribute the revenues

from the levy in the manner he suggests.

In total, the royalties and the levy add up to what was promised in the

budget speach. So they comply with World bank conditionality. I understand

the scheme to have been thought up by the World Bank, and can be attributed

to Jim Douglas.

The scheme is impractical. The Forest Authority has yet to demonstrate any

capacity to regulate in the field. It does not propose to go into rural

development and administer a trust in relation to each forest project. This

is the organisation which cannot administer the projects themselves. It

shares these trustee responsibilities with two other very dubious and

incompetent characters... a representative of provincial government....who

are notoriously inept and incapable of providing basic services to their

people; and "timber permit holders", who are either foreign logging

companies, or their puppets...the so-called landowning companies, who in

the main, have a reputation, generally well-deserved for misappropriating

the surpluses from logging that come their way, through premiums, and other

crumbs that fall from the loggers table.

The loggers have flatly refused to pay either the royalty or the project

development levy. The Minister has no intention of enforcing the law, and

making them pay. He only signed the determinations because the Prime

Minster threatened to sack him if he did not. The Government has complied

on paper with the World Bank.

The World Bank will probably not enforce SAP compliance, although it may

make noises.

The World Bank representatives in PNG, and some PNG officials have been

threatened, and are clearly shaken by the threats. The World Bank office

now has tight security. But the Government has done nothing to bring to

book those who have made the threats....there are some very thuggish

characters in town at present, and the list of suspects is reasonably clear

to all but Blind Freddy.

The bottom line is that since the beginning of the year landholders have

lost in excess of K26 million, the World bank is ignoring this issue of

backpayment, even though it was a condition of SAP that the graduate

royalty be back-dated to 31st march 1996 (if this was implemented

landholders would only lose K13 million ).....and it looks like the World

bank is going to pay up on the loans.

Postscript.....it was part of SAP conditionality that the Government should

not amend the Forest Act so as to alter the composition of the Forestry

board. The Minister for forests introduced a Bill that would remove the NGO

representative from the board. The bill was adjourned after meeting

opposition...the Bill is a clear breach of SAP conditionality.

Brian brunton

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