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PAPUA NEW GUINEA RAINFOREST CAMPAIGN NEWS

Government Responds to Logging Industry Exaggerations

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Forest Networking a Project of Ecological Enterprises

http://forests.org/

11/18/97

OVERVIEW, SOURCE & COMMENTARY by EE

Following is _The Independent_ coverage of the PNG government's

response to the shutting down of 12 operations by the timber industry,

due to claims of excessive taxes and low demand (but actually only six

operations, all at or near end of resource). The Forest Industry

Association has to explain how K750 million in wages can be lost, as

they publicly claimed, when the industry earned K455 million last

year. In my opinion, the current industry predicament is because

the industry over expanded during the boom period, and is

characterized by poorly managed and inefficient operators. Such

operations are providing benefits to no one--certainly not to the

forests or the local peoples.

g.b.

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RELAYED TEXT STARTS HERE:

Title: Government says logging industries claims exaggerated

Source: The Independent

Status: Copyrighted, contact source to reprint

Date: November 7, 1997

Byline: Harlyne Joku

Finance Minister Iairo Lasaro criticised the Forest Industries

Association this week for exaggerating and misleading the country in

its claim that the government stood to lose K50 million annually due

to the closure of 12 major operations.

"Somebody is definitely telling lies here and I want the FIA to tell

us if they are not," Mr Lasaro said Wednesday.

The minister said according to advice he has received, only K7 million

will be lost as a result of the closure.

The minister said something is drastically wrong if the FIA claims

that K5 million in royalties to landowners, and K750 million in wages

will be lost while they also say that the industry earned only K455

million last year.

"If they claim that 2,000 jobs and K750 million in wages will be lost

as a result of the closure of the 12 logging operations is true then

the industry must be earning extravagant wages," Mr Lasaro said.

He added that the claim of the logging industry has to be assessed in

the context of what they perceived to be a period of budget

preparations, a time where various groups press for concessions

anyway.

The minister urged the FIA to provide verifiable information on their

operating costs to prove that they are actually recording losses and

not just under-achieving on desired rates of capital return.

Mr Lasaro said the government was considering cutting down on the

export tax rate but has yet to make a decision.

If relation to the drought, the minister challenged the FIA and its

members to tell the people what they have done to assist drought

victims.

"While appreciating the fact that loggers make money for the country,

it is also fair to ask them how they have contributed to assist in the

drought victims because the forest they destroy immensely adds to the

global warming as a recent research in Australia has discovered," Mr

Lasaro said.

In regard to downstream processing, Mr Lasaro said the government has

encouraged it but the industry does not seem to do anything about it.

"All they want is a reduction in export levy, so they could supply

their foreign buyers and factories to be more specific in order to

make more money," the minister said.

But FIA's executive officer, Jim Belford said the full text of the

press statement released by a minister's staff has a number of

misconceptions and outright errors.

"We would welcome the opportunity to brief the minister on this. We

have responded directly to the minister to correct the

misunderstandings of the state of the industry. It appears that some

one has not checked his or her facts; hence, the misunderstanding is

demonstrated in the minister's statement," Mr Belford said.

Mr Belford said the FIA has a keen sense of responsibility and as the

government recognised representative body of the forest sector, will

continue to pursue its objectives aimed at fair and balanced

conditions for the sector.

The forest industry representative said in regard to processing that

"grand announcements will not substitute for demonstrated government

support by way of stable conditions conducive to investment in

industrial infrastructure."

"When will the government lift the threat of the World Bank's

processing tax," he asked.

Mr Belford said that at the end of the day, investors are on the use

end of government action or inaction.

"Whatever eventuates commercially will be in balance with the

prevailing conditions and investors can only react to conditions as

they exist," Mr Belford said.

###RELAYED TEXT ENDS###

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