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PAPUA NEW GUINEA RAINFOREST CAMPAIGN NEWS

Timber Companies Say They Need More Give-Aways

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Forest Networking a Project of Ecological Enterprises

http://forests.org/

3/15/97

OVERVIEW, SOURCE & COMMENTARY by EE

After nearly a decade of heavy industrial export logging, and repeated

promises to go into in-country processing, the foreign owned timber

industry dominating PNG is pressuring the government for financial

give-aways in order to start downstream processing. These companies

have ruthlessly and aggressively expanded into areas where there is

very little material development, and gained a strangle hold on

people's development aspirations. Now, when pressed to share the

gains of their lucrative export log profits, they monopolistically

exert pressure for yet more resources and a continued delay in their

industry meaningfully developing anything but their own checkbooks.

The neo-colonialist mentality of the mostly Malaysian timber companies

represents a new South-South exploitative relationship (gosh, and I

thought Malaysia was the leader of the non-aligned movement's crusade

against such oppression). Why invest in downstream processing when

are making a bundle, buying the timber for a pittance, and carting off

the resource to your own processing facilities? Or better yet, you

can make a token effort to process in country, have PNG's government

pay you to do it, and continue to make exorbitant profits with the

vast majority of logs you continue to export whole. Now the industry

wants tax and import duty waivers, as well as other incentives PNG can

not afford.

There is another type of governmental incentive which addresses PNG's

development aspirations while offering fair profits to sincere timber

developers--the banning of log exports. This would make timber

industry membership conditional upon downstream processing which would

bring employment and meaningful development to PNG.

g.b.

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RELAYED TEXT STARTS HERE:

Headine: "Timber companies call for more, better incentives"

Source: _The Independent_

Date: 3/7/97

By: Abby Yadi

Page 23

TIMBER operators have called on the government to draw up realistic

incentive packages to promote downstream processing industry.

While re-affirming the industry's commitment and ambition to continue

to participate in downstream processing from timber operations, the

companies said unless there are adequate and fair incentives from

government, investors would find it difficult to invest.

Representatives from the Forest Industries Association, Golden Square

Furniture, Turama Forest Industries, Rimbunan Hijau, Cakara Alam and

Vanimo Timber Products presented the concerns at a meeting to Commerce

and Industry Minister Nakikus Konga.

The executives told the minister that downstream processing was at the

crossroads because there was not consistency and stability in

government policy on the industry.

Current incentives include tax holiday, pioneer industry status,

import duty exemptions on approved processing equipment, spare parts

and consumables for the construction period.

The industry feels these are not enough.

"The water appears little muddy," they said.

They told the minister the forest industry was willing to pump in more

money into downstream processing but the conditions have to be right,

including clear government policies.

They stressed that operators have been operating under difficult

situations.

"The government must now clamp down on loopholes that exist if it

wants a downstream processing industry and provide realistic

guidelines."

"There must be an element of comfort to expand on a long term, stable

and viable basis," they said.

Mr Konga acknowledged the industry's concerns and assured them that

his department will work on policies that will be benificiary for the

industry as well as the country.

Commerce and Industry secretary Joshua Kalinoe said both the

government and industry needed to work together to pursue the goals of

downstream processing.

The government recently approved an incentives package for the Turama

Forest Industries for them to go into downstream processing. This was

to be used as the model incentives for other projects.

The incentives included:

* A five year tax holiday;

* Import duty exemption on approved processing equipment, spare parts

and consumables for the first two years of operation;

* Pioneer Industry status, which allows the company to enjoy a wide

range of other incentives; and

* Duty exemptions on the export of processed plywood.

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