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PAPUA
NEW GUINEA RAINFOREST CAMPAIGN NEWS
Low
Prices Force Logging Firm to Ship Out
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Forest
Networking a Project of Ecological Enterprises
http://forests.org/
7/1/98
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TEXT STARTS HERE:
Title: Low prices force logging firm to ship
machinery out
Source: The National (keep in mind owned by largest
multi-national
logger, Rimbunan Hijau)
Status: Copyright, contact source for permission to
reprint
Date: June 26, 1998
PORT
MORESBY: A large investor in the PNG timber industry has
completed
the shipment of twenty plant items out of Port Moresby for
Russia,
the Forest Industries Council has revealed.
The
move has been made necessary by low log prices on the regional log
market
for tropical hardwood and lack of Government support for the
industry.
The
company, which is sending away some K6 million worth of plant and
equipment,
leaves 200 people immediately without employment and many
thousands
without the benefits they used to derive.
The
plant and equipment sent to Russia included construction, road
building
and logging equipment.
Commenting
on the move yesterday, Mr Robert Tate of the Forest
Industries
Association said, "Such a move by committed investors in
the
country is regrettable but given current and projected operating
conditions
in PNG, it is entirely understandable.
"There
is fierce international competition for foreign investment and
if we
cannot provide the right conditions investors will be attracted
to
other countries where governments are keen to promote development
and
economic expansion."
Mr Tate
said the depression in the log market was expected to continue
for the
next 12 to 18 months and that most major operators would have
to
reassess their investments in the country by the end of the year.
Said Mr
Tate in a statement: "The timber industry in PNG is currently
under
extreme pressure resulting from falling prices and low demand in
Asian
markets."
Log
exports in the first four months to the end of April fell 40 per
cent to
583,000 cubic metres and average FOB price in April was US$58
(K123.40)
per cubic metre, down 53 per cent from the April 1997
income.
It has fallen 28 per cent since January 1998.
The
fall in both prices and volume resulted in total export income
falling
by 67 per cent from US$125 million (K266 million) for the four
months
to April last year to only US$41 million (K87 million) to April
1998.
Mr Tate
said, "However, the situation is made worse by the lack of
Government
support for the industry and its unwillingness to grant any
temporary
relief from unsustainably high rates of export tax which are
imposed
by the World Bank."
A
reduction in rates is seen by producers as allowing them to maintain
limited
operations and a presence in export markets.
Their
concern is to avoid a total shutdown of operations, which will
result
in a permanent loss of export markets.
Export
tax currently averages 25 per cent of FOB value and a reduction
of 13
per cent in rates was proposed.
Mr Tate
said, "Other Asian governments, Indonesia and Malaysia in
particular,
have reacted to the current crisis by granting significant
tax
relief to their industries. However, in PNG we see the Government
is
being dominated by the World Bank and is unable to implement any
short
or long term policies to aid the development of the industry."
If the
major players pulled out the industry would take a long time
and
many millions of kina start up again.
Mr Tate
said, "When investors lose confidence in the Government's
ability
to manage the economic affairs of the country they will
naturally
consider other alternatives. The timber industry was the
third
biggest export industry in PNG behind gold and oil. Through
neglect
and lack of policy direction the industry is being left to
collapse."
He said
there has been significant progress in implementing the
Logging
Code of Practice, in felling and machine operator training and
certification,
in forest monitoring and control with the aid of
Australian
forest rangers and in upgrading forestry education at
Unitech
and Bulolo Forestry College.
"All
these efforts will be a waste of time and money if there is no
industry,"
he said.
Forest
owners renew call for new revenue system
MADANG:
Forest resource owners from Madang and East Sepik provinces
have
joined forces and renewed their support for the immediate
implementation
of the new forest revenue system (FRS) introduced by
the
World Bank.
They
have expressed their concerns over the Forest Industry
Association's
(FIA) claim that the project-by-project audits on all
existing
logging operations in PNG have been completed.
The
principal landowner from the Gum TRP Job Sogasog, Madang Forest
Resource
Owners' Association general-secretary Steven Kadam, chairman
of the
Miari Forest Resource Owners'Association of East Sepik Henry
Miller
and the executive director of NGO group Mission Innovator Noah
Ariku,
renewed their calls for audits into all logging operations
before
any review of the new FRS, in the light of moves underway to
mitigate
and circumvent key provisions that covered the due process
for
resource acquisition, sustainable management, environmental impact
control,
revenue generation and revenue sharing with clan groups.
The men
maintained their earlier stand that loggers played a major
part towards
the closure of their operations which has been brought
about
by market forces.
They
said that the new FRS, which they described as "a breath of fresh
air
down the chimney", must not be used as a scapegoat; nor should the
FIA
mislead the people by playing on their emotions at this time of
social
and economic hardships by ostracising the World Bank.
The
group said that they would verify the loggers claim on the audits
with
the relevant authorities. And if the claim was true they would
request
that the national Government and the World Bank urgently
consider
declaring the audits null and void and immediately call for
tenders
for a reputable organisation to conduct the audits again.
They
explained that this stand would be adopted because if the FIA
claim
was true then it would only confirm the resource owners' belief
that
the audits have been conducted in isolation and the results as
indicated,
do not reflect the real situation on the ground. Hence they
are
undoubtedly biased.
Mr
Sogasog said as a principal resource owner in the Gum TRP, he was
not
approached by any audit team to inspect his land or to gauge his
views
as would have been expected in the terms of reference for such
audits
in line with the spirit of the forestry reforms.
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