Papua New Guinea Loggers 'Laughing All the Way to the Bank"

***********************************************

WORLDWIDE FOREST/BIODIVERSITY CAMPAIGN NEWS

***********************************************

Forest Networking a Project of Ecological Enterprises

http://forests.org/ -- Forest Conservation Archives

http://forests.org/web/ -- Discuss Forest Conservation

12/29/98

*******************************

RELAYED TEXT STARTS HERE:

Title: REPORT: PNG LOGGERS 'LAUGHING ALL THE WAY TO THE BANK'

Source: PACIFIC ISLANDS REPORT

Pacific Islands Development Program/East-West Center

Center for Pacific Islands Studies/University of Hawai`i at

Manoa

Date: December 27, 1998

Byline: David Robie

Greenpeace Pacific forests specialist Brian Brunton brands the recent

lifting of logging export taxes in Papua New Guinea as "scandalous"

and his damning paper about the loss of the country's forests was

gagged at a regional seminar. Newspapers say foreign loggers are now

"laughing all the way to the bank".

PORT MORESBY, Papua New Guinea (December 27, 1998 - PASIFIK NIUS)---

Papua New Guinea's government is under fire over "scandalous" tax

breaks given to logging companies and a threat to provincial forest

management authorities over an order to fast track timber projects.

Forests Minister Peter Arul has instructed provincial forest

authorities to immediately facilitate selection of a "developer of

your choice" to meet timber permit requirements and enable operations

to begin in early January.

The minister warned that failure to comply with this directive would

mean projects would be approved by the cabinet.

Arul cited Prime Minister Bill Skate as saying "downstream processing

and export of logs will create 50,000 jobs and boost infrastructure"

in rural areas.

But Greenpeace Pacific's forests specialist Brian Brunton has warned

that the minister's letter to provincial forest management committees,

dated January 9, "contains an unlawful threat".

"The National Executive Council has no power under the [Forestry] Act

to approve any forestry or logging project, unless the procedures it

uses comply with the Act," he said.

In a statement, Brunton has called on the Skate government to abolish

the tax cuts, impose a moratorium on logging concessions and ensure

sustainable development of the nation's "most precious resource".

Skate has branded the claim as "mere allegations", but he has

reportedly called for a detailed brief on the tax cuts and their

implications from the PNG National Forest Authority managing director,

Thomas Nen.

The Greenpeace call has received wide coverage in the national press

and inspired an editorial in the influential Post-Courier newspaper

which condemned the government for backtracking on logging export

taxes on the Malaysian-dominated industry.

"This government came in on a promise to safeguard Papua New Guinea's

resources. It introduced huge tax levies on log exports which slowed

down logging operations, giving those concerned about the destruction

of our forests hope that we have finally found leaders who are serious

about the future of the industry," the newspaper said.

"That hope was stillborn as the logging lobby in the middle of the

year forced the government to review its rates because it was claiming

depressed Asian markets had cut their operations to shreds.

"The government relented because the industry laid off workers to

prove their point and closed down operations.

"Now what to do we see? A flurry of activity in the industry where

logging operations have resulted in nearly double the amounts of logs

being exported in three months compared to the first nine months of

this year.

"Loggers have been given an open ticket again and they are laughing

all the way to the bank."

Brunton described the tax cuts and the resurgence of logging exports

as "scandalous".

"Log exports in November were up about 150 per cent over the previous

month's average, from about 100,000 cubic meters exported per month

prior to November, to about 250,000 cubic meters exported in

November," he said.

"We believe this is a direct result of the dramatic tax breaks that

the Skate government quietly pushed through in October."

The new tax breaks require logging companies pay absolutely no tax on

any logs exported at a price of under 125 kina per cubic meter FOB.

According to Brunton, these changes see on average, companies saving

25 kina per cubic meter in taxes.

In fact, a recent study by Australian National University researchers

Theodore Lavantis and John Livernois found that the PNG government

captured only 2.75 percent of total value under the recently reduced

tax rates compared to around 33 percent under the previous regime.

(Note: The current value is 2.132 kina equals one U.S. dollar)

"Not only do these rates increase the incentive for companies to

mislabel and undervalue logs, but the government is now getting almost

no income, landholder royalties have declined to pre-Barnett Inquiry

levels, and the nation's trees are being exported at a furious pace.

"We are giving away one of the PNG's most precious resources. We have

reached a point where it is better to leave the trees in the ground

rather than make logging companies rich at the expense of future

generations," said Brunton.

However, Prime Minister Skate told the National newspaper his

government had secured donor-funding of US$ 35 million from the United

States, Japan and the Netherlands and had opened a trust account to

"protect trees and the environment".

"We're doing everything within our laws to protect our trees and our

people," Skate said.

A damning paper by Brunton about the state of the industry, entitled

"Forest Loss in Papua New Guinea", was gagged at an Oceania regional

workshop on deforestation and forest degradation held in Nadi, Fiji,

in September.

In a preface to the paper, Brunton explains: "Representatives of the

United Nations Development program, the PNG government and other

Pacific Island governments attempted to suppress this paper.

"On the basis that they had not read the paper and had not been given

a chance to respond, they took a position that unless [it] was

withdrawn, they would not participate in the meeting. They claimed the

paper contained inaccuracies."

The Australian government also demanded that a paper presented on

forest loss in Australia be dropped.

In the end a compromise was reached in which all papers were formally

withdrawn and then discussed informally after regular workshop

sessions.

Brunton's paper claims: "[Papua New Guinea has] about five to 10 years

to bring forest loss under control. After that time population growth

will make forest planning and management very difficult.

"Current policies and practices point to us losing this struggle. It

is likely that during the lives of our children, the accessible

production forests will vanish.

"Our children will be left with forests on mountains, in wetlands, in

parks and in a few other inaccessible places."

Brunton was critical of the International Monetary Fund and World Bank

support for logging exports: "The World Bank does not see Papua New

Guinea as a producer of manufactured timber products.

"One of the most pernicious structural adjustment program policies,

indirectly linked with forest loss, is the user-pays principle [which]

forces rainforest people to pay school fees and fees for health

services.

"Anecdotal evidence from rainforest landholders suggests school fees

are a prime motivator for people to sell their timber rights."

Another factor was the free-fall of Papua New Guinea's kina currency.

Brunton also suggests that over the next few decades China will

overtake Japan as the major importer of PNG's round logs. Skate has

just returned from a visit to China.

"China must be counted as a likely major underlying cause of future

forest loss in Papua New Guinea. The Chinese government and provincial

governments within China actively encourage overseas Chinese to return

and invest in China," he writes.

"Hiew King Tiong, a member of the Fuzhou family originally from Fujian

province, is chairman of the Rimbunan Hijau group, based in Sarawak.

"Rimbunan Hijau is a major force in the logging industry of Papua New

Guinea and the group owns timber-processing plants in China."

As Brunton points out, the decision by the Chinese government to stop

harvesting logs from domestic forest reserves, and to import 10

million cubic meters of logs over the next two decades "is a major

event - and indicative of future trends."

###RELAYED TEXT ENDS###

This document is a PHOTOCOPY for educational, personal and non-

commercial use only. Recipients should seek permission from the

source for reprinting. All efforts are made to provide accurate,

timely pieces; though ultimate responsibility for verifying all

information rests with the reader. Check out our Gaia Forest

Conservation Archives at URL= http://forests.org/

Networked by Ecological Enterprises, gbarry@forests.org