Cambodia Cancels Log Deals, Hopes for More Aid

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WORLDWIDE FOREST/BIODIVERSITY CAMPAIGN NEWS

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Forest Networking a Project of Ecological Enterprises

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1/28/99

OVERVIEW & COMMENTARY by EE

Cambodia and Papua New Guinea are two countries where mismanagement of

forest resources has reverberated to become an issue with multilateral

funding agencies. In a bold move, Cambodia has shown its commitment

to slowing forest harvests--albeit with the explicit hope that this

will result in more aid. And it should, aid should be dependent upon

sustainable resource use. Otherwise you are throwing money down a

hole.

g.b.

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RELAYED TEXT STARTS HERE:

Title: Cambodia Cancels Log Deals, Hopes for More Aid

Source: Reuters

Date: January 28, 1999

PHNOM PENH, Jan 28 (Reuters) - The Cambodian government said on

Thursday it was cancelling 12 logging concessions covering two million

hectares (4.9 million acres) in an effort to assuage aid donors'

concerns and win more international financial support.

Minister of Agriculture Chhea Song said the timber concessions, held

by nine Cambodian and foreign companies, were being cancelled because

the firms had not fulfilled various technical requirements.

Cambodia's aid donors, due to meet in Tokyo and decide on new help for

the impoverished country on February 25-26, have been urging the

government to halt rampant logging and ensure that revenues from the

industry flow into state coffers.

The International Monetary Fund suspended a support programme to

Cambodia in 1997 largely due to the government's failure to collect

revenues from the logging industry.

"I believe Cambodia will gain more support from the international

community because of this," Chhea Song told Reuters, referring to the

cancellation of the concessions.

Chhea Song said the companies had not complied with various rules and

deadlines in their agreements.

He said the two million hectares covered by the concessions would not

be allocated to other logging companies but would become protected

forests.

"We cancelled those contracts because they didn't respect the

agreements. They didn't operate properly according to their

contracts," Chhea Song said. "We want to keep the areas as protected

zones instead."

Environmental groups and some U.N. officials say much of the

destruction of Cambodia's dwindling forests is due to military units

logging illegally in concession areas.

The IMF said the government lost revenues of more than $100 million

due to illegal logging in 1996. The sum was equivalent to more than a

third of total budget revenue that year.

A senior World Bank official said last year that Cambodia's forests

were being cut at an alarming rate with very little benefit to

government revenues.

The World Bank estimated that 4.2 million cubic metres of timber was

cut in 1997, and forest resources would be depleted in three to five

years if that rate of exploitation continued.

Prime Minister Hun Sen ordered the latest government crackdown on

illegal logging earlier this month, calling on the police and military

to use force if necessary to wipe out what he called "anarchic"

felling.

Chhea Song said Hun Sen fully backed the cancellation of the nine

concessions, most of which are located in Kratie, Stung Treng and

Ratanakiri provinces.

Two of the companies which lost concessions were the Thai Boon Rong

Group Ltd of Cambodian tycoon Theng Bunma, and Malaysia's Samling/SL

International, Chhea Song said.

Cambodian Finance Minister Keat Chhon said recently that Cambodia is

seeking $1.3 billion in foreign aid over the next three years.

The British-based environmental pressure group Global Witness this

week urged Cambodia's aid donors to link their assistance to sound

long-term logging practices.

"As the forests will be logged out by 2003 we cannot return to the old

scenario where the government makes a raft of promises before (an aid

donors') meeting and then does nothing," the group said.

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