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WORLDWIDE FOREST/BIODIVERSITY CAMPAIGN
NEWS
Malaysian Loggers Extend Unscrupulous
Logging to Liberia, Africa
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Forest Networking a Project of Forests.org
http://forests.org/ -- Forest Conservation Archives
http://forests.org/web/
-- Discuss Forest Conservation
3/25/00
OVERVIEW & COMMENTARY
No one likes to target one country for
current primary responsibility
for the demise of the World's rainforests--you
risk being called a
neo-colonialist and/or a racist. There is lots of blame to go
around, from consumers of tropical timber
products to historical
patterns of forest overexploitation
initiated by Europeans and
perfected by Americans. However, currently Malaysian timber
companies stand alone in their systematic
targeting and desecration
of remaining large rainforest
wildernesses. They are practicing a
grotesquely over-intensive, and extensive,
once over harvesting in
much of the World's remaining
rainforests. Papua New Guinea, Brazil,
Guyana, Belize, Cameroon, Cambodia and
elsewhere are facing the same
ecological and social crime--forest
plundering sold as development to
poor countries.
The latest victim is the country of
Liberia, and the largest
remaining rainforest expanse in humid West
Africa. The following
report claims that Oriental Timber
Corporation of Malaysia has been
operating "unscrupulously, without
any control or regulation". The
plot in the drama is familiar: large tropical wilderness in an
impoverished country, promises of
development, questionable dealings
to access the resource, importation of
foreign workers, human rights
violations, contractual breeches,
corruption, exporting of logs rather
than local processing; and very few,
mostly illusory, benefits. The
epilogue:
the companies move on, poor people no longer have
subsistence livelihoods, the Planet is
ecologically weakened, and
Malaysia's GNP goes up a point or so.
This rainforest liquidation must be
stopped. It cannot be tolerated.
Please take the time to contact the
nearest Malaysian embassy or
consulate and demand that the Malaysian
government take responsibility
for their part in the demise of the World's
rainforests, and reign in
the conduct of their companies in the
World's remaining rainforest
ecosystems. Here is a web page with complete listings for Malaysia's
missions abroad, including email and other
contact information:
http://www.kln.gov.my/KLN/Represent.nsf?OpenDatabase
Here is information from the Forest
Conservation Archives and Portal
at Forests.org < http://forests.org/
> about Malaysia's involvement
in rainforest logging. First, here is the Forest Conservation
Portal
search on "Malaysia" of the best
Internet resources:
http://forests.org/cgi-bin/texis.exe/webinator/main?query=malaysia
Here is a search for "Malaysia"
from the Forest Conservation Archives
(copy into browser or go to
http://forests.org/search/query.htm and
type in "Malaysia" yourself):
http://forests.org/search/query.idq?CiScope=%2F&CiMaxRecordsPerPage=1
0&TemplateName=query&CiSort=rank%5Bd%5D&HTMLQueryForm=query2.htm&CiRe
striction=malaysia
What is happening is evil and it threatens
our existence. Malaysia
and all destroyers of rainforests must be
held accountable and this
type of environmental vandalism stopped
forever. Do your part and
protest this ecological injustice. Further, recall that all list
recipients agree to the disclaimer at
http://forests.org/forests/disclaim.html
as a condition to receive
this information.
Making a donation to Forest.org's under
funded and overworked
informational campaign wouldn't hurt
either. Response to the funding
appeal made several weeks ago <
http://forests.org/docs/fundappe.txt
> has been under whelming to say the
least, and it is possible that
these efforts may be scaled back as a
result.
g.b.
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RELAYED TEXT STARTS HERE:
Title:
Investigative Report on Oriental Timber Corporation
Source:
The Perspective
www.theperspective.org
editor@theperspective.org
Status:
Copyright 2000, contact source for permission to reprint
Date:
March 20, 2000
Atlanta - There has been much concern and
controversy regarding the
role of the Oriental Timber Corporation
(OTC) - A Malaysian business
entity - that has been operating some of
Liberia's most reserved
forests unscrupulously, without any
control or regulation by the
government of Liberia.
These concerns range from complaints by
local residents of the
destruction being done to their houses,
villages and farms; and to the
massive deforestation of the land which
could have long-term adverse
consequences on the environment.
The Perspective newsmagazine has received
an investigative report
compiled from direct personal observations
of OTC in the field, along
the road to Buchanan, in the Port of
Buchanan and from conversations
with OTC management, substantiated by
local media reports in Liberia,
and from local foresters very
knowledgeable of the Liberian forestry
sector.
Gus van Kouwenhoven, a businessman of
Dutch origin, succeeded in
buying up or otherwise acquiring 5
concessions in Southeast Liberia
(Grand Bassa, River Cess and Sinoe
counties) in the late 1990s,
totalling a good part of the SE Liberian
forest block. With these
large holdings in hand, many other
concessions (mostly inactive?) were
seized to put together a concession stretching
from just north of
Buchanan east across River Cess county and
into Sinoe county (perhaps
up to the boundary of the Sapo National
Park according to one report).
No maps of the concession area are
publicly available, however, it
varies between 2,500,000 acres (900,000
hectares) to 4,000,000 acres
(1.44 million hectares). Mr. van
Kouwenhoven reached a "management
agreement" with FDA for this forest
area; again, this agreement is not
publicly available and may not withstand
contestation in court.
In early 1999, Mr. van Kouwenhoven invited
a Southeast Asian group to
carry out the field extraction activities.
An agreement was reached
between Government, Mr. van Kouwenhoven
and the "Malaysians" (who
registered themselves as the Oriental
Timber Company) - for OTC to
manage the port of Buchanan (importing 2
tugboats as it had silted
over) and to upgrade the 108-mile dirt
logging road connecting
Buchanan to Greenville into a 4-lane,
all-year highway which will
allow 10-12 months of logging per year.
This road upgrade was
purportedly in the name of
"development" although the road passes
through largely uninhabited areas and has
little traffic besides
logging operations. No environmental
impact assessment was ever
carried out. The road passes through the
Krahn-Bassa National Forest
where permanent infrastructure is
prohibited and where a national park
has been proposed since the 1980s. The
road upgrades were completed in
a matter of months from October 1999 to
January 2000.
The relationship between the
"Liberian-Malaysian Timber Company",
which was the original name announced for
the company to do the
logging activities in SE Liberia, and OTC
is unclear. Perhaps, it may
be the same company. The
Liberian-Malaysian Timber Company had been in
the local media in connection with Mr. van
Kouwenhoven in early 1999
in connection with logging in Lofa County.
Logging Scale and Practices - OTC is
reportedly operating at a
remarkable rate of efficiency. Forest
clearance, log transport,
loading, maintenance and more are running
at "military" efficiency.
OTC has 140-150 "machines"
(Caterpillars, D7 size) working 7 days per
week, plus 70-74 trucks that make 2 trips
per day to Buchanan. Trucks
must drive at over 110 km/hour (on the new
gravel road) to make the
trip since the area of greatest activity
is reportedly east of the
Senkwehn River. Extraction is done by
clearfelling everything, leaving
mostly bare ground behind. Chainsaws are
used to fell the largest
trees while medium and small trees may be
felled by bulldozer instead.
Many report that logs of all diameters are
taken, including ones
smaller than 40 cm diameter which
represent a significant portion of
the production. However, some of these may
be the tops of larger
trees; normally the slender tops would be
discarded but they appear to
be of interest to OTC. In the Port of
Buchanan, the commercially
sought species (primary and secondary) in
commercially demanded
diameters (50- 59 cm and >60 cm) are
separated from the non-commercial
tertiary species and undersize logs.
European buyers are offered
commercially desirable logs at standard
marker prices. OTC is not
trying to undercut or glut the market.
From a buyer's perspective, OTC
has acted extremely professional,
organised and fair. Furthermore,
unlike most Liberian logging companies, it
does not require advance
payments for logs but will sell its
current stock.
Given various observations of OTC trucks,
they extract about 2800 -
3500 cubic meters per day, or 80,000 m3 to
105,000 m3 per month
(800,000 - 1,100,000 m3 per year). 3000
m3/day, or 90,000 m3/month,
seems to be the most generally agreed
number. The average production
of a large forestry company in Liberia is around
10,000 m3 per month,
making OTC larger by an order of magnitude
than anything Liberia is
used to. In 1988, the peak production year
prior to the war, the
entire Liberian timber production came to
about 1 million m3. All OTC
production is exported and all is exported
as raw logs.
These practices are in flagrant violation
of Liberian law and FDA
regulations, which stipulate that trees
under diameters of 60 and 100
cm DBH (diameter at breast height), and in
one case 50 cm DBH, may not
be cut. Clearfelling large areas so to
leave bare dirt, with all the
consequent erosion problems, is entirely
outside the spirit of FDA
rules and renders the area useless for
future forestry: forest
regeneration is near impossible in such
conditions and no
reforestation activities are undertaken.
No other company insists on
"wasting nothing", cutting every
possible tree, which is against FDA
regulations. OTC does not prepare
management plans, inventories or
allow any oversight by FDA. It has posted
armed guards to keep FDA or
other government officials and local
residents away from certain
areas. In construction of the road, it
bulldozed farms and houses of
local residents without any compensation
or consultation. It has
extracted wood from neighboring
concessions and has destroyed forests
used by communities living in its
concession. When the Superintendent
of Grand Bassa County criticized OTC's
practices publicly in December
1999, he was promptly fired by the
Executive Mansion. (He was
reinstated a few days later but since then
has kept silent on OTC.
Rumors exist that OTC, or perhaps the
Liberian-Malaysian Timber
Company, was kicked out of Cote d'Ivoire
after failing to keep
promises or abusing national laws and
regulations.)
Export of raw logs is discouraged if not
forbidden under International
Tropical Timber Organisation and African
Timber Organisation
guidelines. It is an explicit policy of
FDA's post-war strategy to
increase local wood transformation and
value-added. OTC was initially
going to renovate the former VAMPLY
plywood factory in Buchanan but
has not yet done so. The OTC managing
director has said that
production is to supply the parent
company's factories in Asia, while
excess production is sold at the port of
Buchanan, hence OTC has no
plans to transform the wood and add value
locally.
The initial promises of jobs, training and
development have not
materialized. Approximately 600 Asian
laborers have been imported and
were all given free work permits despite
complaints - some have been
sent home for reasons unknown. All skilled
jobs are operated by Asians
with reportedly few going to Liberians.
Only unskilled jobs at the
port, or spotters and chainsaw operators
in the forest are reserved
for Liberians. Almost all food is imported
from Asia as are, boasts
the managing director, the prostitutes
(who are changed every two
months). Training and development or
assistance programs have
not materialized. The announcement in
January 2000 that OTC will "use
half of its profits to renovate the
University of Liberia campus" on
the outskirts of Monrovia is the only
obvious gesture to help Liberia.
However, it has been criticized as overly
convenient since the main
University of Liberia campus across the
street from the National
Patriotic Party Headquarters, Charles
Taylor's ruling party, has long
represented a threat of activism and
opposition at his doorstep.
OTC manages the Port of Buchanan, although
foresters exporting logs in
fact negotiate with Mr. van Kouwenhoven
for use of the port. This
permits OTC an effective stranglehold on
all timber exports from
Buchanan, the principle port for timber in
Liberia.
Global Star (Asia) Holdings Limited
Ownership of the company is still
somewhat uncertain. The company which owns
OTC appears to be Global
Star (Asia) Holdings Limited, member of
the Global Star Group.
According to his calling card, the
Director of OTC is named Joseph
Wong (or Joseph Wong Kiia Tai) and his father
said to be the owner of
Global Star Group. They are based at
4212-5, Hong Kong Plaza, 186-191
Connaught Road West, Hong Kong. They are
ethnic Chinese, perhaps with
Malaysian passports. However, the workers
are mostly if not entirely
Indonesian. Many if not all were recruited
from Sumatra. The reason
OTC insists on being known as Malaysian is
unknown. Perhaps it is to
hide their identity, or it is the most
accurate description of the
transnational company. Another report is
that the logs are being
exported to the Djan Djanti Group which
makes plywood from the logs,
although this company is not listed as one
of Global Star's direct
holdings.
In private conversations, Mr. Wong has
said that OTC is exporting
60,000-70,000 m3 per month to southeast
Asia to supply its plywood
factories. This comes to 720,000-840,000
m3 per year. The excess
production is sold in the port of Buchanan
to buyers mostly for export
to Europe (France and Spain are most
frequently cited).
At this extraction rate, assuming 8 - 10
m3 per acre are obtained by
total land clearance, OTC is consuming
8000 - 12,500 acres of forest
per month, or 3000 - 4500 hectares/month.
At this rate, the forest
concession will be entirely destroyed in
200 - 500 months, or between
17 and 42 years. The southeast Liberian
forest block is the largest
remaining forest block in all of humid
West Africa although very
shortly it may not be. Mr. Wong has stated
privately that he does not
plan to operate OTC for more than 2 - 3
years in Liberia, which begs
the question who or what will replace them
in 2002, and does he think
OTC will have worn out its welcome and
special protection by then?
Finances - OTC has apparently made an
up-front payment of $5 million
to Government, and its pays the BIVAC tax
(1.4% of export price).
However, none of the other fees or taxes
are reported to be paid,
including the industrialisation fee,
severance fees, reforestation
fee, conservation fee, research fee and 5%
export tax. Together, these
should come to about $30-$31 per m3. Thus
assuming they work 10 months
per year and spend the two rainiest months
doing maintenance on their
equipment, this represents an annual tax
evasion of $23-33 million
(dividing the $5 million paid over three
years). This says nothing of
the economic and financial damages that
are incurred and that some
other countries charge by way of fines for
poor logging practices.
However, several sources have said these
accusations of tax evasion
result from jealousy and rumor rather than
fact. They cannot be easily
verified.
Depending upon the price at which the
60,000 m3 is sold to the holding
company for transformation into plywood,
OTC's could in fact be
running at a slight loss, estimating
production costs at $60 million
fixed investment amortized over 3 years
plus $35 million annual
running costs and a selling price of less
than $50/ m3 for tertiary
species. However, this would represent
probably unrealistically low
prices, kept low to reduce the BIVAC taxes
paid and to ensure that all
profits are deferred to the other company
in the Star Holdings Group
that transforms the raw logs into plywood,
planks or veneer. Were the
logs secondary and a few primary species
and sold for a fair average
market price of $135/ m3, estimates of
OTC's profits come to between
$50 million and $90 million per year. The
truth probably lies
somewhere in between.
A rough rule of thumb is that plywood
production profits are
equivalent to the reasonable production
costs for raw log extraction
when timber is bought at market rates. In
this case, the production
costs are uncharacteristically low because
mostly of poor extraction
practices as well as cheap labor and low
transport costs. Assuming
$50- 70 million in reasonable annual
production costs, OTC is
permitting annual profits of $100 to $160
million to the parent
company, and assuming OTC is using it for
plywood.
Public response and presidential
protection - Within a month of
announcing the agreement, it had begun to
draw public criticism
because of the free work permits granted
to Asian workers who were
doing jobs Liberians can do. When road
construction and logging
operations began, citizens complained of
having their houses and farms
destroyed without compensation. By
November, complaints began
surfacing that armed guards were not
allowing FDA staff into the
concession area and that logging was
proceeding in flagrant violation
of all laws and regulations. When the
Grand Bassa County
superintendent criticised OTC, he was
fired on orders from the
Executive Mansion. President Taylor went
on record in October warning
government officials "not to harass
investors" meaning none of the
normal petty or not-so-petty extortion
will be tolerated with OTC.
Around the same time he insisted that
"the forest is for the
government, and no person or section can
claim personal ownership" in
spite of rural communities' traditional
use of the forest and the fact
that it is owned by the people of Liberia
and government is merely the
steward of the asset.
President Taylor summed up the protection
OTC is receiving when he
said it is his "pepperbush" so
no one can touch it. With such
presidential protection, OTC is above the
law and the government. This
is widely recognized by all who are aware
of what OTC is doing, and
most say they are vehemently opposed to
its abuse of Liberia's forest,
laws and people, but the reign of
intimidation and fear so prevalent
in the Taylor administration squashes
criticism. FDA maintains a
rhetoric of gratitude towards the work OTC
is doing, deflecting and
denying criticism in all public forums.
A Second Presidential Pepperbush In Lofa
County? - In parallel,
businessman Victor Haikal is reported to
want to do the same thing in
Lofa County as Mr. van Kouwenhoven did in
SE Liberia, although Mr. van
Kouwenhoven has been negotiating with the
Liberian-Malaysian Timber
Company for operating concessions there
since 1998 or 1999. President
Taylor has already begun talking of a
second pepperbush in Lofa ounty.
Concessionaires received official
communications from FDA on January
25, 2000 that their concessions are being
rescinded. The forests of
Lofa County extending into Sierra Leone
represent the second largest
remaining forest block in humid West
Africa. Lofa County consists of 8
regular concessions and 4 salvage permits
but unlike in SE Liberia the
concessions are being actively logged.
Reportedly, FDA Managing
Director, Bob Taylor, has been in
disagreement with the Executive
Mansion over this issue.
An Asian company is trying to get involved
in Lofa, sent from Shimmer
International Cameroon, Ltd., which is
part of the Rimbunan Hijau
Group, a transnational Malaysian logging
company. Rimbunan Hijau has
proven extremely controversial in south
east Asia and in central
Africa due to abuses of national laws and
regulations, human rights
violations and contractual breeches. The
two people who are trying to
set up the Liberian operations are Thomas
Tiong Yong Yung
(Administrative, PR and Personnel Manager
for Shimmer International)
and Peter Hii Hung Kai (Shimmer
International Regional Manager).
###RELAYED
TEXT ENDS###
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