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FOREST
CONSERVATION NEWS TODAY
Desperate
Malaysian Loggers Resort to Disinformation Campaign in PNG
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Forest
Networking a Project of Forests.org, Inc.
http://forests.org/ -- Forest Conservation
Portal
http://forests.org/links/ -- Forest
Conservation Links
08/06/01
OVERVIEW
& COMMENTARY by Forests.org
The
Papua New Guinea forest industry is launching a major
disinformation
campaign. The increasingly desperate,
mostly
Malaysian,
logging industry has turned to the use of their PNG
newspaper
- one of only two national daily newspapers - to spread
misleading
propaganda. Rimbunan Hijau has been
using their newspaper
called,
inappropriately, "The National", to run a series of
sensationalistic
stories that claim the national log export tax is
crippling
the industry.
In
materials attached below a marvelous new local Papua New Guinea
rainforest
conservation group, Forest Watch, blows the industry's
false
claims out of the water - point by point replying to the
blatant
falsehoods. In fact, essentially all
operations that the
industry
says shut down because of high taxes have actually shut down
because
their permits have expired or they have finished cutting
their
allocated forests.
Indeed,
the PNG timber industry is slowing down as most operations
conclude. The question is whether, and how, remaining
forests will
be
logged. Will business as usual, once
over rapacious plundering of
forests,
continue to be the norm, with little or no benefit to the
landowners
and country, and tremendous environmental costs? Or will
the
government and donors take necessary steps to assist the many
landowner
groups that wish to pursue ecologically sustainable options
including
village based conservation areas and locally controlled
small
and medium scaled certified eco-forestry production on their
lands? Recently the World Bank removed all support
for eco-forestry
from
their proposed forestry project, choosing instead to once again
pursue
reform of the foreign log export industry.
It won't work.
Forests.org
wholeheartedly agrees with Forest Watch's assessment of
the
state of the logging industry, and conclusions regarding what
must be
done. Here are quotations from their
assessment below:
"The
industry is still riddled with bribery, corruption and
malfeasance,
as reported by the 1990 Forests Commission of Inquiry...
Foreign
logging companies have no God given right to log PNG's
natural
forests on an unsustainable and environmentally damaging
basis...
Virtually the whole sector is based only on the export
logging
of natural rainforests on an exploitive and unsustainable
basis."
"In
the light of both global and local environmental concerns, it
seems
difficult to justify the continued support of the existing
exploitive
and non-sustainable log export operations from natural
forests...
With many permits coming to an end and the Independent
Review
having found that most proposed new concessions have
insufficient
resource for log exporting, PNG has a real opportunity
to
change the way that forest are managed to ensure greater benefits
for PNG
and long term sustainability. Log exporting is damaging for
PNG and
should be ended."
REPEAT: IT IS TIME TO END INDUSTRIAL LOG EXPORTS.
NOW.
Additional
donor subsidies for continued industrial log exports does
not
constitute an appropriate reform strategy.
Forests.org and our
conservation
partners repeat our demands to the Government of PNG,
the
World Bank and the Government of Australia (a major donor) to
take
the following firm and decisive actions:
*
Establish a timeline to permanently end industrial log exports from
PNG,
and a process to transition the industry to small and medium
scaled
community and certified forest management.
*
Establish a Commission of Inquiry with broad discretionary power to
investigate
all aspects of the logging industry and make necessary
recommendations,
including possible criminal prosecutions.
* End
donor subsidies to industrial log export. Redirect donor funds
to
transitioning the industry to sustainability and community based
production
and protection, cushioning the economic impact upon the
government
and landowners of doing so.
In
closely, the recent barrage of false news by logger owned "The
National"
means it has lost all claims to being an reputable,
unbiased
newspaper. If the barrage of false
propaganda continues,
the PNG
government should take immediate measures to shut it down.
Following
is a marvelous press release and point-by-point refutation
of the
National's logging propaganda. Please,
all those that love
PNG,
its forests and peoples, get this press release out to media in
your
area.
g.b.
For
More Information: Papua New Guinea
Rainforest & Sustainable
Development
Portal, http://forests.org/pngforest.html
P.S. The volume of the PNG list remains lower than
traditionally has
been
the case over the last 8 years. This is
due to a combination of
factors:
time constraints as I completion of my PhD experiment
(evaluating
this service), funding limitations as we seek support to
maintain
this PNG rainforest news service (donations can be made at
http://forests.org/donate/),
and a lull after the campaign to have
the PNG
logging moratorium maintained. In
particular, Forests.org
has
been waiting for local conservationists to communicate where the
campaign
should go next, so we can mobilize behind their demands.
Note
that we no longer send out every single PNG forest news item to
this
list, and most of the regular news tracking on PNG rainforest
issues
is now done on Forests.org's "Papua New Guinea Rainforest &
Sustainable
Development Portal" at
http://forests.org/pngforests.html. This list is for press releases,
action
alerts, major news developments and more extensive background
materials.
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RELAYED
TEXT STARTS HERE:
ITEM #1
Title: FIA claims on log tax 'totally
misleading'
Source: PNG Forest Watch, lukautimbus@global.net.pg
Date: August 6, 2001
PRESS
RELEASE
Forest
Industries Association claims that the log export tax is
crippling
the forest industry are totally misleading according to a
group
of forest activists, PNG Forest Watch.
"Many
recent closures in the logging industry are caused by permits
expiring
or the forest resources being exhausted. This has nothing to
do with
the level of logging tax," says PNG Forest Watch.
"The
reality is that these companies destroy the forest and that is
why
their operations are closing down. If they followed the law and
logged
in a sustainable way then forest resources would not be
exhausted
and the companies would not need to be continually moving
into
new areas."
An
analysis of Forest Authority data shows that 25 logging permits
were
due to expire between 2000 and 2002. The FIA claim that "13
operations
have shut down in the last five years" therefore has very
little
to do with the level of export tax.
The FIA
also claims five operations closed down in May and June this
year.
Of these, two had permits that have already expired. Two had
permits
that will expire before the end of 2001 and the other will
expire
in the first months of 2002. In all five cases the available
timber
resource had already been exhausted.
"The
logging companies bring very few long term benefits. Royalties
to a
community last a few months or years, logging roads are soon
impassable
and the people are left with polluted water, no bush meat
and
higher levels of disease. These impacts are well documented in
reports
from all around PNG," says Forest Watch.
The FIA
also fails to recognise the positive benefits of the small-
scale
sawmill industry which is flourishing. Estimates from the PNG
Eco-Forestry
Forum show that this sector employs more people than the
log
export industry, brings greater benefits to local people,
requires
less subsidies from government and is less damaging to the
environment.
"The
government should be encouraged to change its focus from log
exporting
which benefits a few politicians to sustainable use of
forest
resources which benefits people in rural communities" says PNG
Forest
Watch.
Port
Moresby, 6 August 2001
Contact:
lukautimbus@global.net.pg
ITEM #2
Title: Response to recent Forest Industries
Association statements
on the logging industry and log taxes
Source: PNG Forest Watch, lukautimbus@global.net.pg
Date: August 5, 2001
The
Forest Industries Association has had considerable publicity in
recent
weeks with a rash of claims about the current state of the
forest
industry and the need to lower taxes. Many of the claims made
are
false and/or misleading. Below we set out the truth behind some
of the
FIA's claims.
1. FIA:
Logging companies faced with mounting losses caused by an
onerous
40 per cent export tax are steadily shutting down operations,
slashing
investments and shedding jobs. Operations in 13 timber
permit
areas have been shut down in the past year with five closing
their
doors in May and June. There are currently only 24 logging
operations,
the lowest level in two decades.
FW: The closure of operations is in fact due to
permits expiring and
forest
resources being exhausted, not excessive taxation.
*
Forest Authority data shows that of about 42 projects still
operational
at the start of 2000, 25 were due to expire before the
end of
2002, which will leave just 17 remaining projects.
* Of
the five identified operations that closed down in May and June,
two had
timber permits that expired in the first half of this year,
two
were due to expire by the end of this year, whilst the other will
expire
in March 2002. In each case the
operations had already
exhausted
their resources.
* The
FIA totally ignores the problem of illegal logging which has
recently
been highlighted in East New Britain and Gulf Provinces and
the
problems of an industry that the Minister has described as being
in
chaos.
* The
average tax rate is in fact currently 35%.
2. FIA: 170
jobs have been shed in the past two months in West New
Britain.
FW: These job losses were caused by expiring
permits and
unsustainable
logging practices, not by excessive taxation
* The
job losses in West New Britain followed the closure of logging
operations
at Umboi, Aria Vanu, Menvuvu, Passimanua and at Ulamona.
All
these projects were due to expire either this year or before June
2001.
* It
should also be noted that since no long term diversified forest
industry
has really developed beyond simple log exporting operations,
employment
within the sector is far lower than what should have been
reasonably
expected.
3. FIA: A
number of processing operations have closed, including
the
Galley Reach rubber wood factory in Central Province which
employed
about 300 people and D Scan, which wiped out a K20 million
investment
and 400 jobs.
FW: Neither of these projects involves export
logging and are
therefore
not affected by log export taxes. The claimed number of
employees
is grossly exaggerated.
*
Referral to these projects is completely irrelevant to the FIA
argument
on log taxes. Both the Galley Reach and
D-Scan operations
are
based on plantation resources and include no log exports.
* The
D-Scan operation has been halted by landowner disputes which
emphasise
the inability of the PNGFA to manage forest resources and
the
need for fundamental reform
* In
addition, the FIA claims about employment at these projects are
highly
exaggerated. Company figures for
employment are 146 employees
at
Galley Reach and 150 at D-Scan.
4. FIA: Although
Malaysian and other foreign timber companies
dominate
the logging industry, even operations owned by nationals
have
been adversely affected.
FW: Despite the impression given by the FIA,
there is only one
nationally
owned commercial forestry operation in PNG and it's timber
permit
is due to expire at the end of this year.
5. FIA: The
Internal Revenue Commission had told the Bogan Inquiry
that 27
logging companies had only paid K21 million in company tax
since
1992 but IRC receipts presented to the Commission for just 10
of those
companies showed a tax payment of K26.97 million.
FW: In fact, the receipts presented to the IRC
were for employee
taxes
deducted by the companies and were not for company taxes.
6. FIA: The
industry is convinced that transfer pricing is not an
issue.
FW: The industry consistently tries to ignore
this issue in the face
of
overwhelming evidence that transfer pricing is rampant.
* The
Bogan Inquiry estimated that on average the export value of
logs is
under declared by 25%, usually as a result of misstating the
quality
of the logs.
* The
Fortech report identified that in 1997, there was an
unexplained
discrepancy in published data for taun/calophyllum veneer
logs
exported to Japan of around US$14 per cubic metre (this Japanese
data is
all that is available from a readily published source).
*
Follow up by the PNGFA revealed that by mid 1998, following the log
market
downturn, this unexplained discrepancy had risen to around
US$30
per cubic metre. In May 2001 it was US$34
per cubic metre.
* It is
likely that transfer pricing also occurs in other markets and
for
other log species/grades. However, the
data provided is all that
is
available from published sources. The issue is very difficult to
resolve
as there is a high degree of protection, secrecy and
collusion
in most offshore log markets.
7. FIA:
We will rapidly get to a stage where there are no more
than
six big operators.
FW: The truth is that has really been no more than
six larger
operators
for several years and the Rimbunan Hijau - Turama group of
companies
already control around 50% of all log exports.
8. FIA:
Unless the government reduces the export levy to
manageable
levels, the once lucrative commercial logging industry
will be
forced to shut more camps and shed more jobs.
FW: With many permits coming to an end and the
Independent Review
having
found that most proposed new concessions have insufficient
resource
for log exporting, PNG has a real opportunity to change the
way
that forest are managed to ensure greater benefits for PNG and
long
term sustainability. Log exporting is damaging for PNG and
should
be ended.
* The
current log export industry is lucrative for whom? The
industry
is still riddled with bribery, corruption and malfeasance,
as
reported by the 1990 Forests Commission of Inquiry.
*
Foreign logging companies have no God given right to log PNG's
natural
forests on an unsustainable and environmentally damaging
basis.
* It is
also worth noting that no substantial forest industry has
ever
emerged. Virtually the whole sector is
based only on the export
logging
of natural rainforests on an exploitive and unsustainable
basis.
* It
must be remembered that this is essentially an extractive
industry
with little long term investment apart from machinery which
can be
easily barged away.
*
Despite what the FIA claim, the log export sector does not have
production
costs per se as it does not 'produce' anything - it just
harvests
the natural forests.
* In
the light of both global and local environmental concerns, it
seems
difficult to justify the continued support of the existing
exploitive
and non-sustainable log export operations from natural
forests.
9. FIA:
Forestry is the only sector in PNG that pays a tax on
gross
revenue
FW: The main reason that the forest industry pays
tax on gross
revenue
is that there has historically been a very high level of tax
evasion
by the industry and also, because the nature of the industry
means
that it is very difficult to monitor and control for tax
purposes.
*
Virtually all of the current forest industry in PNG is concerned
with
unsustainable and environmentally damaging exploitation of the
forests. There has been miniscule investment by the
industry in long
term
forestry development, such as in plantations and post harvest
forest
management.
* In
terms of it's importance to national revenue, in Year 2000, log
export
taxes comprised only 5.9% of total tax revenue and 4.5% of
total
Government receipts.
* The
real question is whether the continuation of the present format
and
structure of the forest sector, dominated by exploitive and
unsustainable
log exporting of natural forest logs, is in PNG's best
long
term interest.
August
5th 2001
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TEXT ENDS###
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