Some of Guyana's timber is now gaining international recognition
Saturday, December 30th 2006
Stabroek News
Dear Editor,
I write in response to Mr Mahadeo Kowlessar's letter captioned "The GFC and the Guyana Revenue Authority need to tackle the prima facie case of the falsification of the export records for logs" (06.12.25). I would like to congratulate Mr Kowlessar for acknowledging to the 'vigilant' public that he indeed used one of the highest valued species in the timber market with which to compare Guyana's species. This very important point was conveniently left out of his earlier "analyses" of forest sector issues, one of which dealt with transfer pricing. Mr Kowlessar needs to be extremely careful in utilizing information from the ITTO timber trade report as analyses of these complex issues, may very well be misrepresented by his simplistic interpretation.
Mr. Kowlessar is clearly not au fait with the mechanical and technical properties of Guyana's timbers. He as-sumes that the species quoted in my previous letter published in the Guyana Chronicle on December 21, cannot be compared with Guyana's species. This is simply not the case. Also, Mr. Kowlessar and readers need to be cognizant that Guyana is not yet as well established in the timber market as he would lead us to believe. In actuality, Guyana's timbers are now gaining international recognition and as such, now gaining market share. Prices are therefore, now beginning to be competitive. Species such as Merbau have been on the markets for a significantly longer time than Guyana's species and as such have established market share. A discussion with any forest producer in Guyana will endorse this point. Please do not forget that Guyana is still in the process of developing the full potential of these species, both from a marketing perspective and from a technical perspective. The recently established Forest Products Marketing Council is testimony to this. Some countries have had such councils established for decades to assist them to build market share for their timber species. Mr Kowlessar continues to address these complex issues from a simplistic perspective. This only serves to mislead the public and cause confusion.
In addition, Mr Kowlessar was quick to criticize the quoted timber exporting countries. Please note that these producing countries are some of the largest tropical timber exporting countries in the world. Why not quote these countries? If we are considering this macro issue from a macro perspective then we must examine these countries.
Mr Kowlessar has now extended his criticism to countries such as Malaysia, Gabon, Ghana, Papua New Guinea and Myanmar stating that three of these are notorious for transfer pricing. The Governments of these countries would be happy to have this "very useful information" from Mr Mahadeo Kowlessar. He may even be able to assist them in their economic analyses with re-gards to transfer pricing.
Mr Kowlessar can continue to delude himself but it is my hope that the nation at large is vigilant enough to recognize the mischief makers amongst us who attempt to use the power of the media to wield non-factual information and sheer assumptions. I hereby reiterate that I stand firmly by my analyses of transfer pricing especially in light of the lack of any convincing evidence (inclusive of Mr. Kowlessar's attempt), in this area.
Yours faithfully,
Samantha Griffith
Gaining recognition becuase other sources are becoming depleted?
Saturday, December 30, 2006
Wednesday, December 27, 2006
Timber Barons
Press Release: 6 June 2002
POLICE FAIL TO PROSECUTE TIMBER BARONS AND PLAN AUCTION OF STOLEN TIMBER
Three Chinese cargo ships which have been held in Jakarta with their crews and cargo of illegal logs for the last seven months are to be released according to reliable sources.
The ships were seized by the Indonesian Navy in November smuggling logs from Central Kalimantan. This case has been watched closely by international observers, including The Environmental Investigation Agency (EIA) and Telapak as a test case for the police and forestry ministry to see if the timber barons who own the illegal logs would be prosecuted. Over 25,000m3 of illegal logs worth about US$4 million are to be auctioned by the police on Friday.
“After seven months of so-called investigation, the Indonesian police have shown the world they are incapable of prosecuting powerful timber barons” said Dave Currey, Director of EIA today. “The illegal logs are on the ships, but the police claim they have no evidence. Last week President Megawati Sukarnoputri expressed her concern over illegal logging and we call on her to stop this auction, the release of the ships, and immediately set up an independent enquiry to investigate the police handling of this case.”
The three cargo ships - MV Rong Chen, MV Fonwa Star and MV Mandarin Sea were arrested by the Navy in November 2001 off the coast of Kalimantan. They were loaded with illegal logs. The Government of Indonesia imposed a log export ban in October 2001. The logs on the ships are believed to have come from Tanjung Puting National Park in Kalimantan, famed for its orangutan population, where timber baron and parliamentarian Abdul Rasyid is accused of being behind much of the logging. Despite compelling evidence, Rasyid’s company Tanjung Lingga has been ignored by the police.
Efforts by the Ministry of Forestry to curb the destruction have been thwarted by a corrupt judiciary and different factions in the police.
“Indonesia’s forests are in their most critical condition ever, and it appears that collusion and corruption remain more important in Indonesia today than the future of its forest people, wildlife and water resources” said Dave Currey. “Prosecute the timber barons’ responsible for this cargo now, and some of us may still believe Indonesia has a hopeful future.”
link
POLICE FAIL TO PROSECUTE TIMBER BARONS AND PLAN AUCTION OF STOLEN TIMBER
Three Chinese cargo ships which have been held in Jakarta with their crews and cargo of illegal logs for the last seven months are to be released according to reliable sources.
The ships were seized by the Indonesian Navy in November smuggling logs from Central Kalimantan. This case has been watched closely by international observers, including The Environmental Investigation Agency (EIA) and Telapak as a test case for the police and forestry ministry to see if the timber barons who own the illegal logs would be prosecuted. Over 25,000m3 of illegal logs worth about US$4 million are to be auctioned by the police on Friday.
“After seven months of so-called investigation, the Indonesian police have shown the world they are incapable of prosecuting powerful timber barons” said Dave Currey, Director of EIA today. “The illegal logs are on the ships, but the police claim they have no evidence. Last week President Megawati Sukarnoputri expressed her concern over illegal logging and we call on her to stop this auction, the release of the ships, and immediately set up an independent enquiry to investigate the police handling of this case.”
The three cargo ships - MV Rong Chen, MV Fonwa Star and MV Mandarin Sea were arrested by the Navy in November 2001 off the coast of Kalimantan. They were loaded with illegal logs. The Government of Indonesia imposed a log export ban in October 2001. The logs on the ships are believed to have come from Tanjung Puting National Park in Kalimantan, famed for its orangutan population, where timber baron and parliamentarian Abdul Rasyid is accused of being behind much of the logging. Despite compelling evidence, Rasyid’s company Tanjung Lingga has been ignored by the police.
Efforts by the Ministry of Forestry to curb the destruction have been thwarted by a corrupt judiciary and different factions in the police.
“Indonesia’s forests are in their most critical condition ever, and it appears that collusion and corruption remain more important in Indonesia today than the future of its forest people, wildlife and water resources” said Dave Currey. “Prosecute the timber barons’ responsible for this cargo now, and some of us may still believe Indonesia has a hopeful future.”
link
Tuesday, December 26, 2006
Timber shipment questions
Timber shipment questions
I would like to share with your readers the following URL sent to me by a friend and which has informative articles on forestry and timber in Guyana - http://guyanaforestry.blogspot.com/
The site has four photographs of logs from Guyana being loaded on November 30 2006 from a pontoon in the Demerara River onto a Chinese-registered ship named "Rong Cheng".
I was struck by the large quantity of logs on the pontoon and the lack of any GFC or Customs presence in the photograph.
I called the Guyana Forestry Commission unsuccessfully on several consecutive days trying to get information on this shipment.
Through your newspaper I wish to ask the Commissioner of Forests the name of the timber exporter(s) with cargo on the "Rong Cheng", what timber species/volumes/values of logs were being exported, and the names of the consignees.
PATRICK JACKSON
I would like to share with your readers the following URL sent to me by a friend and which has informative articles on forestry and timber in Guyana - http://guyanaforestry.blogspot.com/
The site has four photographs of logs from Guyana being loaded on November 30 2006 from a pontoon in the Demerara River onto a Chinese-registered ship named "Rong Cheng".
I was struck by the large quantity of logs on the pontoon and the lack of any GFC or Customs presence in the photograph.
I called the Guyana Forestry Commission unsuccessfully on several consecutive days trying to get information on this shipment.
Through your newspaper I wish to ask the Commissioner of Forests the name of the timber exporter(s) with cargo on the "Rong Cheng", what timber species/volumes/values of logs were being exported, and the names of the consignees.
PATRICK JACKSON
Timber trade statistics
Guyana Chronicle - Monday December 25, 2006
Not comparable
THE letter from Vivek Persaud published in the Guyana Chronicle on December 21 does not give a proper reading to timber trade statistics.
My letter which he refers to in the Stabroek News of December 9 concerned transfer pricing of our best quality timber suitable for the booming markets in solid wood furniture and heavy-duty flooring.
For comparison with purpleheart from Guyana, I used the popular furniture and flooring timber from south east Asia, “merbau”. Technically, the merbau timber is somewhat inferior to purpleheart.
The main importing port for tropical timber logs is Zhangjiagang (the same port as named by the International Tropical Timber Organization (ITTO) as importing locust logs from Guyana, even though the Guyana Forestry Commission says it does not permit export of locust logs in order to protect our local industry – GFC note in Stabroek News December 13) and the manufacturing base is nearby Nanxun with about 500 factories making tropical wood flooring for export (EIA/Telapak – “The last frontier – illegal logging in Papua and China’s massive timber theft”, February 2005).
I used the current merbau log import price into China from the fortnightly ITTO Tropical Timber Market report, although merbau has reached US$732 per cubic metre (EIA/Telapak, March 2006).
I used the merbau price to demonstrate that there is an unexplained discrepancy between the FOB log price declared in Guyana and the CIF import price declared in China. I noted that such discrepancies are usually attributable to the illegal practice of transfer pricing.
Vivek Persaud in his letter gives average prices (from the ITTO market report) for a variety of timbers which bear no technical comparison with either merbau or purpleheart. He quotes also average prices from three countries which are notorious for transfer pricing.
Persaud specifically mentions “beech”, a rather soft white - or straw-coloured hardwood which is not used for the same purposes as merbau and purpleheart, and ten other timbers which are also not comparable.
Persaud quotes a price range for merbau of US$587-612, which is much the same as mine and thus confirms my analysis.
The GFC and the Guyana Revenue Authority need to tackle this prima facie case of falsification of export records, and not be diverted by Persaud’s incorrect use of trade statistics.
You reported on December 9 that the Commissioner of Forests “vowed to take action against log exporters found guilty of transfer pricing.”
Let us see some urgent investigation by the GFC and GRA.
MAHADEO KOWLESSAR
Not comparable
THE letter from Vivek Persaud published in the Guyana Chronicle on December 21 does not give a proper reading to timber trade statistics.
My letter which he refers to in the Stabroek News of December 9 concerned transfer pricing of our best quality timber suitable for the booming markets in solid wood furniture and heavy-duty flooring.
For comparison with purpleheart from Guyana, I used the popular furniture and flooring timber from south east Asia, “merbau”. Technically, the merbau timber is somewhat inferior to purpleheart.
The main importing port for tropical timber logs is Zhangjiagang (the same port as named by the International Tropical Timber Organization (ITTO) as importing locust logs from Guyana, even though the Guyana Forestry Commission says it does not permit export of locust logs in order to protect our local industry – GFC note in Stabroek News December 13) and the manufacturing base is nearby Nanxun with about 500 factories making tropical wood flooring for export (EIA/Telapak – “The last frontier – illegal logging in Papua and China’s massive timber theft”, February 2005).
I used the current merbau log import price into China from the fortnightly ITTO Tropical Timber Market report, although merbau has reached US$732 per cubic metre (EIA/Telapak, March 2006).
I used the merbau price to demonstrate that there is an unexplained discrepancy between the FOB log price declared in Guyana and the CIF import price declared in China. I noted that such discrepancies are usually attributable to the illegal practice of transfer pricing.
Vivek Persaud in his letter gives average prices (from the ITTO market report) for a variety of timbers which bear no technical comparison with either merbau or purpleheart. He quotes also average prices from three countries which are notorious for transfer pricing.
Persaud specifically mentions “beech”, a rather soft white - or straw-coloured hardwood which is not used for the same purposes as merbau and purpleheart, and ten other timbers which are also not comparable.
Persaud quotes a price range for merbau of US$587-612, which is much the same as mine and thus confirms my analysis.
The GFC and the Guyana Revenue Authority need to tackle this prima facie case of falsification of export records, and not be diverted by Persaud’s incorrect use of trade statistics.
You reported on December 9 that the Commissioner of Forests “vowed to take action against log exporters found guilty of transfer pricing.”
Let us see some urgent investigation by the GFC and GRA.
MAHADEO KOWLESSAR
Sunday, December 24, 2006
Barama feeling the squeeze
Barama promising major developments next year
Wednesday, December 20th 2006
StabroekNews
Flayed over its export of logs and non-compliance with its investment plans Barama Company Limited yesterday reiterated its commitment to adding value to the industry and expressed the intention to have its Buck Hall operations running on all cylinders next year.
At a press conference held at the Cara Lodge, the company said that it wanted to dispel the negative press recently about the industry and outlined some of its achievements and future plans.
Barama General Manager Girwar Lalaram said that the company's sawmill at Buck Hall on the Essequibo River will be producing from January or February, 3000 cubic metres of sawn lumber per month. He said that because of skills constraints the plant now only produces 1200 cubic metres of sawn lumber.
He said that the entire production is sold to one of China's largest distributors of tropical hardwoods. As for the veneer plant the company tried unsuccessfully to adopt Chinese technology but had to resort to Japanese technology to make the veneer production sensible. This, he said, was the reason for the delay in the Buck Hall project. Plywood production had been one of the primary objectives of Barama from its inception.
As for kiln-drying, Lalaram said that the equipment for this has arrived in the country and is located at the company's Land of Canaan facility waiting to be transferred to their location at Buck Hall.
Lalaram said that the installation of all the components at Buck Hall is projected for the third quarter of 2007. "Factory buildings, work sheds and buildings for accommodating employees are all in place. In addition to the significant labour force that will be employed when the Buck Hall facilities are in place," he said.
He said that the dry-dock facility and co-generation are also supposed to be completed during next year. He said that the cogeneration is being done in collaboration with Synergy Holdings Inc. This co-generation facility will have a capacity of three megawatts.
According to Lalaram, apart from the initial US$150M invested, the company has made an investment of "a few hundred million dollars," and is expected to further invest in the US$35M Buck Hall facility.
He lashed out at the several groups which lobbied SGS-Qualifor and the Forest Stewardship Council against Barama being certified. "This is anti-national since the nation as a whole stands to gain, not just Barama," he said.
He said that the UK market is now requiring that products are certified through the Forest Stewardship Council and have chains of custody. Lalaram said that a visit by an international audit team during the last week of Novem-ber to assess Barama's compliance with the FSC standards resulted in the company maintaining its certification. "The effort and resources put into the certification process underscore Barama's commitment to the rigorous international standards set by FSC, and to sound social and environmental practices," he said.
On the issue of transfer pricing, Lalaram said that the term is an economic one which is being misused by the media. He said that the company doesn't engage in transfer pricing and the Guyana Forestry Commission has not approached the company on the matter.
Commissioner of Forests James Singh told this newspaper some weeks ago that the issue of transfer pricing is the subject of an ongoing investigation. Many letter writers to the Stabroek News alleged that Barama and Jaling Forest Industries Inc are engaged in this. Singh said that action will be taken against companies which engage in transfer pricing. Minister of Agriculture Robert Persaud stated recently that companies like Barama could face re-examination of their concessions if it is found that they haven't lived up to commitments in their business plans.
Lalaram said that only recently did the company make a profit after being in the red since the commencement of operations in 1993. He concluded that overall, there has not been a reasonable return on investment and despite this, the company's principals continue to finance the operations.
He said that production of plywood is stymied because of spares that are needed for fixing problems with the dryer. He said that the spares amount to about US$700,000. According to him, it is important for the company to recommence the plywood exports since prices for the commodity are high at the moment.
Lalaram said that the company hopes to be supplying India and China with products from the Buck Hall facilities. Lalaram said that logs seem to be the commodity of preference in places like India since the tariff is lower on them.
On working the concessions of smaller companies in addition to its own sprawling north west concession, Barama's General Manager said that this is a practice that brings benefits to both parties. He said that many smaller operators approach Barama for assistance and the company would engage them in partnership, but with majority rights.
Asked whether absenteeism is a result of possible poor working conditions and remuneration, Lalaram went through great pains to outline the benefits offered to the workers. He said that occupational safety and health were important factors of the FSC certification and that they are rigorously enforced.
When asked if there is any independent monitoring of the company's harvesting activities as was the case when the Edinburgh Centre for Tropical Forests was hired in the 1990s, Lalaram said that with the FSC certification this is unnecessary. He said that the company has to submit to audits every six months to ensure that all FSC certification requirements are being complied with.
He said too that the company is working towards Chain of Custody Certification, a system which connects responsible forest management practices and products with consumers. With this certification, Barama will be able to "demonstrate its commitment to environmentally and socially responsible forest management by labelling its products with the FSC trademark." He said that the certification is for companies that process, transform or trade FSC forest products, and can be used to demonstrate compliance with some government or private procurement policies and specifications, thereby increasing access to these markets. (Johann Earle)
Wednesday, December 20th 2006
StabroekNews
Flayed over its export of logs and non-compliance with its investment plans Barama Company Limited yesterday reiterated its commitment to adding value to the industry and expressed the intention to have its Buck Hall operations running on all cylinders next year.
At a press conference held at the Cara Lodge, the company said that it wanted to dispel the negative press recently about the industry and outlined some of its achievements and future plans.
Barama General Manager Girwar Lalaram said that the company's sawmill at Buck Hall on the Essequibo River will be producing from January or February, 3000 cubic metres of sawn lumber per month. He said that because of skills constraints the plant now only produces 1200 cubic metres of sawn lumber.
He said that the entire production is sold to one of China's largest distributors of tropical hardwoods. As for the veneer plant the company tried unsuccessfully to adopt Chinese technology but had to resort to Japanese technology to make the veneer production sensible. This, he said, was the reason for the delay in the Buck Hall project. Plywood production had been one of the primary objectives of Barama from its inception.
As for kiln-drying, Lalaram said that the equipment for this has arrived in the country and is located at the company's Land of Canaan facility waiting to be transferred to their location at Buck Hall.
Lalaram said that the installation of all the components at Buck Hall is projected for the third quarter of 2007. "Factory buildings, work sheds and buildings for accommodating employees are all in place. In addition to the significant labour force that will be employed when the Buck Hall facilities are in place," he said.
He said that the dry-dock facility and co-generation are also supposed to be completed during next year. He said that the cogeneration is being done in collaboration with Synergy Holdings Inc. This co-generation facility will have a capacity of three megawatts.
According to Lalaram, apart from the initial US$150M invested, the company has made an investment of "a few hundred million dollars," and is expected to further invest in the US$35M Buck Hall facility.
He lashed out at the several groups which lobbied SGS-Qualifor and the Forest Stewardship Council against Barama being certified. "This is anti-national since the nation as a whole stands to gain, not just Barama," he said.
He said that the UK market is now requiring that products are certified through the Forest Stewardship Council and have chains of custody. Lalaram said that a visit by an international audit team during the last week of Novem-ber to assess Barama's compliance with the FSC standards resulted in the company maintaining its certification. "The effort and resources put into the certification process underscore Barama's commitment to the rigorous international standards set by FSC, and to sound social and environmental practices," he said.
On the issue of transfer pricing, Lalaram said that the term is an economic one which is being misused by the media. He said that the company doesn't engage in transfer pricing and the Guyana Forestry Commission has not approached the company on the matter.
Commissioner of Forests James Singh told this newspaper some weeks ago that the issue of transfer pricing is the subject of an ongoing investigation. Many letter writers to the Stabroek News alleged that Barama and Jaling Forest Industries Inc are engaged in this. Singh said that action will be taken against companies which engage in transfer pricing. Minister of Agriculture Robert Persaud stated recently that companies like Barama could face re-examination of their concessions if it is found that they haven't lived up to commitments in their business plans.
Lalaram said that only recently did the company make a profit after being in the red since the commencement of operations in 1993. He concluded that overall, there has not been a reasonable return on investment and despite this, the company's principals continue to finance the operations.
He said that production of plywood is stymied because of spares that are needed for fixing problems with the dryer. He said that the spares amount to about US$700,000. According to him, it is important for the company to recommence the plywood exports since prices for the commodity are high at the moment.
Lalaram said that the company hopes to be supplying India and China with products from the Buck Hall facilities. Lalaram said that logs seem to be the commodity of preference in places like India since the tariff is lower on them.
On working the concessions of smaller companies in addition to its own sprawling north west concession, Barama's General Manager said that this is a practice that brings benefits to both parties. He said that many smaller operators approach Barama for assistance and the company would engage them in partnership, but with majority rights.
Asked whether absenteeism is a result of possible poor working conditions and remuneration, Lalaram went through great pains to outline the benefits offered to the workers. He said that occupational safety and health were important factors of the FSC certification and that they are rigorously enforced.
When asked if there is any independent monitoring of the company's harvesting activities as was the case when the Edinburgh Centre for Tropical Forests was hired in the 1990s, Lalaram said that with the FSC certification this is unnecessary. He said that the company has to submit to audits every six months to ensure that all FSC certification requirements are being complied with.
He said too that the company is working towards Chain of Custody Certification, a system which connects responsible forest management practices and products with consumers. With this certification, Barama will be able to "demonstrate its commitment to environmentally and socially responsible forest management by labelling its products with the FSC trademark." He said that the certification is for companies that process, transform or trade FSC forest products, and can be used to demonstrate compliance with some government or private procurement policies and specifications, thereby increasing access to these markets. (Johann Earle)
Sunday, December 17, 2006
More on Barama
Barama came in at a time when investment was badly needed and has been in the vanguard of sustainable forest management
Saturday, December 16th 2006
Dear Editor,
I refer to a letter by Selochan Beharry captioned "Barama's alleged generosity needs to be carefully examined" (06.12.02).
The contents of his letter consist of outdated information and grievances which were all dealt with a long time ago by the Barama Company.
Why are Mr. Beharry and his friends in the Guyana Citizens Initiative (GCI) rehashing the past? I do not think that the spate of letters in the Stabroek News quite recently is fair as regards Barama's forest operations here in Guyana. Further I do not think Barama's detractors or critics are professionally qualified to make an objective analysis of Barama's operations. While Mr. Beharry condemns the Barama Company's operations in Guyana he did not comment on the destruction of our commercial forests by our own local logging companies with their unsustainable forest harvesting methods.
I ask Mr. Beharry this question, which local logging company destroyed the commercial forest in the Kwebanna Amerindian village of Region No.1. Is it Asian Companies or local logging companies that continue to deplete commercial forests in the Amerindian communities of Bethany, Orealla and Siparuta, Wakapau, Manawarin and Cabacaburi. I would like Mr. Beharry to answer these questions before he makes further comments on the forestry sector.
The Barama company's contract to harvest in a sustainable manner the Baromalli forest type in its large concession was made possible under the Hoyte Administration at a time when Guyana was experiencing severe structural economic adjustments and unsubstantial foreign investments. In fact Guyana then was not a suitable destination for foreign investment. When Barama's contract was officially signed there was no opposition to it by the present day critics of Barama. As soon as the Hoyte Govern-ment was replaced by the PPP/C Government, opposition elements in the forestry sector in their bid to pressure the new Government decided to wage a campaign of hostility against the Barama Company. Today this campaign continues which was evident from the letters in the Stabroek News in preparation of the Forest Stewardship Council's (FSC) auditors visit to Guyana. Unfortunately for Barama's critics including Mr. Beharry their letters of venom had no effect or merit and in the final analysis Barama retained its FSC certificate which the critics wanted to be withdrawn.
The Barama Company's intervention in our forestry sector has significantly revolutionized this sector with its sustainable harvesting methods and good forestry management practices notwithstanding its large concession.
Mr. Beharry stated that Amerindian lands were ruthlessly taken away from them by Barama when the company first set up operations at Port Kaituma. This is a monumental lie meant to mislead the Guyanese public and the world at large. While in fact land space was needed and houses had to be removed this was done by way of a negotiation process and in an orderly fashion where compensation payments were made to affected residents.
The Regional Democratic Council (RDC) at that time being the legitimate governing body of Region No. 1 was given the responsibility of making compensation payments to affected residents who were not coerced into giving up their lands.
But many of us residents at Port Kaituma primarily Amerindians felt that Barama's presence at Port Kaituma was of divine intervention since Port Kaituma was transformed from a ghost town to an illuminated community.
Prior to Barama's intervention at Port Kaituma there was absolutely no economic activity taking place, employment in this sub region was very high, children had stopped attending school, teachers left the sub region because they were completely demoralized, the secondary school collapsed and worst of all there was no medical attention with the incidence of malaria taking its toll on residents.
With the arrival of Barama there was a complete transformation. Over 300 residents, primarily Amerindians, were given employment. Their children returned to school because their parents were now in a solid position to afford to send them to school, the school was made habitable by renovations, teachers were happy to return to teach and to enhance the teaching staff, Barama employed at their own expense foreign teachers. Barama also employed their clerical staff from Port Kaituma training them in computer technology and office practice making them proficient in the administrative office. The incidence of malaria was drastically lowered with a full time doctor working overtime in Amerindian communities such as Sebai taking blood samples for diagnostic tests and providing treatment. Medical attention was brought to Port Kaituma with the construction of a well equipped cottage hospital providing for the health needs of residents who once died of malaria, snake bites and other illnesses.
Barama's operations at Port Kaituma contributed to both direct and indirect employment, not only for Port Kaituma residents but also for those at the Mabaruma sub region including all the riverain communities. The company purchased the agricultural products of these residents and a market setting was established where the company's workers did their own purchasing. Many shops were also established transforming Port Kaituma into a hub of economic activities. Life was once again returned to Port Kaituma since the manganese days.
But unfortunately Barama had to relocate complying with its method of sustainable forest harvesting practices. What did Barama leave behind? A completed road way which resembled that of a highway, also other access roads also a well equipped cottage hospital which was handed over to the government and other buildings. But while the Barama Company contributed financially to the development of Port Kaituma, it was unfortunate that the Neighbourhood Democratic Council (NDC) did not at the time propose to the company a sound development programme for funding.
Barama's track record in terms of community transformation is an impressive one and being a resident of Port Kaituma and a witness I cannot say that the Barama Company is depleting Guyana's forest resource base, but rather it is in the vanguard of sustainable forest management in Guyana.
Yours faithfully,
Trevor Atkinson
Stabroek News
Saturday, December 16th 2006
Dear Editor,
I refer to a letter by Selochan Beharry captioned "Barama's alleged generosity needs to be carefully examined" (06.12.02).
The contents of his letter consist of outdated information and grievances which were all dealt with a long time ago by the Barama Company.
Why are Mr. Beharry and his friends in the Guyana Citizens Initiative (GCI) rehashing the past? I do not think that the spate of letters in the Stabroek News quite recently is fair as regards Barama's forest operations here in Guyana. Further I do not think Barama's detractors or critics are professionally qualified to make an objective analysis of Barama's operations. While Mr. Beharry condemns the Barama Company's operations in Guyana he did not comment on the destruction of our commercial forests by our own local logging companies with their unsustainable forest harvesting methods.
I ask Mr. Beharry this question, which local logging company destroyed the commercial forest in the Kwebanna Amerindian village of Region No.1. Is it Asian Companies or local logging companies that continue to deplete commercial forests in the Amerindian communities of Bethany, Orealla and Siparuta, Wakapau, Manawarin and Cabacaburi. I would like Mr. Beharry to answer these questions before he makes further comments on the forestry sector.
The Barama company's contract to harvest in a sustainable manner the Baromalli forest type in its large concession was made possible under the Hoyte Administration at a time when Guyana was experiencing severe structural economic adjustments and unsubstantial foreign investments. In fact Guyana then was not a suitable destination for foreign investment. When Barama's contract was officially signed there was no opposition to it by the present day critics of Barama. As soon as the Hoyte Govern-ment was replaced by the PPP/C Government, opposition elements in the forestry sector in their bid to pressure the new Government decided to wage a campaign of hostility against the Barama Company. Today this campaign continues which was evident from the letters in the Stabroek News in preparation of the Forest Stewardship Council's (FSC) auditors visit to Guyana. Unfortunately for Barama's critics including Mr. Beharry their letters of venom had no effect or merit and in the final analysis Barama retained its FSC certificate which the critics wanted to be withdrawn.
The Barama Company's intervention in our forestry sector has significantly revolutionized this sector with its sustainable harvesting methods and good forestry management practices notwithstanding its large concession.
Mr. Beharry stated that Amerindian lands were ruthlessly taken away from them by Barama when the company first set up operations at Port Kaituma. This is a monumental lie meant to mislead the Guyanese public and the world at large. While in fact land space was needed and houses had to be removed this was done by way of a negotiation process and in an orderly fashion where compensation payments were made to affected residents.
The Regional Democratic Council (RDC) at that time being the legitimate governing body of Region No. 1 was given the responsibility of making compensation payments to affected residents who were not coerced into giving up their lands.
But many of us residents at Port Kaituma primarily Amerindians felt that Barama's presence at Port Kaituma was of divine intervention since Port Kaituma was transformed from a ghost town to an illuminated community.
Prior to Barama's intervention at Port Kaituma there was absolutely no economic activity taking place, employment in this sub region was very high, children had stopped attending school, teachers left the sub region because they were completely demoralized, the secondary school collapsed and worst of all there was no medical attention with the incidence of malaria taking its toll on residents.
With the arrival of Barama there was a complete transformation. Over 300 residents, primarily Amerindians, were given employment. Their children returned to school because their parents were now in a solid position to afford to send them to school, the school was made habitable by renovations, teachers were happy to return to teach and to enhance the teaching staff, Barama employed at their own expense foreign teachers. Barama also employed their clerical staff from Port Kaituma training them in computer technology and office practice making them proficient in the administrative office. The incidence of malaria was drastically lowered with a full time doctor working overtime in Amerindian communities such as Sebai taking blood samples for diagnostic tests and providing treatment. Medical attention was brought to Port Kaituma with the construction of a well equipped cottage hospital providing for the health needs of residents who once died of malaria, snake bites and other illnesses.
Barama's operations at Port Kaituma contributed to both direct and indirect employment, not only for Port Kaituma residents but also for those at the Mabaruma sub region including all the riverain communities. The company purchased the agricultural products of these residents and a market setting was established where the company's workers did their own purchasing. Many shops were also established transforming Port Kaituma into a hub of economic activities. Life was once again returned to Port Kaituma since the manganese days.
But unfortunately Barama had to relocate complying with its method of sustainable forest harvesting practices. What did Barama leave behind? A completed road way which resembled that of a highway, also other access roads also a well equipped cottage hospital which was handed over to the government and other buildings. But while the Barama Company contributed financially to the development of Port Kaituma, it was unfortunate that the Neighbourhood Democratic Council (NDC) did not at the time propose to the company a sound development programme for funding.
Barama's track record in terms of community transformation is an impressive one and being a resident of Port Kaituma and a witness I cannot say that the Barama Company is depleting Guyana's forest resource base, but rather it is in the vanguard of sustainable forest management in Guyana.
Yours faithfully,
Trevor Atkinson
Stabroek News
Saturday, December 16, 2006
Bad wood used to build homes
She noted further that bad wood had been used for roof beams, and one was joined in three places. Close observation, she had written, led to her discovery that some blocks at the centre front of the house were out of line "like falling inward." Two beams were replaced, but the blocks have not yet been aligned, her letter stated.
The woman also disapproved of ordinary carpenter nails being used to nail down the zinc sheets on the roof. She said too that the structure, which is supposed to be the septic tank, was only 12 inches deep.
She said she believed the doorframe put on the house had been used previously since she found part of a lock attached.
And the plyboard used for the ceiling had nail holes in them, she said, indicating that they could have been used before......Read more
Guyana - the land of many waters and wood still can't maximize their resources.
The woman also disapproved of ordinary carpenter nails being used to nail down the zinc sheets on the roof. She said too that the structure, which is supposed to be the septic tank, was only 12 inches deep.
She said she believed the doorframe put on the house had been used previously since she found part of a lock attached.
And the plyboard used for the ceiling had nail holes in them, she said, indicating that they could have been used before......Read more
Guyana - the land of many waters and wood still can't maximize their resources.
Value added timber works - too little too late by Govt?
Local firms launch $300M value-added timber works
By Nicosia Smith
Saturday, December 16th 2006
Stabroek News
Sustainable Forest Inc (SFI) is on a mission to give a supply boost to the value-added market in a $300M investment amid a shortage of prime species of logs.
The consortium comprising Bulkan Timber Works, Precision Woodworking Ltd and Farfan & Mendes Ltd, in June gained approval from the Guyana Forestry Commission (GFC) under a State Forest Permission for an 80,000-acre concession. The government had taken a position to enhance the availability of raw materials to manufacturers who add value to logs.
Yesterday, SFI formally launched at Cara Lodge, Quamina Street and its directors discussed their plans for the new company while calling for an increase in the number of concessions available to small forest producers.
Over the past weeks letters in this newspaper have called on the GFC to improve its monitoring of forest resources, amid concerns that foreign loggers were exporting prime log species like locust and purple heart and were not in compliance with their management plans.
Directors Howard Bulkan, Managing Director of Bulkan Timbers and Andrew Mendes, Managing Director of Farfan & Mendes in an interview with Stabroek News called for concessions in the vicinity of 20,000-100,000 acres to be given to 400-500 small forest producers - since these producers contribute revenues almost equal to the large companies.
Both Bulkan and Mendes said that GFC revenue figures show that in 2002, while the small forest producers only had 26% of the land, they contributed 48% of the total revenue compared to the large concession holders who had 74% of the land and contributed 52%. No other up-dated figures were available to indicate if this trend is continuing.
The directors used these figures to make the point that they will earn more revenue in a year than some of the large concession holders, by maintaining a very high efficiency level and maintaining reduced capital expenditure.
For example, it was noted that SFI will have a small road network since milling will be on site and there would be no need for large vehicles to access the site.
"Mobile saws will cut accurately the good timber and at 65% yield will give 50% more lumber than the best fixed mills in Guyana, and at 1/3 of the traditional cost," according to SFI. It was further noted that "SFI will have no or minimal log hauling costs because its preliminary milling will be at the tree stump." In addition, this means that SFI can cut and recover relatively small amounts of good timber from defective trees, which would not be worth hauling to fixed mills.
This form of logging by SFI, said Mendes, will also bring in more revenue for the government since the GFC calculates a relatively low recovery rate - 20% - in setting royalty for sawn lumber.
The "SFI's recovery rate of 65% means that the GFC will be gaining around three times as much in royalty per tree than it gains from pure logging operations, or about four times as much per hectare," according to Mendes. Some 57 persons will be employed in the forest side of SFI, plus others in a mill for wallaba shingles.
Bulkan noted that due to a shortage of their prime species, locust, over the past year they have operated at 40% capacity. The situation has gotten so bad that Bulkan Timber has had to import a few 40-foot containers of locust from Brazil this week. This comes, according to SFI, even as log exports from Guyana boom with more than 118,000 cubic metres of logs exported before September compared to 115,000 cubic metres in all of 2005.
The GFC has maintained that the forest sector is operating below capacity and that it will like to see harvests increase. Some 20 cubic metres of logs can be harvested per acre sustainably and currently the harvest level is at five cubic metres.
Both Mendes and Bulkan noted that this is true but that what is mainly being harvested are prime species and the harvest is not equally distributed among all the lesser known species. The large companies have made the argument that they must sell the prime species to gain buyers for the lesser known species.
Currently, Bulkan Timber has had to cut its staff from 160 to 135 due to a shortage of locust. Bulkan noted that over the past three to four years they have experienced a steady shortage of raw material.
This concession does not immediately solve the problem, said Bulkan, noting that a $5.3M preliminary forest inventory of 12 blocks, totalling 1200 hectares has shown that extremely low levels of locust and purple heart exist. It was estimated that the amounts are only sufficient for a half or one and a half days work for Bulkan Timbers or Precision whose prime species is purple heart. This discovery has led Bulkan to acknowledge that if the remaining concessions also show low levels of these prime species they may have to seek another. However, Mendes has noted that they will work with what was given and aggressively market the lesser known species and sell sawn lumber on the local market.
In July-October, the consortium entered into negotiations with Citizens Bank (Guyana). Three mobile sawmills and two edgers are already in Guyana; one US$22,000 mobile mill is en route; one US$160,000 skidder is on order together with two tractors worth US$120,000.
In the meantime, staff recruitment has begun and in January 2007 the start of in-forest road building is expected; tree cutting, logging and milling, and full production are expected in April-June 2007.
This week the Agriculture Minister noted that no species of locust or crabwood trees were exported to Asia after an investigation. While Jialing Forest Industries Inc and Barama Company Limited (BCL) were given until September 2007 to meet all requirements of their management plans including bringing into operation sawmills and other value added plants like a veneer plant and to reduce log exports. Jailing said that it will be labour compliant by 2008, which is, having its foreign staff be reduced to 15%, which is above the limit of 15%.
In the meantime, these two log exporting companies continue its export of Guyana's prime species.
By Nicosia Smith
Saturday, December 16th 2006
Stabroek News
Sustainable Forest Inc (SFI) is on a mission to give a supply boost to the value-added market in a $300M investment amid a shortage of prime species of logs.
The consortium comprising Bulkan Timber Works, Precision Woodworking Ltd and Farfan & Mendes Ltd, in June gained approval from the Guyana Forestry Commission (GFC) under a State Forest Permission for an 80,000-acre concession. The government had taken a position to enhance the availability of raw materials to manufacturers who add value to logs.
Yesterday, SFI formally launched at Cara Lodge, Quamina Street and its directors discussed their plans for the new company while calling for an increase in the number of concessions available to small forest producers.
Over the past weeks letters in this newspaper have called on the GFC to improve its monitoring of forest resources, amid concerns that foreign loggers were exporting prime log species like locust and purple heart and were not in compliance with their management plans.
Directors Howard Bulkan, Managing Director of Bulkan Timbers and Andrew Mendes, Managing Director of Farfan & Mendes in an interview with Stabroek News called for concessions in the vicinity of 20,000-100,000 acres to be given to 400-500 small forest producers - since these producers contribute revenues almost equal to the large companies.
Both Bulkan and Mendes said that GFC revenue figures show that in 2002, while the small forest producers only had 26% of the land, they contributed 48% of the total revenue compared to the large concession holders who had 74% of the land and contributed 52%. No other up-dated figures were available to indicate if this trend is continuing.
The directors used these figures to make the point that they will earn more revenue in a year than some of the large concession holders, by maintaining a very high efficiency level and maintaining reduced capital expenditure.
For example, it was noted that SFI will have a small road network since milling will be on site and there would be no need for large vehicles to access the site.
"Mobile saws will cut accurately the good timber and at 65% yield will give 50% more lumber than the best fixed mills in Guyana, and at 1/3 of the traditional cost," according to SFI. It was further noted that "SFI will have no or minimal log hauling costs because its preliminary milling will be at the tree stump." In addition, this means that SFI can cut and recover relatively small amounts of good timber from defective trees, which would not be worth hauling to fixed mills.
This form of logging by SFI, said Mendes, will also bring in more revenue for the government since the GFC calculates a relatively low recovery rate - 20% - in setting royalty for sawn lumber.
The "SFI's recovery rate of 65% means that the GFC will be gaining around three times as much in royalty per tree than it gains from pure logging operations, or about four times as much per hectare," according to Mendes. Some 57 persons will be employed in the forest side of SFI, plus others in a mill for wallaba shingles.
Bulkan noted that due to a shortage of their prime species, locust, over the past year they have operated at 40% capacity. The situation has gotten so bad that Bulkan Timber has had to import a few 40-foot containers of locust from Brazil this week. This comes, according to SFI, even as log exports from Guyana boom with more than 118,000 cubic metres of logs exported before September compared to 115,000 cubic metres in all of 2005.
The GFC has maintained that the forest sector is operating below capacity and that it will like to see harvests increase. Some 20 cubic metres of logs can be harvested per acre sustainably and currently the harvest level is at five cubic metres.
Both Mendes and Bulkan noted that this is true but that what is mainly being harvested are prime species and the harvest is not equally distributed among all the lesser known species. The large companies have made the argument that they must sell the prime species to gain buyers for the lesser known species.
Currently, Bulkan Timber has had to cut its staff from 160 to 135 due to a shortage of locust. Bulkan noted that over the past three to four years they have experienced a steady shortage of raw material.
This concession does not immediately solve the problem, said Bulkan, noting that a $5.3M preliminary forest inventory of 12 blocks, totalling 1200 hectares has shown that extremely low levels of locust and purple heart exist. It was estimated that the amounts are only sufficient for a half or one and a half days work for Bulkan Timbers or Precision whose prime species is purple heart. This discovery has led Bulkan to acknowledge that if the remaining concessions also show low levels of these prime species they may have to seek another. However, Mendes has noted that they will work with what was given and aggressively market the lesser known species and sell sawn lumber on the local market.
In July-October, the consortium entered into negotiations with Citizens Bank (Guyana). Three mobile sawmills and two edgers are already in Guyana; one US$22,000 mobile mill is en route; one US$160,000 skidder is on order together with two tractors worth US$120,000.
In the meantime, staff recruitment has begun and in January 2007 the start of in-forest road building is expected; tree cutting, logging and milling, and full production are expected in April-June 2007.
This week the Agriculture Minister noted that no species of locust or crabwood trees were exported to Asia after an investigation. While Jialing Forest Industries Inc and Barama Company Limited (BCL) were given until September 2007 to meet all requirements of their management plans including bringing into operation sawmills and other value added plants like a veneer plant and to reduce log exports. Jailing said that it will be labour compliant by 2008, which is, having its foreign staff be reduced to 15%, which is above the limit of 15%.
In the meantime, these two log exporting companies continue its export of Guyana's prime species.
Friday, December 15, 2006
The politics of selling out your natural resources
Politics, law and the logging industry
The influence of the logging industry on the politics and laws of host countries should not be underestimated, particularly with regard to obtaining licences to log and to forest policy more generally. There is often a mutually beneficial relationship between logging companies and political elites, involving the acquisition of large private wealth for both parties through bribery, corruption and transfer pricing, at the expense of public benefit through lost revenues and royalty payments and at the expense of social, environmental and indigenous communities' rights. At the very least, these relationships equate to a conflict of interest; at worst, they suggest an institutionalisation of cronyism and corruption. In most cases, there is a fundamental imbalance of power between economic interests, the State and civil society over the control, use and exploitation of forests. The long-term consequences of this are logging at unsustainable rates for quick profit; illegal felling and illegal trade; disruption of successful local economies; social instability; environmental degradation; and social, cultural and political oppression.
Awarding of Concessions and Licences to Log
The awarding of concessions and other licences to log as a result of political patronage, rather than open competitive tender, has been the norm rather than the exception in many countries. All too often, the identity of concession holders is surrounded in secrecy, as is the actual location of concessions. Occasionally, this information has been leaked from forestry departments or made available through unofficial channels. Sometimes, the only information available is a list of the local concession holders rather than the identity of the ultimate owners and/or the sub-contractors who usually reap the rewards. In the case of Sarawak, for instance, the publication of a concession map became a political tool in 1987, when the present Chief Minister succeeded his uncle after an election campaign full of accusations of cronyism and corruption on both sides (see below).
Transnational logging companies, including Malaysian-based ones, often operate abroad through numerous private, locally-registered companies or as subcontractors to national concession holders. In this way, not only are each company's financial details difficult to track, but the actual links between operations (both nationally and internationally) are also obscured. On paper, for example, the licence holders may appear to be separate entities. These practices have enabled companies to dominate the forestry sector of a country, for instance Papua New Guinea, or to circumvent maximum concession holding limits, such as those in Cameroon.39 In countries which are now opening up their forests to timber exploitation (Guyana and Suriname, for instance), huge concession areas are sought by Malaysian and other transnationals. They put pressure on governments to issue logging licences over these areas despite the inadequacies of forestry departments to monitor operations effectively or to enforce legislation, despite indigenous and other local peoples' titles or claims to land and despite the lack of enough state forest to cover their requests. In Cambodia, the anarchic issuing of local permits to log has become an easy way to obtain licences to cut trees, avoiding the more lengthy process associated with forest concessions allocated at the national level.40
Guyana
A 1995 World Bank study confirmed that loggers were getting their timber in Guyana very cheaply and revealed that royalties, taxes and forest fees were some of the lowest in the tropics, less than one-tenth of those paid in most African and Asian countries. With Guyana liquidating its forest assets for little national gain, the World Bank report warned that such forest mining entails a boom-and-bust pattern of development that can be highly disruptive to employment levels, trade balances and other factors of macro-economic stability...... Read more
The influence of the logging industry on the politics and laws of host countries should not be underestimated, particularly with regard to obtaining licences to log and to forest policy more generally. There is often a mutually beneficial relationship between logging companies and political elites, involving the acquisition of large private wealth for both parties through bribery, corruption and transfer pricing, at the expense of public benefit through lost revenues and royalty payments and at the expense of social, environmental and indigenous communities' rights. At the very least, these relationships equate to a conflict of interest; at worst, they suggest an institutionalisation of cronyism and corruption. In most cases, there is a fundamental imbalance of power between economic interests, the State and civil society over the control, use and exploitation of forests. The long-term consequences of this are logging at unsustainable rates for quick profit; illegal felling and illegal trade; disruption of successful local economies; social instability; environmental degradation; and social, cultural and political oppression.
Awarding of Concessions and Licences to Log
The awarding of concessions and other licences to log as a result of political patronage, rather than open competitive tender, has been the norm rather than the exception in many countries. All too often, the identity of concession holders is surrounded in secrecy, as is the actual location of concessions. Occasionally, this information has been leaked from forestry departments or made available through unofficial channels. Sometimes, the only information available is a list of the local concession holders rather than the identity of the ultimate owners and/or the sub-contractors who usually reap the rewards. In the case of Sarawak, for instance, the publication of a concession map became a political tool in 1987, when the present Chief Minister succeeded his uncle after an election campaign full of accusations of cronyism and corruption on both sides (see below).
Transnational logging companies, including Malaysian-based ones, often operate abroad through numerous private, locally-registered companies or as subcontractors to national concession holders. In this way, not only are each company's financial details difficult to track, but the actual links between operations (both nationally and internationally) are also obscured. On paper, for example, the licence holders may appear to be separate entities. These practices have enabled companies to dominate the forestry sector of a country, for instance Papua New Guinea, or to circumvent maximum concession holding limits, such as those in Cameroon.39 In countries which are now opening up their forests to timber exploitation (Guyana and Suriname, for instance), huge concession areas are sought by Malaysian and other transnationals. They put pressure on governments to issue logging licences over these areas despite the inadequacies of forestry departments to monitor operations effectively or to enforce legislation, despite indigenous and other local peoples' titles or claims to land and despite the lack of enough state forest to cover their requests. In Cambodia, the anarchic issuing of local permits to log has become an easy way to obtain licences to cut trees, avoiding the more lengthy process associated with forest concessions allocated at the national level.40
Guyana
A 1995 World Bank study confirmed that loggers were getting their timber in Guyana very cheaply and revealed that royalties, taxes and forest fees were some of the lowest in the tropics, less than one-tenth of those paid in most African and Asian countries. With Guyana liquidating its forest assets for little national gain, the World Bank report warned that such forest mining entails a boom-and-bust pattern of development that can be highly disruptive to employment levels, trade balances and other factors of macro-economic stability...... Read more
Destructive Asian logging multinationals
Destructive Asian logging multinationals move west into Guyana MV Greenpeace meets with Guyanese indigenous peoples
Guyana, South America, October 1, 1994 (GP)
As foreign logging companies set their sights on Guyanese forests in South America, Greenpeace today joined representatives of the country's indigenous peoples to support their fight for the forests.
The logging companies, notably from Malaysia and South Korea, look set to repeat the damage they wrought on forests across the Pacific -- in Papua New Guinea, Soloman Islands and Vanuatu -- where those governments are proving unable to control the foreign multinational companies to carry out unsustainable logging, destroy forest habitats and alienate indigenous people from their lands.
Guyana's Amerindian People's Association (APA), which consists of representatives from 46 Amerindian communities across the country, invited the vessel MV Greenpeace to Guyana. Greenpeace will join the APA when they meet with Guyana's President Thcheddi Jagan today.
In January, the APA were among many groups calling for a freeze on the handing out of logging concessions by the Guyana Forestry Commission until the commission could effectively regulate the timber industry.
In 1989, only some 2.4 million hectares of Guyana's 14 million hectares of loggable forests were being exploited. Today, contracts for more than 8 million hectares have been signed and a further 4 million hectares are in the pipeline. The Guyana Forestry Commission has only five trained foresters and a small budget.
"It is blatantly obvious that the Commission is incapable of controlling this massive expansion of logging," said Greenpeace forests campaigner Bill Barclay. "They have dished out concessions to these companies virtually no regard to the environment or the Amerindian communities."
Many of the companies moving into Guyana are in conflict with indigenous people in Sarawak, Papua New Guinea, Vanuatu and the Solomon Islands and Canada.
Canadian companies seeking access to Guyanese forests also have a poor record of environmental destruction, and are in conflict with workers and indigenous communities.
"These companies are bad news," said Barclay. "They 'cut-and- run', exhausting forests and wrecking local communities -- all for obscene profits which leave the Pacific countries as fast as they're logged. They now look set to do the same here."
Guyana has given the logging companies secure and extraordinarily beneficial contracts, allowing them tax holidays, minimal royalty payments and the right to export unprocessed timber.
Says the APA's Jean La Rose: "We are concerned while all indications point to foreign companies reaping the benefits of the forest, more and more of our land is being whittled away before us and we are receiving little in the long term."
For more information, contact:
Bill Barclay of Greenpeace International on the mv Greenpeace in Guyana on ++874 1300310, or Jean La Rose of the APA tel/fax ++592 261789
Editor's notes
The MV Greenpeace's visit to Guyana is part of a tour highlighting forest destruction in the Americas. After Guyana, the vessel will sail to Brazil for a tour along the Amazon.
http://www.infodrom.north.de/~joey/Greenpeace/guyana.html
Guyana, South America, October 1, 1994 (GP)
As foreign logging companies set their sights on Guyanese forests in South America, Greenpeace today joined representatives of the country's indigenous peoples to support their fight for the forests.
The logging companies, notably from Malaysia and South Korea, look set to repeat the damage they wrought on forests across the Pacific -- in Papua New Guinea, Soloman Islands and Vanuatu -- where those governments are proving unable to control the foreign multinational companies to carry out unsustainable logging, destroy forest habitats and alienate indigenous people from their lands.
Guyana's Amerindian People's Association (APA), which consists of representatives from 46 Amerindian communities across the country, invited the vessel MV Greenpeace to Guyana. Greenpeace will join the APA when they meet with Guyana's President Thcheddi Jagan today.
In January, the APA were among many groups calling for a freeze on the handing out of logging concessions by the Guyana Forestry Commission until the commission could effectively regulate the timber industry.
In 1989, only some 2.4 million hectares of Guyana's 14 million hectares of loggable forests were being exploited. Today, contracts for more than 8 million hectares have been signed and a further 4 million hectares are in the pipeline. The Guyana Forestry Commission has only five trained foresters and a small budget.
"It is blatantly obvious that the Commission is incapable of controlling this massive expansion of logging," said Greenpeace forests campaigner Bill Barclay. "They have dished out concessions to these companies virtually no regard to the environment or the Amerindian communities."
Many of the companies moving into Guyana are in conflict with indigenous people in Sarawak, Papua New Guinea, Vanuatu and the Solomon Islands and Canada.
Canadian companies seeking access to Guyanese forests also have a poor record of environmental destruction, and are in conflict with workers and indigenous communities.
"These companies are bad news," said Barclay. "They 'cut-and- run', exhausting forests and wrecking local communities -- all for obscene profits which leave the Pacific countries as fast as they're logged. They now look set to do the same here."
Guyana has given the logging companies secure and extraordinarily beneficial contracts, allowing them tax holidays, minimal royalty payments and the right to export unprocessed timber.
Says the APA's Jean La Rose: "We are concerned while all indications point to foreign companies reaping the benefits of the forest, more and more of our land is being whittled away before us and we are receiving little in the long term."
For more information, contact:
Bill Barclay of Greenpeace International on the mv Greenpeace in Guyana on ++874 1300310, or Jean La Rose of the APA tel/fax ++592 261789
Editor's notes
The MV Greenpeace's visit to Guyana is part of a tour highlighting forest destruction in the Americas. After Guyana, the vessel will sail to Brazil for a tour along the Amazon.
http://www.infodrom.north.de/~joey/Greenpeace/guyana.html
Ship being loaded with our precious logs in Guyana
Our valuable logs being loaded on a Ship in Guyana destined for Asia.
Wednesday, December 13, 2006
Mining
Big outlay for mining roads next year
-miners meeting hears
Saturday, November 11th 2006
Stabroek News
The Guyana Gold and Dia-mond Miners Association (GG&DMA) is looking at the maintenance of roads, training of designated miners to diagnose malaria, and the establishment of a radio base for co-ordination of communication among miners.
These developments were aired at the GG&DMA's last bi-monthly meeting held at the association's headquarters on Quamina Street.
GG&DMA secretary Edward Shields told miners that the Guyana Geology and Mines Commission (GGMC) had approved a budget of $800M for road improvement in 2007. It is a significant move from zero to $140M plus in 2006 to $800M next year, the secretary said.
The funds, said Shields, come from miners' rental fees of which GGMC will take 25% and that amounts to some $300M while the remainder of the funds are taken from royalty payments.
The second issue surrounding roads pertains to those maintained and built up by timber companies. Enquiries, Shields told the miners, revealed there was no such thing as a private road. No one can stop another from using a road. However there is a road protocol, which says that if one is maintaining a road that person would have some authority but blocking of roads with trucks "must be made a thing of the past."
He said it was really timber industry vehicles that contributed to the destruction of roads. He asked, "How could mining transportation compare to big trucks with skidders...?"
Exploitation by
foreigners
Shields then turned his attention to what he referred to as the exploitation of the mining industry by foreigners and noted that some 100 Chinese were found in the interior unknown to the government. He said this in the context of locals having a hard time acquiring permits. Shields said too that the Amerindians do not talk about how they are being exploited in the timber industry.
The processing of work permits, said Shields, has been known to take some 7,8, 9 or 10 months and still sometimes miners were not able to get their permits. However, he said, following a meeting with the Minister of Home Affairs, Clement Rohee and the Permanent Secretary of the Ministry, Angela Johnson a new policy has been implemented. According to this new arrangement, he said, "from the day one applies for a permit to the day it is actually received should not be longer than two weeks."
With regard to penalties for persons found without permits, he said those who are already in the industry would not be asked to leave and should seek to find out why no permit had been issued. However for those miners who have no evidence of a permit to show, the law would apply. This new policy, he informed his colleagues, was implemented only a week ago.
Security
Turing to the burning issue of security, Shields said two documents on the issue have been prepared dealing firstly with miners' personal security and, secondly, better policing. For instance it was noted that police stations established years ago in areas that are now less busy than they once were should be shifted to areas like Oranapai - the scene of several big robberies recently.
He mentioned also a meeting scheduled with Acting Commissioner of Police Henry Greene on November 19. He said it was hoped that miners could work together with the police for better security.
In relation to health, the secretary stated that a Memorandum of Under-standing (MOU) was signed with the Ministry of Health and PAHO on malaria which states that miners can designate workers who will be trained to diagnose the disease using smears among other relevant techniques.
Miners will get free medicine and impregnated nets though these would be assigned to dredge owners and are not supposed to be brought into Georgetown. Miners are however asked to provide the logistics to move the items. Companies, he said, could work with the Ministry to look after their individual camps. The date for training of camp personnel however is yet to be finalized while the source of the equipment for diagnosis is yet to be cleared up.
Vice-President of the GG&DMA Norman Mclean mentioned that in addition to resuscitating monthly meetings with the Commissioner of Police and miners in the hinterland to share information on security and intelligence gathering, efforts are being made for the association's members to co-ordinate communication with the setting up of a radio base, possibly at the GG&DMA's Quamina Street office. (Christopher Yaw)
-miners meeting hears
Saturday, November 11th 2006
Stabroek News
The Guyana Gold and Dia-mond Miners Association (GG&DMA) is looking at the maintenance of roads, training of designated miners to diagnose malaria, and the establishment of a radio base for co-ordination of communication among miners.
These developments were aired at the GG&DMA's last bi-monthly meeting held at the association's headquarters on Quamina Street.
GG&DMA secretary Edward Shields told miners that the Guyana Geology and Mines Commission (GGMC) had approved a budget of $800M for road improvement in 2007. It is a significant move from zero to $140M plus in 2006 to $800M next year, the secretary said.
The funds, said Shields, come from miners' rental fees of which GGMC will take 25% and that amounts to some $300M while the remainder of the funds are taken from royalty payments.
The second issue surrounding roads pertains to those maintained and built up by timber companies. Enquiries, Shields told the miners, revealed there was no such thing as a private road. No one can stop another from using a road. However there is a road protocol, which says that if one is maintaining a road that person would have some authority but blocking of roads with trucks "must be made a thing of the past."
He said it was really timber industry vehicles that contributed to the destruction of roads. He asked, "How could mining transportation compare to big trucks with skidders...?"
Exploitation by
foreigners
Shields then turned his attention to what he referred to as the exploitation of the mining industry by foreigners and noted that some 100 Chinese were found in the interior unknown to the government. He said this in the context of locals having a hard time acquiring permits. Shields said too that the Amerindians do not talk about how they are being exploited in the timber industry.
The processing of work permits, said Shields, has been known to take some 7,8, 9 or 10 months and still sometimes miners were not able to get their permits. However, he said, following a meeting with the Minister of Home Affairs, Clement Rohee and the Permanent Secretary of the Ministry, Angela Johnson a new policy has been implemented. According to this new arrangement, he said, "from the day one applies for a permit to the day it is actually received should not be longer than two weeks."
With regard to penalties for persons found without permits, he said those who are already in the industry would not be asked to leave and should seek to find out why no permit had been issued. However for those miners who have no evidence of a permit to show, the law would apply. This new policy, he informed his colleagues, was implemented only a week ago.
Security
Turing to the burning issue of security, Shields said two documents on the issue have been prepared dealing firstly with miners' personal security and, secondly, better policing. For instance it was noted that police stations established years ago in areas that are now less busy than they once were should be shifted to areas like Oranapai - the scene of several big robberies recently.
He mentioned also a meeting scheduled with Acting Commissioner of Police Henry Greene on November 19. He said it was hoped that miners could work together with the police for better security.
In relation to health, the secretary stated that a Memorandum of Under-standing (MOU) was signed with the Ministry of Health and PAHO on malaria which states that miners can designate workers who will be trained to diagnose the disease using smears among other relevant techniques.
Miners will get free medicine and impregnated nets though these would be assigned to dredge owners and are not supposed to be brought into Georgetown. Miners are however asked to provide the logistics to move the items. Companies, he said, could work with the Ministry to look after their individual camps. The date for training of camp personnel however is yet to be finalized while the source of the equipment for diagnosis is yet to be cleared up.
Vice-President of the GG&DMA Norman Mclean mentioned that in addition to resuscitating monthly meetings with the Commissioner of Police and miners in the hinterland to share information on security and intelligence gathering, efforts are being made for the association's members to co-ordinate communication with the setting up of a radio base, possibly at the GG&DMA's Quamina Street office. (Christopher Yaw)
Are Logs being exported below market value?
Are logs being exported below their market value?
Tuesday, November 14th 2006
Stabroek News
Dear Editor,
I have been following with interest the reports in your newspaper on the low regard of Asian forestry companies for Guyanese labour, indigenous peoples and forests.
Your readers may be interested in clicking on the url below to read an external evaluation of Guyana's timber trade. For those who do not have access to the worldwide web, I enclose part of the text.
http://www.globaltimber.org.uk/guyana.htm
"Guyana, one of the most corrupt countries in Latin America, is noted especially for links to the illegal drug trade. Guyana has a particular reputation for money laundering …
"The unit prices cited in the ITTO's fortnightly 'Tropical Timber Market Report' indicate that the difference between the unit prices for Guyana's log exports are remarkably small relative to unit prices for equivalent products exported from other producer countries. The difference might well be attributable to transfer pricing fraud. Given that, during 2005, logs account for almost all India's (and half of China's) timber imports from Guyana, and that India and China (primarily India) account for more than half of Guyana's log exports, India and China may well be complicit in such fraud. The loss of export revenue attributable to transfer pricing fraud might amount to US$10 million during 2005. That amount represents some 2% of Guyana's export revenue (of US$500 million, roughly half of which was then attributable to gold, diamonds and sugar, and a further 10% to timber).
"One might expect that such a large percentage in lost revenue would prompt donors to at least claim to be applying effective pressure on the government of Guyana to substantially reduce those losses."
Yours faithfully,
(name and address supplied)
Tuesday, November 14th 2006
Stabroek News
Dear Editor,
I have been following with interest the reports in your newspaper on the low regard of Asian forestry companies for Guyanese labour, indigenous peoples and forests.
Your readers may be interested in clicking on the url below to read an external evaluation of Guyana's timber trade. For those who do not have access to the worldwide web, I enclose part of the text.
http://www.globaltimber.org.uk/guyana.htm
"Guyana, one of the most corrupt countries in Latin America, is noted especially for links to the illegal drug trade. Guyana has a particular reputation for money laundering …
"The unit prices cited in the ITTO's fortnightly 'Tropical Timber Market Report' indicate that the difference between the unit prices for Guyana's log exports are remarkably small relative to unit prices for equivalent products exported from other producer countries. The difference might well be attributable to transfer pricing fraud. Given that, during 2005, logs account for almost all India's (and half of China's) timber imports from Guyana, and that India and China (primarily India) account for more than half of Guyana's log exports, India and China may well be complicit in such fraud. The loss of export revenue attributable to transfer pricing fraud might amount to US$10 million during 2005. That amount represents some 2% of Guyana's export revenue (of US$500 million, roughly half of which was then attributable to gold, diamonds and sugar, and a further 10% to timber).
"One might expect that such a large percentage in lost revenue would prompt donors to at least claim to be applying effective pressure on the government of Guyana to substantially reduce those losses."
Yours faithfully,
(name and address supplied)
The regulation of our forests may not be as effective as the Commissioner thinks
Logs exports benefit the mostly Asian exporters and cripple the livelihood of those in the domestic wood processing sector
Thursday, November 23rd 2006
Stabroek News
Dear Editor,
I wish to respond to the position of the Forest Producers Association (FPA), as reported in your newspaper of 14 November 2006 that "stopping log exports would leave it with nothing to offer, not even logs for the local industries".
My understanding of the Govern-ment's stated policies on the award of large-scale concessions is that these are premised on downstream processing in-country. There is no mention of log exports in the award of Timber Sales Agreements (TSAs).
My question to the state and its regulatory agency, the Guyana Forestry Commission (GFC) is: why is the FPA being allowed to misrepresent the terms of TSA awards?
Currently an average of 15,000 cubic metres of prime hardwood logs are exported per month. At the same time, Guyanese lumber-dependent businesses are all down-sizing or have closed. In plain English: log exports benefit the (mostly Asian) exporter only while crippling livelihoods of Guyanese businesses and workers in the domestic wood processing sector.
Given the poor productivity of our forest resource, the stated forest policy aims to maximize the return on investment by maximizing the achievable yield from the forest in terms of log volume per hectare and lumber volume per log.
We hear ad nauseam about the contribution to the state by log exporters particularly the people they employ and the taxes they pay.
Let them 'put dey money where dey mouth deh' and provide the following information relating to each large-scale concession for the benefit of the public and the new Minister of Agriculture;
For the period 2001 - 2005:
Total size of logging concession held in hectares [acres]
Total logging production by the concessionaire
Total logging production when sub-contracted to the Asians
Total employees and PAYE / NIS paid
Taxes paid - Income and Corporation
Revenue foregone by the State - remission of customs duties and other taxes on imports
Total exports of logs by volume and value to be broken down by species
Total exports of other wood products by volume and value
These figures can then be tabulated, evaluated and compared with the figures from small Guyanese concessionaires who are presently working mainly in logged-over State Forest Permissions, none of which is supposed to exceed 20,000 acres.
The Guyanese public including our policy makers will then be in a better position to weigh the relative contributions to our economy of log exports versus domestic processing of lumber.
Yours faithfully,
Howard Bulkan
Thursday, November 23rd 2006
Stabroek News
Dear Editor,
I wish to respond to the position of the Forest Producers Association (FPA), as reported in your newspaper of 14 November 2006 that "stopping log exports would leave it with nothing to offer, not even logs for the local industries".
My understanding of the Govern-ment's stated policies on the award of large-scale concessions is that these are premised on downstream processing in-country. There is no mention of log exports in the award of Timber Sales Agreements (TSAs).
My question to the state and its regulatory agency, the Guyana Forestry Commission (GFC) is: why is the FPA being allowed to misrepresent the terms of TSA awards?
Currently an average of 15,000 cubic metres of prime hardwood logs are exported per month. At the same time, Guyanese lumber-dependent businesses are all down-sizing or have closed. In plain English: log exports benefit the (mostly Asian) exporter only while crippling livelihoods of Guyanese businesses and workers in the domestic wood processing sector.
Given the poor productivity of our forest resource, the stated forest policy aims to maximize the return on investment by maximizing the achievable yield from the forest in terms of log volume per hectare and lumber volume per log.
We hear ad nauseam about the contribution to the state by log exporters particularly the people they employ and the taxes they pay.
Let them 'put dey money where dey mouth deh' and provide the following information relating to each large-scale concession for the benefit of the public and the new Minister of Agriculture;
For the period 2001 - 2005:
Total size of logging concession held in hectares [acres]
Total logging production by the concessionaire
Total logging production when sub-contracted to the Asians
Total employees and PAYE / NIS paid
Taxes paid - Income and Corporation
Revenue foregone by the State - remission of customs duties and other taxes on imports
Total exports of logs by volume and value to be broken down by species
Total exports of other wood products by volume and value
These figures can then be tabulated, evaluated and compared with the figures from small Guyanese concessionaires who are presently working mainly in logged-over State Forest Permissions, none of which is supposed to exceed 20,000 acres.
The Guyanese public including our policy makers will then be in a better position to weigh the relative contributions to our economy of log exports versus domestic processing of lumber.
Yours faithfully,
Howard Bulkan
Regulation of our forests
The regulation of our forests may not be as effective as the Commissioner thinks
Thursday, November 23rd 2006
Stabroek News
Dear Editor,
Thank you for carrying during the last fortnight illuminating letters and reports relating to forestry in Guyana.
I had not realized that 5 Asian companies controlled more than 50 percent of all State Production Forests, nor that only 18 companies control 80 percent of Guyana's production forests.
I had not realized that the export of prime hardwood logs had skyrocketed during 2005-6, and that the ensuing local shortage of purpleheart has led to the closing or down-sizing of many woodworking shops in Guyana, and endemic crisis for the local lumber retail and wood processing sectors; and that the prime furniture timber "locust" is being exported as unprocessed logs to Asia (thus no added value accruing in Guyana) while local industries have reduced their staff complement because of shortage of this timber in the domestic market.
I therefore read with interest the Commissioner of Forests' letter in your 17 November 2006 edition. I noted the Commissioner's statement that "the GFC is recognized internationally as one of the most progressive forestry regulatory agencies in the world. This is the view of many international organizations and consultants, including the ITTO…."
The Commissioner and your readers may wish to consider the assessment of Guyana in a recent ITTO publication titled Status of Tropical Forest Management 2005, which was published just a few months ago.
ITTO suggests that 'mutually supportive approaches' between the Government of Guyana and industry 'had not yet developed at the level required' (p.239). I've learned from your columns that companies most involved in log exports control 80 percent of State Production Forests. Their public relations statements in the local press try to justify business-as-usual - continuing exports of prime species as unprocessed logs at remarkably low (FOB) prices compared with international (CIF) market prices. This is why Guyana will remain a supplier of primary commodities principally to India and China. Until, of course, the supply of choice hardwood logs dries up.
ITTO's Status of Tropical Management 2005 also states that few if any forestry companies in Guyana conform to the code of practice:
"the code of practice applies to TSAs and WCLs but is presently only mandatory for new concessions….The new forest act, once adopted into law, will make the code mandatory for all forest concession areas. At present, few if any companies fully conform to the code…" (p.241). So it appears that not only Ms. Bulkan, but ITTO also, says that paper guidelines are disregarded in the field.
ITTO 2005 contains other dismal information on the forestry sector in Guyana. Here is a sample:
"It would appear that there is an entrenched culture of forest extraction and utilization within the industry rather than a commitment to enhancing the productivity or value of the forest that is left after harvesting" (p.241)
"Amerindian communities are afflicted by severe social and health problems, particularly in communities adjacent to gold-mining and timber concessions" (p.244)
"Guyana…as introduced and implemented a well-designed forest management and control system in its timber production forests. However, there is a gap between the well-functioning core staff of the GFC and the industry that has to implement forest management in the field. Political and social uncertainty, lack of secure tenure, lack of understanding and awareness, lack of skilled labour, outdated management practices and, recently, a difficult economic environment have imposed major challenges for the achievement of SFM. Progress is being made in improving forest harvesting practices."
"A detailed management provision and control system has been elaborated but is inadequately implemented."
"The areas of totally protected forests is low and there is not enough control and management in protected areas."
"The national forest policy is widely accepted as a sound guide for the forest sector but is yet to be fully implemented."
"A new forest law, which would establish a forest concession system in place of the current TSAs and WCLs, has been drafted (in 1996, a decade ago!) but is yet to be enacted."
With all due respect, ITTO's published comments on the forestry sector in Guyana are at variance with the Commissioner of Forests' representation of that institution's views.
Yours faithfully,
Mahadeo Kowlessar
Thursday, November 23rd 2006
Stabroek News
Dear Editor,
Thank you for carrying during the last fortnight illuminating letters and reports relating to forestry in Guyana.
I had not realized that 5 Asian companies controlled more than 50 percent of all State Production Forests, nor that only 18 companies control 80 percent of Guyana's production forests.
I had not realized that the export of prime hardwood logs had skyrocketed during 2005-6, and that the ensuing local shortage of purpleheart has led to the closing or down-sizing of many woodworking shops in Guyana, and endemic crisis for the local lumber retail and wood processing sectors; and that the prime furniture timber "locust" is being exported as unprocessed logs to Asia (thus no added value accruing in Guyana) while local industries have reduced their staff complement because of shortage of this timber in the domestic market.
I therefore read with interest the Commissioner of Forests' letter in your 17 November 2006 edition. I noted the Commissioner's statement that "the GFC is recognized internationally as one of the most progressive forestry regulatory agencies in the world. This is the view of many international organizations and consultants, including the ITTO…."
The Commissioner and your readers may wish to consider the assessment of Guyana in a recent ITTO publication titled Status of Tropical Forest Management 2005, which was published just a few months ago.
ITTO suggests that 'mutually supportive approaches' between the Government of Guyana and industry 'had not yet developed at the level required' (p.239). I've learned from your columns that companies most involved in log exports control 80 percent of State Production Forests. Their public relations statements in the local press try to justify business-as-usual - continuing exports of prime species as unprocessed logs at remarkably low (FOB) prices compared with international (CIF) market prices. This is why Guyana will remain a supplier of primary commodities principally to India and China. Until, of course, the supply of choice hardwood logs dries up.
ITTO's Status of Tropical Management 2005 also states that few if any forestry companies in Guyana conform to the code of practice:
"the code of practice applies to TSAs and WCLs but is presently only mandatory for new concessions….The new forest act, once adopted into law, will make the code mandatory for all forest concession areas. At present, few if any companies fully conform to the code…" (p.241). So it appears that not only Ms. Bulkan, but ITTO also, says that paper guidelines are disregarded in the field.
ITTO 2005 contains other dismal information on the forestry sector in Guyana. Here is a sample:
"It would appear that there is an entrenched culture of forest extraction and utilization within the industry rather than a commitment to enhancing the productivity or value of the forest that is left after harvesting" (p.241)
"Amerindian communities are afflicted by severe social and health problems, particularly in communities adjacent to gold-mining and timber concessions" (p.244)
"Guyana…as introduced and implemented a well-designed forest management and control system in its timber production forests. However, there is a gap between the well-functioning core staff of the GFC and the industry that has to implement forest management in the field. Political and social uncertainty, lack of secure tenure, lack of understanding and awareness, lack of skilled labour, outdated management practices and, recently, a difficult economic environment have imposed major challenges for the achievement of SFM. Progress is being made in improving forest harvesting practices."
"A detailed management provision and control system has been elaborated but is inadequately implemented."
"The areas of totally protected forests is low and there is not enough control and management in protected areas."
"The national forest policy is widely accepted as a sound guide for the forest sector but is yet to be fully implemented."
"A new forest law, which would establish a forest concession system in place of the current TSAs and WCLs, has been drafted (in 1996, a decade ago!) but is yet to be enacted."
With all due respect, ITTO's published comments on the forestry sector in Guyana are at variance with the Commissioner of Forests' representation of that institution's views.
Yours faithfully,
Mahadeo Kowlessar
Review of national forestry policy
Govt to review national forestry policy after export-of-logs debate
Saturday, November 18th 2006
Stabroek News
The Government says it will use the recent debate on the issues surrounding the export of logs to re-examine aspects of the national forestry policy, particularly the investment regime in the sector.
Cabinet Secretary Dr. Roger Luncheon in his post-cabinet media briefing yesterday said Cabinet noted the current focus of the media on forestry and particularly the views of special interest groups in the sector.
A number of letters appearing in this newspaper pointed out aberrations in the sector and noted that many companies were being granted licences to exploit the forests but returns to Guyana were paltry.
The letters pointed out, too, that many companies were being allowed concessions in the forests to create employment and to benefit Guyanese but not many of them were carrying out this mandate. A call was also made for the Guyana Revenue Authority and the Forestry Commission to do their jobs to ensure that these companies adhere to the laws regulating the sector.
Dr. Luncheon said Cabinet was provided with the essentials of the current policy being implemented by the regulatory body and its differential impact on the various sub-sectors in the industry.
As a result Luncheon said the forestry commission was urged to publicly and within the special interest grouping in the sector to justify its implementation of the policies and those aspects which were being questioned.
He noted, too, that the commission needs to continue its consultative role among stakeholders and advise the Minister of Agriculture accordingly.
Saturday, November 18th 2006
Stabroek News
The Government says it will use the recent debate on the issues surrounding the export of logs to re-examine aspects of the national forestry policy, particularly the investment regime in the sector.
Cabinet Secretary Dr. Roger Luncheon in his post-cabinet media briefing yesterday said Cabinet noted the current focus of the media on forestry and particularly the views of special interest groups in the sector.
A number of letters appearing in this newspaper pointed out aberrations in the sector and noted that many companies were being granted licences to exploit the forests but returns to Guyana were paltry.
The letters pointed out, too, that many companies were being allowed concessions in the forests to create employment and to benefit Guyanese but not many of them were carrying out this mandate. A call was also made for the Guyana Revenue Authority and the Forestry Commission to do their jobs to ensure that these companies adhere to the laws regulating the sector.
Dr. Luncheon said Cabinet was provided with the essentials of the current policy being implemented by the regulatory body and its differential impact on the various sub-sectors in the industry.
As a result Luncheon said the forestry commission was urged to publicly and within the special interest grouping in the sector to justify its implementation of the policies and those aspects which were being questioned.
He noted, too, that the commission needs to continue its consultative role among stakeholders and advise the Minister of Agriculture accordingly.
Country getting a pittance for Timber
Country getting a pittance from Asian forestry companies -Bulkan
-monitoring agency `weak'
Monday, November 13th 2006
Stabroek News
Asian transnational companies are taking advantage of loopholes in the current forestry laws without much profit accruing to the country and the forestry commission is unable to properly monitor the sector.
This is the view of researcher Janette Bulkan, who gave a presentation entitled 'Plunder without Profit' at the Cara Lodge on Thursday. The lecture, hosted by the Guyana Citizens' Initiative, looked at the state of Guyana's forestry sector and the extent to which Asian multinational corporations harvest and export logs, sometimes in breach of local laws and international best practices.
In 'Plunder without Profit', Bulkan stated that none of the seven key recommendations of Nigel Sizer's paper 'Profit without Plunder' done ten years ago have been taken up.
Using social, economic and environmental indicators, Bulkan has determined that the forestry sector has retrogressed. She said that the forestry sector in 2006 is an enclave sector, supplying unprocessed logs to Asia.
According to Bulkan, Guyana's trees should be left standing since the money the country earns amounts to US$4.50 - "less than a towel ($1,000)," she said. She added that in Guyana there is a lack of understanding and appreciation for best practices in the industry.
Giving her recommendations at the end of the talk, Bulkan said that there is need for oversight from the Select Committees of the National Assembly and also from Civil Society, the Bank of Guyana, the Guyana Revenue Autho-rity (GRA) and Go-Invest.
She said too that the Central Bank and Go-Invest need to work with the Guyana Forestry Commission (GFC) on rationalizing resource access and export taxes, plus incentives for the local adding of value.
Bulkan recommended that the government swiftly pass the Forestry Act which has been in draft form since 1996. She said that if the Government could pass the Cricket World Cup Sunset Legislation in a matter of days then she wondered why it was the draft act couldn't be passed after ten years. She suggested that it might be in some sectors' best interest that the draft act not be passed into law. Bulkan said that were the updated legislation in place, Barama Company Limited would not have been able to harvest outside of its 1.6 million hectares of concession as it currently does.
She said that there is need for an independent Board for the GFC so that the body's mission statement could be applied.
According to Bulkan, there was a weak regulatory agency in the GFC, noting that there was a shortage of trained and motivated staff. She said too that there was a shortage of equipment, few bar code readers and limited routine monitoring.
Bulkan is of the view that reforms spoken of a decade ago have been abandoned or not implemented and that penalties are not enforced on major companies like Barama. She said too that transnational corporations and local collaborators behave like pirates and abuse FDI arrangements.
According to Bulkan, for Guyana to return to a reform agenda for the sector, it requires Civil Society to construct more coherent and persuasive economic arguments, work with the National Assembly to increase transparency and accountability of the Government and coordinate with anti-corruption agencies to bring equity to business incentives.
Consolidation
She said that national enterprises and multinational corporations must support best practices, engage in value-adding processes, seek independent step-wise forest certification and routinely apply legal verification.
Bulkan's research has led her to conclude that there is consolidation of the richer and more pristine State Forests (and Amerindian lands) into a few hands but without increasing national benefit. She found that 38 large-scale concessions by 2005 controlled 80 percent of State Production Forests, which is 35% of all State Forests.
She said that of the 38 large-scale concessions held by 14 companies, five of them are known Asian companies. She said too that the Asian companies directly or indirectly control an additional undisclosed amount of smaller concessions and titled Amerindian forests. This consolidation through sub-letting is in contravention of the Forests Act 1953 and specific terms of concessions, she argued.
Bulkan's research found that the small scale logging sector provides 75% of employment while Barama with a concession covering 26 percent of all production forests in 2005 employed 300 Guyanese workers or 2 percent of all forestry sector employment.
Bulkan added that although Barama is exempt from all duties and taxes; it does not pay 2% export tax. According to Bulkan, Barama owed US$70,000 in 2% export tax. She said that when the company was asked if it had paid up, the answer was that they were in discussions with the Office of the President. She said that in the past Barama published disaggregated information where it was possible to discern what should have been paid on exports. She said that the company has ceased this and only makes available aggregated information.
She noted that Chinese company Jaling was given permission to cut bulletwood, a protected species. She contended that the majority of logs on the log market at Port Kaituma were of bulletwood. She said that she was on the ground in Port Kaituma and spoke to workers of this company who all complained about the conditions under which they work. Jaling has come under fire for not starting up its sawmill as promised while all the time exporting logs. It has since said that it was test marketing these logs though no figures have been given on how many logs per species were exported.
Bulkan said that to circumvent a partial ban on the export of locust and crabwood logs, some log exporters list their logs as mixed hardwood. She said that 19,000 cubic metres of locust logs felled in 2005 were unaccounted for and have been exported in this manner. She said that as a result, locust and purpleheart are scarce locally.
She alleged that US$3M per month from 15,000 cubic metres of logs exported is lost through transfer pricing monthly.
Some months ago, Barama's Managing Director Girwar Lalaram said that even though it has not turned a profit in its 15 years of operation it still contributes to Guyana's economy and aims to do more of this.
Lalaram had said that the company will further contribute to the economy through the sale of its certified forest products. Lalaram said that the third party arrangement that Barama has with small concessionaires is of mutual benefit.
Questioned on the preponderance of log exports as against downstream activities, Lalaram said that the company concentrated first on lesser known species and it was only because they found new markets. He said that the development of Buck Hall is expected to utilize many of the logs harvested in the new certified compartments four and five of the company's giant concession.
Barama was certified by the Forest Stewardship Council after a long process of auditing administered by SGS-Qualifor, the agency FSC appointed to carry out the certification. Officials from SGS-Qualifor are due in the country soon to again engage with Barama. Bulkan and other concerned citizens under the aegis of the Guyana Citizens' Initiative will engage them on Barama's activities. (Johann Earle)
-monitoring agency `weak'
Monday, November 13th 2006
Stabroek News
Asian transnational companies are taking advantage of loopholes in the current forestry laws without much profit accruing to the country and the forestry commission is unable to properly monitor the sector.
This is the view of researcher Janette Bulkan, who gave a presentation entitled 'Plunder without Profit' at the Cara Lodge on Thursday. The lecture, hosted by the Guyana Citizens' Initiative, looked at the state of Guyana's forestry sector and the extent to which Asian multinational corporations harvest and export logs, sometimes in breach of local laws and international best practices.
In 'Plunder without Profit', Bulkan stated that none of the seven key recommendations of Nigel Sizer's paper 'Profit without Plunder' done ten years ago have been taken up.
Using social, economic and environmental indicators, Bulkan has determined that the forestry sector has retrogressed. She said that the forestry sector in 2006 is an enclave sector, supplying unprocessed logs to Asia.
According to Bulkan, Guyana's trees should be left standing since the money the country earns amounts to US$4.50 - "less than a towel ($1,000)," she said. She added that in Guyana there is a lack of understanding and appreciation for best practices in the industry.
Giving her recommendations at the end of the talk, Bulkan said that there is need for oversight from the Select Committees of the National Assembly and also from Civil Society, the Bank of Guyana, the Guyana Revenue Autho-rity (GRA) and Go-Invest.
She said too that the Central Bank and Go-Invest need to work with the Guyana Forestry Commission (GFC) on rationalizing resource access and export taxes, plus incentives for the local adding of value.
Bulkan recommended that the government swiftly pass the Forestry Act which has been in draft form since 1996. She said that if the Government could pass the Cricket World Cup Sunset Legislation in a matter of days then she wondered why it was the draft act couldn't be passed after ten years. She suggested that it might be in some sectors' best interest that the draft act not be passed into law. Bulkan said that were the updated legislation in place, Barama Company Limited would not have been able to harvest outside of its 1.6 million hectares of concession as it currently does.
She said that there is need for an independent Board for the GFC so that the body's mission statement could be applied.
According to Bulkan, there was a weak regulatory agency in the GFC, noting that there was a shortage of trained and motivated staff. She said too that there was a shortage of equipment, few bar code readers and limited routine monitoring.
Bulkan is of the view that reforms spoken of a decade ago have been abandoned or not implemented and that penalties are not enforced on major companies like Barama. She said too that transnational corporations and local collaborators behave like pirates and abuse FDI arrangements.
According to Bulkan, for Guyana to return to a reform agenda for the sector, it requires Civil Society to construct more coherent and persuasive economic arguments, work with the National Assembly to increase transparency and accountability of the Government and coordinate with anti-corruption agencies to bring equity to business incentives.
Consolidation
She said that national enterprises and multinational corporations must support best practices, engage in value-adding processes, seek independent step-wise forest certification and routinely apply legal verification.
Bulkan's research has led her to conclude that there is consolidation of the richer and more pristine State Forests (and Amerindian lands) into a few hands but without increasing national benefit. She found that 38 large-scale concessions by 2005 controlled 80 percent of State Production Forests, which is 35% of all State Forests.
She said that of the 38 large-scale concessions held by 14 companies, five of them are known Asian companies. She said too that the Asian companies directly or indirectly control an additional undisclosed amount of smaller concessions and titled Amerindian forests. This consolidation through sub-letting is in contravention of the Forests Act 1953 and specific terms of concessions, she argued.
Bulkan's research found that the small scale logging sector provides 75% of employment while Barama with a concession covering 26 percent of all production forests in 2005 employed 300 Guyanese workers or 2 percent of all forestry sector employment.
Bulkan added that although Barama is exempt from all duties and taxes; it does not pay 2% export tax. According to Bulkan, Barama owed US$70,000 in 2% export tax. She said that when the company was asked if it had paid up, the answer was that they were in discussions with the Office of the President. She said that in the past Barama published disaggregated information where it was possible to discern what should have been paid on exports. She said that the company has ceased this and only makes available aggregated information.
She noted that Chinese company Jaling was given permission to cut bulletwood, a protected species. She contended that the majority of logs on the log market at Port Kaituma were of bulletwood. She said that she was on the ground in Port Kaituma and spoke to workers of this company who all complained about the conditions under which they work. Jaling has come under fire for not starting up its sawmill as promised while all the time exporting logs. It has since said that it was test marketing these logs though no figures have been given on how many logs per species were exported.
Bulkan said that to circumvent a partial ban on the export of locust and crabwood logs, some log exporters list their logs as mixed hardwood. She said that 19,000 cubic metres of locust logs felled in 2005 were unaccounted for and have been exported in this manner. She said that as a result, locust and purpleheart are scarce locally.
She alleged that US$3M per month from 15,000 cubic metres of logs exported is lost through transfer pricing monthly.
Some months ago, Barama's Managing Director Girwar Lalaram said that even though it has not turned a profit in its 15 years of operation it still contributes to Guyana's economy and aims to do more of this.
Lalaram had said that the company will further contribute to the economy through the sale of its certified forest products. Lalaram said that the third party arrangement that Barama has with small concessionaires is of mutual benefit.
Questioned on the preponderance of log exports as against downstream activities, Lalaram said that the company concentrated first on lesser known species and it was only because they found new markets. He said that the development of Buck Hall is expected to utilize many of the logs harvested in the new certified compartments four and five of the company's giant concession.
Barama was certified by the Forest Stewardship Council after a long process of auditing administered by SGS-Qualifor, the agency FSC appointed to carry out the certification. Officials from SGS-Qualifor are due in the country soon to again engage with Barama. Bulkan and other concerned citizens under the aegis of the Guyana Citizens' Initiative will engage them on Barama's activities. (Johann Earle)
Many of the timber deals made with foreign investors were not in the interest of Guyana
Saturday, November 25th 2006
Stabroek News
Dear Editor
We do appreciate the Commissioner of Forests, Mr. James Singh, giving us a detailed account of what the Guyana Forestry Commission (GFC) is doing in his letter captioned "The figure quoted as being earned by the country from forestry investors does not take into account the employment provided and other important spin-off activities" (06.11.17). For now, I shall let the local forestry and industry experts comment on the various points raised in the letter.
However, knowingly or unknowingly, Mr. James Singh gave the impression that poor and unfavourable contracts were only awarded prior to Oct, 1992. His statement was: "Some of the companies being referred to were given concessions prior to October 1992: Barama Company Limited, Demerara Timbers Limited, and UNAMCO. These companies have investment contracts which were favorable and not changeable."
Dr Marcus Colchester (Guyana - Fragile Frontier, Loggers, Miners and Forest People, 1997, London, New York, Jamaica) writes: "As in most tropical countries, political patronage has to a large extent determined who gains large concessions in Guyana. Most of the large concessions given out to Guyanese nationals between 1985 and1991 were to ministers, members of parliament and supporters of the PNC which ruled until 1992. Moreover, in the five years preceding 1989, seven companies absorbed 94 % of foreign assistance given to the sector, with two companies alone, Guyana Timbers and Demerara Woods getting 75%." (page 101)
"With authority to hand out concessions vested in a small, barely accountable government office directly under Presidential control, the opportunities for favouritism, and malpractice abound. In practice timber deals are rarely transparent. As the World Bank has observed and confirmed…" That was the PNC era.
This is the PPP era: Colchester continues - "During the early 1990s, obscurity (secrecy?) concerning the Forestry Commission's operations has increased. The (expatriate) Commissioner for Forests resigned and was not replaced. The Commission began to be effectively run by the Chairman of the Board, who happened to be President Jagan's brother-in-law. Beyond his brief and without even the deputy Commissioner's knowledge, he was single-handedly negotiating logging concessions with foreign companies. The World Bank concluded that the Guyanese Forestry Commission was a perfect example of the "capture theory of regulation", whereby the regulatory body is controlled by the industry it is supposed to regulate."…. ( page 102-103).
"Led by Britain's Overseas Developmental Administration (ODA) and supported by the World Bank officials, donors informally agreed to express concerns to the Government about the handout of logging concessions, while the ODA made its proposed aid project to strengthen the Forestry Commission conditional on a concession freeze."
"Upset by the bad image it was getting abroad. The Government agreed and the President's brother-in-law was removed from his position as Chairman of the Board of the Forestry Commission. Some four million hectares of Guyana's forests had been temporarily at least, saved from the chainsaws."
"A study carried out for the World Bank in late 1995 showed that loggers were getting their timber in Guyana extraordinarily cheaply; royalties, taxes, and forest fees being paid by loggers in Guyana were some of the lowest in the tropics, less than a tenth of those paid in African and Asian countries. Moreover, since 1988 fees had been falling in real terms. Royalties' rates were at 30% of their former value, while customs duties and acreage fees had fallen by more than ninety per cent in the past decade. On top of this, foreign companies enjoyed 'generous tax breaks and other incentives creating conditions of unfair competition (for local producers): 'This kind of forest mining entails a boom-and- bust pattern of development that can be highly disruptive to employment levels, trade balances, and other factors of macroeconomic stability'."(page 113-114).
The British NGO's of ODA, Greenpeace, World Rainforest Movement, and other Environmental groups have been very active in the protecting the interests of the Guyanese people. Unfortunately, the same cannot be said of the corrupt, ineffective, and incompetent PNC and PPP Govts.. Their stewardships (giveaway deals, handouts, etc) in favour of the foreign multinationals (mostly) makes one asks why these giveaways were done?
Lastly, to have the PNC and PPP representatives on the Guyana Forestry Commission is like asking the same organizations who caused the problems to oversee their 'handout -works'. Is this not analogous to the UG Council? How can we have confidence that they will now act in the interests of the people and not in their own selfish schemes?
The effect of these 'deals' will be felt for decades compliments of the PNC and PPP. The young people (including those of the GYSM and PYO) of Guyana must ask why their heritage has been squandered yet again by the inept and/or corrupt Govt./party leaders and/or officials? If the Guyanese people do not demand answers from these parties, then we would be condoning gross misconduct.
Yours faithfully,
Seelochan Beharry
Stabroek News
Dear Editor
We do appreciate the Commissioner of Forests, Mr. James Singh, giving us a detailed account of what the Guyana Forestry Commission (GFC) is doing in his letter captioned "The figure quoted as being earned by the country from forestry investors does not take into account the employment provided and other important spin-off activities" (06.11.17). For now, I shall let the local forestry and industry experts comment on the various points raised in the letter.
However, knowingly or unknowingly, Mr. James Singh gave the impression that poor and unfavourable contracts were only awarded prior to Oct, 1992. His statement was: "Some of the companies being referred to were given concessions prior to October 1992: Barama Company Limited, Demerara Timbers Limited, and UNAMCO. These companies have investment contracts which were favorable and not changeable."
Dr Marcus Colchester (Guyana - Fragile Frontier, Loggers, Miners and Forest People, 1997, London, New York, Jamaica) writes: "As in most tropical countries, political patronage has to a large extent determined who gains large concessions in Guyana. Most of the large concessions given out to Guyanese nationals between 1985 and1991 were to ministers, members of parliament and supporters of the PNC which ruled until 1992. Moreover, in the five years preceding 1989, seven companies absorbed 94 % of foreign assistance given to the sector, with two companies alone, Guyana Timbers and Demerara Woods getting 75%." (page 101)
"With authority to hand out concessions vested in a small, barely accountable government office directly under Presidential control, the opportunities for favouritism, and malpractice abound. In practice timber deals are rarely transparent. As the World Bank has observed and confirmed…" That was the PNC era.
This is the PPP era: Colchester continues - "During the early 1990s, obscurity (secrecy?) concerning the Forestry Commission's operations has increased. The (expatriate) Commissioner for Forests resigned and was not replaced. The Commission began to be effectively run by the Chairman of the Board, who happened to be President Jagan's brother-in-law. Beyond his brief and without even the deputy Commissioner's knowledge, he was single-handedly negotiating logging concessions with foreign companies. The World Bank concluded that the Guyanese Forestry Commission was a perfect example of the "capture theory of regulation", whereby the regulatory body is controlled by the industry it is supposed to regulate."…. ( page 102-103).
"Led by Britain's Overseas Developmental Administration (ODA) and supported by the World Bank officials, donors informally agreed to express concerns to the Government about the handout of logging concessions, while the ODA made its proposed aid project to strengthen the Forestry Commission conditional on a concession freeze."
"Upset by the bad image it was getting abroad. The Government agreed and the President's brother-in-law was removed from his position as Chairman of the Board of the Forestry Commission. Some four million hectares of Guyana's forests had been temporarily at least, saved from the chainsaws."
"A study carried out for the World Bank in late 1995 showed that loggers were getting their timber in Guyana extraordinarily cheaply; royalties, taxes, and forest fees being paid by loggers in Guyana were some of the lowest in the tropics, less than a tenth of those paid in African and Asian countries. Moreover, since 1988 fees had been falling in real terms. Royalties' rates were at 30% of their former value, while customs duties and acreage fees had fallen by more than ninety per cent in the past decade. On top of this, foreign companies enjoyed 'generous tax breaks and other incentives creating conditions of unfair competition (for local producers): 'This kind of forest mining entails a boom-and- bust pattern of development that can be highly disruptive to employment levels, trade balances, and other factors of macroeconomic stability'."(page 113-114).
The British NGO's of ODA, Greenpeace, World Rainforest Movement, and other Environmental groups have been very active in the protecting the interests of the Guyanese people. Unfortunately, the same cannot be said of the corrupt, ineffective, and incompetent PNC and PPP Govts.. Their stewardships (giveaway deals, handouts, etc) in favour of the foreign multinationals (mostly) makes one asks why these giveaways were done?
Lastly, to have the PNC and PPP representatives on the Guyana Forestry Commission is like asking the same organizations who caused the problems to oversee their 'handout -works'. Is this not analogous to the UG Council? How can we have confidence that they will now act in the interests of the people and not in their own selfish schemes?
The effect of these 'deals' will be felt for decades compliments of the PNC and PPP. The young people (including those of the GYSM and PYO) of Guyana must ask why their heritage has been squandered yet again by the inept and/or corrupt Govt./party leaders and/or officials? If the Guyanese people do not demand answers from these parties, then we would be condoning gross misconduct.
Yours faithfully,
Seelochan Beharry
Both the PNC & PPP are blatant culprits - Forestry Handouts
Dear Editor,
We do appreciate the Commissioner of the Guyana Forestry Commission (GFC), Mr James Singh, giving us a detailed account of what the GFC is doing, etc. (SN: 17th Nov, 2006). For now, I shall let the local forestry and industry experts comment on the various points raised in the letter.
However, knowingly or unknowingly, Mr. Singh gave the impression that poor and unfavourable contracts were only awarded prior to Oct, 1992. His statement was: “Some of the companies being referred to were given concessions prior to October 1992: Barama Company Limited, Demerara Timbers Limited, and UNAMCO. These companies have investment contracts which were favourable and not changeable.”
Dr Marcus Colchester (Guyana - Fragile Frontier, Loggers, Miners and Forest People, 1997, London, New York, Jamaica) writes: “As in most tropical countries, political patronage has to a large extent determined who gains large concessions in Guyana .
Most of the large concessions given out to Guyanese nationals between 1985 and1991 were to Ministers, Members of Parliament and supporters of the PNC, which ruled until 1992. Moreover, in the five years preceding 1989, seven companies absorbed 94 % of foreign assistance given to the sector, with two companies alone, Guyana Timbers and Demerara Woods, getting 75%.” (Page 101)
“With authority to hand out concessions vested in a small, barely accountable government office directly under Presidential control, the opportunities for favouritism, and malpractice abound. In practice, timber deals are rarely transparent. As the World Bank has observed and confirmed…” That was the PNC era.
This is the PPP era: Colchester continues - “During the early 1990s, obscurity (secrecy?) concerning the Forestry Commission's operations has increased. The (expatriate) Commissioner for Forests resigned and was not replaced.
The Commission began to be effectively run by the Chairman of the Board, who happened to be President Jagan's brother-in-law. Beyond his brief, and without even the Deputy Commissioner's knowledge, he was single-handedly negotiating logging concessions with foreign companies.
The World Bank concluded that the Guyanese Forestry Commission was a perfect example of the “capture theory of regulation”, whereby the regulatory body is controlled by the industry it is supposed to regulate.”…. (Page 102-103).
“Led by Britain 's Overseas Developmental Administration (ODA), and supported by the World Bank officials, donors informally agreed to express concerns to the Government about the handout of logging concessions, while the ODA made its proposed aid project to strengthen the Forestry Commission conditional on a concession freeze.”
“Upset by the bad image it was getting abroad, the Government agreed, and the President's brother–in-law was removed from his position as Chairman of the Board of the Forestry Commission. Some four million hectares of Guyana 's forests had been temporarily, at least, saved from the chainsaws.”
“A study carried out for the World Bank in late 1995 showed that loggers were getting their timber in Guyana extraordinarily cheaply; royalties, taxes, and forest fees being paid by loggers in Guyana were some of the lowest in the tropics, less than a tenth of those paid in African and Asian countries. Moreover, since 1988 fees had been falling in real terms. Royalty rates were at 30% of their former value, while customs duties and acreage fees had fallen by more than 90 per cent in the past decade. On top of this, foreign companies enjoyed ‘generous tax breaks and other incentives, creating conditions of unfair competition (for local producers): ‘This kind of forest mining entails a boom-and- bust pattern of development that can be highly disruptive to employment levels, trade balances, and other factors of macroeconomic stability.” (Page 113-114).
The British NGO's of ODA, Greenpeace, World Rainforest Movement, and other Environmental groups have been very active in protecting the interests of the Guyanese people. Unfortunately, the same cannot be said of the corrupt, ineffective, and incompetent PNC and PPP governments. Their stewardships (giveaway deals, handouts, etc) in favour of the foreign multinationals (mostly) makes one ask why these giveaways were done? Perhaps they can tell us who has/have profited from these deals?
The person(s) who negotiated these deals should be c,harged and tried for criminal conduct against the Guyanese people. Then maybe our lawyers can re-open and re-negotiate the sour deals - claiming that they were invalid; since bribes, or illegal gifts, or incompetence, or insanity, etc. were probably given/involved to secure the over-generous concessions.
We must have a few legal bright lights that can stand up for Guyana . We can seek the help of international groups. Would the PNC and PPP support this move for justice? Would the AFC, GAP/ROAR and UF call for this in Parliament?
Lastly, to have the PNC and PPP representatives on the Guyana Forestry Commission is like asking the same organisations who caused the problems to oversee their ‘handout -works'.
Is this not analogous to the UG Council? How can we have confidence that they will now act in the interest of the people, and not in their own selfish schemes? They have whacked us with a greenheart plank again and again and again.
The effect of these ‘deals' will be felt for decades (even by children yet unborn) -compliments of the PNC and PPP. The young people (including those of the GYSM and PYO) of Guyana must ask why their heritage has been squandered yet again by the inept and/or corrupt Govt./party leaders and/or officials.
How can young people be part of any organisation that has betrayed the Guyanese people? If the Guyanese people do not demand answers from these parties, then we would be condoning gross misconduct.
Seelochan Beharry
Kaietur News
We do appreciate the Commissioner of the Guyana Forestry Commission (GFC), Mr James Singh, giving us a detailed account of what the GFC is doing, etc. (SN: 17th Nov, 2006). For now, I shall let the local forestry and industry experts comment on the various points raised in the letter.
However, knowingly or unknowingly, Mr. Singh gave the impression that poor and unfavourable contracts were only awarded prior to Oct, 1992. His statement was: “Some of the companies being referred to were given concessions prior to October 1992: Barama Company Limited, Demerara Timbers Limited, and UNAMCO. These companies have investment contracts which were favourable and not changeable.”
Dr Marcus Colchester (Guyana - Fragile Frontier, Loggers, Miners and Forest People, 1997, London, New York, Jamaica) writes: “As in most tropical countries, political patronage has to a large extent determined who gains large concessions in Guyana .
Most of the large concessions given out to Guyanese nationals between 1985 and1991 were to Ministers, Members of Parliament and supporters of the PNC, which ruled until 1992. Moreover, in the five years preceding 1989, seven companies absorbed 94 % of foreign assistance given to the sector, with two companies alone, Guyana Timbers and Demerara Woods, getting 75%.” (Page 101)
“With authority to hand out concessions vested in a small, barely accountable government office directly under Presidential control, the opportunities for favouritism, and malpractice abound. In practice, timber deals are rarely transparent. As the World Bank has observed and confirmed…” That was the PNC era.
This is the PPP era: Colchester continues - “During the early 1990s, obscurity (secrecy?) concerning the Forestry Commission's operations has increased. The (expatriate) Commissioner for Forests resigned and was not replaced.
The Commission began to be effectively run by the Chairman of the Board, who happened to be President Jagan's brother-in-law. Beyond his brief, and without even the Deputy Commissioner's knowledge, he was single-handedly negotiating logging concessions with foreign companies.
The World Bank concluded that the Guyanese Forestry Commission was a perfect example of the “capture theory of regulation”, whereby the regulatory body is controlled by the industry it is supposed to regulate.”…. (Page 102-103).
“Led by Britain 's Overseas Developmental Administration (ODA), and supported by the World Bank officials, donors informally agreed to express concerns to the Government about the handout of logging concessions, while the ODA made its proposed aid project to strengthen the Forestry Commission conditional on a concession freeze.”
“Upset by the bad image it was getting abroad, the Government agreed, and the President's brother–in-law was removed from his position as Chairman of the Board of the Forestry Commission. Some four million hectares of Guyana 's forests had been temporarily, at least, saved from the chainsaws.”
“A study carried out for the World Bank in late 1995 showed that loggers were getting their timber in Guyana extraordinarily cheaply; royalties, taxes, and forest fees being paid by loggers in Guyana were some of the lowest in the tropics, less than a tenth of those paid in African and Asian countries. Moreover, since 1988 fees had been falling in real terms. Royalty rates were at 30% of their former value, while customs duties and acreage fees had fallen by more than 90 per cent in the past decade. On top of this, foreign companies enjoyed ‘generous tax breaks and other incentives, creating conditions of unfair competition (for local producers): ‘This kind of forest mining entails a boom-and- bust pattern of development that can be highly disruptive to employment levels, trade balances, and other factors of macroeconomic stability.” (Page 113-114).
The British NGO's of ODA, Greenpeace, World Rainforest Movement, and other Environmental groups have been very active in protecting the interests of the Guyanese people. Unfortunately, the same cannot be said of the corrupt, ineffective, and incompetent PNC and PPP governments. Their stewardships (giveaway deals, handouts, etc) in favour of the foreign multinationals (mostly) makes one ask why these giveaways were done? Perhaps they can tell us who has/have profited from these deals?
The person(s) who negotiated these deals should be c,harged and tried for criminal conduct against the Guyanese people. Then maybe our lawyers can re-open and re-negotiate the sour deals - claiming that they were invalid; since bribes, or illegal gifts, or incompetence, or insanity, etc. were probably given/involved to secure the over-generous concessions.
We must have a few legal bright lights that can stand up for Guyana . We can seek the help of international groups. Would the PNC and PPP support this move for justice? Would the AFC, GAP/ROAR and UF call for this in Parliament?
Lastly, to have the PNC and PPP representatives on the Guyana Forestry Commission is like asking the same organisations who caused the problems to oversee their ‘handout -works'.
Is this not analogous to the UG Council? How can we have confidence that they will now act in the interest of the people, and not in their own selfish schemes? They have whacked us with a greenheart plank again and again and again.
The effect of these ‘deals' will be felt for decades (even by children yet unborn) -compliments of the PNC and PPP. The young people (including those of the GYSM and PYO) of Guyana must ask why their heritage has been squandered yet again by the inept and/or corrupt Govt./party leaders and/or officials.
How can young people be part of any organisation that has betrayed the Guyanese people? If the Guyanese people do not demand answers from these parties, then we would be condoning gross misconduct.
Seelochan Beharry
Kaietur News
Managing forests on a sustainable basis
The Single Market requires states to manage forests on a sustainable basis
Friday, December 8th 2006
Stabroek News
Dear Editor,
Surely, the Guyana Forestry Commission must be aware that we are on the threshold of the Caribbean Single Market and Economy (CSME). Surely, the Head of the Commission is aware of the requirements of the CSME as far as the forestry sector is concerned.
The CSME requires that the Community, in collaboration with competent national, regional and international agencies and organizations, promote the development, management and conservation of the forest resources in the Member States on a sustainable basis.
Mr. Editor, if we carefully examine the objectives of the CSME, the key requirement of the CSME is the conservation of our forest resources as a Member State. Surely, we cannot achieve this through the wanton export of logs unless it is for further processing in a Member State of the Community. It seems as though the international agencies and organizations with which the Commission is collaborating are the importers of our logs.
The wanton export of logs runs counter to Guyana's interest from every perspective. Within the context of the CSME, the Commis-sioner/Commission should be pushing for policy development in the area of local value added which is highly possible given the proven ability of local companies to compete on the international market.
If the current trend continues, Guyana will not meet its obligations to the CSME and this will constitute a major impediment not only in terms of our national competitiveness, given the natural advantages of this resource base, but also to our credibility as a serious player within this most important economic framework.
Yours faithfully,
O. Gilkes
Friday, December 8th 2006
Stabroek News
Dear Editor,
Surely, the Guyana Forestry Commission must be aware that we are on the threshold of the Caribbean Single Market and Economy (CSME). Surely, the Head of the Commission is aware of the requirements of the CSME as far as the forestry sector is concerned.
The CSME requires that the Community, in collaboration with competent national, regional and international agencies and organizations, promote the development, management and conservation of the forest resources in the Member States on a sustainable basis.
Mr. Editor, if we carefully examine the objectives of the CSME, the key requirement of the CSME is the conservation of our forest resources as a Member State. Surely, we cannot achieve this through the wanton export of logs unless it is for further processing in a Member State of the Community. It seems as though the international agencies and organizations with which the Commission is collaborating are the importers of our logs.
The wanton export of logs runs counter to Guyana's interest from every perspective. Within the context of the CSME, the Commis-sioner/Commission should be pushing for policy development in the area of local value added which is highly possible given the proven ability of local companies to compete on the international market.
If the current trend continues, Guyana will not meet its obligations to the CSME and this will constitute a major impediment not only in terms of our national competitiveness, given the natural advantages of this resource base, but also to our credibility as a serious player within this most important economic framework.
Yours faithfully,
O. Gilkes
Monday, December 11, 2006
Guyana - Investigation into transfer pricing
The investigation into transfer pricing should include a scrutiny of shipping documents from 2006 and earlier
Monday, December 11th 2006 (Stabroek News)
Dear Editor,
I welcome the public commitment of Mr Robert Persaud, Minister of Agricul-ture and Mr James Singh, Commissioner of Forests, to investigate the practice of transfer pricing by log exporters from Guyana to China and elsewhere.
I note the Minister's words as quoted in your report (SN, December 9, 2006): "Further, the GFC will be carrying out, with immediate effect, 100% verification of all exports to ensure that species such as Locust and Crabwood are not exported."
I recommend that the Minister of Agriculture and the Commissioner of Forests read the 16-30 November issue of the freely-available fortnightly Tropical Timber Marketing report from the ITTO (www.itto.or.jp) which states:
"About 7,778 cubic metres of mixed logs from Guyana arrived at Zhangjiagang port for the first time in September this year. The shipment featured 30 species, including greenheart, courbaril and purpleheart."
'Courbaril' is the trade name for 'locust,' a species that cannot legally be exported in log form from Guyana.
The Commissioner of Forests also stated in his letter of November 17, published in your newspaper, that the GFC "does not accept the category mixed hardwood [for export of timber]… all species have to be listed individually on the commercial invoice."
May I recommend that the investigation include a scrutiny of the shipping documents of exports from Guyana in 2006 and earlier? That investigation should uncover which log exporters are listing courbaril among the 'mixed logs' exported.
If courbaril is not listed in the shipping documents submitted in Guyana, how come this species is listed in the shipping documents presented at Zhangjiagang port in China, and later reported to ITTO?
Yours faithfully,
Mahadeo Kowlessar
Monday, December 11th 2006 (Stabroek News)
Dear Editor,
I welcome the public commitment of Mr Robert Persaud, Minister of Agricul-ture and Mr James Singh, Commissioner of Forests, to investigate the practice of transfer pricing by log exporters from Guyana to China and elsewhere.
I note the Minister's words as quoted in your report (SN, December 9, 2006): "Further, the GFC will be carrying out, with immediate effect, 100% verification of all exports to ensure that species such as Locust and Crabwood are not exported."
I recommend that the Minister of Agriculture and the Commissioner of Forests read the 16-30 November issue of the freely-available fortnightly Tropical Timber Marketing report from the ITTO (www.itto.or.jp) which states:
"About 7,778 cubic metres of mixed logs from Guyana arrived at Zhangjiagang port for the first time in September this year. The shipment featured 30 species, including greenheart, courbaril and purpleheart."
'Courbaril' is the trade name for 'locust,' a species that cannot legally be exported in log form from Guyana.
The Commissioner of Forests also stated in his letter of November 17, published in your newspaper, that the GFC "does not accept the category mixed hardwood [for export of timber]… all species have to be listed individually on the commercial invoice."
May I recommend that the investigation include a scrutiny of the shipping documents of exports from Guyana in 2006 and earlier? That investigation should uncover which log exporters are listing courbaril among the 'mixed logs' exported.
If courbaril is not listed in the shipping documents submitted in Guyana, how come this species is listed in the shipping documents presented at Zhangjiagang port in China, and later reported to ITTO?
Yours faithfully,
Mahadeo Kowlessar
Guyana - Under declaration of export price of logs
The figures suggest the under-declaration of the export price of logs is of the order of US $4.8 million per month
Saturday, December 9th 2006 (Stabroek News)
Dear Editor,
Mr Noel Thomas says he is not convinced by the evidence in the International Tropical Timber Organisation (ITTO) statistics of transfer pricing in log exports from Guyana to China. Permit me to remind him of what ITTO, not Mahadeo Kowlessar, extracted from ITTO's bi-weekly Tropical Timber Market Report (www.itto.or.jp):
This extraordinary difference - US $319 per cubic metre - is what is known as "transfer pricing", the under-declaration of the export price, which is illegal under the Customs Act, Cap.82:01, Articles 158 and 159. As 15,000 cubic metres of logs are leaving Guyana per month (monthly data from the Forest Products Marketing Commission) this suggests that transfer pricing is of the order of almost US$ 4.8 million per month.
In most other countries, the export taxes levied by the exporting country will capture most of that excess US $319 for national coffers. That is as it should be as the forests are the patrimony of the nation, not of the log exporter and his/her cronies. The log exporter still makes a huge profit when (s)he exports purpleheart at US $130 per cubic metre. The GFC did a survey of cost of log production in 20 large concessions in 2005 and determined that the cost of production of a log up to the mill gate was less than US $ 55 per cubic metre.
I note that Mr Noel Thomas is speaking for a larger constituency - "we read with much amusement" and "we are certain…". I can only hope that the State agencies and officials who are charged with looking out for the national interest and the public good will investigate the issue of transfer pricing using all the instruments of due diligence at their disposal.
Yours faithfully,
Mahadeo Kowlessar
Saturday, December 9th 2006 (Stabroek News)
Dear Editor,
Mr Noel Thomas says he is not convinced by the evidence in the International Tropical Timber Organisation (ITTO) statistics of transfer pricing in log exports from Guyana to China. Permit me to remind him of what ITTO, not Mahadeo Kowlessar, extracted from ITTO's bi-weekly Tropical Timber Market Report (www.itto.or.jp):
This extraordinary difference - US $319 per cubic metre - is what is known as "transfer pricing", the under-declaration of the export price, which is illegal under the Customs Act, Cap.82:01, Articles 158 and 159. As 15,000 cubic metres of logs are leaving Guyana per month (monthly data from the Forest Products Marketing Commission) this suggests that transfer pricing is of the order of almost US$ 4.8 million per month.
In most other countries, the export taxes levied by the exporting country will capture most of that excess US $319 for national coffers. That is as it should be as the forests are the patrimony of the nation, not of the log exporter and his/her cronies. The log exporter still makes a huge profit when (s)he exports purpleheart at US $130 per cubic metre. The GFC did a survey of cost of log production in 20 large concessions in 2005 and determined that the cost of production of a log up to the mill gate was less than US $ 55 per cubic metre.
I note that Mr Noel Thomas is speaking for a larger constituency - "we read with much amusement" and "we are certain…". I can only hope that the State agencies and officials who are charged with looking out for the national interest and the public good will investigate the issue of transfer pricing using all the instruments of due diligence at their disposal.
Yours faithfully,
Mahadeo Kowlessar
Sunday, December 10, 2006
Log sellout explained
MEDIA STATEMENT BY
ROBERT M. PussAUD
MINISTER OF AGRICULTURE
WITH RESPONSIBILITY FOR FORESTRY
A number of articles have been published recently in the public media on several issues including the lack of adequate supplies of forest products for the added value manufacturers resulting from the exportation of logs, and the non-compliance of the companies - Barama Company Limited and the Jaling Forest Industries Inc. – regarding implementation of their business plans.
Log Exports
The Government of Guyana, through the GFC Board of Directors and the Hon. Prime Minister Samuel Hinds held several meetings with the Forest Products Association (FPA) and the Guyana Manufacturers Associations (GMA) over the past two years on the issue of log exports and meeting the raw material demands of the manufacturers.
I as the Minister responsible for Forestry, continued this consultation process by engaging representatives of the FPA and the GMA in separate meetings on November 17, 2006. The consensus decisions arising out of those meetings based on my proposal were:
The FPA and GMA to nominate two (2) representatives each to be part of a committee to be convened by the GFC.
The FPA and GMA would submit position papers reflecting their ideas on the issue of log exports and raw material supply. The GFC would summarize the outcome of the previous discussions and circulate these to the FPA and GMA respectively.
The Committee will then develop a position paper that would be the basis for a public consultation in January 2007.
Following the public consultation, the Government will then refine its position on the exportation of logs and other related matters.
It must also be noted that the Government had earlier taken positive action to assure a guaranteed supply of raw Material to the manufacturers by providing them with access to prime state forest lands.
The clearly stated intention in providing access to these state forests was to guarantee not only these manufacturers, but also others, access to raw material to do added value activities. This proposal was accepted by the manufacturers and several have received State Forest Permissions
Non-compliance of Jaling and Barama
With respect to the non-compliance of Jaling Forest Industries Inc. regarding the implementation of their business plans, I met with the top management of the Company on November 23, 2006. I articulated the expectations of the Government that the business plan must be complied with, and requested a detailed proposal outlining Jaling’s actions to remedy the situation. Jaling submitted a twelve (12) month plan beginning January 2007. This plan will see the completion of the sawmill, veneer and kiln drying complex by December 2007. It is also projected that there will be a total extraction of 60,000 m³ for 2007; of this 47.7% will be sold to the Karlam Sawmilling Complex in Linden, 30.0% will be converted into squares and 22.3% will be sold locally.
In terms of employment, a ratio of 80:20 (local to expatriate) is proposed for 2007. This is to be further increased to 85:15 in 2008.
A similar meeting was held with representatives of Barama Company Limited (BCL) on November 29, 2006 at which I made the following points among others:
Need for a reduced exportation of logs by BCL
BCL to submit a detailed proposal to address its non-compliance with the implementation of the Buck Hall complex.
Barama in its submission commits the company to the installation of Kiln Drying facilities and a finishing plant by March 2007. In addition, there will be installation of the veneer plant and construction of two (2) barges by September 2007.
The installation of the co-generation facilities is scheduled for completion by September 2007 and from January 2007, the sawmill at Buck Hall will produce three thousand (3000) cubic metres of sawn lumber on a monthly basis. This will see the reduction in the exportation of round logs, a condition I insisted on in the meeting with company officials.
Local employment according to the Company will be three hundred and fifty (350) by December 2007, while there will only be fifty seven (57) expatriates. Of this number, 40 will be skilled persons assigned specifically to the construction of the dry dock and barges.
The GFC will be increasing its presence at these operations to ensure strict compliance in accordance with the commitments made by the companies. Should there be any breaches, the Government will be forced to re-examine the terms of the concessions granted.
Further, the GFC will be carrying out, with immediate effect 100% verification of all exports to ensure species such as Locust and Crabwood are not exported.
I do anticipate that all stakeholders will support the initiative for broad-based consultations and discussion as we move to expand our forestry sector, particularly value-added activities.
December 8, 2006.
ROBERT M. PussAUD
MINISTER OF AGRICULTURE
WITH RESPONSIBILITY FOR FORESTRY
A number of articles have been published recently in the public media on several issues including the lack of adequate supplies of forest products for the added value manufacturers resulting from the exportation of logs, and the non-compliance of the companies - Barama Company Limited and the Jaling Forest Industries Inc. – regarding implementation of their business plans.
Log Exports
The Government of Guyana, through the GFC Board of Directors and the Hon. Prime Minister Samuel Hinds held several meetings with the Forest Products Association (FPA) and the Guyana Manufacturers Associations (GMA) over the past two years on the issue of log exports and meeting the raw material demands of the manufacturers.
I as the Minister responsible for Forestry, continued this consultation process by engaging representatives of the FPA and the GMA in separate meetings on November 17, 2006. The consensus decisions arising out of those meetings based on my proposal were:
The FPA and GMA to nominate two (2) representatives each to be part of a committee to be convened by the GFC.
The FPA and GMA would submit position papers reflecting their ideas on the issue of log exports and raw material supply. The GFC would summarize the outcome of the previous discussions and circulate these to the FPA and GMA respectively.
The Committee will then develop a position paper that would be the basis for a public consultation in January 2007.
Following the public consultation, the Government will then refine its position on the exportation of logs and other related matters.
It must also be noted that the Government had earlier taken positive action to assure a guaranteed supply of raw Material to the manufacturers by providing them with access to prime state forest lands.
The clearly stated intention in providing access to these state forests was to guarantee not only these manufacturers, but also others, access to raw material to do added value activities. This proposal was accepted by the manufacturers and several have received State Forest Permissions
Non-compliance of Jaling and Barama
With respect to the non-compliance of Jaling Forest Industries Inc. regarding the implementation of their business plans, I met with the top management of the Company on November 23, 2006. I articulated the expectations of the Government that the business plan must be complied with, and requested a detailed proposal outlining Jaling’s actions to remedy the situation. Jaling submitted a twelve (12) month plan beginning January 2007. This plan will see the completion of the sawmill, veneer and kiln drying complex by December 2007. It is also projected that there will be a total extraction of 60,000 m³ for 2007; of this 47.7% will be sold to the Karlam Sawmilling Complex in Linden, 30.0% will be converted into squares and 22.3% will be sold locally.
In terms of employment, a ratio of 80:20 (local to expatriate) is proposed for 2007. This is to be further increased to 85:15 in 2008.
A similar meeting was held with representatives of Barama Company Limited (BCL) on November 29, 2006 at which I made the following points among others:
Need for a reduced exportation of logs by BCL
BCL to submit a detailed proposal to address its non-compliance with the implementation of the Buck Hall complex.
Barama in its submission commits the company to the installation of Kiln Drying facilities and a finishing plant by March 2007. In addition, there will be installation of the veneer plant and construction of two (2) barges by September 2007.
The installation of the co-generation facilities is scheduled for completion by September 2007 and from January 2007, the sawmill at Buck Hall will produce three thousand (3000) cubic metres of sawn lumber on a monthly basis. This will see the reduction in the exportation of round logs, a condition I insisted on in the meeting with company officials.
Local employment according to the Company will be three hundred and fifty (350) by December 2007, while there will only be fifty seven (57) expatriates. Of this number, 40 will be skilled persons assigned specifically to the construction of the dry dock and barges.
The GFC will be increasing its presence at these operations to ensure strict compliance in accordance with the commitments made by the companies. Should there be any breaches, the Government will be forced to re-examine the terms of the concessions granted.
Further, the GFC will be carrying out, with immediate effect 100% verification of all exports to ensure species such as Locust and Crabwood are not exported.
I do anticipate that all stakeholders will support the initiative for broad-based consultations and discussion as we move to expand our forestry sector, particularly value-added activities.
December 8, 2006.
Saturday, December 9, 2006
Why Guyana keeps losing
Available data strongly suggest that the invoice prices for logs don't reflect market value
Thursday, November 30th 2006 (Stabroek News)
Dear Editor,
In his haste to respond to articles and correspondence in Stabroek News during the last two weeks, the Commissioner of the Guyana Forestry Commission (GFC) seems to have forgotten some aspects of national policy, legislation and the procedures of his GFC.
What the recent correspondence has shown is the increasing gap between the paper policies and procedures and their implementation. The Commissioner does not address this gap in his response letter which you published on 17 November.
Nor does he explain why the claimed inter-departmental coordination with the Guyana Revenue Authority and Go-Invest (and, one hopes, the Ministry of Tourism, Commerce and Industry) has failed to stimulate value addition to forest products leaving Guyana, in spite of extraordinarily generous terms for foreign direct investment. This "co-ordination" has instead permitted a huge increase in export of unprocessed logs to Asia, especially India and China, over the last few years. Yet, since at least 1996, there have been national policy statements which explicitly favour in-country timber processing and value-addition, in-country employment, in-country up-skilling. It is conventional for governments to back such national policy statements by taxing the export of unprocessed logs to the point at which only the very best logs will show a profit on export. That also helps to combat transfer pricing. Expressing it in somewhat simplified terms, the export tax rates are conventionally worked out backwards from the Cost, Insurance and Freight (CIF) value at the importing port minus insurance and ocean freight charges to reach the "true" Free-On-Board rate at the exporting port. The export tax then captures the excess "rent" caused by the initial underpricing of access to this national resource by the GFC. As it happens, Chinese Customs are assiduous in assessing log imports because they collect tax on the logs; see the reports by Greenpeace and the Environmental Investigation Agency on merbau timber logs exported from Indonesian Papua to China (merbau having timber properties similar to Guyanese purpleheart). So CIF rates (landed price) in Chinese ports are probably as close as you will get to "real" market prices for tropical logs.
There are no national policy statements which favour export of raw materials when they could be processed locally. There are no national policy statements in favour of exporting jobs to Asia, or skills to Asia, or leaving value addition to Asian countries.
Of course log export is more profitable than milling, as long as our government does not tax exports conventionally. This is not a plea for banning log exports, but for ensuring that Guyana obtains the best value overall from its natural resources.
So let us have a look at some data -
FOB export price declared to GFC in Georgetown for best quality purpleheart logs, as reported to the International Tropical Timber Organization US$ 130 per cubic metre CIF import price at Guangzhou City, China, as reported to the International Tropical Timber Organization (Y4600-4800) US$ 569 - 594 per cubic metre Ocean freight and insurance from Guyana to China on 20-foot containers holding 12 true cubic metres of logs not more than US$ 120 per cubic metre. Extraordinary difference between import price in China minus export price in Guyana minus freight and insurance (569-130-120) = US$ 319 per cubic metre. This extraordinary difference is what is known as "transfer pricing", the under-declaration of the export price, which is illegal under the Customs Act, Cap.82:01, Articles 158 and 159. As 15,000 cubic metres of logs are leaving Guyana per month (monthly data from the Forest Products Marketing Commission) this suggests that transfer pricing is of the order of almost US$ 4.8 million per month. This figure unfortunately tallies with the US$ 3 million per month which Ms. Bulkan estimated (Stabroek News, 13 November, 2006).
Yet the Commissioner of Forests denies that this is a problem. In his letter he said, "the GFC has no evidence to substantiate this allegation of transfer pricing . . . Invoices are provided for all exports".
Does the GFC employ any economists, or persons with MBAs? If yes, what do these public servants do during the course of a working day? Whose interests do they serve? The public interest or that of a small group of log traders?
Surely the scale of transfer pricing (almost US $4.8 million monthly) suggested by a routine check of a bi-weekly publicly available ITTO newsletter should have come to the attention of someone trained in economics and working in the public sector? Why is there not an official investigation? Surely this is a matter for a court case? When was the last time that the GFC took anyone to court, apart from small-scale lumber yards illegally situated on the ex-railway embankment?
Yours faithfully,
Mahadeo Kowlessar
Discussion
Thursday, November 30th 2006 (Stabroek News)
Dear Editor,
In his haste to respond to articles and correspondence in Stabroek News during the last two weeks, the Commissioner of the Guyana Forestry Commission (GFC) seems to have forgotten some aspects of national policy, legislation and the procedures of his GFC.
What the recent correspondence has shown is the increasing gap between the paper policies and procedures and their implementation. The Commissioner does not address this gap in his response letter which you published on 17 November.
Nor does he explain why the claimed inter-departmental coordination with the Guyana Revenue Authority and Go-Invest (and, one hopes, the Ministry of Tourism, Commerce and Industry) has failed to stimulate value addition to forest products leaving Guyana, in spite of extraordinarily generous terms for foreign direct investment. This "co-ordination" has instead permitted a huge increase in export of unprocessed logs to Asia, especially India and China, over the last few years. Yet, since at least 1996, there have been national policy statements which explicitly favour in-country timber processing and value-addition, in-country employment, in-country up-skilling. It is conventional for governments to back such national policy statements by taxing the export of unprocessed logs to the point at which only the very best logs will show a profit on export. That also helps to combat transfer pricing. Expressing it in somewhat simplified terms, the export tax rates are conventionally worked out backwards from the Cost, Insurance and Freight (CIF) value at the importing port minus insurance and ocean freight charges to reach the "true" Free-On-Board rate at the exporting port. The export tax then captures the excess "rent" caused by the initial underpricing of access to this national resource by the GFC. As it happens, Chinese Customs are assiduous in assessing log imports because they collect tax on the logs; see the reports by Greenpeace and the Environmental Investigation Agency on merbau timber logs exported from Indonesian Papua to China (merbau having timber properties similar to Guyanese purpleheart). So CIF rates (landed price) in Chinese ports are probably as close as you will get to "real" market prices for tropical logs.
There are no national policy statements which favour export of raw materials when they could be processed locally. There are no national policy statements in favour of exporting jobs to Asia, or skills to Asia, or leaving value addition to Asian countries.
Of course log export is more profitable than milling, as long as our government does not tax exports conventionally. This is not a plea for banning log exports, but for ensuring that Guyana obtains the best value overall from its natural resources.
So let us have a look at some data -
FOB export price declared to GFC in Georgetown for best quality purpleheart logs, as reported to the International Tropical Timber Organization US$ 130 per cubic metre CIF import price at Guangzhou City, China, as reported to the International Tropical Timber Organization (Y4600-4800) US$ 569 - 594 per cubic metre Ocean freight and insurance from Guyana to China on 20-foot containers holding 12 true cubic metres of logs not more than US$ 120 per cubic metre. Extraordinary difference between import price in China minus export price in Guyana minus freight and insurance (569-130-120) = US$ 319 per cubic metre. This extraordinary difference is what is known as "transfer pricing", the under-declaration of the export price, which is illegal under the Customs Act, Cap.82:01, Articles 158 and 159. As 15,000 cubic metres of logs are leaving Guyana per month (monthly data from the Forest Products Marketing Commission) this suggests that transfer pricing is of the order of almost US$ 4.8 million per month. This figure unfortunately tallies with the US$ 3 million per month which Ms. Bulkan estimated (Stabroek News, 13 November, 2006).
Yet the Commissioner of Forests denies that this is a problem. In his letter he said, "the GFC has no evidence to substantiate this allegation of transfer pricing . . . Invoices are provided for all exports".
Does the GFC employ any economists, or persons with MBAs? If yes, what do these public servants do during the course of a working day? Whose interests do they serve? The public interest or that of a small group of log traders?
Surely the scale of transfer pricing (almost US $4.8 million monthly) suggested by a routine check of a bi-weekly publicly available ITTO newsletter should have come to the attention of someone trained in economics and working in the public sector? Why is there not an official investigation? Surely this is a matter for a court case? When was the last time that the GFC took anyone to court, apart from small-scale lumber yards illegally situated on the ex-railway embankment?
Yours faithfully,
Mahadeo Kowlessar
Discussion
Logs - US$130 vs US$569
Logs - US$130 vs US$569
Forestry transfer pricing probe on -Commissioner Singh -Barama, Jialing to come under closer scrutiny
By Nicosia Smith
Saturday, December 9th 2006
In the wake of a flurry of critical letters and concerns about log exports, Commissioner of Forests James Singh yesterday disclosed that a probe is already being done of allegations of transfer pricing in the industry and it was also disclosed that two producers have pledged to push value added output.
Singh also vowed to take action against log exporters found guilty of transfer pricing.
Speaking at a press conference yesterday at the Agriculture Ministry boardroom, Minister of Agriculture Robert Persaud and Singh responded to several concerns raised by letter writers and others in this newspaper over alleged non-compliance by Jialing Forest Industries Inc and Barama Company Ltd (BCL).
Meanwhile, Singh, head of the Guyana Forestry Commis-sion (GFC), told Stabroek News in an interview following the press conference yesterday that the issue of transfer pricing came up several months ago and an investigation is ongoing. "Action will be taken against companies for transfer pricing," he said.
He added that although persons wanted the GFC to make a statement on the issue it could not be done before the investigation was completed. One letter writer (see page 6 of today's issue) quoted the actual export price declared to the GFC for purple-heart logs as US$130 per cubic metre, while the import price at Guangzhou City in China for the same logs was US$569, a large difference. The investigation is expected to uncover if this practice indeed exists as if it does, it means that Guyana is losing millions of US dollars on levies that should be paid on these log exports. read more
Friday, December 8, 2006
Guyana - Transfer Pricing
GuyanaGuyana, one of the most corrupt countries in Latin America, is noted especially for links to the illegal drug trade. Guyana has a particuIar reputation for money laundering and, given that trade in timber accounts for most Guyana's official export earnings, it is likely that at least some of that trade is associated wityh money laundering.
The unit prices cited in the ITTO's fortnightly "Tropical Timber Market Report" indicate that the difference between the unit prices for Guyana's log exports are remarkably small relative to unit prices for equivalent products exported from other producer countries. The difference might well be attributable to transfer pricing fraud. Given that, during 2005, logs account for almost all India's (and half of China's) timber imports from Guyana, and that India and China (primarily India) account for more than half of Guyana's log exports, India and China may well be complicit in such fraud. The loss of export revenue attributable to transfer pricing fraud might amount to US$ 10mi during 2005. That amount represents some 2% of Guyana's export revenue (of US$ 500 million, roughly half of which was then attributable to gold, diamonds and sugar, and a further 10% to timber).
One might expect that such a large percentage in lost revenue would prompt donors to at least claim to be applying effective pressure on the government of Guyana to substantially reduce those losses. Logs, sawn wood, and plywood accounted for approximately 40%, 30%, and 20% of the RWE volume of Guyana's timber exports during 2005.
During early 2006, Guyana's larget timber enterprise, Barama, received an FSC certificate pertaining to the management of 570,000ha (i.e. less than one third of the area) of its forest concessions. This FSC certificate does not reflect Barama's illrepute - which include alleged economic crime (concerning transfer pricing fraud and the granting of the very lage area of its forest concessions and its generous tax treatment), failure to respect the rights of workers and indigenous people, and procuring wood from dubious sources. Although Barama - owned jointly by Samling (a controversial subsidiary of Lingui Developments from Sarawak) and Sunkyong (a major conglomerate from Korea) - is in effect the sole producer of plywood in Guyana, the granting of that FSC certificate should not be deemed to imply that Guyana's plywood exports (or indeed other products made or traded by Barama) are either legal or from sustainably managed forest.
Guyana's second largest timber company, Demerara Timbers, is said to be owned the Prime Group of Singapore - which might be a shell company and which is related to owners of the notorious Rimbunan Hiijau.
http://www.globaltimber.org.uk/guyana.htm
Monday, October 16, 2006
Local company participating in US show to market products
http://www.stabroeknews.com/index.pl/article_archive?id=56505924
Local company participating in US show to market products
Stabroek News
Monday, October 16th 2006
Representatives from the Forest Products Marketing Council of Guyana
(FPMC), Precision Woodworking Limited, and the USAID Guyana Trade and
Investment Support (GTIS) project will be attending a wholesale home
furnishings show in High Point, North Carolina, US, scheduled to begin
today and last until Sunday.
Precision Woodworking will be exhibiting select pieces of their new
line of outdoor furniture, including several different designs of
tables and chairs.
According to a GTIS release, Joint Managing Director of Precision
Rustum Bulkan is hoping that the High Point Market will be their
introduction to the US market.
In an effort to realize this goal, Bulkan has contacted ten of the
largest American furniture wholesalers who will be attending the market
to discuss and hopefully finalize future deals.
Meanwhile, FPMC Director Luvindra Sukhraj will also be attending High
Point to help promote Guyana's other forest product manufacturers who
are not able to be there.
High Point Market is the world's largest wholesale home furnishing show
that features 11.5 million square feet of exhibition space and 2,100
manufacturers displaying everything from upholstery to bedding, and
rugs to furniture.
Local company participating in US show to market products
Stabroek News
Monday, October 16th 2006
Representatives from the Forest Products Marketing Council of Guyana
(FPMC), Precision Woodworking Limited, and the USAID Guyana Trade and
Investment Support (GTIS) project will be attending a wholesale home
furnishings show in High Point, North Carolina, US, scheduled to begin
today and last until Sunday.
Precision Woodworking will be exhibiting select pieces of their new
line of outdoor furniture, including several different designs of
tables and chairs.
According to a GTIS release, Joint Managing Director of Precision
Rustum Bulkan is hoping that the High Point Market will be their
introduction to the US market.
In an effort to realize this goal, Bulkan has contacted ten of the
largest American furniture wholesalers who will be attending the market
to discuss and hopefully finalize future deals.
Meanwhile, FPMC Director Luvindra Sukhraj will also be attending High
Point to help promote Guyana's other forest product manufacturers who
are not able to be there.
High Point Market is the world's largest wholesale home furnishing show
that features 11.5 million square feet of exhibition space and 2,100
manufacturers displaying everything from upholstery to bedding, and
rugs to furniture.
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