Kaieteur News, 6 March 2008
Dear Editor,
I would like to thank Ms Samantha Griffith for informing us that
“Article 8 B (Export Tax) of the agreement signed between the Guyana
Government and Barama on 14th August 1991” requires that company to pay
the export commission on greenheart logs only (“The Forestry
Commission’s critics are now criticising it for enforcing standards”,
SN: February 23, 2008).
I pointed out in my public lecture that Barama owed this tax but was
contesting payment on logs harvested from illegally rented concessions
(“Country getting a pittance from Asian forestry companies – Bulkan –
monitoring agency ‘weak’”, SN: November 13, 2006).
The GFC has not publicly stated that Barama has paid this
long-outstanding debt, nor its other debts and penalties (“Barama still
to pay second fine – Minister Persaud”, KN: January 19, 2008; “Loggers
to pay $275M fines for forestry breaches”, SN: January 20, 2008).
Ms Griffith evidently has privileged access to secret Foreign Direct
Investment (FDI) agreements. The new Section 13 (2) of the Guyana
Forestry Commission Act passed by the National Assembly in July 2007
sets out what is essentially a gag order on any GFC “member, employee,
consultant, or adviser,” unless authorised by the Commission. Section
27 of that Act sets out severe penalties for the disclosure of any
information, so that any person convicted and found guilty under this
Act is liable to up to 10 times the statutory fine set at one year’s
imprisonment and G$1,000,000 (US$5,000). It is not clear if this Act
has received Presidential assent, but let us assume that it has.
The Commissioner of Forests himself recently stated that “as the
regulatory agency for forestry in Guyana, the GFC is duty bound to let
stakeholders be aware of what the real issues are…” (“Timber producers
were advised well in advance of the requirements for approval”, SN:
February 13, 2008). So Ms Griffith appears to be authorised to write
on behalf of the Commission. Mr. Editor, as she is able to disclose
one article in the Barama FDI, could Ms Griffith publicise the entire
text of the Barama agreement, including all amendments since 1991, and
the FDI arrangements for Bai Shan Lin, Jailing and other Asian-owned
loggers?
This would be one way for the GFC to demonstrate transparency. As the
Commissioner chairs a standing committee of the International Tropical
Timber Organisation (ITTO), he will be familiar with the exhortation
about trade transparency in the ITTO annual review and assessment of
the world timber situation 2006, including “It is only through the free
flow of reliable information on forests and trade that governments and
industry can evaluate their resources, set development goals and take
appropriate action to grow the trade, capture more of its value, and
discourage illegal activities”
(http://www.itto.or.jp/live
Ms Griffith did not dispute the estimate that Guyana is losing at least
US$50 million a year from improper Customs declarations of FOB values
of prime hardwood logs to India and China (which together take 95
percent of all logs exported). Declared log export volumes declined in
2007 compared with 2006, but so did sawn timber exports. Ms Griffith
referred to “the logs that Bulkan wants banned”. Log exports are
nowhere endorsed in national policies. On the contrary, national
policies from the National Development Strategy onwards encourage
on-shore processing and value addition. Indeed, the PPP election
manifesto of 2006 mentioned value addition in the timber industry four
times on one page. My letter noted that “350 stakeholders at the
public consultation on a log export policy convened by the Guyana
Forestry Commission (GFC) endorsed overwhelmingly the replacement of
log exports by local timber processing.” And I have never suggested a
ban, only an appropriate tax or levy which shifts the financial
incentive from log exports to local processing, as advised to the GFC
and Forest Products Association by reviewers since at least 1994.
So who opposes national timber processing and the export of value-added
wood products? Those who are involved in the export of raw logs to
Asia. And who are those exporters? Mostly the Asian-owned companies
which receive FDI tax incentives from our Government for on-shore
processing, increased local employment and skills enhancement. And
what is the response of such companies? “Barama plywood mill to shut
temporarily over supply”, SN: December 5, 2007. Barama closes or
threatens to close the plywood mill, which it runs at 25 per cent
capacity, if it is not allowed to continue logging in illegally rented
concessions for our fine timbers, which it and its associated companies
export as logs for manufacture in flooring and furniture factories in
Asia.
At his press conference on December 8th, 2006, Minister Robert Persaud
referred to non-compliance by Barama and Jailing with their FDI
agreements and provided some details of the 12-month plans proposed by
those Asian loggers to achieve compliance. Through your columns, Mr
Editor, perhaps Ms Griffith, or the Commissioner of Forests, or
Minister
Persaud will provide status reports on the performance of these and
other FDI-benefiting companies?
Concerning technical standards for sawmills and lumber yards, the GFC
was quite right to show pictures during presentations in 2007
contrasting poor standards of timber handling in Guyana with those of a
mill or mills in Belém, Brazil. What does not make sense is to impose
requirements which are unrelated to specific market demands and which
lack implementable legislative backing, as has been mentioned
previously in SN. Writers with direct involvement in product
processing have commented on the inappropriate GFC approach (“The
punitive requirements imposed by the Forestry Commission on timber
producers have severely affected them”, SN: February 9, 2008; “The
Guyana Forestry Commission is crippling the forestry sector” KN:
January 26, 2008).
The repetitive responses from the GFC do not deal with the substance of
the complaints: that the GFC lacks the business experience to tell the
industry how to improve, and I would add that it lacks the legal
mandate to do so. It would make more sense for the GFC to develop in a
participatory, non-dictatorial manner a coherent strategy for industry
improvement, taking account of recommendations reiterated in, for
example, the ITTO diagnostic survey of 2002, which had been requested
by the Government.
At a public talk in Guyana in 2006, a visiting anti-corruption expert
put forward a formula for corruption:- C=M+D -T — (Corruption is
facilitated by Monopoly plus Discretion minus Transparency), (“World
body ranks Guyana poorly on corruption - says anti-corruption expert”,
KN: July 14, 2006). Legislators, recently gathered in Brazil from the
Group of Eight (G8) richest economies and five key developing
countries, have called for countries to pass domestic legislation that
would make it a criminal offence to buy illegally logged timber. Both
houses of the US Congress are working in a bi-partisan effort to amend
the Lacey Act so that penalties now applied to traders in illegally
obtained wildlife would be extended to trees and plants harvested in
other countries. ITTO has issued a similar call.
Guyana needs to take serious note of these developments. Instead of
penalizing its forest workers and small processors, our regulatory
agencies need to focus on those nodes of the supply chain where the
forest wealth of Guyana is haemorrhaging while FDI-benefiting companies
remain in non-compliance with their agreements.
As the GFC continues to demonstrate both disregard for local
stakeholders and incompetence in supervising forest harvesting, I urge
readers through you, Mr. Editor, to add their signatures to a
submission on the Forests Bill 2007. This submission to the Special
Select Committee of the National Assembly is open for signature during
working hours at the Jesuit Presbytery, Camp Street and Brickdam. The
submission must be transmitted to the Parliament Office before 7th
March 2008.
Janette Bulkan
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