Our forest wealth continues to haemorrhage while companies remain in
non-compliance with their agreements
Stabroek News, Wednesday, March 5th 2008
Dear Editor,
I'd 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 criticizing it for enforcing standards", SN February 23 2008).
I pointed out in my public lecture that Barama was owing 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 authorized 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 1 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 advis-ed well in advance of the requirements for
approval", SN February 13 2008). So Ms Griffith appears to be
authorized 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
Commis-sioner chairs a standing committee of the Inter-national
Tropical Timber Organization (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 Govern-ment 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 8 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 saw-mills 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 impos-ed by the Forestry commission on timber producers
have severely affected them", SN February 9 2008; "The Guyana Forestry
Com-mission 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 - (Corrup-tion 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 agreement.
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 7 March
2008.
Yours faithfully,
Janette Bulkan
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