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