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