The two items at the end of the action alert were already posted in this
conference. I am providing addresses to protest Timber Industry actions.
Glen Barry
URGENT ACTION ALERT!!! YOUR LETTER NEEDED!!!
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PAPUA NEW GUINEA RAINFOREST CAMPAIGN NEWS
Timber Industry Refuses to Follow PNG Law
"We all are not going to pay the royalty"
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Forest Networking a Project of Ecological Enterprises
7/12/96
OVERVIEW & SOURCE by EE
In a shocking move that threatens to undermine PNG sovereignty and the rule
of law, multi-national timber companies operating in PNG have stated that
they will defy PNG law and not pay the higher landowner royalty rates as
mandated recently by enactment of the 1996 PNG budget. The companies have
been paying on average K6 per cubic meter (about USD4.00) while multi-
nationals are selling the same timbers for anywhere from K150-200. The
1996 Budget promised landholders up to K23 m3 plus 7.5% royalties under the
new graduated royalty system.
In an amazingly hardball move, the major foreign industrial logging
companies, that for years have been building their influence and control in
the country while making millions of dollars, are threatening not only to
not pay the new royalty rates; but even go so far as to say that they will
shut down rather than pay the higher royalties.
Rimbunan Hijau, the largest logger controlling over half the industry, has
been generating approximately USD1 billion in revenues yearly. In addition
to dominating the timber industry, they own one of the largest timber
concessions in the world in Western Province, own one of the two daily
newspapers, and are widely alledged to have bought significant political
influence. Yet, they are unwilling to pay a fair rate of return to the
resource owners, going so far as to openly refuse to honor the law. It is
criminal that a foreign company, that provides meagre returns to a
developing country (about K2 a cubic meter in their Western concession),
would use its tremendous capital as a weapon against its host country.
Clearly, Papua New Guinea, a country with tremendous forest wealth, can do
better than entertain corporate bad actors such as these. The best thing
that could happen is to let the whole cut and run industrial timber
industry as it currently exists simply shut down and leave. Their are
viable small scale timber operations in country which given the proper
governmental and international aid support could insure a sustainable
timber industry for many centuries into the future. Aid donors must be
called upon to help the government weather the short term financial costs
of establishing a sustainable and equitable timber industry.
I appeal to list recipients to use all means to communicate their
dissatisfaction with the situation. Please take the time to send faxes
(optimally, in that this is a fast breaking situation) and letters as soon
as possible to the following addresses. Please be courteous; and I
suggest, in addition to the above information and the enclosed two
background items, the following talking points:
*PNG's forests are a great source of wealth that is like money in the
bank. If the current bad actors don't want to harvest the timbers while
providing a fair rate of return; there is a viable local small scale timber
industry and other more respectful foreign operators that can bring
equitable development.
*Ask that the PNG government not succumb to corporate blackmail. Ask
that the government stand their ground, asserting their right to implement
and enforce their laws. This increase in royalties is a much needed first
step in bringing an out of control timber industry into a meaningful source
of development for PNG.
Send letters and faxes to:
Prime Minister Sir Julius Chan
Office of the Prime Minister
PO Box 6055
Boroko, NCD
Fax: 675 27 6696
The Times of Papua New Guinea
Attn: Letters to the Editor
PO Box 1982
Boroko, NCD
Papua New Guinea
Fax: 675 25 4433 and 675 25 2579
Post Courier
Attn: Letters to the Editor
PO Box 85
Port Moresby, NCD
Papua New Guinea
Fax: 675 21 2721
Mr. Roger Hau'ofa
NBC Radio
PO Box 1359
Boroko, NCD
Papua New Guinea
Fax: 675 21 3747
** Roger is prone to read letters out over the air on his morning radio
program. Make sure they are well researched and written because a good
portion of the nation is listening.
Additional information sent previously to this list on the matter can be
found at the following URLs on the World Wide Web:
gopher://forests.lic.wisc.edu:70/00/png/recent/fiataxes.txt
gopher://forests.lic.wisc.edu:70/00/png/recent/frevwin.txt
If a list recipient was able to condense this information into a short,
concise action alert with sample letter; I would be happy to send it to the
2,000 people receiving this list. Following are two background pieces; the
first from the _National_ newspaper in PNG which is owned by Rimbunan
Hijau. The second comes from Brian Brunton, a local forest activist.
Now is the time to act with urgency to bring some resolution to the ongoing
and worsening PNG forest crisis, before the forests are liquidated by
strong arm timber interests.
Glen Barry
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RELAYED TEXT STARTS HERE:
ITEM #1
/** reg.newguinea: 334.0 **/
** Topic: 129 FIA blocks timber royalty **
** Written 11:25 PM Jul 11, 1996 by drobie@pactok.peg.apc.org in
cdp:reg.newgui
nea **
Subject: 129 FIA blocks timber royalty
To: nius@pactok.net.au Of: 90:900/900.
From: drobie Of: 90:675/100.6
Date: 11/7/96 11:14:29 PM
-------------------------------------------
Title -- FIA refuses to pay K10 royalty
Date -- 11 July 1996
Byline -- Frank Senge Kolma
Origin -- Niuswire
Source -- The National (PNG), 11 July 1996
Copyright -- The National
Status -- Abridged
-----------------
FIA REFUSES TO PAY K10 ROYALTY
By Frank Senge Kolma
PORT MORESBY: The Forest Industries Association has decided that its
members will refuse to pay the additional K10 royalty on top of existing
taxes, imposed at the insistence of the World Bank recently.
The executives of the FIA, which comprises six of the country's biggest
timber firms, among others agreed unanimously to refuse to pay the royalty.
The operators, Cakara Alam (PNG), Open Bay Timber, Rimbunan Hijau (PNG),
Stettin Bay Lumber Company, Turama Forest Industries and the WTK Group,
effectively control 86 per cent of the timber industry in PNG.
President of the Forest Industries Association, Francis Tiong, said
yesterday: "We have reached a collective decision that we all are not going
to pay the royalty.
"There is just no more money.
"You think if there is money to be made, we are going to go to this extent
to confront the government. The truth is we are losing money. We are going
to close down."
Mr Tiong said if the operators do close down, some K400 million to K500
million in direct revenue would be lost to the country.
The multiple effect would be two to three times that figure and over 10,000
jobs will be lost.
(Note: The National is owned by the logging company Rimbunan Hijau; the
writer is editor Frank Senge Kolma. The rival Post-Courier did not carry a
matching story).
+++ends
ITEM #2
/** reg.newguinea: 335.0 **/
** Topic: png graduate royalty press statemen **
** Written 8:24 AM Jul 11, 1996 by bbrunton@pactok.peg.apc.org in
cdp:reg.newg
uinea **
PRESS STATEMENT
ICRAF SAYS THAT THE NEW REVENUE SYSTEM ANNOUNCED BY FOREST MINISTER BAING
DOES NOT HONOUR THE BUDGET PROMISE TO PAY LANDHOLDERS A ROYALTY OF K23M3 ON
EXISTING PRICES, IS CONFUSING, AND WILL NOT SATISFY LANDHOLDERS, WHO ARE
ENTITLED TO A FAIR PRICE FOR THEIR TREES. k10M3 IS NOT ENOUGH. THE WHOLE
SYSTEM OF BUYING AND SELLING TREES NEEDS TO REVIEWED SO THAT LANDHOLDERS
SELL THEIR TREES COUPE BY COUPE FOR A MARKET PRICE.
1. The 1996 Budget promised landholders up to K23 m3 plus 7.5 % royalties
under the new graduated royalty system.
2. Landholders currently are being paid on average K6 m3.
3. Forest Minister Baing simply refused to implement the graduated
royalty. Our information is that the Prime Minister, under pressure from
the World Bank, this week, wrote to Baing and told him to sign the
necessary papers.
4. Forest Minister Baing then held a press conference and announced that a
partial implementation of the budget promise of the landholders graduated
royalty would take effect from the 1st of July 1996. There is to be no back
payment.
6. Using an average existing royalty figure of K6m3, and export data from
the first quarters Forest Digest , ICRAF calculates that landholders have
been deprived of as much as K26 million between 1st January 1996 and 1 July
1996. This figure is approximate because the Forest Authority does not
publish the amount of royalty paid to land holders.
7. Current log prices are about K160m3, and under the promises in the
budget landholders should have received K23m3 since the beginning of the
year.
8. But Forest Minister Baing says landholders will only get K10m3 from the
beginning of July 1996. This does not take into account any deduction of
15% to be paid to provincial governments, and a 5% withholding tax paid to
the National Government. Of course logging companies are paid on the basis
of prices calculated in US dollars. Over the past two years the kina has
devalued, so that the rise to K10m3 may not affect landholders in real
terms all that much.
9. ICRAF is aware that the World Bank had insisted that the graduated
royalty system be brought into effect, and back-dated to the 1st of April
1996. It appears that the Government may be in breach of SAP
conditionality, because of its refusal to back-date to the first of April.
10. The new "project development levy" is really the balance of the
graduated royalty, on top of the K10m3. On current prices this would amount
to K13m3. But ICRAF's information is that it will not be paid to
landholders, but used by local authorities for infrastructural development
and aid. The reason why the Minister is doing this is because the forest
officials do not trust landholders to spend their own money wisely.
11. The budget promised landholders , on current prices , K23m3. This is
the payment the landholders should get for signing the TRP and FMA
agreements.
12. The forest Minister is try to confuse landholders by saying that
"infrastructure" costs, and premiums are to be taken into account for
existing projects. What he is saying is that the project development levy
will not be paid to existing projects because those landholders are getting
infrastructure and premiums on existing projects.
13. This is misleading. Infrastructure is provided under the Project
Agreement, which is a contract between the permit holder and the Forest
Authority. The landholders are not a party to those contracts. In addition,
on many existing projects the infrastructure has not been completed, so why
should the landholders have to pay for something they either do not get, or
which is not theirs.
14. The Minister for Forests is also misleading landholders when he talks
about "genuine premiums paid to landowners". Premiums are generally paid as
a result of a contract between a logging company and a so-called
"landowning company". As a matter of law, landholders, and landowning
companies ( LOCs) are different legal personalities. In reality, many LOCs
are badly run, set up as puppets of logging companies, and do not
distribute dividends. The Forest Minister is wrong when he says that
premiums are paid to landowners.
15 The new policy fails landholders because it does not honour the
promises in the budget that the landholders would get K23m3 on current
prices.
16. The new policy is really an extension of the colonial system under
which landholders were the victims of unequal and inequitable contracts.
Professor Ron Duncan said in 1994 "The Melanesian logging contract
arrangement distributes revenues from the sale of logs (which belong to
customary landowners) in a manner which is economically unjust, and needs
to be changed radically ". The new initiatives will not alter this. What
the Minister for Forests is doing is trying to confuse landholders. He will
not succeed because K10m3 in the hands of landholders (less 15 % to
provincial government, less 5% withholder tax), is not enough.
17. ICRAF calls for a complete overhaul of the way in which landholders
sell their trees. Landholders should not have to sell their timber rights
for a royalty. They should sell their trees on a couope by coupe basis, and
be paid a market price. We believe that this would encourage landholders to
manage their timber assets in a businesslike manner, and so help conserve
resources for future generations, and protect the environment.
B. D. Brunton
Greenpeace Forest Specialist.
Individual & Community Rights Box 155,
P.O. University,
Advocacy Forum Inc. N.C.D.,
PAPUA NEW GUINEA
PH: (675) 326 2469
FAX: (675) 26 0273
###RELAYED TEXT ENDS###
You are encouraged to utilize this information for personal campaign use;
including writing letters, organizing campaigns and forwarding. All
efforts are made to provide accurate, timely pieces; though ultimate
responsibility for verifying all information rests with the reader. Check
out our Gaia Forest Conservation Archives at URL=
http://forests.lic.wisc.edu/forests/gaia.html
Networked by:
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Email (best way to contact)-> grbarry@students.wisc.edu