Guyana’s certified ‘Plunder without Profit’

A new report from researcher Janette Bulkan has cast an interesting light on the Guyanese logging industry, including FSC-certified company Barama.

The report seems to confirm what many Guyanese have long known: that the logging industry is not much good for anybody other than the logging companies themselves. According to the new research, as reported in the Starkbroek News, even the FSC-certified Barama brings little or no value to this desperately poor country. Bulkan has found that, whilst Barama’s operations occupy more than a quarter of the country’s entire production forest, it only, for example, employs 300 Guyanese, or 2% of the forestry workforce. The company does not even pay any export taxes.

In the light of the company spokesman’s comment that Barama has ‘failed to turn in a profit for 15 years’ (which means, of course, that it would be exempt from payment of taxes…) FSC-Watch wonders how SGS, Barama’s certifier, could have determined that the company is compliant with FSC Principle #5, which requires that “Forest management operations shall…ensure economic viability”.

FSC-Watch is also intrigued by references in the article below to ‘third party arrangements with small concessionaires’ – and we invite our readers to tell us how, or if, this has been taken into account by Barama’s certifiers.

Country getting a pittance from Asian forestry companies -Bulkan -monitoring agency `weak’

Monday, November 13th 2006

Asian transnational companies are taking advantage of loopholes in the current forestry laws without much profit accruing to the country and the forestry commission is unable to properly monitor the sector.

This is the view of researcher Janette Bulkan, who gave a presentation entitled ‘Plunder without Profit’ at the Cara Lodge on Thursday. The lecture, hosted by the Guyana Citizens’ Initiative, looked at the state of Guyana’s forestry sector and the extent to which Asian multinational corporations harvest and export logs, sometimes in breach of local laws and international best practices.

In ‘Plunder without Profit’, Bulkan stated that none of the seven key recommendations of Nigel Sizer’s paper ‘Profit without Plunder’ done ten years ago have been taken up.

Using social, economic and environmental indicators, Bulkan has determined that the forestry sector has retrogressed. She said that the forestry sector in 2006 is an enclave sector, supplying unprocessed logs to Asia.

According to Bulkan, Guyana’s trees should be left standing since the money the country earns amounts to US$4.50 – “less than a towel ($1,000),” she said. She added that in Guyana there is a lack of understanding and appreciation for best practices in the industry.

Giving her recommendations at the end of the talk, Bulkan said that there is need for oversight from the Select Committees of the National Assembly and also from Civil Society, the Bank of Guyana, the Guyana Revenue Autho-rity (GRA) and Go-Invest.

She said too that the Central Bank and Go-Invest need to work with the Guyana Forestry Commission (GFC) on rationalizing resource access and export taxes, plus incentives for the local adding of value.

Bulkan recommended that the government swiftly pass the Forestry Act which has been in draft form since 1996. She said that if the Government could pass the Cricket World Cup Sunset Legislation in a matter of days then she wondered why it was the draft act couldn’t be passed after ten years. She suggested that it might be in some sectors’ best interest that the draft act not be passed into law. Bulkan said that were the updated legislation in place, Barama Company Limited would not have been able to harvest outside of its 1.6 million hectares of concession as it currently does.

She said that there is need for an independent Board for the GFC so that the body’s mission statement could be applied.

According to Bulkan, there was a weak regulatory agency in the GFC, noting that there was a shortage of trained and motivated staff. She said too that there was a shortage of equipment, few bar code readers and limited routine monitoring.

Bulkan is of the view that reforms spoken of a decade ago have been abandoned or not implemented and that penalties are not enforced on major companies like Barama. She said too that transnational corporations and local collaborators behave like pirates and abuse FDI arrangements.

According to Bulkan, for Guyana to return to a reform agenda for the sector, it requires Civil Society to construct more coherent and persuasive economic arguments, work with the National Assembly to increase transparency and accountability of the Government and coordinate with anti-corruption agencies to bring equity to business incentives.

Consolidation

She said that national enterprises and multinational corporations must support best practices, engage in value-adding processes, seek independent step-wise forest certification and routinely apply legal verification.

Bulkan’s research has led her to conclude that there is consolidation of the richer and more pristine State Forests (and Amerindian lands) into a few hands but without increasing national benefit. She found that 38 large-scale concessions by 2005 controlled 80 percent of State Production Forests, which is 35% of all State Forests.

She said that of the 38 large-scale concessions held by 14 companies, five of them are known Asian companies. She said too that the Asian companies directly or indirectly control an additional undisclosed amount of smaller concessions and titled Amerindian forests. This consolidation through sub-letting is in contravention of the Forests Act 1953 and specific terms of concessions, she argued.

Bulkan’s research found that the small scale logging sector provides 75% of employment while Barama with a concession covering 26 percent of all production forests in 2005 employed 300 Guyanese workers or 2 percent of all forestry sector employment.

Bulkan added that although Barama is exempt from all duties and taxes; it does not pay 2% export tax. According to Bulkan, Barama owed US$70,000 in 2% export tax. She said that when the company was asked if it had paid up, the answer was that they were in discussions with the Office of the President. She said that in the past Barama published disaggregated information where it was possible to discern what should have been paid on exports. She said that the company has ceased this and only makes available aggregated information.

She noted that Chinese company Jaling was given permission to cut bulletwood, a protected species. She contended that the majority of logs on the log market at Port Kaituma were of bulletwood. She said that she was on the ground in Port Kaituma and spoke to workers of this company who all complained about the conditions under which they work. Jaling has come under fire for not starting up its sawmill as promised while all the time exporting logs. It has since said that it was test marketing these logs though no figures have been given on how many logs per species were exported.

Bulkan said that to circumvent a partial ban on the export of locust and crabwood logs, some log exporters list their logs as mixed hardwood. She said that 19,000 cubic metres of locust logs felled in 2005 were unaccounted for and have been exported in this manner. She said that as a result, locust and purpleheart are scarce locally.

She alleged that US$3M per month from 15,000 cubic metres of logs exported is lost through transfer pricing monthly.

Some months ago, Barama’s Managing Director Girwar Lalaram said that even though it has not turned a profit in its 15 years of operation it still contributes to Guyana’s economy and aims to do more of this.

Lalaram had said that the company will further contribute to the economy through the sale of its certified forest products. Lalaram said that the third party arrangement that Barama has with small concessionaires is of mutual benefit.

Questioned on the preponderance of log exports as against downstream activities, Lalaram said that the company concentrated first on lesser known species and it was only because they found new markets. He said that the development of Buck Hall is expected to utilize many of the logs harvested in the new certified compartments four and five of the company’s giant concession.

Barama was certified by the Forest Stewardship Council after a long process of auditing administered by SGS-Qualifor, the agency FSC appointed to carry out the certification. Officials from SGS-Qualifor are due in the country soon to again engage with Barama. Bulkan and other concerned citizens under the aegis of the Guyana Citizens’ Initiative will engage them on Barama’s activities. (Johann Earle)

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