OPINION: Rainforest or the Illegal Logger – Who is Really Under Threat in Papua New Guinea?
“The forestry industry is on the brink of disaster” warned Bob Tate, the head of the Papua New Guinea Forest Industries Association (PNGFIA) on November 22, 2017. According to Tate, a spokesperson for the logging companies clear cutting the forests of Papua New Guinea (PNG), increase in log export taxes put in place by the government this year, combined with low international prices for tropical timber, are putting the industry at risk.
Is the forestry industry in PNG really “on the brink of disaster” or is Mr. Tate just delusional?
One may legitimately question Tate’s credibility given he works for an industry that is far from transparent in its operations and notoriously involved in a number of illegal activities in PNG, including misrepresentation of financial returns.
Tate laments the increase in the log export tax, which was announced by the government in November 2016 following the Oakland Institute’s exposé that brought forward evidence of massive tax evasion by logging companies.
The Great Timber Heist: The Logging Industry in Papua New Guinea alleged that financial misreporting by logging companies resulted in nonpayment of hundreds of millions of dollars in taxes—vitally needed revenue for the country. Despite decades of operations in PNG, logging companies barely declare any profit as evidenced by the official tax filings of most firms that report losses year after year. Not responding to requests for interview, Mr. Tate never explained why these companies are still in business if they don’t make profits. Tax evasion allegedly occurs through transfer pricing—underpricing exports and overpricing expenses–and the systematic use of a web of subsidiaries and off-shore companies based in tax havens.
Forest Industry in PNG: Ignoring Laws, Receiving Preferential Treatment
A 2006 comprehensive review commissioned by the PNG government already revealed that the “industry is allowed to ignore PNG laws and in fact gains preferential treatment in many cases, while the rural poor are left to suffer the social and environmental consequences of an industry that operates largely outside the regulatory system.” Nothing seems to have changed since this review given the Commission of Inquiry that looked into the Special Agriculture and Business Leases (SABLs) revealed in 2013 that the majority of the land deals were granted illegally, without proper informed consent, or were granted under threat, intimidation, or bribery. The Oakland Institute’s field research confirmed that SABLs land deals – widely used by logging companies – involved all sorts of irregularities, including faked signatures and coercion or sheer bullying of communities.
Tate warns of a significant decrease in volumes of logs exported in 2017 compared to previous years. But he fails to mention that this drop comes after the massive surge of exports in recent years, which saw PNG surpass Malaysia as the first exporter of tropical wood in the world. The recent surge was largely due to the extension of logging to new areas under SABLs, a scheme that the country’s prime minister, Peter O'Neill described as being flawed with shocking corruption and mismanagement.