Closure of bank accounts under new law threatens forest industry

The Forest Industries Association is concerned that the Government’s new Public Money Management Regularisation Act will affect PNG Forest Authority and forest operations in the country.
Executive officer Bob Tate said that as of April 6, all the authority’s bank accounts had been closed and all money transferred to the Finance Department.
“At risk is an industry that earns PNG some K1.2 billion in foreign exchange and government tax revenue of K350 million each year,” Tate said.
He said the PNG Forest Authority has collected payments from industry operators as income in its own right, and has trust money to be paid to forest landowners as royalties and levies.
“All these receipts are governed by the provisions of the Forest Act, project agreements with operators and contractual obligations between the authority and participants,” he said
Tate said the landowners’ trust money included in the transfer exceeded K40 million.
“How and when this will be paid to landowners is now unknown,” he said. “In these difficult economic times, particularly the ongoing lack of foreign exchange, why has such regulation been adopted by government?
“What is known is that if landowners don’t receive their royalties on time, there will be great disruption out in the forestry sites which will result in the slowdown or closure of operations.
“Further, all future monthly ro-yalty and levy payments by the industry will also be transferred to Finance Department, with no distribution method in place to get it to the landowners. As a consequence of the new act, the Forest Authority is now in breach of the Forest Act and its legal obligations to landowners and industry participants.”
He said PNG’s biggest processing factory in Bulolo, Morobe, relied on PNGFA-owned plantations for its factory log input.
“Will it be forced to close, and some 2000 workers laid off, when the authority can no longer meet its contractual and business obligations for log supply,” he asked. “Unless self-funding is restored to the authority, it will no longer be able to carry out its key roles of ongoing forest project reviews.”
The forest project reviews include project monitoring and reporting; and forest plantation development and reforestation.
Tate said all these activities were funded by charges and levies.
“We are in danger of an effective industry closure and undermining PNG’s successful and demonstrated sustainable forest industry.”