The National, Friday 31st August 2012
WITH global timber markets entering unstable times, a sure hand is needed to guide growth in PNG’s forestry industry.
The return of Patrick Pruaitch as forest minister should provide welcome stability in forest policy since he has traditionally understood the significant contribution the industry makes to the livelihood of Papua New Guineans.
The Asian Development Bank’s latest edition of the Pacific Economic Monitor shows Pacific economies continue to grow strongly despite the ongoing global financial turmoil.
However growth is expected to slow down next year – to just 4.5% in PNG – and the report predicts a somewhat challenging future, claiming “the next few years is likely to be a more austere period for PNG”.
Falling global prices for PNG’s largest earners (gold and copper), projected declines in government revenue and managing the vast numbers of workers retrenched after the LNG project winds down are key issues facing the economy.
Falls in prices of agriculture products, such as logs, cocoa, coffee, palm oil and copra, are also a concern. These comprise 20% of PNG’s exports and will result in further cuts to real incomes for the rural population already affected by a rising kina.
The forestry sector in PNG has been experiencing falling prices for its log exports since 2007 while its major inputs, namely fuel oil and diesel, have rapidly risen in value over this period.
Rising input prices and falling output prices, combined with the real appreciation of the kina and hikes in wage costs, have eroded the profitability of the PNG forestry sector.
Wood production in PNG is largely export-driven and the high kina is depressing PNG wood exports. Moreover, markets for timber and wood products are showing signs of depression worldwide – major economies and export markets for PNG forest products are still recovering from the global financial crisis and the European Union is reeling from the Eurozone crisis.
New housing starts in the US, which significantly influence timber prices, have been at their lowest level in decades.
At the same time a slowing Chinese economy has reduced the importation of logs into what is the biggest market for PNG log exports.
According to the United States Department of Agriculture’s (USDA) new Chinese forest sector outlook, trade in wood products is forecast to slow due to a cooling construction market and the rise in environmental trade monitoring, such as the EU timber regulations, the US Lacey Act and the Australian Illegal Logging bill.
The latest Wood Resource Quarterly notes prices for imported softwood logs in China have fallen by 14% this year.
At such a delicate time, the PNG forestry industry can ill afford further restraints and increased costs. However, concerns over Australia’s Illegal logging bill, pressure from the EU for a PNG/EU-FLEGT (Forest Law Enforcement Agreement and Trade action plan) agreement and a forthcoming Commission of Inquiry (CoI) report on Special Agricultural Business Leases (SABLs) threaten to increase both costs and a perception of uncertainty which could undermine business confidence.
Greater certainty in forest policy is required so the return of the forestry portfolio to Pruaitch will give confidence to the industry.
Meanwhile, aggressive Greenpeace campaigning has once again criticised the use of SABLs in PNG.
The latest attack ignores the fact that legitimate SABLs are furthering economic development in PNG’s most underdeveloped regions.
The report, Up for Grabs makes several claims relating to SABLs, including that
they are generally driven by overseas interests, that
they are causing significant biodiversity loss and deforestation, and that the leases have been obtained fraudulently.
The report also claims that SABLs hold about 12% of the nearly seven billion tonnes of above-ground carbon stored in PNG forests.
It argues that foreign companies with logging concessions potentially hold rights to these carbon storages worth US$23 billion (K45 billion) if sold into international carbon trading schemes.
The report supports these claims with GIS data sourced from the University of PNG Remote Sensing Centre – a facility supported by Conservation International amongst other anti-forestry interests.
The report makes a number of recommendations, among which it calls for the suspension of all logging operations in SABL areas until the PNG government fully implements the recommendations of the CoI completed in May this year, and demands the newly-elected government to legislate to nullify leases that do not have the consent of landowners.
Contrary to Greenpeace propaganda, SABLs are an important policy instrument for PNG.
In a country where 97% of the land is owned and regulated by customary laws, impediments to land-based investment which restrict communities from fully utilising and developing their land resources remain critical.
SABLs are legitimate, legally-binding agreements, which in fact protect landowners from losing their land and help generate economic growth by creating a tradeable asset that can be used as collateral to raise money and make land available for commercial purposes.
Secure title to land is essential for continuing investments in such developments.
An agro-forestry project, known as the Toriu Integrated Agriculture Development Project in East New Britain, has highlighted that SABLs can be beneficial when managed responsibly and according to the laws and regulations of PNG.
There is no question that administration of SABL’s needs to be tightened as there appears to have been some irregularities.
They do not however justify Greenpeace’s contention that SABL’s should be abandoned.
Over in Indonesia, Greenpeace’s activities once again sparked controversy.
The country’s justice minister, Amir Syamsudin, is reportedly considering putting a freeze on Greenpeace Indonesia’s licence to operate, amidst claims their activities violate “business competition interests.
Local groups recently held demonstrations in front of the Greenpeace office in Jakarta, accusing the activist group of acquiring funds from
gambling businesses in the Netherlands.
Gambling is forbidden in Indonesia and the Greenpeace Indonesia director has denied the allegations.
It is a matter of public record however that Greenpeace receives funding from the Dutch Postal Lottery. Greenpeace has also been accused of violating Indonesian regulations with allegations it received foreign funds without a permit and failed to report these to the government.
The funds, totalling US$126,515 (K248,000) in 2009 and US$179,230 (K315,000) in 2010, were transferred by the Greenpeace Foundation.
Greenpeace was involved in a similar controversy in Indonesia last month with accusations the organisation misappropriated over US$2 million (K3.9 million).
Recent criticisms come as the organisation faces a number of legal challenges across the globe.
A recent government intelligence report in Canada noted that Greenpeace actions posed health and safety risks to the public.
Last year, Greenpeace vessel Esperanza was subjected to stoning and protest by PNG landowners, accusing the organisation of disrupting economic activity.
Local groups now realise well that Greenpeace campaigns generally serve foreign interests at the expense of legitimate, local businesses. – ITS Global