PORT MORESBY – The increase in duty on round log exports introduced in Papua New Guinea’s 2020 budget is already having a positive effect.
Analysis by community advocacy group Act Now! shows that the higher export duty has increased government revenue and driven down log exports in line with government policy.
The increase in duty from 35% to 45% was a government response to revelations that foreign logging companies were evading corporate income tax by manipulating their financial reporting.
The companies claimed they continuously made losses on their operations, never disclosing any profits.
It was a claim that defied logic and common sense. No company would continue a commercial activity that incurred only losses.
As well as trying to recoup public money lost through the tax evasion, the government is committed to reducing round log exports and promoting more value adding processing in PNG.
Our analysis shows that, over the first 11-months of 2020, the increased export duty delivered on both its intended impacts.
Government revenues from round logs exports were more than K9 million higher than in the corresponding period of 2019 even though the volume of logs exported dropped by almost 20%.
If log exports continue to decline at the same rate, the government is on course to achieve its target of a 50% drop in export volumes of the logs by 2025.
But the picture is not all positive.
Only 16% of logs exported in 2020 were from sustainably managed forestry operations.
The 1991 Forestry Act mandated the PNG Forest Authority to ensure all forest operations are sustainably managed under a National Forest Plan.
Colonial era logging permits were to be replaced with new Forest Management Agreements (FMA).
Yet in 2020, only 16% of log exports came from FMA areas.
Most of the rest were from concessions that pre-date the 1991 Act or from areas logged under Forest Clearance Authorities that allow the total clear-felling of the forest.
The PNG Forest Authority has failed in its mandate to ensure the sustainable management of PNG’s forest.
Recent statements by managing director Tunou Sabuin, urging the new Minister to reverse the increase in log export duty, serves to emphasise how the PNGFA has been captured by foreign logging companies.
For the managing director to argue for the reversal of export duty increases while saying his department needs 300 new staff shows the PNGFA is a rogue organisation working against the interests of PNG and the rural communities it is meant to serve.
The 1991 Forestry Act should be repealed and the PNGFA disbanded.
Rather than an agency dedicated to servicing the demands of foreign logging companies we need a new organisation dedicated to serving the people of PNG.
We need to ensure the sustainable and ethical management of our forests.
This is the only way we can hope to take back our forests.