Guyana among few countries without restrictions on log exportation

The forensic audit report on the operations of the Guyana Forestry Commission (GFC) has indicated that the percentage of log exportation out of Guyana continues to climb at a time when all other tropical countries have set restrictions on exportation of logs.

According to a 2007 discussion paper prepared by the Ministry of Agriculture and the Guyana Forestry Commission, the international trends in promoting and ensuring sustainable forest management indicated a growing occurrence of restrictions in the export of logs, especially in tropical timber producing countries. In some cases, there was a total ban on the export of logs.

Guyana’s neighbour, Brazil has banned the export of all logs since 1969; so did Cameroon, Cote d’Ivoire. Venezuela has banned five main species since 2001. Central African Republic has serious restrictions on log exports. Columbia also has regulations restricting the exportation of logs in force for over ten years. Only round wood coming from planted forests can be exported.

Gabon instituted a log  export quota system from January 2007; Ghana has banned log exportation since 1997. Levies are imposed on export of air dried timber for nine important species.

India has banned logging in natural forests, while Indonesia has instituted bans particularly in East Kalimantan. Malaysia banned log exports since 1985.

Papua New Guinea put a ban on exportation on certain species of logs. The Philippines and Thailand have also put bans on the exportation of logs. The Philippines has done so since 1990.

Forensic Auditor Anand Goolsarran

GFC Boss,
James Singh

Managing Director
of BaiShanLin,
Chu Hongbo

Congo and Myanmar are swiftly moving towards log export restrictions
Chartered Accountant, Anand Goolsarran noted in his audit report that since 2009, GFC had expressed concern about the extent of export of logs. Accordingly, it had proposed a ban on such exports with a view to encouraging downstream processing. However, Goolsarran indicated that at a Stakeholders Forum held in the same year, an alternative proposal was agreed upon whereby there would be a phased increase in the export commission. For example, the export commission on wamara was seven percent in 2009. This was increased to 10% in 2010 and 2011.

The current export commission for this species is 17 percent. Despite implementation of that measure, Goolsarran reported that log exportation in 2014 had increased by75 percent,  compared with 2013. There was an increase from approximately 80,000 cubic metres to 140,000 cubic metres.

Goolsarran said that it is evident that additional measures need to be adopted to restrict the export of logs and to encourage downstream processing in order to maximize the use of Guyana’s forest produce for the benefit of its economy in terms of revenue generation through the export of finished products as well as job creation.

Goolsarran  has recommended that Guyana restrict the exportation of certain species of forest produce in log form and allocate quotas to concessionaires desirous of exporting logs from their concessions.

Goolsarran also said that the GFC should make it a mandatory requirement for concessionaires to engage in downstream value-added processing, failing which their permits will be revoked.

He recommended too that Guyana should also provide all concessionaires, both local and foreign, with the relevant fiscal concessions to enable them to engage in downstream valued-added activities.

GFC responded
In response to Goolsarran’s findings, the Commission commented that the first log export policy was introduced in 2009 as a mechanism to promote further value added activities and reduce the exports of logs. GFC said that the policy provided for a graduated increase in the export commission charged for the export of logs and also compute higher percentage for certain key species.

It was noted that prior to 2009, a flat rate of two per cent export commission was charged on all species of logs exported based on the Freight On Board (FOB) value.

GFC said, “This policy was revised in 2012 and an even higher levels of commission charged. Log export at the moment is less than 35 per cent of production which means in excess of 60 per cent of production is available for local value added activities. In terms of volume, log export for 2014 was 138,502m3 whilst production of logs was 406,433m3 representing 34 per cent of total logs produced. This essentially means that the remaining 66 per cent is available for local added value activities.”

The Commission further commented that it is cognizant of the need to reduce these levels. GFC said that a proposal has been developed for the further revision of this policy and some of the provisions include a restriction or ban of certain key species and increase in the rate for other species. This policy is under consideration by the Department of Natural Resources and the Environment (DNRE) prior to public consultations. For Guyana’s particular case, the proposed policy is envisaged to increase in local added value forest products manufacturing; provide more effectively supply domestic demand in housing, construction and utility sectors and protect species that are in short supply in the forest whilst maximizing the value of the volumes harvested.

GFC said that more jobs will be created in the forest sector; and the policy will reduce the possibility of pressure on the forest of Guyana and thus limit deforestation and forest degradation; encourage investment in manufacturing forest sector and enhance Guyana’s forest product market.