Forestry

In­ter­na­tional de­mand for wood is chang­ing and PNG’S in­dus­try is re­spond­ing.

Business Advantage Papua New Guinea - - Contents - By Kevin Mcquil­lan

Pa­pua New Guinea’s tim­ber ex­ports have been com­par­a­tively sta­ble, de­spite the sec­tor ex­pe­ri­enc­ing many prob­lems. Chief Ex­ec­u­tive of the For­est In­dus­tries Association, Bob Tate, tells Busi­ness Ad­van­tage PNG that one dif­fi­culty is what is hap­pen­ing in China, PNG’S big­gest ex­port mar­ket.

He says the Chi­nese gov­ern­ment is em­bark­ing on a pro­gram of re­struc­tur­ing. ‘They’re clos­ing a lot of their smaller pro­duc­ers, and they’re mov­ing ag­gres­sively into for­est plan­ta­tion es­tab­lish­ment.’

Tate says China is suc­cess­fully ex­pand­ing its range of do­mes­ti­cally pro­duced bam­boo prod­ucts, which is bad news for coun­tries that ex­port tra­di­tional wood prod­ucts. Ex­ports Ac­cord­ing to Tate, over the past two years ex­port rev­enues have fallen by about five per cent, in line with the down­turn in prices. The Bank of PNG re­ports that in the nine months to Septem­ber 2016, forestry ex­ports were K231.1 mil­lion, com­pared with K241.8 mil­lion in the pre­vi­ous cor­re­spond­ing pe­riod.

‘We sell a very mixed bag of species to China, which is the na­ture of PNG forests,’ says Tate. ‘Out­side China, mar­kets seem to be spe­cific-ori­ented.’

On the plus side the PNG in­dus­try, says Tate, is find­ing that Viet­nam, and to a lesser ex­tent In­dia, have shown in­ter­est in PNG’S lo­cal plan­ta­tion-based prod­ucts. Re­search An in­no­va­tive new pro­ject, funded by the Aus­tralian Cen­tre for In­ter­na­tional Agri­cul­tural Re­search (ACIAR), may help in­crease the scale and prof­itabil­ity of PNG’S pro­cessed tim­ber prod­ucts.

The re­search cen­tre’s di­rec­tor, Pro­fes­sor John Her­bohn, says the pro­ject also in­volves teach­ing re­mote Pa­pua New Guineans how to log more sus­tain­ably and to re­pair har­vested forests. A Na­tional Diploma in Wood Pro­cess­ing and Prod­ucts

‘VIET­NAM, AND TO A LESSER EX­TENT, IN­DIA HAVE SHOWN IN­TER­EST IN PNG’S LO­CAL PLANTATIONBASED PROD­UCTS.’ Bob Tate

Pro­gramme has been es­tab­lished in PNG.

Taxes

Mean­while, the 2017 na­tional bud­get flagged the rein­tro­duc­tion of a pro­gres­sive log ex­port tax, which Tate ar­gues will force a num­ber of com­pa­nies out of busi­ness and cost as many as 15,000 jobs. The pro­posed tax rate would rise from 28 per cent to 50 per cent.

‘The bot­tom line is that hav­ing suf­fered a de­cline in vol­umes and prices, it is hardly the time to dou­ble the tax rate.’

James Lau, Chief Ex­ec­u­tive of Rim­bunan Hi­jau, PNG’S largest forestry op­er­a­tion, de­scribes the pro­posed log ex­port tax as the ‘big­gest cur­rent is­sue of con­cern’ in the sec­tor.

‘The tax in­crease orig­i­nally pro­posed in late 2016 would se­ri­ously im­pact PNG’S forestry sec­tor, de­stroy­ing jobs and the roy­al­ties and de­vel­op­ment levies re­ceived by landown­ers,’ he says. 

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