Tim­ber group re­places sub-con­trac­tors

Myanma Tim­ber En­ter­prise will un­der­take ex­trac­tion ac­tiv­i­ties with the sup­port from ser­vice providers, ac­cord­ing to an of­fi­cial from the or­gan­i­sa­tion.

The Myanmar Times - Weekend - - Front Page - SU PHYO WIN su­phy­owin@mm­times.com

THE state-owned Myanma Tim­ber En­ter­prise (MTE) will un­der­take ex­trac­tion ac­tiv­i­ties with the sup­port from ser­vice providers, ac­cord­ing to an of­fi­cial from the or­gan­i­sa­tion.

This comes af­ter it pre­vi­ously said no more sub-con­tracts would be is­sued. It an­nounced that the de­ci­sion to hire ser­vice providers was due to the MTE’S ca­pac­ity lim­its. Ex­perts have ques­tioned the dif­fer­ences be­tween sub­con­trac­tors and ser­vice providers and ar­gued that trans­parency is es­sen­tial in any re­formed pro­cesses.

Last year, the MTE an­nounced that it would only ex­tract tim­ber on its own ca­pac­ity and would not is­sue sub-con­tracts to pri­vate firms to un­der­take ex­trac­tion ac­tiv­i­ties.

In­stead, the MTE is go­ing to carry out its ac­tiv­i­ties with ser­vice providers in five dif­fer­ent con­tracts – felling, skid­ding, road con­struc­tion, truck­ing and load­ing/ up­load­ing pro­cesses, U Khin Maung Kyi, deputy gen­eral man­ager for ex­trac­tion at the state-owned en­ter­prise, said.

The MTE is a state-owned en­ter­prise (SOE) re­spon­si­ble for the cut­ting and ex­port of tim­ber in Myan­mar. Ac­cord­ing to the 1992 Forestry Law, teak or any other hard wood ex­tracted by MTE is per­mit­ted by the law.

The MTE has ex­tracted 80,000 tonnes of teak and 200,000 tonnes of hard­wood. Af­ter sus­pend­ing their oper­a­tions for a year, the or­gan­i­sa­tion plans to ex­tract 15,000 tonnes of teak and 350,000 tonnes of hard­wood in fis­cal year 2017-18, ac­cord­ing to ex­trac­tion sta­tis­tics from the SOE.

U Khin Maung Kyi said that the de­ci­sion to hire ser­vice providers is due to the lim­i­ta­tion of the MTE’S in­sti­tu­tional ca­pac­ity to ful­fil all the de­mands in ex­tract­ing tim­ber. The ex­ist­ing trans­port ca­pac­ity is also hin­dered by the fact that the ve­hi­cles are in use for more than three decades.

“The MTE has a lim­ited ca­pac­ity to ex­tract the full amount of tim­ber.

“With the cur­rent num­ber of ele­phants and ve­hi­cles for tim­ber ex­trac­tions, we do not have suf­fi­cient ca­pac­ity or ef­fi­ciency to man­age the work on our own.

“This is be­cause our ve­hi­cles have been used for more than 30 years. So we will hire ser­vice providers for the ar­eas where the MTE can­not do,” he said.

U Khin Maung Kyi added that the ser­vice providers will not re­ceive profit shares on tim­ber trade and can­not buy the tim­ber ex­tracted. This sig­nals a dif­fer­ence from the SOE’S past prac­tices.

In the past, pri­vates com­pa­nies which the MTE shared sub-con­tracts with en­joyed profit shares on ex­tracted tim­ber trade. This prac­tice lasted un­til the 2015-16 fis­cal year, when tim­ber ex­trac­tion was sus­pended by the Na­tional League for Democ­racy-led gov­ern­ment for a year.

The tim­ber ban lasted un­til March 2017, ex­trac­tion ac­tiv­i­ties have since re­sumed.

“Un­der the new gov­ern­ment, pri­vate com­pa­nies will no longer have sub-con­tracts. Be­fore that, they were hav­ing full oper­a­tions from ex­trac­tion and load­ing or up­load­ing to the ports and shar­ing cer­tain prof­its on tim­ber trade.

“The EU does not like this kind of process which Myan­mar once used,” he said.

U Khin Maung Kyi said that ser­vice providers would sub­mit pro­pos­als re­gard­ing their ser­vices and projects to the cor­re­spond­ing re­gional MTE of­fi­cials. The re­gional MTES would then take the pro­pos­als to the cen­tral of­fice of the MTE to de­cide which ser­vice providers would win the con­tracts.

But there are ques­tions raised among tim­ber ex­perts re­gard­ing the dif­fer­ences be­tween the role of sub­con­trac­tors and ser­vice providers.

“The MTE an­nounced to the world that it will ex­tract tim­ber on its own ca­pac­ity. But then they said they will make con­tracts with ser­vice providers again. So what is the dif­fer­ence?” noted U Sein Win, chair of the Myan­mar For­est Prod­uct Mer­chant Fed­er­a­tion.

Salai Cung Lian Thawng, strate­gic ad­viser of Pyoe Pin Pro­gramme, said the MTE has to pro­vide suf­fi­cient trans­parency over the way they se­lect win­ners among ser­vice providers and how re­sources and money are spent and used.

“Does the MTE have enough bud­gets to work with ser­vice providers?

“On which cri­te­ria will they choose the ser­vice providers? How much money is in­volved in hir­ing the ser­vice providers? How will the MTE pay the ser­vice providers? All these pro­cesses need to be trans­par­ent to the pub­lic,” he added.

In April 2014, Myan­mar banned ex­port of raw tim­ber logs to slow de­for­esta­tion and to boost its own pro­duc­tion.

The Nld-led gov­ern­ment im­posed a na­tional log­ging ban in fis­cal year 2016-17. Dur­ing the ban, the coun­try is meant to only rely on stock­piled tim­ber.

The ban was put in place to staunch one of the world’s worst de­for­esta­tion rates.

Ac­cord­ing to the United Na­tions Food and Agri­cul­ture Or­gan­i­sa­tion, Myan­mar lost 3.2 mil­lion hectares of forests and about 10.8 per­cent of its forests cover be­tween 2010 and 2015. Only Brazil and In­done­sia fared worse.

At the same time, the in­ter­na­tional com­mu­nity has made their con­cerns clear.

In June 2016, Swe­den has pros­e­cuted an im­porter and trader of Myan­mar teak un­der a Euro­pean Union rule that bans plac­ing il­le­gal or high-risk wood on the EU mar­ket, ac­cord­ing to in­for­ma­tion from the NGO En­vi­ron­men­tal In­ves­ti­ga­tion Agency (EIA).

In March, Dan­ish au­thor­i­ties have made a rul­ing to place in­junc­tions on all seven Dan­ish op­er­a­tors bring­ing Myan­mar teak into the Scan­di­na­vian coun­try. The EIA re­leased a press state­ment on March 15 which wel­comed the in­junc­tions im­posed on all Dan­ish op­er­a­tors plac­ing Myan­mar teak on Den­mark’s mar­ket.

The de­ci­sion fol­lows the EIA’S sub­mis­sion of ev­i­dence that Dan­ish tim­ber com­pany Ke­flico vi­o­lated the Euro­pean Union Tim­ber Reg­u­la­tion (EUTR) and sets a clear prece­dent that other Eutr­com­pe­tent au­thor­i­ties must fol­low, the state­ment said.

‘With the cur­rent num­ber of ele­phants and ve­hi­cles for tim­ber ex­trac­tions, we do not have suf­fi­cient ca­pac­ity or ef­fi­ciency to man­age the work on our own.’ U Khin Maung Kyi Myanma Tim­ber En­ter­prise

Work­ers load teak wood bark onto a truck at a tim­ber area on the out­skirts of Yan­gon. Photo: EPA

BUSI­NESS 11

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