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