Logging contracts: the human rights dimension
regarding prices and deforestation
DEAR EDITOR, we have learned much, recently, about the way in which logging has contributed, over many years, to the depletion of Solomon Islands forests.
What hasn’t transpired so far, in my view, is the question whether or not the depletion of the forest reserves has been tantamount to a contravention of Article 25 of the Universal Declaration of Human Rights?
I take the stance that it could be reasonably argued that the depletion of the forest reserves has contravened Article 25.
I say this because by having granted logging rights there is now clear evidence of the depletion of the forests resource base without renewal and the deprivation of current and future generations of the systematic and productive use of such resources.
We have seen evidence of environmental degradation, erosion of government tax revenues, due to unfavourable price fixing, and the erosion of government’s ability to provide the necessary level of social services due to the loss of adequate tax revenues.
We have also witnessed that rural timber producers have not earned maximum benefit out of their timber resources, often faced with situations where they have had to submit to local prices determined by local buyers, which in most cases has not been the best value.
What I have been able to determine is the usual breakdown for the sale of FOB logs is –
60 percent to the logging contractor
25 percent to SIG (export duty)
10 percent royalties to landowner
5 percent to the licensee company
In most cases, logging contractors pay export duty and royalties to the landowners directly.
It is implied that such a system has, allegedly, consistently deprived the SIG and the real landowners of their portions giving rise to conflicts and potential court cases.
The determined prices for logs set by SIG is reportedly claimed to be only a mere fraction of what they fetch on the international market.
Why is this? Well, again allegedly, so that the logging companies can keep the actual net profit overseas. Cutting the SIG short doesn’t make sense so is it true?
This method is called transfer pricing, where the logging companies sell to one of their subsidiaries in Hong Kong, Malaysia or Singapore, who in turn sell the logs at the market price to the actual buyers.
Some companies even resort, it is claimed, to have resorted to under declare the logs grades and specie to maximize the amount kept overseas and thus deprive the Solomon Islands Government of export duty and landowners their actual royalties.
I cannot pronounce on whether previous or current logging contracts have been activated by corruption but it is apparent that there has been ‘unreasonably’ low levels of tax payments which in turn, I believe has reduced the ability of successive Solomon Islands Government’s to deliver basic social services which are envisaged to be provided in the Declaration.
Landowners, too, as stated appear to have been clearly missing out on their maximum benefits.
Reforestation should be a must for all logging companies and royalties from logging should be spent on future money generating income in the Solomon Islands.
Comment would be welcome on such an important subject and especially from the SFA which is the ‘watchdogs’ body of the forestry industry.
Yours sincerely
FRANK SHORT
