Govt Increases Royalties For Timber Exports
PNG - The Somare government has increased the royalty for log exports to enable landowners to receive more benefits from Papua New Guinea's lucrative timber industry.
Timber companies from January 2008 will pay landowners K30 (US$10.17) per cubic meter when exporting round logs, which is a K20 (US$6.78) increase from the old rate of K10 (US$3.39) per cubic meter.
It is understood the levy for sawn and premium timber has also been increased from K15 (US$5.01) to K35 (US$11.87) and K5 (US$1.70) to K10. Government sources say the new rates were recently announced by Forest Minister Belden Namah.
Landowners will welcome the increase as the timber industry, which generated K491 million (US$166,449,000) in revenue last year, has often come under scrutiny for underpaying resource owners.
Out of the K491 million in receipts generated from log exports, between K120-K130 million (about US$40-44 million) was paid as export duty to the PNG Internal Revenue Commission.
Namah has reportedly said the increases were part of a policy that complimented section 46 of the Forestry Act, which stated that landowners should get maximum benefits from their resources.
The timber industry's lobby group, the Forest Industries Association (FIA), remained tightlipped about the increase. But it is bound to worry a number of its members as it will be imposed when fuel prices are set to jump after the government approved a fuel price hike sought by Canadian fuel supplier InterOil Ltd.
The increase is the first major policy shift announced by Namah since he took over the forest ministry from predecessor and current Treasury and Finance Minister Patrick Pruaitch.
According to FIA records, the export of PNG round logs has increased from 1.4 million cubic meters in 2001 to 2.5 million cubic meters in 2006, the latter valued at K489 million (US$165,771,000).
Based on data from the first quarter of 2007 and progress on the government's 10 major forestry projects, this upward trend is set to continue further. As well as providing significant tax earnings to the government, royalties and levies to landowners are currently estimated at around K30-40 million (about US$10-13 million) a year.
The government announced in its 2008 national budget that in order to offset the cost to the industry, it will reduce the log export tax.
Documents released during the budget's tabling in Parliament in November indicate that the government acknowledges that to maximize returns from the forestry sector it must improve governance, enforce sustainable practices including diversification of forest-related investments, eradicate illegal logging, eliminate corruption and effectively administer landownership issues.
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