Forestry in Papua New Guinea: forest sector studies Neil Bird, Adrian Wells, Flip van Helden and Ruth Turia

1.Undertaken by ODI researchers and staff from the Department of Forestry at the Papua New Guinea University of Technology 2.Commissioned by the Government and funded through the European Commission 3.With the intent of informing, and supporting, a national dialogue on forestry development The research

97 % of the country is held under customary ownership The involvement of landowners in the forest industry does not have a good record Customary ownership is no panacea in safeguarding the interests of many rural communities Paper 1 What makes PNG special?

There is an inherent tension between the customary ownership of forests and the State’s view of forests as a national resource This tension can be seen in the evolution of the legal framework that has seen a tussle played out between: the State’s desire to control timber harvesting and to derive revenue from timber sales landowners’ desire to be involved in the sale of a customary-owned asset Key challenge: what legal safeguards are required to give resource owners more say over the sale of their timber? Paper 1 Custom and State

A Commission of Inquiry into Aspects of the Timber Industry was established in 1987 under the chair of Judge Thomas Barnett. More recently, the Government commissioned five reviews on the administration and practice of the logging industry between 2000 and Despite the reforms of the early to mid- 1990s, the recent independent reviews have highlighted continuing significant instances of unlawful behaviour in the forest sector. Paper 1 Government Reviews on forests

A sector that seems continually under litigation in the courts Lack of procedural clarity is an important source of legal conflict Fulfilment by the state of its responsibilities is perhaps a more pressing issue than operator compliance Paper 2 Fit for Purpose?

Standards for “awareness raising” and Free and Prior Informed Consent by landowners Landowner participation in resource allocation processes Structures for distribution of landowner benefits Paper 2 Areas requiring procedural clarity

PNG is the second largest exporter of round logs in the world The economic viability of sawmilling increases with scale: small-scale operations can only continue by being subsidised The Forest Authority is aware of the likelihood of future resource shortages Paper 3 The economic case

The current price endorsement mechanism for log exports appears to lack institutional checks and balances in two ways: The price endorsement procedure is located wholly within the Forest Authority, without a role for the Government bodies tasked with the collection of revenue, such as the Internal Revenue Commission or the Treasury. The Marketing Branch of the Forest Authority does not have a set of procedures and an objectively verifiable source of information to determine whether the FOB price provided by the exporter for his shipment is in line with prevailing market circumstances. Paper 3 Transfer pricing

The national process  A Forestry Dialogue was to have been held on the 6 th - 8 th December 2006, at the University of Technology, Lae. Owing to active opposition to the event from senior sources in government associated with forestry, the full Dialogue was discontinued and replaced by a seminar held in Port Moresby on 6th December.  This led Archbishop Brian Barnes to express his concern, during his Christmas message, over the cancellation of the forestry seminar ‘by Government edict’.