THE FORESTS ARE NOT GOING ANYWHERE

Apr 16, 2011 Features / Columnists, Peeping Tom

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What is the big thing about the Indian forestry deal? What is so lacking in transparency? What is so worrying about something that is routine in the world?

The Indian forestry deal is a commercial deal between three companies. Every day companies sell shares, including at times, controlling interests. The global economy is filled with mergers and acquisitions whereby companies are traded and exchange hands.

In the case of the Indian company that has acquired rights to forest lands in Guyana, the company acquired the lands which were previously granted to an American company that ran into some problems. Then another large concession was secured from another company operating locally. What is so wrong about that?

Why are we so fearful of foreign companies being granted rights to exploit our natural resources on a large scale? This is nothing new. During the former administration far more land was given, on far more generous terms, than what has been secured by the Indian firm. To what extent has the people of Guyana benefited from that deal made with a Malaysian company?

Then there was another timber deal in which the buyer within months turned around and resold the rights for a massive profit.

The granting of rights to foreign firms is nothing new. So why object when an Indian firm goes on the market and acquires forestry rights?

There is nothing lacking in transparency about this. Private companies are free to enter into deals just as how private individuals are free to close down their family-owned businesses or freely trade their shares on the open market.

The acquiring of the concessions to local forests is a private commercial transaction. What would we have preferred? That it was given to another firm from another country?

That Indian company still has a long way to go. It still has to enter into agreements with the Forestry Commission before it can begin work. But the fact that it has acquired forestry concessions indicates that the company is confident of obtaining the deal that it wants. After all, why else would it enter into a deal?

But for those opposed to the project to take this to mean that the government will allow the wholesale exportation of logs does not necessarily follow. The problem that the government faces is that it does not know for sure whether the objections are being made because of the company involved or because these protests are about the fear of logs being exported.

If the concern is about the exportation of logs then this is something that the government needs to make a pronouncement on. It may be asking too much to ask the Indian firm to locate its furniture making factory here.

Guyana would not have the volume and the level of skilled expertise needed for such a large operation. Also the cost of electricity is prohibited high and will remain relatively high even after the hydroelectric plant is constructed. So it makes no economic sense for the Indian company to relocate its furniture-making plant here.

What makes sense is for some processing of logs to take place here. It cannot be feasible for the Indian company to economically export logs. Instead it may be more profitable for the company to undertake minimal processing of the logs and for this finished lumber to be exported to its furniture factory.

Guyana needs the investment that will come with the establishment of such a wood processing plant. Hundreds of jobs would be created, far more than at Sanata, and the countries will receive royalties and other fees.

There are obvious benefits to this investment and those opposed to must therefore state clearly their objections and not try to make an issue about transparency. The issue of transparency has not yet arisen since the concessions were privately acquired and the government would be sending an adverse signal to investors if it again takes the position that it needs to have a say as to whom a private company sells its forestry rights.

Foreign investors are not falling over one another trying to get to Guyana. And while we should not give away cheaply our forests, we cannot hope to encourage foreign investments if we hang on to unreasonable demands.

Guyana’s forests are not going anywhere. Trees may be felled but there is no way, given the international agreement that Guyana has signed, and the significant benefits that accrue from those arrangements, that any government will allow for the extinction of our forests.

It is not going to happen and a simply flyover of Guyana will show why it is impossible for this to happen. We simply have too much forest lands to entertain the fear that it will vanish simply because of  new large scale deals.

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