BaiShanLin’s wood processing facility delayed due to ‘financial difficulties’ – GFC Commissioner

Aug 02, 2015 News

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By Kiana Wilburg

After ten years, Chinese logging giant, BaiShanLin, is yet to honour its commitment to establish a wood processing facility in Guyana. It had given conflicting reasons in the past to justify the delay. However, Commissioner of the Guyana Forestry Commission (GFC), James Singh, recently revealed that the company indicated to him that the holdup is as a result of “financial difficulties.”
“They told us that they have been experiencing some financial difficulties in the sense that they were unable to meet some benchmarks for certain lending agencies…We met with them and they had some concerns. They indicated to us that they met with some Government officials and are expected to submit a revised programme in relation to the facility for review.”
He said, too, that a team from the China Development Bank also accompanied the Chinese company to the meeting. The Commissioner said that he told BaiShanLin to make the wood processing facility their priority.
Singh said that the company promised that once the “financial difficulties” are over, it will also submit the revised programme on the facility to the Commission.
Minister of Governance, Raphael Trotman, explained on Wednesday that after meeting with the company, it promised to get the wood processing facilities up and running within some months. Trotman noted that the Chinese logging company and its Indian counterpart, Vaitarna Holdings Private Inc. (VHPI) this time around, will not escape sanctions if they fail to get their promised value added facilities started. He said that the termination of their contracts could be one of the sanctions.
He made these statements following questions by this newspaper at his post cabinet press briefing with the media which was held at the Ministry of the Presidency.
Trotman who is also vested with some responsibility for the natural resources of the nation had explained that Government will be looking at the concessions that have been granted to certain if not all companies concessions in the forestry sector.
The Minister of Governance was asked if the Granger administration intends to examine the concessions granted with a view to determining how much the nation has truly benefitted. Trotman said that this requires some sort of study or review.
He added, “We have to look at jobs, taxes paid, concessions for duty free vehicles and equipment versus what has been given back in terms of value added operations. But, yes that review is ongoing.”
He was then reminded of statements he made while in the opposition that the contracts between the logging companies and the past administration should be made public for scrutiny. Trotman was questioned whether Government will pursue this route.
The Minister had said, “We have looked at these matters…and we are in fact reviewing all agreements and seeing where there has been compliance or violation and how we could tighten up.”
Presidential Advisor on Sustainable Development, Dr. Clive Thomas, had said that the behaviour of BaiShanLin and Vaitarna, the two logging companies that have benefitted significantly from Guyana’s forest resources is absolutely “unacceptable”. He said too that he will be recommending to the David Granger-led administration for some of their concessions to be taken away.
“Guyana cannot continue to be giving out hundreds of millions of dollars worth in these tax breaks or concessions and we aren’t benefitting from value added operations. If companies make a commitment to do so then the ethical thing to do is to deliver what was promised. If not, their concessions should be taken away. They need to face sanctions of that nature or probably something stronger.
“BaiShanLin and Vaitarna have become logging giants in this country and by its own actions, it is clear that we should review all of their concessions. I would be advising the President of taking such actions. My position on this is clear; they need to cut off some of their benefits,” the Economist said.
He continued, “This is obviously not part of how one promotes the suitability of an economy and an industry and we cannot continue to go this route. Allowing this sort of behaviour to continue, sends a dangerous message to other potential investors and local companies. What has the Guyana Forestry Commission done regarding such infractions? Is this not important?
“We really need to change the landscape of the way business is done in the logging industry and eliminate this kind of slackness we allow these companies to get away with. This is not about whether you are foreign or not. At the end of the day it is what is right for the development of the country and quite frankly these two companies have just been taking and taking and not fulfilling their promises of considerable value added operations. It has been years now, so what can possibly be their excuse? They need to face serious sanctions.”
In 2014, BaiShanLin blamed the Guyana Office for Investment (GO-Invest) for delaying its application for its wood processing factory. In one of its ads, the company stated that in 2008, it applied to the “Government of Guyana through the Guyana Office for Investment (GO-Invest) and other agencies to lease lands to set up a factory to process logs and engage in value-added production, such as the making of furniture, craft and hardwood flooring.”
It had said then that it was experiencing delays.
Kaieteur News later reported that GO-Invest had no such application. BaiShanLin had nothing to say when this was revealed. This caused many, including the then opposition, APNU+AFC, to challenge the previous government to make public the investment agreement it signed on to with the Chinese logging company. This was never done.
In April, the company then blamed the “hostile” media reports during 2014 for dispiriting financiers.
In a statement, the Chinese company said that it is concerned about the apparent “misrepresentations and false reports” being carried by some sections of the media on its operations in Guyana. It identified Kaieteur News (KN) as the leader of the “hostile” campaign and even cited a KN article with the headline: ‘BaiShanLin delays US$70M wood processing factory for gold, housing, logging.’
But in its statement, it did not deny that it was approved ‘US$70M’ for certain activities.
With regard to the wood processing plant in the Linden area that was to be constructed, BaiShanLin, one of the largest exporters of the country’s prime species of wood, had complained that it has indeed suffered major setbacks in completing its wood processing facility that will create hundreds of jobs for Guyanese.
It claimed that these “setbacks” directly related to lack of adequate funding from its financiers, who, since last year “when these sustained attacks began,” became concerned about the “soundness of investing further in what appeared to be a hostile environment.”
Amidst hash criticisms of its operations during 2014 and earlier this year in several quarters, BaiShanLin insisted that it has consistently remained well within the law/regulations governing the forestry sector.
It has been reported on extensively, by insiders and other well-informed critics, including Dr. Janette Bulkan, a forestry specialist, that BaiShanLin practices landlordism.
The Timber Sales Agreement (TSA) which governs logging does not allow that. In fact, it has become the third largest holder of state forests in the country.
Additionally, Transparency Institute Guyana Inc. (TIGI) had said that given the conflicting reports on whether BaiShanLin and Vaitarna operations are in conformity with our laws, specifically the Guyana Forestry Commission Act and the Environmental Protection Act , their contracts should be made public. It had issued this call to the past administration but this was also ignored.
In view of the public outrage at the extent to which these two companies were said to be exploiting the forests resources, TIGI also called on the past administration to place a halt on their operations. But this was as the old adage goes – “throwing water on duck’s back.” Instead, the Donald Ramotar Government chose to defend the two companies.

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