GFC failed the forest sector –Bulkan

Sep 23, 2016 News

– Commission’s failure to apply due diligence audits on the eligibility of applicants for large-scale concessions is “regrettable”

By Kiana Wilburg
The Central Bank of Guyana, which monitors the performance of the nation’s major productive sectors shows that the output from the forestry sector was slower than expected for the first half of the year.

GFC Commissioner, James Singh

Disappointment in this performance was also noted by the Minister of Finance, Winston Jordan.
The ‘slower-than-expected’ output of the sector has awakened a conversation among many local analysts about the value added performance of the forest sector and its overall contributions to the economy.
In this regard, numerous questions arise, one of which includes, whether the Guyana Forestry Commission (GFC) has failed to ensure the effective management of the sector in this regard.
Forest expert, Janette Bulkan, has written numerous columns on Guyana’s forests and the action that needs to be taken to protect it.
She made it clear to Kaieteur News that GFC has a legal mandate when it comes to the management of the State Forests of Guyana, under Section 5 of the GFC Act 2007.
She said that it also has a responsibility ‘to provide an inspection, certification and accreditation service for quality control of forest produce’ (section 5 (g)) which is inherited from the earlier Guyana Timber Export Board.
Bulkan said that this grading service gives it some status in recording and approving exports, although the legal authority is not clear because of the usual confused drafting of law.
She said, too, that the de facto authority of the GFC to sign off export documents makes it collusive in the Customs fraud practised on a large scale by some Asian log traders.
Additionally, Bulkan noted that the GFC does not have formal legal authority for the processing of forest products, other than licensing of mills under the Forests Act and Forest Regulations.
She asserted that the GFC has produced a technically good code of conduct for lumber yards, a code that it could enforce under its licensing authority.
But as with the codes of practice for forest harvesting and management, Bulkan noted that the GFC has failed to implement the section of the Forests Act 2009 to consult and gazette and hence make obligatory, the application of these codes of practice.
The forest expert said, “Considering the international selling price (Cost, Insurance and Freight-CIF) for forest produce from Guyana, the small contribution to the national economy of forest management and forest product processing is disappointing. This was one major reason for creating the Forest Department in 1925. One major, perhaps the major, problem is that the processing companies (mostly lumber yards) are small family-owned businesses whose objectives are a comfortable life for the family.”
She continued, “These companies are not conventional businesses like DDL. They do not aspire for market dominance. They are absolutely resistant to dilution of ownership through public shareholdings. Consequently, they have little or no saved capital for investment in modern processing or modern marketing or continuous staff training.”
Bulkan said that indeed, most of them do no conventional marketing at all, and it is not in the GFC’s legal mandate to intervene directly.
She said that is more of a role for the Ministry of Business or the Guyana Office for Investment (GO-Invest).
“What the GFC should do, and what the GFC concession policy of 1993 requires (but it is not applied), is to link forest concession area and forest quality to product processing capacity and quality. This has never been done so far. There are several good-quality and relevant consultancy reports since 1995, waiting to be updated and implemented,” expressed Bulkan.
The forest expert said that the GFC’s consistent failure to implement due diligence audits and checks on the eligibility of applicants for forest logging concessions is of course “regrettable”.
She said that there is a non-refundable application fee of US$ 20,000 for State Forest Exploratory Permits. Bulkan said that it was set at this level in 1997 precisely to enable the GFC to contract international specialists in due diligence checks.
The civil society member said that these fees have not been used for the intended purposes. She noted that if the application fees had been properly used, companies such as Bai Shan Lin and Vaitarna Holding Private Incorporated (VHPI) would not have been able to obtain forest concessions because they did not have the prescribed skills or experience.
Bulkan said that whether it would have been possible for the GFC to coordinate and work with the Ministry of Finance and GO-Invest to develop and implement the forest industry policy and strategy set out in the forest policy (1997/2011) and forest plan (2001/2011) is an open question.
She stated that it is arguable that the democratic centralism of the PPP/C would not have allowed such inter-agency coordination, at least not while some concessions and FDI arrangements were determined substantially by corrupt deals.