WELCOME TO TIM CURTIN'S CYBERHOME
about tim | publications
| contact | home
Expert: Bank robs PNG of
more logging revenue
April 29th, 2006
A RESPECTED Australian economist has argued that
World Bank intervention in PNG’s logging industry has stifled
exports that could be worth K13 billion compared with only K416
million in 2003.
Economist Tim Curtin compared Papua New Guinea
with Sweden and suggested that PNG’s logging exports could
be worth K13 billion or nearly double the country’s total
exports in 2003.
“A seriously rich country like Sweden, unimpeded
by the World Bank, had been logging at rates of up to 70 million
cubic metres a year for the last decade, 35 times more than Papua
New Guinea,” he said.
Mr Curtin said this was despite the fact that PNG had a much larger
forested area – 369,000 sq km compared with Sweden’s
244,000 sq km.
“Were PNG to attain Sweden’s level
of output and there is no reason why it could not, given its equal
– possibly superior – suitability for softwood pine
forests, then its logging exports could be worth K13 billion,”
he said in a paper that will form part of a forthcoming book, Land,
Law and Economic Development in PNG.
New Zealand, he said, provided a similar example
with loggers producing nearly 10 times as much as PNG in the 1990s,
“but from a forested area that is only 7% of the country’s
smaller total land area”.
Such a scale of operations would require large plantations and progress
to such a phase has hardly begun in PNG partly “because of
the difficulty in securing government approval and landowner participation
in the required transition”.
Mr Curtin also supported the PNG Government’s
decision in May last year to reject the World Bank’s Forest
Conservation Project loan of US$17 million (K53 million).
It was “highly unlikely” the loan
would “generate sufficient tax revenue to enable the government
to repay the full loan which, with interest, could be well over
US$35 million (K109 million).
The World Bank had claimed the loan would generate
financial and economic rates of return of 21% annually but this
was unlikely since the main component of US$6.4 million (K20 million)
was for workshops and seminars to improve landowner decision-making.
The loans required payment with interest, commitment
fees of 0.85% a year for the first four years and front end fees
Mr Curtin said PNG exports of forest product,
mainly two million cubic metres of logs, had contributed K415.8
million, or 5.3% of total exports worth K7.79 billion, “despite
the World Bank imposed export tax system”.
He also criticised the view of another Australian
economist Helen Hughes, that land reform and a massive expansion
of oil palm plantations could help PNG achieve a 7% growth rate.
He said another economist, Michael Bourke, had
shown the improbability of this analysis by pointing out that to
replace crude oil and mineral exports, palm oil would need to be
planted over 1.5 million hectares compared with only 108,000 ha
Mr Curtin said: “If anything, Bourke was
too kind to Hughes – his demolition would have been complete
if he had noticed that her projected growth rate for PNG’s
oil palm exports would within 15 years imply output greater than
current world consumption – and as a result a collapse in
the world price.
“By then, the area under palm oil would
have to be over seven million ha – another implausibility,
as Bourke points out.”
Australian National University
back to top