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‘Old’ forestry law best bet for forest exploitation
April 29th, 2006

PAPUA New Guinea would need to amend the Forestry Act 1991 and revert largely to previous legislation if the government wants to exploit the full potential of forestry resources, an Australian economist suggests.

Mr Tim Curtin said “the Forestry Act was largely a response to what in retrospect seems the half-baked Barnett Report, with its exhaustive exposure of alleged ‘depredations’ through the claimed transfer pricing of foreign logging companies”.

Mr Curtin said that on closer inspection much of the report’s evidence of transfer pricing was false, mainly because Barnett had failed to allow for freight costs when comparing cost insurance and freight log import prices in Japan with free on-board prices in Papua New Guinea.

“Malaysian and Papua New Guinea log export prices tracked each other very closely in the 1980s and showed the same difference from Japan’s import prices,” he said.

Mr Curtin said that instead of seeking to strengthen the capacity of customary owners of PNG’s forests to negotiate directly with logging companies to secure an equitable share of logging revenues, the Forestry Act “in effect nationalised the country’s forests”.

He said the role of the supposed owners was reduced to being no more than spectators of the exploitation of their large single source of wealth.

“The 1991 Act would have made a real contribution to improved management of PNG’s forestry resources if it had put in place mechanisms to allow for ownership of designated areas to be vested in landowner companies rather than the incorporated land groups, because the Act governing the latter makes no effort to define the land to which the ILGs lay claim.

“In addition, the ILG Act has vastly inferior governance and accountability provisions compared with those in the Companies Act 1997.”

Tim Curtin
Australian National University

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