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By Julia Daia Bore

PORT MORESBY, Papua New Guinea (The National, Aug. 22) - The World Bank-sponsored Forest Review Team has predicted that Papua New Guinea’s logging industry will "disappear within ten years" unless timber companies are able to increase their profit levels.

In its recently released draft report, distributed for stakeholder and public comment, the Forest Review Team said that in spite of a lack of profitability, some logging companies were seeking access to additional forest resources.

"This would not appear to be rational behavior unless there exists another reason for remaining in the industry," it said.

It noted that logging companies responded to a question on this situation by pointing to expectations of future increases in log prices and that the initial investment and period of negative profits "would be followed by a period of profitability".

The report said: "It is the opinion of the Review Team that unless the industry becomes more profitable, that the current logging capacity in PNG will decline and eventually disappear within 10 years."

The report was prepared for the National Government's Inter-Agency Forestry Committee headed by Chief Secretary Joshua Kalinoe, which had requested a review of 15 forestry projects. Six were treated in greater detail as "case studies".

Reports dealing with individual projects have been forwarded to the companies responsible for further comment and were not immediately available to the media.

Of the 15 projects meant to come under scrutiny, Concord Pacific's Kiunga-Aiambak Road timber authority was subsequently deemed illegal and shut down and the project was deleted from the Review Team's list.

Key points made in the 100-page draft report included:

The report said the capacity and resources available to the PNGFA to carry out its functions has declined significantly since the mid-1990s and that the PNGFA has been unable to produce adequate records of royalties and other payments received and distributed to landowners.

It said resources available to the Department of Environment and Conservation had also declined greatly since the mid-1990s.

August 23, 2004

The National:

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