FIJI FOREST INDUSTRY HIT WITH ROYALTY INCREASE

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Association protests 57 percent hike

SUVA, Fiji (Fijilive, Sept. 25, 2008) - The Fiji Sawmillers Association says its members are angered and concerned at a recent decision to impose a 57 percent increase on royalty rates.

The association’s members comprise operators of sawmills and plywood mills.

The association, which says its main aim is to protect the timber industry in Fiji, added that the more disappointing factor was the failure of the Department of Forests to notify the 15 players in the industry.

Association president Jay Dayal told Fijilive that the association only learnt of this "huge" increase yesterday afternoon, through a member who obtained a department circular advising this increase.

"The association believes that in the absence of adequate dialogue and consultation, the NLTB and forestry department has hoodwinked the industry and has deliberately misrepresented when agreeing in principle that certain major changes will not take place and all consideration to the plight of the timber will be given," he said.

He said the association had written to interim Forests Minister Joketani Cokanasiga and the Prime Minister’s office to withdraw the increase in royalty and the re-classification of timber species. He added there would be serious consequences on the economic viability of the hardwood timber industry in Fiji.

This has to stop and be reconsidered or we will seek legal action," Dayal said, adding the association was yet to hear from the minister.

He said imposing such high increases on royalty rates, coupled with the uncompetitive prices of timber following the re-classification of lower class timber into higher-class timber, it would all result in unfair competition in the market.

"The re-classification of lower class timber species into higher class timber species will not only make those species extremely expensive but will add to the problems the industry is currently facing," Dayal said. "The lower class of timber species which will now, after the new rates, attract an exorbitant rate of royalty and will make the species of timber involved in the construction industry very expensive and uncompetitive," he said.

He added sawmillers competed with the pine industry and "placed a huge burden of costs without any justification and rationale is totally unacceptable."

Dayal said the result would be unfair competition in the market with one group of businesses selling timber for construction use at ridiculously high prices and other suppliers at lower prices. He said this would also make room for imported timber to penetrate and compete with local produce.

"The locally produced timber will be greatly disadvantaged with high production cost and uncompetitiveness," Dayal said.

"The industry has already been facing tough times because of imported products, the rainy weather seasons and massive competition with Asian species in the export arena.

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