AN OVERVIEW OF ASIAN COMPANIES: CONCLUSIONS
Brazil finds itself in the position of facing potentially massive increases in logging activity in the Amazon basin by a number of large transnational companies which have apparently acquired, or are attempting to acquire, control over significant areas of land. Through examination of some of these companies' environmental, social and financial records in other countries where they operate it can be concluded that such an increase in logging activity is not likely to be in the long term interests of either the local and Brazilian people or government of Brazil.
Emergent themes in the globalisation of Asian forestry sector companies include:
OPERATIONS IN COUNTRIES WHICH HAVE LITTLE OR NO ENFORCEMENT CAPACITY Even in countries where forest policy may on paper offer a sound framework for logging company
operations, the fact that all the countries reviewed have a severe lack of institutional capacity to
monitor and control activities on the ground makes such policies worthless. The Guyana Forestry
Commission has about 7 fully qualified foresters on its staff, none of whom are involved in forest
management. The Forestry Service in Suriname lacks basic skills such as inventory and monitoring
expertise as well as morale. Similar situations prevail in PNG and many countries in Africa and
Southeast Asia. The Timber Control Unit of the Solomon Islands, responsible for the implementation
of logging and export controls, had its funding withdrawn after the government refused to introduce a
sustainable logging policy. This widespread lack of capacity means logging and forestry management
practices, extraction rates and exports are all inadequately monitored, if at all.
APPALLING SOCIAL AND ENVIRONMENTAL RECORD Serious concern over the impact of logging on the region's rivers (increased sedimentation and flash
flooding, the land's reduced holding capacity and increased erosion from rain) has been expressed in
the press in Sarwak on a number of occasions. Unsustainable logging practices have also led to log
shortage in Malaysia, Thailand and Indonesia. Conflicts between the timber companies and forest-
dwelling communities in Papua New Guinea, the Solomons, Surimane, Guyana etc have been covered
all over the world.
CONTRACTS NEGOTIATED BY COMPANIES ARE OFTEN NOT BENEFICIAL TO HOST COUNTRIES Badly negotiated contracts, or contracts negotiated in a climate where companies hold excessive
influence over the political process, allow companies to export excessive amounts of profit (Duncan,
1994). Thus governments, having given lucrative tax concessions and low royalty rates, receive little in
terms of income but continue to lose their forest resources.
ILLEGAL LOGGING PRACTICES ARE WIDESPREAD Malaysia is the largest exporter of tropical timber logs, sawnwood and veneer in the world. Doug
Tsuruoka (1991) documented transfer pricing in Sabah, Malaysia, which included under-declaration of
exports and corresponding over-declaration of supply to domestic mills, as well as smuggling and
illegal logging in protected areas. The ITTO mission in 1990 found anecdotal accounts that transfer
pricing takes place in Sarawak (Callister, 1992), and matters of corruption within the forest department
have been publicly aired (Callister, 1992). "Illegalities in the Indonesian forestry sector appear to be
rampant... The scale of these activities is staggering" (Callister, 1992) According to the World Bank,
lost revenue between 1980-1985 is thought to have been US$1.2 billion (Brown, 1988).
CORRUPTION APPEARS ENDEMIC Berjaya Group Ltd Managing Director, Tony CT Yeong, allegedly attempted to bribe the Solomons'
Minister for Commerce, Employment and Trade (Solomon Star, 1994a). Corruption issues within the
forestry department in Malaysia have been raised (Callister, 1992). Corporate 'donations' to senior
politicians in Guyana have caused public outcry. The Barnett report cited numerous incidents of
bribery and receipt of payments by Ministers and officials in PNG by logging companies including
Malaysian, Japanese and Korean companies (Callister, 1992)
USE OF POOR FORESTRY MANAGEMENT PLANS In PNG, where Malaysian interests dominate the logging industry, only 22 out of 316 timber projects
established since 1975 had submitted an environment plan (Barry, 1992). The current situation is
unclear. In Cambodia, Samling promised massive investment without undertaking a detailed ground
survey of their concession (WB, 1996. p31). With little site-specific data, Barama - a Samling
subsidiary in Guyana -invested and began operations assuming a yield of 25m3 of timber per hectare;
the actual yield is 12-14 m3 per hectare (Sizer, 1996, p39). Access to forests in Sarawak where logging
takes place is strictly controlled by the state government, and the military support the operation of and
work in close co-operation with logging companies. For this reason it is very hard to have a freely
independent assessment of the social and environmental impact of these companies' management
plans.
LACK OF TRANSPARENCY IN CORPORATE OWNERSHIP AND STRUCTURE The Samling group of companies' overseas logging operations are privately held through a network of
subsidiaries. The WTK Realty and Rimbunan Hijau companies are also privately owned through a
complex network of subsidiaries. In PNG and the Solomon Islands accounts and annual returns filed
by Asian and other companies are many years out of date. There are also many reports from
concerned organisations that company records are missing from government offices in Malaysia. The
Government of Malaysia itself admitted the widespread under-invoicing of timber exports. The
complexity of their corporate ownership and structure makes it very hard for governments to monitor
their accounts, economic transactions and overall operation in the country.