AN OVERVIEW OF ASIAN COMPANIES: GUYANA
Approximately 9.1 million ha of Guyana's 16.5 million ha of forests have been classified as State Forests, which are administered by the Guyana Forestry Commission (Bishop. 1995). Of the 9.1 million hectares, well over 8 million hectares (approximately the size of Portugal) are currently under Timber Sales Agreement, Wood Cutting Lease or State Forest Permission licenses. By early 1993, unofficial data suggested that the area of State Forest lease out to concessionaires had increased to some 7.1 million hectares, about 80% of the State Forests, in addition an estimated 1.1 million hectares outside the State Forests had been leased out under other permits. (Colchester, 1997) It has been estimated that some 10-15% of land within the boundaries of Sate Forests are Amerindian Lands (Toppin-Allahar, 1995, p30), potentially an area of considerable conflict The country currently has only one protected area, the 11,655 hectare Kaieteur National Park.
Guyana has no comprehensive laws on land-use planning, monitoring, and enforcement. The Guyana Forestry Commission (GFC) , responsible for monitoring registered cutting practices on some 6.3 million hectares of forest, as well as unregistered activities, has about 7 fully qualified foresters on its staff, none of whom are involved in forest management. The Environmental Protection Bill recently passed by Parliament will lead to the creation of the Guyana Environmental Protection Agency, which should plan for the mitigation of environmental impacts.
During the last five years in Guyana there have been three new developments in the forestry sector; large scale foreign investment, chainsaw lumber production and furniture and millwork. (GNRA, 1995. p8) Chainsaw operations involving large numbers of individuals makes monitoring difficult. Three to four hundred are fully legal and registered with the Guyana Forestry Commission, around two thousand more are unregistered. This "severely limit[s] the ability of the GFC to institute proper forest management" (GNRA, 1995. p9). This is of concern as some of the larger scale processing operations are documented as receiving logs from such operations for down stream processing. Despite of Guyana's great forest wealth, Government income from logging activities in 1995, totalled less than US$1 million, and the forestsīvast non-timber potential has scarcely been developed at all. The minimal royalties and fees in the forestry sector further reduce the contribution to the national economy. Fees charged to companies extracting timber from Guyana's State Forests are extremely low - no more than 1 to 2 percent of total production and export costs (Thompson, 1994). Although in 1996 the Government doubled these fees, they are still extremely low compared to other countries. Current area feed equals only 0.01% of export value of sawn greenheart and only 0.001% of export value for greenheart logs. (Sizer, 96)
There are indications that Guyana started to experience the kinds of negative social and environmental impacts witnessed in South East Asia: alienation of indigenous people from their lands, poor roads, chemical spills, unsustainable logging, destroyed or degraded habitats and poor labour practices. Many of the companies moving into Guyana are the very same ones in conflict with indigenous peoples in Sarawak, Papua New Guinea and the Solomons. (Colchester, 1997)
Recognising the inadequacy of the situation and the government's incapacity to control it, in early
1995, the Government of Guyana declared a three-year moratorium on the issuing of new logging
concessions to allow time to strengthen the Forestry Commission and for policy and legal reform.
FOREIGN LOGGING COMPANIES IN GUYANA Up to the 1960s, Guyana's logging industry remained small and essentially seasonal. With the opening
up of the Guyanese economy in the 1980s, the forest sector was also opened to large scale foreign
exploitation. A number of foreign investors such as the Berjava Group and Solid Timber Sendirian
from Malaysia, and The Buchanan Group from Canada - companies with questionable environmental
and social tract records - have tried to acquire logging rights in Guyana (Sizer, 96).
BARAMA COMPANY LIMITED (Samling) In October 1991 the Barama Company Limited won an investment contract, giving the company rights
to log 1,690,000 ha in the Northwest of Guyana near the Venezuelan border (around 8% of the national
territory). Barama is wholly owned joined venture incorporated in Guyana between Samling Strategic
Corporation Sdn Bhd of Malaysia (80%) and Sunkyong Limited of Korea (20%). Barama has a 25 year
logging licence, automatically renewable for another 25 years, with a 5 year tax holiday automatically
renewable for a further 5 years for the export of raw logs, sawn lumber, veneer and processed
plywood.
The tax holiday gives unlimited exemption from income tax, corporation tax, withholding tax,
consumption tax and property tax.
Barama states that it is committed to extracting timber from its concession using sustainable forestry
practices (Colchester, 1993). An environmental and social impact assessment of the proposed
operations was undertaken by the Edinburgh Centre for Tropical Forestry (ECTF) in 1993. Negative
impacts had already begun to show by the end of the year in which the ECTF study was undertaken.
Residents on the Port Kaituma - Matthews Ridge road have complained to the Minister for Amerindian
Affairs about the pollution of their waters downstream of the Oronoque log pond, which they claimed
was causing them to fall sick. The Amerindian Peoples Association (APA), after protesting about this
and land rights issues, has threatened to call for an international boycott of Guyanese timber
(Colchester, 1993).
With little site-specific data, Barama assumed an average extraction rate of 25 cubic meters per
hectare. The ECTF reported however that "timber harvesting may not be biologically sustainable at
planned extraction levels" and noted that this was a major potential risk. Also according to ECTF,
current logging removes 26% of the basal area, an average of 4.75 large trees per hectare.
Deforestation due to road building was calculated to be 2% of total cover or 6 meters of road per
hectare haversted.
Since high rainfall, clay soils, and in the past labour disputes have sometimes severely limited log
extraction from the concession, Barama has purchased logs from other producers to meet orders on
time and to keep the plywood mill running. In addition, scarcity of some lighter coloured species
needed for the external surfaces of the plywood has prompted purchases from other local loggers
including Amerindians at Orealla and Siparita. Total purchases from other producers amount to 12-
15% of the company's supplies. Neither Barama nor ECTF monitors environmental and social impacts
of these suppliers.
The Government of Guyana collects very little direct revenue from the operations of the Barama
Company. The three sources of direct revenue are:
All these taxes, fees, and royalties are set in the Barama contract in Guyanese dollars with no
provisions for adjustment as inflation devalues the currency (Sizer 196 p41).
The process is startlingly apparent to anyone visiting the Barama Comapny in the North West District.
There, the whole operation is run by a Korean businessman, the actual timber extraction is managed
by Filipino logging operators, while the tractors are driven by indigenous Iban, a Dayak people of
Sarawak. M.Colshester, 1997
DEMERARA TIMBERS LIMITED (DTL) DTL is owned by Primegroup Holdings Limited, registered in the British Virgin Islands, which bought
the company in late July 1995. Primegroup had earlier been awarded a wood-cutting lease (number
3/93 registered with the Guyana Forestry Commission) in Guyana under the name Mazaruni Forest
Industries Limited (MFIL).
Demerara Timbers Ltd. controls about half a million hectares on the middle Essequibo and Upper
Demerara rivers. Although full details of the contract establishing this operation have never been made
public, the company has advertised the generous fiscal incentives that it was able to secure from the
government (including a five-year tax holiday) in order to attract foreign investors. As part of the
negotiation for DTL, Primegroup agreed to relinquish this other contract and to capitalise the new
acquisition with US$16 million during the first year of operations. Ownership of Demerara Timbers
has been something of a mystery. Recent rumours suggest that Primegroup is owned by, or is in the
process of being taken over by the Malaysian company Rimbunan Hijau.
UNAMCO and CASE TIMBERS It is reported that Malaysia's Berjaya Group Berhad (Malaysia's sixth largest conglomerate) has been
aggressively seeking a concession in Guyana's forests. The company has sought to invest in Guyana
through the formation of partnerships with UNAMCO and Case Timbers which have leases for 96,000
hectares in the Upper Berbice and 125,000 hectares in the Northwest. Case/UNAMCO recently
announced that with US$20 million of new Malaysian capital they will build a sawmill with a capacity
to produce 4,500 cubic meters of sawn wood each month and employ 550 people. The Guyanese
partner in Case/UNAMCO denies any connection between his company and Berjaya, but numerous
newspaper reports and other sources confirm that Berjaya is the investor through a company called
Tenaga Khemas, whose representative, Mr. V. Kanagalingan confirms that he is associated with
Berjaya and has bought shares in UNAMCO (Sizer, 1996). For more information on Berjaya Group's
activities in the forestry sector see the Suriname section.
NEW REQUESTS FOR LOGGING CONCESSIONS Despite of the moratorium on new logging licences, the government has now invented a new kind of
permit - an "exploratory lease". The Guyana Information Service released information in August 1995
of the Government's intention to grant 'exploratory timber licenses' to 4 companies: Berjaya Group
(Malaysia), Solid Timber Holdings Sdn Bhd (Malaysia), Buchanan Group (Canada) and Kwitaro
Investments Incorporated (Malaysia) (Sizer, 1996). This announcement was made prior to the
existence of the appropriate legislation and regulatory framework for the issuing of such licences as
promised in the moratorium. The current draft of the 'exploratory timber license' legislation, which is
still passing through Parliament, allows timber cutting for marketing purposes - though no upper limit
is defined - and some infrastructure development including road construction. (Forests (Amendments)
(Exploratory Permits) Bill 1996. Draft.) Given the GFC's lack of resources to monitor such operations
this situation should be viewed with extreme caution.
Among the recent requests that prompted the constraint on issuing of any new forest concessions in
Guyana were at least five substantial requests from foreign investors, each company seeking
concessions of over 500,000 hectares. The companies have promised huge investments in processing
installations. These requests have received considerable national and international attention.
THE BUCHANAN GROUP Buchanan, a private Canadian company, has specialised in cutting timber in marginal forests in
Ontario, Canada, and began to expand into the sawmill industry only in the late 1970s. Ontario's
biggest lumber producer by the late 1980s, Buchanan initially sought a 1,400,000 hectare concession
that crossed the Rupununi region (Sizer, 1996). After several failed applications, Buchanan recently
reapplied for the area vacated by MFIL when MFIL's owner Primegroup acquired DTL. Buchanan
plans to concentrate on producing railway sleepers for the Canadian market. According to Canadian
labour unions, Buchanan has a long track record of doing all that it can to avoid forestry,
environmental, and labour legislation (Frood & Sanders, 1992).
SOLID TIMBER SENDIRIAN BERHAD Solid Timber Sendirian Berhad, a little known Malaysian company, is reported to have a 500,000
hectare concession in Malaysia, operations in Papua New Guinea, a sawmill in China, and investments
in hotels in Malaysia and New Zealand. The firm has applied for a 350,000-hectare exploratory lease
after initially requesting 720,000 hectares. The company reportedly has plans to invest US$250
million, including US$20-30 million in a sawmill to be built during the feasibility study period. It has
also offered to pay the Forestry Commission US$860,000 in fees during the exploratory period (Sizer,
1996)
BERJAYA GROUP BERHAD The Berjaya Group submitted a letter of intent to the Government of Guyana, requesting a 700,000-
hectare concession in the New River-Upper Berbice area with a proposed investment of US$112
million. Berjaya's original proposal did not get very far since the land that the company sought is
outside of the State Forests. Berjaya has subsequently entered the sector more surreptitiously as silent
partners in the Guyanese companies UNAMCO and Case Timbers. (See above.)
Berjaya sought an exemption from withholding tax on dividends paid to non-resident shareholders and
on interest payments paid to offshore lenders, exemption from export duties on all processed wood
products, exemption from import duties on all materials used by the company, a fixed ceiling on
corporate tax rates, fixed royalty rates for the entire life of the contract, deductibility of all interest
payments, an accelerated depreciation allowance, unlimited use of foreign labour when needed, and
investment protection guarantees Berjaya also requested that any new incentives offered to any other
company would also apply to Berjaya. (Sizer,1996) It planned to invest not only in timber and timber
processing, but also in a luxury hotel and the local lottery, activities much more closely related to the
conglomerate's operations in Asia. See the Suriname section for details of Berjaya's problems with
other attempts to enter the logging industry.
LEELING TIMBER According to Leeling's representative in Georgetown, the company was seeking to invest US$
60,000,000 in a 1,200,000 ha operation starting in February 1995 Leeling's proposal did not advance
significantly because the area they were seeking does not fall within the State Forest boundaries.
Leeling Timber is a joint venture between Leeling Timber Group of Malaysia and Hyundai Wood
Company Limited of Korea. The Malaysian firm would cut and process the timber while the Korean
firm would market it. In addition, Leeling's representative also mentioned the possibility of a joint
venture with Chinese investors. While very little is known about Leeling, Hyundai Corporation has a
troubled history of operations and environmental degradation in the Solomon Islands and Siberia
(Sizer, 1996).