AN OVERVIEW OF ASIAN COMPANIES: SOLOMON ISLANDS
As a group of small islands east of the much larger New Guinea, Solomon Islands has less that one tenth of PNG's commercially harvestable forest. However, logging by mainly Malaysian companies has escalated in the last five years to more than 3 times the estimated sustainable yield (AIDAB 1995). In less than ten years all the productive lowland forests will be logged. Yet small scale harvesting carried out by the landowners themselves is rapidly expanding and contibuting significant returns to the local economy (Central Bank of Solomon Is 1995), and can make up to 40 times more for resource owners than the royalties from industrial logging.
The government has come to be reliant on taxes from log exports (over 60% of government income) and logging company connected corruption is known to be common (eg. Solomon Star 1995, Pacific Report 1994). The Forestry Department is grossly understaffed, recently excerbated by the government's cancellation of the Australian Aid funded Timber Control Unit project in Solomon Islands. Without sufficent staff and adequate systems to monitor the logging industry, there is an incentive for the industry to not "follow sound resource management practices" and to use "transfer pricing and under reporting of log receipts" (Central Bank of Solomon Is 1995).
Companies, Corruption and Environmental Degradation Logging in Solomon Is is dominated by Malaysian and to a lesser degree, South Korean companies. The Malaysian companies are clusters of companies belonging mainly to the Kumpulan Emas Group, Rimbunan Hijau, Golden Springs International, and up until recently the Berjaya Group. The companies largely do their deals with the government and landowners in secret, prefering to use the Solomon Island Forest Industries Assn (SIFIA) as their public face. Significantly, the SIFIA spokesman recently admitted that the current company logging was unsustainable, and that some companies are not concerned with a sustainable harvest (SIBC 1997). Furthermore, at the end of 1996, in an unprecedented move, the Malaysian Deputy Prime Minister Anwar Ibrahim called on Malaysian companies operating in the Solomon Is to be sensitive to environmental issues and not overlog (AFP 1996).
Although no government Minister has yet been found guilty in a court or law for receiving bribes from logging companies, there is ample evidence that it is common practice. This included direct payments offered to two Ministers in 1994 to resign and join the opposition party and bring down the government (Pacific Report 1994, Solomon Star 1996). The managing director of the Malaysian Berjaya group company Star Harbour was deported following these allegations. The logging companies at that time had slowed log exports due to new high taxes, waiting until a change of government and the overturning of the taxes, when they resumed exporting at a higher level.
Common logging company practices used to reduce tax payments and in country profits, are transfer pricing, under reporting of log prices, and tax exemptions. In 1993 is was estimated losses for Solomon Is due to to under reporting of log prices and underpayment of duties was US$40 million, or approximatly one third of the total export value (Duncan 1994). In 1995 it was estimated that US$7 million of tax concessions and exemptions from the log export duty were given to round log exporters (SI Timber Control Unit 1995). A recent trend by foreign companies is to link with local landowner shell companies to ensure eligibility for tax concessions.
The Malaysian company logging has been described as the worst seen in any tropical forest (Olsen and Turnbull 1993). Sediment washed from unplanned bulldozer skid tracks and shoddy roading is destroying the island's fragile coral reefs: the main source of protein for the local people. This includes into the Southern Hemispheres largest enclosed lagoon system, Marovo Lagoon, a proposed World Heritage Area, from a Kumpulan Emas company Sylvania. The operations can "appear more like a clearfelling operation"(ibid), with no thought to protecting and regenerating the forest for the future.
These impacts have largely taken local people by surprise, as they watch the with no thought to protecting and regenerating the forest for the future.companies ignore most of the legally required practices. In response to this, angry landowners have burnt company bulldozers in several cases (such as on Pavuvu Is in July 1995), seized company chainsaws (Solomon Star 1996b), and in January 1997 burnt the offices of Golden Springs International.
The social disruption is possibly the worst impact of foreign logging. In October 1995, Martin Apa, a local community leader opposing logging by Malaysian company Marving Brothers Ltd on Pavuvu Is, was murdered. His murder has yet to be investigated.