A RECENT international report shows that Cambodia is allowing its forests to disappear

because of inadequate policies and poor administration.

The report proves that the bulk of the money from Cambodian timber is flowing off-shore.

A copy of the executive summary of a joint World Bank/UNDP/FAO report, dated late

1995, says "current policies risk deepening and accelerating" deforestation

"by repeating mistakes made in other forest-rich developing countries."

The report will be discussed at July's Donors' Consultative Group meeting, where

future aid to Cambodia will be discussed.

Agriculture Minister Tao Seng Huor said that he invited the review team to help him

solve Cambodia's foresty problems. However, the report has led some to speculate

that Seng Huor's ministerial future may be on the line.

The report also points to a re-think away from the current "mega-concessions"

that the Government has awarded to Macro-Pannin, Grand Atlantic, Samling and Kingwood,

among others.

The report takes a shot at foreign logging companies - though none are mentioned

by name - as taking five times more timber than Cambodian forests can stand, and

getting it at a fifth of world prices.

Cambodia was getting about $20 million a year in forestry revenue, the report said.

By auctioning concession rights, pumping up royalities in line with world prices,

and enforcing environmental rules, the Kingdom could earn $100m a year - and the

logging could be sustainable, according to the report.

The present logging ban promoted a capital intensive wood processing sector, it said.

By granting large concessions the Government "appears to have allocated nearly

all of the country's commercially viable timberlands to a small number of concessionaires."

Timber exploitation was therefore unsustainable and "in any case" was too

cheap.

Protecting and subsidizing "value-added processing" would cost the Government

each year about $18,000 per job in "employment creation" - "far above

wages and far above costs in other sectors," the report said.

"Without subsidized [timber], the proposed processing investments are not financially

viable and would not be undertaken without subsidy that would principally benefit

a small number of primarily foreign concessionaires."

Those foreign companies had not done adequate resource assessments "and have

systematically overestimated timber availability," it said.

They would therefore have to log so much land to realize their commitments that the

demand on Cambodian forests would be "unsustainable," it said.

It said Cambodia must restrict loggers to cut only 10 cubic meters of timber per

hectare.

The current rate - proposed by the companies themselves - are up to 50 cubic meters

per hectare or more.

If those companies were restricted to just 10 cubic meters - even with subsidized

royalties - they wouldn't be profitable because of "low conversion rates, poor

marketing strategies, and high capital costs."

Logging companies should have to satisfy the full value of their investment commitments

or else be declared in default.

The concession should then be allocated in a "transparent and competitive bidding

subject to minimum appraisals."

Such a new policy would promote smaller, more locally-owned firms using local labor,

it said.