Logo of Phnom Penh Post newspaper Phnom Penh Post - Defence secretly holds out on logs

Defence secretly holds out on logs

Defence secretly holds out on logs

T HE Ministry of National Defense (MoND) is still issuing licenses for the export of timber despite a supposed official reversal of the controversial decision on Aug 4, according to government sources and documents obtained by the Post.

Moreover, despite the fact that a moratorium on the export of timber is supposed to be in effect since April 1 this year, new licenses are being granted and old ones being extended regularly even six months after the ban came into force.

And while officially only 'old timber' or 'timber already felled' is being licensed for export, a report by the Ministry of Finance as early as April this year had recommended that "further export of logs and sawn timber should not be permitted since almost all old timber felled prior to 1 Jan 1993 has already been exported."

Legally, exporters desiring a license have to get approval from the two Prime Ministers to export a specific amount of timber. The timber has to be physically inspected by the Commission to Investigate and Examine the Problem of Processed and Unprocessed Timber (CIEPPUT) which was established for this purpose on July 20 this year.

After the chairmen of the commission have certified that the timber is old and is of the amount and type stated in the application, the exporter pays taxes on the amount of timber approved to the Ministry of Finance and also a standing timber charge to the Ministry of Agriculture. Only then can a license be granted.

But a confidential government memorandum dated Oct 2 obtained by the Post says that in the case of licenses issued by the MoND, "the body responsible for the inspection of quantity and quality and the collection of taxes is a Commission for Examining Logs in the Ministry of Defense" rather than the officially established CIEPPUT.

An observer close to the government, who spoke on condition of strict anonymity, says there are official documents to prove that at least one license to export timber requested by the Ministry of Defense has been approved by the co-Prime Ministers as recently as Aug 24-25 and issued on Sept 9, a month after the decision to return revenues to the Finance Ministry on Aug 4.

The two Prime Ministers transferred revenues to the Ministry of Defense on June 18, a move that was widely criticized. However, there is evidence to show that licenses were issued by the defense ministry with the concurrence of the Prime Ministers even before this official transfer occurred.

The document obtained by the Post cites two examples of licenses for export of timber from Preah Vihear and Koh Kong granted in May to the Ministry of Defense. "On May 5, the Preah Vihear provincial governor and Ministry of National Defense (MoND) requested approval to export 130,000 cubic meters of logs to Thailand and Laos from Preah Vihear, approval for which was given by both Prime Ministers on May 6.

"Two weeks later, on May 21, the two Prime Ministers approved a similar request for the export of 120,000 cubic meters from the MoND and Koh Kong province," the document states. The revenues for these two deals alone, at the official stated rate of $35 per cubic meter, is $8.75 million.

Another document dated Oct 13 obtained by the Post estimates that approvals have been granted for at least 450,000 cubic meters of timber exports since the 'deadline' of March 31, of which at least 265,000 cubic meters have been authorized by the MoND.

"It can thus be estimated that the MoND have collected at least $9,275,000 [based on a stated price of $35 per cubic meter]. It is known that a significant additional amount of timber in several provinces has also been authorized for export by the MoND with the Prime Ministers' approval in the past few months and that the MoND has continued to issue such licenses, with the apparent approval of the Prime Ministers, up to the present," the document says.

When asked, a source at the Ministry of Finance said: "So far, no tax whatsoever from the export of timber has been paid by the MoND to the Ministry of Finance."

Tao Seng Huor, Secretary of State for Agriculture and co-Chairman of the CIEPPUT denies that any revenues have gone to the Ministry of Defense.

"The Ministry of Defense is only authorized to store and keep logs which are situated in remote or dangerous areas which the Commission cannot go to," he insists. "In the two months since the Commission's formation, we have inspected wood in several provinces and given a revenue of $8,974,000 to the Ministry of Finance.

The transfer of revenues to the MoND on June 18 and back to the Ministry of Finance on Aug 4 has had another consequence. On June 17, the co-Prime Ministers wrote to the Thai government saying that the MoND "is entrusted to deal directly with the matter of timber export." Since then, there has been no official letter to the Thai government changing this stand, despite the Aug 4 reversal.

The Thai government therefore still recognizes only licenses issued by the MoND, and not those issued by the Ministries of Commerce, Agriculture or Finance.

The Thai ambassador Sakthip Krairiksh, asked about his government's stand, said: "We are not aware of any change. There has been no reversal and we are still abiding by the letter," he said. He added: "We had requested a clarification more than a month ago but there has been no response."

The Oct 2 memorandum also says that the MoND has not only been receiving revenues, it has also been granting duty exemption to some companies to import and export machinery.

"Under the prevailing laws and regulations relating to customs, investment and forestry, the MoND has no right to grant duty-free exemption to the BLP, Sofatco and Chaophraya Irrawady companies to import and export machinery," it says.

Apart from the issue of revenues being diverted to the MoND, the other questionable point is the ban on timber exports itself, which has been violated with every new license granted or old license extended since April 1 this year.

The official explanation is that it is only old logs which are being exported. Tao Seng Huor said: "We are very careful before granting a license. There are many tricks played by the exporters. We only grant licenses to companies after physically inspecting if there are old logs."

But the Oct 13 document says licenses are granted on "an utterly arbitrary basis." It adds that "Only in certain cases does the export have the prior approval of the Commission co-chairmen and it appears rare that even their approval is based on any physical inspection."

Tao Seng Huor, however, would not give any statistics about the old logs he had inspected. "We have finished inspecting logs in Kompong Som, Koh Kong, Kratie, Mondulkiri, Rattanakiri and Stung Treng. We still have to go to other provinces. I cannot give you any figures now," he said.

of these measures, the customs revenue collected in the first three months of 1994 - about $6 million - was three times more than the revenue for the whole of 1993.

But the October 13 document says that the issuing of Certificates of Origin "has unfortunately since been abandoned by the two Prime Ministers."

King Norodom Sihanouk, in a letter dated Oct 14 to the co-Prime Ministers and Chea Sim, recommended a "total stoppage of new logging until the establishment of an inventory of wood stock already cut." He also said that "irregularities are unfortunately very routine" and that even his suggestions may not be tough enough to improve the situation.

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