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ASIA: Storm Over Asian-Pacific Timber Trade

by Yoon Szu-MaeSpecial to CorpWatch
March 5th, 2004

Cartoonist: Khalil Bendib

Kuala Lumpur, Malaysia -- Evidence by international environmental groups of illegal practices by multinational timber trade in South-East Asia and the Pacific have stirred up a storm of controversy among regional governments. Two separate investigations were released in February, ahead of the seventh meeting of parties to the United Nations Convention on Biological Diversity held in Kuala Lumpur.

Southeast Asia contains one of the most diverse rainforests in the world, including most of the highest-prized species of tropical wood destined for export to European and North American markets. As a result, these forests and protected areas have become unwitting targets of illegal loggers, who often work under the blind eye of local governments. Deregulating the timber trade under the WTO and other agreements has become a hot button issue for logging corporations and free trade critics alike.

Greenpeace Takes on a Malaysian Timber Giant

"The Untouchables - Rimbunan Hijau's World of Forest Crime and Political Patronage," a searing report issued by Greenpeace International, profiles Malaysian timber giant Rimbunan Hijau ("Green Forest"). A billion-dollar business owned by Sarawak tycoon Tiong Hiew King and his family, Rimbunan Hijau "appears to be protected by an extensive and well- established network of political patronage and media control," according to the Greenpeace the report.

Rimbunan Hijua in Russia

By Leong Kar Yen, Malaysiakini

Russian environmentalists have expressed their concern that logging activities in the northeastern region of Russia by Malaysian timber company Rimbunan Hijau will cause irreparable ecological damage and adversely affect the lives of people there.

Approximately 310,000 hectares of forest in the sub-district of Lazo, Khabarovsky, will be affected and 550,000 cubic meters would be logged yearly. The logging concession was leased to Rimbunan Hijau in 1997 for a period of 49 years. The company has also bought up the concessions for two other areas, Solnechsky and Ulchsky, further up north.

"The ecology and the environment as well as the livelihoods of people living in the area would be severely affected," explained indigenous rights activist Radion Sulandziqq.

Sulandziqq lives in Gvasyugi, a town about 50 kilometers away from the logging area, which is part of a territory allocated for traditional use of resources by indigenous populations.

"Our biggest concern is that Rimbunan Hijau does not have any long-term plans and it is only there to maximize profits," Sulandziqq said. "It is an international company that just takes what it wants and leaves."

According to Sulandziqq, the logging activities overran a territory reserved for hunting, fishing and gathering by local communities. Destruction of the forests would mean that locals would be forced to move out farther to survive.

In another development, a road is planned to connect the northern region of Russia to a port on the Sea of Japan.

"If the new road is opened up another area in the neighboring region of Primovsky would be affected. There would be logging and illegal poaching," Sulandziqq said, adding that another Russian company was also aggressively logging in Primovsky.

Irina Belova, a journalist who lives in the Khabarovsky region, said that Rimbunan Hijau had been fined several times for infraction of forestry laws.

"It has paid the fines but the regional administration is becoming less and less vigilant or eager to record down infractions," Belova explained.

However, Rimbunan Hijau had also paid fines of US$100,000 for a reforestation programme, US$450,000 to the regional administration and US$100,000 to the indigenous population.

"The project, however, also provides work for the people living in Sukpai, which was a Soviet-era town created to harvest the timber there. When the economy took a turn for the worse, the people there lost their jobs but they gained employment when the company came in." she said. "But you must keep in mind this is only for the short term."

Tiong's ties with the "political elite" and his former position as a Malaysian senator representing the Chinese-dominated Sarawak United People's Party have blurred the distinction between government and logging interests, Greenpeace charges. This, the report added, has led "to changes in legislation that favor corporate activities and which result in the disregard and repression of many actors within civil society."

Tiong has since made forays into the media business, and is the owner of three newspapers: Malaysia's Sin Chew Jit Poh, Hong Kong's Ming Pao and Papua New Guinea's National newspaper, among others. Interest groups have in the past charged that his control of National, in particular, helps the tycoon influence public opinion over his Papuan businesses.

Rimbunan not only dominates Papua New Guinea's logging industry, the company also has interests in Gabon, Equatorial Guinea, Malaysia, Vanuatu, Indonesia, New Zealand and Russia. The Greenpeace report focuses particularly on Rimbunan's logging activities in Papua -- where its activities have long been the target of criticism by local communities and environmentalists. Papua's annual $100 million timber exports are largely destined for China, Japan and South Korea.

Although a number of its logging permits have been declared unlawful by government investigators, no action has been taken against its 60-plus companies doing business in Papua.

Some of these logging subsidiaries have also managed to avoid open bidding on logging licenses, possibly due to its "close connections to Papua New Guinea's political elite," according to Greenpeace.

Meanwhile, the environmental organization reports that Papua's prime minister has been "directly involved in the logging industry and his deputy has been criticized in an Ombudsman Commission report for 'arbitrary and irresponsible' interference in directing the unlawful allocation of logging concession to Rimbunan Hijau."

Despite these revelations, enforcement is almost non-existent and the same commission found that the head of the Environment and Conservation Department supported the timber conglomerate, Greenpeace charges.

Two weeks after Greenpeace issued its report, Papua New Guinea's forestry minister, Patrick Pruaitch took out advertisements in the country's two main daily newspapers to deny Greenpeace claims that Rimbunan Hijau had been logging without legal permits.

"All logging operations in the country are legal," Pruaitch said in the advertisements.

Pruaitch said suggestions that illegally felled timber was being exported were "libellous and malicious" and defended the Rimbunan Hijau Group as "one of the most committed logging companies in PNG".

The Greenpeace report also points out that Rimbunan's influence extends even further. In November 2003, a Papua airline was ordered by the company to only fly Rimbunan-approved passengers to its logging concession area and to deny travel to any non-government organization.

Military Links

Elsewhere, Rimbunan's Indonesian subsidiary PT Rimbunan Hijau Jaya, has been accused by Greenpeace of using its ties with the Indonesian military to threaten locals opposed to its logging plans.

Rimbunan's negligent logging practices appear to be widespread and not just limited to Indonesia and Papua New Guinea.

In the Solomon Islands, Rimbunan has also faced criticism from residents and interest groups for environmentally destructive practices, illegal logging and other irregularities such as under reporting of log receipts, and payments made to parliamentary members.

In Malaysia, Rimbunan owns a 20 to 25 percent share of the timber industry. Its activities there are well known for infringing onto native customary land rights, according to Greenpeace.

Similar to the situation in Papua, Malaysian government officials and police work in the interest of logging companies, according to Greenpeace. Faced with inaction by authorities, native communities have blockaded logging roads, denying access to timber companies.

"Police and forest department officials have arbitrarily arrested and detained those indigenous people who put up any form of protest, even though such protests are undertaken within the confines of their own lands and they have legitimate rights under the law to such forms of protest," it Greenpeace said.

Profiting from Plunder

A second study, "Profiting from Plunder," is a two-year investigation by the London-based, independent Environmental Investigation Agency (EIA)and its Indonesian partner Telapak. The groups released the report together with an undercover video recording, which shows Malaysian businessmen laundering illegal timber from Indonesia in local ports right under the noses of the authorities.

Last year, a port official took the two groups to Malaysia's Johor port where stacks of ramin wood had been reportedly seen in three warehouses within the free trade zone. The shipments arrive daily from Sumatra, Indonesia, and were awaiting trans-shipment to Hong Kong, Taiwan and China, according to the environmental investigators.

Ramin, a blond colored tropical hardwood, has been listed by Indonesia authorities as a threatened species under the Convention on International Trade on Endangered Species (CITES).

Since April 2001, all legal Indonesian ramin shipments require CITES export permits, but most of this contraband wood continues to be laundered into international markets, EIA has claimed.

A shipping agent at the Johor port provided investigators with an export flowchart on how the Indonesian ramin gets re-declared as a different species of white tropical wood and stamped with a Malaysian label when they arrive in Malaysia.

EIA and Telapak say that throughout their two-year investigation into the matter, they had sent letters to the government on five separate occasions between August 2001 and the end of last year.

As a result the governments agreed to institute two bans: the first in June 2002 on Indonesian log imports, and the second on squared Indonesian logs in June 2003.

But doubts continue to fester over whether authorities were really intent on ending the illegal trade. Visits to Malaysian ports following the ban on whole logs found boats continuing to unload their illegal Indonesian logs in full open view, said EIA investigator Sam Lawson.

And after the ban on squared logs came into force, illegal squared logs from Indonesia were filmed arriving at Tawau's Barter Trade Jetty, which is controlled by customs. In February the organization found that an entire 'mountain' of what appeared to be illegal Indonesian ramin, still sitting at another port located in the free trade zone of Johor, Malaysia's southern-most state.

EIA senior investigator Alexander von Bismarck told this reporter that while they did not enter the port grounds, the piles of sawn timber sitting in open air was clearly visible from across the fence. "There is so much of it that they have to keep it outside," he noted.

EIA-Telapak investigators claim that they have evidence of a supplier admitting that part of the stockpile of ramin in a client's warehouse was laundered Indonesian timber.

The supplier also alleged that the smuggling is done with the knowledge of government officials through the port of Tanjung Manis in Sarawak state, once customs is paid to allow the shipment through.

The Sarawak Timber Development Corporation, the government issuing authority for CITES permits, visits mills along the Rejang river and issues certificates identifying the ramin as Malaysian, investigators charged.

"The idea of port officials sitting back and allowing free trade to happen is wrong. They are deliberately facilitating that trade, and the government, through the Johor port, are making money from that trade," Lawson said.

According to EIA and Telapak at least 70,000 cubic metres of illegal ramin go through the Johor alone -- almost twice the amount of legal sawed ramin produced in the country.

Denials, Finger-Pointing

The charges by the environmental groups have provoked strong reactions from regional governments ranging from denial to finger-pointing at each other.

Malaysian primary industries minister Dr Lim Keng Yaik first claimed that the Environmental Investigation Agency (EIA) and its Indonesian partner Telapak had "taken things out of context and at times falsified information to make themselves heroes at our expense."

Two days later the minister changed his tune and told the environmental groups to take the problem to the Indonesian authorities, rather than blame Malaysia for the illegal trade.

"If we have to change the law, it may take six months just to go through parliament. But for the time being, we will cooperate with the EIA to try and find a solution," he told reporters.

Indonesian authorities apparently took the minister at his word because the following week national police chief General Da'I Bachtiar announced told a parliamentary commission hearing that "a case of illegal logging has been found in Papua and we have arrested 15 Malaysians allegedly involved in the unlawful activity."

In a related development, Greenpeace said it assisted the Indonesian navy's expulsion of an illegal log vessel in Central Kalimantan, on the same day the hearing was announced.

The Indonesian government has appealed for Malaysia's help in combating the trade in illegal timber from its forests, saying that Indonesia was making its best effort despite limited resources and administrative weaknesses.

"It's our forests. Do you think we are sleeping? We do what we can do, but it's not enough," Indonesian environment minister Nabiel Makarim was quoted saying at a press conference. "The fight has become harder because the demand side is not responding. That's why we would like to have Malaysia on our side, it will make our fight easier."

Yet, at the same time, the minister warned that if the movement towards eradicating remains thwarted, Indonesia would propose that the European Union ban all timber originating from illegal sources. "But please keep in mind that we are only proposing this as a last resort," Nabiel cautioned.

Yoon Szu-Mae is a journalist with Malaysiakini, a Malaysian independent online news outlet.