exports of logs from Solomon Islands compared with importing
countries' declared imports of logs from Solomon Islands
imports of logs from Solomon Islands - by "customs
imports of logs from Solomon Islands - by "location of importer"
Monthly statistics for China's imports of logs from Solomon Islands and several other countries are available from click here - in terms of volume and import value. That data might help the authorities in Solomon Islands[p16] assess the extent of any fraud in the volumes and export values declared by enterprises which supply logs to China. Per cubic metre, changes in import value might reflect changes in transportation cost rather than export value.
The Central Bank of Solomon Islands used to point out that logs account for two thirds of the country's export value, that the country has a substantial balance of payments deficit and that the country's economy will collapse when the forest becomes fully exhausted (between 2012 and 2015 [p18]). Others have estimated that exhaustion was likely prior to 2013 or from 2010 [v] and full depletion by 2012 or 2013[p27]. This has not detered China, the destination for the great majority of Solomon Islands logs, or the opaque enterprises which supply those logs..
Perhaps reflecting the degree to which Solomon Islands has been compromised by foreign interests (despite their rhetoric of non-interference), the Central Bank appears to welcome the increase in the allocation of new logging licences during 2011, implicitly for export to the dominant market, China.
The Central Bank[pp16-17] notes that estimates of standing timber in concessions which were previously considered exhausted can be logged at current record rates until 2036, that clear felling now contributes significantly to the volumes exported, and that the first priority of the Ministry of Forest is "natural reforestation" (implicitly without intervention or financing by the authorities or those culpable for its degradation).
The "re-entry" logging, including of logs from immature trees,[final ¶, p15] will of course make it impossible for the forest to regenerate - conveniently increasing the argument to convert the forest to export-oriented commercial agriculture, notably palm oil, and facilitating a land grab. At least two of the multi-nationals who are alleged to have interests in the timber exports of Solomon Islands have diversified into palm oil elsewhere, particularly in Sarawak.
During 2011, a timber company listed on the Kuala Lumpur stock exchange diversified from its base in Sabah to exploit forest in Solomon Islands[Notes 35 and 36], including at least one concession[-][-] on Kolombangara[-][-], the island of the constituency of a senior politician (who had previously had controversial logging interests[-][-] and who coincidentally became Prime Minister later that year) in order more fully to utilise its timber mills in Malaysia.
Given the allegedly close relations between logging interests and those at the highest levels of government, it is understandable therefore that the government has chosen not to adopt any of the draft new constitutions which have bee recommended during the last decade or so - these not only clearly state that such forest degradation is unacceptable but would make those culpable liable to pay compensation.[15(3), 17, and 13(d) 18 and 19]
It would seem that ministers have been forced out of office shortly after proposing to reduce the economic rents available to the logging industry, seizures of illegal shipments have been released for no apparent reason, persons claiming to represent land owners (and to have received the related free prior informed consent of those others) acquire logging rights (for export rather than local needs) without free prior informed consent or social and environmental impact assessments. [-] The country's Public Accounts Committee states that such concessions can not be suspended or annulled.[p32]
If, as is likely, a small number of enterprises in China account for the majority of China's imports of logs from Solomon Islands, including one based in Huzhou, it should be easy for China to halt its complicity in this destruction and apparent illegality. The lower of the two charts above illustrates trends in the locations associated with China's imports of logs from Solomon Islands
For an insight into the accountancy and legal mischief associated with illegality in the Solomon Islands' logging industry, see http://www.solomonstarnews.com/viewpoint/private-view/7116-we-thrive-on-money-from-illegal-logging .
In the Solomon Islands, the business practices of foreign enterprises, primarily Malaysian and some Korean, have had a dominant influence on governance (and, by implication, political stability) and have substantially reduced the tax revenue which the government should have received per unit of timber exported (their logging practices have in general also been appalling). Those practices are presumably criminal, which might explain why the country is not a member of the ITTO.
Economies of scale might no longer be available and this might explain the increasing presence of informal logging enterprises said to be run by workers from logging businesses which have closed. Nevertheless, established groups might control the export of their output, as seems to be the case elsewhere[p7], for example Republic of Congo.
One of the few successful tree plantations is FSC-certified and commands substantial price premia for the timber which it exports (after processing in countries such as Vietnam) to discerning markets.
The maximum sustainable rate of log extraction was thought to be 320,000m3/year but this was reduced during 2000 to 250,000m3/year.[p2] However, the maximum recommended is now 155,000m3/year.[p4] Since 2010, China alone has imported more than ten times that amount - and this has failed to interest the international media.
The Central Bank suspects extensive transfer pricing fraud (as do others [7.6.3]) and expresses serious concern about the loss to the economy caused both by such illegality and by unsustainable logging. However, there seems to be no interest in changing the basis for determining either the taxable unit value of the logs exported or who should receive export duty exemptions.[38&39] Bizarrely, the former is linked to international prices for logs - most of which are coniferous implicitly following a different trend to tropical hardwood. Unit export values prevailing in Sarawak might be a more suitable bench mark (and tend to be 50% or more greater than those currently recorded in the Solomon Islands - reflecting differences in the mix of species exported).
Most logging enterprises have registered offices in Honiara, either the Ranadi area or c/o Yam & Company.
A Japanese general trading company reports that it has contracts for the supply of some wood from Kolombangara's tree plantation and from a Korean group (whose timber interests include an FSC-certified tree plantation on New Georgia and logging on Choiseul ["3 Cert process" tab]). A Taiwanese group[-] selling relevant products to the EU and USA has aquired majority ownership of the Kolombangara tree plantation but importing countries' trade statitsics for 2012 suggest that the mill which the company proposed at the time of its acquisition may not even now have been established. FSC auditors' reports indicate that roughly 90,000 cubic metres of logs from these two plantations have been exported annually during recent years.[-][-]
Output from the Gold Ridge mine, which has only recently started to produce gold, is likely to only partially offset the formerly imminent collapse in timber exports.[second ¶]
Solomon Islands is but one of many examples which disprove the rhetoric of the World Bank and development institutions (including the UK's Department for International Development) which assert that trade and GDP must increase if poverty is to be alleviated.