By Dr. Tarcisius Kabutaulaka
The forestry industry is the most influential in Solomon Islands. It has dominated the country’s economy since the 1980s and has impacted its political and social landscapes. But poor governance has marred the industry. This was largely a result of weak policies and laws and the state’s inability (and sometimes unwillingness) to enforce regulations. Consequently, unsustainable logging, environmental destructions, social problems, allegations of corruption, unfair benefit-sharing mechanisms, and disputes have dominated the industry. There is therefore a need for reform that will ensure sustainability and that all the stakeholders benefit from the industry. Customary landowning communities are one of the most important stakeholders.The forestry industry is currently Solomon Islands’ economic lifeline. From 2015 to 2020, it contributed on average to 68 percent of the country’s total exports, 46 percent of its foreign exchange revenue, and 7 percent of gross domestic product (GDP). However, since 2017, there has been a decline in both log production and exports. The Central Bank of Solomon Islands (CBSI) reports that in 2019 log production and exports declined by 2.4 percent and 3.7 percent respectively. In 2020 round log production dropped by 13 percent. This was due to weaker demands in China, weaker export price, the impacts of the COVID-19 pandemic, and the anticipated decline in the stock of harvestable logs.In the past four decades, the forestry industry has been marred by numerous challenges. Some of these are outlined here:
LEGISLATION, POLICIES & REGULATIONS – Weak legislation, policies, and regulatory mechanisms has affected the government’s ability to manage the forestry industry. The Forest Resources and Timber Utilization Act is the primary legislation regulating the industry. It was passed into law in 1969, and although amendments have been made over the years, it is outdated and does not reflect the changing nature of the industry. The Forests Act (1999), meant to repeal and replace it, was never passed by parliament due to the lack of political will and push-back from logging companies, represented by the Solomon Forest Association (SFA). In terms of policies, despite successive governments’ desire to downstream and add value to timber in-country, processed timber makes up for less than 10 percent of total export, which is dominated by round logs. Monitoring and enforcement of forestry regulations such as site remediation, Environmental Impact Assessments (EIA), environmental monitoring, the record of log shipments, forest inventory and the enforcement of fines and penalties are weak due to the lack of resources, capacity and political will and policies.
UNSUSTAINABLE LOGGING – Since the late 1980s, the logging industry has been characterized by unsustainable harvesting. According to Solomon Islands State of the Environment Report 2019, “Solomon Islands is felling its tropical forests around 12–14 times the sustainable rate of 250,000 cubic metres per year. Log exports have increased from 500,000 cubic metres in 2002 to about 2.5 million tons in 2016.” This will have adverse environmental, economic, and social impacts.
ENVIRONMENTAL DEGRADATION – Logging has caused widespread environmental damage to land, fresh water, and marine environments. Rivers passing through logging concession areas have high turbidity levels or siltation due to runoffs from soil exposed by logging operation, which pollutes freshwater and marine environments. There is also a loss of biodiversity as a result of logging. This highlights the need for EIA as provided for by the Environment Act, environmental assessments and the enforcement of environmental laws and regulations.
CORRUPTION – Allegations of corruption tarnish the forestry industry. Although most of these have never been proven, it is true that logging companies have built influential relationships with politicians and government officials over the years and have used that to leverage favor and influence policies and legislation. SFA, which represents logging companies, is quite influential and is currently involved in discussions on a proposed amendment to the Forest Resources and Timber Utilization Act. In a recent news, the Leader of the Opposition, Matthew Wale, called on the government to “allow due process to take its cause” concerning the cancellation of Sino Capital’s Foreign Investment Board approval. Wale said, “It is truly regrettable that this company has connections high up in the government which has served it well to the detriment of landowners and the Guadalcanal Provincial Executive.” While this is not a proof of corruption, it highlights the links between logging companies and the higher echelons of the Solomon Islands government.
TAX EVASION – In the past four decades, Solomon Islands has not received the real value of log exports. This is due to tax exceptions and outright tax evasions through transfer pricing and other mechanisms. A study by Price Waterhouse in 1994 showed evidence of transfer pricing and tax evasions that cost Solomon Island millions of dollars in potential revenue. Although no similar study has been done recently, the problem likely persists because no changes have been made to policies, laws, and the enforcement of regulations.
CUSTOMARY LANDOWNER PARTICIPATION – The fact that most logging operations are on customary land means that customary landowning groups are important stakeholders. However, except for the North New Georgia Timber Corporation Act, other laws and regulations do not provide clear guidelines on the participation and benefits to customary landowners. Consequently, customary landowners are largely powerless and, apart from the “middleman” and a few within the landowning groups, most often do not benefit from the industry. Women and youth are usually the most marginalized in terms of benefits from logging. This highlights the gendered nature of the forestry industry, which will be examined and addressed in the SCALE-NRM project. This also illustrates the need to empower communities and providing relevant information and mechanisms for participation in decision-makings about the forestry industry.
BENEFIT SHARING – The benefit sharing mechanism in the logging industry is lopsided in favor of logging companies and the state, leaving landowners disadvantaged. The Standard Logging Agreement provides for a 60-25-15 formula for sharing the revenue generated from log sales: 60% to the logging company, 25% to the government, and 15% shared between the licensee – usually a middleman – and the landowning group. It is ironic that the resource owners are the ones who receive the smallest percentage of the benefit. The issue is much more complex, especially given the dynamics of sharing the 15%. Consequently, most customary landowners have never equally or equitably benefited from the logging industry.
LAND DISPUTES – Logging is one of the major causes of land disputes within and between landowning groups, and between them and logging companies and the state. Some of these conflicts have been violent, and many have ended up in court, resulting in lengthy litigations. Many of these disputes occur after the timber rights hearing process, raising questions about the processes of acquiring logging licenses.
LOGGING COMPANIES & LAWS – Many logging companies often disregard Solomon Islands laws because they are aware of the weaknesses of law enforcement and the leniency of the penalties. For example, recently, one of the biggest logging companies in the country, Sino Capital Solomon Islands Limited’s foreign investment registration certificate was cancelled by the Foreign Investment Division. This was after the company was found to have “failed to comply to the 15 Annual Survey Notifications reminders issued to the company in 2017 – January, February, March; 2018 – January, February, March; 2019 – January, February, March, 2020 – January, February, March; 2021 – January, February, March”. While this is not reflective of all logging companies, it highlights Solomon Islands law enforcement challenges in the forestry industry.
PROVINCIAL GOVERNMENTS – As agents of the Central Government, the provincial governments are expected to support the national government’s policies on the forestry industry. But provincial governments have not always been supportive to the central government on logging as illustrated by the stand of the Western Provincial government in the mid-1980s and more recently the actions of the Malaita and Guadalcanal provinces. This is despite the fact that they do not have a lot of choices since they are dependent on the central government for a large proportion of their revenue. When it comes to the governance of forestry, provincial Governments roles are largely marginal because forestry is a non-devolved responsibility. The provincial governments participate only through the timber rights hearing process and as recipients of business license fees for logging operations in their provinces. They could play a greater role in monitoring if they have more resources and capacity.There is a serious need to rethink this industry and other large-scale natural resource extractive industries.The rumble in the jungle continues.