State fees on timber rile top companies

via Khmer NZ

Wednesday, 01 September 2010 15:01 Nguon Sovan

LEADING companies holding economic land concessions claim that a government royalty could “strangle” investment and hinder the development of concession areas.

Representatives from 34 agricultural development companies met at the Cambodian Chamber of Commerce yesterday to express their objections to a government decision to collect a fee for the value of trees standing in concession areas.

The prakas, issued by the ministers of finance and agriculture in December last year, ordered companies holding concessions to reimburse the state for any trees inside their concession.

Article 2 of the prakas states that the number of trees must be tallied before concession land can be cleared, and that the company then must pay an equivalent value.

At the meeting prominent businessmen voiced objections to the rule, which they say could prevent foreign firms from investing in agriculture.

“The government strives hard to attract investors, especially investors in the agricultural sector … but when they come, they strangle their necks,” said Mong Reththy, President of Mong Reththy Group.

He said the firms planned to submit a petition to Prime Minister Hun Sen requesting that Article 2 be cancelled.

Men Sopheak, deputy managing director of Sopheak-Nika Investment Group, which has been clearing 10,000 hectares of land for a rubber plantation in Stung Treng province, said that the rule was slowing down investment approvals. He said that clearing felled trees and manually removing the stumps from the ground, cost about US$1,300 per hectare, compared with just $700 for clearing land using bulldozers.

Leng Rithy, president of the Vietnamese Rubber Enterprise Federation, which represents 17 companies clearing land, said the rule was a “big barrier” for companies expanding plantations in Cambodia.

But forestry officials said the rules were in place to ensure that revenue from timber, which is classified as state property, went into the state’s coffers.

Chheng Kim Sun, director of the Forestry Administration, said that in the past companies had burned trees down, which contributed to global warming and cost the state revenue.

“We will not allow companies to escape from this obligation,” he said. “The government has no intention of strangling anyone, but the government needs to collect the revenue.”

He said the companies had the option of handing wood over to the government.

Economic land concessions have long been controversial in Cambodia. In a 2007 report, the United Nations Office for the High Commissioner for Human Rights said that their “benefits for rural communities are not apparent, nor is the contribution to state revenues”.

Chheng Kim Sun said that more than 100 companies had been awarded land concessions in Cambodia, covering more than 1.3 million hectares.

ADDITIONAL REPORTING BY SEBASTIAN STRANGIO