In late 1998 the Royal Government of Cambodia increased the timber royalty rate from US$14 to US$54 per cubic metre.
The Cambodia Timber Industry Association’s (CTIA) most outspoken member against the new rate, Samling International, piled on the pressure when it ceased operations on the 27th January 1999 and refused to pay the US$4,320,000 due on its 80,000m3 stockpile. News that the Malaysian government is weighing in on behalf of this logging giant could prove decisive in the long-running dispute.
“It is astonishing that Malaysia, as an ASEAN member state, feels it has the right to tell Cambodia how much it should sell its natural resources for, and CTIA references to low royalty rates in Malaysia ignore the fact that this factor, amongst others, has led to devastating forest destruction throughout Malaysia” said Patrick Alley of Global Witness
Most of the concessionaires make “unofficial payments” of between US$40 and US$80 per cubic metre. “Rather than fighting the increase in the official royalty rate the concessionaires should be seeking a reduction in all the unofficial payments that they are obliged to make” said Alley.
Samling is one of only two companies in Cambodia that have extensive experience in forestry but despite this it has been warned by the RGC in the past for illegal logging. The other concession companies have consistently breached the terms of their concession agreements taking advantage of the lawlessness in Cambodia over recent years.
“It is ironic that the concessionaires, which have presided over a period of such unprecedented forest destruction, complain the minute that the RGC attempts to put forestry in order. If the royalty rate slips back to US$14 per cubic meter it will generate only US$ 7,000,000 for the RGC year, the maximum annual sustainable yield for Cambodia is 500,000m3; which begs the question “why have the concessionaires at all?”
Press Release / March 3, 2000