Capitalism Ominously Comes to Myanmar’s Forests

Plantation farming is expanding rapidly in Burma and is emerging as the main driver of deforestation, according to a new report released earlier this week saying politically connected businessmen are receiving government licenses to log swathes of natural forest in ethnic minority regions, ostensibly to plant rubber and oil palm.

The report by US-based research center Forest Trends highlighted problems with plantation expansion and other forms of logging, and raised concerns over the legality, environmental sustainability and land rights impacts of Burma’s current timber extraction policy.

The group warned Western nations not to resume timber imports from Burma until the government has addressed these issues.

Forest Trends found that by mid-2013, the government had given firms a total of 2.1 million hectares (5.2 million acres) in plantation concessions, up from 1.3 million hectares and 0.9 million hectares in 2012 and 2011, respectively.

More than 60 percent of the concessions were granted in Kachin State and Tenasserim Division, two of the country’s most densely forested regions. Many of the concessions are allocated in natural forests and allow firms to log and sell old-growth trees in order to clear the area for rubber or oil palm plantations.

Although exact government data on this type of forest loss is unavailable, researchers believe that plantation expansion “is likely the largest single source of timber in [Burma], especially for non-teak high value timber.” After clearing the forest, many firms fail to actually plant their concessions and almost two-thirds of the areas remain fallow, according to the report.

Big companies—such as Tay Za’s Htoo Trading, Htay Myint’s Yuzana Company, Zaw Zaw’s Max Myanmar, Win Aung’s Dagon Company and Steven Law’s Asia World—are being granted plantation concessions “predominately in resource-rich ethnic conflict areas,” the report said, adding that this policy was “part of the government’s attempt at gaining greater state territorial control and access to natural resources.”

In southern Burma’s Tenasserim Division, more than 10 well-connected companies received large oil palm concessions “in an area that holds the Mekong region’s last large expanse of lowland Dipterocarp rainforest,” the report said. “The result so far has been more logging than actual planting of palm oil seedlings.”

The expansion of Burma’s rubber and oil plantations is part of a wider regional trend, largely aimed at supplying China’s growing industries, that has threatened forests and community land rights across Southeast Asia.

Other major sources of timber in Burma are the state-managed teak forests in the central region and the logging and harvesting of old-growth forest in ethnic conflict areas, according to Forest Trends.

The latter logging concessions are allocated in forests under control of the government or armed ethnic rebel groups and “involve Burmese military and state officials and local ethnic leaders,” Forest Trends said, while large “crony” companies are also increasingly granted such concessions. Armed rebel groups, the report added, were taxing much of the timber trade through their areas of control.

Forest Trends said there is little government oversight on the ground to ensure that timber extraction is legal, conducted in an environmentally sustainable way and without impacting local communities’ livelihoods and land rights.

The state-owned Myanmar Timber Enterprise, which regulates Burma’s timber trade, does little to track how private firms extract timber, the report said, adding that it provides permits to most firms as long as they export timber through Rangoon Port.

Burma’s neighbors India, China and Thailand are the biggest buyers of its timber, which was estimated to total 2.6 billion cubic meters in 2012, worth US$1.2 billion, according to customs data of importing countries that was aggregated by Forest Trends.

A significant share of the wood is also transported overland to these countries, according to the foreign customs data, even though this is illegal under Burmese law, which requires that all timber is exported through Rangoon Port.

The illicit overland transport of timber from conflict-torn Kachin State to southern China is particularly large, with an estimated value of $225 million in 2012, according estimates by Forest Trends. A researcher from the group visited the Chinese border town of Nangdao in April 2013 and “witnessed hundreds of Chinese timber trucks crossing the Burma border with very large old-growth hardwood logs from Burma.”

It remains unclear how much public revenue the government collects from timber exports. Ministry of Commerce data indicate that in 2011-12, Burma exported $283 million worth of teak logs and $282 million worth of hardwood logs, making timber the third biggest export product that year after natural gas and jade.

Burma is historically one of Asia’s biggest timber producers and was renowned for its teak forests in central Burma and densely forested border regions. During the country’s long-running ethnic conflicts, both government and ethnic rebels heavily logged the forests, yet Burma remains one of Asia’s most forested countries.

Forest Trends said the lack of government oversight on how timber is sourced, lax export regulations and the extraction of timber in ethnic conflict areas should be a concern for the European Union and the United States, both of which are keen to resume Burmese timber imports after years of international sanctions that targeted the former military regime.

“The first step to tackle this paramount issue on the future for [Burma]’s forestry sector is for the government, private sector, and donor community to frankly discuss the complexity of the verification of legal origin” of timber, the report said.

Burma’s government has expressed interest in reforming its timber supply chain and it held a dialogue in July with the European Union on the joint implementation of a Forest Law Enforcement Governance and Trade (FLEGT) action plan, according to the EU Office in Burma.

“The government is consulting internally on the next steps to take,” an EU spokesman told The Irrawaddy in a recent statement.

The voluntary FLEGT plan, which could take several years to implement, would help Burma verify the legality and sustainability of its timber products—a key requirement for gaining access to highly regulated EU and US markets.

In an effort to reduce deforestation and the outflow of unprocessed timber, Naypyidaw announced earlier this year that it will ban the export of raw logs by April 2014, after which only sawn wood is allowed to be exported.

Burma is one of the few countries in the world that still allows for the export of unprocessed logs, and raw timber makes up the majority of its exports.

Forest Trends said consequently Burma had failed to build up a wood-processing industry that could add value to the vast quantity of timber that the country produces.

“[M]any are wondering how the domestic industry will be able to respond to demands for even rudimentarily processed sawn logs” after the April 2014 log export ban comes into effect, the report said.

(This appeared originally in The Irrawaddy, with which Asia Sentinel has a content-sharing agreement.)