Bai Shan Lin uses naturalized Guyanese to acquire large logging/mining concessions

 Bai Shan Lin uses naturalized Guyanese to acquire large logging concession

APRIL 29, 2015 | BY KNEWS |NO VALUED-ADDED PROCESSING AS PROMISED – LOGS EXPORTED

There is evidence that months before becoming a naturalized Guyanese, Chu Hongbo, the principal in Bai Shan Lin Forest Development Inc., had a Guyanese holding almost 700,000 hectares of state lands for him.

logs  region1

Bai Shan Lin trucks with logs in Region One, Essequibo.

The forested lands were immediately transferred to Chu and Bai Shan Lin’s control after the Chinese investor received his Guyanese citizenship last year.

The transaction has raised several questions, one of which is why concerns were not triggered by  the ,Guyana Forestry Commission (GFC) and the Guyana Revenue Authority (GRA) that a Guyanese who is not a known logger, could be given control of such a large swath of forest as well as the legality of it being transferred later to Chu.
After Barama Company Limited, a Malaysian operation which has 1.6 million hectares, Bai Shan Lin is the third largest holder of state land that has been allocated for forestry activities.   The company reportedly also has a significant foothold in the Mining sector.

Bai Shan Lin’s activities in logging and mining have been under the microscope for over a year now after indications that the company was responsible for exporting large amounts of logs.
In January, GFC which monitors the forestry sector disclosed that the company only has “legal access” to 627,072 hectares instead of over one million hectares that was being reported.  These include 344,849 hectares as State Forest Exploratory Permits (SFEP’s).
Bai Shan Lin also controls 274,053 hectares of Timber Sales Agreement -Joint Venture Agreements and 8,170 hectares of State Forest Permissions.
Government has been on the defensive over Bai Shan Lin which was supposed to put down factories for plywood and other value-added wood products. These are yet to become operational.
Last year, several overhead shots of the Bai Shan Lin operations in especially the Kwakwani, Upper Berbice area, were published by Kaieteur News showing large stocks of logs ready for exports. It drew widespread criticisms over the seeming coziness of Government with the Chinese logging firm.
Earlier this month, the Guyana Geology and Mines Commission (GGMC) announced in a statement that Chu has become a naturalized Guyanese and thus was entitled to acquire the properties via the relevant systems under the Mining Act and Regulations.
In fact, 98 of his Mining Permits listed were won via an open competitive bidding process at last year’s auction.
With increased scrutiny over logging in Guyana’s forests especially with a US$250M agreement with Norway which mandates this country to control its deforestation rates, GFC has been under pressure to defend its monitoring as the government’s regulator.
Last year, exported logs earned $24.4M compared to US$12.5M in 2013; sawn lumber US$20.3M compared to US$19.6 in 2013 and roundwood US$4.1 as against US$2.7M in 2013.
According to 2014 log production, values show an increase of 42 percent over the 2013 total for categories that include Wamara and the other lesser utilized species and a mere 11 per cent increase for those species in the prime category -also called Special Category.

 ———-

Bai Shan Lin delays US$70M wood processing factory for gold, housing, logging

APRIL 30, 2015 | BY KNEWS | FILED UNDER NEWS

– no evidence company signed investment agreement 
Bai Shan Lin was reportedly approved US$70M to invest in a wood processing plant just off the Linden area. Instead it diverted the money to logging, gold and housing activities.

Logging at Kwakwani

Bai Shan Lin’s operations in the Kwakwani, Upper Berbice area.

Bai Shan Lin which has several operations across the country, has been attracting attention not only because of its large logging operations but also the manner in which it acquired hundreds of thousands of hectares of state lands it now controls.

The delay in the wood processing plant has been questioned by critics and Opposition alike who say that the absence of an investment proposal has only worsened matters.
The US$70M was reportedly used to gain control of logging and mining lands.
Bai Shan Lin was leased a large area off Linden by the National Industrial and Commercial Investments Limited (NICIL) for the proposed processing facility and for which it is paying a significant monthly rent on.
Guyana has been pushing for more value-added operations in the forestry sector but there is little evidence of how serious it is when it comes to monitoring Bai Shan Lin’s commitments and deadlines to make it happen.

ramotar in chinaPhoto: President Donald Ramotar meeting with Chairman of Bai Shan Lin, Chu Wenze, in China.

With Bai Shan Lin expanding operations rapidly in recent years, there was a noticeable increase in forest products’ exports. Last year, it was reportedly more than 20 percent. And it is believed that log exports were mainly responsible.
The company came under the spotlight last year when Kaieteur News published photographs showing huge piles of logs in the Kwakwani, Berbice area ready for export.
Government and Bai Shan Lin downplayed the extent of the company logging operations saying that everything was above board.
But recent disclosures that Chu Hongbo the principal in Bai Shan Lin, acquired his Guyanese passport last year and now owns more than 50 percent of the company, has again raised questions.
It has also been reported that Bai Shan Lin used a Guyanese to acquire and hold around 700,000 hectares until Chu Hongbo became a national of Guyana last year.
With the delays of its wood processing operations, revelations that a Guyanese acquired the forestry concessions and the fact that Bai Shan Lin has gained a significant toehold in the gold mining sector, there has not been much word from Government as to how serious it is about value-added processing in Guyana.
Last year, exported logs earned $24.4M compared to US$12.5M in 2013.
Bai Shan Lin has been granted lands to build luxury homes at Providence as well as a mall.
It has also been granted significant duty free concessions on executive SUVs, and other equipment as well as tax holidays on basis of being tax gifts.

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  • guyaneseonline  On 04/30/2015 at 9:42 am

    Guyana’s iconic timber species over-harvested, under-priced
    April 30, 2015 • By Letter by Janette Bulkan
    Dear Editor,
    The author of the Peeping Tom column in Kaieteur News on Sunday 26 April 2015 (‘The Chinese are not the problem’) complained about the high domestic price of greenheart sawnwood, which he/she thought was the cause of the shift from traditional wooden to concrete houses in the coastland. The author attributed the price of US$638/m3 (G$300 per Board Measure, 1/12th of a cubic foot) to the inefficiency of the family-sized Guyanese-owned timber processors and their inability to form consortia to compete with modern companies exemplified by the tax-assisted Chinese transnational loggers.

    US$636/m3 as a domestic price is the same as the lowest grade of rough-sawn export lumber (‘merchantable’) declared by the Guyana Forestry Commission to the fortnightly Tropical Timber Market report of the International Tropical Timber Organization for the last fortnight of March 2015, while the premium grade of rough-sawn export lumber (‘prime’) was selling for twice the price – US$ 1236/m3. These figures conform to economic theory; the best grades and highest price go to the market which can transform the lumber most profitably into even more valuable products such as furniture, with a multiplier factor of 14 or more compared with the price of the unprocessed log.

    There seem to be three questions:
    Q1 – can we continue to supply to the export market our excellent sawn timber properly priced and appropriately taxed?
    Q2 – if we continue to send our best timber overseas for value-added processing, how do we satisfy the local market?
    Q3 – instead of having our timber improved in value by overseas processing, could we add value domestically and sell more processed products in the export market?

    In this letter, I address Q1 – continuity of supply. Our approved National Forest Policy (1997) and National Forest Plan (2001), both revised in 2011 but not approved by the National Assembly, and the GFC Code of Practice on Timber Harvesting (1996/2002/2014), promote and require a sustained supply of forest products. Sufficient seed-bearing trees of each commercially desirable species should be retained in all logged forests to ensure the survival of those species in those same areas.

    In contrast, it has been evident for years that the Guyana Forestry Commission’s casual approach to the required conservation of individual species among our 1000+ tree species has been allowing massive over-harvesting of the commercially-preferred timbers. The following table shows that there is still a tremendous concentration for the export market on a very limited number of tree species. Unlike the practice in Suriname, the GFC only provides aggregate (total) volumes of log and lumber production and exports; it does not disclose any information by species or concession. In consequence we only have the information disclosed to the ‘annual review and assessment of the world timber situation’ produced by the International Tropical Timber Organization (ITTO) although that review is always some years out of date.
    Log exports reported by GFC to ITTO, 2000 –2011

    For the years 2012-2014, the GFC’s Forest Sector Information Report (FSIR) confirms this concentration. In 2012, the top three species for log production were greenheart, wamara and purpleheart and the top ten species accounted for 76 per cent of total log production (page 30). In 2013, the top class 1 timber was wamara (page 26), with no information about greenheart or purpleheart. In the last published FSIR, for January-June 2014, wamara and greenheart were the top two timbers and purpleheart was fifth in log production (page 23).

    The figure in the table show two marked trends: firstly, the trend of forest degradation is evident in the rise and fall in exports of commercially desirable timbers. Guyana’s iconic species – greenheart, purpleheart and more recently, wamara (and itikiboroballi) – are overharvested, and are extinct or approaching commercial extinction in accessible forests. The ratio of their log volumes to total log volumes far exceeds the ratio of the volumes of the standing trees in the forest to total forest volume.

    Secondly, these four species together comprised more than 50 per cent of total log exports in all but one year (2004), and more than two-thirds of all log exports between 2007 and 2010.

    The remarkably large difference between the declared FOB prices for logs exported from Guyana compared with the declared CIF prices for the same or similar timbers landed in China and India is conventionally a signal of transfer pricing. This practice involves incorrect Customs declarations. In addition, taxes for our excellent timbers are notably much less than for equivalent timbers in Malaysia. So the answers to Q1 are that harvesting is excessive and unsustainable, pricing is wrong and taxes are too low.

    Corroboration about Customs fraud is in the report on ‘Illicit financial flows from developing countries: 2003-2012’ from the Washington-based Global Financial Integrity (December 2014). These flows are estimated for Guyana at US$84 million in 2003 rising almost continuously to US$440 million in 2012. Around half of the illicit flows (US$ 1464 million for 2003-2012) are attributed to export under-invoicing.

    The Asian log exporters will continue to cream Guyana’s fragile forests of commercially desirable species until the last tree is harvested. They are supported in their quest by the explicit statements of the President (KN, 28 August 2014, ‘President Ramotar condemns “attacks” on Chinese investment’), the Minister of Natural Resources and the Environment (SN, 6 September 2014, ‘Natural Resources Minister blames energy cost for lack of value-added forestry’) and the GFC (Guyana Forestry Commission’s Fact Sheet on Forest Management – debunking misrepresentation. Part 2. 16 August 2014; accessed on Ministry of Natural Resources and the Environment’s website on 17 September 2014).
    I will address questions 2 and 3 in subsequent articles.
    Yours faithfully,
    Janette Bulkan

  • N.Augustus  On 04/30/2015 at 1:00 pm

    This and other p;rojects demand scrutiny. Incompetency, fraud, poor management and possible corruption or cronyism all seem to play a part i n too many of these projects. Govt. tend to accept any excuses from investors for not producing value added products, Giving out large parcels of land must have timelines and doable promises and penalities. Citizenship or any practices that is used to circumvent the laws must be investigated. These chargtes must be taken up at the next parliamentary sitting. Convinced that the opposition could have done better with the power and laws available to actually investigate and not only make charges of corruption while wiaitiong to gain power. The opposition as so far does not inspire confidence and leavesww reasona ble voters to vote in hope and not in confidencce. Just saying.

  • Carl Montgomery  On 05/09/2015 at 8:56 am

    When the concessions were granted initially. Hongbo was not a citizen of Guyana, therefore, now as a citizen the whole agreement must be reviewed by LAW as to how he now ” owns” 700,000 Hectares of Guyanese land. What about the rest of the population, have they been granted any concessions! The interior continues to be raped by a “citizen” Ask any man in the street if he has seen any improvement from the income and the answer would be a resounding NO. Very soon this man is about to create a two tier living standard by building houses for the better off and the rest of my fellow Guyanese would continue to be serfs. It very much appears that the very people who authorised all these concessions are interested in money and not bothering if they die tomorrow then what have they gained. Look at Thailand a certain people did the same there as is happening in Guyana, the country has been raped of its forest and the same would happen in Guyana if a STOP is not applied NOW. What about the wild life – has any thought been given to them. I don’t think so. There are many areas that need “a look Into” Maybe a later date.
    All I say to those who chase wealth is -think of the drugs baron who died of a heart attack on the operating table- his billions of $ did not save him.
    C Montgomery
    England

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