PRIME MINISTER Hon. James Marape recently announced the enactment of two new laws in the forestry sector aimed at ensuring Papua New Guinea (PNG) maximizes the value derived from its forestry resources. These laws, which focus on the State Marketing Agency (SMA) and Purchase Option (PO), are part of a series of initiatives implemented by the PNG National Forestry Authority over the past five years under the Marape Government.
The newly enacted laws are designed to ensure that the resource owners—the landowners
on whose property trees are harvested for export—receive greater benefits from their resources. This initiative is intended to enhance the country’s revenue, particularly through
downstream processing.
Prime Minister Marape highlighted these legislative changes in a five-year anniversary report
presented to Parliament last week.
“In forestry, we enacted laws to establish the State Marketing Agency (SMA) and Purchase
Option (PO) to purchase logs from permitted operators. This reduces unfair trade practices,
especially transfer pricing and tax evasion. Downstream processing is the ultimate goal,”
he stated in the report.
The forestry industry has long been a crucial part of PNG’s economy but has faced numerous
criticisms over the years. In response, the industry has taken significant steps to improve
its image and ensure it benefits the country more effectively.
Currently, the majority of timber produced and exported from PNG is in the form of raw
logs. The Marape Government aims to shift this trend by promoting downstream processing,
encouraging the export of finished products that command higher prices than raw
materials. This shift is expected to contribute significantly to the country’s overall economic
improvement.
Prime Minister Marape acknowledged the economic challenges faced by the people and
assured them that his government is working diligently to effect positive change, though
major improvements will take time.
“What we have done is foundational. Its impact will come with time. We’re addressing
issues comprehensively, not haphazardly, to achieve a unified outcome,” Prime Minister
Marape said.
“We’re laying down strong building blocks under difficult circumstances. We inherited an
economy that was poorly managed.”
The introduction of the SMA and PO laws represents a strategic move to enhance transparency and fairness in the forestry sector. By curbing practices like transfer pricing and tax evasion, these laws aim to create a more equitable distribution of benefits and ensure sustainable management of forestry resources.
As PNG continues to evolve its forestry sector, these laws are expected to play a critical role in driving economic growth and improving the livelihoods of its people. The Marape Government’s focus on downstream processing and fair trade practices marks a significant step towards achieving long-term economic stability and prosperity for the nation.
The forestry industry stands as a cornerstone of Papua New Guinea’s economy, offering immense potential for growth and prosperity. With the recent enactment of laws establishing
the State Marketing Agency (SMA) and Purchase Option (PO), Prime Minister Hon.James Marape’s government has taken pivotal steps to maximize the value derived from this critical sector.
Historically, PNG’s forestry industry has predominantly exported raw logs, limiting its economic benefits. The new legislation aims to shift the focus towards downstream processing, promoting the export of finished products that command higher prices. This transition not only enhances revenue but also creates jobs, fostering local economic development.
The SMA and PO laws address unfair trade practices such as transfer pricing and tax evasion,
ensuring a fairer distribution of benefits to landowners and the state. This is crucial for
sustainable resource management and economic equity.
The potential economic impact of these reforms is substantial. By boosting downstream
processing, PNG can significantly increase its export revenues, strengthen its manufacturing
base, and create thousands of jobs. This, in turn, will spur infrastructure development
and improve living standards.
The Marape Government’s strategic approach lays a strong foundation for long-term economic stability. By unlocking the full potential of the forestry industry, PNG is poised to
achieve a more prosperous and equitable future, benefiting its people and securing sustainable growth.
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