This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 GEORGETOWN 000294 
 
SIPDIS 
 
BRASILIA FOR ESTH HUB - JAMES STORY 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAGR SENV BEXP ECON ETRD GY
SUBJECT: GUYANA TIMBER INDUSTRY LOOKS TOWARD 
SUSTAINABLE FORESTRY, FUTURE 
 
 
¶1. SUMMARY: In a bid to achieve recognition for 
sustainable forestry, the Malaysian/South Korean firm 
Barama Company Ltd. has received Forest Stewardship 
Council (FSC) certification, the first of its kind in 
Guyana. While the FSC label should allow the firm to 
command higher prices in international markets, 
questionable enforcement of concession boundaries, 
controversial labor practices, tension with miners over 
access to logging roads, and concerns about the long-term 
value-added continue to challenge Barama and the timber 
industry as a whole. END SUMMARY. 
 
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Hope for the Timber Industry 
---------------------------- 
 
¶2. Barama CEO Yaw Chee Ming accepted the FSC designation 
in a ceremony March 27. The firm collaborated with WWF 
Guianas and the Swiss verification company SGS to obtain 
FSC certification, which will allow Barama to market its 
products as originating in a sustainably managed forest. 
According to the firm's general manager, Girwar Lalaram, 
the 570,000 hectare concession--around 37% of the 
company's 1.6 million hectare concession--is the single 
largest block of certified tropical forest in the world. 
The firm is also working towards obtaining Chain of 
Custody Certification by mid-year. 
 
¶3. The timber industry offers promise to heavily-forested 
Guyana. According to the International Tropical Timber 
Organization (ITTO), forest product exports amounted to 
US$48.6 million in 2005, a 12% increase from the previous 
year. Timber exports accounted for nearly 10% of Guyana's 
overall exports in 2005, with the primary markets for 
sawnwood being Barbados, the U.S. and the United Kingdom. 
India, China, and Vietnam remain the primary markets for 
logs. With such exports increasing, ITTO predicts Guyana 
will soon surpass Ecuador as Latin America's largest log 
exporter. 
 
¶4. As a result, the sector has seen substantial 
investment activity. In addition to pursuing FSC 
designation, Barama commissioned an automated sawmill at 
Buck Hall, along the Essequibo River, in February and is 
also contemplating a co-generation plant fueled by wood 
waste. Barama's strategy has also involved increasing the 
number of wood species available for cultivation. The 
firm, which has been operating in Guyana since 1991, was 
among the first to cultivate baromalli, commonly used for 
plywood, in addition to the traditional exports of 
greenheart, purpleheart, and mora. A Canada/Hong Kong 
venture, Jaling Forest Industries, is also currently 
ramping up a US$15 million investment to cultivate timber 
in Guyana's northwest. 
 
------------------- 
A Faustian Bargain? 
------------------- 
 
¶5. However, both Barama and the forestry industry at 
large have been criticized for failing to bring Guyana 
greater returns, both in currency and jobs. Newspaper 
editorial pages have been ablaze in recent weeks with 
allegations that Barama has benefited from secretive tax 
concessions and fixed royalties, questions that Forestry 
Commissioner James Singh deflected at a recent press 
conference. The firm also stated in a March 27 press 
conference that is had not made a profit in its 15 years 
of operations, raising questions about the transparency 
of its accounting practices. Others have criticized 
Jaling for relying on Chinese workers to service its 
concession, rather than hiring Guyanese. A third common 
criticism condemns Barama's arrangements with smaller, 
third party concessionaires, a practice that increases 
the firm's holdings in practice but not on paper. The 
firm's management counters that such arrangements allow 
smaller concessionaires to access its roads into the 
interior. 
 
¶6. These interior roads are also used by the mining 
community, which has at times been at odds with the 
forestry sector. As SGS' certification report notes, "A 
significant issue in Guyana is mineral exploitation that 
takes precedence over forestry. If minerals are found in 
an area, mining takes priority over forestry, leaving no 
scope for implementing sustainable forest management in 
the affected areas." While the report found no evidence 
of mining activity that threatens the area certified by 
the FSC, such tension could impact the promise of 
sustainable resource management in other areas where the 
industries intersect. 
 
¶7. COMMENT: A more pressing criticism of the forestry 
industry in Guyana is the relative lack of value-added 
activity. According to ITTO statistics, only 10% of 
Guyana's forest product exports in 2005 were in such 
value-added products as furniture, doors and moldings. 
Meanwhile, sawnwood amounted to 37% of exports, logs made 
up an additional 28%, and plywood made up 23%. Local 
furniture manufacturers consistently complain of the 
difficulty of obtaining logs in such an export-intensive 
market. While the step toward sustainable forestry is a 
positive development, a more robust indicator will be 
Guyana's success in moving beyond raw timber and sawnwood 
extraction to more value-added exports. END COMMENT. 
 
BULLEN