Tuesday, 19 October 2010 9:31 AM

Determined Value of Log Must Reflect Market Value: TSI

The increase in the Determined Value of Log Exports from an average of US$83.00 to an average of US$90.00 is not good enough, says Transparency Solomon Islands (TSI)Executive Officer, Mr. Fox Qwaina.

TSI continues to demand that the Determined Price of Logs be set at the real value, which was US$295 per cubic metre in August 2010. TSI is also urging government to ensure that the price is set independently of political interference.

"The current small increase does not recognize the economic value of national forestry Resources," said Mr. Qwaina. TSI questions why the Government chooses to carry out small increases rather than doing the right thing in ensuring that "that the determined value of logs simply reflect the current world market prices."

The Central Bank of Solomon Islands monthly reports has been citing increases in international prices of logs, which are more than double the average price of the current determined value.

Over the years, the Solomon Islands Government and Resource Owners have lost hundreds of millions of dollars in revenue because of poor decisions in determining the value of log exports.

A July 2010 International Monetary Fund report has shown that the Solomon Islands has not been able to benefit from export duties of log exports due to the higher estimated FOB price of logs compared to the lower determined value.

According to the IMF report, the difference between the determined value and the FOB is due to the discretion exercised by the Ministry of Finance and Treasury in updating and adjusting the determined value of logs.

TSI therefore calls on the Government to ensure the Determined Value is set independently and fairly so that the determined price truly reflects current world prices.

"The undervalued determined price means lost revenue for the Solomon Islands Government and also the Resource Owners - the only winners being the logging companies," said Mr. Qwaina.

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