The Environmental Investigation Agency (EIA) has hit out at the Myanma Timber Enterprise’s decision to hire service providers, and said that the risk of corruption and bribery in the allocation of harvesting rights remains high for the timber harvested during the 2017-18 season.





After Myanma Timber Enterprise (MTE) announced its decision to hire service providers due to MTE’s capacity limits, experts have questioned the differences between sub-contractors and service providers based on the transparency issue.

Earlier, the MTE committed to undertake extraction activities by its own capacity and would not issue sub-contracts to private firms to undertake extraction activities related to the reform process of Myanmar’s timber industry which is in ongoing process of FLEGT VPA in later last year.

The MTE is a state-owned enterprise (SOE) responsible for the cutting and export of timber in Myanmar. According to the 1992 Forestry Law, teak or any other hard wood extracted by the MTE is permitted by the law.

The MTE has extracted 80,000 tonnes of teak and 200,000 tonnes of hardwood. After suspending their operations for a year, the organisation plans to extract 15,000 tonnes of teak and 350,000 tonnes of hardwood in fiscal year 2017-18, according to extraction statistics from the SOE.

Instead, the MTE is going to carry out its activities with service providers in five different contracts – felling, skidding, road construction, trucking and loading/ uploading processes, U Khin Maung Kyi, deputy general manager for extraction at the state-owned enterprise, told The Myanmar Times last month.





“The MTE has a limited capacity to extract the full amount of timber.

“With the current number of elephants and vehicles for timber extractions, we do not have sufficient capacity or efficiency to manage the work on our own,” he said.

On August 8, the Environmental Investigation Agency released a briefing note responding to the MTE’s decision to hire service providers.

It referred to the MTE’s recent announcement that the SOE will be contracting “service providers” to undertake harvesting operations for the 2017-18 logging season, due to a lack of internal capacity.

While there are to be some changes to the profit-sharing model previously used to pay subcontractors, the changes are insufficient, according to the EIA.

The agency said that changing the name of existing processes without changing the underlying processes themselves does not represent any real transformation.

“While there are to be some changes to the profit sharing model previously used to pay subcontractors, changing the name of existing processes, without changing the underlying processes themselves, does not represent any real transformation.

“It appears the MTE has now stepped back from its previous reform commitments,” the media statement released by the EIA on August 8 stated.

“EIA’s substantiated concerns, focused on Burmese teak and submitted to EU Timber Regulation Competent Authorities in October 2016 and January 2017, underlined the high risk of illegality associated with reported corruption and bribery in the allocation of harvesting rights to subcontractors.

“This was acknowledged by the Ministry of Natural Resources and Environmental Conservation [MONREC] through its announcement that it would now be removing subcontractors from MTE felling operations, which appeared to be the first step of the MTE reform process,” the media statement added.

The EIA reported this development in a presentation to the FLEGT/EUTR Group of Experts meeting in June 2017, noting that, while this risk remained high for previous years’ harvests, it would potentially be mitigated in future harvests.

The agency expressed “strong concerns” that the issues with the harvesting process will remain.

“EIA holds strong concerns that the same actors, who have a history of corrupt practices, will remain involved in harvesting operations and that the same incentives for this corruption will be present,” it said.

“As such, EIA advises that, for timber harvested during the 2017-18 season [and, unless future reforms address this risk, future harvests], the risk of corruption and bribery in the allocation of harvesting rights remains high and operators intending to place timber from Myanmar on the EU market must be able to demonstrate mitigation of this risk in order to comply with the EUTR.

“At this time, EIA is not aware of any system in place that would allow for successful mitigation of this risk to occur,” the statement continued.

The agency also advised the EUTR competent authorities to include assessment of mitigation of this risk when auditing the due diligence systems used by EU operators placing timber from Myanmar on the EU market.

Salai Cung Lian Thawng, strategic adviser of Pyoe Pin Programme, said that as the MTE has deviated from what it recently announced, the deviation can affect the building of trust between Myanmar’s timber industry and EU, and ultimate the reform efforts.

“Local and international stakeholders are concerned regarding the contracts with service providers.

“The MTE has a chance to show its transparency by announcing to the public the detailed process of contracts with service providers, how they purchase, what criteria they use and how they operate,” Salai Cung Lian Thawng said.

On November 25, last year, Myanmar started the preparatory work to eventually join the Voluntary Partnership Agreement (VPA) for Forest Law Enforcement, Governance and Trade (FLEGT).

Joining the FLEGT process would mean greater transparency across the length of the supply chain, from logging to export. It would include independent monitoring by civil society groups and the community itself to guarantee that the wood was legal, said U Myo Min, consultant of Myanmar Forest Products Merchants Federation (MFPMF).

Myanmar held FLEGT-VPA legal introductions in all states and regions. July 25 was the last day of legal introduction.