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Introduction

Introduction

THE AIM of this report is to highlight the need to stop the destructive activities of TNCs through concerted international efforts. The clear divide between an increasing concern over the fate of the world's forests and the destructive activities of TNCs has yet to be addressed seriously by relevant international fora. Forest destruction is carried out by TNCs both from countries whose governments support the need for a Forest Convention and from countries opposing such an international instrument. TNCs operating not only in the forestry sector but also in the oil sector (from the USA, France, Holland and Britain, amongst others), in the mining sector (such as those from Britain, Canada and Australia) and in the pulp industry (for example, from Japan and Finland), are responsible for extensive negative impacts, mostly in Southern countries.

Northern and newly emerging Southern-based corporations use their economic and political leverage to exploit tropical forests, resulting in social and environmental degradation. There is no clear North-South divide applicable to TNCs. Their actions and impacts are similar, regardless of their home country, and forest destruction takes place in both Northern and Southern countries. However, within the current world context, the more severe impacts take place in the South. As a result of the imbalance between the economic power of TNCs and many Southern governments, TNCs are able to obtain advantages which dramatically increase their profits, to the detriment of local peoples, the environment and the country as a whole, while often a small but powerful economic and political elite obtain disproportionately large benefits.

The report discusses the activities of Malaysian-based transnational logging companies and their impacts on forests and forest peoples. By highlighting these impacts, the report raises some of the issues facing tropical countries with forestry sectors dominated by transnational corporations. Several case studies illustrate that the political and legal frameworks of these countries often facilitate the negative excesses of the logging industry. The impacts on forests and forest-dependent peoples are explored through conflicts over land rights and the social and environmental impacts caused by unsustainable and often illegal logging operations.

The expansion of logging interests in tropical rainforest countries has taken place within, and often been facilitated by, the liberalization of markets. This has encompassed the opening up of countries to increased foreign direct investment, a process driven by the host countries' own policies or introduced under pressure from the International Monetary Fund, the World Bank and the wider neo-liberal agenda of GATT/WTO. Such foreign direct investment, whether originating from the North or South, often results in economic exploitation rather than co-operation with genuine benefits for the host country. Liberalization policies tend to be implemented regardless of the environmental and social impacts associated with the operations of an industry sector per se, such as logging, or individual companies' records elsewhere.

Whilst Malaysian transnational logging interests are by no means the only ones operating in the forestry sector, they provide a useful case study on the need to regulate the activities of TNCs, both nationally and internationally. Due to the efforts of civil society to build up information on these companies, details of some of their environmental and social impacts are becoming known. Most companies operate in secrecy, however, a secrecy fostered by some governments which withhold information on contracts, location of concessions and the impacts of operations. Many countries with tropical rainforests have weak forestry and environmental laws and little or no effective enforcement capacity. As a result of these institutional weaknesses, cutting levels, extraction rates and the subsequent exports of logs or processed products are frequently inadequately monitored and usually unsustainable. A number of countries, such as Papua New Guinea and Cameroon, were dogged by illegalities in the timber trade, even before the arrival of recent Malaysian logging interests. Compounding these problems is the fact that most companies have poor forestry management plans which are rarely followed, or no plans at all.

Like many other industrial sectors in South-East Asia, several Malaysian logging companies have been badly affected by the recent Asian economic crisis and their operations reduced since the last quarter of 1997. Whether the current reduction in timber output will provide a breathing space that enables the development of a means to control and regulate the excesses of the logging industry in the future will depend on the political will of national governments and international institutions and the effective participation of civil society.