THE LEGAL BASIS FOR FOREST CHARGES AND LICENSING

A very important feature of any licensing and forest revenue system is that the activities requiring a licence are clearly defined and explained in relevant laws and regulations. These regulations should also specify what charges are to be paid (if any) for permission to perform these activities, specify any penalties for non-compliance with the terms of the licence and explain how, where and to whom, any charges and penalties should be paid. Any appraisal of forest revenue system should start, therefore, with an appraisal of the legal basis for licensing and revenue collection.

The new arrangements for forest charges and proposals for revenue sharing are set-out in the 1999 Forests Act. The Act establishes the need for licences and lists some details of proposed licences, but it does not go into detail. The Act was entered into the Government Gazette on 8^th October 1999 but has not been implemented yet. Therefore, during this transitional phase, the Forestry Department is still using licensing and charging arrangements developed under previous Acts and Statutory Instruments.

The remainder of this section examines the laws and regulations underlying the licensing and forest revenue system currently in place in Zambia.

Part I (Section 3) of the Act states that:

Following parts of the Act, establish the need for licences on different types of land.

The need for a licence in National Forests and Local Forests

Parts III and IV define National Forests and Local Forests, their purpose and restrictions. The purpose of National Forests and Local Forests is presented in Table 1.

The need for a licence is established in the section of the Act describing the restrictions placed on National Forests and Local Forests. A licence is needed to enter a National Forest. Entry to a Local Forest, without a licence, is not forbidden, but a long list of activities is forbidden without a licence. This list appears to exclude almost all activities except hunting wildlife and non-consumptive activities (e.g. walking in the forest for recreation).

The Zambia Forestry Commission (ZAFCOM) will be responsible for the management of National Forests and Local Forests.

Joint Forest Management Areas

Part V of the Act states the procedures for establishing and managing a Joint Forest Management Area. It does not place any restrictions on Joint Forest Management Areas or establish the need for licences in such areas. However, a Statutory Instrument (SI) will be needed to establish a Joint Forest Management Area so, presumably, this would cover these issues.

Joint Forest Management Areas will be managed by a Forest Management Committee and this part of the Act gives some details about how this committee will operate.

State Land, Customary Land and open areas

Part VIII of the Act addresses major forest produce in State Land and Customary Areas. In some sections, it also refers to open areas. Presumably, with respect to licensing, it is actually meant to apply to open areas as well, but this is not clear in the Act. Some of the sections of this part of the Act appear to be contradictory and ambiguous. It is assumed here that the intention of this part of the Act is that:

felling and removal of major forest produce from these areas is allowed for personal use without a licence;

production of charcoal from wood taken from these areas is allowed for personal use without a licence;

collection, removal and trade in minor forest produce from these areas is allowed without a licence;

felling, removal and trade in major forest produce for commercial purposes from these areas requires a licence (and the permission of the landowner); and

commercial production of charcoal from wood taken from these areas requires a licence (and the permission of the landowner);

It is not clear whether the permission of the landowner is required in the first three cases above, but presumably this is the case. This section of the Act is also a little confusing in that some parts only refer to production, while others also refer to removal and trade.

Control and management of the licensed felling and removal of major forest products in these areas will be the responsibility of ZAFCOM.

Private land

The Act says very little about trees on private land. Discussions with Forestry Department staff revealed that planted trees on private land would not be considered as belonging to the state (as stated in Section 3 of the Act). Presumably, therefore, production of forest products from planted trees in these areas does not need to be licensed and charges do not have to be paid. This leaves open the question of how indigenous trees on private land and planted trees on other types of land should be treated with respect to licensing and charging.

It is also unclear whether the conveyance of forest products from planted trees needs to be licensed and a charge paid, but presumably this is the case.

Part IX of the Act lists five types of licences that may be issued. The types of licence listed are:

Sawmill licence – permitting timber processing using a sawmill or any other type of wood processing equipment for up to 5 years;

Pitsawing licence – permitting cutting, felling and processing of timber using a pitsaw for up to 3 years;

Concession licence – permitting operation in a specified area on condition that the licensee holds a sawmill or pitsawing licence;

Casual licence – permitting the collection and sale of minor forest produce from a specified area for 2 weeks; and

Conveyance licence – allowing the licensee to transport forest produce.

This part of the Act also gives the Minister the option to create new types of licence.

The licences listed above are roughly the same as the licences currently used in Zambia. The main exception is the concession licence, which does not currently exist. The forest licences currently in use combine the functions of a licence to operate a sawmill or pitsaw along with the licence to harvest an area of forest.

If the licences described in the Forest Act are supposed to be similar to those currently used, there also appears to be a mistake in the Forest Act. Currently, a casual licence can be issued for any length of time, but a conveyance licence only has a validity of two weeks. However, in the Act, the two weeks restriction is placed on casual licences, not on conveyance licences.

The remainder of this part of the Act establishes the right to charge fees for these licences and lists the conditions attached to licences, limitations, penalties and the appeals procedure.

Other legal documents concerning licensing, forest charges and restrictions on forest production and trade include: SIs; licence agreements; and the 1996 Timber Export Policy (Government of Zambia, 1996). The National Forestry Policy (Government of Zambia, 1998) also contains some general policy statements about sustainable forest management and licensing, which are relevant to the design of the licensing and forest revenue system.

Statutory Instruments

An SI is used to revise the levels of forest charges. The current SI (Government of Zambia, 1997) covers the following forest products:

timber – covers trees felled for any purpose (charged per tree and varied by species groups);

poles and bamboo – only covers poles and bamboo for sale (pole charges are varied by butt diameter - between 14 and 30 cm – and are charged per pole, bamboo is charged per 20 canes);

fuelwood – only covers fuelwood for sale and made from indigenous trees (charged by the stacked cubic metre, cord or headload);

hut materials – levied on licensed campers in the gazetted forest using temporary, semi-permanent and permanent huts (charged per hut);

miscellaneous – covers a number of NWFPs;

conveyance – covers timber (sawn), firewood and charcoal (timber and firewood are charged by the cubic metre, charcoal by the "standard grain bag measure"); and

fees for service – covers charges for siting sawmills and other production infrastructure in the forest (charged per hectare per year) – these fees are also charged for areas cleared to grow crops (cultivation) or for mineral exploration in National Forests and Local Forests.

In Statutory Instrument No 133 of 1994 (Government of Zambia, 1994) fees were set in Kwacha while, in Statutory Instrument No 48 of 1997 (Government of Zambia, 1997), they were set in "Fee Units". The Fee Unit is a measure used across all Government Departments for the setting of fees and one Fee Unit is currently (January 2001) equal to K 180. The Fee Unit has not been revised since the charges were designated in Fee Units in 1997. The Forestry Department can not revalue a Fee Unit (this would probably be done by another Department such as the Ministry of Finance). Further information about the structure and level of charges is contained in Section 4.1.

Existing licence documents

The two main licence documents currently in use in Zambia are the Forest Licence (Commercial Sawmilling) and the Forest Licence (Pitsawing). These serve the purpose of the forest concession licence plus the sawmilling or pitsawing licence, proposed under the 1999 Forests Act. The other two types of licence currently in use are casual licences and conveyance licences and these are also mentioned in the 1999 Forests Act.

Forest Licence (Commercial Sawmilling). A commercial sawmilling licence is issued for an area of up to 10,000 ha (specified on an accompanying plan) for up to five years. The licence gives permission to enter the forest and "to fell, cut, take, work and remove timber logs within and from the licence area to the sawmill....". The licence specifies some basic operational restrictions that must be followed and requires the licensee to submit a plan of operations every year. A forest concessionaire must get permission from the Forestry Department before starting operations in any compartment and should not re-enter a compartment once it has been harvested and officially closed by the Forestry Department.

The forest concessionaire is required to mark and measure all logs taken from a compartment. The mid-length diameter of logs must be measured underbark (or converted to an underbark measure) in centimetres along with length in tenths of a metre. A list of logs felled in a month must be submitted to the Forestry Department and all sawn timber, logs and cants must be marked by a Forestry Officer before they are removed from the licence area.

A Commitment Fee of K 200,000 is charged for issuing the licence. Timber fees are charged on a "per tree" basis and the licensee has to pay for a specified number of trees every month in advance. Licensees are restricted to paying for a minimum of 200 trees per month. If they cut more than 200 trees, they are billed for the additional trees in the next month. A maximum of 600 trees per month is set and the licence says that excess trees will be charged at two times the normal fee. A number of penalties are specified for non-compliance with various conditions set in the licence.

The remainder of the licence agreement sets out the arrangements for suspension, cancellation, arbitration and termination of the licence.

Forest Licence (Pitsawing). A pitsawing licence is issued for an area of up to 5,000 ha (specified on an accompanying plan) for up to three years. A pitsawyer has to pay for a minimum of 20 trees per month and the maximum is set at 60 trees per month.

The other terms and conditions of a pitsawing licence match those for the commercial sawmilling licence.

Casual licence. A casual licence is currently issued for any period of time, for the production of all other forest products (i.e. anything except timber logs produced by a sawmiller or pitsawyer). For example, casual licences are currently being used to cover the production of poles, fuelwood, charcoal and bamboo. In the past, casual licences have been used to licence and collect charges for the production of up to ten timber logs outside of the formal concession arrangements. However, this practice has been stopped.

A casual licence is, more or less, a simple receipt saying that fees have been paid for production of the specified product from a specified area and for a specified time period. In most cases, it does not require the licence holder to follow any particular forest management practices or place any operational conditions on their activities. In the case of charcoal production however, there is some organisation of felling into coupes and control over what can and can not be felled. Charcoal producers are supposed to move on once an area has been harvested, but this is difficult to enforce.

The 1999 Forests Act says that this licence should only be used for minor forest products and that it should only be issued for two weeks. This is very different to current practice and, presumably, the rules governing casual licences will have to be clarified.

Conveyance licence. A conveyance licence is also a relatively simple receipt saying that the licence holder has paid the conveyance fees for forest products and is allowed to transport them over a period of two weeks. Products should be marked by the Forestry Department and a listing of the products, along with evidence that the production fee has been paid, should accompany the products while they are conveyed.

The requirement to show that the production fee has been paid is not specified anywhere in the law, but this is current practice (i.e. people found without conveyance licences are charged for both production and conveyance). Legal producers usually pay for production and conveyance at the same time.

Other types of licence. If someone wants to collect a forest product that is not charged but, according to the law, is licensed (e.g. to collect mushrooms from a Local Forest), there is currently no standard procedure for issuing a licence to do this. Discussions with Forestry Department staff revealed that they usually issue an official letter to someone if they ask for permission for these sorts of activities.

The 1996 Timber Export Policy

The 1996 Timber Export Policy banned the export of peeler logs and sawlogs and restricted the export of wood products to value-added products, which it defined as: sawnwood; sleepers; poles (only from forest plantations); and finished wood products (such as wood panels, furniture and doors). The export of charcoal was also explicitly banned (although the policy does not say anything about the export of firewood). The Policy also introduced a system of quotas and a charge on the export of wood products.

The export quota was set at 75% of production in 1996 and should have been reduced to 20% by 2001. This means that, in the current year (2001), no licence holder should be allowed to export products accounting for more than 20% of the total annual production of their concession. If a timber merchant is exporting the wood, they have to get a certificate from the forest concessionaire that supplied the wood to say that this condition has been met.

The exporter has to declare the total value of the exported wood products and the charge paid to the Government is calculated as a percentage of that value. This charge was initially set at 6% in 1996, with the intention to raise it to 10% by 1999. The charge is supposed to be paid into a Regeneration Fund, but the Forestry Department’s Annual Report makes no mention of this (Government of Zambia, 2000).

The remainder of the document contains a number of forms that have to be completed by the following: the wood producer; the exporter; the Provincial Forest Officer; the Forestry Department; the Zambia Bureau of Standards; and the Zambia Revenue Authority.

National Forestry Policy

T hree sections of the National Forestry Policy (Government of Zambia, 1998) are most relevant to the discussion of licensing and the forest revenue system: the section on sustainable forest management; the section on licences; and the section on export of forest products.

Two parts of the section on sustainable forest management refer to: "encouraging forest ownership by individuals" (p20) and "facilitating private sector participation in plantation forestry" (p21). For these strategies to be implemented, the licensing and forest revenue system may have to adapt to recognise more types of privately owned forest resources (see Section 3.1.4). This section also highlights the importance of having good information about forest management and utilisation. Because most of this information will probably come from the licensing system, a stronger monitoring and reporting system for forest revenues and licences will help to achieve this aim.

The section on licences (pp 29-31) list a number of shortcomings of the present system that will probably be repeated in this appraisal. An important strategy raised in this section is the need to develop guidelines for the issuance of licences. This will help to raise transparency and improve administration and a later section of this report will make some suggestions in this area (see Section 5.1.1 and Annex 5).

The section on export of forest products (pp 31-32) presents as a strategy: "encouraging the export of value-added forest and non-wood forest products". A charge on the export of forest products is a relatively easy and lucrative way to raise revenues, which is used in many countries. However, export charges discourage the export of products. Thus, the question of whether to continue using an export charge should be considered very carefully in the design of the licensing and forest revenue system.

The documents reviewed above reveal a number of ambiguities and inconsistencies with respect to licensing and forest charges. The 1999 Forest Act is not consistent in some places and contradicts some clauses in current licence agreements and SIs. It also seems to contain some major differences to current practices. Therefore, the exact way in which the new licensing and revenue system will be implemented should be more clearly spelled-out in supplementary guidelines and regulations. These should be reviewed in consultation with all stakeholders and should be made available to the public when they are finalised.

A few observations on the current situation are given below.

How clear are the statements on licensing and charges?

The first problem with the existing system is that it is necessary to read several different documents to get an idea of exactly what is expected in any particular circumstance. For example, anyone wanting to produce or transport a forest product has to ask three questions:

Do I need a licence (and if so, how do I get one)?

What can I or can’t I do when I have my licence?

How much do I have to pay?

The first question is partly answered by the Forests Act. However, even this contains gaps (e.g. the exact rules governing planted trees) and it does not explain how to get a licence. The second question is answered fairly well in the two main types of licence (sawmilling and pitsawing) but not in the casual licence. In addition, even the sawmilling and pitsawing licences refer to other documents, such as felling regulations, so the licensee has to get hold of these as well if they want to get a complete picture of what is expected of them. The third question is answered by the SI on charges.

It would be very helpful to put all of this information together in a set of clearly written and easy to understand packages (e.g. one for commercial, sawmillers, one for pitsawyers, one for commercial charcoal producers etc.). This should help both licensees and Forestry Department staff.

The second problem with the current legal documents is that it is confusing when they say different things about the same activity. For example, the Forest Act says that a sawmill licence grants permission to "process timber using a sawmill" while a pitsawing licence allows the holder to "cut, fell or process timber or to remove or sell such timber". It is unclear whether the difference in wording actually means something because the two licence agreements currently used are worded almost exactly the same.

There also appear to be a few mistakes in some of the documents. For example, the Commitment Fee referred to in Clause 1 of the sawmilling and pitsawing licence agreement is then referred to as a Deposit Fee in Clause 6c.

The third problem is that the Forestry Department has developed a number of operational guidelines or working practices that are not clearly set-out and made publicly available. The legal basis for licensing and charging would be much stronger if these practices were formalised and set-out in publicly available guidelines (for example, in the packages suggested above).

One final major challenge concerns the overall complexity of all of the different circumstances, which the various legal documents recognise. Currently, the licensing and charging system seems to try to distinguish between the following:

five different types of land ownership (National Forests; Local Forests; Joint Forest Management Areas; state/customary/open areas; and private land);

two different types of use (personal use and commercial use);

many different types of product (8 wood products – logs, poles, fuelwood and charcoal, each of these from indigenous or planted trees; several minor forest products; and services such as site fees); and

two different activities (production and conveyance).

There are many different combinations of these factors, but there are currently only four different types of licence that try to cope with every eventuality. It would be very useful to clarify exactly what type of licence is needed in each different circumstance and to formulate clear rules and guidelines as to how each situation should be dealt with.

How well do the legal requirements support sustainable forest management?

Generally, the rules and regulations incorporated into the current licence agreements are broadly supportive of sustainable forest management. The requirements to produce plans and to organise forest harvesting into felling compartments should provide a very basic level of control over areas being harvested. However, whether these requirements will result in sustainable forest management will depend upon a number of factors, including:

the general level of information available about sustainable forest management in Zambia (in particular, the growth and yield of commercial timber species and, consequently, the appropriate silvicultural system, annual allowable cut, harvesting intensity and cutting cycle that should be used);

the quality of plans that are submitted and the knowledge of forest officers approving or amending such plans; and

the degree to which the requirements specified in the licence agreements are actually implemented and enforced.

There are probably gaps in knowledge and capacity in all three of the above areas. For example, the current licensing arrangements say nothing about the size of the area that should be cut in a year compared with the total area of the forest concession (i.e. implicitly, the cutting cycle that is being aimed for in forest concessions).

Outside commercial sawmilling and pitsawing concessions, the current arrangements appear to provide very little control or support to sustainable forest management. For example, in most cases, casual licences are very simply receipts to say that the holder has paid for some forest products. They do not usually place any conditions on where or how the licence holder should operate.

The charging policy also does not support sustainable forest management. In particular, the emphasis on only charging per tree encourages high grading and does not encourage the maximisation of production per hectare. These issues will be discussed in Sections 4.2 and 4.3.

How well do the legal arrangements comply with forestry policy?

Distinctions between different types of forest. The purpose of National Forests and Local Forests are supposed to be slightly different. In particular, Local Forests are supposed to "meet the social, cultural and economic needs of the local community" (see Table 1). However, in terms of the need for a licence to cut and remove forest products and the charges that will be paid, they are treated the same (see Table 2).

It would probably be quite complicated and difficult to try to introduce different licensing and charging arrangements for National Forests and Local Forests. In addition, the 1999 Forests Act also makes one important distinction between the two and this is that a Local Forest can be converted into a Joint Forest Management Area, while a National Forest can not. Thus, Local Forests can be viewed as areas that might come under Joint Forest Management at some time in the future. This seems sufficient to meet the overall objective of the policy stated in the Act, which will be fulfilled when these changes have taken place.

A second important factor that the licensing and the forest revenue system should take into account, is the difference between natural forest, forest plantations and planted trees. The National Forestry Policy includes, as an objective, the promotion of forest plantation investment. Later, it says that "facilitating private sector participation in plantation forestry" will be a strategy to meet this objective. Currently, however, the Government claims ownership of all trees in Zambia (Section 3 of the 1999 Forests Act). The only explicit reference to plantations occurs in the SI on forest charges, which differentiates between indigenous trees and other trees with respect to charging for fuelwood and charcoal production.

Distinctions between different types of user. Currently, there is no clear statement on the policy towards the use of forest products for personal use (as opposed to commercial use). Harvesting of forest products for personal use is allowed without a licence outside National Forests and Local Forests but, even in these areas, the harvesting of timber logs for personal use might be charged.

In National Forests and Local Forests, there is no distinction between personal use and commercial use in the 1999 Forests Act, but the SI on charges refers to "poles and bamboo for sale" and "fuelwood from indigenous trees for sale", so it appears that a distinction is introduced in the SI for these products (but not for timber logs). With the exc eption of bamboo, harvesting of minor forest products is not charged, irrespectively of whether they are harvested for sale or for personal use. A licence is needed to collect these products in National Forests and Local Forests and this licence should be free. However, it was pointed-out that a casual licence could not be issued because no money would be paid in this case. Current practice seems to be to issue an official letter if someone asks permission to collect these products for personal use.

Guidance as to what might be considered "personal use" is not clearly spelled-out, leaving this open to interpretation by forest officers. Guidance on this and clarification of what sort of licence might be required for personal use could be developed.

Commercial production of NWFPs does not currently appear to be charged (except in the case of bamboo). From a socio-economic viewpoint, this is probably a good idea, although there may be the potential to raise some revenues from such activities. However, revenue collection from commercial production of NWFPs is likely to be only very small. Therefore, if the Forestry Department does want to consider introducing charges for this, a very low cost method of charging should be found.

Other difficulties in interpreting the legislation

There are a number of other difficulties in interpreting the legislation that are presumably overcome at the moment by forest officers using their discretion. These are as follows:

Production and conveyance fees. From the point of view of collecting revenues, the use of both production and conveyance fees is a complication that might lead to some problems. It seems that, currently, all major forest products should pay a conveyance fee, but the production fee only has to be paid under certain circumstances. Thus, when a truck is stopped with unmarked timber, the current practice of charging for both conveyance and production may be questionable. Legal producers tend to pay both of these charges at the same time, so this potential problem could be avoided if there was only one charge for production and conveyance.

Logs, cants and sawnwood. Much of the legislation refers to "timber logs" or, more simply, "timber". The assumption underlying much of the legislation is that trees are felled and processed into sawnwood in the forest. This is not always the case. Therefore, for the purposes of charging, a clearer statement of how charges will be calculated for each of these products might be helpful, along with a definition of what is a log, what is a cant and what is sawnwood.

For example, with respect to the export regulations, only the export of sawnwood is supposed to be allowed, but exporters may be exporting cants. This is probably not the original intent of the regulations. Furthermore, the current forest concession licences allow the concessionaire to transport timber logs to a sawmill. If the sawmill is not in the forest, should the concessionaire pay a conveyance fee and, if so, how much? The 1997 SI refers to "timber (sawn)", which is not much help if the sawmiller is transporting logs to a sawmill outside the forest.

Licensing the production of poles, firewood and charcoal. The 1999 Forests Act says that casual licences can only be issued for minor forest products. According to the definitions at the front of the Act, this would exclude fuelwood, charcoal and poles (whether they are for personal use or commercial use). However, the other types of forest concession licences currently in use would not seem to cover these products (except, perhaps, as by products from the production of timber logs). Thus, there is a need for greater clarity about how and where these products can be produced, how production will be licensed, controlled and monitored and how much the charges will be. This is, perhaps, the greatest uncertainty with respect to licensing under the 1999 Forests Act and it could be overcome by designing some sort of license for the production of these forest products.

These uncertainties are probably tolerated at the moment because the overall level of charges is very low. If, however, forest charges are raised to more reasonable levels, the rules governing what the producer does and does not have to pay for will probably have to be made clearer.

In terms of gaps in the legislation, the following have been noted:

The discontinuity between small and large-scale production. A Forest Licence (Pitsawing) allows the concessionaire to cut 20-60 trees per month, while a Forest Licence (Commercial Sawmilling) allows the concessionaire to cut 200-600 trees per month. This seems to rule-out medium sized operators who might want to produce 60-200 trees per month.

Small pitsawyers. Many holders of a Forest Licence (Pitsawing) seem to use this to produce cants, which they then sell on to commercial sawmillers. However, some of them are genuine pitsawyers (i.e. they produce sawnwood using a pitsaw) and they have said that they can not convert this many trees into a finished sawnwood product in a month. It may be desirable to think about developing a licensing arrangement for very small producers of sawnwood either using a pitsaw or chainsaw.

Other forest products. As already noted above, there is currently no process for licensing and charging commercial harvesting of NWFPs. It has been suggested that the commercial production of mushrooms might be considered in the future, in which case some sort of licensing arrangement would have to be developed. This might also become important if bioprospecting and ecotourism are developed on a commercial scale.

It is believed that licences for some of these situations are already being considered by the Forestry Department.

More general comments about the current legal arrangements for licensing and charging

It is currently unclear how far, under Joint Forest Management, local communities will be involved in the management and supervision of their forests. Three levels of involvement might be described as follows:

Minimum level. Communities are involved in the development of a management plan for their forests and participate in some activities (e.g. by informing ZAFCOM staff if there are problems with control or evasion of charges) but the conditions of licenses are standardised and communities have very few real powers over what goes on in their forests.

Medium level. Communities develop the plan and are involved in developing local guidelines governing harvesting that could differ from those specified at the national level, but they still do not have any real powers of enforcement.

High level. Same as the medium level, but communities are given legal power to control activities and to collect charges either for themselves or on behalf of the Government.

Anything above the minimum level described above would presumably require quite detailed guidelines to be developed for the implementation of Joint Forest Management Agreements. At a very high level of decentralisation of control, it may be necessary to develop a mechanism whereby members of the community can be given some legal power of control over their forests. The designation of "Honorary Forest Officer" described in the 1999 Forests Act might be a useful instrument for such a purpose.

Perhaps one indication of the clarity of the current laws and regulations governing forest management and harvesting is the success rate of the Forest Department in prosecuting offenders. The majority of individuals found committing Forest Offences are either fined or cautioned and released. However, 124 cases were sent to court in 1999 (Government of Zambia, 2000). Of the cases tried (77), two-thirds of the defendants (49) were acquitted. Such a low rate of success at prosecuting offenders might suggest that the laws governing forests are not very strong or, at least, are poorly understood.

One final point to note is that some of the licensing requirements appear to be anti-competitive. For example, current licensing arrangements (and those presented in the 1999 Forests Act) appear to tie the issuance of a forest concession licence to the ownership of a sawmill or pitsaw. This establishes a barrier to entry that will reduce competition by preventing smaller operators from entering the sector. The procedures for exporting timber also seem to be very restrictive and extremely bureaucratic. They may have helped to prevent the export of unprocessed products but, in the process, they have probably also reduced the chances for the development of a profitable forest products export industry. These issues will be discussed further in Section 4.