Working towards greater community control over land, forests and natural resources

Poor accounting hollows out timber revenues

Vientiane Times, July 08, 2015. 

The Ministry of Finance has identified numerous loopholes in the accounting of timber sold by local authorities that meant the government has been missing out on much needed revenue. The government has set the target to collect revenue of 100 billion kip from the sale of its timbers for the 2014-15 fiscal year but in the past six months of this fiscal year only 13 billion kip was collected. Of particular concern was the sale of timber acquired from state stockpiles, as the revenue was not being paid back to the national budget by local authorities, the ministry has said.

The Minister of Finance Dr Lien Thikeo clarified the situation to National Assembly members at the ongoing session recently, saying that as the revenue from timber was not centralised, it created loopholes for local authorities to spend the revenue for other purposes.  He explained that some local authorities spent the revenue sourced from the sale of timber to pay their debts owed to entrepreneurs who invested their capital for state infrastructure projects in those provinces. Some provinces created their own accounts for the revenue sourced from the government’s timber for which they should transfer the money to the national budget. Actually, the government must be notified of all income from the sale of timber and it will then allocate some ratio of the income to the provincial authorities. For instance, 50 percent of the income from the sale of illegal timbers which are confiscated by local authorities will be given to that province. Dr Lien said his ministry will scrutinise the accounting of various provinces to ensure the revenue from timber can be added to the national budget. Provinces which hide the income from timber will face legal action.

To address the problem, the Ministry of Finance has proposed that the government should improve the mechanisms for the management and sale of the government’s timbers. The move is aimed to ensure transparency and generate more income from the sale of timber for the national budget because timber is a national resource. Regarding the timbers cut which have not been removed from forests, the government has entrusted the relevant authorities to inspect the reality of the timber.  If the timbers are illegal, authorities have to confiscate it and can sell it to local furniture factories. The government asserted that all timbers are banned from being exported until it is processed before the exports can be made. In fact Laos has lost huge revenue from the sale of natural resources, particularly timber. In September 2013, a senior official from the Ministry of Finance said that the ministry had collected only around US$20 million in taxes and tariffs from the export of wood products for that year. However it later emerged that Laos has actually been selling wood products to neighbouring countries worth hundreds of millions of dollars a year.


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