Estimating actual and potential government revenues from timber harvesting in Cambodia

The aim of this report is to estimate forest revenues in Cambodia based on available information on harvested wood, operable logging areas, and forestry taxes. This study has two parts. First, we analyze wood product, sawn wood, and veneer wood in three major forests in Cambodia. Second, we estimate forest revenues based on royalty rates, taxes for reforestation or forest maintenance and protection, exports, and customs, and export license fees. For comparison, revenues are analyzed under three scenarios: business as usual (BAUSU), long-term economic gains (LEGA), and climate beneficial option (CLIBO). Under the BAUSU scenario wood production in Cambodia is estimated at about 1.6 million m3 per year, of which 0.7 million m3, 0.2 million m3, and 0.6 million m3 are from evergreen, mixed, and deciduous forests, respectively. Our estimates are within wood production previously estimated in Cambodia. Annual forest revenues from all forests are estimated to be US $3639, US $5095, and US $6550 per ha, and the country's total annual revenues are estimated at US $111.7 million, US $156.3 million, US $201.0 million under the BAUSU, LEGA, and CLIBO scenarios, respectively. These results are also within the range of previous forest revenue estimates by independent organizations in Cambodia. However, the actual highest forest revenue collected in 1995 was only US $24.5 million, about five to six times lower than our estimate under the BAUSU scenario, indicating the existence of irregularities in the tax collecting system in the Cambodian forest sector. According to this study, royalty charged on wood product is a major source of forest revenues. Because wood product is strongly affected by logging damage, better logging practices should be introduced. The conversion of wood to sawn wood and veneer also plays an important role in generating revenues. Thus, sound technology should be sought to increase the efficiencies of wood processing.