Introspective
By Calixto V. Chikiamco
On Oct. 27, 2019, I came out with a BusinessWorld article, “Why Not Forestry?,” arguing that forestry development should be a national priority and should be a focus for generating jobs, protecting the environment, and addressing the insurgency.
Forestry development had been neglected far too long. Nay, not just neglected but abandoned and subjected to all sorts of wrong policies to the extent that the country is now importing most of its wood requirements where once it used to be a major exporter. What a waste and lost opportunity!
Being a tropical country, the Philippines could be a major wood producer and exporter. As a Finnish expert said, Finland, a wood superpower in Europe, can only produce five to 15 cubic meters of wood per hectare while the Philippines could very well produce 100 cubic meters of wood per hectare. We have the climate and the geography but have chosen to waste what God has given us with wrong-headed man-made policies and an uncertain property rights regime.
One of these wrong policies, formulated during the time of former President Aquino, was a total log ban. It can be argued that the government is a poor steward of the forest and that the private sector has better incentives to sustain the forests with the right incentives. Moreover, the other problem with that policy was that it didn’t make a distinction between natural forests and planted forests.
In other words, the regulatory overreach was applied even to what normally would be tree farms. Permits would be required for everything — to plant, to inventory, to harvest, to transport. The result was more extortion and difficulty in doing business. Also, wood processing plants were given only short licenses to operate, with threats of raids and shutdowns, causing tremendous uncertainty among investors. As a result, in the CARAGA region, the number of wood processing plants fell from 23 to three, causing demand for trees to fall, impoverishing tree farmers and contributing to the unrest in the uplands.
However, I’m pleased to report that the Department of Environment and Natural Resources (DENR) under Secretary Roy Cimatu has seen the light, and, due to the support of several sectors, has issued DAO (Department Administrative Order) 2020-18, titled “Promoting Tree Plantation Development and Liberalizing Harvesting and Transport of Planted Trees and Tree Derivatives for Inclusive Growth and Development.”
The DAO liberalizes the rules on tree plantation, from inventorying and transport, allows qualified foresters to make certifications, and encourages tree farmers to integrate and set up their own wood processing plants.
This DAO is a good first step in attracting more private investments in tree plantation. However, for the forestry sector to truly boom and see the reforestation of millions of hectares of denuded lands, the uncertainty over property rights must be settled. Investment in forestry is truly long term — it takes anywhere from nine to 20 years, depending on the species, to grow trees to maturity. However, no investor in his right mind will invest if just before harvesting, he would not be allowed to harvest. His property rights must be secure.
The first problem is that the DAO doesn’t have the stability of a law. It could very well be that the next DENR Secretary may reverse the Department Administrative Order. Therefore, a new law must be passed to codify the DAO and provide assurances to investors that the policies won’t be easily reversed.
The other huge problem is that there’s a giant cloud of uncertainty governing rights in forestlands. For one thing, the government has been issuing forest tenurial instruments — IFMAs (Integrated Forest Management Agreements), Community-based Forest Agreement (CBFA), Socialized Forest Management Agreement, Private Land Timber Permit — right and left but there’s no central registry of those tenurial instruments. For another, the National Commission on Indigenous Peoples has also been issuing Certificate of Ancestral Domain (CAD) titles with no survey and no due diligence on existing rights over the same area. Imagine, you are an investor and tree plantation owner, and then suddenly there’s this ex-military claiming to be from this and that tribe brandishing his CAD title and staking a right over your plantation. You will flee like Speedy Gonzales and abandon the farm to the elements.
What is happening now in the uplands is property rights mayhem, triggering conflicts. In the process, there’s no development and no livelihood, but rather conflicts and unrest. This is one big reason why the NPA has moved into the uplands and is actively recruiting among the lumads. The agrarian unrest that used to stalk the plains of Luzon has been calmed by the land reform program, but social unrest, because of the government’s mishandling of property rights in forestry, has moved into the uplands.
One solution, according to attorney Erwin Tiamson, former head of the Land Management Bureau and a property rights lawyer, is the establishment of a forest cadastre. While a cadastre exists for agricultural and alienable lands in the country, administered by the Lands Registration Authority under the Department of Justice, no such system exists for forest lands. A cadastre is a comprehensive record of all rights, claims, and ownership over a property, in this case, the forest. While theoretically the government owns all forest lands, in reality, it has been using tenurial instruments given to communities and individuals over forest lands and CAD titles as well. CAD titles are qualified titles, i.e., their validity is subject to prior rights, but the holders treat them as absolute.
If a forestry cadastre exists, the whole world would know who has claims over what. It makes forest tenurial instruments bankable because there will be an official public record of all claims and titles. Financial institutions will have access to information to weigh financial risk.
According to Mr. Tiamson, “In addition to the establishment of a forest cadastre, some means of adjudicating claims must also be established in order to resolve conflicting rights. Conflict of rights in forest lands caused by the different policies and issuance of different tenure instruments had caused uncertainty that paralyzed economic activities in the forest. Courts should be the last resort as these are expensive and time-consuming. As the absolute owner of forestlands, the government must be able to adjudicate the claims without judicial intervention.”
Another possible temporary solution prior to the establishment of a forestry cadastre is for the government to pinpoint certain areas and declare them special forest economic development zones. These zones must be cleared by the government of any conflicting claims so that investors can just come in and plant trees.
The future doesn’t belong only to the IT industry, but to forestry as well. Why? Climate change is making forests more critical in environmental sustainability. Forests are carbon sinks, capturing large swaths of carbon emissions. With the US rejoining the Climate Pact, the trading in carbon credits is expected to accelerate. Forests, including planted forests, will become more valuable for the carbon credits that they will generate.
Moreover, forests, for enabling the conservation of water, are vital to agriculture and to life itself. Forest regeneration is also a way to protect the entire planet from future pandemics because denudation exposes the general population to viruses from wild animals which it comes into contact with.
As for fighting rural insurgency, instead of the government spending P16 billion to fund the National Task Force to End Local Armed Conflict (NTF-ELAC), it should instead focus on developing the forestry sector and generating livelihood for upland dwellers.
When we in the Foundation for Economic Freedom met with the Board of Investments (BoI) to discuss putting tree plantation under the Investment Priorities Plan, the BoI officials pointed out that there’s a worldwide shift from plastic packaging, which is non-biodegradable, toward paper packaging and cartons. However, paper comes from trees, but we don’t have enough trees to produce pulp and paper for our own needs, much more, for export.
Let our government leaders, from the President on down, start focusing on forestry. Not just on tourism or rice or car manufacturing. Let forestry be our future.
Calixto V. Chikiamco is a board director of the Institute for Development and Econometric Analysis.
