REPEAT OFFENDER Vietnam’s persistent trade in illegal timber ACKNOWLEDGEMENTS This report was written and edited by the Environmental Investigation Agency UK Ltd. This document has been produced with CONTENTS the financial assistance of UKaid and the Norwegian Agency for Development Cooperation (NORAD). The contents of this publication are the sole responsibility 2 INTRODUCTION of EIA. EIA expresses its gratitude to the individuals 3 VIETNAM’S TRADE IN STOLEN TIMBER who contributed to the production of this report and who for safety reasons must remain anonymous. 7 STATE-SANCTIONED TIMBER THEFT 16 REGULATING FOREST CRIME May 2017 © Environmental Investigation Agency 2017 18 CONCLUSIONS AND RECOMMENDATIONS All images © EIA unless otherwise stated Design: www.designsolutions.me.uk LAOS Dong Ha La Ley THAILAND Attapeu town Bo Y O’Tabok Pleiku Qui Nhon O’Tang Le Thanh CAMBODIA Phnom Penh VIETNAM Ho Chi Minh City ENVIRONMENTAL INVESTIGATION AGENCY (EIA) 62/63 Upper Street, London N1 0NY, UK Tel: +44 (0) 20 7354 7960 email: [email protected] www.eia-international.org EIA US P.O.Box 53343 Washington DC 20009 USA Tel: +1 202 483 6621 email: [email protected] COVER: Logs illegally cut in O’Tabok Community Protected Area, within Virachey National Park in Cambodia’s Ratanakiri province, await transportation to Vietnam, February 2017. INTRODUCTION This month, Vietnam and the European Union (EU) will initial an agreement to ensure only legally harvested and traded timber flows through Vietnam to the EU and beyond. But as both parties meet to secure corrupt Cambodian officials and With about 300,000m3 of logs having commitments, Government officials and security force personnel in the pay been smuggled out of Cambodia and security force personnel in Vietnam will of Vietnamese timber traders. legitimised in Vietnam under these continue to pocket millions of dollars in quotas, such kickbacks are likely to illicit cash payments from major timber Rather than rejecting this illegal have amounted to more than $13 million smugglers in return for allowing wood, Vietnamese state and security since the beginning of November 2016. hundreds of thousands of cubic metres officials have issued and administered Not only are Vietnamese officials of logs stolen in Cambodia’s national formal quotas to give it lawful status corruptly profiting, but so too is the parks to be laundered into Vietnam’s in Vietnam’s economy. These quotas Vietnamese state, formally taxing the timber economy. have incentivised and facilitated illegal traffic of logs and so effectively massive illegal logging in taking a cut of the illegal businesses it Between November 2016 and March 2017, neighbouring Cambodia, precisely has sanctioned. EIA investigations uncovered illegal at a time when that country is logging on unprecedented scales in publicly seeking to stop all timber The looting of Cambodia’s forests is Community Protected Areas (CPAs) in trade with Vietnam. merely the latest phase in Vietnam’s long Virachey and Ou Ya Dev national parks and continuing history of wilful timber and in Lumphat Wildlife Sanctuary, in During undercover meetings in Vietnam Cambodia’s Ratanakiri province. in February 2017 with companies theft. Until 2015, Laos was Vietnam’s benefiting from those quotas, EIA biggest timber supplier and hundreds of All of the wood is being smuggled with investigators learned how Vietnamese thousands of cubic metres of logs flowed impunity to Vietnam as logs – in violation traders pay millions of dollars in bribes into Vietnam each year in violation of of both Cambodia’s log export ban and a to Cambodian officials to open up Laos’ log export ban. That traffic only total closure of the border with Vietnam logging areas and smuggling routes stopped in 2016 because Laos’ new Prime to timber, instituted in early 2016 by a in Cambodia. Minister banned all raw timber exports, Coalition Committee for Forest Crime not due to any respect in Vietnam for Prevention. Much of the smuggled wood Traders also disclosed the need to pay Laos’ laws or sovereignty. was logged illegally in protected areas bribes of as much as $45 per cubic metre funded by the EU. to Vietnamese officials, including the Chairman of Gia Lai Provincial People’s State involvement in multi-million dollar The devastation of Ratanakiri’s protected Committee, customs and border army transnational organised timber crime areas is not permitted by the Government personnel, in return for the provision and cannot be accepted by the international of Cambodia – or, in many cases, by local administration of quotas allowing them community and must not be ignored by indigenous people – but is enabled by to import into Vietnam. the EU. Cambodian logs at the yard of Son Dong Company Ltd, Chuprong District, Gia Lai Province, Vietnam, 1 March 2017. 2 VIETNAM’S TRADE IN STOLEN TIMBER ABOVE: Despite growing global attention to the While timber imports come from over A convoy of over 60 log trucks problem of illegal logging over the past 100 countries, the biggest source region line up at Lao’s border with 15 years, Vietnam continues to rely on is Asia, especially Laos and Cambodia.5 Vietnam at La Ley, Saravan imports of illicit timber to supply its Overall, Vietnam relies of imports for at Province, Laos, February 2015. burgeoning wood processing sector, least 80 per cent of the raw materials especially from the neighbouring countries consumed by its factories. Analysis of of Laos and Cambodia. Since 2007, EIA Vietnam’s imports by source country has repeatedly documented flows of indicates that in 2013, 18 per cent were illegal logs across the land border judged to have a high risk of illegality.6 between Laos and Vietnam, and more recently from Cambodia.1 It is neighbouring countries which have borne the brunt of this illicit trade. Vietnam has made strenuous efforts to Until 2015, Laos – which has a log increase its own forest cover, including export ban – was the largest single strict controls on the logging of natural supplier of timber to Vietnam by value. forests. In 2016, a total ban on logging Due to stronger political will in the natural forests was announced.2 By country to curb illegal logging, it has 2015, the country’s forest cover had now been supplanted by Cambodia, increased to 14.7 million hectares (44.6 another neighbouring country which per cent of total land area), compared bans the export of raw timber. In 2015, with nine million hectares in 1990.3 Vietnam imported timber worth $386 million from Cambodia, a 52 per cent At the same time, the Vietnamese increase on the previous year, and $360 Government has promoted the rapid million from Laos.7 Combined, the two expansion of an export-oriented wood countries provided Vietnam with illicit processing sector, which has become the timber worth almost three quarters of a sixth largest in the world. In 2017, the billion dollars in a single year. country’s exports of wood products are “Vietnam continues predicted to be worth $8 billion, This shift in sourcing has been compared with $7.3 billion in 2016.4 driven solely by supply-side measures. to rely on imports Rather than improve its regulatory Vietnam’s wood processing industry is controls over imports of illicit timber, of illicit timber to heavily reliant on imports for the supply Vietnam has actually introduced supply its burgeoning of raw materials, principally round logs measures to ease the flow of timber and sawn timber. Imports have been from Cambodia, once again showing wood processing growing at about 10 per cent a year, flagrant disregard for the forest laws sector” reaching 4.79 million m3 in 2015. of its neighbouring countries. 3 companies in the country. For years, it LAOS LEAKS has used privileged connections to the ruling elite of Laos to secure lucrative Despite Laos imposing a log export ban construction projects and logging as long ago as 1999 and a spate of quotas. The company was even reported regulations in 2002, 2004, 2008 and to have built a luxury residence for 2015 – all restricting log exports except then-President Choummaly Sayasone.10 in “special” or “specific cases” – over the past decade, round logs have been the In 2011, Phonesack Group staff admitted TOP: main wood product imported into to EIA investigators that a big furniture Logs cut by Vietnamese Vietnam from Laos. and flooring factory the company had military company COECCO in constructed in central Laos was merely a connection with the Xekaman I By 2012, these supposedly “special front to secure valuable logging quotas, hydropower project in Laos, cases” of log exports had become the with most of the timber smuggled across stored at Quy Nhon port, norm and Laos’ wood products industry the border to Vietnam for cash payments, Vietnam, 2012. was starved of raw materials. Nearly all leaving even its own mill short of raw timber harvested in Laos was exported materials. BOTTOM: as raw logs to neighbouring Vietnam and, Log trucks snake round increasingly, to China. Vietnamese companies have also mountainous roads leading to directly participated in illegal logging the La Ley border crossing to The devastating scale of illegality in inside Laos, including the military-owned Vietnam, Saravan Province, Laos’ forest sector was revealed in an enterprise Company of Economic Laos, February 2015. unpublished report which was leaked in 2015.8 The report was the result of a cross-border project focusing on carbon sinks and biodiversity in southern Laos and central Vietnam, and involved the Lao Ministry of Agriculture and Forestry. It found that Laos exported 1.4 million m3 of timber to Vietnam and China in 2013, more than 10 times the country’s official harvest. As much as 98 per cent of Laos’ total 2014 exports comprised logs and sawn timber – products nominally prohibited from export.