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March 2006 Dear Sir/Madam, We understand that a vote on the PAPUA
NEW GUINEA - Smallholder Agriculture Development P079140 loan is scheduled
for approval for loan disbursement in the forthcoming Board meeting.
We are strongly opposed Our reasons: · The Government of Papua New Guinea is unaccountable. Papua New Guinea has a long track record of governance failures, mismanagement and misuse of public funds by those in power. This has rendered most development assistance useless and ineffective. · Imprudent banking. It is irresponsible for the World Bank to disburse a loan for this project given the failure of the Forest and Conservation Project (FCP). Last year the Asian Development Bank (ADB) had to cancel its loan for a similar project entitled the Nucleus Agro-Enterprises project on ground of financial mis-management. Given that the risk involved is high and the World Bank has little leverage to influence outcome as a lender, it is a bad banking practice to embark on yet another project for oil palm expansion, and to provide another loan to PNG. · Increase national indebtedness: This loan, if approved, will increase the debt burden of Papua New Guinea with no real development gain. We fear that increasing debt level in the face of governance failure will lead to the further devaluation of the Kina, adding greater burden to our people and our precious environment. This will inevitably lead to more hardships for our people and further pressure to exploit the relatively healthy environment, which over 80% of our people depend on for their survival. This is essentially poverty creation, not reduction! · Oil palm is risky. We are opposed to having more oil palm projects in Papua New Guinea because of the adverse social and environmental problems found in existing oil palm areas. Oil palm price is highly dependent on the world commodity price which can be volatile. Given the massive oil palm expansion program in other countries especially Indonesia, the risk of a slump in price is very high. · Oil palm is environmentally destructive.
The World Bank project document downplays the environmental impact
of oil palm. Our country has already suffered the adverse impacts
from oil palm in those provinces where it is grown. PNG's track record
in ensuring environmental sustainability is abysmal. The Department
of Environment · Oil palm is bad development: Over
two decades of oil palm growing in Papua New Guinea has resulted in
little if any real development outcomes for our country. In fact we
see a regression of living conditions and standards in places where
oil palm is grown. Our Government offers tax breaks and tax credits
for the oil palm industry operators but this considerably limits the
economic benefits to PNG. · Oil palm is forced upon our people.
Oil palm growers inform us that they only grow oil palm because they
need money to pay for the ever increasing school fees so that their
children can be educated. Ironically, school fees have been imposed
on us precisely because our Government heeds advice from foreign power
such as the World Bank to adopt the user-pay system so that revenue
is directed to repay debt.For a developing nation like PNG, education
and basic health care are essential services which should be priority
areas for revenue PNG gets · Oil palm increases balance of
payments problem for PNG. Growers become too reliant upon a monocultural
cash crop. What is left of their hard earned cash income from oil
palm merely ends up enriching foreign · PNG becomes indebted to subsidise the palm oil industry. Although the project document claims that this is a scheme that would increase income for PNG, it is in reality a subsidy provided to the industry. Our people, especially the growers whom the World Bank has identified as needing assistance to get out of poverty, have ended up shouldering the bulk of the debt burden. It is on this basis that communities have begun to reject oil palm projects, as evidenced by the statements of protest attached for your reference. · Loan contradicts our National Goals & Directive Principles. Our national constitution emphasises small-scale enterprises and respect for the PNG way, integral human development for our people, wise use and management of our natural resources for now and for the future. If the World Bank is genuinely interested in development in PNG, the five directive principles of the constitution provides a sound framework for a unique development approach we believe will be more beneficial for our country. Should you require further information or clarification of our position in this matter, please do not hesitate to contact Damien Ase at dase@celcor.org.pg. Thank you for your attention. Damien Ase, Endorsed by the following NGOs in PNG: Cc : |
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