Pleas for help as politics and the China debate cast shadow over KPFL’s survival.

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(L to R): Kolombangara Forest Products Limited General Manager, Dan Raymond; the Australian High Commissioner, Dr Lachlan Strahan; Australian High Commission Counselor Economics, Andrew Schloeffel; and the Honourable Minister and Member of Parliament for Gizo/Kolombangara, Lanelle Tanandaga, touring the Kolombangara timber plantations last year.
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BY BEN BILUA
Gizo

Kolombangara Forest Products (KPFL) – one of the biggest employers in Solomon Islands and an important source of income to local communities in Western province – is on a financial knife-edge.

In an exclusive interview with Island Sun Gizo Office, KPFL General Manager, Edwin Schramm said KFPL is struggling to sell its logs and is requesting the shareholders to inject more funds to keep the company going.

Schramm said the company’s focus is business and that it is not interested in politics.

The comments come after an Australian Broadcasting Corporation program reported that a Chinese state-owned enterprise had shown interest in the weakened company and that during a visit representatives of the Chinese enterprise paid particular attention to KPFL’s deep water harbour which has potential for military use.

In response, the office of Prime Minister Manasseh Sogavare issued a statement saying: “It is a baseless allegation to say that a Chinese firm is going to buy off the Kolombangara Forests Products Limited (KFPL) on Kolombangara Island, Western Province.”

Since COVID pandemic, KPFL has been struggling financially and has needed extra cash to survive.

The company shareholders are Elite Idea Ltd – a Taiwanese company – and the Investment Corporation of Solomon Islands (ICSI) which is owned by the Solomon Islands government.

“So far, the Taiwanese Company (the majority shareholder) has injected four or five times funding, but ICSI zero, Schramm said

“This means, the balance of share(holding)_has completely changed. Currently, ICSI has very minority share, while the Taiwanese Company has substantial shares.

Documents filed with the Solomon Islands Business Registry show that since May 2020 ICSI’s shareholding in KPFL has fallen from 33% of the total number of shares to just 17.6%.

Australia has no share with KFPL but is funding development projects Schramm stated.

“It is a concern that ICSI is not very supportive of the company at the moment, he said“. Twenty percent of ICSI’s share to KFPL is meant to go the communities but they don’t have 20 percent share left because they are not funding this company. This has created a lot of unhappiness in most of the communities. They know that by now they should have 20 percent of ICSI’s share as ownership by themselves,” Schramm told Island Sun.

The Kolombangara Land Trust Foundation (KLTF) is a body set up to ensure communities benefit from KPFL.

So far KLTF has received nothing from the ICSI, Schramm told Island Sun.

He said KFPL needs more support from the government to make sure all its logs are exported and more customers are coming in to do business.

Like many businesses, KPFL was hit hard by COVID.

Unlike some, it is still suffering from a confusing and uncertain future.

KPFL management is worried.

Schramm said KFPL’s log exports has been stopped since the lockdown and that even though international restrictions have been lifted, not a single international customer has been interested in doing business with KFPL.

“I’m trying to understand why the business is not running for more than a year and yet we are still keeping 1400 employees.

“We thought that when the borders were opening on the 1st of July, and state of emergency was lifted on 24th of July, we thought the customers, from records, we have many customers from years ago. I don’t familiar with them but Vietnam, Philippines, Japan and Chinese.

“There are many different customers who have been buying logs here but not even one single customers is committed to come back and I don’t understand why.

“Is it something to with Chinese issue in Solomon Islands? Is the government changed the export regulation for border control? Is it because of politics or is it because this company is core owned by a Taiwanese company? You know the shareholder of this company is Taiwanese, China and Taiwan is not in a good term, I don’t know.

“All we are trying to do is to attract customers coming here,” he said.

“People are saying that politic(s) is interfering, that what people are saying not me, but if politics is involved, we have to resolve these issues quickly,” Schramm said.

He said KFPL is very grateful that Bulacan International Limited has stepped in and buy some of the logs.

“KFPL needs to remain viable because we care for the people of this islands to help them but in order to that, we need financial support.

“We need to sell our logs. KFPL must remain viable critically. We have a population of about 8000 people in this island. There are people from other islands that are looking for employment here but I have to cut back on our recruitment.

 â€œFor me, if we talk about KFPL, we talk about business and not the politics,” Schramm said.

Kelvin Naphtalae, Senior Accountant at KFPL said COVID-19 has had a major blow to KFPL as most customers stop buying logs from the company.

He adds that the international restrictions have forced customers to stay out.

Naphtalae further stated that the company has lost its privilege of duty-free export.

“In the previous years, the government gave us duty exceptions on our export, but this has changed recently. Maybe it’s something to do with economy recovery, maybe there are changes in our export regulation, I don’t know,” he said.

Naphtalae said KFPL has contributed well in the economic development of Solomon Islands, not only that, the company also provides employment to people all over Solomon Islands.

He said KFPL is a sustainable company with huge potential to deliver much needed service for the people and at the same time contributes to the country’s economic development.

“We pay our taxes, contributes to our employee NFP and also pays other fees. These are our contribution to our country and I calls on the government and other aid donors to help KFPL continue with its service,” Naphtalae said.

He said KFPL is gold for Solomon Islands and that assistance from donor partners to secure more customers would be high appreciated.

“KFPL is our bread and butter so all of us including those working in plantation don’t want this company to go down,” Naphtalae said.

William Duran, Assistant Supervisor KFPL Necessary said his department also lost staff due to financial constraints.

He said only three employees out of ten are currently managing the Necessary department.

“Our government must support KFPL because we support the government in many ways. KFPL provides employment, pay taxes, pay NPFs and other state obligations to drive the country’s economic forward.

“Stop the politics and think about the people who are struggling to fend for their families as we enter into post-covid period,” Duran said.


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