Teak Information

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Policies and Legislation Affecting Teak Management, Production and Trade

Plantation Establishment

Government influences on plantation establishment generally fall in two categories: direct government planting programs and the payment of incentives for plantation establishment.

The great majority of the world's teak plantations have been established under government planting programs. The government has had a dominant role in plantation establishment in India, Indonesia, Myanmar and Thailand, countries that account for about 87 percent of the world's teak plantations. In the future, however, the role of the private sector in plantation establishment in these countries is likely to be significantly greater. Such as the tax incentives offered by Panama. This reflects a shift in government policy from direct to indirect involvement in tree planting.

Several countries in Central America and Africa utilize incentive policies to promote teak planting. Policies in Central America, particularly in Costa Rica and Panama, are currently attracting much attention. Costa Rica's incentive system includes a direct payment to plantation owners for provision of environmental services, financed by a selective consumption tax on hydrocarbon fuels. It also includes exemption from various taxes as well as access to credit and payment of a subsidy in the first five years of the plantation's life. In Panama, investments in forestry (including land costs) are fully deductible for income tax purposes. This policy has triggered speculation leading to an upward spiral in land prices. Import duties are also waived on equipment and machinery used in plantation activities.

In Africa, much planting is still carried out by government agencies or as part of externally assisted afforestation or reforestation projects. Nonetheless, private-sector interests are becoming increasingly active in plantation establishment, often assisted by government incentives. Examples in Ghana include the development of several private-sector-funded out-grower schemes and plans to establish a Plantation Forest Development Fund which would be initiated through an export levy on air-dried timber (Odoom, 1998).