Time for tax exemption on Non-timber Forest Products in Cambodia?

How can forest-dependent communities across Cambodia benefit better from the collection, transformation, and commercialization of Non-timber Forest Products (NTFPs)? A key barrier to generating local profits through the commercialization of NTFPs is the complex and sometime opaque system of tax collection applied to these various products, such as bamboo, rattan, Traing (Talipot palm), resin, and many others. To carry their products to the processors or the traders, local villagers must get an authorisation from the nearest forest administration office and pay a tax. More than the amount of the tax itself, it is a time-consuming process. Often the transport requires further informal payments along the road. The traders themselves have to pay additional taxes that they deduct from the price paid to the villagers. This system creates negative incentives for the development of these value chains and for the sustainable management of these resources.

“My community faced difficultly on rattan transportation. Buyer only want fresh rattan, but we have difficulty in transporting. Thus, it effects to the quality of rattan.” A representative from Katie community, O Kak shared their challenge during the workshop.

Mr. Phai Bunleang, community member, shared his experience during the meeting

“In the article 40 of forestry law, the community is not required to pay for tax, only 3rd party required to pay. From this point, the middlemen try all the ways to avoid paying tax by using corrupted money and community channel. This needs strong intervention from the high ranking government official.” Said Nherk Sonnary, deputy director of FA cantonment Katie

In Cambodia, NTFPs are harvested for consumption and income generation by over two million households in 2014, which contribute to their livelihood and well-being. NTFPs are all forest resources that are not timbers, including products from non-timber plants, wildlife, their processed products, and services. Benefits from NTFP are a key driver to encourage the local communities to manage sustainably their forest. Despite the high significance of NTFPs for supporting rural livelihoods, economic potentials are not fully realized.

In September 2020, the Non-Timber Forest Products-Exchange Programme Cambodia (NTFP-EP) together with the World Wildlife Fund for Nature (WWF) and The NGO Forum on Cambodia, all organizations involved in supporting communities to protect forest and natural resources, have organized a multi-stakeholder meeting to assess results, experiences and issues affecting the development of sustainable value chains for NTFPs benefitting directly the communities who take care of the forest.

Mr. Sim Bunthoeun, Country Program Manager, NTFP-EP Cambodia

One of the key issues for the sector development remains the lack of private investment and the difficulties faced by community-based enterprises to commercialize their products. An obvious policy recommendation has been the reduction of the tax rate or the full tax exemption for NTFP products and a simplified process for the issuance of transport permit. The 44 participants in 3 females to the workshop including various NGO, CSO, government officials and the members of the Cambodia NTFP Working Group (CNWG) considered together how a tax exemption could benefit to business development and improve the local livelihoods, and what mechanism should be used for communities to get tax exemption.

Group photo during the meeting in September 2020

MRLG is working with The NGO Forum on Cambodia to study the commercialization of NTFPs as part of the Customary Tenure Workstream in Cambodia. The idea is to identify opportunities for forest-dependent communities to improve their local livelihood through NTFP and the impact of forest conservation. As well as to understand law and regulations which would help to promote NTFP commercialization in a sustainable forest management.  Furthermore, the policy dialogue would be organized among key stakeholders from government institutions, civil society organizations and representatives of the forest-dependent community in a meaningful engagement for a recognition of customary tenure rights of community in the context of biodiversity protection.

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