Legal framework for forest management and timber trade of Cambodia

Forest governance

Cambodian forest resources are state owned property and are managed by two ministries, namely Ministry of Agriculture, Forestry and Fisheries (MAFF) and Ministry of Environment. Under the 2002 Forestry law, the Forestry Administration under the MAFF is responsible for the sustainable management of the permanent forest estate to maximize social, economic and environment benefits and cultural values of Cambodia. The permanent forest estate is defined as the overall forest complex which includes the permanent forest reserve and private forests (Preferred by Nature 2020).

Permanent forest reserve is state forest on lands with no private ownership and is divided into three categories:
> Production forests (on state public land): including forest concessions, rehabilitated forests, tree plantations, degraded forest land and community forests;
> Protection forests (on state public land): are mainly used for the protection of forest ecosystems such as watersheds and biodiversity conservation.
> Conversion forestland: land that is mainly comprised of secondary vegetation and which is used for development purposes.
Private forest (on private land): consist of forest plantations or trees that are mainly under private ownership.

About 41% of forest land, on the other hand, is under jurisdiction management of Ministry of Environment, which comprises 66 protected areas combined with biodiversity conservation corridors (MoE, 2020). Following to the Protected Area Law 2008, the Ministry of Environment is designated to ensure the management, conservation of biodiversity and sustainable use of natural resources in protected areas.

Legal rights to harvest

State owned land
According to the forestry law 2002, all forest products and by-products (timber products, non-timber forest products and processed products) located and originating from the permanent forest reserve are state property. The products are used prioritized for domestic annual need and export when the supply is higher than local demand. Any individual, legal entity or community intending to harvest forest products and by products for commercial purposes must possesses the following permitsand documents:

Permit to set annual harvesting quota for forest products and by-products;
Permit to harvest of forest products and by-products;
Permit for transport quota of forest products and by-products;
Permit for transport of forest products and by-products;
Permit use of forests;
Prakas to establish a forest industry, sawmill, or processing facility;
Permit to enter forest for coupe preparation;
Permit to establish a stock place to sell and distribute forest products and by-products;
Export quota;
Export permits;

Based on production potential, the government has the authority to grant an area of production forest to investors or any legal entity a forest concession in which they are allowed to manage and harvest forest products and by-products. This is done through a public bidding process and follows the National Forest Sector Policy, the National Forest Management Plan, and the Forestry Law. In order to have legal right to harvest forest products and by-products, the concessionaire must hold the following documents:

Concession Agreement
Long-term Management Plan（including Environmental and Social Impact Assessment）
Annual Operational Harvesting Plans for each coupe level Block Management Plans for each annual harvest
Permit to set harvest quota
Permit to harvest forest products & by-products

However, in 2002, the government cancelled all concession companies (ITTO, 2002), and has banned logging permits in natural forests, and suspended the export of timber in 2006. Currently, the harvest of the forest products and by-products on state owned land is only allowed in one of the circumstances below:

Economic Land Concession (ELC)
An ELC is a grant of private state land for investors to use and develop the land for agricultural purposes and industrial-agricultural exploitation (including cultivation of food or industrial crops or tree plantation) for less than 50 years lease and not exceeding 10,000 hectares. ELCs were issued within sustainable use zones in protected areas and production forest. Since 2012, approval of new ELCs has been suspended and existing ELCs were called for review following to Order 01BB in 2012 on measures for strengthening and increasing the effectiveness of the management of ELCs. The following are required documents to receive legal right to harvesting timber inside ELCs:

Economic Land Concession contract
Management plan
Land Register
Cadastral maps
Environmental and Social Impact Assessment
Forest Inventory Lists of timber species and volumes
Commercial registration
Permit to harvest forest products & by-products

Social Land Concession
State owned land can be allocated for poor families or people suffering from natural disaster or demobilized soldiers following to the sub-degree No.19 on Social Land Concessions. The Ministry of Land Management, Urban Planning and Construction is responsible for requests to the government for areas of land to be granted. If approved, the area could be cleared by auctioning company following to the result of forest inventory conducted by the Forestry Administration. A harvest permit and transport permit would be required. Families who live and utilize the allocated land for five years have the right to request for ownership of the land to the Ministry of Land Management, Urban Planning and Construction.

Infrastructure Development
As a result of infrastructure development, timber harvesting is allowed with the use of the following documents:

Memorandum of Understanding with Ministry of Mines and Energy
Feasibility Study
Approval by the Council for the Development of Cambodia
Water use license from Ministry of Water Resource and meteorology
Environmental Impact Assessment
Build-operate-transfer (BOT) contracts
Permit to set harvest quota
Permit to harvest forest products & by-products

Private land
Private land is normally owned by individuals and private companies. The Ministry of Land Management, Urban planning and Construction is the responsible authority for issuing private land on which the owner has the legal right to use and develop the land. The owner has the rights to manage, develop, use, sell and distribute the products or forest products by themselves (Forestry Law 2002). Private land, including private forests and tree plantations, are divided into small, medium and large-scale land. Small scale tree plantation includes family-based land (less than 10 hectares) and small private plantations (10-100 hectares). Private companies normally own and manage medium and large-scale plantations (100-1000 hectares for the medium and more than 1000 hectares for large scale).

A registration certificate is needed for all private land. The Provincial Department of Agriculture, Forestry and Fisheries issues a certificate for a small-scale plantation, the Forestry Administration for medium scale plantations, and the Ministry of Agriculture, Forestry and Fisheries for large-scale plantations. Products sourced from private forest or tree plantation do not require permits like a harvesting permit, a license permit or a PC for transport of the products. The export products or processed products from private forest or tree plantation, a license is required, which is issued by the Ministry of Commerce together with the Forestry Administration (MAFF, 2017).

Community forest
Local communities have customary user rights on forest products and by-products and can assist forest management through community forestry. All community forestry shall be authorized and recognized by the Ministry of Agriculture, Forestry and Fisheries based on the proposal from the Forestry Administration Cantonment. To receive legal rights to harvest ina community forest, a community forestry agreement and a community forest management plan signed by the community are needed, which need to be approved by the Forestry Administration Cantonment. In a community forest, the community has the right to harvest forest products and by- products consistent with its community forest management plan and under its community forestry agreement.

The community also has the right to harvest forest products and by-products from its community forest for commercial purpose upon approval from the Ministry of Agriculture, Forestry and Fisheries and a harvest permit issued by the Forestry Administration. The payment for premium and royalty is needed and jointly determined by the Ministry of Agriculture, Forestry and Fisheries and the Ministry of Economy and Finance. Based on the law, the community cannot use the community forest as concession, nor sell, barter or transfer to a third party. To date, 636 community forests covering a forest area of about 516,817 hectares have been established, and 484 have been officially approved by MAFF (FA, 2018).

Taxes and fees

Royalties and premiums shall be paid by individual or legal entity that harvest forest products and by-products from permanent forest estates for commercial purposes to the national budget through the Forestry Administration (Forest Law, article 52). In order to receive a permit to harvest the products, a security deposit to guarantee payment of royalties and premium is required and the amount of the deposit is based on the annual harvest quota permit. On the other hand, the products harvested from private forests and community forests are not required to pay for royalties and premiums. Prior to the export, the export tax and other duty tax need to be paid to the national budget.

Timber harvesting activities

All timber harvesting activities from natural forest are regulated by the Forestry Administration. Under a forest concession and an ELC area, timber harvesting in natural forest can take place. All requirements must be met to receive the legal rights from the government to harvest timber from these areas:

In an ELC: an ELC company is required to develop a management plan by allocating areas for development and protection and following an environmental and social impact assessment.
In a forest concession: the government, when granted a forest area to a private company requires a concession agreement for a period not exceeding 30 years. In the process, a long-term management plan, annual operational harvesting plans, and a block management plan for each annual harvest are needed. Larger projects require an environmental and social impact assessment (ESIA) in their forest concession management plan.

After receiving the rights from the government, the company shall request a letter of permission to the Ministry of Agriculture, Forestry and Fisheries together with forest inventory list conducted by the Forestry Administration Division in order to conduct harvesting activities in the propose area. After approval, the company shall pay royalty and premium and will then obtain the right to clear or harvest timber in the approved forest block. All material and facilities used for harvesting timber must be registered with the Forestry Administration. After felling, all timber must be measured, marked with a hammer and recorded in the Log Book A by the Forestry Administration. After approval in Log Book A, the Forestry Administration issues a License Permit and stamp an additional three hammer marks for each log to allow the company to use the timber.

Currently, timber harvesting is applied mostly in private forests. To harvest timber from private forest and tree plantations, the owner is required to record the quantity and quality of forest products and by-products in Log Book A (a book issued by Forestry Administration Division). A harvesting permit and local transportation permit of the timber are not required.

Third parties’ rights

By forestry law, local communities are recognized, and they are ensured their traditional user rights for the purpose of traditional customs, beliefs, religions and living. In forest concessions, concessionaires are required to ensure that the operation in the area does not interfere customary user rights, where it takes place on registered land property of indigenous communities; and customary access and user rights practiced by communities residing within or adjacent to forest concessions. The community may receive a granted forest area through community forestry agreement validated for 15 years approved by the Forestry Administration.

Trade and transport

All wood products are mainly processed and transported locally by private companies with permits of the Forestry Administration. Based on the export ban (sub-degree 131), only processed forest products from legal sources of natural forests such as furniture, plywood, veneer can be exported, and logs and sawn timber are not allowed to be exported. Transportation of the harvested timber from the forest area to the mill, the company is required to have a PC-1 issued by the Forestry Administration Division. PC-1 contains summary information on quantity of the harvest timber being transported to the mill based on the approved License Permit and specific truck to be used for transport. The mill owner must have a book to record all input and output products of the mill. The timber and processed products intended to be transported to local market shall be accompanied with a PC-2 issued by the Forestry Administration Division.

To export processed forest products, a company must obtain an export license from the Ministry of Commerce and shall be consistent with the annual quota set by the government. Documents such as patent document, sale contract, invoice, packing list and quota letter are required to obtain the export license. The annual quota for private forest and community forest is not required. The license of exportation is issued by the Forestry Administration together with the Ministry of Commerce.

Before transport, the products are brought to the custom’s warehouse and stockpile area where they will be inspected and sealed by the Forestry Administration official. A permission certificate (PC-IMEX) is required to transport the products from the company to custom’s warehouse and stockpile area for export. The products will be inspected by the customs prior to loading the container as a part of export clearance. An export permit for a specific shipment of the products for export needs to be issued by the General Department of Custom and Exercise. The export documents including export license, PC-IMEX, export permit, commercial invoice and packing list are required by the customs prior to sealing container for export.

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