Forest certification in Sri Lanka.

Introduction

Sri Lanka is endowed with a rich diversity of natural and plantation forest resources. According to the Central Bank of Sri Lanka (CBSL 2004), the agricultural sector accounted for 17.8 percent of the gross domestic product in 2003, while the forestry sector contributed 1.7 percent. Even so, the true economic contribution of forestry is undetermined due to incomplete data on harvesting, market prices, and time spent on collection and consumption of fuel wood and non-wood forest products. The forest sector accounted for less than 1 percent of Sri Lankan exports in 2004.

Sri Lanka is self-sufficient in meeting its domestic requirements for most forest products with the exception of plywood, paper, and paperboard. The diverse forest system ranges from dry, sparse forests to tropical. wet forests. Figure 1 shows the relative geographic areas of these forest types throughout the country. Figure 2 identifies the number of hectares per major forest type. The growing demand for wood and industrial wood products for Sri Lanka s increasing population are often met by exploitation of the country's forest resources. As a result, closed canopy forest cover has declined to 22.4 percent of the total land area with an annual deforestation rate of 1.14 percent (Ministry of Environment and Natural Resources Sri Lanka 2002).

[FIGURE 1 OMITTED]

According to the Forest Sector Master Plan (2005), demand for sawn wood is increasing at ah average annual rate of 2 percent and is projected to total 885,000 [m.sup.3] by 2020. This increase in demand will likely drive expansion of wood-based manufacturing industries. Existing natural forests are being increasingly subjected to pressure to become classified as conservation forests, and, as a result, forest plantations of eucalypts, pines, teak, and mahogany have been established as an alternative to meet future demand for sawn timber.

The government is also making such provisions as long-term land leases under concessionary rates for forestry projects to increase private sector participation in forestry (Ministry of Environment and Natural Resources Sri Lanka 2002). As a result, in 2004, several plantation management companies converted their unproductive lands into forest plantations. According to the Ministry of Plantation Industries Sri Lanka, in 2003, the land area used for plantations was 14.079 hectares, a 48-percent increase over the previous year. Investment in commercial forest plantations is continuing (CBSL 2004). Opportunities also exist for foreign investors to invest in forestry projects in the country with government-approved tax benefits provided by the Sri Lanka Board of Investment, including a tax waiver for the first 5 years and a 35-percent decrease in income tax from the fifth year onward for duty-free imports (Weerawardane 2003).