Document of The World Bank FOR OFFICIAL USE ONLY Report No. 7218 PROJECT COMPLETION REPORT BURMA FORESTRY II EAST PEGU YOMA PROJECT (CREDIT 949-BA) April 28, 1988 Asia Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS US$1 = Kyat 6.5 WEIGHTS AND MEASURES 1 Hectare = 2.47 Acres 1 Millimeter = 0.04 Inch 1 Hoppus foot iHf) = 1.273 cubic feet true geometric measure 1 Hoppus ton (ht) 50 Hf in round logs or 50 ft3 of converted lumber or 63.75 ft3 true geometric measure or 1.805 m3 roundwood under bark 1 metric ton = 2.205 pounds 1 meter = 1.09 yards GLOSSARY OF ABBREVIATIONS IEEC European Economic Community ESRR Economic Rate of Return FAO/CP Food and Agriculture/World Bank Cooperative Program FD Forest Department FRI Forest Research Institute GBH Girth breast height GOB Government of Burma GOF Government of Finland MAF Ministry of Agriculture and Forests OE Operations Evaluation Department PSC Project Steering Committee PU(TC) Project Unit (Extraction and Sawmilling) PU (FD) Project Unit (Plantations) TC Timber Corporation UNDP United Nations Development Programme GOVERNMENT OF BURMA FISCAL YEAR April 1 to March 31 THE WORLD DANKF Washnton. D.C. 20433 US.A. OSI. ,EOiectivGmut April ^8, 1988 MEMORANDUM TO THE EXECUTM DIRECTORS AND THE PRESIDENT SUBJECTt Project Completion Report on Burma Forestry II East Peau YToms Proiect (Crodit 949-BA) Attached, for information, is a copy of a report entitled "Project Completion Report on Buzma Forestry II Ecrt Pegu Yoma Project (Credit 949-BA)' prepared by the FAO/IBRD Cooperative Program together with an Overview prepared by the Asia Regional Office. Further evaluation of this project by the Operations Evaluation Department has not been made. Attachment This document has a riled ditrbution nd may be used by repiets only in theo pefom of their oMcial duties Its contents may not otrise be disclsed whout Wodd Bank authosation. FM OMCIAL USZ ONLY PROJECT CCnLuTICUPS vORism It EAST PMO TWA PROJECT (CDIT 949-IA) TASLE OP COIRTUZT Preface ............................................... I B lc Data Sheet 11................*..................... II Evaluation 8UMMry II I1 l. tockground ................. ........1....... II. Project ForinalatI ........0................*.... 3 I II. Implementation ... 6 IV. Project IZpaCt i1 V. Institutional Perforuunc Mnd Development..00.. 21 VI. IDA Perforuane 23 VII. Fineancil ed Sconomic I-evaluatio. 24 VIII. Suiary end ConclusLons 26 Attaciment I - Pleating d M aitennce Schedule Tebler Ibi dowum ba a rusIFe- 'diWlu madoW be mad by q* Ind puwfo'm m of I k offidd fduL Its moats ma mlbeiwis be dsdmi wtht WC -Mtoaa. - I - PROJECT COMPLETION REPORT BURMA FORESTRY II EAST PEOU YOMKA PROJECT (CREDIT 949-BA) PREFACE This Project Completion Report (PCR) reviews lmplementation of the Forestry II (East Pegu Yoms) Project in Burma, for which Credit 949-BA in the mount of US$35.0 million vws approved in August 1979. The credit closing date was originally September 1985, but this was extended to September 1986. The final disbursement was made on April 13, 1987. The undisbursed balance of US$10.1 million was cancelled at that time. The PCR wma prepared by the FAO/CP. An Overview, prepared by the Asia Region, is based on the PCR, the Staff Appraisal Report (SAR) No. 2564-BA, dated July 17, 1979, the President's Report (No. P- 2611-BA) dated July 24, 1979, the Credit Agreement dated September 21, 1979, and Bank supervision mission reports. The Project Performance Audit Report (OED Report No. 4801, dated November 28, 1983) on the preceding project--Burma Forestry I Project (Credit 493-BA) and repor- ts relating to the ongoing Burma Wood Industries II Project (Credit 1444-BA) were also consulted. The project has not been subjected to audit by the Operations Evaluation Department. The draft report was sent to the Borrower on February 22, 1988 for their coiments. However, no coinents have been received. - Hi - . roF n uw It ASi PcCU winI . 51. "MU? CltfT l IfFUT - SA1C DATA swi T*tul Proet Cot CUSS ill.) 6.4 6.4 7n ec1t ) 31.0 24., 71 Co-ftrc1tvq (zC * 6.0 1.2 GO gat Pbpsical a 12/5 i/ ltstutsial Perfrvee Adute haquate Agre-oconsmic Pefrfwuce Adequate Adequate Us. of Otrct amficaries 3,000 ,O ne 2,300 1,70 farmers Over 2 oe * I cenmic late of dturn Ovnr lOGt Oe Iura nsaw PM Origns)t Pla SM Pojct brief V. it" Degraisl ROeOt Ue.1&4M3 Jip 191 Date of Usgetitie bane 1919 Date led Apel I. 1 Credit Sigin /Om flat% of Irfciwe slii Creut Clsing DatO 30.3.3 32/1286 FIscAI Vos: US ElK fm UK 11 E ("ID tstCtt 0.4 13.9 29.3 33.4 34.5 3.0 . A (05 millin) - I. 10.? 16.0 10.6 t1.1 4.1 84., Ataa as S ofApaisal 9 37 41 14 6 U 11 Oats of Fidrtl Cosot April 13,11 Fisal Vows *K U £1 aU UK (EEC Crdit) 4wIasal Esthete 0.4 1.6 6.0 6.0 6.0 CUSS million) Actuel ( million) . . 1.0 2.3 3.1 1.1 1.2 ActualatofAgpvLul 13 36 4S er 31 Oate of F.a34 Ssb0 1wt Aprt 131 . I13 fission: XE 1 Y i-- A reaation IA/CP 1/73 1 60 &.b.c, - Prearatin IDAUCU /1 2 10 e.e Pro-arasal IOeA /73 ' b - - Appraisal IDA II11/711 6 I t .. * Follow-up IDA 7t8 1 .4 0 Suervisioen IDA 11/ 314 b.c.e I - Suesion 11 lIA 1/U I 1 b 2 2 0 eisi" 11i IDA 3-31 3 33 a.b.c I 1 0. 5= tlvsi v IOA 11/U 1 3 42 S. .c N o .,? Spmrvisiom V IOA 4-1/31 1 14 b 8 U, Isls VI IDA 10/Il I I b 2 2 tl,. =p1w 11v 1 VI l 1DA 4-51/3 3I 0 a.btc I 1 U '~ ~ ~ ~~~~~~~~SPVSO Va1" il llA R 341 2 3 , sj I f evvisn V IOA 3/3 I 6 a* I 2 t Swweuvsim11 IDA 18/3 1 Li b 2 1 t sv.rvistm1 IDlA 3/65 1 4 b I I Vmistahm.it 0 IDA 131 3 16 abD 1 T S_wisionu1X IDA a/3 2 U a.b 3 3 lt a * agtrboltwlatg * * eoemhsts c * englnmw me * _ a_ p zeielist; t * training euoilist. j I * 1" rus 2 * _uisree Uiwlsnu a * probI. I * 1 g 2 *statiawy 3.* lteroaq. 9ffiBRt o :S tamofb leroe Socialist Uubl c df tAd Uno 1V d FirsAl Year I April to 31 woo "a of Curreinc gint Iattng Agoncy Ninistr of Agricultue on FUwts W4r504l1yel p KIM U1979/U USI1.O0 * 6.91 gm (a) Interv"e Vees Ave"rag 135/31 al 191/U1 * 1. 13 3 . * 7.16 1364/61 * .41 1361/3 * .41 - iii - PROJECT COMPLETION REPORT BURMA FORESTRY II EAST PEGU YOMA PROJECT (CREDIT 949-BA) EVALUATION SUMMARY Objectives The project was to be the first phase of forestry and forest industry development in the East Pegu Yoma and was expected to increase teak and hardwood export revenues, increase the supply of sawn hardwood to the domestic market, augment teak supplies through compensatory plantations and select suitable fast growing species and establish land clearing techniques for future large-scale plantation of fast growing species. In the project area, increase in extraction capacity, road construction. rehabilitation of existing hardwood saw- mills and construction of aew hardwood sawmills were provided for. Rehabilitation of Okkyin teak bawmill in Rangoon, improvement of rail transport capacity for timber and technical assistance and overseas training for extraction, sawmilling and plantations were also included. Implementation Experience Implementation was slower than anticipated mainly due to delays in equipment procurement. Disbursement had only reached about 602 of appraisal estimate at the original credit closing date. Credit closing was extended by 12 months, at uhich tlme 712 of the credit amount had been disbursed, and the remainder was cancelled. Fuel shortages were another principal reason for delays in implementation. Results Though there was some delay in project implementation mainly due to delays in equipment procurement, the project was an overall success. Most appraisal targets were equalled or exceeded. Short- falls occurred in targets for production of nonteak hardwood logs and sawnwood, mainly due to the inability to promote exports and inade- quate sawmllling capacity, and for construction of all-weather and extended logging season roads, mainly due to shortages of fuel and road building materials. The economic rate of return (ERR) at comple- tion is estimated at over 100X as anticipated at appraisal. Sustainability The Timber Corporation (TC), which was the principal Imple- menting agency, was considerably strengthened through the project. Its efficiency was improved in part through decentralization of opera- tions which permitted greater flexibility, and in part through ImprovewAnt in logging and sawmilling infrastructure. The outlook for sustainability appears good, at least over the assumed economic life - iv - of the several processing facilities provided which extends to 25 years in the case of the newly constructed hardwood sawmills. FindinRs The main lessons which emerge from the project's implementa- tion experience are as follows: (i) the economy-wide problem of for- eign exchange scarcity, as evidenered by shortages of fuel and building materials, which adversely affected project implementation and may affect post-project maintenance activities, was underestimated at appraisal; (ii) in view of the slow and cumbersome procurement proce- dures in the country, more lead time should be allowed tor procurement activities; (iii) the scope and timeframe for building up an export market for nonteak hardwoods have proven to be overoptimistic as the project failed to meet the nonteak hardwood export target envisaged at appraisal; more work needs to be done to build up nonteak hardwood e,v,rts; and (i%) in the plantation program, the effectiveness of tha 'aungya silvicultural method, using landless hill people and thvs eliminating shifting cultivation and the resultant loss of forest, was established. O.her points of interest are: - The low prices of hardwood (nonteak) products in the local market, together with high average milling costs per ton due to low utilization of capacity and low conversion rates, have led to a deterioration in financial viability of hardwood production. Attempts should be made to increase the propor- tion of export grade hardwood sold on the local market and to price it accordingly. - The appraisal expectation that the sawmills constructed and rehabilitated under the project will operate on double shift has not yet materialized cue to insufficient power and non-- availability of trained operators, the latter factor at least partly resulting from the reluctance of TC to close some of the old sawmills and relocate labor, which is considered politically undesirable. - Unlike Forestry I Project (Credit 493-BA), technical assis- tance staff under Forestry II were recruited through a specialized forestry consulting company and this arrangement has proved effective. - Technical assistance and training under the project have considerably strengthened the TC's organizational structure and performance and continued the process started under Forestry I to decentralize the TC's logging and sawmilling operations. - The Project Unit concept worked well and facilitated ongoing decentralization efforts. - Due to fuel shortages and a larger than anticipated availa- bility of elephants, much greater reliance was placed during - v - project lIplemntation on an elephantlmechanical systcm of extraction than on fully sechanised extraction envisaged at appraisal. While no major negative environmental effects of project activities have been identified, the possibility of an insect or disease attack In large-scale w'noculture lantations and possible erosion problems in teak plantations should be kept under review. - vi - BURMA FORESTRY II - EAST PECU YOKA PROJECT (CRECIT 949-BA) PROJECT COMPLETION REPORT Overview 1. This overview is primarily based on the PCR for the Forestry II Project (Cr. 949-BA) prepared by FAO/CP and presented to the Bank in November 1987. The PCR presents a detailed review of the project's performance and impact and the Region agrees with the findings and conclusions of the PCi. This overview is divided into two sectionss section A, which is based on the PCZ, sumarizes the important aspects of project implementation and impact; and section B, which utilizes information from documnts (listed in the Preface) other than the PCI, complements and elaborates some parts of the PCR relating to implementation issues and lessons learned. A. Project Implementation and Implct 2. Project Objectives and Components. The project was designed *a the first phase of forestry and forest industry developmnt in the East ftgu Yom. to increase teak and hardwood export revenues; increase the supply of sawn hardwood to the domestic market; augment teak supplies through compensatory plantations; and select suitable fast-growing species and establish land clearing techniques for future large-stale plantation establishment of fast growing species. These objectives were to be achieved through: (a) invest- ment in new, and rehabilitation of existing extraction equipment which would increase annual eztraction capacity by about 290,000 hoppus (H) tons and reduce teak log losses; (b) road construction to improve access to currently inaccessible or poorly accessed forest areas; (c) upgrading mechanical mainte- nance capacity in the project area; (d) rehabilitation of existing hardwood sawmills and construction of new hardwood sawmills in the project area to increase annual capacity and reduce timber wastage by improved equipment and sawing techniques; (a) rehabilitation of Okkyin teak sawmill in Rangoon and provision of minor spares to private teak sawmills; (f) investment in 29,500 acres of teak plantations; (g) investment in about 6,000 acres of large-scale trial plantations for selection of appropriate fast groving species and the development of lend clearing techniques; (h) upgrading of timber wagons and locomotives to provide adequate unit-train timber transport capacity; and (i) technical assistance for extraction, sawmilling and plantations and overseaa training for personnel of the Timber Corporation (TC) and Forest Departneat (FD) in manag_msnt, extra:tionq workshops, roads, finnce and milling and marketing. 3. Project Cost and Financing. The project was to be implemented over a 5-year period from 1979 to 1984. Total project cost was estimated at K 578.9 million (US$86.4 million equivalent) with a 58S foreign exchange component. Excluding taxes and duties, project cost was estimated at US$65.5 - vii - million equivalent, of which IDA was to finance US$33.0 million (531 of project costs), EEC US$8 million (122) for equipment, Government of Finland US$1.4 million (21) for technical assistance, UYDP US$0.2 million (less than 1X) for overseas training and Government of Burma (GOB) the remaining US$20.9 million equivalent (32Z). 4. Project Implementation. Despite a good start, implementation of the project was slow. By September 1985, the original credit closing date, disbursement was only about 601 of the appraisal estimate. The credit closing date was extended to September 1986 and final disburseesnt was made on April 13, 1987. By then only 711 of the credit amount had been disburseds the rest was cancelled. DeLays in equipmnt procurement and fuel shortages were the principal reasons for slower than anticipated project implementation. However, the project eventually achieved most of its targets (see Table 1). 5. Chenges in Project Scop nd Design. Changes introduced in project during implementation were relatively minor. Of these, the significant change was in harvesting and land clearing methods. At appraisal, mechanical harvesting and land clearing was expected to be introduced on a larse scale. Ho ever, during implementation, mechanical harvesting was reduced due to fuel shortages and greater cost-effectiveness of combined elephant/mecbsnical method of extraction. Moreover, use of power saw was discontinued after a short trial period due to high operation and maintenance cost of these machines and the scarcity of skilled operators. The use of crosscut saws was found to be more economical and socially more acceptable. For plentations, mechanical site preparation was tried on 75 acres but further trials were postponed indefinitely due to high costs, fuel shortages and shortage of suitable equipment and trained operators. 6. Status of the Project at Completion. The total project cost at comp'etion was K 480 million (US$62.4 million equivalent) or 832 of the appr&isal cost estimate in Kyat terms and 722 in dollar terms. Major factors contrirtaing to lower costs were reduced procurement of logging and road construction equipment and spare parts, reduced road construction and deletion of the rehabilitation of private sawmills and local consultant components. Costo in dollar terms were l ver than those in Kyat terms due to devaluation of the Kyat by about 131 in the project implementation period. 7. Despite the implemntation delay and shortfalls in some appraisal targets, the project was an overall success. The re-estiuted economic rate of return (EU) is very high (pare. 19). Significant increases in export revenues, employment sod efficiency of sawmilling have resulted from the project. The status of major individual components of the project at completion is briefly discussed below and shown in Table 1. - viii - Table 1: PROJECT PHYSICAL DENELOPMEVT Item Unit Appraisal Actual (--FY8O/81-86/87--) Teak Logs (000 Ot) 895.0 977.4 Hardwood Logs (000 Ht) 1,772.0 1,172.0 Hardwood Sawnvood (000 Ht) 640.7 576.6 All-Weather Road (AW) Construction (miles) 120.0 18.' Extended Logging Season (ELS) Roads (miles) 240.0 45.5 Feeder Roads (miles) 1,900.0 2,005.0 AW/ELS Road Maintenance (miles) 1,600.00 1,872.0 Hardwood Mills Rehabilitation (units) 16 16 Hardwood Mills Construction (units) 2 2 Teak Hill Rehabilitation (units) 1 1 Now Workshops and Improvements (units 7 7 Administrative Building (units) 1 1 Equipment Rehabilitation (units) 167 167 Teak Plantations (acres) 29,500 40,610 Species Trials (acres; 6,100 6,911 Log Wagons Rehabilitation (units) 190 190 Locomotives Rehabilitation (units) 5 5 s. Estraction. The extraction operation has been generally success- ful. In the case of teak, log production exceeded appraisal targets in the project implementation period (Table 1). However, hardwood log production, which was mostly consumed domestically, has been lower than expected since available sawmilling capacity was inadequate. As mentioned earlier (para. 5), a significont feature was the much greater use of elephant/mechanical method of extraction rather than mechanical logging envisaged at appraisal. 9. Road Construction and Maintenance. The projeet envisaged improvement of road infrastructure to facilitate the mechanical extraction of logs and reduce reliance on the river rafting system, thus reducing losses and lowering costs. However, while construction of feeder roads (usable for 120 days a year) ezceeded appraisal targets, that of all-weather roads (usable for at least 300 days a year) an.d extended logging sQason roads (usable for 150 days a year) considerably fell ,Fort of appraisal targets (Table 1). This was due to the unforeseen fuel shorta1'. shortage of road building materials, scarcity of skilled labor and reduc, mechanical eztraction. 10. Mechanical Equipnt Rehabilitation Aind Maintenance. As envisaged at appraisal, new workshops were established wAd fully equipped to carry out - ix - the required maiatenance work and equipment was rehabilitated (Table 1). The maintenance program and organization established under the project has been working sacisfactorily and workmanship is of a high professional quality. 11. Hardwood Sawmill Constrvction and Rehabilitation. While rehabilita- tion of 16 existing state sawmillai was accomplished early in the project, con- struction of two new hardwood sawmills and their full operation were delayed due to late and sporadic arrival of equipment, machinery and building materials; insufficient electric power; and scarcity of trained operators. The last two factors also account for non-introducrion of double shifts envisag-d at appraisal for the new mills. Due to delays in construction of new hardwood sawmills and non-introduction of double s*ift operation, sawn hardwood supply to the domestic market was 15-20% lower than appraisal expectations. Moreovar, the quality of end-products of rehabilitated mills has not improved significantly due mainly to poor sawmill design and green lumber handling techniques. 12. Okkyin Teak Mill Rehabilitation. Though mill rehabilitation was accomplished, the conversion rate (41X) remains low compared to that in existing hardwood saw mills rehabilitated under the project (50-54X) and one of the two new saw mills constructed under the project (601). The quality of end products also remains low. The reasons for these are low quality of saw logs received (even low quality teak logs have been exported leaving only vsry poor quality logs for the teak mills), problems of log transfer, worn out head rigs and wood flow patterns in resaw areas. Like the twc new mills con- structed under the project, the Okkyin mill has also not operated on a double shift basis, as envisaged at appraisal, due to power problems and non- availability of trained and experienced operators, the latter at least partly resulting from the reluctance of TC to close some of the old sawmills and relocate labor, which is considered politically undesi able. 13. This project component had also included provIsioan of spare parts, mainly circular saws, at cost, to 14 private (hire) saw mills operating under contract for the TC. Due to the high cost of these spare parts, tha "hire" mills preferred to continue working with the used state sawmill blades which were available at lower cost. The reason for this is partly the low contract price for milling which has not changed appreciably over the last seven years. Funds for the component were, therefore, not utilized. 14. Plantation Progrm. Both teak plantation and species trial plantation acreages exceeded appraisal targets (Table 1). As envisaged at appraisal, the major silvicultural method used was the well established Taungya syste, employing the landless hill people who generally practice shifting cultivation. They were given financial compensation and allowed to use the land for subsistence crop production. The Taungya system, besides achieving lower than anticipated cost of plantation establishment (K 322/acre), had the advantage of settling the landless hill people who would otherwise have continued the shifting cultivation practice, thus depleting forest resources at an average of 2-3 acres per family per year. Each plantation of 600-800 acres required some 400 workers (200 families) and resulted in the saving of 400-600 acres from denudation and of 8-12 Mt of recoverable wood per acre of plantation. Another significant achievement in - x - this component was the establishment of * teak seed orchard, which is expected to provide quality seed for future plantations. The species trial plantations have provided valuable information on appropriate silvicultural techniques, spacing maodeLs and mixed stands which will help toriullate methods for estab- lishment of future large-scale plantations. Besides the Taungya method, mechanized methods for site preparation were also tested. However, as mentioned earlier (para. 5), after mechanical preparation of one pilot area, the experiment was discontinued since the available equipment did not have the required handling characteristics and was not considered appropriate in view of the prevailing fuel constraints. 15. Rail Transport Rehabilitation. The rehabilitation of log wagons and locomotives was accomplished as anticipated at appraisal (Table 1) and helped improve sawnwood and log transportation and reduce transportation costs. 16. Technical Assistance and Trai3ins. The technical assistL_ce and overseas training components, financed by Covernment of Finland and UNDP/FAO respectively, were implemented successfully. The technical assistance, provided through a Finnish consultancy company, was satisfactory to COB. This was in marked contrast to the disappointing experience with technical assis- tance under Forestry I Project (Cr. 493-BA). Recruitment of all technical assistance personnel through one company proved advantageous as it facilitated coordination and comeunication. The impact of technical assistance and training on project implementation and post-project continuation of activities by trained personnel is considered to be substantial. 17. Management and Bank Performance. Throughout the project period, management was of a high professional standard. Local and overseas training is considered to have enhanced staff quality and helped sustain post-project activities. Based on the experience gained under Forestry I project (Cr. 493-BA), the project aimed at decentralizing the TC's logging and sawmilling operations in the project area. Significant progress has been made in this direction and the TC cocsiderably strengthened in its organizational structure and performance. The perforwrnce of contractors and suppliers was also satisfactory. However, considerable delays in the procurement of materials and equipment occurred due to the cumbersome and slow procurement procedures prevailing in the country. Preparation of unaudited and audited reports als, suffered long delays due to work overloads in the TC, FD and Central Auditor-General's office. IDA's supervision of the project was generally satisfactory. Over the 7-year project period, a total of 12 supervision missions were carried out or approzimately two missions per year. The frequency and skill mix of supervision missions were appropriate. However, supervision missions had little success in resolving the issues of low locaL timber prices (Government regulated) and the lack of efforts to increse hardwood exports (see further pares. 21 and 23). 18. Financil Viabiity. Excluding costs and benefits from the Okkyin teak sawmill (whic dis not located in the project area), rail transport rehabilitation, teak plantation, technical assistance and overseas training (grants), but including teak lo;s transferred to the Okkyin teak sawmill, the estimated net income (after tax) of the East Pegu Yoma project is sufficient to cover debt services and future replacement of equipmnt. Relative to - xi - appraisal estimates, the cash flow is less favorable due to: Mi) the higher log and sawnwood production assumed in the 'without project' situation but lower log and sawnwood production in the 'with project situation nad delayed operation and high operating costs of the sawmills; (ii) a substantial duties and taxes component in project investment and operating costs; and (iil) low product prices for hardwoods (non-teak) (see further para. 21). 19. Economic Imp.act. The PCR reestimates in 1987 constant terms the economic rate of return (ERR) for the East Pegu Yoma Project (over 100X), Okkyin teak sawmill (over 50S), teak plantation (392) and the whole project, excluding Okkyin teak sawmill, rail transport rehabilitation and technical assistance and overseas training (over 1001). Compared to estimated opportunity cost of capital of 102 in Burn, these are very attractive rates of return. These ERR* are about the same as expected at appraisal except for teak plantation which substantially exceeds the appraisal estimate of 142, mainly due to about 401 higher acreage (Table 1). B. Implementation Issues and Lessons Learned 20. Though implementation issues were not serious enough to prevent the project from being successful, they provide lessons for the design and imple- mentation of similar projects in the future. These issues are discussed below. 21. Timber Pricing. In early 1987, financial prices (Government- determined) -ofVh-dwood logs and sawnwood in the local market were 25-50S of the estimated economic prices, under the assumption that they could have been converted to export grade. The divergence between financial and economic prices has remained over the project period as financial prices have not been adju,ted appreciably over this period. The low financial prices were a major reason for the disinterestedness of private sawmills in the project component for provision of spare parts (para. 13). The low product prices along with high duties and taxes and high operating costs (mainly due to low conversion rates), have also jeopardized the financial viability of sawmills (para. 18) and will increasingly do so in future, if no price and quality adjustments occur. The pricing issue is being addressed under Wood Industries II project (Cr. 1444-BA). But 008 has not yet taken a decision to increase prices of wood products. 22. Kacroeconomic Issue. The economy-wide problem of foreign exchange scarcity was evidently underestimated at appraisal. The shortages of fuel and building materials resulting from the foreign exchange problem considerably affected the project and led to some design modifications (para. 5). The post-project mainteance activities may also be adversely affected by the continuis4 difficulty in obtaining spare parts. 23. Hardwood Exports. The project aimed to increase teak exports from 7,800 to 17,200 Ht p.a. and hardwood exports from less than 200 It to 35,000 St p.a. While teak exports have considerably exceeded apppraisal targets and expected to stabilize at 38,000 It, hardwood exports were negligible and are expected to stabilize at 6,000 It (logs only). The scope end time frame for building up a hardwood export market have proven to be overoptimistic mowtly - xii - due to lack of quality improvements and to Governmnt's priority allocation of resources to teak extractica Much more work needs to be done to build up hardwood exports. 24. Procurement. Delay in tendering and procuring equipment, machinery and building materials resulted in delays in construction of the two new hard- wood mills and rehabilitation of the Okkyin teak mill. Procurement procedures prevailing in the country were slow and cumbersom. The problem was aggra- vated by the Government's unfamiliarity with the EEC tender rules for equip- ment to be purchased under the EEC loan. In future projects, more lead time should be allowed to deal with the complicated procurement procedures in the country. 25. Double Shift Operation. At appraisal, it was itnticipated that the two new hardwood sawmills and the rehabilitated Okkyin teak mill will operate on double shift. However, this has not yet materialized due to insufficient power and nonavailability of trained operators, the latter factor at least partly resulting from the reluctance of TC to close some of the old sawmills and relocate labor, which is considered politically undesirable. Thus higher efficiency from double shift operation, at least in the new hardwood sawmills which have a conversion rate of 60Z compared to only 50-54X for older mills, has not been achieved and the sawnwood milling capacity and supply of sawnwood in the domestic market continue to be inadequate. 26. Forest Mester Plan. Most of the forest inventory data is very old and may not be reliable. Under the project, 008 was to prepare a program for the development of a Forest Master Plan by December 31, 1980. However, this had to be delayed pending the results of the National Forest Survey and Inventory Project supported by FA0/IUDP. The inventory was expected to be completed before the end of 1987. The completion of this inventory and establishment of a forest management plan are high priorities. 27. Environmental Issues. No major negative environmental effects of project activities have been identiffid. In fact, a positve environmental impact of the project was brought about by the deployment of the hill people in the Taungya plantation, eliminating shifting cultivation and the resultant loss of forest, and replanting large areas of degraded reserve forests with productive forests. However, some issues need further investigation under future projects. The large tracts of land under monoculture plantations could impose a future threat due to insect or disease attack and some concern has also been eprcssed about possible erosion problems in teak plantatigns. A significant feature of project implementation was the much greater raliance on elephant/m_chanical syster of extraction than on fully mechanized extraction envisaged at appraisal (para. 5). This was due to fuel shortages and a larger than anticipated availability of elephants. While the mechanized system of extraction along with use of road transport has undeniable economic advantages over the elephant/float system in terms of reduced losses of logs in transit, reduced tim between felling and milling and greater harvesting of non-teak hardwoods, it can also have some negative environmental impact because machinery damages the fore t more than elephants* To this extent, greater use of elephants during projew implemntation had a positive environmental imp$'Ž:t. - xiii - 28. However, *nviroumentalists have expressed concern that the use of elephants in the fortfts is aggravating the decline in the total elephant population in Burma._' Domsticated elephants do not breed very welL, and, with a high proportion (estimated over 502) of the national herd in captivity, this has a significant effect on the overall population dynamics. Cnvironmentalists have suggested that elephant management should be reviewed to determine, aong other things, ways in which the management of elephants in captivity could be changed in order to encouragl,breedings and changes in the capturing process which would reduce mortality.- Some work on this has been done under an FAO project in Burma and further review deserves consideration. i/ Project Performance Audit Report (Report Wo. 4801), urma Forestry I Project (Cr. 493-BA), OFD, ovecber 286 1983. BURMA FORESTRY II (EAST PEGU YOIMA) - CR.949-BA PROJECT COMPLETION REPORT I. BACKGROUNn A. Introduction 1.1 The Forestry II - East Pegu Yoms Project for which Credit 949-BA for USS35 million was approved on 9 August, 1979 and became effective on 20 December, 1979, was to be implemented over a five-year period. The project complemented the Forestry I project, for which IDA had provided -a USS24 million credit In 1974. This second forestry project had been designed mainly to increase teak and hardwood <1, exports, increase the domestic market supply of sawn hardwood nd augment teak supplies through plantation developent. B. The ForestrY Sector 1.2 Climate and topography have combined to give Burma a rich forest cover containing many tree varieties. The forests of Burma cover about 96 million acres or 57% of the land area; of this soue 24 million acres are reserved forest, half of which is teak reserve. Burma has eight forest types, deciduous forest being the most Important, and there are over 120 com rcial hardwood tree species with teak, Kanyin, Pyinhado, Paduk and Gurgin currently being the preferred species. Other forest types contain bamboo and coniferous species. Currently about 35% of the forest resource (15% of teak) is Inaccessible because of topography and security. Taungya shiftint cultivation affects about 660,000 ac per year on a 6-year cycle, however, controlled Taungya is used successfully to establish plantations with the frmers intercropping between planted trees. 1.3 Burma has one of the oldest forest departments in the world maging the forests. The first plantations were established prior to 1860; the earlier plantations were for teak enrichment and have since reverted to jungle status. Since 1962, about 2,000 ac of teak, 1,000 ac of Pyinhada and 3,000 ac of other species have been planted annually. Since 19690 some 20,000 ac of Eucalyptus have been planted for watitrshed protection nd fuelwood. Until 1980 about 200,000 ac of plantations had been established, 50% of which was teak. …-----------------------------------… '1' In this report, 'hardwood' refers to non-teak hardwood. - 2 - 1.4 Although inventory data on forest stocking and yields are out of date, it is felt that the present rate of extraction can be sustained for the next forty years. GOB has undertaken a forest inventory, the first results of which are expected for the Pegu Yoma area during late 1987. In 1978, the annual output of teak was about 310,000 Ht, out of an AAC <,> of 400,000 Ht (300,000 Ht accessible areas). The annual teak output has been substantially increased to 350,000 Ht in 1986 by reducing the girth at breast height from 7' 6" to 6' 6'. Teak yield can also be increased for a short period to eliminate a backlog of approximately 440,000 Ht of girdled, unfelled trees. <2> The production of hardwood in 1978 was about 375,000 Ht and increased to about 720,000 Ht in 1986, well within the range of 1.1 million Ht MAC. 1.5 The geography of Burma is dominated by the Irrawaddy River complex, which drains two-thirds of the country, allowing access to many of the forest areas and providing cheap, if slow, transport for rafting logs from remote forest areas to Rangoon. Insurgency affects significant areas of forests. Where insurgency has been controlled, for example in the project area, rich natural forests are available for development. 1.6 The project area is located northeast of Rangoon on the eastern slope of the Pegu-Yoma mountain range. The area extends from the Sitang river in the east to the Pegu-Yoma Ridge in the west and from jus'L south of Pegu to north of Yamithin. It is roughly rectangular In shape, about 50 x 280 miles, centred around Toungou and measures about 140,000 squ&r. miles, of which approximately 6,500 square miles (4 million acres) are reserve forests. The topography of the project area ranges from gently undulating hills along the foothills to ragged, steep terrain broken by many streams and rivers. The elevatlon ranges from 400 to 2,000 ft. The soils in the area are sandy loams with sery limited clay and laterite content making a poorly structured base for ruad building. The climate is monsoonal with two distinct seasons. The dry season lasts from November till April and has an average monthly precipitation of 18 mm with a low0of 1 m in January, and an average maximum temperature of 34 C, reaching 37;C in April. The wet season from May to October has an average precipitation of 300 m per month with highs of 833 m in July and August. The wet season temperature averages around 30°C with a low maximum temperature of 29°C during August. 1.7 The climatic conditions are a predominant factor in the extraction process. Stumping (skidding) is done mostly in the wet and early dry season. Green teak and hardwoods are transported in the dry season on feeder roads to depots located along all-weather roads, for transportation in the wet season to mills and distribution depots. The dry teak is floated along streams t rivers for rafting. 1.8 The project area has a transportation corridor running north-south with the main Mandalay-Rangoon highway and railway. The Sitang River is also an important transportation route for teak logs. East-west transportation is negligible with about four access routes Into the forest at present. The present project area population is about 2.5 million, with 10% living in the c1l Allowable annual cut. (2> Standing teak is girdled to kill it and allow natural drying while standing. After three years, the teak is felled and skidded to stream beds for floating/rafting to mills or depots. -3- urban areas of Pegu, Toungoo, Yadeshi, Lewe and Pyimnana; the rest live in villages located mostly &long the transportation corridors, with some scattered as far as the foothills. Although the forest areas are sparsely populated, no problems have been encountered in obtaining labour for forest operations. 1.9 The project area includes 6 of the 36 Divisions in Burma: north and south Pyinmana; north and south Toungoo; and north and south Pegu. The area has 20% of Burma's teak reserve forests and 17% of the reserved hardwood forests; it contains about 20% of the standing teak and 21% of merchantable hardwood inventories with over 4 ft girth at breast height (gbh). About half of the reserve forests have never been felled for hardwood due to a lack of road :nfrastructure. The area contains some 120 species of potentially cornercial trees of which presently about 30 are utilised with a preference for about 6 species. C. PCR Information Source 1.10 Upon completion of the project, the Timber Corporation had started to gather data and information for the PCR preparation and an internal document had been prepared summarizing the main project achievements. An FAO/World Bank Cooperative Programme mission visited the country in June 1987 to assist with the preparation of the draft. This report is based on the findings of the mission and on project documents and reports prepared by GOB and the World Bank during project preparation, appraisal and implementation. II. PROJECT FORMULATION A. Identification. Preparation and ADDraisal 2.1 The Forestry I Project (CR.493-BA), signed in December 1974, included Feasibility Studies for further forest development. These studies identified a priority investment area in East Pegu Yoma, on the basis of which GOB prepared a project Identification report in 1977, covering extraction, saw milling and plantation establishment for this area. 2.2 Project preparation was undertaken by GOB through a Project Preparation Comuittee (PPC) comprising the Forestry Department (FO), the Timber Corporation (TC) and the Ministry of Planning and Finance, supported by the Ministry of Agriculture, Planning Department. An IDA and FAO/CP mission visited Burma in May 1978 to assist the PPC with preparation work. A further FAO/CP assistance mission in July 1978 reviewed preparation work of Technical Annexes and provided an outline for the preparation of the final report, which was completed in October 1978. - 4 - 2.3 On receipt of the preparation report, an IDA mission appraised the project in December 1978 with no substantial changes in project concept and design. B. ProJect Description 2.4 The project which was to be implemented over a 5-year period from 1979 to 1984 In the East Pegu and Yoma districts pursued the following major obJectives: 1) to I.gcrease teak and hardwood export revenues by increasing projected teak log and sawnwood exports to 68,100 Nt and hardwood exports to 42,400 Ht; 2) to increase the supply of sawn hardwood to the domestic market from 36,400 Ht to 105,300 Ht; 3) to augment teak supplies through compensatory plantations; and 4) to select suitable fast growing species and to establish land clearing techniques for future large-scale plantation establishment of fast growing species. 2.5 The project, was designed as the first phase of integrated forestry and forest industry development in the area, and included the following components: a) setting up project units (PU) in the project area for extraction and saw milling under the Timber Corporation (TC), and for plantations under the Forestry Department (FO); b) provision of new, and rehabilitation of existing extraction equipment which would increase annual extraction capacity by about 290,000 Nt and reduce teak log losses; c) construction of roads to Improve access to currently Inaccessible or poorly accessed forest areas; d) upgrading the maintenance capacity for mechanical equipment in the project area; e) rehabilitation of existing hardwood saw mills and the construction of new hardwood saw mills in the project area which would increase existing annual capacity by about 21,000 Mt, add 24,000 Nt of new single shift annual capacity and reduce timber wastage by improved equipment and sawing techniques; f) rehabilitation of the Okkyln teak saw mill in Rangoon, provision of minor spares to other teak saw mills to provide teak saw milling capacity to meet increased project output, and provision for minor equipment to Timber Corporation Milling and Marketing Department; g) planting 29,500 acres of teak; h) large-scale trial plantations on about 6,000 acres for selection of appropriate fast growing species ard the development of land clearing techniques; 1) upgrading 190 timber wagons and 5 locomotives on the Taungdwingyi- Rangoon rail line to provide adequate unit-train timber transport capacity to Rangoon; J) provision of 16 man years technical assistance for extraction, saw milling and plantations; and k) provision of 137 man months for overseas and various local training. 2.6 Project costs were estimated at US$66.4 million over a period of 5 years. TC and FO would be the main implementing agencies under the overall coordination of NAF. The economic rate of return for the whole project was estimated at over 100%. C. Negotiations and Effectiveness 2.7 The Council of Ministers approved the Credit on 5 July, 1979, and the credit agreement was signed on 21 September, 1979. It was agreed at negotiations, that the credit would become effective whan GOB had established the Project Steering Committee (PSC) and both the Timber Corporation (TC) and Forestry Department (FD) Project Units (PU) had appointed Project Directors for their PUs, with qualifications and experience acceptable to IDA. It was further stipulated that the EEC Special Action Credit and Govermuent of Finland grant would have to be effective. 2.8 All the above conditions were fulfilled in a timely manner and the loan become effective on 20 December, 1979. 2.9 The tenure of the project was for five years, conmencing from FY79/8O to the end of September 1985, however, due to delays in procuremnt and construction/rehabilitation of sawmills, the credit closing date was extended for one year and IDA credit was closed on September 30, 1986. IDA continue0 to disburse against eligible expenditure up to April 13, 1987 in order to clear the disbursement backlog. III. IMPLEMENTATION A. Start-uR 3.1 The project had a good start. Even prior to effectiveness, a number of actions were initiated by GOO and the institutions involved, facilitating tiely project start-up and subsequent implementation. 3.2 Under the project two separate Project Units (PU) were to be set up. The Timber Corporation was to set up one unit in the project area responsible for extraction, sawmilling, road construction and maintenance. This unit started activities in May 1980, i.e. the begilning of FY84/81. 3.3 The other PU was to be established by the Forestry Department (FO) and was responsible for the implementation of the plantation and species trial components. This unit started Its activities immediately after credit effectiveness, in December 1979. B. Changes In Project 3.4 At appraisal, It was foreseen that mechanical harvesting and land clearing would be a major component of the project and would be introduced on a large scale. During project implementation, it was found necessary to reduce the mechanical harvesting component mainly because of fuel shortages. In addition, it was found that the combined elephant/mechanical method of extraction was more cost effective. For this reason, less logging equipment was acquired and the number of elephants Increased from 800 to 1,100 to carry out all stumping. It was however necessary to increase the number of wheeled loaders and 6.5 m ton trucks to achieve the set extraction targets. 3.5 It was also agreed with IDA to discontinue the-use of power saws after a short trial period because of the expense of operating and maiftatsing these machines and the lack of skilled operators. The use of crosso,. sms was found to be more economical and socially more acceptable. 3.6 One sawmill location was changed from Kyungon to U Yin Daw because of better site characteristics and improved access to road, rail and power and proximity to a good labour source. 3.7 Mechanical site preparation for plantations was tried on 75 ac but further trials were postponed indefinitely because of high costs, fuel shortages and lack of suitable equipment and trained operators. 3.8 The all-weather (Ai) road construction was not carried out to the extent anticipated due to high cost of construction and reduced mechanical extraction. 3.9 Provision of spare parts to private "hireu mills lid not take place due to the comparatively high cost. C. General ImDlementation Experience 3.10 Oespite a good start, project implementation was slower than anticipated mainly due to delays In equipment procurement. With regard to teak extraction, project implementation has been extremely successful although mechanization was not introduced at the anticipated scale. Sawnwood production fell short of expectations mainly due to delays in the construction/rehabilitation of mills and the failure to introduce a double shift operation. Hardwood extraction and production targets were not met resulting in a reduction of project benefits anticipated at full development. 3.11 Throughout the project implementation period, and especially during the last 2-3 years, project implementation suffered from diesel shortages. Whereas the SAR anticipated a requirement of 1.6 million gallons per annum at full development, in the last projecg year, total diesel allocation was less than 1 million gallons. 3.12 The project substantially strengthened the institutions involved, and In particular assisted the TC in advancing and firming up decentralization efforts. Project management was generally satisfactory and GOB support to the project was good throughout. 3.13 With some delay, (see Table 1) the project achieved most of Its physical development targets as shown below: ProJect Physical Development Item SAR Estimate Actual ( . . FY8081-86/87 ;7. T Teak logs ('000 Ht) 895.0 977.4 Hardwood logs 1,772.0 1,172.0 Hardwood sawn wood U 640.7 576.6 Mll-weather road (AW) construction (miles) 120.0 18.5 Extende -logging season (ELS) roads 0 240.0 45.5 Feeder roads a 1,900.0 2,005.0 AWIELS rcad maintenance a 1,600.0 1,872.0 Rehabilitation hardwood mills (units) 16 16 Construction hardwood mills 2 2 Rehabilitation teak mills ' 1 1 New workshops and improvements 7 7 Administrative building 1 1 Equipment rehabilitation ' 167 167 Teak plantations (acres) 29,500 40,610 Species trials ' 6,100 6,911 - 8 - 0. Imp'ementation of Main ComPonents Extractiun 3.14 Annual Timber production at full development was to increase from 130,000 Hoppis tons (Ht) to about 423,000 Ht. Of this, about 45,000 Nt would be dry teak, 88,000 Ht green teak and the remaining 290,000 Ht commercial hardwood. 3.15 It was foreseen that three extraction systems would be used to Increase the teak and hardwood production in the project area. The three methods were: i) Elephant/float - elephant extraction of dry girdled teak in steep, remote areas to streams where it is floated in the wet season to rivers for rafting to Rangoon. ii) Elephant/mechanical - elephant extraction in the steeper areas to skid or feeder roads from where the logs are forwarded to a central loading area by skidders or hauled by light trucks to depots along the all-weather roads. iii) Mechanical - the use of mechanical logging systems using crawler tractors to bunch logs to be forwarded by skidders. 3.16 Mechanical logging was intendedi to decrease the dependence on animals and to accelerate the reduction of teak 1inventory in the extraction process. By adding the use of mechanical equipment to the logging system, it was anticipated that the productivity per elephant would increase from 200 Ht to 350 Ht per year. Teak log production would increase from 60,000 Nt in 1979/80 to 132,500 Ht from 1981/82 onwards and hardwood log production was to increase from 70,000 Ht in 1979/80 to 290,000 Nt from 1982/83 onwards. Increased teak productfon was to come from efforts to eliminate the backlog of girdled unfelled teak and a temporary reduction in girth cutting limits. Increased hardwood production was to be achieved through increased felling, however; within the limits of the allowable annual cut.' 3.17 The extraction of logs was accomplished without the large-scale introdueS1on of the echanised extraction system, as more elephants were made ava4lable - 1,100 Instead of the estimated 800 - and the fuel shortage becm maore critical. Equipment requirements were therefore lower and also changes in the composition of the equipment component were necessary. Fewer tractors were required, however, more front-end loaders were needed and more 6.5 m ton lorries were purchased. Twenty self-loading units were acquired but the units were found to be too light 'or the heavy logs. Sixty power 3aws were purchased but were found unsuitaole for the project due to operational costs, lack of skilled operators and maintenance difficulties. 3.18 In spite of these changes, the extraction operation has been generally successful and has, in the case of teak, actually achieved more than the projected targets as shown below (sea also Tables 3 and 4): - 9 - Log Production Suwmary for Forestry 11 ProJect Period. ('000 Mt) ( . . . . . Teak . . . . .) ( . . . . Hardwood . . . . ) Year Appraisal Actual £ Appraisal Actual X 79/80 1/ 60.0 - 70 - 80/81 100.0 131.4 131 122 186.2 153 81/82 132.5 159.6 120 200 140.6 70 82/83 132.5 153.9 116 290 186.5 64 83/84 ./ 132.5 165.9 125 290 133.2 46 84/85 132.5 142.1 107 290 182.4 63 85/86 ]/ 132.5 128.0 97 290 181.6 63 TOTAL / 762.5 880.9 115 1.482 1.010.5 68 86/87 96.6 5/ 73 161.2 56 87/88 7/ 89 67 1606/ 56 88/89 89 67 160 56 89/90 89 67 160 56 1/ Base year cutting without project. I/ Original end of project. F1 FY85/86 used in all calculations as end of project. J Total includes FYSO/81 to 85/86. N New cutting budget based on allowable annual cut. V Reduced cutting budget based on sawmill capacity. Projected stabilised cutting budget. 3.19 Teak production was higher than anticipated and peaked during 1983/84 with 166,000 Ht extracted. Since then, due to the reduction of the backlog of girdled teak and a resumption to logging 7' 60 gbh from the reduced 6' 60 gbh used at the start of the project, production decreased o 96,56 lt in 1986/87. Production is estimated to stabilise at a constafvt 89,000 Ht from 1988/89 onwards. 3.20 Hardwood log production has been lower than expected since it had to be adjusted to the available saw milling capacity. 3.21 At the beginning of the project, large inventories of hardwood logs had been built up following increased logging during 1979/80, in anticipation of early project start-up. These were only gradually reduced as savilling capacity remained below expectations. Under normal circumstances, some inventory is present at all stages of extraction operation, however, logging targets were not adjusted quickly enough to take care of Inventories in the system. Thanks to greater experience and better coordination, the situation has shown gradual signs of improvement. - 10 - Road Construction 3.22 To accomplish the intended extraction programme, the appraisal report foresaw the need to enhance the road infrastructure. Three major road designations were established: a) All-weather roads (AWR) would be usable for at least 300 days per year, would have log bridges and a minimum of 40 compacted stone/laterite clay surfaces. b) Extendri logging season roads (ELS) would have log bridges, culverts and side drainage similar to the all-weather roads, but with minimal surfacing, they wo:.ld be serviceable for only about 150 days per year. c) Feeder roads, serviceable for 120 days and without bridges and only minor culverts. These units generally have a one-year life span and are mozIv constructed by the Extraction Department. 3.23 Constrv, > on of 120 miles of all-w_atier roads, 240 miles of extended logging season roads and 1,900 miles of feeder roads were foreseen at appraisal. In addition, 1,600 miles of roads would be maintained. This basic infrastructure would facilitate the mechanical extraction of logs and reduce reliance on the river rafting system, lowering costs due to smaller inventories required. It would also reduce losses, as It has been estimated that logs are in the river system for an average of three years during which time average losses of 8% have been recorded. 3.24 Changes in the road construction programme have been considerable. This was mainly due to the unforeseen shortage of fuel supply, difficult accessibility of road building material, and a scarcity of skilled labour. Some 1,872 miles of roads were maintained and about 2,000 miles of feeder roads have been built, 75% of which by the Extraction Department and the remaining 25% by the Road Department. The increased feeder road system reflects the greater use made of the 6.5 ton trucks to transport logs from the jungle to depots. A summary of the road construction and maintenance programme is given below (see also Table 1): AWR, ELS and Feeder Road Construction AWR ELS Maintenance Feeder Roads SAR 120 240 19600 1,900 Actual 18.5 45.5 1,872 2,005 3.25 To implement the road maintenance and construction programme, the project procured equipment for two road building units in the project area. No major changes were made in the equipment component. Two extra front-end loaders were purchased to facilitate road material loading and hauling, and two additional road rollers were provided for compaction. The project also procured a rock crusher for the production of the required surfacing material (see Table 2). - 11 - 3.26 The rate of equipment utilisation has been very low due to the reduced construction activities. Most of the time recorders show only 2,000 to 3,000 hours of equipment use after 4-5 years. Mechanical Equipment Rehabilitation and Maintenance 3.27 The SAR foresaw the rehabilitation of existing equipment which still had an economic life of at least 5 years. In addition, the repair and maintenance facilities in the project area were to be improved to secure proper operatlin of the mechanical equipment. For this purpose, the existing agency workshops and stores were to be upgraded, two additional ones were to be constructed and a new central workshop and spare part store was to be established. All workshops were established and supplied with tools, equipment and spare parts as foreseen at appraisal and are now fully equipped to carry out the required maintenance work. 3.28 Rehabilitation of equipment took place over the project period and totalled 167 units as foreseen at appraisal (see Table 1). 3.29 The maintenance programme and organization, as established under the project, has been working very satisfactorily and workmanship is of a high professional quality. To sustain the operation it would, however, be necessary to ensure the continuous supply of spare parts. Rail Transport Rehabilitation 3.30 To improve sawnwood and log transportation and to reduce transportation costs, the rehabilitation of 190 log wagons and repair of 5 locomotives were ircluded in the project. The Timber Corporation was to purchase the required spare parts and provide them to the Burma Railways Corporation which would carry out the repairs and be responsible for the operation of unit trains. A total of USS1,427,000 had been allocated mainly to provide spare parts for five locomotives, brakes and bearings for the wagons. l 3.31 BRC carried out the required repairs and unit trains started their scheduled service on the Taungdwingyi-Pyiruna-Rangoon line in 1981 (see Table 7). Over the project period, a total of 194,000 Nt of logs were transported. <1> Savings viz-a-viz road transport, were calculated to be K350 per ton or approximately K68 million (USS10 million) over the project period.- …------------------------------------ .C13>. Data for previous years not available. -12- Teak Wood Arrivals in Rane-on by Rail from ProJect Area Units 80/81 81/82 82/83 83/84 84/85 85/86 Total 86/87 Wagons 2,717 2,747 2,128 3,120 3,272 2,411 16,395 2,472 (nmober) Logs 497 530 403 567 654 455 3,106 446 (hundreds) HT ('000) 33 35 28 23 38 37 194 30 Hardwood Sawmill Construction and Rehabilitation 3.32 In order to increase the production and quality of domestic sawnwood as well as to improve the teak saw milling capacity, the project foresaw the construction of two new hardwood saw mills as well as the rehabilitation of 16 state saw mills and the provision of spare parts to private (hire) mills. 3.33 Two new saw mills were to be constructed with a 12,000 Nt capacity each, increasing to 24,000 Ht on a two-shift basis. The saw mill complexes had been designed allowing for future expansion to 20,000 Ht per shift and the addition of air drying areas, dry kilns, dried lumber storage and a moulding mill. Construction of both mills was to comence In FY81/82 and to be completed by FY82/83. 3.34 Due to late and sporadic arrival of equipment, machinery and building material, the first mill at Payagalay started operation In January 1983 and full production of 12,000 Ht was only reached by FY84/85, due to insufficient electric power and a lack of trained operators. The Improved design and equipment of this mill has resulted In the achievement of a conversion factor close to 60% compared to only 50-54% for older mills. 3.35 The second mIll tzo be constructed at U Yin Daw (para 3.6) was not completed until March 1986 and could not comence operations until early 1987 due to the lack of a transformer. However, operations had to cease iediately thereafter as a storm caused severe damge to the mill building. It is now expected that the sawing can recomence by August 1987. 3.36 As indicated, it was anticipated that both new mills would operate on double shifting and were to reach full capacity of 24,000 Ht by FY83/84. Due to insufficient night-time power and a lack of trained operators, this will not, however, be possible In the foreseeable future. 3.37 The rehabilitation of 16 existing state sawmills was accomplished early in the project (1981/82) resulting in increased production, reaching a maximum output of 113,000 tons in 1982/83 or 117% of projections. Production dropped off mainly due to fuel constraints and has stabilised at 100,000 Ht. During the project period a total of 682,500 Ht (109% of SAR) were produced and conversion factors have remained constant at around 50-54%. End-product quality, however, has not significantly improved due mainly to old and poor saw mill design and green lumber handling techniques. - 13 - 3.38 The project foresaw the provision of spare parts, mainly circular saws, at cost, to 14 private (hire) saw mills operating under contract for the Tiuber Corporation. Due to the high costs of these spare parts, the 'hire' mills preferred to continue working with the used state saw mill blades which were available at lower cost. The reason for this is partly the low contract price for milling which has not changed appreciably over the last seven years. Furthermore, spare part requirements decreased due to the closure of some of the less efficient private mills. For this reason the component has not been utilised and funds have been '-eallocated. Okkyin Teak Mill Rehabilitation 3.39 Although not located in the project area, the project included the rehabilitation of the Okkyin mill as its improvement was expected to have a considerable impact on the export possibilities of teak sawnwood. After project effectiveness, a saw milling expert drew up a rehabilitation plan (1979/80) which recommended the installation of seven new band resaws and sawnwood handling equipment. In addition, the mill's road infrastructure was to be improved, new timber storage sheds and saw mill workshops to be built and the main mill building was to be partly converted to accommodate the improved lumber flow. The rehabilitation was expected to enhance productivity from an estimated 20,000 Mt (27% of original design capacity) to 50,000 Ht (67% of design capacity) per shift and to increase conversion and product quality. Total cost of rehabilitation was estimated to be USS4.6 million. 3.40 Rehabilitation of the mill commenced during 1982 and was completed in 1985 resulting in a total expenditure of about USS3.7 million. It succeeded in increasing throughput capacity which reached a maximum of 55,500 Ht in 1983/84 and has since dropped to 36,800 Ht in 1986/87, with a projected production of 39,000 Ht from 1988/89 onwards. Although maximum capacity is now 50,000 Nt, to maintain this rate of production would be difficult with the problems of log transfer, worn out head rigs and wood flow patterns in resaw areas. Another constraint is the quality of saw logs received. Even low quality logs have been exported (40,000 Nt or 232% of SAR), leaving only very poor quality logs for the teak mills. These and other variables have been major factors In the low conversion return (41%) and lower than expected quality. The Okkyin mill was scheduled to operate on a double shift basis, however, this Is not expected to materialise in the near future because of power problems and non-availability of trained and experienced operators. 3.41 Some consideration could be given to relocating this mill to a hardwood producing area and reconstructing as a hardwood mill when the other teak mills in Rangoon reach full production capacity. Plantation Prowrme 3.42 The project was to establish 29,500 acres of teak plantation in order to expand the future resource base and to reduce dependency on natural regeneration. At full development, the teak plantation programe was planned to provide an allowable annual cut (AMC) of about 450,000 Nt, equal to the existing AAC of teak in the whole of Burma. The teak plantations were to be distributed evenly over the whole project area and the major silvicultural ethod to be used would be the well established Taungya system, using the landless hill people who generally practise shifting cultivation. - 14 - 3.43 In addition, provision was made for the establishment of 6,100 acres of trial plantations for fast growing species and also to establish an experiment with species mixes, spacing densities and mechanical preparation of plantation sites which would be located at the two extremes of the project area. 3.44 Furthermore, this component also provided for tractors and other machinery to establish and maintain plantations, for the construction of field offices and residential compounds, and also for the provision of local building materials for the Taungya villagers. 3.45 Teak plantations. The Forestry Oepartment started operations in September 1979 and completed the activity as foreseen during FY84/85. As shown below, a larger area than anticipated at appraisal has been planted to teak although the FD was only reimbursed by the project up to the appraisal cost. The additional finance required was provided by FO from own resources (see also Tables 8 and 15). Progress in Teak Plantation Establishment (acres) 79/80 80/81 81/82 82/83 83/84 84/85 Total % Appraisal 1,700 3,200 3,900 5,650 7,050 8,000 29,500 Actual 1,701 4,142 6,649 9,190 9,521 9,407 40,610 137 3.46 As anticipated, the landless hill people have been employed to establish and maintain the plantation sites. They were given financial compensation and allowed to use the land for subsistence crop production. Besides resulting in lower than anticipated costs of plantation establishment (K322/acre), the use of the Taungya system had the advantage of settling the landless hill people who would otherwise have continued the shifting cultivation practice, thus depleting forest resources at an average of 2-3 acres per family per year. Each plantation of 600-800 acres required some 400 workers (200 fmilies) and resulted in the saving of 400-600 acres from denudation and of 8 to 12 Ht of recoverable wood per acre of plantation. 3.47 Other benefits derived from the teak plantation programme, which were not anticipated at appraisal, were the reduced loss of marketable trees, potential pole sales from the first two thinnings and post and log sales from the third and fourth thinnings (see Table 16 and Attachment I). Furthermore, a teak seed orchard was established to obtain a superior seed source from selected (plus) trees. This orchard is expected to have an appreciable impact on the availability of quality seed for future plantations. 3.48 The benefits of large-area monoculture plantations should however be carefully monitored for environmental effects such as possible erosion or potential insect or disease epidemics. - 15 - 3.49 SPecies trial plantations. Also this programne has been started In FY79/80 and planting was successfully completed in FY84/85, achieving 113% of the appraisal target as shown below (see also Table 8). Progress in S2ecies Trial Plantation Establishment (acres) 79/80 80/81 81/82 82/83 83/84 84/85 Total % Appraisal 0 900 1,000 1,400 1,400 1,400 6,100 Actual 0 1,099 1,193 902 1,059 2,658 6,911 113 3.50 The programne was executed in cooperation with the Forest Research Institute, planting mostly indigenous fast grnwinn rnuueroial species with the aim of testing appropriate silvicultural techniques, spacing models and mixed stands. These trials have provided valuable information and are helping to formulate methods for the implementation of future large-scale plantations. However, no conclusive data are yet available on which future species mix or spacing can be based. 3.51 It was foreseen that, besides the use of the Taungya method for the establishment of plantations, also mechanised ethods would be tested for site preparation. However, only one pilot area has been mechanically prepared. It was found that the available equipment did not have the required handling characteristics and was not appropriate in view of the prevailing fuel constraints. The experiment was therefore discontinued. Office and Comnunication Facilities 3.52 In order to provide the necessary accommodation for the decentralised administration of the project under the PU (TC), the construction of one administrative building, the extension of the existing headquarters in Toungoo, housing for senior staff and upgrading of the facilities in the six agency offices was foreseen. In addition, offices and Staff hmsirng were to he orovided for the two new %a& mills constructed under the project. Also, the FO Project Unit was to he provided with office facilities and staff quarters. 3.53 The TC administrative offices and quarters were constructed during 1980/81 and the remaining buildings were mainly completed by 1985/86. The FO building programme was completed during the project period with major works during 1979/80 and 1981/82. Out of a planned 669 units, only 273 were constructed. This was considered to be sufficient for project needs as some buildings were transferred fro, other divisions. 3.54 In order to facilitate com unicatlons, the SAR foresaw the purchase of radio transmitters. The TC procured 8 sets and Installed two 100 watt units in Rangoon for use by the Timber Corporation and the Project Unit. The Toungoo and Pyirmana offices were provided with 25 watt units. The remaining four 25 watt units were sent to other projects where comunication difficulties were more critical. - 16 - Technical Assistance and Train1nq 3.55 The appraisal report identified the need for managerial and technical level assistance and training to improve the utilisation of new and existing equipment and make future development in the area self- sustained. The total cost of the project's technical assistance and overseas training component had been estimated at US$2 million of which USS0.4 million would be in local currency. Foreign exchange costs of about USSO.2 million were earmarked to cover 137 man-months of overseas training for TC and FO personnel. These funds were provided as a grant under an UNDP/FAO project (see Table 9). 3.56 After the appointment of a technical assistahce coordinator, responsible to the project steering committee (PSC), the training programme was successfully launched and a total of 42 people were sent abroad under the external training progra e. 3.57 Sixteen man-years of expatriate consultancy assistance, amounting to USS1.4 million, were provided within the framework of the project under a grant agreement between GOB and the Government of the Republic of Finland. Out of these, assistance to TC amounted to 13.5 man-years in the fields of workshop engineering, mechanic training, as well as logging and saw milling engineering. Timber Corporation management received further technical assistance to improve management accounting and the management information system. The Forestry Department utilised a total of 2 man-years in the fields of silviculture and land clearing operations. 3.58 The actual TC consultancy appointments, starting and finishing dates are listed below: Specialist Start Finish Man-onths Maintenance engineer 5/80 11/82 30 Fitter instructor 5/80 11/82 24 Foreman fitter 9/80 3/82 19 Foreman fitter 1/84 2/84 2 Logging engineer 5/80 10/82 30 Sawmill engineer 2/80 5/83 39 MNafagemmnt accountant 6/80 12/81 18 TOTbLI) 162 3.59 The expatriate technical assistance was provided through a Finnish corisultancy company to the entire satisfaction of GOB. It has proven advantageous to recruit all technical assistance personnel through one company thus facilitating communication and coordination. Benefits from both the training and technical assistance progra_es were substantial. Project start-up and implementation has been facilitated, the quality of existing manpower enhanced and an additional cadre of well trained personnel built up to secure proper continuation of activities even after the closure of the project. - 17 - E. ProJect Costs. Financino and Disbursement ProJect Costs 3.6C Total project costs were estimated at K578.9 million (USS86.4 million) including foreign exchange costs of K140 million (US$20.9 million) and duties and taxes of K105.9 million (US$15.8 million). Excluding technical assistance and training, about K495.1 million and K70.4 million were estimated for TC and FD respectively. Tables 10 and 11 present actual project expenditures and a comparison between project cost estimates at appraisal and actual costs. Actual project costs were K480 million, or 83% of the appraisal cost estimates. Major factors contributing to lower costs were mainly reduced procurement of logging and road construction equipment and spare parts, reduced road construction and maintenance, deletion of the rehabilitation of private sawmills and local consultant components, and non- utilisation of the unspecified fund provided to meet physical and price contingencies. The low procurement of equipment resulted In direct savings on duties and taxes of about K35 million (USS4.5 million). Total savings in the project were about K115 million (USS15 million). In terms of US dollars, project costs were 62.4 million, or 72% of the project costs estimated at appraisal. Project costs were much lower due to the above reasons and the devaluation of the Kyat by about 13% during the project implementation period. Financing and Disbursement 3.61 Total external financing was estimated at USS44.6 million to cover 100X foreign exchange costs (excluding reserve procurement of US$5.1 million which would be procured locally and financed by GOB), or 68% of total project costs net of taxes and duties. The appraised and actual financing is shown In Table 12. 3.62 The actual total external financing was US$32.5 million, or 79% of total project costs net of taxes and duties (USS40.9 million). GOB's contribution was US$29.9 million, or 48% of total project costs, which was higher than appraisal estimates (24%). IDA and EEC financing was only 71% and 68% respectively of the total estimated credits, while the grant from Finland was 43% higher than the estimates and the grant from UNOP was fully util1sed. 3.63 IDA's disbursements were slow during the early years of the project, while EEC's disbursements lagged two years behind schedule. Delays In the procurement of equiprent and the recruitment of consultants were major reasons. Total disbursements as of 30 June, 1987 were as shown below: - 18 - Cumulative Disbursement - (USS million) ApDraisal Estimate Actual Actual as X FY IDA EEC Total IDA EEC Total Est1mais 80 0.4 0.4 0.8 - - 81 13.9 5.8 19.7 1.6 - L2' 1.6 8 82 29.3 8.0 39.3 11.' 0.6 11.8 30 83 33.4 - 41.4 16.9 2.9 19.8 48 84 34.5 - 42.5 18.8 3.5 22.3 52 85 35.0 - 43.0 21.2 4.1 25.3 59 86 - - - 24.2 5.4 29.6 69 87 - - - 24.9 5.4 29.6 69 I As of June 30, 1987. / Insignifi cant. F. ComPliance with Covenants 3.64 GOB complied with most covenants in a timely manner. Only with regard to the preparation of unaudited and audited reports (Section 4.01C of Development Credit Agreement) delays of over 2 years were encountered. According to Section 4.04, GOB was to prepare a programme for the development of a Forest Master Plan by 31 December, 1980 and promptly thereafter discuss the contents of the programme with IDA. The preparation of such a Master Plan, however, had to be delayed pending the results of a Forest Inventory Project under FAO. The inventory is now expected to be completed in fall 1987 and only then a new management plan can be established. IV. PROJECT IMPACT A. Intended Impact 4.1 The project aimed to increase teak exports from 7,800 to 17,200 Nt per annum and hardwood exports from less than 200 Ht to 35,000 Ht per annum. In addition, the supply of sawn hardwood to the local market was to increase from approximately 35,000 to 105,000 Nt per annum. Compensatory teak plantations of approximately 29,500 ac would be established to reduce dependency on natural regeneration and augment future teak supply. Trials with fast growing species and mechanical land clearing would provide the required experience for the selection of suitable species and for future large-scale plantation establishment. - 19 - 4.2 It was anticipated that about 1,700 landless farmers would participate In plantation establishment and maintenance under Taungya cultivation. This would increase the annual income of each Tauhgya family from K1600 per year to K3000. B. Incremental Exports 4.3 Teak wood production increased from the estimated 80,000 Ht in the 'without project' situation to 128,000 Ht in 1985/86 with a maximum of 165,900 Ht in 1983/84. In 1986/87, production decreased drastically and is expected to stabilse at 89,000 Ht due to the decline in the standing dry teak inventory as the MAC is being reduced in view of the return to the original diameter cutting limits of 7 ft 6 inches gbh. 4.4 Of this total teak production, already in the first project year 21,000 Ht were exported, exports increased to 53,700 Ht in FY84/85 and subsequently levelled off at 38,000 Ht in FY88/89. 4.5 Teak export revenues at the annual extraction level of 89,000 Ht are estimated at about K260 million (USS40 million) per annum at present prices, of which K210 million (USS32.5 million) or 80% would be from the export of 30,000 Ht logs, and KS0 million (USS6.5 million) or 20% from the export of 8,000 Ht sawnwood. This represents an annual Incre.nta. teak export revenue of about K95 million (US$15.5 million) over the assumed export revenues of K139 million (USS14.6 million) from 7,800 Ht logs and 13,500 Ht sawnwood in the 'without project' situation. 4.6 Hardwood production increased in the early stages of the project to a maximum of 186,500 Ht in 1982/83 and stabilised around 160,000 Ht (Table 14). Although the SAR anticipated that approximately 35,000 Ht would be exported annually, exports were negligible. Annual incremental hardwood export revenues at the annual extraction level of 160,000 are estimated to be marginal at only K13 million per annum (USS2 million), derived mainly from the export of 6,000 Ht logs. In this respect, the project failed to achieve its impact on export revenues. C. Sawnwood Production 4.7 Sawn hardwood supply to the domestic market increased substantially as a result of the project, however, it never achieved SAR projections. Already in 1980/81, sawnwood out-turn reached 76,700 Ht and peaked in 1982/83 with 89,100 Ht (see Table 5). The main reason for the persistent shortfall of about 15% in supply of sawnwood can be attributed to the delays in the construction of new mills and postponed double shift operation. Therefore the supply of sawnwood in the country rnains critical. - 20 - IX Pan"'A _ '. _w<;uction 4.8 The establishmernt of pl Fitit'`icns progressed better than anticipated, and exceeded the 29,50W c pl is.nd to be planted by about 11,000 ac. ine imaintenance of these il;^u- -ons require substantial financial and manpower resources (Tables vS and 16) but Government is committed to provide the rei7uired 1ro'A. a for the continuation of the programme. 4.9 At this stage, it is too early to assess the impact of the plantation programme in full. However, the plantations which were established at the beginning of the project show already promising financial results. A pilot sales operation of the poles of the first thinning was succesfully carried out in 1986/87 and resulted in the sale of 5,000 Nt valued about K6.5 million (US$1 million). E. Trial Plantations 4.10 The trial plantations have provided valuable information and are helping to formulate the methods of implementing future large-scale plantations. However, no final data are available yet. Mechanical land preparation has been discontinued. F. Technolocical Chances in Logaing and Milling 4.11 The project provided for the incorporation of mechanical extraction and iransportation of logs to reduce losses and the reliance on animal power. These technological changes were not completely achieved, partly due to fuel shortages and a larger than anticipated availability of elephants. Thus a greater than expected use was made of the elephant/mechanical system, using small 6.5 ton lorries to transport logs to depot areas. 4.12 The use of self-loading equipment was not successful due to the lightness of the units. The project also encountered problems with the road building programme, limiting the need for the more sophisticated technological concepts proposed in the extraction process. 4.13 The improvement of sawuilling technology through construction of new mills achieved the goals set and the conversion went up from average 51% in the old mills to 61% in the new mills. - 21 - G. Environmental Effects 4.14 The major environmental impact of the project was brought about by the deployment of the hill peonle in the Taungya plantation, eliminating shifting cultivation and the resu tant loss of forest. Large areas of degraded reserve forests have been replanted with productive forests. However, the large tracts of land under monoculture could impose a future threat due to insect or disease attack and some concern has also been expressed about possible erosion problems in the teak plantations. 4.15 No lasting negative environmental effect could be identified as a result of project activities. H. Employment 4.16 The Incremental employment provided by the project was expected to amunt to 3,000 posts. Due to the lesser than anticipated employment under the forest component, additional posts created are now estimated to be 2,200 - 2,400. 4.17 The land preparation, planting and plantation maintenance was expected to provide employment on a more permanent basis for about 1,700 Taungya farmers in the various areas. The response to this approach was better than foreseen and over 2,000 are presently engaged in these activities. V. INSTITUTIONAL PERFORMANCE AND OEVELOPMENT A. Implementino Aoencies 5.1 s all extraction and plantation activities were to take place in reserved forest areas, the Ministry of Agriculture and Forestry (MAF) was given responsibility for project implementation, except for the rehabilitation of the rolling stock to be carried out by BRC. 5.2 Under MAF, the Timber Corporation carried out the extraction, road building and saw milling components, whilst the Foreistry Oepartment implemented the teak plantation ond trial component. As foreseen at appraisal, a Project Steering Comittee (PSC) was set up to coordinate activities mong these agencies and with other agencies and Ministries as required. - 22 - 5.3 For the purpose of project implementation, the Timber Corporation established a Project Unit (PU) within Its headquarters in Toungoo. As foreseen, the PU (TC) had six Department Heads, viz. Extraction, Roads, Workshops, Milling and Marketing, Finance and Accounts, and Internal Audit. All Departments, sections and agencies were established as designed and only minor staffing problems were encountered throughout implementation. 5.4 The Forestry Department also established a PU with its headquarters In Toungoo to execute the p'antation and species trial components. As foreseen, plantat;ons were established and handed over by the PU to the FD after a period of five years. 5.5 Throughwut the project period, management was of a high professional standard and on a continuous basis. Furthermore, staff quality of the TC and FO was enhanced at managerial and operational level through local and overseas training. All this has greatly contributed to the continuing success of the project. 5.6 Based on the experience gained under Forestry I, the project aimed at decentralising the Timber Corporation's logging and district sawmilling operations in the project area. Within the framework of the decentralised project, however, strong coordination was required which had been carried out by the Project Coordinating Comittee. 5.7 Coordination between the various departments/agencies improved considerably and resulted in more streamlined operations. The supply of logs to end-users was executed in a more systematic way and logging was adjusted to processing capacities and inventories which had been building up at the end of each logging season. 5.8 Through the project, especially the Timber Corporation has been considerably strengthened in its organizational structure and performence and has taken a considerable step ahead in further decentralising its operations. Within the overall framework of the Timber Corporation, the PU (TC) operated successfully in an autonomous way throughout the project period. 8. Contractors and Suppliers 5.9 The performance of contractors and suppliers was considered satisfactory. Minor delays and deviations from specifications occurred in many Instances, but did not affect project lmplementation as a whole. Only in the case of the U Yin Daw sawmill did the slow supply of roofing material delay the completion of the building. 5.10 Considerable delays in the procurement of material and equipment occurred, especially at the beginning of the project, due to the cumbersome and slow procurement procedures prevailing in the country. The problem was further aggravated in the case of equipment to be purchased under the EEC loan, as procurement had to be carried out under EEC tender rules, limiting also the number of suppliers to EEC member countries. - 23 - C. RePorting and Accounting 5.11 Quarterly and annual reports were prepared in time, within two months after the end of each fiscal year. Special accounts were prepared in line with IDA's required format and maintained properly by the Timber Corporation and Forestry Department. However, the preparation of unaudited and audited reports suffered long delays due to work overloads in the TC, FD and Central Auditor-General's office. The unaudit2d reports were completed between 8-25 months after the end of each fiscal year, while the audited reports were completed 12-29 months after the end of each fiscal year. VI. IDA PERFORMANCE 6.1 The basic concept of the project, i.e. to enhance teak and hardwo-d exports and the supply of sawnwood to the local market through the improvement of logging and sawmilling infrastructure facilities and equipment, was sound. Also, the need to establish large-scale teak plantations and carry out species trials had been well identified. 6.2 Certain assumptions which at the time of appraisal were based on sound judgement, however, turned out to be too optimistic. Thus the significant change from an extraction system largely depending on animal power to a mechanised one, did not take place on a large scale partly due to fuel constraints which were not foreseen at appraisal. Also the scope and time frame for' building up a hardwood export market have proven to be over- optimistic mostly due to lack of quality considerations and partly due to Government's priority allocation of resources to teak extraction. 6.3 Supervision of the project from IDA 'was regular and mostly by staff from headquarters. Over the 7-year project period, a total of 12 supervision missions were carried out. In general, the period between missions did not exceed 7 months. One large gap, however, occurred between May 1980 and March 1981 which might have contributed to slower than expected ordering of equipment. 6.4 Overall, IDA's supervisory effort was satisfactory and of sufficient cStinuity, however, more attention should have been giqvn to the issue of low local timber prices and the lack of efforts to enhance hardwood exports. - 24 - VII. FINANCIAL AND ECONOMIC RE-EVALUATION A. Financial Analysis Extraction and Hardwood Sawmills 7.1 Actual and estimated operating income statements were prepared for the 16 State-rehabilitated hardwood sawmills, 14 hired private hardwood sawmills, two new hard nod sawmills and a consolidated income statement for the project (East Pegu Yoma) as shown in Tables 17-21. Sawnwood production, sale volumes and prices are given in Tables 5 and 6. 7.2 The hardwood sawmills have been operating on a one-shift basis and their out-turns have been low, ranging between 50% and 53%. For both the State and hired private sawmills, about 90% of the sawnwood was sold to mainly Government agencies and some private individuals. The remaining 10% was transferred for local sales at the Timber Corporation's selling depot located outside the project area. For the two new harlwood sawmills about one-third of sawnwood was for local sale, two-thirds for transfer and only 100 Ht for annual export. Present prices of sawn hardwood for local sale and transfer are low and estimated at K967/Ht and K985/Ht respectively. Operating costs have been high and accounted for about 80-90% of the total operating revenues mainly because of low out-turns. Due to low prices for local sales and transfer and high operating costs, the estimated operating incomes over the project period were low, but satisfactory with an average of K7.4 million per year for the State sawmills and K4 million per year for the hired private sawmills, except for the operating income of the new sawmill which was estimated to generate only KO.6 million per year. However, under GOB's heavy taxation <1> levied on the Timber Corporation's operations which is as high as 50% of the operating Incomes, the estimated net income after taxes for all sawmills was reduced by 50% to about K3.8 million, K2 million and KO.3 million respectively. 7.3 The financial analysis of the East Pegu Yoma Project excludes costs and benefits from the Okkyin teak sawmill, wagon rehabilitation (BRC), teak plantation (FO), technical assistance and overseas training (grant from UNOP and GOF) but includes teak logs transferred to the Okkyin teak sawmill. The estimated net income of the project, after tV., Is satisfactory and averaged about K79 million annually over the project period which is sufficient to cover debt services and future replacement of equipment (Table 24). The high net Income of the project is contributed mainly by the sale of logs which generate about 80% of the total project revenues, of which about 65% is from teak log export, 12% from local sales and transfer of teak logs and 3% from hardwood log export and local sales. Tables 22 and 23 present the actual and estimated sources and applications of funds and balance sheet summary of the project which indicate a satisfactory financial status. Current ratio has <1' See relevant Tables 17-19 and 21. Including export produce equalization fund, commodity and service taxes and state's contribution. 25 - remalned high between 3.1 to 6.9 times during FY80/81 to 87/88 and is expected to continue due to the high log inventory during April and May of each year which is the peak logging season. Debt service coverage ratio is high and estimated to be about 20 times over the project period. 7.4 The calculations of the internal rates of return (IRR) have been carried out in 1987 constant prices. The past project Investment costs were adjusted to 1987 prices by GOP deflator factors. All equipment replacements are based on an assumed economic life of 7.5 years. Extraction and saweilling costs are based on the 1987 estimated unit costs. The estimated 86/87 prices of logs and sawnwood are based on actual FY85/86 prices (Table 20). The IRR, calculated over 30 years (Table 24), is re-estimated at 9K compared with 14% estimated at appraisal. Major negative factors contributing to a lower IRR are the higher log and sawnwood production assumed in the 'Without project' situation but lower log and sawnwood production in the 'with project' situation and delayed operation and high operating costs of the sawmills. Okkyin Teak Sawmill Rehabilitation 7.5 Tables 25 and 26 present the income statement and calculation of IRR for the Okkyin teak sawmill. The sawmill has been operating on a one- shift basis with throughputs between 35,000 - 55,000 Ht per year during FY80/81 - 86/87 and is expected to stabilise at 39,000 Ht per year in FY87/88 and thereafter, with a low average out-turn of about 40%. Approximately 20X of total sawnwood is for local sales, 65% for export and the remaining 15X for transfer to other Timber Corporation selling depots for local sales. The operating ratio (before taxes) is satisfactory averaging between 50-65%. The operating income before taxes averages about K30.8 million per annum over the project period and the net income (after taxes) is estimated at K5.4 million per annum. The re-estimated IRR, calculated in 1987 constant prices over 15 years, is reasonable at 12X. B. Economic Analysis 7.6 A re-estimation of the economic rate of return (ERR) has been carried out for the East Pegu Yoma Project, the Okkyin teak sawmill, the teak plantaion and the whole project on the basis of 1987 constant prices. The past project investment costs, net of duties and taxes, were adjusted to 1987 constant prices by using GOP deflator factors. Foreign exchange costs were valued at the official exchange rate of USS1 * K6.5 and local costs were converted into border prices by the standard conversion factor (SCF) of 0.80. Costs of extraction and sawmilling are based on current 1987 prices, as actual prices for earlier project years were not available. The financial unit costs were then adjusted to economic costs by using SCF and several specific conversion factors (CF) as shown in the relevant tables. Replacement of equipment is based on the assumed economic life of 7.5 years. The economic prices for export sales are based on the actual average/weighted average f.o.b., Rangoon projected for 1987, while economic prices for local sales including transferred log and sawnwood are based on the world price projected. for 1987 by the World Bank for similar timber, as shown in Table 27. The assumed, actual and projected log and sawnwood production and sale volumes in the without and with project situations are presented in Tables 3 to 6. - 26 - 7.7 The analysis periods based on the assumed economic life of buildings and production cycle vary from 10 years for the existing hardwood sawmills, 15 years for the Okkyin teak sawmill, 25 years for the newly constructed hardwood sawmills to 65 years for teak plantations. However, since the discount value beyond Year 50 is insignificant, the analysis of the teak plantation has been carried out over 40 years excluding the final benefit from log production during Years 60-65. Tables 28 to 31 present cost and benefit streams for the individual components and the East Pegu Yoma Project. The results of ERRs are summarised below: ERR (X) SAR PCR East Pegu Yoma Project 1/ 90 over 100 Okkyin teak sawmill - over 100 Teak plantation 0/ 14 39 Whole project 1/ I/ over 100 over 100 l/ Excluding technical assistance and overseas training, Okkyin teak sawmill and wagon rehabilitation. 2/ Excluding benefits from Taungya and final teak log production (Years 60-65). 7.8 The re-estimatea ERRs are all very favourable compared to an estimated opportunity cost of capital of 10%. Factors contributing to higher ERRs are significant incremental log and sawnwood production during the early project period (Years 1 to 6) and reduced project costs. Since the ERR of the teak plantation alone is high, it is unnecessary to carry out separate analyses which include benefits from Taungya and final teak log production. Costs of technical assistance and overseas training were also small, and were therefore excluded from the analysis. VIII. SUMMARY AND CONCLUSIONS 8.1 The project aimed at the development of an integrated system of extraction, saw milling and marketing to secure an increase in teak and hardwood export revenues and enhance the local market supply of sawn wood. Teak and trial plantations were to be established to secure and broaden the teak production base and develop the supply of other hardwoods. Although with some delay, the project achieved most of Its physical development targets. 8.2 Hardwood extraction fell short of expectations due to the lower than expected saw mill capacity and the lack of hardwood log exports. The distance of the road construction sites from 2vailable road building and surfacing material and the fuel supply constraint impeded the planned construction of AW and ELS roads. Constraints in tendering and procuring - 27 - equipment, machinery and building materials resulted in delays in construction of the two new hardwood mills and the rehabilitation of the Okkyin teak mill. 8.3 Under the project, decentralised logging and sawmilling operations had been established thus allowing for greater flexibility. Within the overall TC operation, project management was given more independence; financial autonomy, however, remained limited. Following the success of the decentralisation efforts, TC is now comintted to decentralising its operations on a nationwide basis. 8.4 During the project period, extraction of teak and hardwood was considerably enhanced, from about 80,000 Ht and 85,000 Ht to about 160,000 Ht and 186,000 Ht. respectively. This incremental extraction has also significantly augmented export revenues from teak, from K166 million (USS26 million) per annum to K260 million (USS40 million) per annum. The project has also improved sawmilling capacities and conversion factors, but has failed to have an impact on the quality of sawnwood. It only partly achieved its objective to enhance the availability of sawnwood for the local market as the supply increased only to about 85,000 Ht per annum against SAR estimates of 105,300 Ht; the project did not manage to promote hardwood exports. 8.5 A greater than estimated average of teak plantations was established, potential production of poles and posts was estimated at 1.48 million Ht and 2.43 million Ht of logs over the production cycle. Two thousand landless farmers have also benefitted from the plantation programme and Taungya cultivation has provided higher annual income at about K5,000 per family compared with about K3,000 estimated at appraisal. 8.6 Total project costs were only K480 million (USS62.4 million or 83% of appraisal estimate), due mainly to a reduction in procurement of logging, workshops and road building equipment and spare parts as well as a reduced road building programme. 8.7 Because of low out-turn which directly caused high sawmilling costs and the prevailing low prices for local sales and transfers, the operating incomes uefore taxes of all sawmills have been low, but satisfactory averaging between K4 million and K7.4 million per annum, except for the newly cbnstructed hardwood sawmills which generated only about KO.6 million per annuu. Moreover, under GOB's heavy taxation, the net Incomes after taxes of a,l sawmills were reduced by 50%. Due mainly to the considerable increase in teak log sales and exports, the estimated net incomes of the East Pegu Yoma ProJect are satisfactory and, with an average of K79 million per annum, are sufficient to cover all investments, debt service and future equipment replacement. 8.8 The re-estimated IRRs are 9% for the East Pegu Yoma Project and 12% for the Okkyin's teak sawmill. Major negative factors contributing to the lower IRRs are the higher log and sawnwood production assumed In the 'without projectm situation as well as delayed construction and high operating costs of the sawmills. The re-estimated ERRs, however, are very favourable ranging from 39% for the teak plantations, over 50% of the Okkyin teak sawmill to over 100% for the East Pegu Yoma Project and the whole proJect. - 28 - Lessons Learned 8.9 From the experience gained during project implementation, the following lessons could be learned for the design and Implementation of similar projects in the future: a) The project's approach to integrate logging and sawmilling has resulted in more streamlined operations and in a better adjustment of supply to demand. b) The establishment of Project Units has proven to be a well working concept, enhancing flexibility and further promoting on-going decentralization efforts. c) The interdependance of different technical activities, within the same unit provided a strong staff motivation to work towards the common goals and resulted in a good staff orale. The success of the project can be greatly attributed to these factors. d) At appraisal more attention should have been given to the soc10 economic implications of the intended large-scale introduction of a fully mechanised logging system. e) More detailed information on the availability of road building material and transport distances Involved should have been sought at appraisal. f) Already at appraisal, diesel availability was precarious. A scenario, assuming further restrictions should have been elaborated. g) The introduction of double shift sawmilling was impeded by the reluctance of TC to close some of the old saw mills and relocate labour, which is considered politically undesirable. h) Hardwood exports were not given the required attention. More promotional work and quality improvement will be required. 1) More attention should also have been given to sawnwood pricing. The Timber Corporation should urgently review the local sales and transfer prices to reflect sawmilling costs and ensure that sufficient incomes are generated to cover investnent. debt service as well as future equipment replacement. j) More lead time should have been allowed for tender formulation and ordering of equipment given the complicated procedures in the country. - 29 - Attachment I BURMA FORESTRY II (EAST PEGU YOMA) - CR.949-BA Plantina and Maintenance Schedule Year 1 - Prepare land, clear fell and utilise timber, burn and prepare planting site. Benefit - 10-15 Nt/acre. 1 - Plant in wet season 8.5 x 8.5 spacing, 3 weedings, Taungya cultivation, 75410% survival. 2 - Two weedings - no Taungya cultivation, uwe 5 worknen/acre. 3 - Two weedings. 4 - One weeding. 5 - Plantation considered established and handed over to Territorial Conservator within the Forest Oepartment. 6-8 - First thinning, reduce stand to abQut 225 trees per acre. About 50% of the stems exceed a diameter of 4-50 mid-girth and are saleable. 15 - Second thinning, reduce stems to 110 per acre producing 11 Mt saleable"poles. 25 - Third thinning - reduce stems to 80 per acre producing 9 Ht of saleable posts. 35 - Fourth and last thinning - reduce stems to 50 per acre, producing 15 Mt of small logs. 60 - Clear fell by Timber Corporation - production of good logs at 60 Nt per acre - start new cycle. Note: In 1987, 5,000 Mt of poles were exported at a price of K13jQO (USS180) per Ht. Local price for poles Is K70. Table 1 .1_30 * ,r -- ILt1 .. U 3* * *i i g * II ~-' 1 5s : *" 55 33.| '"1 .1 "es 3 . 5; s1 ;, ,,, ,. *8 Slg ''. t'1~~I 6 0 6 0l * ^ 3 S ~I 6 6 0 ' i1 l ' 3|1I * t* 00 0 '0 .1 60^ I .1 $1 **-i * .; I" - i sag aE 23 -I f - " I 31 *S| a~e' X ! 2.s t iiX '''_: ''' ' s ''--l' . ~~jj * ii 1 ,,*, £. - - ia *. "i i:t}. i 01 ...!0 fIiill, 3!0a1l b9 - iim g. Mt11 m - m.m-a E1nmU _A1s Abin lo S sC 5101" (b i-- $W Ut VA"1 _M_ 5w-. A i. NsM . _m Act. s wD_S - - 5 - - - - - M srmdw Tm 73 I 4 4 - - - - - - - - 4 5 8 D In up C me1 - - - - - - - - - - - - S 5 aD O Wn11 r - - - - - - - - 2 0 - - 1 0 2 0 - - - - - - - - - - - - 2 3 2 bILe,, - - 0 2 - - - - - - - - O 1 0 _ ~~~- - O I - - - - _ . - _ _ _ 0 U 1MIwI q U_ Z 40 - - - - - - - - - - - - a 4 b.dt I - - 2 4 - - 2 0 - *- - - 1 1 5 5 I23IUft6|M . - i - - - -i 15 T roche Ts is U - - - - - - - - - - *- . 15 I 15 IL Tims - - 3 - - - - 2 0 - - 5 0 2 M . a uMMIM '1 UD - - 1- - - - M so *.s I o.r. - - - - t2 *Z - - 5 *. - - s O : a 6.2IL I orwke - - - 6 7 -- 7 _ - 6 0 - - - - - - - - 8 8 Ul.ityIw* - - - - 2 1 - - - - - - - - 2 1 3.5MLA - - - - - - 2 0 3 2 - - - - 5 2 U IL t - - - - - - - - - - - - I - I I 4u42s 4US U - - 2 0 32 31 2 0 - - 4 4 29 0 8 35 *allum - - - - - - - - - - - - I O I 0 law __d - - - 0 1 0 1 snr Bad lpip. 91 2 - - - - - - - - - - ^ - U M 1w M in - - - - - - - - - - 0 4U In - .S W. not ft l -- 3 3 M 4 - - - - - - 4 0 7 7 m S. "iowIaaw a - - - - 0 t 0 3sw*1An - - - 4 3 4 Is _ _ _ _ 3 9 rns,.I3.nIf - - - 4 S 3 * - - - - 7 tO *dawv INiuu.r - *- - - - - - 14 0 14 0 NS TM# Ir! 4 - *- - - - 1s1 4D tIt281.Ibuu- - - - - - - - - - t 0 1 0 mm"'., - - l - as i L w ~~IT ii U_ _U aOSITEW II tEAS? P6GU VOMAI - CUOd-EA*^ yafirv cf i-mrdwaad Lo Eiaraet4an *nd D1-trIhtlon (lt t 000) TOTAL &STIATR - Etimae_ Sao Ht 122.0 200.0 290.0 200.0 290.3 290.0 1492.0 - - Actual Mt 196.2 140.6 156.5 133.2 102.4 lSl.6 1010., 161.2 160.0 Actual S of SAN 153 70 *4 40 63 03 so - - blmrtbn*tatn of Loam SAN Mt - 24.0 35.0 35.0 3J.0 35.0 .164.0 - - Actual Ht 3.3 5.6 5.2 4.3 3.7 , 1.0 23.1 2.0 - 0.0 N Actual s of SAl I - 23 15 1211 3 *4. ., - _ I - Local Sales SAN Ht 12.0 49.0 99.0 64.0 64.0 64.0 341.0 - - fine. Plymill) Actual Mt 19.1 23.2 29.1 22.6 27.0 20.0 141.6 70 12 1 ISO 4?p 33 30 44 31 42 - - Slate Smwawll Arritvel SAN Mt 63.0 00.0 96.0 96.0 96.0 96.0 *27.0 - - Actual Mt 79.4 29.3 113.3 100.6 101.4 106.1 5U4.1 04 34 1 136 77 91 as 32 of 63 - - Itre Milll Arrivals SAN "M 47.4 41.0 41.0 47.0 47.0 47.0 202.4 - - Actual Mt 61.1 60.0 52.0 33.7 36.6 41.1 236.5 35 30 1 131 39 126 73 107 10S O0 - - - Mkw SwelilI Arrivwls SAl tt - - 24.0 40.0 40.0 40.0 160.0 - - Actual Mt - . - 1.3 6.0 12.4 12.1 32.6 17 24 S - - 2a 14 25 29 2a - 24 - Other 1*tin*9er Actual l.t 23.3 t37.1* 414.4. %3S.3p '3.02 1.0 24.3 2.0 12.0 D ..gativw volum reflects the use of logo out of inv-ntory created by acceleratad logging In 1919130 end 1390011. PORASTNV 11 (EAST PCGU VOKA% - CE -4-pA pecw .1 Tek Lee Eut eeno *nd *4ef4bu*4=ten (Ht T0006 S TIMATIE TOTAL 03-36 M~ U 8M U& M flS £8JM3M k n 5*1t Ht 100.0 132.5 132.5 132.5 132. 5 132.5 762.5 - - - Astual Production Mt 1t1.4 13.40 153.9 105.3 142.0 120.0 .00.0 96.6 60.0 70 r Actual l oe SAN * Sa1 120 IsI 125 507 07 it - - . ;.I - Iport. S- p rlt 3.0 17.2 17.2 17.2 17.2 st.2 S.g - - - w ACtual Mt 21.0 34.3 2.3 1A1.1 t3.7 40.3, 12.0 40.6. 40.0 36.0 Actual s of SAN 2 1o i 164 2 312 234 231 - - - _ Loe*l Sole oSA "t 2.5 4.0 4.0 4.0 4.0 4.0 22.1 - - - Aetuel Mt 23.0 24.2 42.3 01.7 43.1 49.3 243.5 25.0 20.0 20.0 Actual S at lAO S 050 605 1051 1142 1202 1222 I4116 - - - LOCOl Samills (in Project Area) Acrivala Mt S1.1 30.3 10.7 1T.7 34.3 4.3 74.4 36 2.6 2.6 - (Outside project Area) arve$la Ht 71.4 00.0 72.7 33.0 21.7 24.3 327.2 20.5 44.0 41.4 5AN 1 13 13 13 13 13 13 13 Actual I is 22 is o f 32 26 41 45 40 Il Include. all lose dlatrlbuted b* T.C. E port and Marketing Departmnt. 1! t~~VS "ese 0*G a,n @" Vas 4i 0 n e see "l ee see aeo 6se ses se us s"l le 'WA" e.g. *.6g *L* e e* $ Lc 55 sl LL SN e 655 650Sa 15 . * 0*9S few S* NI to -aLS WOO sees 9*e too eg C." egt Vgo *0 mu _ sea eTri Iu MCe IS MC S- TMIU~ lawfse. ea ce .g 5g cs ec' | ~... ,. w- .. *.. . . £ * *. se cm eg row e~s e u c w Se *A se age eaS g t e m 5 *S se s. c cs cc m us e e s,bU ~~~~~~~~~~~~~~~~~~~~~~~~W II U W9 BUMA sEORESmV 11 AleAT PSBu WOMAI - ex 646-PA Yan n Lanmd Prod eIa nd s4*tbiUltion (Mt '0OO> TOTAL ESTIMATE U~~ S~~~U 8~~U UAM 34kM ST-Na kI 1 M Project Area Mll)s - Lo Throughput Actual Mt 13.3 11.2 11.8 13.4 . 1.3 4.1 75.1 4.1 4.0 - Out-turn Mt 5.5 4.S 4.7 O.S t.2 2.0 J2.7 1.? 1.0 - Conversion 1 41 43 40 44.. 47 46 44 _ . *..: - Log Arrivals Sam Mt 35.0 50.0 60.0 100.0 - 100.0 100.0 461.0 - - Log Throughput Actual * Ht 36.5 35.0 43.6 55.5 50.6 44.4 265.1 36.6 36.0 - Out-turn Ht 15.6 15.2 17.7 22.5 21.0 19.1 100.3 14.1 11.0 - Conversion 1 43 43 41 41 41 41 42 36 - - (Out-turn) TOTAL Ht 21.3 20.0 22.4 31.0 26.2 ,.1 133.0 15. - - Loeal Sales Mt 3.4 4.6 3.1 a O 3.5 3.2 26.2 3.0 - - expert Sales Mt 10.0 11.6 6.6 14.7 12.6 14.1 72.6 6.0 8. - frssa9er Mt 3.7 3.3 2.4 2.4 4.6 4.6 21.2 - - TOTAL SALEK Ht 17.1 10.6 15.5 25.1 20.S 21.0 120.0 - - IXM0RT 0o PROODUCTION S 47 so 43 47 41 70 54 - - I! t"t11 SAsT Eau VZZAa "D mX4§-mA I~~~~LlhhAVt (ChI 0161*4 MniU &2J3U &l.-U UAMM AA-ml as-a TOA sm Pie. M. Pyl a wagon 1,411 1.311 *04 I.Ve 1.766 .16, 1.622 1.661 Lose 00 261 246 lag 312 364 315 1.63 *09 nt 000 Il 10 .2 to 20 82 20 Fom S. py lnman woion 1,302 1.204 1.399 1.200 1.470 .606 7.260 774 4" Grmon tok Logo 00 236 245 27 2too0 I2 *e II '. 1,422 137 "t 000 of t 10 17 1l 0 as sO Dry Took Wagon - 14 100 - 26 eS 375 7 Log o - 32 Is - 4 tS so "t 000 -I I - - a is _ Low Pk Wagon - 46 21 32 1 42 140 - Logo - 7 4 S - 7 23 Mt oo - I - 4 - I - Wagon 2.717 2.747 2,t24 3,120 3,272 2.411 t6.305 2.472 Logo 00 407 530 403 567 664 455 3.106 446 Mt 00033 35t 20 23 3t 37 IJ4 10 I ; X~~~~~~SR POREIT3V Ii11*3?S PESO WOMAI . CUULI|-& Planat4*on Ia*abllahman* *nd Teak ProductIon (Nt '000) IUL 12 I I 4 IL A 7o2 D_o SS2 . Szz A=eas TOL Took Plantation S* Ac 1.700 3.200 3.000 5.050 7.050 *.000 20.500 Actual Ac 1.701 4.142 6,646 . 0,100 0.521 0.40? 40.607 Trisl Plantation SAN hC 900 l)00O. 1,400 1.400 1.400 *,100 A*ptual AG - . 1.f93 t.1'.2 02 ;-..t .LB .3.333 TOTAL SA3 Ac 1.700 4.100 4.,00 7,50 . .450 *.400 S5,000 TOTAL Actual Ac 1,701 5.241 7.043 10,002 6.10b0 12,061 47.510 - lot Thinning ) Yu-r £ I .1 L L .2 3 Ioport Ht 4.700 5.000 5,000 5.000 5.000 5.000 29.700 ) Local Ht - 6.500 13,000 20,000 21,000 26,000 3o500 ) Poise - 2nd Thinning var 1n1 is 1 .11 13 2Q export Ht 5.000 5,000 5,000 5.000 5,000 5.000 30,000 Local 't 13.700 36.000 60.000 05,000 00,000 05.000 371.700 - Srd Thinning 3 haL 23 21 ' Ia II in 3 - Nt 15,300 37.000 59,000 02,000 05.000 a4.000 362,300 Posts - 4th Thinning i-- 31 as Al U 3 Mt 25,000 62.000 00,000'. 137,000 *42.000. 141,000 S06.000 - Harvet (Los) I*6 33 EL *3 £3 3 Nt 102,000 241,000 398006S 551.000 871.000 564.030 2.434.000 1, let Thi_ , - bhalt of teae are aamesile. .I. loasw M LE ACSt *aaU VOA- - -" Ip-n" *.C. u me is - Al as a a a I is ?.C 1 _6_ - - Isa s- .132 8 0 *w a. i S 0. TOTAL - - 1 . 38 a is to 14.6 la 4318n Costs usl 2.000 - - 6.010 Wst.11 41.410 21.719 3.16 IS0.006 T.C. Igo s o 63 34 4 - 162 F.D. a - 12 _ - 24 l0 7 t2 70 34 2 - II3 P1ew Urkhes 000 3.480 ,015 1.o00 230 - .050 exchenge Rote I US$ 3.34 4.26 5.29 6.6 US$ equivalent 906,250 705.215 345.935 47.703 _ 2.0S5.163 Ir qo sumMA - PopEsTay 11 (EIAT PSFGU voMAI - CR-949-5A Prpsoet Ex£pndltur.a - 1 '0001 I5CAL VIAR Isis MmI 01182 &21U 3 63ia4 a4MSm Mm sle? . . . . . TOTAL . . . . . £orsinn Local tso del ki Suale1o0oA&Inftme Exchansa Cos.ts 4vil works, buildings - - 5 - 71 571 - _ _ 647 47 quipoent - * 4-704 U A 545 5-2i 0 ALL s L 0I9 1ok.LM.Jl. - - 4.709 as 547 1,116 226 52 461 0.275 6,736 omd .Clistr ħuG.n 4vil works 919 761 g0o 1.190 1.254 1.735 - - 6.270 6.270 quipent . LDAZ .Z.Z .LLD.0 2L1U3 9.S. 22ii3 Ilots I1 015 IL,= slBim IMZLAt.a.l - 1,626 13.314 12.901 3,303 10,942 4,001 10,156 31,015 25.111 56,213 maminm- a . works - 37 - 527 549 20 - - 1.133 1.1 ui pu.nts logging - S,537 45,631 72.105 34,562 13.206 25.356 8.996 112,602 92.797 205s3s, i mintenance - 3,573 971 2.693 - 1,337 - 39 2.734 5.3739 .612 a asepervisi-n - ...l. - 1. _ - _- . _.t _ .Lii .. 1-.2J Iaatai.fi a. -, *,,10.607 46.645 74.927 3s.0a9 I5.092 25,376 9.034 115,?37 101.333 216.770 aulo _nt *1-1abS19tllt* - 4,344 4,036 1,123 79 34 1.00I 3.302 8,282 5.657 13.919 lvii works - - - 126 - 3 - - 962 962 quipm nt - - LIII iZZ - S30 - 4-s04 2 o 7.010 ISuNIAL - - 6.25 348 - 1.366 4.504 3.466 7,972 ta.t. _._uon Lauil tau lvii works - - - - 2.480 4.292 3.091 - - 9.171 9.171 quipo_nt - - 1..5h Z4-4La - -ZAA Li2 i _ L.&.Lh 1J.L.Ui IZ.M imubdnw - 111159 24,498 2.4a5 11.571 6,543 - 30,162 26.304 56.966 lvil works - 1.374 1.674 303 4s9 - - - - 3,809 3.809 qulpoent _ _ Jl 1527. 2 La 1425 8- 02i4 14712 J.LZ9 24L.M Iufl.1*1a.t - 2,304 1,974 15.566 906 1.425 903 6,024 14.712 14.095 25.307 p11mm, Onulnmant *mhlIl* . b - .9,496 - - - - - 6.523 2. 60 9.496 FD Plantation iviI works & building 769 2.615 769 1.060 129 - - _ - 5.362 5.362 quIpoent 5.388 6.301 4.666 3,391 161 1.599 - - 11.301 9,725 21.526 s0k plantatlon 1.436 3,639 5.645 7,475 9.325 6.169 - - - 33.669 33.669 pec1es trials .14 7es 936 1L016 1.468 s57 5s48i 5496 Subrtotsl 7.927 13.350 12.046 12.942 11.033 1.715 11.101 54.262 66.063 *i,jja.ia.iul.Amsjaia.nu - 7.026 5.459 2,076 369 - , _ 1s.532 - 15.532 Ja *ve.faa traInIng - 450 432 330 SoS Iso - - 1 ,548 - 1 ,54i Lr OtAL _,927 39,#013 .115.920 J 4.JA5 5 4 .3 2 50,AU 2JA. 22,MM5 232 9ti224 o | 2o SURM FOIESTUV It IEAST PEGU YOtAl - to049-S Caoar-lmon Setu--ni Prolect Coat Stimtent- *nd Actu-S Costj Percmntses Anor-1--1 e- Eatim a j/ ' Actual _A,ta Ihnes n Terms Adminiatraticui *nd Etoort ClvII Works and Ou1 Idngs No. 1 2.4 0.3 I 0.6 0.1 100 25 33 Equipment 6.7 1.0 6.1 0.9 91 S0 Road Constreution Civi Works Nil* 3.860 32.1 4.6 651.5 6.3 0.6 17 20 17 Equip-ent 38.8 5.6 42.9 6.5 129 112 1MHDIala. ILl Jh6 6I LA 21 Al oonain.. transport . Maintenance Maintanance Workshoo No. 7 0.6 0 12 7 1.1 0.15 100 132 125 Equipment 306.9 45.6 . 21S.6 27.9 70 of Sub"-total 307.7 21 i-2 21" 1Q AL I t *auto _ nt pehabilitatAon Unit 167 12.7 1.9 364 13.9 1.9 21I 10 05 Civil Works NO. to 0.6 0.1 16 .0* 0.1 100 .12S 00 Equipment lI.? 1.t 7.0 0.S S0 50 eIt .6 0.2 - - _ _ ,S-tat Hppdmppd S- 111l CanateUction Civil Works no. 2 3.1 0.5 2 9.9 1.3 100 319 260 Equipment 26.3 4.2 47.1 S.. 11 145 ISubTtal 31.4 4I ILA o 14 JAI 1mu Civil Works No. I 7.8 1.2 I 3.J 0.5 100 43 42 Equpment 29.7 4.4 25.0 3.2 64 73 IunIaaaL 114~~~~~~~~~~~IZ IA ZIA Li ii Plantation f0 .3 Civil W Nor: *nd uildlngs 14.1 2.1 5.4 0.7 3J 33 Took Plantation Eatsblishment Acre 29,600 12.9 1.9 40,607 33.7 4.5 136 261 237 Faot Groaing Species Trials Acre 6.100 4.4 0.7 6.911 5.5 0.7 113 125 100 Equipment 39.0 5.6 21.5 2.9 55- 50 ub-Tatat *10 JLI LLA D l Eu10--nt for Railways Wagon 190 IIT. 1.6 9.5 1.2 01 07 Overseas Training m 137 1.6 0.2 129 6.5 0.2 94 94 100 technical ASSIMtnnc, GM 286 V 11.6 1.6 I66 Al 15.5 2.0 96 131 III lua SI0.a ALA hL I U a *IIncloodiw! physical and price contingancies. gi too M foreign consultants and 96 MM local consultants. Al Only foreign consultcnts. I_ - 41 - Table 12 FORESTRY II (EAST PEM YVAIS - CR.9MO-M Finncing Plan ADrai sal Estimates IDA EEC FINLAND MM M TOTAL X Timber Corporation 30.9 .8.0 _ . 15.0 53.9 82 Forestry Oepartent 3.9 - - - 5.7 9.6 15 Technical Assistance 0.2 - 1.4 - 0.2 1.8 3 Overseas Training . - , - 0.2 - 0.2 - TOTAL is0 A. 1.4 0 f2 20.9 N5IS 100 Actual IDA EEC FINLMND gD 0 TOTAL X Timber Corporation 21.5 5.1 - - 24.8 51.4 82 Forestry Oepartent 3.4 0.3 - - 5.1 8.8 14 Technical Assistance - - 2.0 - - 2.0 3 Overseas Training - - - 0.2 -*0.2 - TOTAL 24.9 5.4 2.0 flJ 62.4 100 .- I teriu mu ems, u tst * oft Imp Ut at v-e * a a 3 4 5 6 T 3 6-t1 It O3 3-15 16-2 73-30 Took Ls Prouctio- 14- teak L.u e.m . 00731 - * - - - tek La" m 66.0 1U.6 133.5 132.5 132.5 132.5 t13.5 Aetel 01.S 131.4 159.6 153.9 65.0 142.0 123.0 96.6 60.0 30.0 83.0 60.0 3.0 3.0 30.0 omeat Aetual - 51.4 10.6 73.0 35.0 61.0 43.3 14.6 i. 3., 9.0 g.e 0.0 g.m i.e T.ah La Sagoest UA t .3 13.0 £7.2 31.3 17.2 1.T2 11.2 17.2 Aetual 37.0 31.0 34.3 33.a 53.5 53.7 40.3 40.0 40.0 30.6 30.0 30.0 30.0 30.0 30.0 UsmefIt Aeatul - T 1M.3 1t.2 W4.3 36.7 33.3 3.0 33.0 13.0 13.0 3.0 1 E.6- 1 3.0 13.0 Longl Log 1lae l 03 * 1.3 2.5 4.0 4.0 4.0 4.0 4.0 4.6 I Aetel 20.0 23.0 24.2 42.3 61.7 43.1 49.3 25.0 n0.0 30.0 n.o 20. 20.0 30.0 20.0 11writ Actual - 3. 4.3 3 -.3 41.7 23.3 3. 5.0 -0 0 'S- - * .. Ii * U'lu Usommil IM 25.0 35.0 50.0 36.0 100.0 100.0 t00.0 200.0 106.0 100.0 100.0 10.0 300.0 - - Autaua 35.0 36.5 35.0 43.6 52.7 48.2 38.4 31.11 2.0 n. 3.0 3.0 . - - - 33.5 10.O 1.6 37 .7 15.3. 3.4 6.6 4.0 14.0 14.0 14.3 34.6 _ _ Tea le * tuamtfaa owg 35.4 40.5 6S.3 31.3 11.3 33.3 33.2 AoS_l I3.0 0.6 66.1 39.3 - - - - - - - - o.0 n. - 33.0 46.1 31.0 0 0 0 0 0 0 O 0 * 33.6 33.0 3D .somi" Sale. btpat OWN 33.8 13.8 13.8 33.0 33.3 13.0 13.8 13.3 33.6 13.6 13.8 33.8 13.0 33. 1s. Actual _.5 30.0 33.6 9.6 14.7 2.6 34.1 9.* 3.0 *.0 3.0 3.0 0. _ - _ aeltl Alet _ - T.E 4.I 1.1 Y.i 5.3 _iMi F .* .3 .s .s .s Lae"I b so 1* 7.4 l3.3 .11.6 0.3 7.0 4.6 4.6 4.6 Aeteal 3. 3.4 4.6 3.5 3.0 3.5 3.3 3.3 4.0 3.0 3.8 3.0 3.6 _ _ Ufei3* Aeteal - Ti* 5i 3. 7 6 . 1.7 1.4 0.5 21. 3. 3 a1 *.3 3.3 * ttt ~ 13 -a - - - - - - - riml 2.r 2.7 3. A 2.4 2.4 4.3 4.7 3.2 5.4 6.4 6.4 6.4 6.4 - - Ib..f _Klal * 0.; .3 4..i 0.3 I i : i.. 0.7 3.9 . 3.!' T -" er ftl at ftom ie§§--- rt*qwt 7c0355T SI (EAST FfU TONAl - C0.949-1A Uerdwoo6 ftoicteulearn Bmito cut '0lo It 2 ast s- , 3 4 5 6 I I 9-10 it 12 13-tS tf-?T 20-30 L"P S -U N #. a o.o Mo o . o.o - o.o Osu~~~~.oiB lag 3* U9 13.0 24.te 3. l. |. *.60.0 290.0 290.3 210.0 290.0 290.310. SActuai 35 106.2 143.6 1316.5 133.2 132.4 131.6 151.2 1601.0 160.0 160.0 160.6 160.0 160.0 160.0 Eomafit Asta - 10;i. 55.6 1o1.5 40.2 7.4 *6.6 76.2 75.0 75.0 75.0 75.D0 7.0 75.0 75.0 Law Upsut MA - 1.0 40.0 61.0 64.0 64.1 64.6 64.0 * Atft& 3 3.3 5.6 5.2 4.3 3.7 1.0 2.0 6.0 6.0 6.0 6.0 e.g 6.0 *.g Is se Asalm -.3 2. .12 1.3 0.7 42.0) S1.0 2.0 i2.0 3.0 2.0 2.6 2.0 3.0 Lal sa3es SAO - 19.0 U1.1 34.8 24.0 34.0 34.0 34.0 Mtwia Is 16.1 23.2 29.1 23.6 27.9 20.0 7.0 12.p 12.0 12.0 2a.0 12.0 12.9 12.6 _ tueft AotS 4.1 3.2 14.1 T.6 T2.I 5.0 43.0) (3.0M (3.0) TS.0- S-.0) 4S.0) 43.3) 43 .3 state 361 WA3 - 03.1 60.0 * .0 91.0 96.0 9f60 966. tui 32 79.4 U.9 112.2 100.6 105.4 t0.6 64.0 94.6 94.0 4.0 - - - - sofast Aetmi 47n.4 56.9 61.2 6.6 -73.4 14.6 52.o 62.6 62.0 15.0 - - - - 6lu NKIS S" 47.4 47.0 47.0 47.0 47.0 47.0 47.09 -' AsO%M ' 0. 61.t 6.0 52.t 38.6 36.6 41.1 35.0 36.0 36.0 - - - - - _eamt *A.01 ii ii 44.13@ W-'i - 3.71 W 2. iii - - - - - VW sin il - - 24.0 45.0 50.0 1.0.0 101..0 Atgus - - - .3 6.0 12.4 1M.1 11.2 17.0 24.0 24.0 24.0 24.0 24.0 12.0 _m ast tam& * 13 . 6. I 1T.4 12.1 11.2 17.0 24.0 26.0 24.0 24.0 24.0 12.0 tfreetr A. sI 2t 22.2 - - . - .9 2.0 - - 71.0 S11.0 110.o 118.0 136.0 r,w1oml usmorts. of Pr-o .t lbrdwuA Surnowi Pwodast ee Distribustio 2* *..r 0 ! a 2 4 5 6 I a 9-10 s *3 13-151 6-2" 2-36 not- s - a a a a - - - - _ _ -- LEasl les 14.6 36.5 43.5 55.5 53.8 57.9 45.7 43.9 49.1 49.1 49.1 Transfer 3.20 .4 5.3 5.2 5.1 2.6 2.6 2.3 2.6 2.6 2.6 Nave MIlls La_l I *l2 3.2 17.3 30.3 25.2 21.5 19.6 14.3 15.3 6.9 Me. - Trse_ter 1.1 6.0 5.2 2.6 2.2 3.5 2.3 1.7 1.9 1.9 - _N ull _ et a.. . . . 0.1 - 0.1 0.1 3.1 6. 0.1 0.3 0.s 0.1 6.1 gL _ am - - 0.3 3.7 5.0 2.6 2.4 3.7 5.1 5.1 S.1 S.I S.1 5.1 2.6 ?r a.tou - - - , .4 3.4 4.8 4.4 6.6 9.2 9.3 0.2 3.2 9.2 9.2 4.5 TOTAL SALSS soa 3.0 59.6 65.5 91.4 165.3 105.3 tOS.3 10.*3 aet6 I 21.9 67.2 2.6 96.2 93.1 93.2 74.7 72.6 4.3 4.9 66.1 14.4 14.4 34.4 7.2 11"fwrt AtasI 45.2 1.7 -74.3 69.2t 69.3 s a51.7 62.0 62.0 44.2 47.s3 t 47.5) 4.S) 414.7 ) to p.o"_i. gatlamio tattut Ptweat. It ON"" stlee bi ta Matb Ptoieo. _ sol1e or lawoa mlet m m. PJJRMA URtSklRV ll (AtSI PEGU YUMA) - ca 949-BA Labour intensive Plantatton EstAblishllnt Twaleal Inputs and _Coat Cost/Acrg Input/Acre Kv-ta Activity mmUnil Actual Actual A. LAN"L..EARIHG 1. Surveying - Labour 1an days 0.5 0.5 2.70 3.25 2. Land Clmarig - Labour Man days 15 17 81.00 110.50 - Toole sum sum 3. 94.60 6-2S 116.7S 3. Burning * Reburning - Labour Man days 9 7.69 4L.60 48.60 50.00 50.00 4. Staking - Labour Man days 2 A.S S 10.80 10.00 S take sum SU~M. 1j.00f 25.80 I0.00Qf 20.00 PLANTING COSTS 5. Nursery Costs -Seed sum :5.00 5 Plastic Bog/Pot SUm 15.00 - Soll SUm 15.00 - Ls;Our Man days - 3.6 25.00 - Transport SUM 2Q000 - Stump/Seed - 29 40 29.40 100.00 G. Planting & Replanting - Labour Man days 2.5 3.1 13.50 20.00 20.00 - Tools SUm - 8L50 22.00 7. Camp Costs Labour Men days - 0.6 - - 4.00 - Materials SUm LimQ 12.00 S. Total Establishment Cost 223.10 322.00 1/ S. MAINTENANCE cosrs 1. ltt Veer Weeding - Labour Man days 5.0 5.0 27.00 32.50 - Tools SUm SUm tL50 2.50 a 3 34.50 105.00 2nd Vyer Weeding K 2 34.50 70.00 3rd Year Weeding u 2 34.50 70.00 4th year Weeding K I 34.50 35.00 f. garotectton - lIaour Mner days - 164 - 10.00 - Tuul, 3SUM - __f0 13 00 3. Total Malntnani Coat '38.00 29300 , saN di1d not recognize the weeding routine and protection requirement for tat 5 years. OEXS t AT 1T lEAST PEB a - e R4-BA *Ip-n*- 4 an CamS a*,dUana4*m (K 000 120 la- 810 SI11 842 TOA IMLt4 J. I 0 1 I I A4 Cost of Establishment Took 1.430 3.639 5.845 7.475 9.325 6.169 33.689 Maintenance and OH Trial S14 __5 .m 1.810 1.421 __I ... L280 TOTAL 1.750 4.434 6,591 6,495 10.793 6.926 36.960 1/ MaIntenanc. Co%t* x a a * LL i It Weeding Kyats 1,887 1,210 422 - - - Protection kysts aM __. 5ub-j.aħa 2,483 1,738 846 295 157 - Exrcta Cet -E Ift TTiInning Kyats - 1.175 2.875 4.500 6.250 6.500 7.500 > Transport (Export) Kyata - 5.24 ...Jfl _ *._00 __9DO usI TTIAL 2,483 3.477 4,323 5,395 7.007 7,100 5,100 2nd Thinning Year 1 11 li II Thinning Cost Iysts 4.675 10.2S0 10,250 22,S00 23.500 23.250 Handling Transport (Export) Kyato -.00 Go - An SOO Soo Goo TOTAL 5,275 10.50 16.150 23,100 24,100, 23,650 3rd Thinning .laar 21 21 Az 21 21 au Kyats 9,272 22.422 35,754 40,692 51,510 10,004 4th Thinning 'i-r AU Au 21 au AU An Kyoto 15,150 37,512 590.64 63,022 36.052 iS.446 Final Polling v--- Um eIL U Kyats 61,612 160,208 241,160 333,900 346,026 341,74C J Including w"ding nProtection. 31 Includes Maintenance Costa. aJ ltrection Cost let and 2nd Thinning S 250 INHt , 3rd, 4th and final logging S I0 N 1 t. BURMA FORESTRY 11 itAS1 8tb Uo^ -OIA Cit949-6^ Osratino Incane - Ruthablltated Hardwood Sa"milLs (K Million In Current Prices) ul^L Q 1 I I A 1 1 1 L-I .1 Throughput (Ht) 32,000 79.357 88.923 113.255 100.629 105.42B 106.550 84.000 94.000 Out-turn (Mt) 17.510 43.427 46.534 60.542 55.426 57.935 57.191 46.200 51.700 Sales (Mt) - Local Sales 14.555 30.535 40.491 55,812 53.814 57,936 48.678 43.890 49.115 - Transfer 2.955 7,418 5.792 5.281 5.082 2.605 2.557 2,310 2.5S5 Price- t"Htl I Locel 50102 700 813 917 613 855 906 933 930 967 Transfer 853 853 572 572 572 1,020 96,S 935 965 Rv - Local Sales 10.2 29.7 37.1 45.4 46.0 52.5 45.4 40.6 47.5 Transfer 2.6_ j 8.3 3.3 3.0 2.9 2.7 2.5 2.3 2 S lshainuħ 12.6 36 0 40.4 46.4 46.9 55s2 47.9 43.1 So.0 25.0 Oneartina Cort- Log Costs 6.3 15.6 25.8 34.0 40.0 34.6 39.4 j/ 31.1 34.8 Sommilling & Overheads 12 3.Q 5.7 8.2 7.2 5.7 n.4 2f 6.3 7.6 IH-JAħL; 7.S 13.6 31.5 42.2 47.3 40.3 47.3 37.9 42, Qnsartina Profit EAlSEjt.l 5.3 17.4 6.9 6.2 1.6 14.9 0.1 5.2 7.6 3.5 Taxoe A/ 2.7 3.4 4.6 3.2 0.0 7-6 - 2-7 3.9 2.0 tie.L.aM _LLLU -!U*t 2.5 0 .5 4.3 3.0 0. 7.3 0.1 25 p.7 1.a Operati.g Ratio so) 59 52 78 57 97 73 lo1 s 3 5 us Return an Sales ) 41 43 22 13 3 27 12 Is 15 Source & Timber Corporation I Estimated at N 80JHt. RI Estimated at 93f"HINt. at State contriliution. ' SURMA FORESTRY tl (EAST PEGU YONA% - CR 949-BA Oncratina Income - HirEd Hardwood Saw1i)1- (K million In Curr-nt PrIcea) Y-' Qrz 2, B f f -10 Production Data Throughput (Ht) 8.000 61.141 59.991 52,104 38.652 36.552 41.132 35.000 36.000 Out-turn (Mt) 4.363 33.348 31.165 27.792 20.883 19.358 21.524 17.000 18.800 Sales (Mt) - Local Sales 3.242 17.269 30.298 28.178 21.513 19.S52 19.337 15.300 16.920 - Transfer 1.121 S.972 5.159 2.770 3.189 3.492 2.157 1.700 1.880 Price tK&Htl Local Sales 700 813 917 813 855 906 933 930 967 Z Transfer 853 853 572 572 572 1.020 985 985 985 s Revenues Local Sales 2.3 14.0 24.9 22.9 18.4 18.6 18.0 14.2 16.4 Trensfer L.o 5.1 3.0 1.6 1.8 3.6 2.1 _ 1.7 1.9 Sub-Total 3 3 19.t 27.9 24 5 20.2 22.2 20.1 1S.9 18.3 Onaratino Costs Log Costs 1.6 12.0 17.4 15.B 15.3 12.0 15.2 13.0 13.3 Sawmilling S OverhOads 0.03 0.3 2.0 3.4 3.1 2.3 3 3 2.3 2.6 Sub-Total 1.8 12.3 19.4 19.O 18.4 14.3 t1.5 1S.3 1S.9 On-rsting Profit (Deficit) 1.7 6.8 8.5 5.5 1.8 7.9 1.6 0.6 2.4 Taxes j/ 0.8 3.5 4.3 2.8 0.9 4.0 0.8 0.3 1.2 Not Incomes after Taxes 0.9 3.3 4.2 2.7 3.9 3.9 0.8 0.3 1.2 Operating Ratio (S) 48 64 70 78 91 64 92 96 87 Return on SaleS (S) 62 Sli6 30 22 9 36 8 4 14 Sourc- : Timber Corporation 1J State contribution. B SURMA - FORESTR *I tEAST PEGU VOAI - CR-.4O-SA Onaratina *noeo - Na. Nard.nndtammlla Wepa I year 2 vear 3 V- r 4 V-a r 1Y-L2 7 *22fl ProductIon o-ata (81/52) Throuohout - tatk (0t4 - - 2,21t 41* - - - _ _ - hardwood - 1.321 1 6.306 12,400 12.050 11.231 17.000 2' 24.000 12.000 Out-turcn - toek * - - 1,172 Is? - - - - - - hardwood * - *04 4.039 7.514 7.375 60,67 10,210 14.400 7.200 S-lor at teak - Local sales - - 144 22 - - - - _ -Exports * - - 955 93 - _ _ _ _ - Trnsfer - - - t7 152 - - - - - Salas of hardnood - Lo=al sales - 346 3.678 5.037 2.754 2.442 3.690 5.200 2.600 Export - - 92 - 125 100 tOO tOO -Transfer -- 388 2.457 4.8t7 4,401 6,,5t0 9,244 4,500 Price of Np-dwood - Locrl males 8 - 631 912 907 927 930 967 - - - Exports - - - 2.710 - 2.500 2.t06 - - - Transfer - - - 572 1,020 965 995 965 - R-w.nu.s . . . . . . . . . . . . . . . (K million In current prices) . . . . . . . . . . . . . . . . . - Took - - 5.9 0.9 - - - - - - Mardwood i local sales - 0.7 3.4 4.6 2.6 2.3 3.6 5.0 2.S 5 j exports - - - 0.5 - 0.3 0.3 0.3 0.3 t transfer - _ 0.2 2.5 4.7 4.3 6.5 9.1 4.6 Sub115 - ti ot-Q Runninn Costs Teak - - 2.7 .i4 - - - - Hardwoods log costs - * 0.4 2.7 4.1 4.5 3.5 5.3 7.4 .4 3.7 s sawmllling & overhoads - 0.2 0.3 3.2 3.3 3.1 4.6 6.4 1j 3.2 ona"L.iEon Profit (Deficit) - 0.1 3.3 0.6 (0.5) 0.3 0.5 0.6 0.5 Taxes 2/ 0.1 3.1 1.3 0.4 0.5 0.2 0.2 0.1 n-t Income after Taxes - - Q_2 J9-51 10.0) .L02 9LA La. QLA Operating Ratio () - 66 65 91 107 96 95 9 9.3 Return on Sales (S) - 14 35 9 - 4 5 4 7 ShU=fst Timber Corporation. Export produce equal xoltion fund. 11 Only 3 months. II Second sawmill starts operating with an estimated throughput of 5000 MIt. l/ including export produco equalization fund IEPEP) - see Table 25 tOr task productsg service taxes (51 on fixed export price of 574.6/Ht for sawn hardwood)& commodity tax (at fixed export price of K124.62tNt). j1 Estimated at K306/"t. 4S a-t lmt.d at 5267/Ht. Table 20 - 49 - BURMA FORESTRY II (EAST PEGU YOMA) - CR.949-BA Ftnancial Prces (K;Hlt) Araisal Estiate Actual Estimates (79 "80179/80 867 1987 Teak Lo Local Sale 745 745 982 1,015 Export 4,965 5,697 6,406 7,046 transfer - 901 843 843 Hardwood LoG Local Sale 353 203 2W3 203 Export 1,710 1,710 1,880 2,070 Transfer - 243 365 365 Teak Sawnwood Local Sale 700 601 1,996 2,119 Export 39975 39975 5,753 6,1W Transfer - 1,701 2,473 2,473 Hardwood Sawnwood Local Sale 860 700 930 967 Export 920 - 2,500 2,986 Transfer - 853 985 985 103131 II 653 MMl TOM) - C.943-M 0wet" Incom of tow 1_ *t wega Tm Stii miii.. 1s Ouzt ftrime Tl 6 s a 3 4 S 6 1 a 9-1 1 Is 2 3-151 -27 8-30 .. . . ....... ......... . Actmi- .. . . . . . . . . . . . - - - - - - - . . - . Extractlon 16.3 35.1 356.1 369.4 435.5 436.2 401.6 232.5 317.6 257.5 263.4 301.6 360.6 322.5 326.3 UmS_neoiu 16.1 35.3 6.3 13.6 16.9 5.6 15.4 63.4 62.7 217 64.4 3.4 t4.4 14.4 1.4 Sub-Totl 11.3 31.6 425.0 433.0 S4.0 576.0 417.0 361.9 333.1 346.2 341.6 340.0 315.6 336.9 334.3 operotUm a to U Eutxetlrcs 7 .6 .2 131.3 t32.3 165.2 362.3 133.3 70.6 53.0 61.0 6.17 16T.6 017.0 161.0 .1t.? USmmille 3.2 36.8 56.3 61.7 31.8 62.1 74.1 63.5 72.1 72.1 56.2 35.0 13.4 13.8 6.3 binv Cot* mC Prw;o.em 3.6 3.3 4.0 12. 117.0 53.0 30.0 10.0 5.0 .11.3 15.6 15.3 15.6 15.6 15.0 Sub-Total 46.3 133.6 116.0 206.0 264.0 264.6 236.0 143.7 146.1 143.1 15.3 157.06 135.6 135.6 133.6 operotleg ftrtil Elftlolt) 135.1 116.0 4. 227.0 316.0 312.0 239.0 216.2 253.6 192.1 167. 183.0 119.2 261.1 236.7 To,. 3f.3 116.. 166.0 154.0 221.0 213.0 169.0 1421. 152.2 t£1.3 12.7 109.4 1017.5 I2.? 12.4 obt Icmes after Tes 39.2 63.6 76.0 73.0 63.0 33.0 70.0 76.4 102.4 76.8 75.2 73.2 71.1 6.4 ".3 Oapeatlio Sotlo 331 as 43 43 46 46 46 s0 40 37 44 46 43 4w 40 motors n sales 7S 1s 51 51 32 54 54 90 40 63 56 56 4 51 6 S liic imber CWrpsrtiIm 'I Ff556 1t (EMV PE:U T) - C.M9" horft" tk1!iatiu ot Fuuie - East !noleaa.Pr.ocat .. ... km ... . . ........... Projec@tion ............ ...... iat LLi X I 2 I - 1! ! 1 LIl IZ a H ln JJ L7 1I 1!Niii 28-36 'KW*nS 13.1 76.6 73.1 9.6 9 76.1 76.4 111.4 71.8 76.8 75.2 73.2 71.7 71.7 71.7 66.4 16.4 01.4 90.4 1.4 6.4 1.3 .clade V/ 1.6 4.4 2.6 4.6 41.1 43.1 36.1 36.6 25.6 25.6 25.6 25. 25.6 25.6 25.1 25.6 25.6 25.6 15.1 M5.l 16.1 11.6 .-total jjj fl8 ffJ 1~!J ULi liji J!~ I *4 161.8 161.9 ~ %- 96.7 9S.7 f.?V L 1 65I.4 165.4 4 95.4 A.4 96.3 MC teas 2.7 54.4 92.1 4.7 19.6 17.4 - - - - - - - - - - - - .*k of t m 16.6 4.1 31.6 37.V 21.? 26.4 -- - - - - - - - -total llL7 !! t5 3 - - - - *- - - - - - - - - - - ' P !A _ 2 lSiM IMk IV 9 LS *I! 15.t 1Z4 9 8. 2 9 1A.7 6. 1. .4 95.4 95.4 91.4 96.3 .1 31.7 93.6 629.4 42.3 41.5 33.6 28.5 - - - - - - - - - - - - - - - JEEC - - - - - 6.3 5.7 15.1 15.1 17.1 19.4 19.4 19.4 10.. 19.4 19.1 13.7 4.3 3.l 1.4 - - I~ 61:9 j;:j 261.6 31.2 3*1 29:1 ThI 7 i:I 9.1 5 .7 : 5:4 3: 6: 6. 64 61 17.6 1 2 1I3 13:4 23 2 I 5 13 112 .6 7'1 S'4 3'* 1.1 S~~~~~~~~~L 43 i- 47 3s NJ Ml WS 19 SE IU 4" ZU 24 91 96 LI L2 i. - 14.3 76.7 72. 92.2 %.3 5.8 56.2 14.1 4.9 57.5 S7.2 61.9 1.5 76.2 71.9 62.7 9.6 1.3 91.2 93.5 91.4 91.3 P ZES II '71.3 M 15M.M 1. 131.4 If I ! 1!" U H W 2 I$ 97 MIZ LS.4 Il - iLi A !Li !A 96 . 3 Ls Tii. CuW,atim. -aIKaut Of ustomuft St#PtS 1 TOW 9 (flUl99 - sm Table 26. apnt :o 6ssw at ltwst rate of 92 P" mom piv% 5 yw grwe tgo d. 9,t Sw 5,1 n at I W mm - mid so arKpe riud. I~. FORESTRY 11 LEAIT PEGU VONA) - CR.49-04 Bmiance Shoat SummaCL of the East Pe-u Voen JR Million) ILhi IJ-02 9If I3 01AS U14-.8S lle-a? a?-z0 Not Fixed Asset. 17 104 194 167 * 14S 129 120 122 Other Assets 1 35 59 19 45 54 42 44 Current Assets 244 300 453 649 606 793 824 053 TOtAL ASSETS 292 439 706 036 gaS 076 092 I 010 Currant Liebilitles 46 59 144 179 la3 163 130 123 Lana-T-rm Debt IDA/EEC 3 57 150 154 174 191 16 171 Other la Se 81 too 95 84 s0 Si Ubh=121 to 113 231 254 269 275 266 222 Government Capital 134 129 129 129 129 129 129 129 Retained Earnings J/ 63 131 202 273 355 409 467 S45 *OlAL LIAIILITIES _ 262 439 706 83S ga6 976 992 1.019 Current Ratio (tims) 5.3 5.1 3.1 3.6 5.2 4.9 6.3 6.9 Debt Service Covernag Ratio - 17.4 4.9 4.0 3.6 2.7 2.2 2.3 Saturn on Assets (S) 15 14 11 9 10 10 7 7 Source i Timber Corporation ji tlbil 21 I'-a Interest charges to long-term debts. I4b N W* BURA FORESTAV II (EAST PFGU VOuAI - CR 942-zA Financi1- Analysis of the East Peou Vamp (K million in 1987 Constant Prices) COSTS BENEFITS .1/ 2/ Production Costs Investment Equipment / Sam Net Incremental Costs Rmn.=lacnnt Total R-v-nuos Extraction Millnna Tsaxs SansfitL Not Benefits Hatance Year 0 256.3 100.6 3.2 108.3 42.2 - I 18.5 18.5 380.1 209.9 11.0 103.2 56.0 13.8 (4.7) 2 93.4 93.4 511.5 204.4 11.1 203.0 93.0 50.8 (42.6) 3 119.9 119.9 449.9 233.4 13.1 138.0 65.4 23.2 (96.7) 4 42.8 42.8 657.3 207.3 14.3 310.6 125.1 82.9 40.1 5 40.5 40.5 658.8 208.1 14.8 296.4 139.5 97.3 56.H 6 37.5 37.5 417.0 213.4 14.7 133.6 75.3 33.1 (4.4) 7 22.7 22.7 387.9 176.5 13.7 134.6 G3.2 21.0 (1.7) 8 - - 399.7 129.5 16.6 152.2 101.4 59.2 59.2 9 14.0 14.0 340.2 131.5 16.6 115.3 76.8 34.6 20.6 to 25.0 25.0 341.2 131.5 16.6 115.3 76.8 34.6 9.6 11 153.4 153.4 347.8 145.9 14.0 112.7 7S.2 33.0 (120.4) 12 (10.6) (10.6) 340.0 146.8 10.2 109.8 73.2 31.0 41.6 13 (0.6) (0.6) 315.0 129.4 6.4 107.5 71.7 29.5 30.1 14 - - 315.0 129.4 6.4 107.5 71.7 29.5 29.5 15 25.0 25.0 315.0 129.4 6.4 107.5 71.7 29.5 4.5 16 - - 336.9 129.4 6.4 120.7 80.4 38.2 38.2 17 e.s 6.5 336.9 129.4 6.4 120.7 80.4 38.2 31.7 18 178.7 178.7 336.9 129.4 6.4 120.7 80.4 38.2 (140.5) 19 - - 336.9 129.4 6.4 120.7 80.4 38.2 38.2 20 - - 336.9 129.4 6.4 120.7 80.4 38.2 38.2 21 - - 336.9 129.4 6.4 120.7 80.4 38.2 38.2 22 - - 336.9 129.4 6.4 120.7 80.4 38.2 38.2 23 25.0 25.0 336.9 129.4 6.4 120.7 *80.4 38.2 13.2 24 - - 336.9 129.4 6.4 120.7 80.4 38.2 38.2 25 31.0 31.0 336.9 129.4 6.4 120.7 80.4 38.2 7.2 26 153.4 153.4 336.9 129.4 6.4 120.7 80.4 38.2 (115.2) 27 - - 336.9 129.4 6.4 120.7 80.4 38.2 38.2 28 (13.3) (13.3) 334.3 130.4 3.2 120.4 80.3 38.1 51.4 29 - - 334.3 130.4 3.2 120.4 80.3 38.; 38.1 30 (64.2) (64.2) 334.3 130.4 3.2 120.4 8C.3 38.1 102.3 IRR a 8.9% .J/ Table 10 adjusted into 1987 constant pric-s by using GDP's deflator factors of 0.88. 0.89. 0.93. 0.95. 0.97. 0.99. 0.909 end 0.99 during FY 79/80 - FV 86/87. 2/ Assuming an economic life of 7.5 years (See also Table 10 for individual equipment groups). a - Tablos 13-14 and Table 20. S/ Using 1987 estimated costs of K1606/t for extraction of teaK log and X3VO for hardwood log. K80/it for smmtilSing in the old mills and 1267/lt in the new mills. SURMA FORESTRV It (EAST PECU VO A) - CR,949-BA oeratina Income - Okhvin Took kawmi"l (K million in Current Prices) lEar I .L A I A 7 A ust. . . . . . . . . . . . . Actual . . . . . . . . . . . . . . . . Projected . . . . Production Oata Throunhout Mt 25.000 36.536 35.002 43.575 55,619 50.830 44,423 36.,s9 39,000 39.000 Total OutputS S 43 43 44 41 41 41 41 38 41 41 lt 10,750 15.812 15.232 17.692 22.535 21,005 18.194 14.104 16,000 16.000 Local Sales lI Mt 1,758 3.381 4.657 3.509 7.9eq 3.482 3.202 2,306 4.000 3.000 Exports Mt 7.500 10.042 11.644 9.607 14,668 12,630 14.109 9,839 8.000 6.000 Transfer Ht 2,460 3.716 3,296 2.416 2,415 4.764 4,653 3.228 5.440 6.440 Price (K/Ht) Local Sales 601 622 579 1410 1195.1 1395.2 1880 1996 2119 2119 Exports 3975 5081 4915 5721 5500 6289 6194 6753 6100 6100 1 Transfer 1701 1701 1719 1719 1719 2130 2473 2473 2473 2473 > Revenues Local Sales 1.1 2.1 2.7 4.9 9.S 4.9 6.0 4.6 8.5 6.4 1 Exports 29.8 51.0 57.2 55.0 80.7 79.4 87.4 56.6 48.8 48.8 Transfer 4.2 6.3 5.7 4.2 4.2 10.1 11.5 .8.0 13.5 is 9 Sub-Total 35.1 59.4 65.6 64.1 94.4 94.4 104.9 69.2 70.8 7 Runnina Costs Log Cost 11.4 16.8 16.2 20.0 28.5 27.4 25.9 22.3 23.6 23.f Sammilling and Overhead 11.4 16.6 15.6 21.4 78-4 26.7 23-2 16.0 20.4 20 Sub-T*tDi 22.8 33.6 31.8 41.4 56 9 54.1 49 1 40 poeratino Profit (Deficit) 12.3 25.8 33.8 22.7 37.5 40.3 55.8 28.9 26.8 27.1 Taxes Z/ 11.4 24.2 29.1 24.4 3/ 37.9 3/ 35.6 42.4 22.0 20.4 20.6 Net Income after Taxes 0.9 1.6 4.7 (1.7) (0.41 4.7 13.4 6.9 6.4 6.5 Operatino Ratio (Sl 65 57 48 65 60 57 47 56 62 62 Return on Sales (1% 35 43 52 35 40 43 53 42 38 38 Source ; Timber Corporation 1/ Including wastage. _J Including *xport produce equalization fund (30% of export value); commodity taxes (fixed rate at K505.33 per Ht on export and local sale volumes; service taxes (5% on fixed f.o.b. price of K2045.5/Ht and local sale of K1043.65 Mt; and state contribution at 30% on net profits after taxes. X 2I No state contribution. 4 Estimated at K1606Ht. j/ Estimated at K488/Ht. n- SURAu FORESTRV II (EAST PEGU VOMA) - CR0949-mA Financial Analysis - okkvin Tak SawmilL (K million In 1987 Constant Prices) 1/ hI Invastmnt Reolasant Saw Millina Inct lremmntal LQ4141 £MCs a/ Ba Rsvanuas L La.naħa s Taesx Benefits Nat Benef it B8Iance V-a 0 - 55.8 27.4 24.8 3.4 - - 1 2.6 77.7 40.0 33.3 4.4 1.0 (1.6) 2 1.8 89.1 38.3 41.7 9.1 5.7 3.9) 3 16.4 72.0 47.7 24.7 (0.4) (3.8) (20.2) 4 0.9 112.4 60.7 50.5 1.2 (2.2) (3.1) 5 1.4 101.2 55.6 29.7 15.9 12.5 11.1 6 0.9 104.4 48.6 41.3 14.5 l.1? 10.2 > 7 6.1 72.9 40.3 24.8 7.8 4.4 (1.7) 8 1.0 70.8 42.7 20.4 7.7 4.3 3.3 1 9 - 71.1 42.7 20.6 7.8 4.4 4.4 10 16.1 71.1 42.7 20.6 7.8 4.4 (11.7) 11 0.4 71.1 42.7 20.6 7.8 4.4 4.0 12 1.4 71.1 42.7 20.6 7.8 4.4 3.0 13 0.9 71.1 42.7 20.6 7.8 4.4 3.5 14 0.1 71.1 42.7 20.6 7.8 4.4 (1.7) 15 (9.0) 71.1 42.7 20.6 7.8 4.4 13.4 IRR 12% ħ/ Table 1. adjusted Into 1987 constant prices by using GDP's deflator factors. 2/ Assuming an economic life of 7.5 years. fl Table 25 adjusted by estimated price for 1987. I/ Estimated at 1095/Ht. . . . . . . .. ._ __ _~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- - 56 - Table 27 BURMA FORESTRY It (EAST PEGU YOMA) - CR.949-BA Estimated Economic Prices (Kyat H/t) Teak Loa SAR (1987) PCR (1987) Local Sale 1/ 4,620 4,460 Export ]/ 8,965 7,046 Hardwood Loa Local Sale 2/ 1,050-1,220 1,360 Export 3/ 940-7,310 3,000 Teak Sawnwood Local Sale / 5,485 4,575 Export 0 7,215 6,100 Hardwood Sawnwood Local Sale 2/ 2,310-2,550 2.045 Export 3/ 1,770 4,015 Teak Post / - 2,470 Teak Pole / Local Sale SOO Export 13.000 1 Based on actual f.o.b. price of lowest quality teak log. /Based on world market price, c.i.f. Rangoon for similar log and timber. / Weighted average f.o.b., Rangoon. 4/ Based on f.o.b. price less 25% quality discount. I/ Based on actual export and local sale prices. SURMA, rFDISRTU 11 LEAST PECU VOMAI - dcR.go4-6A fcono1ic Cost Strramm - East Peou VYom&rolact (K m11lion) (. . . . . . . . . . . . nvestment Costs . . . . . . . . . . . . . ( . . . . . Production Costs . . . . .) IEIL r A1flAin. sj Worksho Stat e Nw man Totr1 Extraction Costs Sa mfimllina Totcl ^ E=nort Irsnaoort Sawmill S-u- n O _ _ _ _ - - 32.6 31.3 5.7 69.6 I _ 1.2 6.4 2.9 - - 10.5 53.9 68.5 20.0 142.4 2 3.3 9.1 27.1 2.6 4.3 8.2 54.6 65.4 65.3 21.1 151.6 3 0.1 0.6 45.3 0.7 0.3 16.5 71.5 * 63.1 74.0 23.7 160.8 4 0.4 1.4 19.7 0.1 - 2.1 23.7 68.0 63.7 20.7 152.4 0.a 7.1 8.4 - 1.0 8.2 26.5 56.2 66.4 21.9 146 - A 0.1 2.8 13.8 0.6 - 4.7 22.0 . 52.5 66.8 22.7 142.c 7 - 6 4 4.9 2.0 - - 13.3 39.6 59.3 lt1.5 117.4 t _ _ _ - - T. 36.5 60.7 20.9 110.1 9 4.2 - - - 4- - 9.0 36.5 63.3 21.9 121.7 1 'U - - - - - 16.0 16.0 30.5 63.3 21.9 121.7 1' - 32.0 122.0 8.7 - - 162.7 36.5 56.9 10.1 10S.5 * - - - - (1.8) - tI.8) 36.5 56.9 * 3.4 98.5 *4- - - (1.3) - (1.3) 36.5 58.9 3.4 95.8 **- _ _ - - - - 36.5 56.9 3.4 98.6 5 - - - - - 16.0 16.0 36.5 56.9 3.4 95.8 S - - - - - - - 36.5 58.9 3.4 96.6 4.2 - - - - - 4.2 36.5 56.9 3.4 95.6 6 - 32.0 122.0 8.7 _ 16.0 176.7 36.5 58.9 3.4 96.6 - _-_ - - - - - 36.5 58.9 3.4 98.6 20 - - - - - - - 36.5 56.9 3.4 98.6 21 _ _ - - - - - 36.5 55.9 3.4 98.6 22 - - - - - - - 36.5 58.9 3.4 98.6 23 - * - - - 16.0 16.0 36.5 68.9 3.4 98.8 24 - - - - - - - 36.5 58.9 3.4 96.8 25 4.2 - - - - 16.0 20.2 36.5 58.9 3.4 98.6 26 - 32.0 122.0 8.7 - - 162.7 36.5 58.9 3.4 96.3 7? - - - - - - - 36.5 55.9 3.4 98.0 26 - - - - - (6.5) (6.5) 36.5 56.9 1.7 97.1 20 - - - - - - 36.5 56.9 1.7 97.1 30 (1.1) (13.0) (49.0) M.5) - - (63.6) 36.5 58.9 1.7 97.1 J/ Table 10. adjusted into 1907 constant pricoe by using CDP deflator factors. Costs of equipment are net of duties and taes (40% for administration. 38% for roads. 46% for logging and transport. 41% for workshop. 36% for state sawmill r=habil1tation and for now sawmills. 41% for teak sawmills and 45% for plantations. LoCal costs ware further adjusted by SCF of 0.60. Replacement Is omsed on an economic life of 7.5 years. 3J Estimated at K410/Ht (tallingU NIG * oth-r expenses X50. adjusted by SCF plus transport K340 x CF of 1.05). ai Estimated at K3661Ht (felling KIS * other expenses N25. adjusted by SCF plus transport K320 r Cf of 1.05). _ .I Weighted average at KI7MHt. silj,seted by SCF of 0.60. URMA ORESTRV t1I tEAST PEGU VOMA) - CR-949-8A seonomic Analysis - Ea-t P-nu Yom Pro ipet (K milion in 1987 Constant Prices) .1/ j/ j/ Sawn 2ardwood Lao Exoort Lon Loe-l Sales Local Total Investment Product10n U" Net IncramantAl IaA, barewood Teak Exbort S6ħ31 Benefits Costs Costs bnft 6anafits Vear 0 119.8 9.0 201.0 57.1 - 44.8 511.7 - 69.8 441.9 1 148.0 9.9 492.4 57.7 - 137.4 845.4 10.5 942.4 692.5 250.6 2 241.7 18.8 558.8 31.6 - 168.9 1017.8 54.6 151.8 811.4 369.5 3 198.7 15.6 560.6 39.6 - 196.7 1011.2 71.5 ?L0.8 778.9 337.0 4 362.9 12.9 510.2 30.7 0.4 196.1 1103.2 23.7 152.4 927.) 485.2 S 378.4 11.1 393.6 37.9 - 188.5 1007.7 2S.5 148.S 833.7 391.8 a 284.0 3.0 391.1 28.0 0.4 152.3 658.8 22.0 142.0 694.6 252.9 7 281.8 6.0 252.4 39.4 0.4 150.3 730.3 13.3 117.4 599.6 157.7 8 281.8 18.0 218.5 16.3 0.4 173.4 708.4 - 118.1 590.3 148.4 1 9 211.4 18.0 263.1 16.3 0.4 173.2 682.0 9.0 121.7 551.3 109.4 10 211.4 18.0 263.1 16.3 0.4 173.2 662.0 16.0 121.7 544.3 102.4 X 11 211.4 18.0 263.1 112.9 0.4 135.0 740.8 162.7 105.5 472.6 30.7 12 211.4 18.0 263.1 176.8 0.4 29.2 698.9 (1.8) 98.8 601.9 160.9 13 211.4 18.0 263.1 176.8 0.4 29.2 698.9 (1.3) 98.8 601.4 159.5 14 211.4 18.0 263.1 176.9 0.4 29.2 696.9 - 98.8 600.) 158.2 15 211.4 16.0 263.1 176.8 0.4 29.2 698.9 16.0 98.8 584.1 142.2 l6 211.4 18.0 263.1 176.8 0.4 29.2 698.9 - 98.6 600.1 150.2 17 211.4 19.0 263.1 176.8 0.4 29.2 698.9 4.2 98.8 595.9 154.0 18 211.4 19.0 263.1 176.8 0.4 29.2 698.9 178.7 98.8 421.4 (20.5) 19 211.4 19.0 263.1 176.8 0.4 29.2 698.9 - 98.8 600.1 158.2 20 211.4 1a.0 263.1 176.6 0.4 29.2 698.9 - 98.8 600.1 158.2 21 211.4 18.0 283.1 176.8 0.4 29.2 698.0 - 96.6 600.1 156.2 22 211.4 18.0 263.1 176.a 0.4 29.2 698.9 - 98.8 600.1 158.2 23 211.4 18.0 263.1 176.8 0.4 29.2 698.9 16.0 98.8 S84.1 142.2 24 211.4 18.0 263.1 176.8 0.4 29.2 398.9 - 98.8 600.1 159.2 25 211.4 18.0 263.1 176.8. 0.4 29.2 698.9 20.2 98.8 579.9 138.0 26 211.4 18.0 263.1 176.8 0.4 29.2 698.9 162.7 98.8 437.4 (4.5) 27 211.4 18.0 263.1 176.6 0.4 29.2 696.9 - 98.8 600.1 158.. 28 211.4 18.0 263.1 193.1 0.4 14.5 700.5 (8.5) 97.1 611.9 17(1.0 29 211.4 18.0 263.1 193.1 0.4 14.5 700.5 - 97.1 603.4 161.5 30 211.4 16.0 263.1 193.1 0.4 14.5 700.5 (63.6) 97.1 667.0 225.1 ERR * Over 100% 11 Tables 13 and 14 multiplied by economic price In Table 27. jI Including log transferred to Okkyin and herduood sawlillS outside the projeCt areas. al Table 28. FORESTRY It IEAST PECU VfM I - ER-949-BA Economic Ana -is - Okkwin Teak Sawmill (K million in 1987 Constant Prices) Inyat _ nt Co-t- al Benefi t (Sawtnwood) 1n1 L m/ Total kasa1 a"1 Inarms-nta. hoZu.lament Costs Saw MUlla Lal"A mnIn Al Total 8atis "at sanetits Year 0 - - 10.3 l0.S 20.8 45.8 19.3 65.1 44.3 1 1.2 0.6 15.0 15.3 32.1 61.3 32.5 93.3 61.7 17.4 2 1.4 14.4 14.6 30.4 71.0 36.4 107.4 77.0 32.7 3 0.3 9.5 17.9 16.2 45.9 58.6 27. as5.7 39.0 (4.5) 4 0.4 0.3 22.6 23.2 46.7 89.5 47.6 137.l 90.4 46.1 S - 0.9 20.a 21.3 43.0 77.0 37.7 114.7 71.7 27.4 6 - 0.5 18.2 16.6 37.3 36.1 35.9 122.0 84.7 40.4 7 - 3.6 15.1 15.4 34.1 60.0 25.3 65.3 51.2 6.9 3 - 0.6 21 16.0 16.3 32.9 48.8 43.2 92.0 59.1 14.6 9 - - 16.0 16.3 32.3 48.8 43.2 92.0 59.7 15.4 10 - 9.5 16.0 16.3 41.6 48.8 43.2 92.0 50.2 5.9 1 - 0.3 16.0 16.3 32.6 48.6 43.2 92.0 59.4 15.1 1: - 0.9 16.0 16.3 33.2 48.8 43.2 92.0 53.8 14.5 I - 0.5 16.0 16.3 32.6 48.3 43.2 92.0 59.2 14.9 t4 - 3.6 16.0 16.3 35.9 46.3 43.2 92.0 56.1 11.8 I5 - (5.4) 16.0 16.3 26.9 43.6 43.2 92.0 65.1 20.6 ERA a Over 100S J/ Tealo 10 (Local costs x SCF Of 0.30. equipmnt including duties and taxes (41%). adjusted Into 1967 constant prices by -nog GOP's doflator factors. lsc_ment costs with annual economic life of 7.6 years. Ji I/Mt (Financial costs n SCF). n. /Ht (Financial costs x SCF). 1l Including sawnwood transferred to selling dopota outside tho project area. I4 DURMA FORESTIRY 1 (EAST PECU VONA) - CR 242-pA Econouic Analysis - Tgak Platatjon (K million in 1987 COnstant Prices) Inw_ Fnt Casts Ext-Lact1Ln Total f I ts C1w1 IoekĞ Aar" nt- Ca hi £aaħa L Q aa 1-/ Ea" 1Q/ Not Sang f S YZA r 10.7 3.4 1.3 - 5.4 - - (S.4) 2 2.4 3.9 3.3 - 9.6 - - (9.6) 3 0.7 2.8 4.9 - 0.4 - - (5.4) 4 0.9 2.0 6.3 - 9.2 - - t9.2) 5 0.1 0.1 7.7 - 7.9 - - (7.9) 0 0.2 ./ 0.9 5.0 - 1.6 - - (.6) 7 0.2 - 2.0 / - 2.2 - - (2.2) a 0.2 - 1.4 1.5 3.1 61.1 - 56.0 9 0.2 6.6 3) 0.7 2.9 10.1 68.3 - 55.2 10 0.2 - 0.2 4.2 4.6 71.6 - s6.9 11 0.2 - 0.1 S.6 S.9 75.0 - 69.1 12 0.2 - - 5.8 6.0 75.5 - 69.5 13 0.2 - - 6.6 6.8 76.0 - 71.2 14 0.2 - - - 0.2 - - (0.2) 15 0.2 - - 4.4 4.5 71.9 - 67.3 16 0.2 6.6 - 8.6 15.6 83.0 - 67.4 17 0.2 - - 13.6 13.8 9S.0 - 01.2 o le 0.2 - - 16.6 16.3 107.5 - so.? O 19 0.2 - - 19.4 19.6 109.5 - s9.9 20 0.2 - - 19.4 19.0 109.0 - 19.4 21-22 0.2 - - - 0.2 - - (0.2) 23 0.2 6.5 - - 0.2 - - (0.2) 24 0.2 - - - 6.8 - - (6.6) 25 0.2 - - 7.4 7.6 - 37.8 30.2 26 0.2 - - 17.9 18.1 - 91.4 73.3 27 0.2 - - 28.6 28.8 - 145.7 116.9 26 0.2 - _ 39.8 40.0 - 202.5 162.5 29 0.2 6.6 - 41.2 46.0 - 210.0 162.0 30 0.2 - - 40.7 40.9 - 207.5 16.6 31-34 0.2 - - - 0.2 - - (0.2) 3S 0.2 - - 12.1 12.3 - 61.8 45.S 36 0.2 6.6 - 30.1 36.9 - 153.1 116.2 37 0.2 - - 52.6 53.0 - 244.5 1I9.S 36 0.2 - - 66.4 66.6 - 338.4 271.3 39 0.2 - - 60.6 9.0 - 350.7 261.7 40 0.2 (2.2) - 09.4 66.4 - 348.3 281.- ERR * 39% I/ Assuming 5% of th- investment costs for annual maintenance. I/ Assuming economic life of 7.S years and taking only S0% of total Investment costs for pIlntatlon maintonance and extraction. I/ Maintenance costs (Table 16 x SCF). 41 Estimated at K250 per Mt x SCF for first and s*conod thinning and K4101It for third and fourth thinning (see Table 1S). j/ See Table 8 for production x economic prices In Table 27. If" FORESTRY II tEAST PECU TONAl - C1,49-Sh Plantatlon Progra - Additional Output and snefits of Taungyn Plantation Additionl Outputs of Tau.yh Vmr _s IIE IuICY WROIT SEED YIELD NET YIELD ICE 5IUAU1 KIACM mm Aetual SA Actna) SA* Actual EAS Actuab SAW Mllii ni*e I Mixed tI .0 i 30 20 2t g SO."w a6*.u Igo." Ostten i. - 2 Visa - 70 Vies - Gs Visa - 4S View - 30. Smewaduta .7N .75 So 20 .23 1.25 . 34.0 O." 315 1155.6 Olsas - .03 4 3 4 2.91 n .0 130.00 340 535.00 is this cintere, roalisesbest voters for baule cropping. it Vies a 3.6 p*' d.. 79-S* _o-at s1-32 12-83 03-34 54-35 Banefisial Cultivation It AC 1.020. 3.100 4.700 6.100 6.300 7.200 28.428 UrsahdumI - RlcolCttea AC 610 1.550 2.350 3.050 3.150 3.600 14.210 Ironmut AL 255 7na 1.175 1.525 1.575 1.300 7.165 saga" AC 255 775 1.175 illS 1.5s5 1.300 7.105 B~enef its in K 000. icoelp..ttem x 252.5 767.3 1.163.3 1.509.3 1.557.3 1.752.0 7.034.2 Orosudmt K 294.5 335.1 l.357.1 1.761.4 1.t3.1 2.073.0 1.204-2 Slese a 136.4 414.4 623.6 3t1.9 342. 6 63.3 3.501.t TOTAL K 633.4 2,077.0 3,143.0 4.047.1 4.221.0 4.U24.0 19,341.5 !i Darnd on 2 aersa required pr.r family - 200 (amilies to establish 600-400 acre plautation - or .6 of area planted will be u"der cultivation. it rsabdown a Sig BleelCatten. #4 Gruiandnut and 114 *same. SURLMA FORESTRY 1* tEAST PEGU yOMA) - CR.949-BA geonomic Cost and Benefit Strea-s - Whole Prolect (K million) 2ALE ~~~Coa a Be oneof its a.m Osa.onc £E.ast.Iaai& Dkkvxn TeAb Plantation ot-aa Ea.a.* stEPao Okkvxn Teak Plantation Total IanafLt 0 69.8 20.8 - 90.6 511.7 65.1 576.8 486.2 - 1 152.9 32.1 5.4 190.4 845.4 93.8 939.2 748.8 262.6 2 208.4 30.4 0.6 248.4 1.017.8 107.4 I 125.2 878.8 392.8 3 232.3 45.9 8.4 286.6 1.011.2 85.7 t.096.9 810.3 324.1 4 176.1 46.7 9.2 232.0 1.103.2 137.1 1.240.3 1.008.3 522.1 5 174.0 43.0 7.9 224.9 1.007.7 114.7 1.222.4 997.5 511.3 6 164.0 37.3 1.6 202.9 856.8 122.0 980.8 777.9 291.7 7 130.7 34.1 7.2 167.0 730.3 85.3 815.6 648.6 162.4 8 118.1 32.9 3.1 154.1 708.4 92.0 16.1 8t6.5 662.4 176.2 9 130.7 32.3 10.1 173.1 682.0 92.0 68.3 842.3 669.2 183.0 l0 132.7 41.8 4.6 184.1 682.0 92.0 71.5 845.S 661.4 175.2 11 268.2 32.6 5.9 306.7 740.8 92.0 75.0 907.8 601.1 114.9 12 97.0 33.2 6.0 136.2 698.9 92.0 75.0 866.4 730.2 244.0 s 13 97.5 32.8 6.8 137.1 698.9 92.0 78.0 868.9 731.8 245.6 14 98.8 35.9 0.2 134.9 698.9 92.0 - 790.9 656.0 169.8 15 114.8 26.9 4.6 146.3 698.9 92.0 71.9 862.8 716.5 230.3 16 98.8 15.6 114.4 698.9 63.0 781.9 667.5 181.3 17 103.0 13.8 116.8 698.9 96.0 793.9 661.1 190.9 18 277.5 18.8 296.3 698.9 107.5 806.4 510.1 23.9 19 98.6 19.6 118.4 698.9 109.5 808.4 690.0 203.8 20 98.8 19.6 119.4 698.9 109.0 807.9 689.5 203.3 21 98.8 0.2 99.0 698.9 - 698.9 599.9 113.7 22 98.8 0.2 99.0 698.9 - 698.9 S99.9 113.7 23 114.9 6.8 121.6 698.9 698.9 577.3 91.1 24 98.8 0.2 99.0 698.9 - 698.9 599.9 113.7 25 119.0 7.6 126.6 698.9 37.8 736.7 610.1 123.9 26 261.5 18.1 279.6 698.9 91.4 790.3 510.7 24.5 27 98.6 28.8 127.6 698.9 145.7 844.6 717.0 230.8 29 88.6 40.0 128.6 700.5 202.5 903.0 774.4 288.2 29 97.1 48.0 149.1 700.5 210.0 910.S 765.4 279.2 30 33.5 40.9 74.4 700.5 207.5 908.0 833.6 347.4 1-34 0.2 0.2 - - (0.2) (0.2) 35 12.3 12.3 61.6 61.8 49.5 49.5 36 36.9 36.9 153.1 153.1 116.2 116.2 37 53.0 53.0 244.5 244.5 19I.5 191.5 38 66.6 66.6 338.4 338.4 271.8 271.8 39 69.0 69.0 350.7 350.7 281.7 281.7 40 66.4 66.4 348.3 348.3 281.9 281.9 ERR Over 100$ 01t