Agency Urges New Sawmills

The country's forestry chief on Tuesday said Finland and other countries should build sawmills in Russia before export tariffs for unprocessed timber skyrocket in 2009.

"We've announced our rules of the game, now it's time for them to think," Valery Roshchupkin, head of the Federal Forestry Agency, told reporters. "Finland should hurry to create joint ventures while resources are available in accessible areas of Russia."

Export tariffs for unprocessed timber rose in July, and will jump to as much as 80 percent of the value of exported timber in 2009, doubling the cost of wood for Finnish companies. Finland buys about 20 percent of its wood from Russia. If foreign companies do "at least minimal processing" of wood here, they will be exempt from the tariff hike, Roshchupkin said.

The government raised tariffs to shore up industries such as wood processing and manufacturing as it tries to reduce the economy's dependence on oil and gas exports. Russia exports about 30 percent of the 186 million cubic tons of timber it logs annually.

The government is offering to build roads to logging sites for companies that build sawmills in the country as well as a 50 percent discount on logging rights and tax benefits. Building projects must have a minimum value of about 300 million rubles ($12.2 million) and receive government approval to qualify, Roshchupkin said.