Tuesday, 28 July 2009

New Rule to Add Indonesian Timber Revenues To Government Coffers

July 28, 2009

Arti Ekawati The Jakarta Globe

The Ministry of Forestry is preparing a regulation requiring that all timber cut while clearing forest land for commercial use be auctioned by the central government, with the total proceeds going into the state treasury, a ministry official said on Monday.

The plan is aimed at illegal logging by companies who are awarded permits to clear forest land for plantations and other commercial ventures, but who abandon the land after clearing it and sell the valuable timber while paying only small fees to the government.

“It has been the subject of internal discussion at the ministry, and we plan to enact the regulation soon,” Masyhud, the ministry’s head of information, told the Jakarta Globe.

Masyhud said the government earned only small fees for reforestation and forest royalties, while the companies had the right to sell the valuable timber they cut while clearing the land.

“What the government earns from those fees is very insignificant considering the value of the timber [the companies] sold,” Masyhud said.

The ministry’s plan appeared to take some in the industry by surprise.

David, the vice chairman of the Indonesian Forest Entrepreneurs Association, said the ministry should first hold public hearings before implementing a new regulation.

“Some companies might oppose the regulation because they probably think it will reduce their income from selling timber,” he said.

“Each regulation has its own positive and negative effects,” said David, who goes by one name.

“Therefore, all the forestry stakeholders including the government, [nongovernmental organizations] and businessmen, need to sit down and discuss it.”

Elfian Effendi, executive director of the NGO Greenomics, said he supported the regulation as a way to prevent illegal logging. He said some companies operated with criminal intent, securing permits to open plantations in forest areas but abandoning the proposed projects after cutting down and selling all the timber.

“Of course, not all companies do such things, but I think the regulation will be good to avoid the repeated” offenses, Elfian said.

Under current regulations, the government receives only 17.5 percent of the total value of the timber cleared from newly opened forests, while the companies keep 82.5 percent, Elfian said.

Data released by Greenomics showed that 17.5 percent of the 4.6 million hectares of forest nationwide that was released by the Ministry of Forestry for creating plantations was abandoned after being cleared of timber.

“We urge the government to seek answers from the companies as to why they’re abandoning their land,” Elfian said.

He noted that the government planned to soon release an additional 4.2 million hectares of forest for plantation development.