The wood processing industry in Riau, including sawmills and molding firms, is on the brink of collapse due to a scarcity of raw material supplies, said the head of Riau's Indonesian Wood Community (MPI), Hotman Butar-Butar.
Hotman said on Wednesday that wood supplies were falling because many forest concession holders were involved in rampant illegal logging practices in the province.
"The (illegal logging) cases involving a number of forest concession holders are being investigated by the Riau Police," he said.
"There is no clear information as to when the investigation will be completed. The problem is that we depend heavily on them."
Hotman said nearly half of the 150 sawmills registered at MPI had stopped operations and "similar hardships" were affecting 35 registered molding firms in the province.
Nearly 30 percent of 35,000 workers employed at the wood processing industry had been laid off, he said.
"If the log scarcity prevails until next month, more companies will go bankrupt and thousands of other workers will be jobless."
Hotman further said since January 2007 the Riau Police had frozen some 175,000 hectares of forests owned by 18 forest concessionaires.
He said the "problematic causes" that led to the forests being frozen included the extension of logging licenses, annual working plans and unlicensed machinery.
Jhony Setiawan Mundung, head of the Riau office of the Forum for the Indonesian Environment (Walhi), said he deplored the slow pace at which police investigations took place around illegal logging cases.
He rejected an opinion which said freezing forest concessions would cause an increase in unemployment in the sector.
"It was just disclosed by a man who is in need of wood in a large quantity," Mundung said.
A report by WWF conservation group released Wednesday said that Riau province had lost 65 percent of its forests in the past 25 years as companies used the land for pulpwood and palm oil plantation.
Indonesia has one of the highest rates of deforestation in the world, driven by voracious demand for commodities and weak law enforcement.
Emissions from deforestation, and in particular peatland -- which is made up of deep layers of semi-decomposed vegetation -- have made Indonesia the world's third-largest carbon emitter, behind the United States and China.