Forest royalties may be raised this year: Minister<\/p>\n
JAKARTA (JP): Minister of Forestry Djamaludin Suryohadikusumo
\nsaid yesterday that the government is likely to increase forest
\nroyalties in the second half of the current (1996\/97) fiscal year
\nif world prices of forestry products continue to increase.<\/p>\n
Djamaludin said, however, that the royalties will remain the
\nsame for the current fiscal year half starting April 1.<\/p>\n
The government's decision not to increase the royalties, he
\nsaid, was made after calculating earlier this year that the
\nincrease of world plywood prices by about 20 percent last year
\nhad not exceeded the highest price reached in 1994.<\/p>\n
"And because the levels of the royalties are determined, among
\nothers, by price fluctuations on the world market, the government
\ndecided not to increase the royalties for the first half of this
\nfiscal year," Djamaludin told reporters here.<\/p>\n
Strong<\/p>\n
"But if prices remain strong, or continue to rise, we can hope
\nto see forest royalties go up in the second half of the current
\nfiscal year," he added.<\/p>\n
Forest royalties are among the fees that forest
\nconcessionaires must pay in order to operate. The rates of forest
\nroyalties are usually reviewed every six months.<\/p>\n
The last time the government increased forest royalties was
\nlast August, when royalties were raised between 9 and 27 percent
\nto reflect price rises on the world market and inflation.<\/p>\n
The ruling, which was enforced through a ministerial decree,
\nbecame effective between Aug. 1, 1995 and March 31, 1996.<\/p>\n
The government's decision not to increase the royalties for
\nthe first semester of this year will cause the ruling to remain
\neffective until September.<\/p>\n
Djamaludin said yesterday that forest royalties make up 6
\npercent of the price of forest products, which include logs,
\nresin and rattan.<\/p>\n
He said that forest concessionaires must not consider the
\nroyalties as an obstacle to becoming more competitive.<\/p>\n
"Of course, forest concessionaires can only say they will
\nbecome less competitive if their competitiveness depends on the
\nprice of raw materials... But they must learn to see another
\naspect, efficiency, as the main factor determining competitive
\nstrength," he said.<\/p>\n
Djamaludin said that 45 percent of forest royalties currently
\ngo to the local administrations for local forest development, 20
\npercent are paid as land tax, 15 percent go to the central office
\nof the Forestry Ministry for national forest development and 20
\npercent are paid to the state treasurer.<\/p>\n
"In the end, the royalties go back to the forests and are used
\nto secure their sustainability," he said.<\/p>\n
The government in fiscal 1995\/96 collected Rp 430 billion
\n(US$186.96 million) in forest royalties. The provinces which
\ncontributed the most were Central Kalimantan (Rp 95 billion),
\nEast Kalimantan (Rp 87 billion), Riau (Rp 39 billion), West
\nKalimantan (Rp 32 billion) and Irian Jaya (Rp 28 billion).<\/p>\n
Djamaludin said the recent increasing concern for
\nenvironmental and social issues must encourage forest
\nconcessionaires and forest-based industries to be willing to pay
\nmore for forest development.<\/p>\n
"They can't expect to keep seeking higher profits as they did
\n20 years ago, when the government first started issuing forest
\nconcessions to the private sector," he said.<\/p>\n
"Nothing is free. Paying for environmental and social damages
\nthey have caused to the forests must now be seen as a cost, and
\nno longer a voluntary contribution," he said.<\/p>\n
Djamaludin said the government can now monitor the companies'
\nactivities by checking on their balance sheets which must comply
\nwith the special standard accounting method for forestry-based
\ncompanies. The method was introduced last year.<\/p>\n
The government presently requires forest concessionaires to
\ncarry out a number of social and environmental activities in
\norder to continue operating. Such activities include "social
\nforestry" projects in which local people must be involved in the
\nconcessionaires' activities. (pwn)<\/p>",
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