Govt may set up alternative forestry financing<\/p>\n
Annisa S. Febrina, The Jakarta Post, Jakarta<\/p>\n
With the goal of helping the ailing forestry industry, the
\ngovernment plans to set up an independent financing institution
\nto revitalize and support timber-processing companies with fresh
\nfunds.<\/p>\n
"The alternative financing institution will help provide the
\nmuch-needed funding to revamp the industry's aging machinery,"
\nMinistry of Forestry director general of forestry production
\ndevelopment Hadi Pasaribu said on Thursday.<\/p>\n
Aging machinery is the reason for inefficiency in most timber-
\nprocessing firms and most of the equipment is not suited for the
\nincreasingly smaller logs produced nowadays, Hadi explained.<\/p>\n
The forestry ministry announced earlier in its assessment of
\nthe national timber industry that only 14 out of 140 registered
\ncompanies showed fairly good financial and environmental
\nperformance.<\/p>\n
However, most of the 14 best performing companies had an
\nefficiency rate of some 50 percent, a joint study from
\nenvironmental group Greenomics and Indonesian Corruption Watch
\n(ICW) revealed.<\/p>\n
A timber processing company with an efficiency rate of 50
\npercent can only process half of the raw material it consumes,
\nleaving the rest as waste.<\/p>\n
The same resource-based industry in developed countries,
\nutilizing a newer generation of machinery, produces almost zero
\nwaste.<\/p>\n
Hadi said that replacing the machines would cost millions of
\ndollars.<\/p>\n
Unfortunately, banks are reluctant to provide loans due to the
\nindustry's notorious environmental image, Greenomics executive
\ndirector Elfian Effendi said previously.<\/p>\n
"We have had discussions with the World Bank to help provide
\nthe starting fund through soft loans," Hadi added.<\/p>\n
The bank's environmental division head was unavailable for
\nconfirmation on Thursday.<\/p>\n
Other sources of startup funds will come from the ministry's
\nforest rehabilitation funds, estimated to reach Rp 5 trillion
\n(around US$500 million) this year. The forestry ministry collects
\na certain percentage of revenue quarterly from timber-processing
\ncompanies to rehabilitate natural forests.<\/p>\n
However, the reallocation of the fund will still need the
\napproval of the House of Representatives.<\/p>\n
The setting up of the financing institution is part of the
\ngovernment's effort to revitalize its forestry industry.<\/p>\n
However, aside from solving the problem of financing, the
\ncompanies themselves must made a commitment to restructure their
\nbusinesses, Minister of Forestry M. S. Kaban said.<\/p>\n
"They will have to start thinking about inviting investors and
\nseeking alternative materials to timber," Kaban said, pointing to
\nChina and Malaysia that have begun using bamboo and other
\navailable resources.<\/p>",
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"sponsor": "Okusi Associates",
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