Investment in forestry, plantations at zero level<\/p>\n
JAKARTA (JP): Virtually no new money has entered the forestry
\nand plantation sectors the past two years because potential
\ninvestors have been frightened off, an executive said on Tuesday.<\/p>\n
Agribusiness Club secretary-general Tony Kristanto said the
\ncountry's questionable security and the government's unfavorable
\ninvestment policies combined to make investors hesitant to enter
\nthese sectors.<\/p>\n
He said government regulations requiring investors to include
\nthe local community in the ownership of plantations and forestry
\nestates were certainly discouraging.<\/p>\n
This regulation, in addition to the uncertainty surrounding
\nthe security situation in the country, has deterred potential
\ninvestors, according to Tony.<\/p>\n
\"I think foreign investors will not enter these sectors until
\nsecurity is established and the government is willing to review
\nunfavorable regulations,\" he was quoted as saying by Antara news
\nagency during a dialog on the forestry industry hosted by Harvest
\nInternational.<\/p>\n
Director General of Plantations Agus Pakpahan acknowledged the
\ncountry had seen a drop in new foreign investment in the forestry
\nand plantation sectors. However, he said the decline was mainly
\nthe result of foreign investors having difficulty securing soft
\nloans to finance their investments, not due to changes in the
\ngovernment's investment policies.<\/p>\n
He did not provide any figures on foreign investment in the
\nforestry and plantation sectors.<\/p>\n
In the view of most foreign investors, the policy requiring
\nthem to involve local residents in the ownership or management of
\nplantations and forestry estates is a setback.<\/p>\n
The current regulation requires timber companies to sell at
\nrelaxed terms at least 20 percent of their shares to
\ncooperatives, hand over its plantation or factory to local
\nresidents after the company's concession period has ended and
\nallocate a certain portion of their concession areas for locals
\nto work on.<\/p>\n
The regulation was issued early last year as part of the
\ngovernment's effort to provide local communities an equal
\nopportunity to manage forest assets. According to the government,
\nthe involvement of local communities would help reduce conflicts
\nbetween companies and residents.<\/p>\n
A number of timber firms have been involved in heated disputes
\nwith local residents over ownership of the forest since Soeharto
\nwas toppled from the presidency in 1998.<\/p>\n
Some residents have carried out illegal logging in companies'
\nconcession areas, while others have gone so far as to seize
\ncontrol of entire areas in their efforts to receive some sort of
\ncompensation from timber companies.<\/p>\n
A number of foreign investors in the plywood industry have
\nreportedly delayed contracts with local timber companies due to
\nconcern over the conflicts.<\/p>\n
Over 50 timber companies in Irian Jaya, Kalimantan and
\nSulawesi were forced to halt their logging operations due to
\nuncertain security and continued threats from locals.<\/p>\n
Tony said the government should establish a profit-sharing
\nmechanism in which timber companies would distribute a share of
\ntheir revenue to local residents in return for their contribution
\nto the companies' operations.<\/p>\n
Agus, however, insisted the existing regulations were fine and
\nthat his office had not received any complaints from foreign
\ninvestors.<\/p>\n
He also said the government's policy was to protect the
\nwelfare of residents living near plantations and forestry
\nestates.<\/p>\n
Foreign investment projects must be able to bring benefits to
\nthe locals, Agus said. \"Investment is important, but people's
\nwelfare is much more important.\" (cst)<\/p>",
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