3 million hectares of forest will be auctioned to public

JAKARTA (JP): The government will auction to the public next month a number of concession rights to carry out logging activities in three million hectares of the country's forests, a senior official of the ministry of forestry and plantations has said.

Director General of the Utilization of Production Forests Waskito Soerjodibroto said the ministry will also give another three million hectares to cooperatives and small scale businesses.

"Insya Allah (God willing), the auction will be held in January. We are currently preparing the names of the timber companies and cooperatives which qualified to participate in the auction," he said after a breaking the fast gathering on Wednesday.

He said that the logging rights on offer would be those which formerly belonged to companies whose licenses had not been extended after expiry or those that had been suspended for breaching logging regulations and failing to manage their concessions in a sustainable fashion.

Waskito said that the auction would mark a change in the government's policy in granting forest concession rights to investors. At present companies those which are allowed to carry out logging operations are directly appointed by the government.

Under the new regulation, each concessionaire would be limited to a maximum of 100,000 hectares of forest in a province.

Concessionaires will be allowed to manage other forest areas in other provinces, but the total area under their management could not exceed 400,000 hectares.

Waskito said that the ministry has calculated that there will be around nine million hectares of forests whose logging contracts have expired or been suspended as of next year.

However, he said, the government's initial assessment showed that only 6 million hectares are still operable.

"So, there will be three million hectares to be offered to the general public through auction, while the remaining three million hectares will be granted to cooperatives and small scale companies," he said.

Waskito said that the forest area to be granted to each cooperative and small scale business would be limited to 50,000 hectares, while those to be auctioned will range between 50,000 and 100,000 hectares each.

Logging contracts for areas below 10,000 hectares will be given to cooperatives and small scale firms by the governor of the particular province as part of the government's effort to give local administrations greater autonomy in managing the country's forest assets, he added.

"Local cooperatives which apply for a logging contract should hold a recommendation from the governor," he said.

Waskito said that the bidding prices of the logging contracts will be dependent on each area's yield potential.

Waskito said that some of the forest areas controlled by big timber groups such as Kayu Lapis Indonesia (KLI), Barito Pacific Group, Kalimanis Group and Djajanti would be included among those offered to the public.

According to the minister's data, the KLI Group owned by Hunawan Widjajanto is the largest forest concession holder. It owns 3.5 million hectares of forest concession areas in the country, followed by Burhan Uray's Djajanti Group with 2.9 million hectares, Prajogo Pangestu's Barito Pacific with 2.7 million hectares and Mohamad "Bob" Hasan's Kalimanis with 1.6 million hectares.

Indonesia earlier planned to introduce the auction system for forest concessions by the end of July to comply with reform agenda agreed with the International Monetary Fund (IMF).

But the plan was rescheduled until the end of this year.

The government first began to award forest concessions to private companies in 1971 under the auspices of the Forestry Law which grants concession holders the sole right to cultivate and exploit the forest in their concession areas.

The move has led to a concentration of the country's forest assets in the hands of a small number of business groups.

At least 421 private companies are currently involved in logging activities on 51.5 million hectares. But most of the companies are operating under just 33 leading business groups.

Meanwhile, Minister of Forestry and Plantations Muslimin Nasution said separately on Wednesday that his office was facing difficulties in fully enforcing the new regulation.

He said the logging contracts owned by several timber companies under these leading business groups have allegedly been extended before their expiry date. (gis)