3 million hectares of forest will be auctioned to public

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)