43 timber firms seek licenses to export logs

JAKARTA (JP): Forty three timber companies have applied to the Ministry of Forestry and Plantations for licenses to export logs as a result of weak demand on the domestic market, an official said on Tuesday.

The director for forest supervision at the ministry, Wolter Nababan, said the 43 companies planned to export a total of 1.6 million cubic meters of logs.

However, the ministry has thus far issued licenses to only 12 companies which will allow them to export a total 600,000 cubic meters of logs, Nababan was quoted by Antara as saying.

In June, as part of an agreement reached with the International Monetary Fund (IMF), the Indonesian government replaced a technical ban on log exports with a 30 percent export tax and has said it will cut this tax to 20 percent by the end of the year.

Nababan said the 12 timber companies which had received log export licenses included Djajanti Group and Mudjur Timber.

Djajanti has shipped 12,000 cubic meters of logs to India, while Mudjur has not yet made use of its license, despite having obtained it before Djajanti.

Djajanti, owned by Burhan Uray, is the country's second largest forest concessionaire. Together with its sister company Budhi Nusa Group, the company controls 2.95 million hectares of forest in Irian Jaya, Maluku and Central Kalimantan.

Nababan believed there was not a big demand for Indonesian logs on the export market because of doubts over the continuity of supply from the country.

Foreign buyers believe that Indonesian log exports will be of a temporary nature given the current weak demand on the domestic market as a result of the economic crisis. They believe exports will dry up once the country's economy returns to normal and the timber industry here revives.

"There are currently a lot of unsold logs in Indonesia and it's better to export them rather than leave them to rot here," Nababan said.

"After all, the exports generate foreign exchange earnings which Indonesia needs very much under the present circumstances," Nababan said, adding that about 5 million cubic meters of logs could be exported in the current 1998/99 fiscal year.

Nababan said log exports would only be used as a short term emergency measure during the crisis, adding that the government had no intention of promoting the trade in the long term. (jsk)