Apkindo protests logging quota cut

Tony Hotland, Jakarta

Local logging industry players are objecting to the government's decision to cut the logging quota again for next year, saying the decision could leave the domestic timber industry hanging by a thread and that it will be ineffective in protecting the natural forests.

Indonesian Wood Panel Association (Apkindo) chairman Martias said that the decision would not be able to protect the forests unless the government acted aggressively against uncontrolled and widespread illegal logging, which they argued was the main reason for the rapid destruction of the country's forests.

"The decision means less raw materials and a higher production cost for the industry, leading to the shut-down of companies, while at the same time illegally cut will logs continue to flood the market," he told The Jakarta Post on Monday.

"And at the end of the day, the quota cut will lead to more layoffs as more companies will have to close and dismiss their employees en masse. This, in turn, will result in the decrease in export volume and value," he added.

Last week, the government announced a further cut in the logging quota from natural forests at 5.45 million cubic meters for 2005, down from 5.74 million cubic meters this year. In 2003, the quota was at 6.98 million cubic meters, far from 12 million cubic meters in 2002.

The gradual quota decrease is part of the government's efforts to protect the nation's rapidly diminishing natural forests. It has been predicted that in the next decade, the quota will be down to just 2 million cubic meters per year.

Martias said that there were only 70 plywood companies left in the country, from 115 a few years ago, and not all of them were operating at full capacity for various reasons, most notably, a shortage of their most basic raw material -- wood.

He predicted that plywood exports, which used to be a major foreign exchange earner for the country a decade ago, would drop to less than four million cubic meters this year, from the 4.5 million cubic meters in 2003 and 5.5 million cubic meters in 2002.

He called on the central government to sit down with local administrations and the businesspeople to discuss how to restructure the forestry industry and how to keep it running and sustainable.

While announcing the new logging quota, the government urged the industry to import logs or to procure them from industrial timber plantations (HTI) to alleviate the raw material shortage.

Martias however dismissed the proposal as implausible given the problems confounding the existing HTI investors and the reluctance of new investors to enter the sector.

"Many HTI investors are dealing with legal uncertainties and cash shortages due to the government's lack of coordination with local administrations. And new investors are reluctant to invest in the sector because their is too much risk," Martias argued.

He explained that today, securing an HTI license from the central government did not guarantee it would be able to operate on the designated land because the local people might prevent them -- usually with mass demonstrations and/or road blockades -- from entering the concession.

They concluded that the only way to attract new investment in the HTI sector, was for the government to provide investors with absolute certainty by improving law enforcement.