Concession limits not to affect existing deals

Concession limits not to affect existing deals

JAKARTA (JP): Minister of Forestry and Plantations Muslimin Nasution said on Tuesday a government plan to limit the amount of state forests controlled by individuals and companies would not affect existing logging contracts.

Muslimin said the government would honor all of its existing logging contracts but warned he would revoke any permit held by concessionaires found to be violating logging and forest management regulations.

"We will honor all the existing contracts, but after they expire new contracts will be proffered based on the new regulation," Muslimin said in a weekly news briefing.

Muslimin said each concessionaire would be limited to own a maximum of 100,000 hectares of forest in a province under the new regulation, now being prepared by the government.

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

He said plantation companies, except sugarcane plantations, would be not be allowed to manage more than a total of 100,000 hectares of land, with a limit of 20,000 hectares in each province.

"The restriction is aimed at giving equal business opportunities to Indonesian businesspeople, including cooperatives and small businesses," he said.

But, he said, the restrictions would be flexible, based on the areas and the commodities planted.

"For example, tea or coffee plantations need smaller areas than oil palm plantations, while sugarcane plantations need up to 150,000 hectares nationwide. The details of the plan are still being prepared."

Muslimin said the country's forest concessions were currently controlled by a handful of business groups, which managed logging contracts for millions of hectares of forests.

"Such a scale of forest control is not fair and has forced the government to reexamine its policy to increase forest management efficiency," he said.

At least 422 private companies are currently involved in logging activities on 51.5 million hectares. Most of them are operating under just 14 leading business groups.

According to ministry data, Kayu Lapis Indonesia Group, owned by Hunawan Widjajanto, is the country's largest forest concession holder. It controls 3.5 million hectares of forest, while Burhan Uray's Djajanti Group comes in at a distant second with 2.9 million hectares.

Prajogo Pangestu's Barito Pacific Group controls 2.7 million hectares and Mohamad "Bob" Hasan's Kalimanis Group manages 1.6 million hectares.

The country's six state forestry companies -- the five PT Inhutani companies and Perum Perhutani -- oversee logging operations spread over approximately 2.3 million hectares.

The government first began to award forest concessions to private companies through a 1971 forestry Law, which grants concessionaires the sole right to carry out logging operations in their concession areas.

Abbas Adhar, the chairman of the Association of Indonesian Wood Panel Producers (Apkindo), said separately on Tuesday the government's new restriction plan threatened existing timber companies.

Limits on forest concessions would hurt operations of the country's wood-processing industry, he said.

Most of the country's wood-processing plants, set up to meet a government requirement that timber companies or forest concessionaires operate their own processing facilities, would face acute shortages in raw material should the regulation be put in place, he argued.

Speaking at a hearing with the House of Representatives Commission III for agriculture, forestry, transmigration and food affairs, Abbas said most timber companies owned wood-processing facilities in their concession areas.

He said, for example, the Barito Pacific Group had a plywood industry with an annual production capacity of 1.5 million cubic meters. The group controlled a large concession area because its plants needed a huge supply of logs.

"The government plan is good but it shouldn't force plywood producers to suffer from a scarcity of logs," he said.

Speaking at the same hearing, Adi Warsita Adinegoro, chairman of the Association of Indonesian Forest Concessionaires, urged the government to base its limits on each area's yield potential since the country's forests differed significantly. (gis)