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)