Forestry concessions to be auctioned

JAKARTA (JP): The government, for the first time, will auction three forest concessions in East and Central Kalimantan early next month.

Director General of Forest Utilization Waskito Soerjodibroto said the concessions averaged 50,000 hectares to 100,000 hectares each.

Their durations have lapsed or they were taken over by the government from errant holders.

"We will announce the names, the locations and the acreage of the concession rights to be auctioned after the Idul Fitri holiday," Waskito said at a breaking-of-the-fast gathering on Wednesday.

"We plan to auction two or three logging rights per month."

Waskito, whose office is under the forestry and plantation ministry, said auctions would be open to all, including cooperatives, private or state timber companies, which met requirements.

Prospective bidders will be obliged to provide a performance bond or bank guarantee in an amount commensurate with the potential yield of each area.

The bank guarantee is necessary to ensure companies or cooperatives pay their reforestation funds and forest royalties, he said.

Waskito said prospective bidders should submit their applications to him in his capacity as the head of the tender committee.

"The bidder's application should reveal at least two things, namely the technique it will use in managing the forests and the bidding prices."

Waskito said the ministry's preferred prices would be based on the forest's potential yield -- factoring in the number of trees and current prices of logs -- and the forest's function, including as a water catchment area and biodiversity.

"After announcing the names of the bidders who meet our requirements, we will brief them on the auction's mechanism and bring to see the forest areas directly in late February."

The auction is a marked shift from the government's customary policy in granting forest concessions.

It 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 led to a concentration of the country's forest assets in the hands of a small number of business groups.

During the 32-year presidency of Soeharto, the government granted unlimited acreage to private investors, most of whom were kin or cronies of the ruler.

Under President B.J. Habibie's administration, each concessionaire will be limited to a maximum 100,000 hectares in a province.

Although concessionaires will be allowed to manage forest areas in other provinces, the total area under their management cannot exceed 400,000 hectares.

Waskito predicted that next year there would be about nine million hectares whose logging contracts expired or were suspended.

The government's initial assessment showed six million hectares of the total were still operable.

"Of the six million hectares, three million hectares will be offered to the public through auction, while the remaining three million will be granted to cooperatives and small scale companies."

He said some forest areas controlled by major timber firms, such as Kayu Lapis Indonesia, Barito Pacific Group, Kalimanis Group and Djajanti Group, would be included among those offered to the public.

The government earlier planned to introduce the auction system by the end of July last year in compliance with the reform agenda agreed to with the International Monetary Fund.

It was subsequently rescheduled to the end of 1998.

At least 421 private companies are involved in logging activities on 51.5 million hectares, but most of them operate under 33 leading business groups. (gis)