Forestry ministry rejects WB plan as unrealistic

Forestry ministry rejects WB plan as unrealistic

JAKARTA (JP): Minister of Forestry Djamaludin Suryohadikusumo said yesterday the government could not meet a World Bank proposal on the increase of mandatory forest royalties because its implementation would hurt the domestic market.

Djamaludin said that any increase in the royalties would force timber prices to go up. "And if local people and domestic consumers can not afford the new price, they will go after cheap, illegally-cut timber," he told reporters.

Djamaludin was responding to the World Bank's recent country report on Indonesia, which recommended, among other things, that the government should raise forest royalties as a way to gain more revenue.

The bank, according to the report, considered that the current royalties, which average at about US$22 per cubic meter, are significantly below the estimated difference between world and domestic log prices -- currently about $90 per cubic meter -- with actual collections even lower.

The bank considered that the royalties could be raised to over $50 per cubic meter, to correspond with the ratio of public to private revenues from oil.

To guarantee environmental sustainability, the World Bank also suggested that the government change the forest concession system, which currently gives concessionaires a 20-year operating period, and require more transparency in forest management.

A lack of transparency, the report said, has led to irresponsible forest management.

Djamaludin said that even with the current royalties, domestic customers, particularly local, low-income buyers, could not afford to buy legally-cut wood.

"Legally cut wood -- whose royalties, reforestation funds and other requirements have been paid for -- now costs about Rp 300,000 (US$130) to Rp 400,000 per cubic meter... This is already too much for a farmer or teacher's earnings," he said.

But he pointed out that forest royalties are reviewed every six months to reflect the current inflation rate and world market prices. The last time the government increased forest royalties was last August, when royalties were raised by between 9 and 27 percent.

Forest royalties and reforestation funds are among the mandatory fees that concessionaires must pay to guarantee that forests are managed in an environmentally-sound manner. The payment of the fees also determines whether or not a concessionaire can continue its operations.

Extension

Responding to the World Bank's suggestion to extend the current 20-year concession period, Djamaludin said such a change could not yet guarantee better forest management.

"In developed countries, where there is sound environmental awareness and responsibility, there is a positive correlation between longer concession periods and better forest management. But in our business society particularly, such an awareness is still questionable," he said.

"I know this because I deal with them everyday. Extending concession periods at this time, I believe, may actually harm forests even more," Djamaludin added.

He said his office would consider all of the World Bank's recommendations, but insisted that whatever it did would be in line with Indonesia's national interest and in favor of the people.

Under the government's most recent forest regulations, he cited, concessionaires are subject to a five-year government check-up and assessment.

"After five years, we can determine whether a concession is feasible enough to continue or not," he said.

Previously, a concession was assessed only when it had almost ended its 20-year concession period. (pwn)