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)