Forestry ministry to auction logging rights next month

JAKARTA (JP): Minister of Forestry and Plantations Muslimin Nasution said on Friday that his office will auction next month concession rights to carry out logging activities in a number of forest blocks in the country.

Muslimin said the logging rights on offer would be those which formerly belonged to companies which had been suspended for breaching logging regulations and failing to manage their concessions in a sustainable manner.

"My team is still preparing the names of the timber companies and cooperatives which qualified to participate in the auction. We will be ready to hold the auction next month," he was quoted as saying by Antara news agency.

He said that the auction would mark a change in the government' policy in granting forest concession rights to investors. At present, companies which are allowed to carry out logging operations, are directly appointed by the government.

Under the new regulation, each concessionaire would be limited to owning a maximum of 100,000 hectares of forest in a province.

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

Plantation companies, except sugar cane plantations, would 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.

Muslimin said that the timber companies which obtain the contracts through the open bidding system would be obliged to give a one-year guarantee bond to ensure that the forests will be managed in a sustainable manner.

"If they fail to manage the forests in a sustainable manner, their logging contracts will be revoked," he said.

Indonesia earlier planned to introduce the auction system for forest concessions by the end of July to comply with reform agenda agreed with the International Monetary Fund (IMF).

But the plan was rescheduled until the end of this year.

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

At least 422 private companies are currently involved in logging activities on 51.5 million hectares. But most of the companies are operating under just 14 leading business groups. (gis)