Fuel price hike blamed for logging industry troubles

Rusman, The Jakarta Post, Samarinda

The timber industry in East Kalimantan is on the brink of collapse due to rising production costs and a lack of raw materials, an executive with a timber firm association says.

Taufan Tirtamana, the secretary of the Indonesian Timber Firm Association (APHI), said the government must intervene to save the industry, otherwise thousands of workers would lose their jobs.

Taufan blamed the fuel price hike on Oct. 1 for the rising production costs. "The higher fuel price has burdened a lot of timber firms, leading to slow business in timber sales and production here," he said. These companies consumed significant amounts of fuel during wood processing and transportation.

The second problem was the government policy to cut legal tree felling quotas in East Kalimantan, Taufan said. Last year, the government allowed 1.5 million cubic meters of timber to be felled in the province, but this year, the quota was reduced to 1.4 million, leading into lack of raw materials for mills.

The national crackdown on illegal logging is also likely to have affected business.

Demand for logs reaches about 8 million cubic meters a year and firms now seeking logs outside East Kalimantan have only incurred increased transportation expenses.

Taufan called for the government to subsidize fuel for timber firms and increase the quotas for logged timber.

Meanwhile, the East Kalimantan manpower office estimated some 54,000 people worked in the forestry, milling and transportation industries.

Some 4,200 workers were laid off last year with 1,200 losing their jobs so far this year.

Suriansyah, 34, was one of those unlucky workers. He had still not received the severance pay he was legally entitled to, despite working for his company for several years.

"The workers understand the timber industry is still in the doldrums, but we badly need severance pay to continue living," Suriansyah said.

A migrant from East Java province, Suriansyah has been joining protests about the issue since last week. He is planning to set up a small restaurant back in East Java if he gets paid out.