Government loses US$4.39m though forestry loopholes

JAKARTA (JP): The government plans to require forest concessionaires to undergo official assessments of their logging activities to make certain they are paying their forest royalties and reforestation fees, a minister says.

Minister of Forestry Djamaludin Suryohadikusumo said after installing forestry officials yesterday that under the current self-assessment mechanism, many concessionaires have been able to avoid paying the mandatory forest contributions.

Financial losses caused by unpaid fees, according to a Supreme Audit Board calculation earlier this month, reached Rp 2.76 billion (US$1.2 million) in forest royalties and US$3.19 million in reforestation fees during the first semester (April-September period) of 1994-95 alone.

"I think it is time for the self-assessment system to be revised," Djamaludin said.

The self-assessment system, he said, has loopholes which enable concessionaires to escape from paying forest fees and to mark down the amount of their logging activities. It also encourages the illegal felling and marketing of timber.

Djamaludin said that in the future, only large concessionaires with their own processing plants and a "good reputation" -- endorsed by the ministry's local offices -- would be allowed to conduct self-assessments and complete logging documents by themselves.

"The government may have to select which companies need official assessment and which do not," he said.

According to government regulations aimed at maintaining forest sustainability, forest concessionaires must pay reforestation fees at a range between $10.50 and $20 per cubic meter of logs felled and pay forest royalties of up to $255,000 per ton depending on the type of wood.

The self-assessment mechanism, Djamaludin said, is based on trust and is meant to reduce contact between government officials and the private sector because "the more contact is made, the larger the chance of collusion".

However, he admitted that the government has failed to keep a close eye on the implementation of the self-assessment system, allowing companies to make too many "mistakes".

Djamaludin cited cases where companies declared a shipment of 50 cubic meters of wood in their documents, while actually shipping 200 cubic meters.

"These things happen not only because the government has failed to keep an eye on the system, but also because the system enables them to carry out such fraud," he said.

Djamaludin said a new assessment system would be discussed in an upcoming coordination meeting involving related ministries.

Calculation

Although he declined to give his own figures for the amount of losses caused by the present system, he pointed out that they could be calculated by comparing the trees being felled and the sum of forest royalties and reforestation fees collected.

"If felling has gone up by 30 percent and the fees by only 20 percent, we can say that there is a fraud of 10 percent in the tree felling," he said.

Djamaludin explained that according to regulations, logging activities can be conducted not only by concessionaires -- whose concessions can be revoked by the government -- but also by holders of companies holding wood-utilization permits.

Holders of such permits are required to submit a bank guarantee before they can conduct logging activities, which, he said, gives the government a certain degree of control.

The officials installed by Djamaludin yesterday included Bambang Soebijantoro, who was appointed as the new marketing director of the state-owned Perhutani forestry company, Efendi Bachtiar Hasnan as commissioner of PT Inhutani II; Sumahadi as chief commissioner of PT Inhutani IV, as well as M. Arie Soedarsono and Kamil Sjoeib as commissioners of PT Inhutani IV.

Oetomo S. was installed as chief commissioner of PT Inhutani V, Waskito Surjodibroto and Nur Indiarto as commissioners of PT Inhutani V, and Toga Siallagan and Idar Effendi Salam Nasution as instructors at the Ministry of Forestry's education and training division.(pwn)