Government mulls tax incentives for timber estates

Government mulls tax incentives for timber estates

JAKARTA (JP): The minister of forestry, Djamaluddin
Suryohadikusumo, said yesterday he was looking at tax incentives
to encourage investors to develop industrial timber estates.

"We are considering an incentive allowing industrial timber
estates to delay the payment of their property tax until they
fell the trees they have planted," the minister said after
opening a national ministry workshop.

Djamaluddin said a delay in property tax payment would reduce
financial burdens and was necessary to encourage concessionaires
to speed up the planting of trees because log production in
natural forests was declining.

He said the government had allocated part of its reforestation
funds for interest-free loans to concessionaires to encourage the
development of industrial estates.

"It is not feasible for concessionaires to develop industrial
timber estates, which need 10 to 20 years before they can be
harvested, with commercial loans from banks with interest rates
of up to 20 percent per annum," he said.

The loan facility might help concessionaires halve their
financial costs, he said.

The minister said the development of industrial timber estates
outside Java during the past three years had risen 899,411
hectares to 2.02 million hectares.

Of this 811,679 hectares was for pulp wood, 718,903 hectares
for furniture wood and 200,314 hectares had been developed in
cooperation with transmigrants, he said.

Indonesia has about four million hectares of planted forests.

Java has 2.1 million hectares of industrial timber estates of
which 1.097 million hectares are hardwood forests and 1.004
million hectares lumber tree forests.

Djamaludin said wood procurement from natural forests had
dropped 22.5 million cubic meters a year in the current Sixth
Fire-year Development Plan from 31.4 million cubic meters a year
during the previous development plan.

"We expect the production will decrease further to 20 million
cubic meters a year in the Seventh Five-year Development Plan,"
Djamaludin said.

Illegal timber cutting, overcutting by concessionaires, the
conversion of natural forests to non-forest facilities like palm
oil plantations and population expansion caused the decline, he
said. (10)