Government sets standard selling prices for timber
JAKARTA (JP): The government has set standard selling prices of various forest products destined for export as the basis for calculating the resource royalty provision.
The industry and trade minister said in a decree dated June 8 obtained by the media yesterday that the standard selling prices of timber were calculated by averaging prices on the international and domestic markets.
The new decree also stated that the calculation of the wood standard prices depended on the type of products and their origin.
The standard price for big-diameter logs, such as meranti from Sumatra, Kalimantan, Sulawesi, and Maluku, is US$59 per cubic meter.
Mixed jungle wood with a diameter of more than 30 centimeters is $35 per cubic meter.
Wood from industrial forests have also different standard prices: $7 per ton for pine, $5 per ton for acacia, $3 per ton for balsa, $5 per ton for eucalyptus and $3 for sengon.
The government also imposes various standard prices on fancy woods, such as teak, ebony and sandalwood.
The standard price for teak is $67 per cubic meter, ebony $574 per ton and sandalwood $676 per ton.
All those woods' standard prices will be effective until Dec. 31, 1998.
The decree stated those standard prices would be adjusted periodically to accommodate fluctuations in market prices.
Titus Sarijanto, an expert at the Ministry of Forestry and Plantations, said yesterday that the official standard selling prices were too high compared to the current prices of logs on the international and domestic markets, making it hard for timber companies to export their products.
Meranti logs, for instance, were sold at $125 per cubic meter internationally and Rp 250,000 at home, Titus said.
Last month, the government introduced resource royalty provisions, or rent taxes, on the country's timber companies to replace mandatory forest royalties, as required by the International Monetary Fund (IMF) in exchange for a US$43 billion bailout package.
The imposition of the resource rent taxes aims to protect the environment and eliminate the bias against production for exports.
According to Government Regulation No. 59/1998, dated May 5, forest concessionaires are liable to pay rent taxes, ranging from zero to 6 percent of timber sales.
Concessions
Meanwhile, the director general of forest utilization at the Ministry of Forestry and Plantations, Harnanto HM, said yesterday that the government would work with the IMF to set a new date for the auction of forest concessions and design the best bidding mechanism possible to prevent the concentration of ownership in a handful of big timber companies.
Harnanto said the government would grant no new forest concessions in order to prevent further deterioration of the country's forests.
Therefore, new logging contracts would be limited to areas whose concessions had been revoked by the government.
The auctioning of forest concessions is stipulated in the Supplementary Memorandum on Economics and Financial Policies signed by the government and the IMF last April.
Under the memorandum, Indonesia is supposed to introduce the auction system by the end of this month.
The memorandum said adopting an open bidding system to appoint forest concessionaires would help ensure transparency in the management of the country's forest resources.
Under former president Soeharto's administration, the government awarded forest concessions to certain companies and individuals, mostly Soeharto's cronies, without open tender, which had according to some analysts led to the destruction of forests. (gis)