Government to guarantee log supply in domestic market

Government to guarantee log supply in domestic market

JAKARTA (JP): The government will ensure that the scraping of
a restriction on log exports will not cause a shortfall here, a
minister said yesterday.

Minister of Forestry Djamaludin Suryohadikusumo said that he
and Minister of Industry and Trade Tunky Ariwibowo would work
together to guarantee there was a sufficient supply of logs.

"We will find the best way to avoid timber companies from
overexploit our forests for export without providing a supply for
domestic industries," Djamaludin said. "The solution will not
break the government's commitment to IMF."

President Soeharto announced a series of drastic economic
measures last week, approved by the International Monetary Fund
(IMF), which are expected to lift the country out of the economic
crisis.

The reform stipulates that starting March, export taxes on
logs, sawn timber, rattan and minerals will be reduced to a
maximum 10 percent with appropriate resource rent taxes imposed.

The export taxes will be replaced by resource rent taxes,
which will protect the environment, while eliminating the bias
against production for export rather than for domestic use.

The government currently imposes an export tax of 200 percent
on logs, aimed to encourage timber companies to fulfill local
demand and to force buyers to purchase Indonesian processed-wood
products which have a higher value.

Djamaludin said the ministries are studying the possibility of
timber companies providing a percentage of their products for
domestic use before they were allowed to export it, or use
special parameters such as the companies' performances in plywood
export over past years.

"Timber companies have to meet domestic supply before they can
export their logs."

He added that the problem could also be solved by imposing a
higher price for logs needed by domestic industries.

"But the price has to be affordable so it does not kill the
local industries," he said adding that the normal price of
meranti logs is US$100 per cubic meter.

He added that Indonesia's supply of logs, as of Dec. 31,
reached 28.9 million cubic meters -- comprising 5.9 million cubic
meters in forests, 18 million cubic meters in timber companies'
annual working plans and 5 million cubic meters in wood-use
permits. (gis)