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)