Government to revise regulation on forest royalties

JAKARTA (JP): The government is to revise the regulation on the collection of forest royalties to give provinces and regencies a larger share of the country's forest revenues.

Minister of Forestry and Plantations Muslimin Nasution said on Monday the change was needed to ensure that local people could benefit more from the development of forest resources.

"The local administrations should be given a bigger share because they are the one who directly feel the impact of the logging operations in their areas," he said.

But he declined to disclose the portion of the royalties which he thought should go to provinces and regencies.

The government imposes resource royalty provisions, previously called mandatory forest royalties, on the country's timber companies on every cubic meter of timber sold.

Under the mandatory forest royalties scheme, 45 percent of the revenue was paid to local administrations for local forest development, 20 percent as land tax, 15 percent to the Ministry of Forestry for national forest development and 20 percent to the state treasurer.

Earlier this year, the government revised the distribution of the resource royalty revenues. According to Presidential Decree No. 67/1998, 45 percent of the royalty revenue was to go to the local administrations, 40 percent for national forestry development and 15 percent for local forest development.

But the revision was still considered unfair on local administrations.

The resource royalty provision is based on the wood standard selling prices, which are determined by the Ministry of Industry and Trade after taking into account wood prices on the domestic and international markets.

The rate of the resource royalty provision depends on the type of product and its origin.

Big diameter logs such as meranti from Sumatra, Kalimantan, Sulawesi and Maluku are charged Rp 28,500 (US$2.75) per cubic meter, while those from Irian Jaya, East and West Nusa Tenggara, Bali and East Timor are charged Rp 23,000 per cubic meter.

Mixed jungle wood from Sumatra, Kalimantan, Sulawesi and Maluku is charged Rp 17,000 per cubic meter while that from Irian Jaya, East and West Nusa Tenggara is charged Rp 10,000 per cubic meter.

In addition to resource royalty provisions and concession fees, timber companies are still required to pay reforestation funds, to encourage them to manage forests in an environmentally sustainable manner.

Muslimin said that the government expected to collect Rp 566 billion from resource royalty provisions in the 1998/1999 fiscal year. (gis)