Government wants 5% rise in forest royalties

JAKARTA (JP): The Ministry of Forestry has proposed a 5 percent increase in forest royalties, but the business community is against the plan, Forest Minister Djamaludin Suryohadikusumo said over the weekend.

Djamaludin said the decision to increase forest royalties for the April-September period was still being discussed. He did not say when the government would announce the decision.

He said the proposed 5 percent increase was merely an adjustment to the rise in the inflation rate. "But businesspeople had asked for a postponement of the raise," he added.

Djamaludin said that although world prices of timber products were currently on the rise -- which made an increase of the fees justifiable -- businesses had complained of the various fees they had to pay, Antara reported.

Forest royalties are among the fees that forest concessionaires must pay in order to operate.

Together with reforestation funds, they are designed to guarantee that concessionaires manage their forests in an environmentally-sustainable manner.

Forest royalties currently make up about 6 percent of the price of forest products, which include logs, resin and rattan.

The government usually adjusts the royalties with prices on the international and domestic market every six months.

The government raised the mandatory royalties by 10 percent last October to reflect rises in world prices and inflation.

The government during the January-December period of last year managed to collect Rp 592.78 billion (US$247 million) in forest royalties, up from Rp 539.33 billion in 1995.

During fiscal 1995/1996, the government collected Rp 430 billion in forest royalties. The provinces which contributed the most that fiscal year were Central Kalimantan (Rp 95 billion), East Kalimantan (Rp 87 billion), Riau (Rp 39 billion), West Kalimantan (Rp 32 billion) and Irian Jaya (Rp 28 billion).

The government decided not to raise the royalties during the April-September period of last year because of unfavorable plywood prices at the time.

Forty-five percent of forest royalties are currently paid to local administrations for local forest development, 20 percent as land tax, 15 percent to the Forestry Ministry's central office for national forest development and 20 percent to the state treasurer. (pwn)