Govt gives HTI firms 30 days to pay back debts

Rendi A. Witular, The Jakarta Post, Jakarta

The Ministry of Forestry has issued a 30-day ultimatum to 31 privately owned industrial timber estates (HTI) to surrender their collateral assets as a guarantee that they will settle their debts with the government.

The director for industrial estates at the ministry, Adi Subaktiono, said on Friday that his office would revoke the licenses of the timber estates if they failed to surrender their assets within a specific time.

"We are giving the companies 30 days starting from today to hand over an asset guarantee letter, or else we will revoke their licenses at once," Adi said.

The 31 companies owe some Rp 803 billion (US$91.2 million) in reforestation funds to the government. The fund is used to finance the forest rehabilitation program.

Reports had earlier said that in the past many companies, particularly those linked to top government officials, had declined to pay the reforestation fund obligation.

The Ministry of Forestry has been under pressure to revamp the corrupt forest management system of the past to help protect the country's severely damaged forests.

The country's industrial timber estate companies manage a total forest area of 2.7 million hectares.

The companies have long been blamed for contributing to the destruction of the country's old-growth forests, especially in Java and Madura, due to the companies' failure in rehabilitating and sustaining their resources.

Last week, the ministry concluded the first phase of an audit of 92 industrial timber estates to see which companies had violated existing rulings on forest sustainability. There are a total of 178 HTI firms.

From the first phase of the audit, 60 HTI companies were found to have failed to meet the sustainability requirement, thus their operations will have to be shut down.

The other 31 companies, however, managed to pass the test and will be allowed to continue operations. Their next test now is the requirement of surrendering their collateral assets and repaying their reforestation fund obligation.

The ministry declined to disclose the details of the audit. A number of environmental groups have criticized the lack of transparency, saying that the audit might have been tainted with vested interest.