Govt loses Rp 15t in unpaid royalties, reforestation funds
JAKARTA (JP): Inefficiency and lack of supervision in forest management have cost the government approximately Rp 15 trillion (about US$1.8 billion) in unpaid royalties and reforestation funds in the last five years, according to findings by the Ministry of Forestry and Plantations and the Development Finance Comptroller (BPKP).
Minister of Forestry and Plantations Muslimin Nasution said here on Thursday that the government also considered the possibility that corrupt, collusive and nepotistic (KKN) practices had contributed to the loss.
"We'll see to it that further investigations will be conducted into these findings," he told the media.
The ministry and BPKP conducted an audit between the fiscal years of 1994/1995 and 1998/1999, the result of which was presented during the media conference.
The ministry's report of the Rp 15 trillion potential losses is based on the difference between the potential income derived from the targeted Yearly Work Plans (RKT) submitted by existing timber companies to the ministry, and the actual log output they reported.
"There is a gap in the potential production amount as stated in the RKT of companies and what they have actually produced," Muslimin explained.
Irregularities were also found in the operation of companies holding forest concessions, the minister said.
The ministry took a sample of three companies holding forest concessions, whose owners are believed to enjoy close relations with the Soeharto family, and found several violations, among others: felling trees outside the permitted area, not conducting any operations for 17 years and subcontracting forest exploitation to third parties.
However, the ministry encountered difficulties in tackling administrative violations in such companies, as most licenses were obtained under regulations enacted during the Soeharto regime, which supported KKN practices, Muslimin said.
Yet in July, the ministry reported that it had revoked eight forest concessions totaling 1.7 million hectares from companies jointly owned by former president Soeharto's children on alleged KKN practices.
The ministry suspected that the eight forest concessions were granted through KKN practices, as defined on the basis of President B.J. Habibie's directives.
The ministry's move to revoke the eight forest concessions was based on joint audits by BPKP and Ernst & Young.
Auditing of reforestation funds by independent international auditors is stipulated in the Supplementary Memorandum on Economic and Financial Policies, a reform package agreed to by the government with the International Monetary Fund in exchange for emergency funds of US$49 billion.
Muslimin said Ernst & Young should have finalized the audit in late August so that his office could announce the audit result before the change in the Cabinet at the end of this year.
The minister also announced on Thursday the transfer of the six timber companies' forest concession rights due to their alleged KKN practices and forest regulations violations.
They include concession rights held by PT Alas Helau and the Karya Delta Permai group, both of whose shares were owned by family members of Soeharto and their business associates.
Redesigned forest concessions will then be placed under the management of local universities and Islamic boarding schools, Muslimin said.
Muslimin also said that problems also occurred at plantations after the ministry looked into the operation of 33 companies in 11 provinces that cultivated an area of 303,000 hectares.
The Salim business group, for instance, has violated maximum land usage by 40,871 hectares in Riau province and by 18,850 in Central Kalimantan, the ministry reported.
The ministry also encountered irregularities during land-swaps procedures for non-forestry activities.
It registered eight companies with indications of KKN, of which three, PT Semen Cibinong, PT Indocement Tunggal Perkasa and PT Arha Putra Internasional have been inspected on site.
The three companies were given three months as of Sept. 1 to solve the matter or their usage rights on forests through the land-swap procedure would be revoked.
The remaining five companies will also undergo inspections shortly, the ministry reported.
To further eradicate KKN practices in the Ministry of Forestry and Plantations, Muslimin said, the government will replace the Basic Forestry Law 5/1967 with the Basic Forestry Law 41/1999.
According to him, the new law would enable the government to prevent KKN practices as well as abuses on forest rights concessions. (03)