Govt prioritizes issuing of timber estate permits

Govt prioritizes issuing of timber estate permits

JAKARTA (JP): When issuing new permits for industrial timber
estates, the government will give priority to paper producers
that still rely on pulp sources outside their concession areas,
Minister of Forestry Djamaludin Suryohadikusumo said yesterday.

Speaking to reporters after signing a joint decree on the
utilization of confiscated wood for low and medium-cost houses,
Djamaludin said the policy will be applied to those forest
concessionaires whose permits to establish industrial timber
estates are currently being considered by his office.

President Soeharto called on the Ministry of Forestry last
month to help boost the domestic paper supply by allowing more
concessionaires to establish industrial timber estates, which
provide raw materials to the pulp and paper industries.

Djamaludin said last week that so far seven companies had
"shown serious interest" in establishing timber estates.

Companies from the Bimantara Group, owned by President
Soeharto's second son Bambang Trihatmodjo, are said to be among
them.

Djamaludin later said that apart from selecting suitable areas
for such estates, the new concessionaires must also include
government enterprises overseen by his office as stake holders to
ensure forest sustainability and an even income distribution for
the indigenous people living in the surrounding areas.

Djamaludin said yesterday that prospective concessionaires
could opt to use the government's reforestation funds if
necessary.

Reforestation funds, along with forest royalties, are
financial contributions which concessionaires must submit to the
government for every cubic meter of timber they harvest from the
forest.

Djamaludin stressed that prospective investors in the pulp
industry should not enter the sector "without bringing in
anything".

"By setting this priority, we require them (prospective
concessionaires) to have a pulp and paper plant, for instance,"
he said, adding that it would also be useful if a company already
has experience in tree-planting activities.

He said that government equity participation in the form of
reforestation funds could be used as 26 percent of a company's
capital. About 35 percent of the capital may come from the
company's own equity and the remaining 39 percent from commercial
loans.

Djamaludin said the government will allocate some Rp 300
billion (US$135 million) from reforestation funds to establish
the new timber estates.

"We will set up clear requirements and criteria in the
selection of the companies which are considered most suitable for
managing timber estates. Everything will be transparent," he
promised. (pwn)