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)