Govt threatens to revoke permits of defiant firms

Govt threatens to revoke permits of defiant firms

JAKARTA (JP): Minister of Forestry and Plantations Muslimin
Nasution warned on Monday 33 timber companies would lose their
licences if they failed to pay overdue fees by March 1, with the
government introducing new rules to bring delinquent firms into
line.

Muslimin said timber companies were given a two-month deadline
from January to settle their reforestation fee and forest royalty
debts, but there had been no response.

"Those timber companies have been given a warning and a 2
percent fine per month has been imposed on them since January. If
they fail to pay their debts before March 1, their logging
contracts will be revoked," he said at a session with the House
of Representatives' Commission III.

The commission deals with forestry, plantations, agriculture
and food affairs.

Director General of Utilization of Production Forests Waskito
Soerjodibroto said unpaid reforestation fees reached more than Rp
116.2 billion (US$13.7 million) and unpaid forest royalties stood
at Rp 59.1 billion as of December last year.

Waskito said some of the negligent timber companies were owned
by giant timber groups. He refused to name them, saying that the
government would reveal their identities after March 1.

He divulged that the biggest debtors for forest royalties were
timber companies operating in East Kalimantan, with the major
debtors for reforestation fees in South Sulawesi, Maluku and
Irian Jaya.

Reforestation fees and forest royalties are mandatory fees
imposed by the government on forest concessionaires to ensure
forests are managed in an environmentally sustainable manner. The
size of the fee depends on the volume and type of timber felled.

Since last April 1, the government has accounted for
reforestation funds collected from timber companies as nontax
receipts in the state budget. Previously, the funds were
transferred to the forestry ministry's bank account and its
allocation was governed by presidential decree.

Muslimin said timber companies would be required to make a
financial deposit to guarantee on-time payment of the
reforestation fund and other forestry levies in the future.

He also said timber companies would be obliged to pay the
reforestation fund in advance, not after they sold their logs or
wood products.

"The old payment system has resulted in a huge amount of
unpaid funds."

Muslimin also said international auditors would be hired to
examine the use of reforestation funds and forest royalties to
track possible misuse.

Auditing of the 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
(IMF) in exchange for emergency funds of US$49 billion.

"The World Bank will finance the auditing, including providing
the money used to pay the international auditors. I will meet
the World Bank officials tomorrow (Tuesday) and we will choose
the auditors."

He said his preferred auditors would be Price Waterhouse or
Arthur Andersen because Price Waterhouse was currently auditing
the Association of Indonesian Wood Panel Producers (Apkindo),
while Arthur Andersen was auditing the Association of Indonesian
Forest Concessionaires (APHI).

"The auditing process is expected to be completed in June," he
said.

The IMF targeted the reforestation fund because much of the
money, instead of being used to finance the country's
reforestation projects, was rerouted to other project, such as
financing the national passenger jet project, a huge peatland
project and the 1997 Southeast Asian Games in Jakarta.

Muslimin said his ministry expected to collect Rp 1.05
trillion in reforestation funds in the 1999/2000 fiscal year,
starting April, a 7 percent decline from Rp 1.13 trillion in the
previous year. (gis)