Govt to increase forest royalties by 10 percent

JAKARTA (JP): A government official confirmed yesterday that royalties for wood products would be increased by an average of 10 percent to compensate for inflation.

Director General for Forest Utilization Titus Sarijanto told reporters that the increment would go into effect "some time this month".

"We are actually reluctant to increase forest royalties because we understand that it will be hard on the domestic market. But it is unavoidable," Titus said.

The rates of forest royalties are usually reviewed every six months and any changes are announced in June each year.

Titus said that, beginning next year, however, changes will be announced in April, at the start of the new fiscal year.

Prajogo Pangestu, owner of the Barito Pacific Timber group, which holds a number forest concessions in East and South Kalimantan, Maluku and South Sulawesi, said last week that increasing reforestation funds and forest royalties since June 1993 had contributed to the group's declining profits last year.

Prajogo announced at a shareholders meeting that Barito's profits in 1994 slumped by more than 50 percent.

According to government regulations aimed at maintaining forest sustainability, forest concessionaires must contribute to reforestation funds and pay forest royalties.

For Maluku and Kalimantan, the royalties for meranti (shorea sp.) logs are currently Rp 21,500 (US$9.57) per cubic meter and for other types of logs Rp 11,000 per cubic meter.

For Sumatra and Sulawesi, the royalties for meranti and other logs are Rp 18,500 and Rp 9,000 per cubic meter, respectively, and for Irian Jaya, Nusa Tenggara, Bali and East Timor, Rp 17,500 and Rp 8,000 per cubic meter, respectively.

For the entire country, the royalty for fine wood is Rp 29,500 per cubic meter, for sandalwood Rp 255,000 per ton and for ebony Rp 210,000 per ton.

For teakwood, the royalties range between Rp 6,500 and Rp 24,500 per cubic meter, depending on the diameter of the tree.

Reforestation

Titus said that reforestation funds will not be revised because they are not related to timber prices on the world market.

Reforestation funds for logs currently range between $10.50 and $20 per cubic meter for all areas in Indonesia.

Responding to questions about the prospect of new concessions for timber industrial estates, Titus said that, so far, seven companies had either submitted, or were in the process of submitting, applications to establish such estates to support the pulp and paper industry.

In a bid to lower newsprint prices, President Soeharto last month called on the Ministry of Forestry to allow more concessionaires to establish industrial timber estates, to boost the supply of raw materials for pulp production.

According to a forest executive who requested anonymity, PT Sinar Alam Lestari and PT Tanah Merah Hutan Lestari, both of which belong to the Bimantara Group, are among those planning to establish timber plantations and integrated pulp plants.

The group is controlled by businessman Bambang Trihatmodjo, a son of President Soeharto.

The executive said that Sinar Alam had proposed an area of 144,000 hectares in East Kalimantan and that Tanah Merah had proposed 243,000 hectares in southern Irian Jaya.

PT Korindo is also said to be among the interested concessionaires, the executive said. (pwn)