Govt to raise mandatory forest royalties by 10%

Govt to raise mandatory forest royalties by 10%

JAKARTA (JP): The government plans a 10 percent hike in the
mandatory royalties it imposes on forestry products following
increases in the prices of plywood on the international market
and of logs domestically.

Minister of Forestry Djamaludin Suryohadikusumo said over the
weekend that he would issue a ministerial ruling on the royalty
increase in September and make it effective on Oct. 1.

"With the planned increase of the forest royalties, the
plywood industry must improve its efficiency to remain
competitive," Djamaludin said.

The government usually adjusts the mandatory royalties with
the prices of plywood on the international market and of logs on
the domestic market once every six months.

The existing forest royalties in Sumatra, Kalimantan, Sulawesi
and Maluku are set at Rp 23,500 (US$9.96) per cubic meter for
high-quality tree species used for sawn timber and Rp 14,000 for
jungle timber used for wood chips.

In Irian Jaya, Nusa Tenggara, Bali and East Timor, the
royalties are Rp 19,000 per cubic meter for high-quality tree
species and Rp 9,000 for jungle timber.

The current levels of forest royalties are based on the
forestry minister's ruling No. 376/Kpts-IV/1995, which expired on
March 31, 1996.

Djamaludin said recently that the government postponed the
adjustment of the forestry royalties because the average prices
of Indonesia's plywood on the international market were still
below those in the 1994/1995 fiscal year.

The minister said over the weekend that the prices of
Indonesia's plywood had been increasing significantly in the last
several months and they had even surpassed the level of $500 per
cubic meter.

Meanwhile, A, Tjipto Wignyoprajitno, an executive of the
Indonesian Wood Panel Association, said last week that the prices
of Indonesia's plywood in the key Japanese market increased from
$449.60 per cubic meter in April to $507.30 in June on the back
of stronger demand for plywood in the Japanese construction
sector.

Tjipto said Japan's monthly imports of Indonesia's wood panels
increased significantly to 350,000 cubic meters in August from
300,000 cubic meters in June. Japan's imports of wood panels from
Indonesia averaged at 260,000 tons per month during the second
quarter of this year, increasing from 240,000 tons per month in
the first quarter.

The prices of Indonesia's wood panels in the Japanese market
stood at $460 per cubic meter in the second quarter, up from $450
per cubic meter.

"Every increase in wood panels usually drives up the prices of
plywood on the world market," Tjipto said, adding that the prices
of wood panels have become the benchmark for plywood prices.

Indonesia is currently the world's largest exporter of
plywood, with annual exports of 10 million cubic meters, of which
3.6 percent go to Japan. (rid)