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)