Govt to shut down five state-owned forestry firms

Govt to shut down five state-owned forestry firms

Rendi A. Witular, The Jakarta Post, Jakarta

The government plans to liquidate five state-owned forestry
firms, Inhutani I through to V, and transfer the firm's control
of 9 million hectares of badly damaged forest to the local
community and private firms, an official at the Ministry of
Forestry said.

Ministry spokesman Tachrir Fathony told The Jakarta Post
during the weekend that the ministry was now waiting for the
President's approval to close the firms.

"We expect the President will give her approval soon," Tachrir
said.

The liquidation plan was made after the companies'
profitability declined in the past three years. In addition, the
companies had also failed to rehabilitate forest areas damaged by
unscrupulous forest concessionaires.

As an example, Inhutani I, whose operation covers a vast areas
in East Kalimantan, Sulawesi and Maluku, saw a significant
decline in net profit from Rp 59 billion (US$6.7 million) in 2000
to only Rp 15 billion in 2001.

Tachrir said the declining profit had caused the firm to be
unable to properly perform its forest rehabilitation task.

Thus far, the five firms control some 6.5 hectares of badly-
damaged forests and around 2.4 hectares of industrial plantation
estate areas.

Tachrir said the firms could no longer perform sustainable
forest management to produce logs for domestic and international
markets as the firms' industrial plantation estates were not
productive.

Tachrir said the Minister of Forestry M. Prakosa had proposed
in late December to close the five forestry companies.

If the president approved the decision, the ownership of the
forests would be transferred to the local community as community
forest, if it is located near villages.

Remote forest areas will be auctioned to private firms to be
turned into plantation estates.

Inhutani was first established by the government in 1972 to
manage and protect the country's forests.

The tasks comprises setting up industrial plantation estates
to supply timber for privately owned forestry companies,
forestry-based product industries and rehabilitating damaged
forest areas and conserving and sustaining production forest.

However, inefficient management and rampant illegal logging,
which produces cheap timber, has impacted on the firms.