High prices encourage illegal timber trading

High prices encourage illegal timber trading

JAKARTA (JP): Minister of Forestry Djamaludin Suryohadikusumo
said yesterday that the low purchasing power of timber users
combined with the rising price of timber has led to a significant
increase in the illegal trade and distribution of timber.

Speaking to House members of Commission IV, Djamaludin said
that local consumers in timber-producing provinces are reluctant
to buy timber from concessionaires operating in their own regions
because timber prices on the black market are far cheaper.

"As a result, forest concessionaires do not want to meet their
obligation to set aside part of their timber production for local
utilization," Djamaludin told the commission, which oversees
agricultural and forestry affairs.

The obligation, stipulated in a decree from the Director
General of Forest Utility last May, requires a concessionaire to
allocate five percent of its annual timber production for
utilization in the province where it operates.

Djamaludin said the huge difference between the prices of
timber produced by concessionaires and the purchasing power of
local consumers has encouraged timber theft and the trade of
cheap, illegal wood on the local market.

To solve the problem, he said, the Ministry of Forestry
stipulates that state forestry enterprises must provide timber at
price levels affordable to local users.

Prices of state-produced timber, he said, incorporate only the
floor price with a reasonable profit margin, disregarding the
developments of export prices.

Holders of logging permits, Djamaludin said, will only be
allowed to use timber with a minimum diameter of 50 cm for
export-oriented mills, while those with smaller diameters will be
designated for local consumption and feedstocks for particle wood
production.

Director General of Forest Utilization Titus Sarijanto said
yesterday that a lack of penalties has led concessionaires to
avoid their obligation to allocate part of their annual timber
production for local consumption.

"The implementation of the (May 1995) decree is still
disappointing because there are no clear penalties yet for
violators," he said.

Shortage

Legislator Sukoraharjo yesterday questioned the ministry's
plans to anticipate possibilities of a timber shortage in the
near future in light of increasing consumer demand and government
purchases.

He calculated that timber demand in Java in 1993 reached 7.5
million cubic meters, of which 1.3 million cubic meters were
produced in Java and the other 6.2 million cubic meters were
produced on other islands.

"According to available data, only two million cubic meters of
the timber from islands other than Java were equipped with legal
documents, but the remaining 4.2 million cubic meters were not,"
he said.

Djamaludin said that from the total demand of 7.5 million
cubic meters in Java, about 1.5 million cubic meters were
provided by the state-owned Perhutani forest enterprise.

The remaining six million cubic meters, he said, were obtained
from "people's forests" on Java and other islands.

"Estimates say Java can potentially harvest four million
hectares of timber a year from the people's forests, but the lack
of monitoring facilities cannot confirm this as yet," he said.
(pwn)