Fri, 31 Jan 2003

Loggers told to cut capcity, not trees

Rendi A. Witular, The Jakarta Post, Jakarta

The country's forestry-related industry should cut its installed capacity by more than 70 percent in order to protect the country's forests from continued overexploitation, the Ministry of Forestry has said.

Ministry spokesman Tachrir Fathony told The Jakarta Post on Thursday that, based on the ministry's analysis, the processing capacity of the country's forestry industry should be curtailed to 20 million cubic meters per year from 63 million cubic meters at present.

Otherwise, he said, the country's forests would remain under threat of being overexploited.

"We wanted the capacity to be cut to the level of timber supply this year. However, we have seen that it would be impossible for the industry to do so. Thus, we think that 20 million (cubic meters) would be fine," said Tachrir.

Tachrir added, however, the ministry had to discuss the figure with industry players and the Ministry of Industry and Trade.

Analysts have said efforts by the government to curb the rapid pace of deforestation would never pay off unless the country's forestry-related industry is restructured to cut down its processing capacity.

The ministry's data says the installed capacity lies between 60 and 70 million cubic meters per year, despite the fact the existing running capacity now reaches only 30 million cubic meters per year.

The remaining capacity remain unutilized as many companies were forced to stop operations due to the economic crisis.

On the other hand, the ministry set the annual timber supply quota for the industry at around 12 million cubic meters last year and 6.89 million this year.

The incredibly huge gap between supply and demand is considered by many analysts as the main factor behind widespread illegal logging. The industry takes illegally felled timber to feed its production facilities.

Tachrir said should the ministry cut down the capacity to 20 million cubic meters per year, the ministry would not change the supply quota of 6.89 million cubic meters.

Thereby, the industry would have to import logs to fully supply its plants.

Commenting on Tachrir's statement, chairman of the Indonesian Wood Panel Association (APKINDO) Martias said the reduction of both log supplies and the industry's capacity would cause prices for timber-based products to increase by at least 30 percent.

He said under the existing capacity, the plywood industry had already forecast that the plywood price on the export market would rise to US$350 per cubic meter this year from $270 last year, thanks to the strong demand.

Should the government order plywood suppliers to cut their capacity, the price would inevitably soar, he said.

The installed capacity of the country's plywood industry now reaches 10 billion cubic meters.

The industry managed to contribute $2 billion to the country's foreign exchange earnings last year.