Merging timber firms 'counterproductive'

Merging timber firms 'counterproductive'

JAKARTA (JP): Director General of Forest Utilization Titus
Sarijanto said yesterday that merging state timber companies into
a single entity would be counterproductive.

Titus also said that merging the six forestry companies under
the control of the Ministry of Forestry and Plantations was not
necessary because their respective financial performances were
relatively strong.

"That fact that each company operates in different provinces
complicates any proposed merger," he told the media at his
office, adding that the large areas managed by the five state
companies also posed a problem for any such move.

The ministry controls six state timber companies, PT Inhutani
I to V and PT Perum Perhutani.

Inhutani I manages forests in East Kalimantan and Maluku,
Inhutani II has operations in South and East Kalimantan, Inhutani
III operates in West and Central Kalimantan, Inhutani IV oversees
forests in Aceh, North Sumatra, West Sumatra and Riau, and
Inhutani V manages forests in Jambi, South Sumatra, Bengkulu and
Lampung.

PT Perum Perhutani manages forests in Java and East and West
Nusatenggara.

A senior ministry official said yesterday that state timber
companies PT Inhutani I through to V would not need to be merged
into a single company because they were in good financial health.

But Titus said the ministry was still considering plans to
merge PT Inhutani IV and PT Inhutani V, which both operate in
Sumatra, due to their smaller operating areas and declining
forest stocks on the island.

"We are still studying the feasibility of merging these two
companies. Timber companies have to own large areas of land to
support their efforts to managing forests in a sustainable
manner, but overly large areas could be unmanageable," he said.

Speculation about possible mergers among the five state timber
companies was triggered by the government's Jan. 15 agreement
with the International Monetary Fund, which states that decisive
action to restructure, close or privatize poorly performing state
enterprises must be taken.

Over a dozen state companies under the auspices of the
Strategic Industries Supervisory Agency (BPIS) are to be merged
following the agreement. The government also plans to merge four
state banks and 18 state companies under the control of the
Ministry of Communications.

Titus said it was almost impossible to sell shares in forestry
companies to the public because their main asset, the forest
areas which they are licensed to exploit, belonged to the
government.

"Forest concession holders have been given rights to exploit
forests in their designated areas, but the forests remain
government property," he said. (gis)