Tue, 09 Mar 1999

Minister Rahardi rules out new restriction on log exports

JAKARTA (JP): Minister of Industry and Trade Rahardi Ramelan ruled out on Monday any plans to reimpose an export restriction on logs despite complaints from wood-processing industries about the scarcity of logs on the local market.

Rahardi said the complaint about log scarcity was groundless as a a great volume of logs in several provinces such as Kalimantan was left unsold.

"There are currently a lot of unsold logs in Kalimantan's rivers and it's better to export them rather than leave them to rot there. Imagine how much loss we will suffer if we ban the export of logs again," he said after a plenary meeting with the House of Representatives deliberating a consumer protection bill.

"Many timber firms have felled trees for export but since the market for wood products and plywood in main buyers like Japan and South Korea is still sluggish, the logs remain unsold. So it is not true that there is a scarcity of logs on the domestic market."

Rahardi also said that the volume of exportable logs is adjusted annually to the country's logs supply so as not to endanger sustainability of forest resources.

"But it was up to the Minister of Forestry and Plantations to set the quota of logs which could be exported," he said.

According to the Ministry of Forestry and Plantations, the government has granted licenses to export 862,000 cubic meters of logs in the 1998/1999 fiscal year, which ends next month.

But the log export realization in the first 10 months of the fiscal year was only 13.26 percent of the total export quota, generating US$13.22 million in foreign revenue.

Rahardi also said that the government had been under no pressure to ease its restrictions on the export of logs.

"We were not pushed by anyone, not even the IMF (the International Monetary Fund). The move is only a short-term emergency measure to generate foreign exchange earnings during the crisis."

He was commenting on the statement of the Association of Indonesian Wood Panel Producers (Apkindo) which said that the IMF has set different standards to help the forestry sectors of crisis-hit countries.

It questioned the fund's policies requiring the Cameroon government to ban log exports in accordance with an agreement to receive its financial aid, while at the same time it is obliging Indonesia to remove the export barrier.

According to the economic reform program agreed to by the government and the fund, in exchange for the agency-brokered multibillion bailout package, Indonesia has to gradually reduce its export taxes.

The government previously imposed log export levies of up to 200 percent.

As part of its agreement with the fund, the government was obliged to cut the export tax to 30 percent in June last year, to 20 percent by the end of 1998 and 15 percent by the end of 1999.

Minister of Forestry and Plantations Muslimin Nasution said he had asked the IMF to postpone the reduction because many local wood-processing companies have complained about the scarcity of logs on the domestic market.

But he said the IMF has insisted that the tax reduction should be carried out according to schedule. (gis)