More disclosures expected from new forestry method
More disclosures expected from new forestry method
JAKARTA (JP): The government expects greater disclosures and
an increased collection of levies from the forestry industry
after the implementation of a new standardized accounting method,
a minister says.
"The new accounting system will help the government improve
the supervision of the industry's conservation efforts. We can
also obtain a precise level of economic rents from the industry,"
Minister of Forestry Djamaludin Suryohadikusumo said in a seminar
yesterday.
The new accounting method, which took effect this month, was
formulated by the Association of Indonesian Accountants and the
Center of Accounting Development of the University of Indonesia.
The new method is expected to lead to greater financial
transparency and disclosure from the forestry industry, which
regularly contributes significant export earnings to Indonesia.
The minister said the new standardized method supports the
industry as it moves towards globalization through capital
markets and obligatory ecolabeling.
Indonesian forestry regulations stipulate that timber estates
are state properties which are given out to concessionaires for a
limited time and which are subject to strict regulations.
For the forest industry, economic rents can be regarded as
state earnings in excess of total production costs including
operating expenses, depreciation, overhead and transportation
costs.
Concern
In Indonesia, such earnings are usually obtained from forest
royalties, reforestation funds and corporate taxes from timber
companies.
Minister Djamaludin also expressed his concern yesterday that
most of the concessionaires tend to under-report their profits
and are only willing to invest in logging activities rather than
replanting.
"With the new accounting system we can now anticipate problems
at an early stage," he said without elaborating.
During the seminar, Soemarso S.R., an accountant who helped
formulate the new system, explained that the new accounting
method will force timber companies to adopt a comprehensive data
base containing all information, including non-financial factors.
Meanwhile, an executive of an industrial timber plantation and
pulp firm told The Jakarta Post that most leading timber
companies have already adopted the new accounting method.
"The new system is much closer to international accounting
standards," he said, while requesting anonymity.
Director General of Forestry Development Hendarsun Surya also
told reporters that the government expects timber companies to
devote at least half of their profits to forest conservation
efforts. (hdj)