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)