Open bidding system for logging contracts: Minister of Forestry

JAKARTA (JP): Newly appointed Minister of Forestry and Plantations Muslimin Nasution said yesterday that he would study the possibility of introducing an open bidding system to award new logging contracts.

The former vice chairman of the National Development Planning Board said that a bidding system would give the common people a better chance of benefiting from the country's forest resources.

Muslimin said that Indonesia needed a better system to manage forest concessions to ensure that logging activities not only benefited large business groups but also small and medium sized companies and cooperatives.

"The current system of forest management has not yet integrated and accommodated small business, cooperatives and local people," Muslimin said after a ceremony to mark the hand over of duties from his predecessor Sumahadi, who held the position for a mere two months.

He said that adopting an open bidding system to appoint new forest concessionaires would help to ensure transparency in the management of the country's forest resources.

"But I will further study the plan, and may add some requirements such as involving local people in the management of concessions through, for example, the use of their labor in logging operations," he said.

The auction of forest concessions is stipulated in the Supplementary Memorandum on Economic and Financial Policies, a reform package agreed by the government with the International Monetary Fund (IMF) in exchange for emergency funds of US$43 billion.

Under the latest memorandum agreed with the IMF, Indonesia is supposed to introduce the auction system by the end of next month.

Indonesia has around 143 million hectares of forest, including 64 million hectares which have been leased to forest concessionaires for logging operations.

At least 430 private companies are currently involved in logging activities over a forest area of 61.7 million hectares.

The country's six state-owned forestry companies -- PT Inhutani I to V and Perum Perhutani -- have logging operations spread over approximately 2.3 million hectares of land.

The government first began to award forest concessions to private companies through the 1971 Forestry Law, which granted concessionaires the sole right to cultivate and exploit forests in their concession areas.

Private concessions are mostly controlled by 50 leading groups, including Kalimanis Group owned by Mohammad "Bob" Hasan, PT Barito Pacific Timber owned by Prajogo Pangestu and Joso A. Gautama, PT Djajanti Djaja Timber owned by Soejono Varinata and PT Menara Hutan Buana owned by Probosutedjo.

Muslimin, a new face in the so-called Development Reform Cabinet, said that he would also focus on efforts to provide more employment and boost foreign exchange earnings from the forest and plantations sector.

"Indonesia holds a comparative advantage in the sector and related industries therefore have good export prospects," he said, adding that he would welcome foreign investment, provided it was of benefit to farmers and low-income households.

Muslimin said he would give reform of the palm oil sector priority because it produced cooking oil, an important basic commodity.

Married with three children, Muslimin, 59, is a graduate of the Bandung Institute of Technology. He received his doctoral degree from Bogor Institute of Agriculture (IPB).

"I'm new here, so I'll study a lot. But I will finish the difficult jobs today and the impossible tomorrow," he said, adding that he expected the press to provide him with information on any violations of the rules and collusive practices perpetrated by officials in his ministry. (gis)