Perhutani reverts to non-profit oriented firm

Perhutani reverts to non-profit oriented firm

Rendi A. Witular, The Jakarta Post, Jakarta

The government has decided to reverse the status of the ailing
state-owned forestry company PT Perhutani into a non-profit firm
after the Supreme Court annulled an earlier government decree
making the company profit-oriented.

Perhutani president Marsanto told reporters on Tuesday the
Supreme Court's decision ended two years of uncertainty about the
status of the company.

"The status has given us a definite track for our operational
guidelines. Now, we know where to bring the company," said
Marsanto.

In 2001, the government under the previous administration of
president Abdurrahman Wahid changed the status of Perhutani from
a non-profit firm (local technical term Perum), to profit-making
one (local technical term Persero).

The move was aimed at lifting the ailing company out of its
financial difficulties due to the shortage of timber in Java and
Madura. Perhutani manages forest areas in these two regions.

But the decision angered many people particularly
environmental groups, who then asked the Supreme Court to conduct
a judicial review.

The protesters argued that turning Perhutani into a profit-
oriented company would only weaken the company's main function to
rehabilitate and preserve forest areas in Java and Madura.

Marsanto, however, said that the change in the company's
status would not alter plans to set up partnerships with the
private sector to develop Perhutani's forest areas.

He said that among the planned programs with the private firms
was the setting up a joint marketing division to sell Perhutani's
timber products overseas, and programs to boost the supply of
timber.

Perhutani is also planning to raise the price of its timber
this year by around 30 percent.

The move is part of the companies target for this year to
raise a net profit of Rp 1.9 trillion (US$215 million). In 2002,
the company's net profit declined to Rp 140 billion from Rp 252
billion in 2001.

Marsanto said that the profit would help finance the company's
forest rehabilitation program.

Many environmentalists blamed Perhutani for contributing to
the destruction of natural forest areas in Java and Madura due to
the company's failure to rehabilitate and sustain its forest
resources.

To date, the total forest area in Java and Madura reaches 2.9
million hectares. Some 2.6 million hectares are under the control
of Perhutani.