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.