Sat, 18 Mar 2000

Plywood investors back off

JAKARTA (JP): About 10 foreign investors and buyers of plywood from Kalimantan have threatened to pull out of their contracts due to concern over escalating conflicts between timber companies and local communities, the Indonesian Forestry Society said on Friday.

The forestry society and the Association of Indonesian Forest Concessionaires (APHI) said separately that foreign investors and buyers were worried plywood mills would not be able to meet delivery schedules as many timber companies had stopped logging operations as a result of prolonged disputes with local communities.

Soedradjat Djaja, the chairman for the forestry society, said concerns over lengthy conflicts between timber companies and local communities in Kalimantan, Irian Jaya, Sulawesi and Sumatra, had also forced some new foreign investors in the wood- based industry to postpone or cancel altogether their investment plans.

"These investors and buyers, most of whom are from South Korea, have begun to lose confidence in the country. They are worried about the security and legal uncertainty of conducting business here," Soedrajat told The Jakarta Post.

Soedrajat added that foreign companies were astonished to see the complete inability of local authorities to stop people from squatting on concessions, forcing timber companies to stop logging operations.

Some concessionaires have been forced to pay compensation to squatters in order to be able to continue logging operations, he said.

Meanwhile, APHI chairman Adiwarsita Adinegoro lambasted local administrations for failing to quickly address the conflicts.

Citing an example, Adiwarsita said a group of locals recently took 2,000 cubic meters of logs from a Korean joint venture timber firm in Irian Jaya.

"Local administrations have not been serious about settling the disputes. So far, only the Irian Jaya administration has shown serious efforts in seeking a consensus between the conflicting parties," he told the Post on Friday.

He said the Irian Jaya administration was expected to issue a decree soon defining the rights and responsibilities of timber companies and local communities in utilizing forests in their area.

He said the decree would also regulate the amount of compensation the companies must pay for the timber they take from the areas.

Adiwarsita said timber companies were always willing to settle disputes with local communities, but they found it difficult to do so because locals sometimes came up with demands that were impossible to meet.

"Some people, for example, demanded timber companies pay Rp 250,000 (about US$35) for every cubic meter of logs the companies take from neighboring forests. That's just impossible," he said.

According to APHI, at least 50 timber companies which control about 10 million hectares of forests in Irian Jaya, Kalimantan and Sulawesi, have stopped their logging activities due to growing conflicts with local residents, who not only claim ownership of the firms' concessions, but also often threaten the workers.

Meanwhile, some 77 loggers in East Kalimantan have threatened to stop their operations, arguing that residents in Kutai and Bulungan districts have seized some of their heavy equipment and demanded compensation amounting to billions of rupiah.

Director General of Production Forestry Management Soegeng Widodo recently warned that conflicts between local communities and timber companies would likely increase in the future because people were now more aware of their rights.

He said in order to solve the problems, the government would investigate the validity of the locals' demands and determine whether timber companies were legally operating on the land.

Soegeng said local communities were not solely responsible for the conflicts, adding that confusion in land ownership claims might have stemmed from mistakes made by the old government in granting concessions to timber companies.

He said companies might have also contributed to the conflict by ignoring the needs of local communities or using locals' farmland without offering fair compensation.

According to official data, more than 80 percent of the country's forests are controlled by the family and close friends of former president Soeharto.

Although many parts of their concessions overlap with local residents' farmland, they often allegedly seized the area without giving any compensation. Residents were unable to do anything but accept their presence due to reported threats from security guards at the companies.

With the downfall of Soeharto in mid-1998 and the rise of a more democratic government, people have begun to feel more courageous about expressing their opinions and voicing their demands, albeit at the risk of violence. (cst)