Plywood investors back off

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)