Provincial government to have shares in forest concessions

Provincial government to have shares in forest concessions

JAKARTA (JP): Timber companies will be required to give at least 10 percent of their shares to provincial administration- owned companies if their concessions are to be extended, Minister of Forestry and Plantations Muslimin Nasution said on Wednesday.

Muslimin said the move was designed to involve local administrations in the management of forest resources in their areas in line with the policy of giving greater autonomy to local authorities.

In addition, Muslimin said timber companies would be obliged to give 10 percent of their shares to state timber firms and another 20 percent to local cooperatives.

Muslimin said the government would establish a new regulation, a revision of Government Regulation No. 21/1970 which awards timber companies the right to exploit the country's forests. The revised regulation would give cooperatives and ordinary people greater opportunities to obtain benefits from the country's forest assets.

"The new regulation will include several prerequisites for the extension of logging contracts. Companies will have to give 20 percent of their shares to cooperatives, 10 percent to provincial administration-owned companies and 10 percent to state forestry firms," he said before a Cabinet meeting.

The new regulation was awaiting presidential approval, the minister said.

Muslimin said the role of the provincial administration-owned companies was vital because they represented the local administrations.

"They would ensure that timber companies managed their forests in an sustainable manner. They would also secure their forest areas from theft and looting.

"As a shareholder, a provincial administration would be entitled to know how many trees had been felled by the timber companies, how much profit they made and how much local taxes they should pay," he said.

Muslimin said timber companies would also be obliged to increase cooperatives' stakes by 1 percent every year.

"If they (the cooperatives) start with 20 percent stakes and the concession lasts for 35 years, they will have a 55 percent stake when the concession expires."

The government first began to award forest concessions to private companies under the 1970 Forestry Law, which grants concessionaires the sole right to cultivate and exploit forests in their concession areas. Concessions currently last for 20 years, but will be extended to 35 years under the new regulation.

Many parties have criticized the existing system for allowing a handful of large business groups to gain control of millions of hectares of the nation's forests.

Muslimin said the government would stop issuing new forest concessions in order to prevent further deterioration of the country's forests.

"The number of forest concessions has been reduced to 146 concessions, from 422 concessions in the early 1990s. We think it is enough.

"So we have decided not to open new forest concessions," he said.

Private timber companies currently own rights to exploit 51.5 million hectares of the country's forests. The six state forestry companies -- five PT Inhutani enterprises and Perum Perhutani -- manage 4.9 million hectares.(gis/prb)