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)