Reforestation fund management to be revised
Reforestation fund management to be revised
JAKARTA (JP): The government will improve the management of
its reforestation fund to ensure transparent fund collection and
disbursement, Minister of Forestry and Plantations Nur Mahmudi
Ismail said on Thursday.
Responding to results of an audit on the fund by independent
auditor Ernst & Young, Nur Mahmudi acknowledged that there had
been leakages and inefficiencies in management of the fund.
"We will improve fund management to help create an open
administration system so that the fund is used and collected
properly," he told reporters.
According to the audit result, the government lost US$5.25
billion due to inefficiency in collection and utilization of the
fund over the past five years ending in March 1998.
To maximize fund collection, Nur Mahmudi said his office would
end the existing system of self-assessment and self-reporting by
concession holders, which he said did not have a proper control
mechanism.
The government, he said, would implement the old system of
employing government officials to calculate the amount of
reforestation funds forestry firms have to pay to the government.
The government will also force delinquent companies to pay
reforestation funds owing, he said.
"We will send three consecutive warning notices to the
companies in order to collect those funds. If they ignore them,
we will revoke their forest concessions," he said.
Reforestation funds are collected by the government from
companies for every log cut in their concession areas to ensure
sustainable forest management during their activities.
In a bid to improve management in the utilization of the fund,
Nur Mahmudi said his office would strictly limit the use of funds
for reforestation, and would no longer allow money from the
reforestation fund to be used for other purposes.
In the past, under the Soeharto administration, reforestation
funds were sometimes used as a cash source for various
politically well-connected companies such as PT Kiani Kertas or
activities funded by well-connected people such as the consortium
which underwrote the last Sea Games.
Nevertheless, Nur Mahmudi said the government would not in the
near future use the remaining funds, currently standing at Rp 4.1
trillion (US$585 million).
In addition, Nur Mahmudi said he would follow up on all
suggestions presented in Ernst & Young's audit report.
Ernst & Young suggested in its report that the Ministry of
Forestry and Plantations collect all money from the reforestation
fund lent to various parties.
It also suggested that the ministry monitor both interisland
and export movement of logs and maintain the balance between
supply and demand of logs.
The ministry should also develop a reliable information and
accounting system to ensure that all credits and debits of the
funds are documented properly.
In the longer term, the government should introduce tax
incentives to encourage more investment in the forestry sector.
The government also has been advised to establish a real
estate investment trust to help small companies and community
organizations to participate in sound forest management. (06)