Ruling on new joint timber estates revised

Ruling on new joint timber estates revised

JAKARTA (JP): The establishment of joint-venture timber
estates must now comply with the 1995 Law on Limited Liability
Companies which states that half of the nominal value of each
share subscribed must be paid up at the time of establishment.

Previously, a 1995 decree issued by the minister of forestry
stipulated that to establish a joint-venture timber estate, 10
percent of the government shares and reforestation funds
allocated for the timber estate must be paid up.

The revision, which was made through Ministerial Decree No.
57/1996, was announced yesterday.

According to the 1995 Ministerial Decree, the equity capital
of a joint-venture industrial timber estate shall consist of
government shares derived from reforestation funds (14 percent),
private capital (21 percent), interest-free loans from
reforestation funds (32.5 percent) and loans at commercial rates
from reforestation funds (32.5 percent).

Law No. 1/1995 on limited liability companies states that all
issued shares must be paid up in full at the time of a company's
legalization by virtue of valid evidence of payment, while each
further issuance of shares must be paid in full.

The law also stipulates that at the time a limited liability
company is established, at least 25 percent of the authorized
capital must be issued.

The government currently encourages businesses to establish
timber estates to help offset the country's declining log
supplies and to secure raw material for wood-based industries.

The funds to establish a joint-venture industrial timber
estate can be obtained from government shares within the firm,
usually called "government equity participation" which is
financed by reforestation funds.

Reforestation funds, together with forest royalties, are
mandatory fees imposed by the government to ensure that forests
are managed in an environmentally-sound manner. The amount of the
fees, which depend on the volume and type of timber felled, is
incorporated in the timber prices.

The development of timber estates are funded in two stages.
The first stage uses funds from government shares, private
capital and interest-free loans from reforestation funds.

The second stage uses loans from reforestation funds with
commercial interests. But these loans can only be obtained after
a minimum of 67.5 percent of the area targeted for a timber
estate has been well-developed. (pwn)