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)