State firms face tough job with new forest concessions

By Prapti Widinugraheni

JAKARTA (JP): Five state forestry firms, PT Inhutani I to V, are cautious about developing forest concessions once managed by private companies.

Inhutani IV president Abas T.S. said the forest concessions were managed by private firms in a "very disorganized way", which made it difficult for his company to improve them.

He said the private concessions were often handed over with little notice, which meant Inhutani IV had little time to handle new problems with its limited staff and information.

"Our initial funds are only enough for feasibility studies and maintaining forest security. But we need to carry out field activities quickly to provide jobs for locals and improve the forests," Abas told a hearing with members of the House of Representatives.

Inhutani V president M. Toha said virgin forests only made up 5.7 percent of the area of the ex-private concessions handed over to his company.

"If the forests were managed in a sustainable manner, at least 43 percent of the area should have been virgin forests," he said.

"It will be very difficult to manage these forests using the selective cutting and planting system applied by normal concessionaires," Toha said.

Analysts consider the state firms are not up to the tough job in front of them. Two of the state firms are only five years old.

Bambang Sukartiko, an observer of forestry issues, said the state firms were not ready to handle "such a huge responsibility".

"Inhutani I to V are not equipped with the organization needed to manage so many new concessions. The forests handed over to them are in bad shape and no longer commercially productive," he told The Jakarta Post.

He said the firms had no choice but to accept the task because it was delegated by the Ministry of Forestry.

"State firms have a duty to redevelop the poorly managed forest concessions. If the government takes over private concessions, the only ones that can be ordered to make improvements are the Inhutani firms," he said.

Since 1993, the government has ordered Inhutani I through to V to take over the management and operation of private forest concessionaires whose concessions had expired.

More than 60 concessions have been handed to the state firms.

These concessions were not extended because the government considered they were not managed in an environmentally sustainable basis.

Inhutani I, founded in 1972, was given 20 more forest concessions; Inhutani II, established 1974, obtained 32 additional concessions; and Inhutani III, founded in 1974, was given 28 more concessions.

Inhutani I through to III have operations in Kalimantan and Sulawesi.

Inhutani IV, established 1991, obtained 16 more concessions; and Inhutani V, also founded in 1991, was given 22.

Inhutani IV manages forests in Aceh, North Sumatra, West Sumatra and Riau, while Inhutani V has several concessions in Jambi, South Sumatra, Bengkulu and Lampung.

Michael Groves, an environmental specialist at SGS Forestry, said that, while he is confident of Inhutani's ability to manage the concessions, the question of "whether they have the resources is a different thing".

"The people working at Inhutani are generally quite good. They are all foresters and all have interests in long-term forest management. But there's a limit to how many concessions they can manage," he said.

Unlike Abas and Toha, Inhutani III development director Harry Santjoko, said the additional concessions gave the state firms an "opportunity".

"Just imagine, we were given new areas to manage, with government funds at very low interest rates," he told the Post.

Harry explained that forestry regulations stipulated that forest concessions formerly belonging to private firms should be rehabilitated using government reforestation funds.

The rulings also state that if the concession areas still contain virgin forests they may be managed through selective cutting and planting -- as applied by all concessionaires -- but the proceeds must go to forest rehabilitation.

"So there is no reason for state firms (Inhutani) to say they face financial problems in carrying out the task," he said.

Harry said logged-over areas, which have potential but cannot be harvested immediately, could be rehabilitated, while grasslands could be replanted with industrial timber species for forest estates.

"For all of this, we can use reforestation funds which are 35 percent comprised by government grants, 32.5 percent by loans at zero percent interest and 32.5 percent by loans at commercial interest rates," he said.

Of Inhutani III's 1.79 million hectares of new concessions, 7.6 percent are virgin forests, 75 percent are logged-over areas and 17.4 percent are grasslands and shrub.

Although Inhutani executives have different attitudes toward handling the new concessions, all are aware they have to face the job.

"It doesn't matter whether the forests are feasible or not, it is still our job to preserve them. I don't think we can return the forests to the Ministry," he said.

Abas said his company would assess the new concessions.

"If they are feasible, we will manage them, if not, the finance ministry told us we could return them to the forestry ministry," he said. The Ministry of Finance is the nominal shareholder of state firms.

To solve Inhutani's woes, Bambang suggested, the "weaker" firms recruit experienced personnel from Inhutani I through to III or from state-owned Perum Perhutani which manages teak plantations in Java.

Groves said Inhutani could invite private firms to help manage the new concessionaires. He also suggested the government should ask good private concessionaires, which operated in an environmentally sustainable manner, to do the job.

But Harry said all this was unnecessary.

"The country's universities produce about 600 new foresters (undergraduates) a year and many more technicians from secondary schools and universities. We have no problem in this aspect either," he said.