State firms face tough job with new forest concessions

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.