State timber firms in Sumatra to merge

State timber firms in Sumatra to merge

JAKARTA (JP): State timber companies PT Inhutani IV and PT
Inhutani V will be merged into a single company, a minister said
yesterday.

Minister of Forestry Djamaludin Suryohadikusumo said the
merger of the two Sumatran-based companies would improve forest
management on the island.

The two state companies manage the forests of Sumatra.

"It would be better if Sumatran forests were managed by one
state timber company due to the decreasing forest area on the
island," he said after opening a national-level Ministry of
Forestry meeting.

"Just like banks, timber companies should be merged to combine
their capital and their areas. Timber companies have to own large
areas which can support their efforts in managing forests in a
sustainable manner," he said.

He said his ministry would propose the merger to the minister
of finance, who now directly supervises the companies.

Six state timber companies operate under the Ministry of
Forestry, but due to a change in government regulations on the
management of state companies, the ministry will no longer be
directly involved in the management of five of the companies, PT
Inhutani I to V.

Unlike the other five state timber companies, Perum Perhutani,
which oversees 2.5 million hectares of forests in Java, will
continue to conduct several non-profit oriented activities under
direct ministry supervision.

The state timber companies manage the country's forests in
cooperation with private timber companies.

Inhutani I, established in 1972, currently manages 2.37
million hectares of forests in East Kalimantan and Maluku.

Inhutani II, founded in 1974, has operations in South and East
Kalimantan covering 603,000 hectares.

Inhutani III, established in 1974, operates in West and
Central Kalimantan, covering 742,310 hectares of forests.

Inhutani IV, founded in 1991, manages 224,000 hectares of
forests in Aceh, North and West Sumatra and Riau.

Inhutani V, also founded in 1991, oversees 958,690 hectares of
forests in Jambi, South Sumatra, Bengkulu and Lampung.

Forestry analysts have proposed that Inhutani IV and Inhutani
V be merged due to their small operation areas and the decline of
Sumatra's forest area as palm oil plantations continue to expand.

Previously, Djamaludin said Inhutani I to V would not need to
be merged due to their healthy performance.

Djamaludin also said the ministry, in cooperation with the
Ministry of Finance, was still considering a plan to establish PT
Inhutani VI to oversee forests in eastern Indonesia.

"We are still studying the feasibility to create Inhutani VI.
The decision will depend on the size of the area, because forests
are not profitable if managed in small sizes, and the business
feasibility," he said.

He said if a new state timber company came into being, it
would manage forests in Irian Jaya, Maluku and Sulawesi. (gis)