Terms set for cooperatives to get forestry contracts

JAKARTA (JP): Only cooperatives that can prove their capability in managing a forestry business will be granted logging contracts or given a chance to purchase shares in forestry firms, Minister of Forestry and Plantations Muslimin Nasution said on Tuesday.

Muslimin said it was necessary that cooperatives had two- year's experience in forestry before participating in forestry tenders or trying to obtain shares in forestry firms.

"We want to do it (the redistribution of the country's forestry assets) gradually to ensure that only people with a serious commitment to managing forests in an environmentally sustainable manner will manage our forests," he said in a seminar on empowering cooperatives in forest management.

He said he would require timber companies to involve cooperatives in log transportation, planting and logging activities to give cooperatives first-hand experience in forestry.

"If cooperatives do their jobs well they can acquire 20 percent of a timber companies' shares or bid for logging contracts."

The chairman of the Association of Indonesian Forest Concessionaires, Adi Warsita Adinegoro, said that concessionaires were ready to involve cooperatives and small enterprises in their activities.

"Many of our activities can be done by cooperatives. They can provide us with their services as contractors in log transportation, planting and seeding activities," he said.

Muslimin said the government's new forestry regulations, expected to be issued by the end of this month, would oblige timber companies to give 20 percent of their shares to cooperatives and 5 percent to companies located in the same province as the concessions or to state-owned forestry firms PT Inhutani I, II, III, IV and V.

The new measures will also limit the ownership of forestry assets by individual companies. Each concession holder will be limited to owning a maximum of 100,000 hectares of a forest in a province or 400,000 hectares nationwide.

Muslimin said the government would honor the terms of all existing concessions until the contracts expired. Concession renewals would then be subject to the new regulations.

"If forest areas under a company's management exceed the maximum limit, some of the concessions will be offered to the public through auction," he said.

Director General of Forest Utilization Harnanto H. Martosiswojo said tender participants would have to meet several requirements.

They must have experience in forest management, have related equipment, a balance of payments and not be insolvent.

The participants may be state-owned timber firms, Indonesian private firms, cooperatives or any legal entity.

He said the government would conduct due diligence to assess the condition and potential of forest areas before offering them to the public.

The government first began to award forest concessions to private companies through the 1970 Forestry Law, which grants concessionaires the sole right to cultivate and exploit forests in their concession areas. Concessions last for 20 years, but may be extended to 35 years under the new regulations.

At least 421 private timber companies currently hold rights to exploit 51.5 million hectares of the country's forests. The six state forestry companies -- the five PT Inhutani enterprises and Perum Perhutani -- oversee logging operations on 4.9 million hectares. (gis)