Terms set for cooperatives to get forestry contracts

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)