Timber companies close due to rampant levies and illegal fees

Indra Harsaputra, The Jakarta Post, Surabaya

As many as 150 out of 250 timber and sawmill companies in East Java have closed down due to the increasing number of levies being imposed by some government institutions, an official said.

It was not immediately clear, however, how many employees were affected by the closure of the companies.

Hariono Arsudin, the executive secretary of the Indonesia Timber and Sawmill Business Association in East Java, confirmed that the ailing timber and sawmill companies could not afford to pay the various legal and illegal fees being imposed by state agencies.

"The levies are being imposed at a number of inspection gates for timber and wood products in each city," he told reporters on Monday.

Citing an example, Hariono said a company transporting timber from Tanjung Perak seaport in Surabaya to nearby Banyuwangi in the eastern part of East Java had to allocate a certain amount of money to pay legal and illegal levies in every regency the truck passed through.

"Such practices obviously hamper the performance of companies in this sector," Hariono said, adding that the situation had been worsened by a decline of up to 20 percent in the prices of wood products on international markets.

Currently, the prices of wood products ranged between US$500 and US$600 per square meter, compared to $700 dollar in previous months.

Hariono also complained about frequent police investigations into the illegal timber trade in the province, which led to firms being unable to deliver their products on time.

"The investigations sometimes take one month. In the end, the timber owner suffer financial losses," he explained.

Hariono asked the government to pay attention to the problem as it was affecting the growth of timber and wood product companies in East Java.