Timber companies close due to rampant levies and illegal fees

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.