Timber companies upset over local fee payment

Timber companies upset over local fee payment

JAKARTA (JP): Timber companies have to pay a number of fees to
local government following the implementation of regional
autonomy in January this year, an executive of a forestry-based
company said here on Tuesday.

Sumardi, the president of PT International Timber Corporation
Indonesia Kartika Utama (ITCI), said the additional levies
imposed by the local government had caused financial difficulties
to timber companies.

He cited that his company and other timber companies in East
Kalimantan had to pay four kinds of levies to the local
government.

"The local fees are really crippling our business because
besides such levies, timber companies have to make various
payments to the central government," Sumardi said after a company
presentation at the Ministry of Forestry.

East Kalimantan-based timber companies are required to pay
US$8 per cubic meter of their log production to the provincial
administration for the rehabilitation of burned forests.

They are also asked to pay Rp 15,000 per cubic meter for the
development of human resources in the local forestry industry, Rp
3,000 per cubic meter as compensation to local communities and $2
per cubic meter for the development of an Islamic center in the
province.

"In addition, we must also pay a certain amount to local
residents as compensation for their land," Sumardi said.

Besides such local fees, the central government also requires
payment of reforestation funds, concession fees, royalties and
property tax.

Under the autonomy law, the provincial administration
receives 80 percent of the forestry royalties.

The Association of Indonesian Concession Holders (APHI) has
recently lodged an objection to the Ministry of Forestry over the
unrealistic amount of payments that they have to make both to the
local and central government.

The association said that the government should issue a clear
cut policy related to fee payment so that the ministry's policy
will not overlap with those issued by the local government.

According to APHI, during the first three months of this year,
total fees paid by the industry accounted for 55 percent of the
sales price of the logs.

"The fee payment has really hurt the business because the
other operating costs are also increasing," APHI's chairman
Adiwarsita Adinegoro said.

According to Adiwarsita, many forestry problems stemmed from
the lack of guidelines in implementation of the regional autonomy
legislation.

The regional autonomy law has brought more harm than benefit
to the forestry industry due to the lack of clear guidelines, he
said.(03)