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)