Timber firms object to new forestry fee plan

JAKARTA (JP): The Association of Indonesian Wood Panel Producers (Apkindo) on Friday balked at the government's plan to impose a new forestry fee, saying it would place heavy financial burdens on the timber industry.

Apkindo chairman Abbas Adhar said on Friday that the measure would hike the wood-processing industries' production costs and cut profit margins.

"Timber companies will most likely increase log prices to compensate for the new fee," he said.

Minister of Forestry and Plantations Muslimin Nasution, said last week the government would impose a new fee on the country's timber companies to inject funds into local community resources.

He said the fee, to be set at US$2 for every cubic meter of logs produced by timber companies, would be introduced later this month or early next month.

Funds raised from the new fee, called the levy and grant, will be used to improve educational and other resources for local communities.

The fund will be managed by an independent foundation currently being set up by the government.

Abbas said current favorable timber prices on the international market indicated the $2 fee was not overbearing.

"But when log prices fall, an impact will be felt."

The fee will replace the existing fee of Rp 1,000 (12 U.S. cents) for every cubic meter of timber felled. The fee goes to local administrations.

Local officials have repeatedly complained that the amount is too small to develop prosperity for local people, adding that fee collection is very difficult to control.

In addition to the above fees, timber companies are still required to pay reforestation fund and forest royalties -- mandatory fees imposed by the government on forest concessionaires to ensure forests are managed in an environmentally sustainable manner. The fee amount depends on the volume and type of timber felled.

Log quota

Director General of Forest Utilization Waskito Soerjodibroto, said the government set a logging quota of between 20 million and 22 million cubic meters of logs for the 1999/2000 fiscal year. The amount corresponds to the current fiscal year quota.

He denied concessionaires' allegations that the government was too slow in approving timber companies' logging plans, causing a scarcity of log supplies for wood-processing industries.

"Timber companies' logging plans will be approved by April 1. The delay was caused by timber companies late in submitting their annual working plan," he said.

Chairman of the Association of Indonesian Concessionaires Adi Warsita Adinegoro, urged the government to approve the plans as soon as possible, as any delay disrupted log supplies.

He said in past years, 40 percent of logging plans submitted by 400 timber companies were approved by the government by March. So far this year, not a single timber company has seen their working plan approved.

Government approval of the logging plan determines the annual logging quota for each timber company. (gis)