Timber firms slam govt's new reforestation ruling

JAKARTA (JP): The country's timber companies have voiced criticism of the government's new policy of obliging them to make huge reforestation fund payments prior to the commencement of their operations, saying that the policy will bankrupt most of them.

Indradi Kusuma, president of PT Erna Djuliawati, said that the government's plan to issue a ministerial decree obliging timber companies to make advance payments worth three years of reforestation fund contributions would severely damage the already-struggling timber companies.

"We really don't know how to raise the huge amounts of money needed to cover these massive new reforestation fund payments," Indradi told reporters at a media gathering.

Indradi said that every timber company would find it difficult to find the sums of money required under the new ministerial decree.

"In fact, the (reforestation) payments will be much higher than our operating costs per year," he said.

Minister of Forestry Marzuki Usman emphasized on Wednesday that the new ruling on reforestation funds was expected to take effect within two weeks.

The new reforestation fund is aimed largely at cracking down on illegal logging activities carried out by "unscrupulous forest concession holders", Marzuki claimed.

"We want to stop the damaging impacts of logging activities on the forests. Around 30 million hectares of forest have been damaged, while another 55 million hectares are now in critical condition," Marzuki said.

Observers said the government's current aggressive measures to contain illegal logging in Indonesia were closely related to the pressures being exerted by the country's creditors, including the World Bank, the United Nations Development Program, and the Paris Club of creditor nations.

Combating illegal logging is one of the requirements set by these organizations for Indonesia to continue to be able to access loans.

Criticism of the new ruling has also been aired by the Association of Indonesian Forest Concession Holders (APHI).

The association warned last week that the new ruling could lead to the closure of many timber companies.

APHI, which represents around 350 timber companies, said the closure of the timber companies would leave around four million workers jobless.

"The government will also lose around $8 billion in foreign exchange earnings from the forestry sector," it added.

But Marzuki was unfazed by the association's warning.

"We don't care if they are going to close down because of the ruling.

"They can look for other jobs instead of logging and hunting in the forest, activities which will only worsen the country's forestry situation," Marzuki said.

Marzuki however believed that the new ruling would only lead to timber companies exercising more care in the conduct of their operations rather than bankrupting them.

As such, he said he was optimistic that the government would be able to collect greater revenue from the industry next year.

The ministry proposed a Rp 2.8 trillion budget for 2002 to the House on Wednesday, representing a 30 percent increase on the estimated Rp 2.05 trillion budget for this year.

"We estimate that we will raise about Rp 5.5 trillion in total revenues. Next year's revenues will come from the reforestation fund at Rp 3.9 trillion, provision for forest resources (PSDH) at Rp 1.5 trillion, and other levies and fees at around Rp 63 billion," Marzuki said. (03)