Timber firms told to give 20% stakes to cooperative

Timber firms told to give 20% stakes to cooperative

JAKARTA (JP): Timber companies will have to give at least 20
percent of their shares to cooperatives if they want their
concessions to be extended, Minister of Forestry and Plantations
Muslimin Nasution said here on Friday.

Muslimin said that the move was designed to involve
cooperatives in logging operations and would be one of several
preconditions for the renewal of concessions.

Muslimin said that the new regulation, a revision of
Government Regulation No. 21/1970 which awards timber companies
the sole right to exploit the country's forests, would give
cooperatives and common people a greater opportunity to benefit
from the country's forest assets.

"Under the new regulations we have added several prerequisites
for the extension of logging contracts. Companies will have to
give 20 percent of their shares to cooperatives and 5 percent to
companies located in the same province as the concession or to
the state-owned forestry firms PT Inhutani I to V ," he told
reporters.

The new regulations are currently awaiting presidential
approval. If that is forthcoming then the new measures will take
effect by the end of this month, the minister said.

Muslimin said that timber companies would also be obliged to
increase cooperatives' stakes by one percent every year.

"If they (the cooperatives) start with 20 percent stakes and
the concession lasts for a further 35 years, they will have a 55
percent stake when the concession runs out," he said.

Muslimin said the new measures would also limit the ownership
of forest assets. Each concessionaire will be limited to owning
rights to a maximum of 100,000 hectares of forest in a province
or 400,000 hectares nationwide.

He said that the government would honor the terms of all
existing concessions, but thereafter renewals would be contingent
on the new requirements being met. "If forest areas under their
management exceed the maximum limit, some of their concessions
will be offered to the public through an auction," he said.

The limits on ownership should allow the government to put 2
million hectares of forest up for auction by 2002 as concessions
come up for renewal, he said.

Muslimin also said the government would conduct due diligence
to assess the condition and potential of forest areas before
putting them on offer to the public.

The government first began to award forest concessions to
private companies through the 1970 Forestry Law, which grants
concessionaires the sole right to cultivate and exploit forests
in their concession areas. Concessions last for 20 years, but
will be extended to 35 years under the new regulations.

At least 421 private timber companies currently own rights to
exploit 51.5 million hectares of the country's forests. The six
state forestry companies -- the five PT Inhutani enterprises and
Perum Perhutani -- oversee logging operations on 4.9 million
hectares.

Many parties have criticized the existing system for allowing
a handful of large business groups to gain control of millions of
hectares of the nation's forests.

The Association of Indonesian Concessionaires (APHI) has urged
the government to place forest sector industries on a more
certain footing.

APHI chairman Adi Warsita Adinegoro said that at least 186
timber companies whose logging contracts had ended were still
awaiting a government decision on whether they would be extended.

"If the government wants to sever the contracts and offer the
areas to the public, it must do so quickly because delays are
costly for companies. They force companies to keep their heavy
equipment idle in the forest," Adi said.

The delays have also caused a scarcity of logs on the domestic
market because the operations of many timber firms have been
brought to a temporary halt, Adi said. (gis)