US$17.39 loan set aside for people's forest projects

JAKARTA (JP): The government has set aside Rp 40 billion (US$17.39 million) this fiscal year to finance the development of peoples' forests and Rp 15 billion to promote silk cultivation, an official said yesterday.

The Director General of Reforestation and Land Rehabilitation, Hendarsun S. Sanusiputra, said the funds would be given as soft loans to farmers in 16 provinces.

The loans for developing peoples' forests would go to farmers in 13 provinces. The provinces are Aceh, North Sumatra, Riau, Jambi, Bengkulu, South Sumatra, West Java, Central Java, South Kalimantan, East Kalimantan, Central Kalimantan, South Sulawesi and Lampung.

The loans will support projects on 20,000 hectares.

The loans for silk cultivation will go to farmers in West Java, West Sumatra and South Sulawesi, covering 3,390 hectares.

Hendarsun said the loans would be given to farmers through nucleus estate and smallholder programs.

Under the programs, wood or silk-based industries act as nucleus estates which provide farmers with a market and collateral.

This way farmers and smallholders' access to loans is through their nucleus estate partners.

"We have no target or priority as to who will get these loans. Whoever is ready may submit an application to Bank Pembangunan Daerah (Provincial Development Bank)," he said.

Hendarsun signed an administrative arrangement agreement with Bank Pembangunan Daerah yesterday. The bank will distribute the loans at the local level.

The loans for peoples' forest mature in 11 years, with an eight-year grace period, while loans for silk cultivation mature in five years with a one-year grace period. The loans have a 6- percent interest rate.

Hendarsun said the loans, which are the first of their kind, were expected to invigorate farmers' businesses.

The amount provided by the government could be added or subtracted in the future depending on how farmers responded.

"If the farmers can only absorb Rp 20 billion of the Rp 40 billion provided for peoples' forests, then we might consider giving them Rp 20 billion only in the future. But if they want to borrow more than that this year, we may increase the amount next year," Hendarsun said.

He said farmers would be given loans of Rp 2 million a hectare. For provinces in Java, farmers eligible for the program must have between 0.25 and 1.5 hectares, while those outside Java must have between 0.5 and 3.4 hectares.

He said the government had chosen provinces that have a tradition of making and using silk. (pwn)