Wood-processing firms face log scarcity: Minister

Wood-processing firms face log scarcity: Minister

JAKARTA (JP): Minister of Forestry and Plantations Muslimin
Nasution predicted on Wednesday that the country's wood-
processing industry was facing a log shortage of at least 25
million cubic meters annually over the next five years.

The supply of logs over the next five years, he said, would be
31.36 million cubic meters per year -- far less than the 57
million cubic meters needed by the country's 1,812 wood-
processing firms each year.

"The log supply is only sufficient for about 55 percent of the
wood-processing industry's production capacity."

Indonesia has 1,701 sawmill companies with a combined annual
production capacity of 13.28 million cubic meters, 105 plywood
companies able to produce 8.14 million cubic meters and six pulp
and paper companies with a production capacity of 3.86 million
cubic meters.

Operating at maximum levels, the sawmill industry would need
26.57 million cubic meters of logs per year, the plywood industry
17 million cubic meters and the six pulp and paper firms 13
million cubic meters.

To address the shortage, Muslimin said the government would
cut its log export quota next fiscal year.

The government set a log export quota of 5 million cubic
meters for 1998/1999 as agreed with the International Monetary
Fund.

The freeing up of log exports was mandated by an agreement
with the IMF despite the fact that most of the country's wood-
processing industries are currently operating at 30 percent to 40
percent of production capacity.

Muslimin blamed the Ministry of Industry and Trade and the
Investment Coordinating Board (BKPM) for the current scarcity of
logs and the idleness of most wood-processing firms.

"BKPM and the Ministry of Industry and Trade issued permits to
those wanting to develop wood-processing plants without
calculating the log supply with the Ministry of Forestry and
Plantations," he said in a hearing with the House of
Representatives commission III for agriculture, forestry and
plantations, transmigration and food affairs.

"The supply shortage has resulted in rampant wood stealing and
illegal trade. I've discussed the matter with Pak Rahardi and we
will discuss it further," he said, referring to Minister of
Industry and Trade Rahardi Ramelan.

Muslimin urged the Ministry of Industry and Trade to return
monitoring functions on local wood-processing industries to his
ministry to avoid a further scarcity of raw materials in the
coming years.

The supervision of the industry has been under the Ministry of
Industry and Trade since 1986.

Muslimin also said on Wednesday he would increase interest
fines imposed on timber companies late in paying their
reforestation fees to between 1.5 and two times the current
banking commercial rates in a bid to force them to pay the fees
on time.

"The current fine of two percent of timber companies' debts
per month is too low compared to the current commercial rates. We
have discussed it with the finance minister and he said that the
fines should be increased between 1.5 and two times the
commercial rates," he said.

Current commercial rates are hovering over 60 percent.

Muslimin said unpaid reforestation funds totaled Rp 133
billion (US$12 million) since April last year.

Last week, Muslimin's office announced that timber companies
would be obliged to pay reforestation funds in advance and not
after they sold their logs or wood products in a bid to avoid
late payments and huge unpaid fees. (gis)