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)