INDONESIA MAY EXPORT LOGS

By Andi Abdussalam

Jakarta, Jan 26 (ANTARA) - The Indonesian government is studying the possibility of exporting logs produced from timber estates (HTI) while allowing domestic paper and pulp industries to use wood from natural forests.

        According to the director general for timber estate development of the Ministry of Forestry, Bejo Santoso, the study was aimed at expanding overseas markets and in response to a decline in domestic demand for timber.

        However, pulp and paper industries claim they are running short of raw materials from HTI businesses facing problems in the development of their estates in the past two years.

        In response to the shortage of raw materials, the Forestry Ministry will allow pulp and paper industries to use wood from natural forests if supply from timber estates (HTI) is not available.

        "It is not impossible to extend a policy allowing pulp and paper industries to use wood from natural forests," Forestry Minister MS Kaban said recently.

        The minister did not specify a time frame for the use of wood from natural forests, saying "it depends upon their annual plans."

        The forestry minister earlier issued a decree banning pulp and paper industries from using wood from natural forests. Under the decree HTI companies linked with pulp and paper industries are required to finish planting their areas in 2009 at the latest.

        The Forestry Ministry has projected the timber estates at a total of five million hectares by the end of 2009, while by the end of last year the figure is estimated at 4.3 million hectares.

        According to Minister Kaban, many HTI companies have delayed their planting and industrial forest development activities for fear of being suspected of illegal logging, because in the last two years several HTI companies had been suspected of illegal logging.

        The ministry's director for timber estate development, Bejo Santoso, has a different reason why HTI companies are not able to develop their estates.

        At present a total of 222 timber estate companies have been operating on 9.807 million hectares of land, including 164 companies with a definitive license to operate on 7.1 million hectares, 26 units on 2.03 million hectares with a reserve license and the remaining 32 companies on 300,000 hectares for transmigration purposes.

        Santoso said his office had often received complaints from HTI companies about difficulties in selling their products to domestic pulp industries. "There has been slide in demand for HTI logs," he said.

        PT Kertas Nusantatra, a pulp and paper company, for example, has stopped purchasing wood from state-owned forest plantation firm Inhutani. "The pulp and paper market is delaying demand because of the global economic crisis."

        The slowdown in demand for HTI logs is feared to affect the viability of timber estates and disturb the national forest planting program as a whole. For that purpose, solutions to the problem are needed so that investment in timber estates would continue and support industries at home.

        Santoso said that the solution could be in the form of opening export of logs from timber estates. "Exports can be restricted to certain types of wood and periods of time," he said.

        Data available at the Forestry Ministry show that up to November 2008, wood products from timber estates which were supplied to forest-related industries reached 19.6 million cu meters.

        In the meantime, President Director of state-owned forestry company PT Inhutani IV, Mustoha, said the forestry ministry's plan to open exports for logs would help HTI companies raise their bargaining position in the face of domestic pulp and paper industries.

        "It will increase HTI businessmen's bargaining position. So far, they are facing difficulties in developing their timber estates due to unfavorable prices," he said.

        Asia Pulp&Paper and Riau Andalan Pulp&Paper (Riaupulp) are two pulp and paper giants which have so far absorbed some 85 percent of raw timber produced by HTIs. However, the prices they offered were low, namely at a range of Rp220,000 to 230,000 per cubic meter.

        With this less profitable price, HTI companies are not able to maintain the development and expansion of their estates, Mutopha said.

        "So far, the prices offered by pulp and paper companies are too low but HTI owners have no other choices because there are only two companies which purchase their products," Mostoha said. He said that demand for timber of the world market in the last several years remained high, despite a drop in the price to US$560 per ton.

        Mustoha expressed hope that the Indonesian Forestry Businesses Association (APHI) would play a more decisive role in fixing HTI logs' prices.

        "At a favorable price, HTI companies are expected to be able to resume their planting development programs," he said.
        (T.A014/A/HNG/A/S012) (T.A014/A/A014/A/S012) 26-01-2009 23:01:37