Jakarta – Several foreign investors and buyers may pull out of contracts with Indonesian plywood producers over escalating conflicts between timber companies and local people in Kalimantan, a report said yesterday.
The warning came days after an international association of crude palm oil buyers threatened to boycott Indonesian products if Jakarta failed to control forest fires.
The Indonesian Forestry Society and the Association of Indonesian Forests Concessionaires (APHI) said foreign firms were worried that mills would have difficulty meeting delivery schedules.
Forestry society chairman Sudrajat Jaya said: "These investors and buyers, most of whom are from South Korea, have begun to lose confidence in the country. They are worried about the security and legal uncertainty of conducting business here."
APHI figures cited by the newspaper showed at least 50 timber companies, which control about 10 million hectares of forest in Irian Jaya, Kalimantan and Sulawesi, had halted logging because of disputes with the local population. Some 77 loggers in East Kalimantan also have threatened to stop their operations after residents seized heavy equipment and demanded billions of rupiah in compensation.
In the past, disputes between local communities and loggers, usually over profit share, forest access or compensation, have largely been kept under wraps. But since the fall of former president Suharto in May 1998, many disputes have come into the open.
APHI chairman Adiwarsita Adinegoro cited the case of a group of residents who took 2,000 cubic metres of logs from a Korean joint venture timber firm in Irian Jaya. "Local administrations have not been serious about settling disputes," he said.
He said the Irian Jaya administration was expected to issue a decree soon defining the rights and responsibilities of timber companies and local communities in utilising forests. He said the decree would also regulate the amount of compensation the companies must pay for the timber they take from the areas.
Mr Adiwarsita said timber companies were always willing to settle disputes with local communities. However, agreements sometimes were difficult to reach because locals made demands that were impossible to meet, he said.
"Some people, for example, demanded timber companies pay 250,000 rupiah for every cubic metre of logs the companies take from neighbouring forests. That's just impossible," he said.
Mr Jaya said the conflicts already had forced some new foreign investors to postpone or cancel plans. The director-general of Production Forestry Management, Mr Sugeng Widodowas, said disputes probably would escalate in the future because people now were more aware of their rights.