Jakarta – Indonesia's state-owned forestry company could lose its profitable "ecolabel" certificates if it does not act to stamp out illegal logging on Java island, it was revealed Wednesday.

Many foreign companies will no longer accept wood products without the ecolabel stamp, a guarantee the wood has come from a renewable source.

United States-based certification body SmartWood has threatened to withdraw the ecolabel certificates it has issued for six of P.T. Perhutani's 57 forest districts, threatening Java's exporters of wood procucts such as furniture.

Businessmen in need of cheap timber are paying locals to hack down trees illegally, a process which Smartwood fears will ruin the reforestation process. It has told Perhutani to deal with the problem by October 20 or lose the certificates.

P.T. Perhutani, which estimates its exports this year at 67 million dollars and manages 2.8 million hectares (6.9 million acres) of forest on densely-populated Java, defended its record Wednesday. "Perhutani is developing forest resources on Java island in an efficient, professional, fair and democratic manner," company director Marsanto Sastrowardoyo told a press conference.

Perhutani spokesman Martono said the company wanted to invite certification bodies under the Forest Stewardship Council, a Mexico-based forest accreditation body, to assess its forest management for ecolabel approval. "Otherwise we will have to wait for 20 years until they (SmartWood) finally certify all of the forest districts," Martono said. "They don't have enough people."

Martono said his company was committed to sustainable methods and would take firm action against illegal loggers. "We prioritize the prosperity approach but if their action is illegal we'll take them to court," he said.

But Javan small enterprises are complaining that the ecolabel process is undermining their business. "The requirement for ecolabelling has undermined their business. Their exports have been decreasing," said non-governmental organisation activist Adang Gumilar.

Illegal logging has been on the rise following the economic crisis that began in mid-1997 and the end of the iron-fisted rule of president Suharto in May 1998. In one incident earlier this year, Martono said, police were forced to release six residents arrested for stealing timber at Cepu in Central Java after violent protests by fellow villagers.

The protesters burned several buildings and homes belonging to Perhutani when police refused to release the detainees, said Martono. He said Perhutani had been running a project called the Community-based Forest Management since 1972. The scheme involves residents of forest areas in the process of developing them.