Khoirul Amin, Jakarta – Forestry companies have raised concerns over a new ministerial regulation that requires them to allocate at least 20 percent of their existing concession areas to local people, saying the ruling would severely hurt their plantation operations.
Association of Indonesian Forest Concessionaires (APHI) executive director Purwadi Soeprihanto said the regulation would make their forestry business no longer economically viable because it would significantly squeeze their plantation areas.
"We do understand the government's purpose to provide greater benefits to the people, but we're concerned that the rule could possibly ruin companies' efforts to achieve business goals," he told The Jakarta Post on Tuesday.
Under the previous regulation, an industrial forest concession holder is required to allocate up to 70 percent of its concession areas for industrial forests, 10 percent for ingenious plants, 5 percent for use by local or indigenous communities, 10 percent for forest conservation areas and 5 percent for utility area.
Under Environment and Forestry Ministerial Regulation No. 12/2015, which was issued in March, the percentage of areas dedicated for local people increased to at least 20 percent. While technical details of the regulation are still being formulated, the association is worried that the government would require its members to reduce the size of their existing industrial forest area to fulfill the 20 percent quota for use by local communities.
Purwadi said that if the regulation was not changed, it could significantly squeeze their existing industrial forestry areas. For this reason, he said, the association had proposed to the government to impose the new regulation only on a new concession area, not the areas that have been planted.
As many as 154 of the association's members are involved in the industrial forestry business, with total concession areas of 7.45 million hectares. They are mostly involved in timber, sago and rubber plantations.
Publicly listed agriculture company PT Sampoerna Agro – part of conglomerate Sampoerna Group – stated that it was still studying the new policy when contacted separately by the Post.
Apart from its palm oil business, Sampoerna Agro currently runs sago and rubber plantations in Riau and South Sumatra, respectively.
Meanwhile, publicly listed palm oil and wood producer PT Dharma Satya Nusantara (DSN Group), which holds a forest concession for a timber plantation, said that it would welcome the new regulation despite its business being affected.
According to the company, revenues from its wood production dropped 6.9 percent year-on-year to Rp 344 billion (US$25.7 million) during the first quarter of the year.
"Basically, we will comply with any of the government's regulations," said DSN corporate secretary Paulina Suryanti in a text message.
The government has set a target of allocating 5.5 million hectares of forest to local people in the next four years, the majority of which will be taken from around 30 million hectares of existing forest concession areas.
The move is aimed at meeting the government's target to allocate 12.7 million hectares of forest areas for use by local and indigenous people, as stated in the National Mid-Term Development Plan (RPJMN) for 2014 to 2019. This year alone, the government plans to give 2.5 million hectares of forest to local people, with 20 percent from concession areas.
The Environment and Forestry Ministry argues that the redistribution of forest will prevent conflict and create justice in forest management, which has long been dominated by large companies.
As many as 48.8 million people and 30,000 villages around and inside Indonesian forests do not have access to forest management, according to the ministry's data.
Meanwhile, the Alliance of Indigenous Peoples (AMAN) said that the increase in the allocation of the land area to local people would not restore the rights of indigenous people to manage their customary forests.
AMAN secretary-general Abdon Nababan said the increase was too small given the fact that the size of the customary forests used for plantation activities was estimated to reach 40 million hectares nationwide.
The Environment and Forestry Ministry's secretary-general, Bambang Hendroyono, said the new regulation would be able to reduce the size of industrial forests to about 4 million hectares within the next five years.
Source: http://www.thejakartapost.com/news/2015/07/08/new-ruling-upsets-forestry-firms.html