MINISTRY'S REFORM AGENDA
ON FORESTRY STATE ENTERPRISES

Minister of Forestry and Estate Crops Muslimin Nasution finally made his promise to implement total reform while holding the basic principle that the reform should be well planned, well oriented or well targeted, and legally acceptable. This is evidenced by careful and systematic preparation of a guideline of "Reform Agenda of the Forestry and Estate Crops Sector", which was launched on 30 June 1998 and exposed to the press on Thursday, 16 July 1998. The document transparently enlists the reform targets, the measures to attain them, and the due dates.

The document will allow the public to monitor the reform, including within the Secretariat General, Inspectorate General, Directorate General of Forest Utilization, Directorate General of Forest and Estate Crops Inventory and Land Use Mapping, Directorate General of Forest Protection and Nature Conservation, Directorate General of Reforestation and Land Rehabilitation, Directorate General of Estate Crops, as well as Forestry and Estate Crops Enterprises.

With regard to Forestry State Enterprises, the main agenda of reform are eight rescue programs, two recovery programs, and sustainability programs. Recovery programs have less urgency than the rescue programs, and can be implemented within a year, while sustainability programs are of further less urgency and aimed to maintain long term measures.

The rescue programs on the forestry state enterprises includes empowerment of forest dependent people through encreased production by application of the taungya system. Under the system, people are given the access to the productive assets, while land preparation is mechanically done by the Industrial Forest Plantation (HTI), Concessionaires and supported by the agricultural production facilities program.

The labour intensive program is accelerated, both on people's private forests and on state forests under management of state enterprises or Small Scale Enterprises and Cooperatives. HTI Concessionaires are now allowed to have pre-plantation operation cooperation with the local people, small and medium scale enterprises, and private companies for a period longer than one year without any aproval from the Ministry of Forestry and Estate Crops.

Agribusiness is promoted in forest areas, through issuance of a ministerial decree which allows industrial forest plantation concessionaires to undertake differsification into estate crops commodities within a forest utilization system which involve participation of small scale enterprises and cooperatives.

Another rescue program has cancelled the regulation of Director General of Forest Utilization concerning implementation of land clearing by industrial forest plantation concessionaires or other companies, which gives the forestry state enterprise a low bargaining power. Now timber utilization on conversion areas is managed by forestry state enterprises through auctioning.

Logged over areas still have a lot of resources which can be used as splinter materials. At present, wood waste utilization is completely up to the concessionaires, while Reforestation Fund for the small-log is the same as that for splinter materials.

The Ministry of Forestry and Estate Crops is arranging so that the standard prices of log and sawn wood and their tax rates could be reviewed in order that log export becomes feasible.

The Reforestation Fund put into investment in industrial forest plantation is regarded as goverment's equity. For transmigration-HTI, the Reforestation Fund financing could be replaced by state budget financing. Alternatively, the concession could be transferred to private companies, coorperation agreement could be adjusted, or compensation could be given to the counterparts.

Among the recovery programs is replacement of Government Regulation No. 13 of 1998 concerning public company, to allow PT. Inhutani state limited companies to become public companies or to be autonomous. The sustainability programs will address the lack of Rehabilitation Fund, and lack of the institutional and human resources development to manage the handed-over forest concessionaires, and will reformulate the strategy of forest concession system.