Could the Indonesian government be preparing to get tough with the forestry industry in the country? Recent news that the government is to sue 16 logging companies for USD225 Billion seems to indicate that muscles are being flexed.
The law suit will be a first for the country and the government is going after a substantial level of compensation. The case revolves around illegal deforestation of an area in Riau Province on the island of Sumatra dating back to 2007.
16 logging companies could be sued in Indonesia.
16 logging companies (14 associated with Asia Pulp and Paper or Asian Pacific Resources International Holdings Limited) are being sued for $225 billion but the value of the timber only makes up 4% of the total being sought. The remaining 96% is to compensate for the ecological services that the illegally logged trees provided – such as soil damage, water degradation and habitat losses.
If the case being bought by the Environment Ministry does make it to court and the court agrees that the loggers are responsible for more than just the cash value of the trees lost then illegal logging could become a major drain on the profitability of timber companies. Once their profits start to be eaten up in compensation payments then it’s highly likely the timber companies will change their ways.
Indonesia plans to be world largest producer of pulp and paper by 2020.
It’s important for the Indonesian government to win this case because forestry is an important part of its economy. Their 10 year forestry plan will see Indonesia become the largest provider of sustainable pulp and paper producer in the world by 2020. Effectively the size of their timber plantations is set to almost double within the ten-year plan. It’s important that protected forests and reserves are not encroached on as the plantations expand. There’s plenty of non-protected land for plantation development in Indonesia and tough action need to be taken against those timber companies that choose the easy option of cutting down trees in protected wildlife reserves.
Forestry is an important part of Indonesia’s economy and plays a major role in its poverty alleviation programmes by providing jobs and income to local economies. Indonesia’s first quarter growth this year was over 6% year on year a lot of it being driven by its forestry and natural resources. Ensuring that forestry can continue to play a long-term role in the economy is essential and eating into protected forest reserves can impact on the saleability of Indonesia’s wood and paper products.
Expansion of land for sustainable forestry.
The importance of bringing Indonesia’s forestry practices up to world leading standards is important if the forestry sector is to continue to contribute effectively to the economy. At the moment forestry contributes 3.3% to the country’s GDP (USD 18 billion a year) and forestry provides 600,000 jobs mainly in poor rural regions. Forestry also provides the state with a substantial income of USD 7 billion a year.
The 2010 forestry growth plan saw the Indonesian government announce plans to release an extra 500,000 hectares a year for new forestry plantations leading to a total of 10 million hectares being under sustainable wood production by the end of the 10 year plan.
Forestry is an essential part of the Indonesian economy and needs to be placed securely on a sustainable footing through enforcement action.