Implementation of 2-year moratorium postponed

Implementation of 2-year moratorium postponed

25 January 2011

published by timber.fordaq.com


Indonesia — The 2-year moratorium planned to be implemented on 1 January 2011 in Indonesia has been postponed. Various ministries in the country are still trying to reach consensus and consolidate details of the requirements of the 2-year moratorium on new permits to convert natural forests and peatlands. The views differ on how much and which types of forests should be covered in the moratorium. In addition, there is no consensus on whether current forest concessionaires will be permitted to clear any forest or whether they will get any compensation in lieu of.

Two contrasting drafts for the moratorium have been submitted to the Indonesian president for approval. While the Ministry of Forestry seeks to enforce only a ban on new permits to clear primary forests and peatlands, the Indonesian Presidential Delivery Unit calls for the inclusion of secondary forests, the review of existing permits and the extension of the moratorium beyond 2 years. The Presidential Delivery Unit also proposed incentives and land swaps to be included as a form of compensation to existing permit holders.

The Ministry of Forestry has identified 35 million hectares of land for business development. To date, 9 forest plantation companies have submitted proposals to develop 320,000 hectares of plantation forests. Any permit to develop these land areas depend on the formalisation of the moratorium. The proposed moratorium will protect up to 43.8 million hectares of natural forests and up to half of the 20 million hectares of peatlands in the country. Indonesia aims at reducing greenhouse gas emissions by 26% before 2020.

Forestry project budget for 2011
The Ministry of Forestry has earmarked Rp.2.5 trillion of the total of Rp.6.0 trillion project budget in 2011 for priority programmes such as forest rehabilitation, enhancement of river watershed areas, forest fires control and conservation of biodiversity.

The project budget proposed for 2011 comprises 402 programmes and activities to be executed by 46 central working units, 185 technical working units and 171 working units in the provincial and regency levels.

Higher timber prices on the back of robust growth in property demand Prices of Indonesian timber products and other building materials are expected to increase in 2011 as property development in Indonesia is projected to grow between 20% to 30%. Housing demand in Indonesia has reached 8 million new units per year as the Indonesian economy continues to recover and purchasing power improves. The interest rates for housing loans, known as housing credits (KPR), have dropped to 10% – 11% and this has boosted housing activity in the country.


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