V. Results of Changes in Timber Concession Distribution: 1997/1998Page 1 | 2The core of this study is an examination of the changes in the distribution of timber concessions and mill holdings among Indonesia's timber groups over the course of the 1990's. Up to this point, the report has only presented the baseline findings, namely, who controlled what in 1995. We turn now to the presentation of the distribution of timber concessions and mill holdings, and changes in the national supply and demand balance for timber, in the aftermath of the Department of Forestry's closure and reassignment of a large number of timber concessions. This section attempts to provide a snapshot of how timber concession and mill holdings are now divided between timber groups, and the implications of that division for the supply of timber in Indonesia.
Four companies that were timber groups at the time of the baseline study – Andatu, Gunung Raya Utama, Kayon, and Medang Kerang – have now completely lost their HPH holdings. (Andatu and Gunung Raya Utama had most of their HPHs acquired by, or have been merged for methodological purposes with, existing timber groups.) A further six companies that were timber groups at the time of the baseline study – Hartati, Hendratna, Jatitrin, Katingan Timber, Subago, and Sumber Kayon – have now been reduced to single concessions, and can no longer be considered to be timber groups. Also of interest are the rising and falling fortunes of the 45 or so timber groups which are not among the half dozen giants that continue to dominate the industry, nor among the ten smaller companies that have fallen out of the bottom. Table 5.2 (on the next page) shows the top five winners and top five losers as a result of the Department of Forestry's closure and reassignment of timber concessions. The positions which these ten companies occupy in the national ranking of timber concession holdings has risen or fallen by fifteen places or more. It is worth noting that the position of the National Police at the top of the winners list is due to the fact that when the baseline study was carried out, Police control of the Brata Jaya Utama timber group was overlooked. Holdings of these two groups have now been merged under a single name, and this partly explains the apparent sharp rise in the timber concession holdings of the Police. Kodeco's position skyrocketed due to the acquisition of a single 691,700 hectare HPH in West Irian, now the country's single largest HPH. Mujur timber's position shot up due to its acquisition of numerous HPHs which has formerly been licensed to Gunung Raya Utama. As was mentioned in section III, Pakarti Yoga and Satya Djaya Raya are two companies aligned with elements that fell out of favor with President Suharto in the closing years of his government. This may explain their position as the first and fourth biggest losers in terms of timber concession holdings. Table 5.2 Biggest winners and losers from the closure and redistribution of HPHs (timber concessions)
There are only two recent sets of rankings with which to compare the rankings presented in this report, those of the Direktorat Pemanfaatan dan Peredaran Hasil Hutan (PPHH) 1997, and those of the concessionaire's association (APHI) reproduced in LATIN 1998. While the rankings produced by the two groups vary with those produced in this study, the rankings presented here are thought to be more thorough and thus likely to be more accurate. For example, PPHH does not recognize the Salim group as a concession holder. APHI does not recognize Kodeco or Hanurata as concession holders. Neither PPHH nor APHI recognizes the Armed Forces/Army as a concession holder. Only this study recognizes all these groups as important concession holders. Table 5.3 Comparison of ITFMP ranking of top fifteen private timber concession holders with those of the Direktorat Pemanfaatan dan Peredaran Hasil Hutan (PPHH)*, and Indonesia Association of Forest Concessionaires (APHI)**
* Of the two most important Departemen Kehutanan, Direktorat Jenderal Pengusahaan Hutan sources consulted for this study, only the one produced by Direktorat Pemanfaatan dan Peredaran Hasil Hutan (PPHH) provides a list of timber groups broken down by their timber concession holdings. The more exhaustive of the two reports, that produced by Direktorat Penyiapan Pengusahaan Hutan (PPH), produces no such list. However, should the latter wish to re-issue its report with a list of each timber group's concession holdings, it will first have to do a more thorough job of identifying the groups controlling the licenses to individual concessions. In addition to the many shortcomings outlined earlier in this report, the author found that PPH had failed to label the group owners of exactly 200 timber concessions, and had misidentified the group owners of a dozen more.
** The aggregate APHI figures in this table are based on a study by LATIN (1998) which totals the area of the concessions that are members of APHI (APHI 1998a). Our study found APHI's list to be deficient in two ways. First, our study identified 94 active HPHs which are not among APHI's listed membership. This may explain why APHI's list of timber groups (APHI 1998d) has only 49 as against the 56 found to still be in existence in our study. Second, our study identified three HPHs among APHI's list of active HPHs which have already been shut down according to PPH.
*** APHI considers the Djajanti group (which it ranks as the country's 3rd largest concession holder) to be a separate entity from the Budhi Nusa group (which it ranks as the country's 7th largest concession holder). As already discussed in the methodology section, this report considers the two groups to be one, as their headquarters are located in the same building and they are owned by the same family. In order to have standard units for comparison in the above table, the total hectarage designated for Djajanti and Budhi Nusa by APHI have been added together and combined under the Djajanti group.
**** Both PPHH and APHI consider Bumi Raya Utama and Bumi Indah Raya to be separate companies. This report combines the two, as they are owned by the same family. For the purpose of having standard units for comparison, the total hectarage designated for Bumi Raya Utama and Bumi Indah Raya by PPHH and APHI are added together, and combined under the Bumi Raya Utama group.
In the few short years between the completion of this report's baseline study and the present update, the size of the HPH-connected plywood and sawmilling sector in Indonesia grew from 385 mills with a legal processing capacity of 41.4 million m3 of logs in 1990 to 410 mills with a legal processing capacity of 46.7 million m3 in 1997. This is due to the Ministry of Industry (now the Ministry of Industry and Trade) licensing the expansion of the processing sector with scant regard to the supply of timber in the country. This is a problem that was highlighted last year by the Minister of Forestry, who quite rightly complained that the "Ministry of Industry and Trade issued permits to those wanting to develop wood-processing plants without checking the log supply with the Ministry of Forestry." The Minister added that the result was "rampant wood stealing and illegal trade" (Jakarta Post 1998d). The runner-up for receiving increased production permission is Barito Pacific. The annual amount of timber which Barito is allowed to consume has grown from 3.4 million m3 to 4.3 million m3, an increase of nearly a million cubic meters. Highest honors go to Kayu Lapis Indonesia, whose allowed consumption of timber has grown from 2.4 million m3 to 3.6 million m3, a hike of fifty percent. Levels of permission granted to other top timber processors – including Alas Kusuma, Djajanti, and Bumi Raya Utama – have remained constant. But there has been a 10 percent increase across the board in the industry. While the implications of a growing wood-processing sector are positive for Indonesia's balance of trade, they are negative for the country's forests. Between completion of the baseline study and updating the work, the supply of roundwood from timber concessions fell from 18.3 million m3 to 15.8 million m3. As a result the roundwood deficit of the HPH-connected saw and plymilling sector increased in the space of four short years, growing from 23.1 to 30.9 million m3. The HPH-linked plymilling and sawmilling sector has gone from being 44 percent supplied by HPH timber to being only 34 percent supplied by HPH timber. The growing log deficit for HPH-connected sawmills and plywood mills is expressed in an even more compelling way by looking at the ranking of the shrinking official log supply in many of Indonesia's timber conglomerates. Only a few years ago, the total number of timber conglomerates with less than a quarter of their total capacity met by their own HPHs was 12, but that number has now grown to 21. High honors for a shrinking log supply go to the Raja Garuda Mas conglomerate, whose saw- and ply-mills fell from being over 30 percent supplied by logs coming from their concessions to only five percent. Remember, the figures in the table below are for sawmills and plywood mills only, and do not take account of the pulpwood consumption of four of the timber groups included in the table – Sinar Mas, Raja Garuda Mas, Bob Hasan, and Barito Pacific - who have, or soon will have – operational pulp mills. Page 1 | 2
September 7, 1999
|