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Impacts on Economy, Environment and Society
Krystof Obidzinski and Agus Andrianto Forest Governance Program Center for International Forestry Research (CIFOR) April 2005
© 2005 by CIFOR All rights reserved. Photos by Agus Andrianto and Krystof Obidzinski Published by Center for International Forestry Research Center for International Forestry Research Jl. CIFOR, Situ Gede, Sindang Barang, Bogor Barat 16680, Indonesia Tel.: +62 (251) 622622; Fax: +62 (251) 622100 E-mail: email@example.com Web site: http://www.cifor.cgiar.org
TABLE OF CONTENTS
List of Tables, Figures, and Maps Glossary Acknowledgements Executive Summary 1. 2. 3. 4. 5. 6. INTRODUCTION OBJECTIVES METHODOLOGY STRUCTURE OF THE REPORT OVERVIEW OF THE FORESTRY SECTOR IN EAST KALIMANTAN ILLEGAL FOREST ACTIVITIES IN BERAU DISTRICT, EAST KALIMANTAN 6.1. Overview of the forestry sector in Berau District 6.2. Illegalities associated with extractive forestry operations 6.2.1. HPH 6.2.2. Small-scale logging permits – IPKTM, IPK 6.2.3. HTI 6.2.4. Small-scale logging teams 6.3. Illegalities associated with wood-processing industries 6.3.1. Sawn timber and moulding 6.3.2. Timber kiosks 6.3.3. Ship-building 6.3.4. Pulp and paper production 7.
iv vii x xi 1 2 3 4 5 7 8 8 8 24 29 32 34 35 39 41 42
ILLEGAL FORESTRY ACTIVITIES IN THE NORTHERN PART OF EAST KUTAI DISTRICT 44 7.1. Overview of the forestry sector in East Kutai District 7.2. Illegalities associated with extractive forestry operations in the northern part of East Kutai District 44 44
3.1.2. Impact of illegal forest activities on district economy 8. HPH IPK Small-scale logging teams 45 48 51 7. Impact of illegal logging on environment in both districts 59 59 70 77 8.3. 7.3. Factors facilitating illegal forest activities in Berau and East Kutai and how to mitigate them 80 REFERENCES APPENDICES 83 88 iii . Sawmills and moulding 53 8.3. SUMMARY AND ANALYSIS 8.7. Illegalities associated with wood-processing industries in the northern part of East Kutai 53 7.4.1. 7. Impact of illegal forest activities on livelihoods in Berau and East Kutai 220.127.116.11.2.2.
Table 21. Table 11. Table 19. Table 23. 2004 Timber kiosks in Berau District. 2002-2004 HTI natural forest log production in Berau. Table 8. Table 3. 2001-2002 Log production in East Kutai in 2003 Reported transport of HPH logs in East Kutai in 2003 Provincial IPK permits in East Kutai active in 2004 IPK permits issued by East Kutai District (Bupati). Table 17. Table 13. Table 6. Table 16. Table 25. Table 15. East Kutai. 2004 Log production in East Kutai. 2004 HPH operations in Berau. as of 2001 HPH and IPK roundwood production in Berau. Table 22. as of 1997 Plantation ventures seeking IPK permits in 1999 Provincial IPK logging permits in Berau. 2004 Ship-building in Berau. Table 9. Table 24. FIGURES. Table 4. 2003 HTI natural forest log production in Berau in the first half of 2004 Small-scale logging teams in Berau District. 2004 Sawn timber and moulding production in Berau in 2003 Sawn timber and moulding production in Berau as of May 2004 Sawn timber and moulding mills in Berau. Table 2. an in-depth look IPKTM issued by Bupati Berau in the period 2000-2001 IPK Wood Utilization Permit-Holders in Kabupaten Berau. Table 14. Table 20. 2002-2004 HPH and IPK log production in Berau in 2003 HPH and IPK log production in Berau until May. Table 18. 2001-2004 Reported transport of IPK logs in East Kutai in 2003 A sample of small-scale logging teams near Muara Wahau.LIST OF TABLES. Table 7. Table 5. Forest Area by Forest Land Use Type by Sub-District. AND MAPS List of Tables Table 1. Table 10. Table 12. 2001-2003 Province-level IPK logging permits in Berau. 2004 8 9 9 12 13 14 24 25 26 27 30 30 32 36 36 39 40 42 45 46 47 48 49 50 52 iv .
Discrepancy between the production and shipment of logs from Berau. 1993-2002 HPH-IPK roundwood production in East Kutai. 2004 Timber shipments by boat from Wahau to Samarinda. East Kutai. Figure 9. List of Figures Figure 1. Table 30. July 2004 Passage fee system for sawn timber on the route Wahau-Samarinda Production per type of large-scale logging license in Berau. Figure 7. Figure 5. 1999/2000-2003 HPH-related employment in Berau. Figure 12. 2003 Documented HPH/IPK illegal logging cases in Berau. 2003 A sample of 15 sawmills operating in Muara Wahau. 1999/2000-2003 IPK-based employment in Berau. Figure 10. 1999/2000-2003 Logging-based employment (HPH. IPK) in East Kutai. 2000-2003 HPH and IPK employment in Berau. 1999/2000-2003 HPH-related employment in East Kutai. 2000-2004 Market value and Retribusi Pengelolaan tax losses from undocumented shipments of sawn timber/moulding in Berau. 2003 (in Rp billion) Employment generated by licensed and unlicensed forestry sector in East Kutai by category. Table 29. Figure 11.Table 26. 1999/2000-2003 Deforestation in Berau 1997-2000 74 75 75 78 v 10 37 38 47 65 70 71 71 . Table 36. Table 33. 2003/2004 54 55 56 58 58 60 60 63 67 69 73 Table 34. Figure 6. 1999/2000-2003 IPK-related employment in East Kutai. The official record of sawn timber and moulding mills in East Kutai in 2004 Sawn timber production in East Kutai. 1996-2003 Supply of HPH/IPK logs and the production of sawn timber in Berau. Table 31. 2000-2002 Revenues gained and lost in Berau’s forestry sector. Table 28. Figure 2. 2003 (in Rp billion) Revenue collection and loss in the forestry sector in East Kutai. Table 32. 2003-2004 Sawn timber produced and shipped in Berau. 2001-2003 PSDH revenues collected in East Kutai. Table 27. Figure 3. Table 35. Figure 4. Figure 8.
Map 2. Map 8. Map 9. Map 6. Map 10. Map 7. Map 3. Administrative map of East Kalimantan Province Berau district Forest concession companies in Berau and East Kutai overlap between forestry and mining operations in Berau Talisayan sub-district PT Karya Lestari Jaya PT Berau Timber PT MSK Timber PT Taurus Berau and the northern part of East Kutai district 86 87 88 89 90 91 92 93 94 95 vi . Map 4.List of Maps Map 1. Map 5.
Reforestation Fund General Allocation Fund Special Allocation Fund Province/District Forestry Service Provincial/District Finance Office Aloes Wood Hak Guna Usaha. Commercial Forestry Concession Hak Pengusahaan Hutan-Tanaman Campuran. Commercial Forestry Concession & Oil Palm Plantation Hutan Tanaman Industri. Industrial Timber Plantation Protection Forest Indonesian Bank Restructuring Agency Izin Pemanfaatan Kayu. Regional Development Planning Agency Berau Forest Management Project Output based job Badan Pusat Statistik. formerly District Branch of Forestry Service Dana Reboisasi. District/Province government enterprise District Head Cabang Dinas Kehutanan. Statistics Office Badan Usaha Milik Daerah. Commercial Forestry Concession & Mixed Plantation Hak Pengusahaan Hutan-Tanaman Coklat. Timber Utilization Permit Dinas Pendapatan Daerah : vii . Commercial Forestry Concession & Cocoa Plantation Hak Pengusahaan Hutan Tanaman Kelapa Sawit.GLOSSARY Baplan Kehutanan BAPPEDA BFMP Borongan BPS BUMD Bupati CDK Dana Reboisasi DAU DAK Dinas Kehutanan Gaharu HGU HPH HPH-TC HPH-TC HPH-TKS HTI Hutan Lindung IBRA IPK : : : : : : : : : : : : : : : : : : : : : : Badan Planologi Kehutanan. Forestry Planning Unit Badan Perencanaan Pembangunan Daerah. Business License Hak Pengusahaan Hutan.
IPKTM IPPK Kabupaten Kadishut Kanwil Kapolsek Kawasan hutan KBK KBNK Kios kayu KKN Kopassus Koramil Mandor Masyarakat MoF MTH IHPH NTFP PAD Pajak Daerah PBB Pemkab Perda Provisi Pihak Ketiga PSDH PWH Reformasi Retribusi Daerah : : : : : : : : : : : : : : : : : : : : : : : : : : : : : Izin Pemanfaatan Kayu Tanah Milik. Kolusi dan Nepotisme. Sub-district Military Command Logging team leader Local people Ministry of Forestry Mixed Tropical Hardwoods Iuran Hak Pengusahaan Hutan. Forest Estate Kawasan Budidaya Non-Kehutanan. Opening of forest area Political transformation in Indonesia after 1998 District Fees viii . Collusion and Nepotism Komando Pasukan Khusus. Head of Province/District Forestry Service Kantor Wilayah. Corruption. Commercial Forestry Concession tax Non-Timber Forest Product Pendapatan Asli Daerah. Land and Building Tax Pemerintah Kabupaten. Sub-district Police Head Forest Estate Kawasan Budidaya Kehutanan. Permit for Extraction and Utilization of Timber District Kepala Dinas Kehutanan. Non-Forest Estate Timber Kiosk Korupsi. Utilization Timber Permit form Privately Owned Land Izin Pemungutan dan Pemanfaatan Kayu. Timber Royalty Pembukaan Wilayah Hutan. Military Special Forces Komando Daerah Militer. Regional office of a National Government Agency Kepala Kepolisian Sektor. Regionally Generated Revenues District Tax Pajak Bumi dan Bangunan. District Regulation Sumbangan Pihak Ketiga Provisi Sumber Daya Hutan. Peraturan Daerah.
Timber Processing Fee District Spatial Development Plan Surat Keputusan. Letter of Legality for Forest Products Sumbangan Pihak Ketiga.RKL RKT RP RP RTRWK SK SKSHH SPK STREK Sumbangan Pihak Ketiga UPTD : : : : : : : : : : : Five Year Forestry Workplan Rencana Kerja Tahunan. Third Party Contribution French-funded Sustainable Forest Management Project in Berau. Provincial Forestry Service ix . 1989-1994 Third Party Contribution (District level tax) Unit Pelaksana Teknis Daerah. Government Decision Surat Keterangan Sahnya Hasil Hutan. Annual Forestry Workplan Retribusi Produksi. Timber Production Fee Retribusi Pengelolaan.
Wijil Rahadi. contacts in other HPH. We gratefully acknowledge the assistance of PT Sumalindo Lestari Jaya IV. We are also grateful to TNC staff in East Kalimantan whose assistance during the process of data collection was indispensable. Christoforus Winfried Belle. Trade and Industry. and Customs Offices at the provincial level in Samarinda as well as in Berau and East Kutai districts. In particular. as well as Forestry (UPTD. woodworking sector enterprises. Pak Dimin and Pak Bambang of Jabdan/Muara Wahau – each of whom provided critical assistance during the field component of the study. Dinas Kehutanan). IPK. Statistics. The authors gratefully acknowledge this support. We would also like to thank Dedi and Bambang of Yaysan Bestari. IPPK/IPKTM. Dodi Hernawan of Bioma. x . We also extend our appreciation to Mbak Daryatun and Mas Agus for making available to us TNC field equipment. numerous government officials and forestry officers made themselves available for interviews and provided important data. PT Gunung Gajah Abadi. we extend our thanks to Pak Junaedi for extensive help with spatial imagery as well as for useful discussions about forestry problems in Berau and East Kutai districts. Rini Kusumawati.ACKNOWLEDGEMENTS This study was funded by The Nature Conservancy. During the authors’ visits to Berau and East Kutai.
EXECUTIVE SUMMARY This study examines illegal forest activities in Berau and East Kutai Districts in Indonesia’s East Kalimantan province. social/livelihood and environmental impacts. In 2003. xi . the study identifies illegalities associated with these operations and assesses their economic. such losses amounted to over Rp 103 billion. By analyzing all types of extractive and processing forestry activities. Illegal forestry activities in Berau and East Kutai The analysis of logging and woodworking in Berau and East Kutai indicates illegalities are widespread. They occur mainly in the following forms: 1) 2) 3) 4) 5) 6) 7) Logging operations cutting out of block Logging companies pretending to be stagnant while in fact they extract timber Land-clearing (IPK) permits issued for dubious plantation schemes Unlicensed small-scale logging Log/sawn timber production is under-reported and shipping documents are illegally altered Logging and woodworking enterprises in both districts routinely evade taxation Logging as well as woodworking enterprises engage in tax evasion Economic impact of illegal forestry activities in Berau and East Kutai The 2003 analysis shows the illegal forestry activities cause large budgetary losses in Berau. It also identifies the key driving forces behind illegal forest activities and proposes corrective measures. this revenue lost is not literally ‘lost’ as a substantial part of it is appropriated by individuals and government institutions in position to do so. However.
3a 0 3. xii .38 0 0 109.3 2. most of the revenue ‘lost’ is appropriated by well-connected individuals and government institutions in the district. b This estimate is based on the information that on average each of 37 sawmills in Berau operates 11 months a year and each has a monthly ‘informal budget’ of Rp 5 million. PBB TOTAL Revenue collected (Rp billion) 14.15 0 0 29. Similarly. In 2003. 88 billion for the period 2000-2003 by three to obtain a yearly average.2 0.03b 1.4 103.24 Note: a This number has been derived by dividing the official figure of lost DR-PSDH of Rp.2 71 0 10 Revenue lost (Rp billion) 12.65 1. economic losses resulting from illegal activities in the forestry sector in East Kutai district are large and they far outweigh the gains. IPK and unlicensed small-scale logging. As in Berau.BERAU HPH/IPK/HTI PSDH Retribusi Produksi DR IPPK/IPKTM DR-PSDH Retribusi Produksi Small-scale logging teams Informal tax DR-PSDH Retribusi Produksi Sawmills Retribusi Pengelolaan Informal tax Lumber kiosks and ship-building Informal tax Pulp and paper Water tax.89 0 0.8 0.6 0 0 0 65. mainly in lost tax revenue on HPH. the losses amounted to Rp 126 billion.1 0.
5 28.5 0 0 2. unlicensed forestry operations in Berau generated 4. In 2003. particularly for the unskilled labor force.5a 23.867-5.000 1.917 xiii . while licensed operations created 2.4 69.410 (70 percent skilled jobs) 393 124 256 2.6 0 0 126 Note: a The amount of DR revenue gained is based on the assumption that about 31 percent of the total DR revenue generated from the production of logs in 2003 was transferred to East Kutai. Illegal forestry activities in Berau and East Kutai and local livelihoods While illegal forest activities in Berau and East Kutai are a drain on the finances of the local government.000 jobs.EAST KUTAI HPH/IPK PSDH DR Small-scale logging teams PSDH DR Informal tax Sawmills Informal tax TOTAL Revenue collected (Rp billion) Revenue lost (Rp billion) 17.4 63. moulding Timber kiosks Ship-building Total licensed forestry sector (logging + woodworking) Total unlicensed forestry sector (logging + woodworking) Total forestry sector (licensed + unlicensed) Source: CIFOR survey 2004 Employment in 2003 434 250-300 3.1 10.773 5.000 jobs.144 3.1 46. BERAU Licensed logging sector HPH/IPK HTI Unlicensed logging sector Small-scale logging teams Licensed woodworking sector Kiani Kertas pulp and paper mill Unlicensed woodworking sector Sawmills.094-2. it must be admitted they generate employment opportunities.1 3.
logging in the district affects between 58.000 and 38. In 2003.000 m3 of wood products (production/employment ratio: 615 m3/person/year). moulding Total licensed forestry sector (logging + woodworking) Total unlicensed forestry sector (logging + woodworking) Total forestry sector (licensed + unlicensed) Employment 5. b This is an extrapolation from the situation in the Wahau-Kombeng area. the official log production in the district (521.9 percent.500 employment opportunities.713 ha of forest (or 2.500 ha per year.000-380. The licensed forestry sector supported 5.919-8.000 m3 of timber from between 35.000b 95 505-605c 5.319a 2.000 ha of forest. whereas small-scale logging teams extracted 350. Note: a About 74 percent of these jobs (or 3. both licensed and unlicensed.000 m3 of logs to 31 local sawmills that produce 105. or 42.7-2. 690. xiv . b This is an extrapolation from the situation in the Wahau-Kombeng area where 55 logging teams (about 550 loggers) annually supply 210.965 m3) was generated from at least 23.000 ha of which was located in the Production and Limited Production Forest zones and 200. As of 2002. In 2001. the EU’s Berau Forest Management Project estimated the rate of deforestation in Berau at 1.019 Source: CIFOR survey 2004.8 percent of the total forest cover) annually.605 7.500 jobs in the district due to disproportionately high number of IPK land-clearing jobs that will be available for a very short time only. East Kutai is facing far more serious forest degradation and deforestation problems. soil and water resources in both districts. This study estimates that logging.505-2.The licensed and unlicensed forestry activities also generate significant employment opportunities in East Kutai. where 31 sawmills employ 171 people and annually produce 105. The latter includes the Kutai National Park.000 m3 of wood products. in Berau annually affects nearly twice as much forest.403 ha of degraded forest in the district.713 ha of forest. The unlicensed forestry activities created 2. EAST KUTAI Licensed logging sector HPH/IPK Unlicensed logging sector Small-scale logging teams Licensed woodworking sector Reporting woodworking mills Unlicensed woodworking sector Other sawmills. there were at least 890.000 ha in conservation areas. Cumulatively. The impact of illegal forest activities in Berau and East Kutai on the environment Illegal forestry activities in Berau and East Kutai are having an increasingly negative impact on forest.414 2.953) were generated by IPKs.713 and 61. which is almost completely destroyed.
yet critical. What can be done to prevent them? In order to curtail the illegal forest activities by in Berau and East Kutai. far outweigh the risks (applicable legal sanctions). an unbeatable opportunity for quick enrichment. In order to narrow the gap between the costs and benefits of illegal forest activities in both districts. prevention and suppression measures need to be complemented by a range of other initiatives pursued simultaneously: 1) Maintain the spotlight on a difficult. law enforcement measures alone (such as detection. The vast riches available from illegal forest activities in Berau and East Kutai cause competition and conflict among key players seeking to benefit from them – e. District Forestry Bureau and other institutions.Why do illegalities occur? By far the most important driving force behind illegal forest activities in Berau and East Kutai is their economic significance as a source of enormous rents – well over Rp 100 billion annually in each district. private companies and communities. as well as institutional budgetary augmentation. Making the on-going detection. This large pool of money is an important source for personal enrichment. issue of restructuring the enormous overcapacity of Indonesia’s woodworking industries which drives the insatiable demand for logs 2) Operationalize bilateral agreements between Indonesia and timber importing countries to eliminate illegal timber trade 3) Generate incentives for Indonesian timber producers to adhere to the legal standard through tenure security and certification schemes 4) Help synchronize the forestry legal framework and strengthen tenure security for local communities 5) Support grass-root movements to pressure for greater accountability and transparency in the district forestry sector. prevention and suppression operations by the government’s law enforcement agencies work in tandem with these additional initiatives and the grass-root pressure would result in a more potent tool with which to limit illegal forest activities in both districts. vast rents in the form of bribes or windfall corporate profits. for various district government institutions. This is because the benefits from illegal forestry activities. prevention and suppression) undertaken by the security agencies are unlikely to be sufficient.g. District/Province UPDT. The logging and woodworking enterprises underreport production and tamper with timber transportation records because by doing so they minimize tax liabilities and make windfall profits. the official detection. This renders forestry a gold mine for rent-seekers. xv . these parties engage in shifting alliances to undermine the opponent(s) in whichever way possible. Constantly maneuvering to maximize their respective shares. The scramble for rents from illegal forest activities hampers the cooperation between different government institutions in Berau and East Kutai and fundamentally undermines forest governance in both districts. District/Province Police.
These practices also harm the economy. with Kalimantan contributing about 30. 1 . Unfortunately. the definition of which encompasses a diverse number of unsustainable logging practices. Sumatra and Papua (western part of New Guinea). the forests cover approximately 100 million hectares (ha) of the country’s land surface. extending from coastal swamps to central mountain ranges (Baplan Kehutanan 2002). unlicensed small-scale manual logging. medicines and materials traditionally collected in the forests. It is estimated by the Indonesian government that over two thirds of the logging activity in Indonesia is illegal or quasi-legal (Tacconi et al 2004). and reduces available subsistence foods.5 million ha per year (Analisa 2003. Pikiran Rakyat 2003).6 million ha of forest (Tacconi and Kurniawan 2004). At present. Gatra 2003. agricultural conversion and logging – both legal and illegal. Indonesia’s valuable tropical forests are being lost at the rate of between 2 and 3. not only devastates Indonesia’s forests but also harms water and soil quality. The primary causes for this deforestation include forest fires. Illegal logging. to subsistence farmers clearing lands for agricultural use. Illegal logging. with hundreds of millions of dollars of lost government revenue each year. undertaken by both licensed and unlicensed forestry operations. Illegal logging is causing serious fast water-run-offs and resultant land-slides and mud-slides which are killing people and ruining their lands. INTRODUCTION Indonesia possesses one of the most extensive tropical forests in the world. Most of Indonesia’s forests are found on three large outer islands of Kalimantan (Indonesian part of Borneo). Republika 2003. Asia Pulse 2003. East Kalimantan is one of the most forested Indonesian provinces on the island of Borneo. is undertaken on a wide range of scales – from licensed capital intensive commercial logging operations. The forest in East Kalimantan covers about 60% of the province.1.
national). and community livelihoods 2. inform the debates in which they are involved and offer feasible options which could usefully complement the on-going government initiatives seeking to address the illegal logging problem in the region. Describe and analyze the obstacles to preventing illegal forestry activities in both districts 4. social and environmental impacts of illegal logging in Berau and East Kutai Districts to clarify the situation for the relevant stakeholders (district. province. Specifically. the goals of this study are to: 1. Describe and analyze the factors driving illegal forestry activities in Berau and East Kutai 3. district economy. OBJECTIVES This study aims to construct a clear picture of economic. Identify strategies for overcoming the above obstacles to reducing illegal forestry activities 2 .2. Document the impacts of illegal forestry activities on the forest.
METHODOLOGY In order to understand the economic. the coverage is substantial enough (about 50-60 percent sample across both licensed and unlicensed forestry operations) to ascertain the validity of the information and based on it conclusions. permits. The study of this segment of the overall forestry sector was based on district-wide survey of unlicensed logging and processing activities in order to understand their operational characteristics. revenue and benefit flows. plans. The basic premise in assessing the extent and nature of illegal forest activities in this segment of the forestry sector in Berau and East Kutai was to compare the official forestry statistics. maps. In practice. The surveys of licensed and unlicensed forestry activities were as extensive as possible. the project has undertaken a comprehensive review of all forestry operations grouped in two broadly defined categories: Licensed forestry sector HPH/IPK/HTI/IPPK-IPKTM/wood-working (pulp and paper).3. map out the obstacles and identify strategies to help reduce such activities in both districts. 3 . investment. production logs. environmental and social components of the illegal forestry activities in Berau and East Kutai. The survey and statistical data were augmented with interviews with company employees and forestry sector insiders. Whenever possible. Unlicensed forestry sector small-scale logging teams/sawn timber-moulding mills/timber kiosks/ship construction. the comparison of the official forestry data with actual operations was undertaken as well. Overall. participation of the main stakeholders. shipping reports etc with on-the-ground realities of these operations. this exercise involved field checks of the current logging activities and interviews with company employees and forestry sector insiders.
4 . identifies key driving forces behind such illegalities. It follows the structure of Section 6 by first presenting a brief overview of the district’s forestry sector and subsequently discussing illegalities in both extraction and processing of timber. focuses on illegal forestry activities in Berau District. assesses the obstacles to reducing illegal forest activities and outlines possible ways to strengthen the on-going anti-illegal logging (anti-illegal forest activities) initiatives in both districts. social and environmental impacts of illegal forest activities in Berau and East Kutai. It opens with an overview of Berau’s forestry sector. focuses on illegal forestry activities in the northern part of East Kutai District. These chapters are followed by the summary and analysis section which examines economic. Subsequently. Section 7. it discusses illegalities associated with extractive forestry operations (various forms of logging) as well as wood-processing industries in the district. The second part of the study. STRUCTURE OF THE REPORT The body of the study consists of two major parts.4. Section 6. The first of these.
East Kalimantan has for a long time been one of the most important timber producing provinces in the whole of Indonesia. BPS 2000). of which 65 were active and 17 stagnant. large-scale concessionaries (known as Hak Pengusahaan Hutan. has always been sparsely populated. in 2002 there were 27 operating plywood/sawn timber mills of which 20 were located in the provincial capital. According to the province’s Forestry Office (Dinas Kehutanan). there were 83 HPH permits in effect. active HPHs totalled 89 companies. The province’s population increased by more than 300% over the last 30 years. Currently. there were 19. mainly due to financial problems. In 2003. many newly formed district governments began issuing large numbers of small-scale concession permits (IPPK/IPKTM or HPHH). Since then. Between 1970 and 2000. it is unclear if and when such plan will materialize.5.6 million hectares of forest in East Kalimantan. BPS 2000). However. East Kalimantan continues to have a fairly significant wood-working sector. As of 1999/2000. Samarinda and Tarakan. Nunukan districts and the township of Tarakan into a separate province of North Kalimantan (Tempo Interaktif 2004). mainly due to intensive in-migration caused by growth in natural resource based industries such as timber. In 1999. The rest of the province’s area. the province comprises eight administrative districts and there townships (see Appendix 1). The effective HPH permits had 8. particularly the hinterland. gas and coal mining.4 million m3. East Kalimantan was divided into four administrative districts of Kutai.8 million ha of forest under licence (Dinas Kehutanan Kalimantan Timur 2000. Rencana Kerja Tahunan) (Casson and Obidzinski 2002). or HPH) extracted about 156 million m3 of logs from the province’s forest (Dinas Kehutanan Kalimantan Timur 2000.2 million ha) (BPS 2002). Prior to decentralization and regional autonomy. In 2002.400 km2. with an area of 211.5 million m3. social conflicts and difficulties with securing annual work plans (RKT. OVERVIEW OF THE FORESTRY SECTOR IN EAST KALIMANTAN The province of East Kalimantan is located in the eastern part of the island of Borneo. Bulungan and three townships – Balikpapan. It is one of the largest and richest provinces in Indonesia. As of mid-2004. The remainder was classified as National Parks and Reserves (1.6 million ha). the population of East Kalimantan province numbered 2.8 million ha). the number of active.6 million m3. The urban areas of Samarinda and Balikpapan as well as adjacent parts of Kutai Kartanegara district are inhabited by 55% of the province’s population. there were only 30 HPH companies with approved RKT plans active in the province.6 million people (BPS 2002).8 million ha) and Protection Forest (2. At their peak in 1992.2 million m3. the official log production in the province totaled 7. large logging concessionaries in the province has declined. Limited Production Forest (5. In 2001. Pasir. At the same time. oil. There is talk about turning Bulungan. this fell to around 4. Berau. Malinau. the logging quota for East Kalimantan was about 1. five in Balikpapan and 5 . Samarinda. mainly comprised of Production Forest (4. while in 2004 it was lowered to 1. As of 2003.2 million ha) and Conversion Forest (5. making it the second largest province in the country after Papua.
it would still face a deficit of logs that in 2002/2003. giving a total of 4.000 tons of pulp per year.one each in Sangkulirang and Tarakan. reached between 4 and 5 million m3. In 2000. However. There were also two wood chip mills. as there is a significant discrepancy between the demand for timber and the available supply of logs. While the installed capacity of woodworking industries in the province has been relatively stable over the last several years at around 6 million m3 per year. Even if the industry operated at half of the capacity. with Kiani Kertas’ mill in Berau capable of producing 525. This figure includes logs that were illegally exported (Smith et al 2003). illegal logging in East Kalimantan was estimated at between 2. There were also 90 officially registered sawmills. This has been the case since the mid-1980s when natural gas and oil became the main contributors to the province’s economy. the real capacity for sawmills is likely to be much higher as only a small number of them are officially registered. oil and gas generated about 60 percent of the export value in East Kalimantan. one each in Tarakan and Nunukan. its significance has been declining.7 million m3. for instance.8 million m3 per year in installed capacity. the supply of logs has been falling steadily. Illegal logging is filling this gap. In 2002. with a combined capacity of 298. While the forestry sector is still considered important within the framework of East Kalimantan’s economy. The pulp and paper capacity of the province was relatively small in 2002. with a total installed capacity of 0. 6 .000 tons. with coal mining showing particularly strong growth in the 1990s.5 and 5 million m3 per annum (Obidzinski and Palmer 2002). East Kalimantan’s woodworking industries are faced with a serious deficit of the raw material. The remaining 40 percent were generated by coal (and other mineral) mining as well as forestry.
Until the late 1980s. 7 .000 people have arrived (primarily from West and Central Java) and settled permanently (Noor 1996:108. The coastline is of considerable length and diversity. as dozens of islands and reefs (best known among them is Pulau Derawan) are scattered along the shore (Pemkab Berau 1990) Tanjung Redeb is the capital of the Berau district. Berau faces the Celebes Sea (see Appendix 2). The interior is dominated by hills and mountain ranges that rise to over 2000 meters above sea level in the extreme western part of the district. If compared to the total of about 50. between 1994 and 1995 alone. East Kutai and Malinau (Kompas 2001). district capital. Covering a land area of 24. few locals found employment in this sector as logging companies brought contract labor from outside (Tim Monografi Daerah Berau 1976). The influx of spontaneous migrants (also primarily from Java) to Berau began in the late 1980s when the company PT Berau Coal was about to open the mining of coal in the district. Together with two adjacent towns of Gunung Tabur and Sambaliung. it is clear that the population of Berau experienced tremendous growth over the last twenty years (BPS Berau 1998:20). ILLEGAL FOREST ACTIVITIES IN BERAU DISTRICT. no more than 17-18. a crucial construction phase of the PT Kiani Kertas mill. BPS Berau 1998:37-38). native Dayaks (Segai. is covered with forest (BPS Berau 1998:96.000 in the mid 1980s.6. The overall population of the district in 2000 was estimated at nearly 120. Although transmigration to Berau began as early as 1981. the majority of the population was local Malays and Buginese pursuing subsistence agriculture (wet and dry rice) as well as trade. Kaltim Post 2002). 1 Kelay and Segah Rivers merge into the Berau River near the town of Tanjung Redeb. Most of Berau territory lies in an extensive hinterland of the Segah and Kelay Rivers that provide crucial communication arteries throughout the district by linking interior with the coast1. In the east. In the early 1990s.000 (Kompas 2001). about 50 km from the estuary. the population of Berau increased by over 20 percent (BPS Berau 1998:20. EAST KALIMANTAN Berau is one of eight districts (kabupaten) comprising the province of East Kalimantan. the district is located in the northwestern part of East Kalimantan and now borders kabupaten Bulungan. According to official government data. A small minority was comprised of town-based Chinese traders. this influx turned into a flood as the Kalimanis group of timber tycoon Mohammad “Bob” Hassan announced plans to build a large pulp and paper mill in the eastern part of Berau (Barr 1998). Although HPH logging operations have been active in Berau since the early 1970s. about 80 percent of the district’s area.000 people. it forms a larger urban area of about 50. Kenyah and Punan) inhabiting villages in the hinterland and Bajau sea nomads in the east (Pemkab Berau 1990).2 million hectares.000 square kilometers. For instance. Pemkab Berau 1999:14). or 2.
As in many other parts of Indonesia.675 165.475 20. Table 1.000 ha classified as Protection Forest.a. small-scale logging permits such as IPK (Izin Pemanfaatan Kayu) or IPPK/IPKTM (Izin Pemungutan dan Pemanfaatan Kayu.800 539.475 28. n. 353.a. Since the mid-1980s.2. Indonesia’s largest timber-producing province.025 0 337.999 45.650 5. Fifty three percent of Berau’s Production Forest is located in the interior sub-districts of Kelay and Segah. 6. Illegalities associated with extractive forestry operations The extractive forestry sector in Berau consists of the following sub-sectors: HPH (Hak Pengusahaan Hutan) large-scale logging concessions.900 5. Izin Pemanfaatan Kayu Tanah Milik). while over one-half of the kabupaten’s Conversion Forest is located in the coastal sub-district of Talisayan.5 million ha has been designated as either Permanent or Limited Production Forest.2.975 182.1.975 328.400 68. MoF distributed 14 8 .075 0 0 0 5.049 786.a. Berau has been an important area for log production in East Kalimantan. 59. n. The illegality problems associated with extractive forestry operations in each sub-sector are discussed below.075 0 87. or Forest Estate (see Table 1). Forest Area by Forest Land Use Type by Sub-District.2 million hectares (ha) – or approximately 90 percent of Berau’s total land area – is classified as Kawasan Hutan.950 353.150 99.350 208. development of HTI (Hutan Tanaman Industri) industrial timber plantations and small-scale unlicensed logging teams. substantial volumes of logs have also been harvested in recent years by land clearing license holders and operations based on small-scale logging permits.775 2. Until the collapse of Suharto’s New Order regime in May 1998.725 621.325 n.227.750 150.000 slated for conversion to other uses.175 23. Over the ensuing decade.1.6. Of this. Overview of the forestry sector in Berau District Over 2.524 289.775 6.750 340.800 48. n.200 105. as of 2001 Kecamatan Kelay Segah Talisayan Gunung Tabur Sambaliung Biduk-Biduk Pulau Derawan Tanjung Redeb Total Permanent Limited Conversion Protection Total Production Production Forest (ha) Forest (ha) (ha) Forest (ha) Forest (ha) 62.a. 6.500 16. n.300 318.449 Source: BPS Berau 2001.975 84. 1.075 758. and 329.950 64.750 34.900 427. formal timber extraction in the district was largely carried out by companies holding HPH (Hak Pengusahaan Hutan) timber concessions issued by the central government. HPH The Ministry of Forestry (MoF) allocated the first HPH concessions in Berau in 1969.a. during the start of East Kalimantan’s commercial timber boom.
Province-level IPK logging permits in Berau. whereas the process of phasing out of IPPK/IPKTM permits is nearly complete. With forests that are rich in high-value dipterocarps.213. 1999). However. coal mining.282 751. indicating serious irregularities (Figure 1). however.904 402. as illegal logging – by HPH-holders and by other parties – is known to have been common practice in Berau. the reported production of roundwood in Berau by HPH concession holders has been declining. Among the main reasons for this are financial difficulties and legal uncertainty the companies are facing as a result of tenure/compensation conflicts with local communities as well as concession overlaps with other land-use license holders (e.447 2. covering an aggregate area of 1. East Kalimantan Province It is important to note that over the last few years the reported shipment of log from Berau has often exceeded the reported log production in the district. HPH-holders operating in Berau reportedly harvested 10. For a brief moment in 2001 and 2002. It is likely. that the actual volumes of timber harvested have been substantially greater than these official figures suggest.582 120. or over 13 percent of the 77 million m3 of roundwood formally extracted by concessionaires in Indonesia’s largest timber-producing province (Dinas Kehutanan. and other parts of East Kalimantan (Kartodihardjo 2000). the drop off in the production of roundwood by HPHs was offset by the increased log output from IPK land-clearing permits and IPPK/IPKTM district timber extraction licenses (Table 2). District Forestry Service. During the 15-year period from 19851999. 2002-2004 Year 2002 2003 2004 Area (ha) 18. Since 1998.5 million m3 of logs.700 244. the allocation of IPKs has fallen sharply in recent years (Table 3).000 Production target (m3) 365.400 4.282 365.448 Source: Dinas Kehutanan. Table 2.202 65.g. HPH and IPK roundwood production in Berau.703 26.109 Source: UPTD.378 348. Berau has been one of the province’s most productive sources of timber over the last three decades.752 IPK 918.HPH concessions in the district. plantation estates). 9 . 2001-2003 Year 2001 2002 2003 Production (m3) HPH 294.4 million ha (Kanwil Kaltim 1998).357 Total 1. Berau Table 3.
the district’s largest timber producer was the state-owned enterprise.000 200.000 800. The official district statistics suggest that between 1996 and 2003 HPH and IPK operations in Berau extracted between 775.400. Kalimanis entered Berau in 1973. Controlled by Suharto’s close associate Mohammad ‘Bob’ Hasan. Bob Hasan had also become the director of the Astra Group. The group expanded its presence in 1978 by securing a 330. PT Inhutani I (see Appendix 3).000 1. Greater production than shipping would not be surprising if Berau possessed an established plywood sector (sawmills do not use HPH or IPK logs for processing). more logs were produced than shipped. 1996-2003 1. Until recently.876 m3 of logs illegally. By the mid-1990s. This means that in the years when production exceeded shipping.179.000 600.937 m3 and 1. Inhutani I had operations at four HPH sites in Berau.000 400. but it does not.000 0 1996 Logs Shipped (m3) Logs Produced (m3) 1997 1998 1999 2000 2001 2002 2003 Source: UPTD Berau. Inhutani I hosted a French-sponsored STREK project conducted forest disturbance and recovery studies at its concession area in Labanan. The work initiated by STREK was continued by the EU-funded Berau Forest Management Project (BFMP) – a cooperative project with PT Inhutani I that operated in Berau between 1996 and 2002 with the capitalization of nearly US $ 15 million.2 Until 1999.000 Volume (m3) 1. when PT Kalhold (later re-named Rejo Sari Bumi) obtained a 70.Figure 1.000 ha of forest area in Berau that was previously managed by private concession-holders whose HPH contracts have now ended.000 ha HPH for PT Alas Helau. from which it extracted 125.000 ha of the area initially assigned to Inhutani I is located in Berau. Since the early-1990s. In the late 1990s. when it was given control of HPH concessions over an area totaling 2. In some years. The BFMP work is set to resume with a new EUfunded 5-year Berau-Bulungan Participatory Forest Management Project. BPS Berau (2001. the largest corporate actor among private concession-holders in Berau was the Kalimanis Group. Inhutani I has also assumed control over 165.000.200. about 775. Discrepancy between the production and shipment of logs from Berau.4 million ha in various parts of East Kalimantan (Dinas Kehutanan 1999).000 ha concession. 2 10 .000 m3 – or 30 percent of Berau’s formal roundwood production – in 1998/1999 (Dinas Kehutanan 1999). 2002) Between 1996 and 2003. Approximately 365. which Between 1990 and 1995. Inhutani I first became active in 1976. the excess logs were almost certainly transported illegally out of the district as well.937 m3 more of logs had been shipped than produced in Berau. Based in Balikpapan.
In the same year. Mohammad ‘Bob’ Hasan was jailed on corruption and embezzlement charges associated with. PT Hutan Alam Kalimantan and PT Karya Lestari Jaya logging activities are oriented towards the establishment of plantation estates in forest areas currently under their control.000 ha of pulpwood plantations intended to feed the mill. and PT Amindo Wana Persada.e. since many companies were active (i. These licenses were granted to PT Hutan Alam Kalimantan and PT Karya Lestari Jaya. These are being established to support the group’s Kiani Kertas pulp mill. the Kiani Kertas pulp and paper mill was sold to the consortium led by Kopassus Chief Mr. HPH and IPK license holders reported cumulative production of just over 346. ranging in size from 30. However. Finally. which Kalimanis built just southeast of Tanjung Redeb in 1997.000 ha in Berau. awarded to the following companies: PT Karya Lestari. PT Alas Helau lost its HPH concession license due to the allegations of irregularities in the process of license procurement.000 ha. Mohammad ‘Bob’ Hasan only retains some control over the 200. Rather unusually. it seems likely that a significant amount of underreporting had taken place. conducted logging) and yet did not report any production. Hasan also lost control of PT Sumalindo Lestari Jaya forest concessions. former Minister of Trade Luhut Panjaitan and the current Intelligence Chief Indra Priyono. among others. Prabowo. PT Wana Bhakti Persada Utama. At the moment. 11 . Mixed Plantation) and HPH-TC (Tanaman Coklat. in early 2004.100 ha respectively. Since then. their licenses are labeled as HPH-TC (Tanaman Campuran.000 ha in Berau through two HPHs managed by PT Sumalindo Jaya.000 m3 of logs (Table 4). In 2003. It was subsequently divided into five much smaller concessions.000 ha and 8. While the partition of PT Alas Helau increased the total number of HPH concessions in Berau by 4. The Kalimanis Group also secured the rights to develop tree plantations on just under 200. his remote sensing business operations. PT Aditya Kirana Mandiri. In 1999. PT Mahardika Insan Mulia. between 1999 and 2004 there have only been two new HPH licenses issued for available unmanaged forest estate in Berau. Cocoa Plantation) respectively. Kalimanis’ hold on forest resources in Berau has been severely weakened. In contrast to other HPH concessionaries in the district. for 12. as these were sold to the Hasko Jaya Group in 2000.000 ha to 50.controlled concession areas totaling 140.
656 significantly more 0 47.855 8.354 0 36.755 Underreported 16. did not prevent them from continuing logging operations (see ‘remarks’ in Table 5 below).110 48. however.038 0 0 10.183 0 0 0 7.966 1. Inhutani I PT.910 0 38.800 0 0 0 0 21. Sumalindo 18 Lestari Jaya PT.339 3. as these were contingent on prior settling of timber royalty (PSDH.462 0 4.702 9.528 5. Multi Puri 13 Sejahtera PT.679 0 3.228 12.595 0 0 0 1.197 0 0 1.917 0 0 0 60.531 significantly more 0 0 0 0 0 19.529 0 0 0 8. 12 .506 3.768 3.618 0 0 0 0 2.836 0 0 0 0 4. Karya Lestari 9 Jaya PT. Dana Reboisasi) payments.381 0 0 0 0 11.388 0 2.019 0 0 0 3.653 0 0 10.414 2.653 0 0 0 0 0 0 0 3. Rencana Kerja Tahunan).907 0 25.499 Remarks Logged throughout the 0 year 12. Hutan Alam Kalimantan PT.775 0 0 0 1.156 0 3.217 11. Inhutani II 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8.123 31.981 production 58.507 0 0 0 1.080 0 34.073 0 0 4.625 0 0 0 7.658 0 0 0 5.993 0 0 0 9.019 Source: UPTD Berau. Tabalar 19 Wood Industries PT.476 0 50.274 0 0 0 0 19.545 Logged throughout the year and produced 3.462 3.175 21.119 2.791 0 1.207 346. Daisy Timber PT.157 0 0 1.317 0 0 9. Ltd PT.185 2.887 1.003 12. CIFOR survey 2004 In the first half of 2004. Wanabakti 20 Persada 0 0 0 0 0 0 0 0 0 0 3. Karya Lestari PT. Sentosa 17 Kalimantan Jaya PT. This.824 5. Puji Sempurna 14 Raharja 15 PT.535 3.411 1.014 0 0 856 0 0 1.843 0 13.023 0 0 0 3.716 0 0 0 1.150 0 0 0 11.277 5. Mahardhika 11 Insan Mulia PT. Rejosari Bumi PT.278 7.418 0 0 0 0 1.480 0 25.Table 4.532 0 0 0 6. Provisi Sumber Daya Hutan) and reforestation fund (RD. Repindo Jaya 16 Sawit Sejati PT.062 2.875 4.975 0 0 0 0 8.983 0 0 0 0 0 0 0 0 0 0 4. Malinau Dian 10 Bara PT.146 production 0 4 5 6 7 0 0 0 0 0 0 0 0 0 0 0 3.499 Logged throughout the 0 year Underreported 39.670 0 38. most HPH concessions in Berau were officially immobilized due to difficulties with securing annual work plan approvals (RKT. MSK Timber 12 Co. HPH and IPK log production in Berau in 2003 No Company Jan Feb Mar April May June July Aug Sept Oct Nov Dec Total Perusda Bakti 1 Praja PT.531 28. Aditya Kirana 2 Mandiri 3 PT.718 0 3. Dwiwira Lestari Jaya PT.401 0 0 0 0 0 0 9.656 0 0 3.902 0 0 0 0 0 8 PT.135 0 26.694 0 Likely produced 5.687 0 5.
Sentosa 17 Kalimantan Jaya PT. underported 0 production Grossly underreported 8. 12 Ltd 13 PT. However.460 3. Wanabakti Persada 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Operated for most 0 of the period Operated for most the period.840 0 0 0 0 0 0 0 9. The companies claim that in 2003 and 2004 their operations were based on unfinished logging quotas (carryover) from previous years. Karya Lestari 0 0 0 912 0 0 0 0 0 0 0 0 0 0 0 Operated for most the period.266 0 0 1. Karya Lestari Jaya 10 PT.401 0 0 10.806 0 Operated for most 0 of the period 41.735 0 0 0 0 0 0 0 0 0 8. MSK Timber Co. Dwiwira Lestari 4 Jaya PT. Puji Sempurna 14 Raharja 15 PT. CIFOR survey 2004 Based on field surveys as well as interviews with company insiders. 2004 No Company Jan Feb Mar April May Total Remarks 1 Perusda Bakti Praja PT. Daisy Timber PT.406 0 0 2.296 0 0 0 0 0 4. Most concessions show indications of a range of violations.Table 5.480 3. Aditya Kirana 2 Mandiri 3 PT.136 0 0 0 0 2. underported 0 production 0 5.322 Source: UPTD Berau. Rejosari Bumi PT.557 0 0 3. Inhutani I 7 PT.296 0 0 0 0 0 0 0 10. underported 912 production Operated for most 0 of the period 0 Operated for most the period. HPH and IPK log production in Berau until May. Tabalar Wood 19 Industries 20 PT. it is clear that most roundwood producers in Berau (HPH and IPK) were grossly underreporting their production output. including: 13 . Hutan Alam 5 Kalimantan 6 PT. Malinau Dian Bara PT. In order to probe further the practices of large-scale logging enterprises in Berau.556 0 9. this does not explain why the real production figures were not reported to the forestry authorities.018 0 0 0 0 0 0 1. Sumalindo Lestari 18 Jaya PT.776 production 0 0 0 0 0 5. grossly underported 0 production 9 PT. Inhutani II 8 PT.526 Operated for most 0 of the period Operated for most the period.016 9.592 0 3.165 10.149 2. Mahardhika Insan 11 Mulia PT. Repindo Jaya Sawit 16 Sejati PT.705 0 0 4. 15 HPH and IPK operations have been studied in greater detail (Table 6).962 0 0 0 0 0 0 1. Multi Puri Sejahtera PT.
Although technically most of SLJ IV concession is located in Limited Production Forest (HPT).5% of production going to the former and 22. with 77. PT. PT. PT. In addition. HPH operations in Berau. an in-depth look No 1 Concession PT Sumalindo Lestari Jaya (SLJ) IV Contractor Seeking to break the stagnation of operations in 2001-2003.000 per m3 in cash and Rp 7500 per m3 for village infrastructure. PT Aji became the party responsible for logging on production sharing basis. A number of prospective companies were considered. oil palm estates. skidding trails and the position of log yards and log ponds all deviate. SLJ IV sought to revive logging operations through sub-contracting. Eventually. SLJ IV concession is not yet facing a serious threat from small-scale illegal logging operations due to rugged • • • 14 . the logging operator. Sues Timber. Surya Satria (Panin Bank Grup). SURI (Jakarta). TPKs and logging roads not deviating much from forest management plans/maps). following the acquisition of the company by the Hasco Group (PT Aji. Johan Abadi and PT Aji. However. Logging operations conducted comparatively well (RKTs for the most part clearly marked. Table 6.No clearly marked concession borders Current/past/future logging blocks are unmarked Delineation of logging roads. Biru Hijau (Malaysia). industrial timber plantations (HTI. clearly in some areas the viability of log extraction in rugged topography is pushed to the limit. being one of its subsidiaries).5% being the share of the latter. in some RKTs (2003. coal mining concessions etc. thus facing a major legal uncertainty factor (see Appendix 4). • Remarks Stagnation between 2001 and 2003 due to compensation conflict with 5 villages on the upper Segah River. SLJ IV began operating again in late 2003. The value of monthly production is divided between PT Aji and SLJ IV. Jabontara Eka Karsa (oil palm developer). often radically. 2004) logging has been carried out on very steep slopes. Hutan Tanaman Industri). including PT. PT. most HPH and IPK concessions overlap with other land uses such as protection forest (Hutan Lindung). from what district forestry and company concession maps indicate Nearly all concessions face problems with local communities and must deal with land as well as compensation claims. In addition. PT. SLJ IV/Aji is paying a fee of Rp 15. The findings about the surveyed HPH concessions are presented in the table below. The conflict with local villagers was finalized with a one-time payment of Rp 350 million to the communities.
as PT Hutan Hijau Emas seeks 40.500 ha of scrubland is completely unproductive. In 2002/2003. Ulin and Meranti species.terrain and difficult access. In 2001. In 1997. There were at least 19 such permits issued within the concession’s boundaries. • • • 15 . the company obtained 9. although improving road connection with Tepian Buah could change that. Berau’s Bupati revoked the plantation permit. the concession was briefly encroached upon by IPPK/IPKTM operations based in Punan Malinau and Long Ayan/Long Ayap. Roughly sawn timber is produced on the spot and it is transported by trucks to Labanan. unless it is taken over (as is planned) by another oil palm developer – a Malaysian company PT Hutan Hijau Emas. The concession also suffered degradation from the activities of PT Palma Karisma Sekawan. The area has been encroached upon by IPPK/IPKTM logging operations between 2000 and 2003. these are defunct. These loggers target Bangkirai. This plan must be treated with caution and monitored closely. Currently. Teluk Bayur and Tanjung Redeb. with most of the area logged and no trace of plantation.500 ha of Inhutani’s concession ostensibly to establish an oil palm plantation. PT Inhutani I Unit Tepian Buah is overrun by teams of small-scale loggers from surrounding villages. its condition is deteriorating rapidly. Currently.000 ha of forest/land for its oil palm estate in the vicinity of Tepian Buah. 2 PT Inhutani I – Unit Tepian Buah PT Royindo (no detectable field operations in 2004) • Although the concession area still possesses good quality forest (particularly in the upper Siduung/Siagung watersheds). Gunung Sari and Trans SP 2. the 9.
Teluk Bayur and Tanjung Redeb. The concession area suffers from excessive opening of the forest/canopy (PWH . 3 PT Hutan Sanggam Labanan Lestari (HSLL) PT Royindo • • • 4 PT Aditya Kirana Mandiri PT Royindo (since 2003) • The contractor conducts logging operations in proper RKTs. The renowned Plot STREK is located within the boundaries of HSLL’s concession. These loggers extract mainly Bangkirai. Excessive logging is undertaken in the process of road construction. secondary roads. UPTD). the overall layout of operations (roads. the latter are difficult to locate because of near non-existent marking of RKT blocks in the field. The plot area has been damaged by an IPKTM operation conducted by PT Jabontara Ekakarsa as well as by small-scale loggers. skidding trails criss-cross the concession in all directions. It is unclear whether there is official clearance for such • 16 . The main road. this does not bode well for Inhutani’s Tepian Buah Unit. Ulin and Meranti species. TPKs etc) differs substantially from plans/maps available at the district forestry offices (Dinas. Given the deplorable state of the forest in HSLL’s concession (PT Royindo is the logging contractor). The concession is invaded by the teams of small-scale loggers.Pembukaan Wilayah Hutan) due to unnecessarily high density of roads. However. Although in 2003 logging was carried out in the proper area.• Unconfirmed information suggests that Tepian Buah Unit will be taken over by PT HSLL (Hutan Sanggam Labanan Lestari). Roughly sawn timber is produced on the spot and it is transported by truck to Labanan.
The main difficulty it was faced with was linking its concession to more accessible parts of Berau. it completed the Long Keluh-Long Lamcin road that linked its • 5 PT Wanabakti Persada Utama PT Royindo • • • 6 PT Amindo Wana Persada PT Amindo Wana Persada • 17 . It had two options: 1) build a connecting road across the Kelay River into the HPH of PT Aditya. PT Amindo Wana Persada began operating in 2001. or 2) try to link up with the road network of PT SLJ IV on the upper Segah River. but it has already logged in the block for 2005 There is a continuing disagreement between the villages of Long Keluh/Boy. PT Amindo decided on the first option. HPH area of PT Aditya is relatively free from small scale loggers. Royindo explained that logging was based on carry-over volumes from the previous year. Carried out logging in RKT area for 2004 well before the permit was issued. In 2002/2003.discrepancies. There is some small scale logging activity on the border with Inhutani’s Tepian Buah Unit. while preparing a camp at Km 70 in preparation for RKT 2004. but so far it has been very limited. a branch road was constructed going deep into steep slope areas and out of the approved RKT block. • In 2004. but district government forestry sources do not confirm this There is information suggesting that not only has Royindo logged RKT block for 2004 prior to receiving proper documents. although Royindo employees explain it is an accepted fact that operations in the field will diverge. from the official planning. sometimes substantially. Long Pelay and Lamcin and PT Wanabakti/Royindo over areas that can be logged as part of HPH and those that should be left out as community (adat) forest.
under the current District Development Plan (RTRWK).000m3 in 2003. However. Bad roads. PT Mahardika is one of two HPH companies in the upper Kelay watershed (the other one: PT Karya Lestari) that transport logs via the corridor road to Labanan (part of this road overlaps with the SamarindaBerau trans-Kalimantan highway). producing about 41. • The link road was badly constructed and it was usable only for a very short period of time. terrain as very difficult and. most of the areas to be traversed are classified as Protection Forest (Hutan Lindung). Distances involved are considerable. in reality it logged 1200 ha.HPH concession to the corridor road established by PT Aditya. Amindo helped itself to about 4000 m3 of commercial logs from HPH Aditya (this is in addition to logging done to open up the road bed). Inside information indicates that in 2003 the company logged well in excess of its RKT allowance. The company was never able to fully establish production activities in its HPH concession In early 2004. The company hopes it will be easier that in Berau. The company has not received its RKT for 2004 until late in the year. Apparently. Inside information indicates that in the process of the road construction.000m3. the company has been considering the possibility to access its concession from the Wahau (East Kutai) side by linking it to the Narkata-Mugi TrimanEssam corridor road. PT Amindo suspended operations in Berau. but such an assessment is flawed. PT Mahardika was supposed to work on 500 ha/22. • 7 PT Mahardika Insan Mulia (operates since 2001) PT Royindo (in charge of logging since 2002) • • 18 . sub-par equipment and very difficult terrain all conspired against PT Aditya.
The license. when RKT for 2004 was granted. A part of SLJ I concession was taken over by PT Dwi Wira Lestari for a logging venture called HPH-TKS (Tanaman Kelapa Sawit. However. Intensive production of square logs and roughly sawn timber by logging teams from Dumaring and Talisayan is taking place. In July 2004.• In 2001/2002. There is little control over access in and out of the concession. the company’s logging contractor intruded into the Protection Forest area between the Kelay and Gie Rivers. was operated by PT Royindo and PT Alam Permai Bhakti (based in Tarakan). the fine has not been paid yet. The company was supposed to pay a Rp 2 billion fine. The case was investigated by the District Forestry authorities and the Police. the company already extracted more than 2000 m3 (TPK transit on the Kelay River) In 2003. under the name of Long Gie village. The concession is severely degraded and it will likely be abandoned in the near future. The small-scale loggers are logging old RKT areas as well as the few ones with still good timber stands on which SLJ I depends for survival in the next few years. The company is run as a partnership between a well-known (but disreputable) figure in the logging circles in East Kalimantan – Luther 8 PT Karya Lestari (HPH Pesantren Hidayatulah Balikpapan) PT Prima Wanatama (based in Tarakan) • • 9 PT Sumalindo Lestari Jaya I PT Surya Graha Sakti • • • 19 . as negotiations continue. the company “allocated” 800 ha of its concession for an IPKTM enterprise. Oil Palm Plantation). the companies logged approximately twice the size of the licensed forest area. According to local estimates. Carried out logging in the 2004 RTK area prior to securing the permit.
it is surprising that it shipped a few thousand m3 in the middle of the year -. Berau Perkasa Mandiri. The concession is heavily degraded On the northeastern side. Timber sector insiders in Berau suspect that Daisy Timber documents (Daisy Timber did have an RKT for about 6. this part of ex-SLJ I concession is headed for destruction. • SLJ I HPH concession area has also suffered degradation from the activities of Berau-based enterprise PT. which carried out logging based on the IPK permit for road construction. it has been illegally logged by PT Meranti Samarinda Kalimantan (MSK) based on the IPK permit related to the planned development of coal mining (see the section on IPK. it planned to resume logging activities by hiring PT Nabila (Hanurata Group) from neighboring East Kutai as a contractor. Because the company was officially not active in 2004.Kombong – and an ex SLJ I staff Turyadi/Ateng. In the second half of the year.even though clearly all of its log ponds.. IPPK/IPKTM logging below) More illegal logging inside the 10 PT Daisy Timber PT Daisy Timber • • • 11 PT Puji Sempurna Raharja (Malaysian outfit) • • • 20 . but currently it confined to the area north of the Suleiman River. TPKs were empty. Small-scale logging has penetrated parts of Daisy Timber concession.000 m3) have been used to cover the logs of PT Nabila extracted in East Kutai without RKT. If other forestry operations by the Kombong family in Berau are any indication (see the case of PT Karya Lestari Jaya below). PT Daisy Timber suspended operations in late 2003 and it has been inactive for the first half of 2004.
there are two IPK operations associated with PT Berau Coal (located within the HPH of PT Rejosari Bumi) conducted by Mitra Abadi cooperative and by PT. fow which there is no IPK permt. The area is heavily degraded. Lahan II is in large part a scrubland. The concession is degraded. 12 PT Rejosari Bumi PT. The communities are engaged by the company in IPK-like logging activities to clear the forest for the plantation.concession was done by an IPK related to road construction (Tanjung Redeb – Kasai – Tanjung Batu). north and south of the Talisayan Protection Forest (Hutan Lindung) – see Appendix 5. The link between Lahan I and Lahan II is the ex PT Gonpu road. the concession is inactive. and an IPK for oil palm development (PT Bina Maju Hutanindo) • The concession is overrun by smallscale logging teams producing square logs and roughly sawn timber. The teams are based in Kasai and in Gunung Tabur At the moment. Sungai Berlian Jaya (Haji Abidinsyah) The concession of PT Dwiwira consists of two enclaves (Lahan I and Lahan II). carried out by the individual named Awong. Sentosa Kalimantan Jaya (SKJ) • • • 13 PT Dwiwira Lestari – HPH-TKS (Tanaman Kelapa Sawit. Oil Palm Plantation) PT Dwiwira Lestari • • • • 21 . which cuts across the Talisayan Protection Forest. It is overrun by small-scale logging teams from Gunung Tabur that produce square logs and roughly sawn timber. Currently. The concession area overlaps with the area licensed for coal-mining by PT Berau Coal. Local press indicates that the Governor of East Kalimantan will recommend the license to be revoked for subsequent auction.
The condition of the road is terrible. 22 . HPH-TC (Tanaman Campuran Coklat. Samarinda Harapan • • Among the worst cases of violations associated with HPH logging currently in effect in Berau is that of PT Karya Lestari Jaya. PT HAK made provincial and national press/TV headlines when it was discovered that the company has logged extensively out of the block.000 m3.000 m3 in excess of what it was allowed. In return. Forestry insiders in the district are of the opinion that the company was allowed to keep the rest in exchange for a substantial fee per m3 to a number of locally powerful figures. This strategy seems to have little success. This amount was eventually reduced further in Berau District Police reports to 8.• This road is also used by PT SLJ I as well as by small-scale loggers. Karya Lestari is obliged to sell its logs to PT Segara’s wood working industry in Samarinda – PT Segara Plywood. Internal/confidential information indicates that PT HAK logged about 33.000 m3 was seized by the Police and District Forestry authorities as the proof of wrong-doing. Mixed Plantation) PT. A detailed case study of this logging enterprise follows below. Mixed Plantation – Cocoa). Both companies state they keep the road in deteriorated state on purpose to limit encroachment. 14 PT Karya Lestari Jaya (KLJ). established in 2000 Joint venture with PT Segara Timber • • • 15 PT Hutan Alam Kalimantan (HAK). The biggest problem with KLJ is that its license status is unclear (its HPH license has not been finalized and the company operates based on an IPK) Widespread underreporting and logging out of block have taken place (see the case study below) In mid-2004. HPH-TC (Tanaman Campuran. Cooperation with PT Segara Timber allows Karya Lestari to use PT Segara’s machinery. However. only 12.
In June 2001. KLJ applied for a HPH license covering just over 8.000 ha IPK from the provincial forestry office in Samarinda. explaining it had logged only 300 ha and produced 9.132 m3 of logs (twice the original target production volume).704 m3 to the production target (total of 53.Illegal logging by HPH license holders – the case of PT Karya Lestari Jaya In July 1999. to be completed by the end of January 2001. In October 2000.892 m3 (quota left: 700 ha. to be completed by October 2001.863 m3).100 ha of the forest in the ex concession area of PT Hanurata.000 ha IPK had the production quota of 16. Mixed Plantation of primarily cocoa). it was concluded there was still a substantial production potential in the IPK area.025 m3. in October 1999 the company requested a 1. the Ministry of Forestry agreed to allocate the concession.718 m3). However. a survey team from the provincial forestry office visited KLJ site in Berau and established that the company had by then produced 33. KLJ requested an extension from the provincial forestry office in Samarinda. even though legally KLJ was not yet a HPH concession holder for the area in question. KLJ sought a hybrid between HPH concession and HTI plantation in the form of HPH-TC (Tanaman Campuran Coklat. The extension was granted. 2000 the permit was granted. inexplicably with an additional production allowance of 22.610 m3 of logs. Although as a concept HPH-TC was without precedence in the Indonesian forestry nomenclature. Within 2 months of getting the official nod for HPH-TC (but with no permit in hand). The 1. 23 . Consequently. 6. the provincial forestry granted an extension for another year (until August 2002) and added another 20. In February.
In April 2004. obtained an IPKTM permit seeking to use timber fees for the expansion of livestock (cattle).575 196.425 200 14.785 3. IPKTM issued by Bupati Berau in the period 2000-2001 Sub-district 1 2 3 4 5 6 7 8 9 Biduk-biduk Segah Gunung Tabur Kelay Pulau Derawan Sambaliung Talisayan Teluk Bayur Tg. it announced that extensions would no longer be granted once the existing licenses expired. In 1999.396 ha.000 ha of forest with the production target of nearly 1.304 2.625 995 72.2. have been at the center of logging boom in Berau and other parts of East Kalimantan in the aftermath of decentralization and regional autonomy in Indonesia.000 m3 of logs – more than 10 times its licensed production quota.923 35.2. IPKTM for Livestock by PT Taurus In February 2002. extracted about 65. In early 2003. 24 . additional 183 permits were issued covering more than 35.380. as indicated by the case of PT Taurus (see box 2). The district-based small-scale logging permits. its contractor (PT Taurus) continued to log in forest areas well beyond the designated IPKTM site.4 million m3 of roundwood (Table 7). The logging was to be completed within a year. Small-scale logging permits – IPKTM.039 1.528 232. Utilization Timber Permit form Privately Owned Land). The survey of all logged areas indicate between February 2002 and April 2004. Segah sub-district. on behalf of PT Berlian Indah. or IPKTM (Izin Pemanfaatan kayu Tanah Milik. nearly a year after the expiration of Berlian Indah’s IPKTM license in Gunung Sari. Cipta Abadi cooperative from the village of Gunung Sari. The number of these permits issued between 1999 and 2002 totals more than 200.336 300. In late 2002. The party responsible for the implementation of the IPKTM was a Berau company PT Berlian Indah. However. Redeb Total Total of IPKTM permits 10 14 47 24 6 28 35 17 2 183 Production target Area (ha) Output (m3) 1.216 m3 of roundwood.622 20.573 115. some IPKTM operations found ways to survive well into 2004. Between 2000 and 2001. PT Berlian Indah was to establish a herd of about 50 cattle in return for which it was allowed to carry out logging on 200 ha of forest with the production quota of 6.753 1.6.221 3.697 Source: Dinas Kehutanan and UPTD Berau. Table 7.437 256. PT Taurus. small-scale logging permits in Berau have come in two types: district and province licenses. 573 1.729 129. Berau officially ceased to issue new IPKTM licences. IPK Until recently.200 62. IPKTM based logging peaked in 2001 and subsequently declined as a result of progressive limitations imposed by the central government authorities on districts’ right to issue such permits. there were 24 licenses (with multiple extensions) awarded for the total of 11.
13 companies held IPK permits in Berau for a combined area of 43.291 3. In contrast to the selective harvesting techniques required under the HPH system.637 1. IPK permits allow logging companies to harvest all standing timber from a forested area that is being converted to another form of land use.230 854 2. IPK Wood Utilization Permit-Holders in Kabupaten Berau. and it has generally assigned these to companies converting forestland to timber or pulp plantations.000 ha (Table 8).Since the mid-1990s.000 2. Table 8. In 1997.822 43.600 1.000 400 7. The Ministry of Forestry holds full authority to issue IPK permits.100 4. a growing portion of Berau’s timber production has been carried out by companies holding Wood Utilization Permits (Izin Pemanfaatan Kayu. 1997 Area (ha) 9. or IPK).331 1.557 4.250 4. or mining operations.072 HTI Pulp HTI Pulp HTI Pulp HTI Pulp HTI Trans HTI Trans HTI Trans Type Estate Crop (Oil palm) Estate Crop (Oil palm) Estate Crop (Oil palm) Estate Crop (Coconut palm) Estate Crop (Coconut palm) Coal Mining 25 . as of 1997 Company PT Inhutani I/PT Tanjung Redeb Hutani PT Rejo Sari Bumi PT Tabalar Wood PT Hanurata PT Sumalindo Lestari Jaya I PT Alas Helau PT Tabalar Wood PT Baldiwasa Palmaindo PT Palma Kharisma Sekawan PT Jabonsara Ekakarsa PT Tanjung Buyu Perkasa PT Inhutani I/PT Sentosa Kalimantan Jaya PT Berau Coal Total Source: Cabang Dinas Kehutanan Berau. agroindustrial estate crops.
Segah Punan Malinau. Teras Cakra Perdana PT. 14. By 1999.Batu. PT. Mega Buana Utama PT. 17. Taman Buana Tirta Indah PT.000 20. 6.Batu. 8. Segah Long Ayap. Borneo Agro Sawit Lestari PT. Talisayan Long Ayan.000 4. Plantation ventures seeking IPK permits in 1999 No 1. Talisayan. Repindo Jaya Sawit Sejati PT. Semurut. Batu Sempit Sawit Indo PT. 19. Segah Tg. P.Tabur Tepian Buah. 7. Jabontara Ekakarsa Plantation permit date 3/10/1997 29/9/1998 (HGU 14.In 1998.000 15. Hono Baswen Sumber Rejeki PT. after the fall of Suharto’s regime there was a flurry of applications for plantation estate permits in Berau. Long Ayan. Behowen Sumber Makmur PT. 18. Table 9. 13. 5. Berau Bukit Gemilang PT.000 12. ostensibly to establish oil palm plantations (Table 9).000 20. P. 3. Company PT. 15.Berau PT. Dumaring. Gn.000 20. 11. Palma Kharisma Sekawan PT. Biduk-biduk Biatan Hilir. 16.000 20.000 20.000 18. Teras Cakra Perdana PT. 12. 9. 4. Sentosa Kalimantan Jaya Total Long Laai. there were no fewer than 19 companies applying for a total of 240. Segah Sepinang. Kelay Long Ayan. Dwi Wira Lestari Jaya PT. Segah Biatan Lempake. Gn.000 13.Long Ayap.Tabur Tasuk.000 Ha) 30/11/1999 addition of 6. Derawan. Talisayan Tg.200 ha of the forest.700 18.Tabur Long Ayan. Badiwata Palma Indo PT.000 15. Segah Tg.000 11.000 6. Biduk-biduk Maluang. 10.500 2. Pantai Harapan.000 Ha 11/11/1998 28/02/1998 04/02/1999 03/03/1998 04/02/1999 03/03/1998 04/02/1999 11/02/1998 04/02/1999 27/02/1999 15/04/1999 05/06/1999 08/07/1999 11/08/1999 20/09/1999 20/09/1999 07/10/1999 18/11/1999 18/11/1999 04/02/1999 Location Batu Putih /Talisayan Plantation type Oil Palm Area (ha) 29.Prepat.000 20.000 240.000 16. Inhutani I Adm. Kartika Propita Ganda PT. Lesan Dayak. Derawan Oil Palm Oil Palm Oil Palm Oil Palm Oil Palm Oil Palm Oil Palm Oil Palm Oil Palm Oil Palm Oil Palm Oil Palm Oil Palm Oil Palm Oil Palm Oil Palm Oil Palm Coconut 11. Talisayan Sembakungan. Segah Long Beliu. Lini Andalan PT. Gn.000 20. Tembulan.200 Source: Dinas Perkebunan Kabupaten Berau 26 . Agritimur Karya Graha PT.
most of the new plantation IPK holders never established operations on the ground. Bhakti Praja reported to the provincial forestry office that it had managed to log only 832 ha of forest. In May 2002.000 Production target (m3) 365. Pendapatan Asli Daerah). The second one-year extension of Bhakti Praja’s IPK permit was granted only in September 2003 (522. Provincial IPK logging permits in Berau. the area allocated for IPK logging declined as well (Table 10). the existing plantation IPK operations are far from being effectively controlled. impounded over 7. Table 10. 2002-2004 Year 2002 2003 2004 Area (ha) 18.21/4810/DK-VII/2003). Bhakti Praja reported no production activities to district forestry authorities. East Kalimantan Province Despite this decline. As is evident from the analysis of two IPK sites in Berau.2/2001).200 ha of forest only. plantation development continues to be used as a a façade for timber extraction. In September 2001. although it logged continuously. producing 10. 27 . between 2002 and 2004. and requested an extension. However. Badan Usaha Milik Daerah) established in 1999 to help Berau district government increase locally generated income (PAD. indicating that to date it had carried out logging on 1. PT Bhakti Praja obtained an IPK permit from the provincial forestry office in Samarinda for 3. the provincial forestry service granted a 1 year IPK extension (358/Kpts/KWL-4.793 m3 of logs in addition to 10. It also reported that during the first extension term it produced 9.202 65. IPK by Perusda (district company) PT Bhakti Praja PT Bhakti Praja is a district-owned enterprise (BUMD.703 26.018 m3 of timber. In May 2004. unable to secure the necessary financial investment.448 Source: Dinas Kehutanan. Consequently.700 m3 of illegally cut logs and uncovered what they claim to be extensive cutting out-ofblock dating back to at least 2001/2002. Dinas Kehutanan Berau and the Police raided Bhakti Praja’s IPK location. As a result. The logging was to be completed within a year.540 m3 of logs (435/Kpts/KWL4.447 2.2/2000).200 ha of forest with the production target of 53. Bhakti Praja asked for the second extension.Nearly all of these plantation applications turned out to be front schemes for timber exploitation. In September 2000. Following an exchange of documentation and field visits.018 m3 produced during the first year of operations. the government authorities in Berau revoked inactive plantation permits of this kind.400 4. During the intervening 12 months.
the IPK land-clearing license remained in effect.000 ha.436 ha in the northeastern part of the district. PT Nusantara Jaya Perkasa suddenly realized the coal deposits it was seeking to exploit were geologically “too young” and therefore of no economic value. Although the permit states the IPK covers 2. As a result.Coal-mining IPK – PT Berau Bhakti Permai In February 2003. On 17 March 2004. was filled with improperly or completely unmarked logs. the provincial Dinas Kehutanan in Samarinda issued such an IPK permit for 2. the company applied for an IPK license to clear the area intended for exploration. near the border with Bulungan district. it asked the Bupati of Berau to cancel its coal exploration permit.000 ha (with the production target for 26.000 ha. However. The coal exploration permit was cancelled.448 m3) to a Berau based firm PT Berau Bhakti Permai (SK Kadishut Propinsi Kaltim No 522. PT MSK continued to operate in Berau based on the IPK for non-existent coal exploration. the survey of the area marked on the concession map indicates it actually extends over 3. Bupati Berau granted a coal exploration permit (Ijin Kuasa Pertambangan Eksplorasi) to PT Nusantara Jaya Perkasa for 6. Nearly all of its logging activities were carried out outside the allocated IPK area and its main log pond in Tanjung Bone. which subcontracted the logging to PT Meranti Samarinda Kalimantan (MSK) – an ex HPH concessionary in the area. Once the IPK became effective. Having secured the exploration permit.21/777/DK-VII/2004). In late 2004. 28 .
the establishment of HTI (or HPHTI) plantation estates in the district dates back only to mid-1990s.2. The production activities of HTI companies in Berau entail clearing the natural forest as well as harvesting of planted Acacia or Eucalyptus pulpwood. HTI The industrial plantation estates are a comparatively new segment of the forestry sector in Berau.673 ha HTI unit near Batu Putih on the ex-HPH area of PT Gonpu Indonesia.330 ha plantation was established in 1996 in order to supply natural.000 m3 of natural forest logs. instantly becoming the largest wood-processing industry in the district.6. the above companies produced just over 164. After the first five months of 2004. in 1998 the Kalimanis Group and PT Inhutani I formed a HTI company PT Belantara Pusaka on 15.3. 29 . In order boost the raw material base for Kiani Kertas mill further. their production of natural forest logs stood at 105. The 180.762 m3 (Table 11 and Table 12). PT Sumalido Lestari Jaya established a 10. and eventually Acacia.610 ha of the HPH area of PT Alas Helau. In 2003. wood to PT Kiani Kertas pulp and paper mill in Mangkajang near the estuary of the Berau River. If HPH and IPK logging have been in effect for over 30 years. The most prominent HTI industrial plantation in Berau is PT Tanjung Redeb Hutani. As Kiani Kertas mill was officially launched in September of 1997 by then President Suharto.
711 0 6. Sumalindo 1 Lestari Jaya HTI PT Tanjung Redeb 2 Hutani HTI PT.158 Mar 7.339 0 7. PT Tanjung Redeb Hutani is by far the largest HTI estate in Berau.665 0 4.690 6.834 164.864 11. The HTI companies in Berau invariably subcontract land-clearing operations to smaller logging companies. While the achieved harvest volume constituted only about 56% of the planned target (99. subsequent to which planting is to be undertaken. PT Tanjung Redeb Hutani employs a number of logging contractors for the production of natural forest roundwood. HTI natural forest log production in Berau.660 0 14. mostly Gmelina arborea (PT SLJ-I:7-8). In comparison to other HTI plantations in Berau as well as in the province of East Kalimantan. 2003 No Company Jan Feb Mar April May June July Aug Sept Oct Nov Dec Total HTI PT.665 3.389 Total 50. planting has been implemented on 534 ha. Belantara 3 Pusaka 0 0 0 0 15.663 0 7.549 1.271 0 13.005 0 28.080 May 12.729 9.781 0 0 12. The production of plantation pulpwood is considerably more difficult to estimate. Berau The natural forest logs are produced through land-clearing.500 m3).961 April 6. these numbers are quite respectable.444 0 22. PT Inhutani I (35%).762 Source: UPTD Forestry Bureau. Berau Table 12.435 78.715 10.040 55.399 56.711 0 72.836 0 12. In 2003.432 m3 of pulpwood.836 0 12. is jointly owned by the Kalimanis Group (65%) and the state forestry enterprise.677 65.660 0 14.811 0 66.694 0 29. PT Sumalindo Lestari Jaya HTI-Transmigration Batu Putih unit appears to be doing comparatively well among the companies in the district3.946 0 0 4.Table 11. Belantara 3 Pusaka Jan 12.217 0 18. the company harvested about 400 ha of its planted estate producing 53.582 Source: UPTD Forestry Bureau.061 12.173 Feb 10. or 66% of the target. For instance.505 0 0 0 0 0 15.722 0 105.111 6.696 16.397 0 0 0 12. HTI natural forest log production in Berau in the first half of 2004 No Company HTI PT.242 87. established with the singular task of supplying plantation logs to Kiani Kertas pulp and paper mill. PT Sumalindo Lestari Jaya I hired Samarinda-based PT Surya Graha Sakti to carry out land-clearing on its Batu Putih HTI site. The HTI operations of PT Tanjung Redeb Hutani in Berau have been financed largely from Indonesia’s 3 The same cannot be said about its financially unviable Muara Karangan unit in the neighboring East Kutai district (Djumainah 2000) 30 . The company. Sumalindo 1 Lestari Jaya HTI PT Tanjung 2 Redeb Hutani HTI PT. Similarly.097 0 22.
In 2004. despite the relatively high levels of financial investment and support it has received. direct observation in the field indicates the company will fall far short of these targets. As such. It also planned to plant 6. suspending all non-essential operations (Botha 2002). Due to the fact that only a fraction of Tanjung Redeb Hutani’s 2003 production and planting targets were achieved. or DR). Belantara Pusaka 31 . of which the company is reported to have received Rp 83 billion (Ernst & Young 1999).000 ha of the planted area is subject to land claims by local communities.523 ha – 11% realization rate). Out of 180.330 ha available for the HTI plantation. Considerably more worrying is the fact that in the same year the company planted only 493 ha of land (out of the target of 4.000 ha are actually plantable. However.000 m3 of pulpwood. reducing the effective plantation area further to at most 33. In addition. for most of 2003 Tanjung Redeb Hutani was operating with only a skeleton staff. only 91. The goal of PT Belantara Pusaka HTI plantation was to complement Tanjung Redeb Hutani in supplying pulpwood logs to Kiani Kertas mill. the company aimed to harvest nearly 7.800 ha but was implemented only on 71 ha (4% realization rate).571 ha of new plantation area. An area of about 7. but only 40. replanting of dead seedlings was to be undertaken on 1.220 ha of its plantation producing 121. Having nowhere to go with its pulpwood. Since its inception in 1998. The third HTI plantation company operating in Berau is PT Belantara Pusaka located in the Lesan area in the southern part of the district.national Reforestation Fund (Dana Reboisasi.000 ha.500 ha of plantation in order to produce approximately 635. in the process achieving about 22% of targeted harvest area and 28% of harvest volume (PT Tanjung Redeb Hutani:6-7). these were merged with the 2004 work plan (carry over). the company’s operational record is very poor. However. the company has been facing financial problem resulting from its association with the Kalimanis Group in general. PT Tanjung Redeb Hutani claims that since 1993 approximately 67. and with PT Alas Helau in particular.000 ha are currently considered utilizable (Botha 2002).400 ha have been planted. cannot make timely payments for the deliveries of logs. In 2003. Tanjung Redeb Hutani reportedly harvested 1. One commonly given explanation for this poor performance are cashflow problems resulting from the fact that the main consumer of Tanjung Redeb Hutani’s logs.024 m3 of Acacia mangium logs. Kiani Kertas pulp and paper mill.
the company was reported to have about 8. placed Belantara Pusaka in financial crunch. collusion and nepotism (KKN). Table 13.3). Small-scale logging teams Berau wood-working industries’ demand for timber fuels a considerable amount of small-scale logging throughout the district (see also section 7. Batu-Batu. Belantara Pusaka’s HTI activities stagnated. in unfavorable light. Tabur (Merancang. financial difficulties disrupted the harvest operations (PT Belantara Pusaka:4).365 1. Kelay Maluang-Bulungan Talisayan Total / Number of Number of Number of teams chainsaws Loggers 14 28 73 13 17 8 11 14 16 13 106 118 153 50 133 148 73 54 757 239 284 103 383 406 165 144 1. the company received the annual work plan permit according to which it was expected to harvest 1. As of 2001. the HPH license of PT Alas Helau was cancelled due to the allegations of corruption. Location Segah Gn.490 4.341 ha of HTI ready for harvest (Gmelina arborea and Acacia mangium – planted as early as 1995/1996 by Alas Helau).920 2.275 The main concentration of these logging activities is along the roads than can be accessed by Mitsubishi Colt diesel trucks. placing other Kalimanis companies. However.805 1.797 Production (m3/month) 560 2. Kasai) Sambaliung (Merancang. The survey carried out throughout Berau has revealed that in 2004 there were approximately 106 small-scale logging teams operating along the accessible roads in the district. as the company continued to be stagnant. Labanan. In 1999. 2004 No 1 2 3 4 5 6 7 8 Total Source: Survey CIFOR 2004. In 2002.700 20. Small-scale logging teams in Berau District.142 m3 of pulpwood and plant 500 ha of new plantation. which are the vehicles of choice for transporting timber overland in 32 . Kasai) Teluk Bayur Teluk Bayur. The subsequent pressure on the Kalimanis Group. 6.711 ha of plantation. It is estimated that these teams produced approximately 202.is wholly owned by Kalimanis and it was established on the area for which the group’s other subsidiary PT Alas Helau obtained a HTI permit in 1992.2. In 2003. Batu-Batu.040 3. Sari Gn.750 m3 of logs (Table 13). None of these targets were even partially met. particularly in connection with the misuse of Reforestation Fund. such as Belantara Pusaka. produce 159.395 3.4.
While in the limited time available for this research it was not possible to undertake a detailed investigation of river-based logging teams. Berau-Samarinda. Labanan-Long Paai.g. As old roads are steadily improved (Tanjung Redeb-Bulungan. Sambrata. Most of river-based logging is centered in the middle and lower sections of the Segah River and its tributaries (Birang. Siduung. except for the section of transKalimantan highway between the Kelay River and the village of Labanan. penetrating forest along seemingly impassable dirt tracks. on the other hand. Labanan-Long Keluh/LongDuhung). Malinau). They are extremely durable and once modified can negotiate very difficult terrain. based on 33 . In the southeastern part of the district. Berau-Tanjung Batu-Bulungan. The Kelay River area. Siagung. is relatively free from small-scale logging. The timber transported is usually in the form of squared logs or roughly sawn timber. Nearer the coast. Pura. Lati and Kasai branches of the Berau River are important areas of small-scale logging. Berau-Tepian Buah) and new roads are being built (e. Such teams specialize in producing round logs that are tied into rafts and floated downstream to sawmills and moulding mills. In addition to land based illegal logging teams in Berau.Berau. there are also small-scale teams working along the major waterways. the recently improved roads from Talisayan to Teluk Suleiman and in the direction of Sangkulirang are rife with small-scale logging teams. it is likely the extraction of timber by illegal logging teams for delivery overland will increase in the near future.
000 m3 of timber (round logs.interviews with logging team leaders (mandor) in several key areas. The survey at key police check points on overland timber delivery routes converging on the main consumer markets of Teluk Bayur-Tanjung Redeb-Gunung Tabur-Sambaliung revealed the loggers pay Rp 50.000-18.000-180. it is possible to estimate there are at least 75-80 such teams employing approximately 1.6 billion. square logs. Overall.000 loggers with 1. operating both on land and along the rivers.300 chainsaws are employed on the annual basis to generate this output.000 m3 of round logs per month. 34 . The government agencies in Berau are de facto formalizing illegal logging activities of this kind by subjecting them to informal taxation. 2) timber kiosks and 3) ship-building. bringing the total to about Rp 3. 6. produce 15. annually produce 350. It can therefore be estimated that the police annually generate just over Rp 2 billion from the passage fees on trucks ferrying timber to the main consumer markets in Berau.5-1.200-1300 people who.000 m3 per year.000-380.000 per truck (5 m3 of timber) for safe passage. using 520-550 chainsaws. roughly sawn timber) that are consumed by Berau’s wood-working industries.3.5-3. or 150. it can be estimated that small-scale logging teams. Illegalities associated with wood-processing industries Timber extraction activities in Berau provide raw material to three distinct wood processing industries in the district: 1) sawmill and moulding industry.8 billion per year for the police. Approximately 3. A similar passage fees are applicable to water-based transport of timber and these generate additional Rp 1.
the Industry and Trade Office (quoting UPTD Forestry Office) states that in 2004 Berau’s sawn timber and moulding mills totaled 59 units.3. In 1981. the first mechanized sawmills were established in the district (PT Becosurveys 1981). In the late-1970s. the total number of sawn timber and moulding mills listed by the Industry and Trade Office in Berau was 64 units. the same UPTD Forestry Office reports the existence of only 24 active (reporting) mills. and the first high-yield band saws were installed. Sawn timber and moulding The history of wood-working industry in Berau dates back to the early 1970s. In the early 1980s. The official government data on sawn timber and moulding processing in Berau is inconsistent and often contradictory. most of which operated low-yield circular saw blades for production (BKPMD 1988). sawmills in Berau began to multiply. In 1995.1. For instance. Casson and Obidzinski 2002). local government sources reported 17 mechanized sawn timber and moulding mills in the district (Pemkab Berau 1981). this total increased to 22 mills. In 2000.6.028 m3 and 16. the number of officially registered mills in the district totaled 30 units. as the government imposed a national ban on log exports. Two years later.452 m3 of wood products respectively (Table 14 and Table 15) 35 . although only 40 of them were active (Obidzinski et al 2001. In 1974. Yet. It also reported that in 2003 and 2004 (until May). in 1983. Berau was reported to have a few manually operated mills producing low quality material for the local market (Direktorat Perencanaan 1974). some of these mills (12 in 2003 and 8 in 2004) produced 31.
Maluang Raya Jan 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Feb 0 0 0 535 0 0 0 0 1. Linda CV. Daisy Sulaiman Wood Ind PT.763 650 848 0 0 0 0 0 721 0 0 0 0 0 0 0 5.663 2.634 1. Sungai Berlian CV. Kaltim Damai Lestari PT.851 2. Sawn timber and moulding production in Berau as of May 2004 No 1 2 3 4 5 6 7 8 9 10 11 12 13 15 16 17 18 19 20 21 22 23 24 Company CV. Kaltim Damai Lestari PT. Tanjung Buyu Perkasa Sambarata Raya Singkuang Jaya Syahrani Taram UD.962 0 0 0 0 0 0 382 0 0 0 0 0 0 0 0 3. Sisilia CV.638 April 150 0 0 0 631 0 0 0 0 0 0 0 0 0 1. Linda CV.872 0 0 0 0 0 299 0 0 0 0 0 0 0 2.700 4. Maluang Raya Jan 0 0 0 0 0 0 0 0 1.039 0 0 0 0 0 0 0 0 0 1. Tanjung Buyu Perkasa Sambarata Raya Singkuang Jaya Syahrani Taram UD.802 April 0 0 0 0 0 0 0 0 0 817 0 0 0 0 0 0 0 0 0 0 0 0 0 3. Daisy Indah Wood Ind Source: UPTD Forestry Bureau. Berau Table 15. Sungai Berlian CV.371 Total 458 0 0 923 130 453 0 0 6.280 8. Paribau Sentosa PT.120 0 0 0 0 0 0 1.028 Source: UPTD Forestry Bureau. Paribau Sentosa PT.360 July 46 0 0 0 130 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2.665 Sept 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2. Cahaya Bintang CV.450 675 0 0 0 0 0 0 0 3. Sisilia CV.037 0 0 0 0 0 0 0 0 0 458 0 0 0 0 2.616 2.098 Mar 0 0 0 0 0 0 0 0 0 1. Agra Sarana UD.802 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1. Sawn timber and moulding production in Berau in 2003 No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Company CV.069 1.452 14 PT. Cahaya Bintang CV.280 16. Agra Sarana UD.023 0 0 0 4.517 May 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 June 412 0 0 0 0 453 0 0 0 1.439 0 0 0 0 1.603 0 0 0 0 0 0 2.196 721 0 122 458 0 0 0 10. Daisy Indah Wood Ind PT.663 Oct 0 0 0 0 0 0 0 0 2.Table 14.820 May 0 0 0 0 0 0 0 0 2. Tanjung Prima Lestari Erliana Gunung Agung Herry Chandra Meranti Jaya Perdana Nusantara PT.762 590 0 0 0 0 0 0 0 0 0 0 0 0 0 6. Talisayan Gemilang CV.115 0 0 0 0 0 0 342 927 0 0 0 0 0 0 0 2. Berau 36 . Meranti Segah River CV.039 2. Meranti Segah River CV.218 2.395 Aug 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 122 0 0 0 0 1. Tanjung Prima Lestari Erliana Gunung Agung Herry Chandra Meranti Jaya Perdana Nusantara PT.125 31.872 0 0 0 0 1. Kayu Abadi UD.385 Feb 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 542 0 0 0 0 0 0 0 0 542 Mar 0 0 0 0 392 0 0 0 1.067 Total 150 0 0 0 1. Daisy Sulaiman Wood Ind PT.936 8.344 Nov 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 814 0 0 0 0 0 0 0 0 814 Dec 0 0 0 388 0 0 0 0 2. Citra Wana Rimba Mulia PT.543 1. Kayu Abadi UD. Citra Wana Rimba Mulia PT.211 3. Talisayan Gemilang CV.
Figure 2. HPH or IPK operators. Indeed. indeed.855 m3 per month (Figure 2). if one matches the reported sawn timber production for 2003-2004 with 5 percent of the official log production in the district for the same period.685 m3 of raw material for the entire period. 2003-2004 2003-2004 lo g demand fo r repo rted levels o f sawn timber pro ductio n lo g supply fro mHP H/IP K.e. 37 . However. Berau Reported production vs reported shipping of sawn timber Similarly. there are differences between the reported volumes of sawn timber produced and shipped in Berau (Figure 3). the mills face a shortfall of about 45. sawn timber/moulding mills in Berau obtain the raw material from legal sources – i. or 2. Supply of HPH/IPK logs and the production of sawn timber in Berau. HPH and IPK logging permits stipulate that the companies supply 5 percent of their production for local consumption. hypo thetically 5 % o f all pro ductio n so ld di B erau) 1 4000 1 2000 1 0000 vol (m3) 8000 6000 4000 2000 0 Source: UDPT Forestry Bureau. The forestry as well as trade and industry officials are at loss to explain this discrepancy.Official log supply vs reported production of sawn timber According to UPTD Forestry Office as well as District Industry and Trade Office. They suggest it may be the result of statistical errors or. some underreporting. as it is commonly known that nearly all production output is sold outside.
the survey of all wood-working industries in the district indicates that. 38 . 2002 Sawn timber produced Sawn timber shipped The research findings for this report indicate that underreporting in Berau’s woodworking sector occurs on a large scale.000 10.000 20. 2001.000 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Source: BPS (quoting District Forestry Service): 2000.000 40. Sawn timber produced and shipped in Berau.000 Vol (m3) 30. 1993-2002 60. there were 37 active sawn timber and moulding mills in Berau (Table 16). as of 2004.Figure 3. In contrast to the UPTD Forestry Office and Industry and Trade Office data.000 50.
2004 Wood-working industries Type Sawmill Moulding Total Total 27 10 37 Employment 335 58 393 Raw material intake/month Value (Rp Vol (m3) billion) 32.2 32. Sawn timber and moulding mills in Berau. Assuming 11-month work year.35 21. In terms of legal status. The mills are relatively new enterprises – the oldest ones date back to 1995. Most of these mills (32) are located within a 10 km radius of the district capital of Tanjung Redeb.995 16.3. transport.510 16. in order to boost the local economy.850 m3 of raw material in order to generate approximately 219. Despite abundant evidence to the contrary.2 535 0. it needs to be intensified.g. 39 . valued at Rp 80 billion and Rp166. The remaining 5 mills operated in the Talisayan seaboard area and in the Berau River delta4 (see the Appendix 2).65 Source: CIFOR survey 2004. However.3 485 0. Increasingly.985 8. In 4 5 Villages of Batu-Batu and Kasai. 6.4 Output/month Value (Rp Vol (m3) billion) 21. hotels. Real raw material input and production The survey findings indicate that in 2004 sawn timber and moudling mills in Berau consumed about 329. These figures differ greatly from the official district government records. near the strategic confluence of Kelay and Segah Rivers as well as along the lower course of the Berau River.450 8. which is the sector’s norm. the reported annual raw material supply volumes are significantly lower than the volumes needed to match the official production and shipping figures.Table 16. The fact that far more sawmills operate that the official industry registers show and that these mills produce and consume between 5 and 7 times the reported volumes of timber calls for a reconsideration of such ideas. the majority was opened in the late 1990s. while the most recent one was established in 2004. they are also becoming involved in government infrastructure projects.2. that it produces and consumes relatively small quantities of timber and therefore.5 billion respectively5.950 m3 of timber products. most mills possess business licenses (HGU) or permits form the Industry and Trade Office. shop-keeping. The sawmills and moulding mills in Berau are operated by local businessmen (Berau Malay. Some even submit annual raw material supply plans to District and UDPT Forestry Offices. Timber kiosks A relatively new development in the wood-working sector in Berau over the last few years has been the emergence of timber kiosks (kios kayu) as the main source of wood for local consumption. district policy-makers are of the opinion that woodworking in Berau is still small-scale. Banjarese and Chinese) who engage in various other parallel enterprises – e.
Segah Labanan.5 63 67.Segah.Mracang Kasai.348 Source: CIFOR survey.Segah Kasai.Segah Labanan. upgrade of port and waterfront areas. Table 17.Sambarata Labanan.Labanan. The emergence of timber kiosks in Berau is closely linked to economic development processes in the district taking place within the framework of post-2001 regional autonomy.Sambarata Labanan.Pranoto Mangga II Merah Delima Sanipah II H.Sbrata Birang. 40 .Merancang.Labanan Bangun Birang.Segah. Segah Birang.Segah Birang.Durian III Jln. such infrastructure project require large volumes of timber. as well as construction of government offices and housing complexes. The spectacular growth of the financial wealth available to the district (the district budget increased from Rp 54 billion in 1998 to over Rp 440 billion in 2002) translated into a multiplicity of infrastructure projects – especially roads.Sbrata Segah. The presence and activities of timber kiosks in the district have been legally regulated by the District Regulation (Perda) No.Buah Tumbit.5 18 27 31 27 45 45 36 81 54 54 22.365 max 20 30 70 80 30 40 40 40 80 40 200 25 20 30 50 30 50 60 40 100 60 60 25 60 70 100 80 50 40 80 25 1. 2004 Timber kiosks No Location 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Tepian Buah Tepian Buah Teluk Bayur Teluk Bayur Teluk Bayur Teluk Bayur Teluk Bayur Rinding Rinding Rinding Rinding Rinding Rinding Sambaliung Jln.Durian III Milono Murjani III Manunggal Manunggal APT.5 54 45 63 72 45 36 45 22.Lbnan.Tumbit. 2004.Segah Labanan.Labanan Tepian Buah Labanan.Labanan.5 10 10 25 15 25 25 20 70 25 25 17.Durian III Jln.Segah Labanan.Merancang Birang.5 27 27 36 36 67 36 105 22.082 20 30 70 80 30 40 40 40 80 40 200 25 20 30 50 30 50 60 40 100 60 60 25 60 70 100 80 50 40 80 25 1.Merancang.Buluh Total Established 2000 2002 2000 2000 2003 2003 2001 2002 2003 2003 2002 2004 2004 2004 2004 2002 2003 2002 2001 2000 2000 2002 2003 2004 2003 2003 2003 2002 2003 2003 2004 T. Naturally.725 min 10 10 35 30 15 20 28 28 40 20 35 12.5 14 21 28 21 35 42 28 70 42 42 17.Segah Birang Birang.Segah Origin of raw material min 20 20 50 60 30 30 40 40 80 40 50 25 20 20 40 30 50 50 40 100 50 50 25 60 50 70 60 50 40 50 25 1.Isa II Jln.5 1.2004.Kasai Birang.Tumbit. there were 31 such timber kiosks.5 1.Segah Labanan.Kasai T.Segah Labanan.Buah.5 42 35 50 56 35 30 40 17.TLS. almost all located in Tanjung Redeb-Teluk Bayur Gunung-Tabur-Sambaliung urban area (Table 17). 13/2003. Birang.725 Vol intake (m3/month) Procurement value (Rp million) Sales Value (Rp million) 15 22. Sambarata Birang.Buah T.Pemuda Jln.Durian III Jln.Bulungan Sanipah II Sei.5 30 35 49 30 25 28 35 12.Birang Birang.Segah Tumbit. Timber kiosks in Berau District.5 783 max Vol (m3/month) 10 15 35 56 21 21 28 28 56 28 100 17. Labanan.
129 manufacturing enterprises of this kind employed 256 people and consumed 901 m3 of timber year (Table 18). it is likely to increase in the near future. The timber kiosk owners procure sawn timber of various sizes through a network of chain saw operators in the villages in the proximity of main town and communication arteries. the official production of which is expected to double by 2011 (BAPPEDA Berau 2001). 6. it means they will be supplying close to 40.975 m3 of timber in the main urban areas in the district. In 2003. If this assumption is applied to the actual supplier of timber for development projects in Berau.3. industrial and manufacturing centers. The 2001-2011 District Strategic Development Plan envisages an acceleration of construction projects in the district (roads.975 m3 may not seem as a significant amount of timber. It is assumed that timber for these projects will come from sawmills. airport. In 2004. timber kiosks. In 2004. tourism facilities etc). Ship-building A largely unknown aspect of the use of timber in Berau is the construction of wooden vessels (ships. they are likely to supply a similar amount. i.e. While at the moment 18.3.This study estimates nearly all construction-based demand for timber in Berau is supplied by timber kiosks. canoes etc). such kiosks sold about 18. 41 . boats.000 m3 of timber per year in the near future.
November 11. the mill is run until a part breaks. located 40 kilometers south of Tanjung Redeb. In Kiani’s case. and reportedly cost US$ 1. proper use of machinery and the right equipment in place. when a part needs to be replaced. 2004 Sub-district Biduk-biduk Gn Tabur Kelay P. the Kalimanis Group received heavy government subsidies for the construction of the Kiani mill (Barr 2000). If the normal life of a part is 3-4 months. “For a mill to run efficiently. an allocation of US$ 100 million from the government’s Reforestation Fund. Bob Hasan’s Kalimanis Group developed a large-scale pulp project in Mangkajang. the former is distinguished by the fact that only 40 m3 of timber are consumed per employee per year whereas each sawmill worker processes more than 24 times that amount of timber (970 m3) during the same period of time. rather than new. In addition. These included at least US$ 300 million in loans from four state banks.000 tons per annum when it came online in mid-1997. According to individuals involved with the mill’s operation. the Suharto government gave Kiani Kertas a permanent waiver on the payment of import and export duties for all capital goods. Note: a 40-ton ship requires 15 m3 of timber. Pulp and paper production In the mid-1990s.3 billion to build (Kenny 1997).6 Many of the components purchased for the mill were apparently rebuilt. While ship-building is only slightly behind sawmills in terms of employment (256 jobs vs 335 jobs). The Kiani Kertas pulp mill had an official production capacity of 525.” 42 . 2004.Table 18. Ship-building in Berau. Drawing on its owner’s close ties with President Suharto. you never know when you are going to have a catastrophic breakdown. A particularly interesting feature of ship manufacturing in Berau is that enterprises of this kind require small volumes of wood and are highly labor intensive. and the use of sub-par equipment in some parts of the mill has limited other parts from running at full 6 Confidential interview with a pulp mill engineer employed by PT Kiani Kertas. then everything stops. Equipment is being pushed to the max. Kiani has none of these. it needs high levels of coordination between raw material supply and processing. and a 10-year holiday on corporate income tax. The problem is. Tanjung Redeb. a mill will run down its stocks to 30 percent or less. 2000.3. 6. It is widely reported within the industry that the real costs involved in the construction of the Kiani mill were substantially lower than those reported by the company – perhaps by as much as onehalf (Barr 2000).4. the diversion of finance during the construction of Kiani Kertas resulted in the creation of a highly inefficient processing unit. As this informant explained. Derawan Sambaliung Segah Teluk Bayur Total Number of enterprises 21 5 30 31 17 13 12 129 Employment 58 25 58 43 37 17 18 256 Raw material use (m3/year) 332 78 150 193 48 37 63 901 Source: CIFOR survey. and spare parts on hand when equipment breaks. whereas a 100-ton ship needs 30 m3 of wood. Kiani pushes it to 6-8 months. Normally.
The remaining 90 percent have been plantation pulpwood imported from Sabah.406 tones in 1998. Since the fall of the Suharto regime in May 1998. In September of that year. The industry sources estimate that since the mill began operating. Kalimanis pledged Kiani Kertas.065. together with 33 other companies. In 2001 and 2002 the mill is estimated to have consumed approximately 1. 10-year period (IBRA 2000).capacity. A negligible amount of HTI pulpwood is also produced and delivered by HTI operators in Berau – particularly PT Sumalindo Lestari Jaya I and PT Tanjung Redeb Hutani. which have incurred substantial costs. In 2002. IBRA sold some US$ 480 million of Kiani’s debt to Bank Mandiri and a consortium of investors (Barr and Setiono 2003).7 Because of technical and financial problems. Prabowo Subianto and Luhut Pandjaitan.8 billion) in Bank Indonesia liquidity credits (Barr 2000). This number increased to 175. In August 2002.5 m3 of wood (under bark) are required to produce one ton of pulp. Kiani Kertas’s operations have been further complicated by the Kalimanis Group’s overall financial problems.000 tones of pulp. Kiani Kertas is also directly responsible for US$ 628 million in outstanding debts in IBRA’s portfolio. In its first year of operation.667 tones in 2001 (BPS Berau 2001). Kiani Kertas has reportedly operated well below its installed capacity since it came online in 1997.870 m3 of wood respectively.875 tones in 2000 and declined again to 236. IBRA entered into a debt restructuring agreement with Kiani that allowed the company to continue operating under its precrisis management team and to pay its debts over an extended. 7 This consortium includes former president Suharto’s son-in-law. to the Indonesian Bank Restructuring Agency (IBRA) as collateral for the repayment of some Rp 12 trillion (or US$ 1.749 tones of pulp. the mill has experienced frequent shutdowns. and Hendropriyono. the mill produced 143. Kiani Kertas produced and exported only about 22. Vietnam and Australia (Tasmania) (Botha 2002). In the years since production began at Kiani. the former trade minister and ambassador to Singapore. 43 . as approximately 4. In October 2000. which is only about 35 percent of its installed production capacity (BPS Berau 2002). roughly 10 percent of it’s raw material intake have been mixed tropical hardwoods (MTH) harvested from natural forests in Berau and other parts of East Kalimantan. declined to 138.000 m3 and 646. increased again to 273.233 tones in 1999. Indonesia’s current Chief of Intelligence.
In the north. In its central and southern parts. the district is facing the Celebes Sea and it has an extensive and diverse coastline running from the Mahakam delta to the eastern tip of Mangkalihat Peninsula. Along its eastern edge. lowlands and swamps. ILLEGAL FORESTRY ACTIVITIES IN THE NORTHERN PART OF EAST KUTAI DISTRICT 7. It is considerably larger than Berau as it covers 35.45 million ha) and 5) Park/Reserve Forest (0.559 people. or 17 percent of the province’s land area. moulding mills). 4) Protection Forest (0. East Kutai has two major communication arteries: 1) trans-Kalimantan highway that cuts through the eastern and northern parts of the district connecting it to Samarinda in the south and other districts to the north and 2) Wahau-Kedang Kepala Rivers flowing into the Mahakam River. 7.8 million ha of East Kutai’s land area were classified as a forest estate. 3) Conversion Forest (1. 44 . Illegalities associated with extractive forestry operations in the northern part of East Kutai District According to District Forestry Office (Dinas Kehutanan).853 resided in the district capital of Sanggata – a coal-mining town on the coast (BPS Kutai Timur 2002). of whom 56.09 million ha). in 2002 about 2.2.7. 2) Limited Production Forest (1. These forest resources support a range of licensed and unlicensed extractive activities (HPH.97 million ha).07 million ha). In 2002.747 km2. IPK. northwest and northeast the district’s topography is defined by mountainous terrain that includes carst mountain ranges. small-scale logging teams) as well as licensed and unlicensed woodworking (sawn timber. the district had a population of 167.22 million ha) (BPS Kutai Timur 2002:96). This forest area comprised: 1) Production Forest (0. Overview of the forestry sector in East Kutai District East Kutai District is located in the central-eastern part of East Kalimantan province.1. East Kutai is dominated by undulating plains.
2001-2002 No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 C o m pany P T.660 7.168 65. Bengkal Sangkulirang Sangkulirang Sangkulirang M a.759 18. S um alindo Lestari Jaya / H T I P T. H anurata unit K elokan P T. Prim er K arya Baru K op M andu S aka Lestari K op. S ilvaduta C ooperation P T.928 25.805 7. W ahau M a.744 19. M andu Palm a Lestari P T.286 24.318 39. D harm a Satya N usantara /IP K P T.324 0 5. N arkata R im ba P T. H anurata unit B engalon P T. Bengkal B engalon Kongbeng M a. Inhutani II/ Kitadin P T.359 9.125 721 2.143 21.275 12.557 29. Telaga M andiri K op. E lang M entari K op. Bengkal M a.769 0 42.412 0 4.644 127.147 45. G unung G ajah Abadi P T. Bum i U layat K U T.087 0 17. S um ber M as Tim ber P T. O ceanic Tim ber P roducts P T. Bengkal M a. Bengkal An nual produ ctio n (m 3) 2001 20. Telen S andaran Sangkulirang Telen Kongbeng M a. Inhutani Long N ah P T.579 10.881 44. W ahau B ontang B ontang M a.163 587. Note: IPK production figures are in shading. Karya P em bangunan K op.393 42.511 0 118.463 0 0 0 0 0 0 0 0 0 0 0 46. O ceanic Tim ber M arah TP P T.329 7.184 8.732 68.535 0 0 0 0 10.168 L ocation S andaran Sangkulirang S angata B engalon S andaran Sangkulirang Sangkulirang Sangkulirang M a.200 23.247 18.468 19.960 6.814 31.190 18.147 45.972 2.333 482. A ncalong P roducts M a.953 18.857 40.399 16.732 68. O ceanic Tim ber D un TP P T. Telen P roducts M a. B orneo K arya Indah P erm ai C V A lfath K elom pok Tani G ajah Indah K elom pok Tani Tiga T awai Y ayasa Fastabiqul K hairat Total H P H Total IP K TO TAL 359.087 0 17.526 2.069.755 0 6.747 33.863 0 0 0 13. Inhutani I Sangkulirang/ C arryover P T.993 66.134 10. S egara Indochem Afd S G T P T. Sanggata. Inhutani SP III Pengadaan P T. P anam bangan P T.623 0 50.334 0 16.484 22.861 26.618 21.994 8. H anurata unit S angata P T.727 23.777 48.906 11.321 25.608 21.742 13. K iani Lestari P T. A ncalong Sangkulirang Sangkulirang M a.393 0 65. D harm a Satya N usantara P T.151 3.829 P T.345 29. B asuim ex P T.797 C um u lative p ro du ctio n (m 3) 66. W ahau Sangkulirang K aliorang Sangkulirang Sangkulirang Sangkulirang M a.431 2.625 7.708 5. M a.922 1.864 0 18. S um alindo Lestari Jaya/ IP K P T. Long B agun P rim a S awit P T.960 29.127 4.071 27. B asuim ex carryover P T.960 6.948 10.770 4.742 13.960 19.125 721 2.003 13.814 15. H anurata M anum bar / IP K P T. S im a A gung P T.497 1.674 7.632 82.407 4.407 1. W ahau K aliorang Sangkulirang Sangkulirang M a. Intertropic A ditam a P T.324 13.246 4.840 9. M a. Inhutani II/Indom inco M P T.889 3.035 2. P utera K alim antan Perm ai K op. S oko Joyo M akm ur P T. Bengkal P roducts M a. M ukti Lestari LKM D .224 92.708 24. O ceanic Tim ber D un Kopkar P T.489 19. K edungm adu Tropical W ood P T. Batu Lepoq P T.290 486.431 2.674 7.770 10.005 10.736 23. E tam B ersam a Lestari /IPK P T.467 18. A ncalong B usang 0 2.738 12.784 16. W ahau M a.032 15.357 32. Bengkal K aliorang Sangkulirang Sangkulirang M a. 45 .033 2002 46.856 8.617 1. S egara Indochem Afd S G I P T.271 33.891 10.526 2.187 8. M elapi T im ber P T. W ahau B usang M a.150 2.128 74.532 38. Loka D wihutani R aya P T. W ahau Kongbeng B usang M a.824 51.537 9.867 23.Table 19.273 26. S urya H utani Jaya P T.891 10.591 10.127 0 68. Log production in East Kutai.688 28.736 91.243 19.919 12.495 9.001 13.562 40.888 0 68.151 3.184 2. Peridan K erayaan Jaya LKM D .934 Source: Dinas Kehutanan East Kutai.251 46. O ceanic Tim ber M arah K opkar P roducts M a. E tam B ersam a Lestari /IPK -T P P T.251 17. W ahau M a. H anurata unit M anum bar P T.851 26. W ana K altim Lestari P T.922 1.889 3.
059 26. The company has a prime quality logging concession in the Atan-Marah watersheds in the north-western part of the district.412 86. and with far fewer strings attached.105 588 2. While in other parts of the province IPK operations had by then out-competed HPHs. By 2003. the slowdown in the HPH sector became pronounced and the dominance of IPK logging established.337 IPK (m3) Valuiable species 0 12 0 19 8 7 0 0 0 0 5 3 Mixed 22. social conflicts and problem with securing RKT work plans.2.119 29. 46 .767 17. also see Appendix 3).369 Source: Dinas Kehutanan East Kutai. however.220 41. HPH sector in East Kutai maintained its dominance in extractive (logging) activities through decentralization and the initial period of regional autonomy (until 2001/2002).714 8.7. Gunung Gajah Abadi and Dharma Satya Nusantara).868 37. In 2001/2002 there were still 22 HPH concessions active in the district.499 30. A prime example of this is a HPH concession holder PT Oceanic Timber Products Inc in Telen and Muara Ancalong subdistricts.345 44.095 Gmelina arborea 0 0 312 2.770 5.572 35. Due to difficulties with RKT documents. A similar shift from HPH to IPK logging was undertaken by PT Narkata Rimbah in the Wahau-Kombeng area.199 Valuiable species 0 0 4 0 7 4 13 0 0 21 0 55 Mixed 0 0 145 28 198 1. It is far more than it would have been allowed to extract as a HPH concessionary. in East Kutai the latter were able to hold out longer.361 23.921 402 41 2.081 298 0 0 0 0 0 HTI (m3) Acacia mangium 0 0 0 100 92 0 2.011 14.819 456 178 2.638 13. it secured 4 IPK permits with the total production target of 202. between 2001 and 2003.500 32.398 103 9. This growth occurred in no small degree due to the fact that many HPH concessionaries. facing financial difficulties.961 m3 over 2 years.098 7.328 Meranti 30.413 40.e.385 3.863 13.350 300 2.988 24. Only about 10 HPH license holders continued to be active that year. Sanggata Overall. Table 20. Log production in East Kutai in 2003 HPH (m3) No Month Meranti 0 10.506 16.975 5.740 HTI = 9.674 6. switched to IPK operations that carry far fewer responsibilities.427 48.645 21.023 461.016 9.698 5.161 822 Total HPH = 207.222 1. In partnership with company employees and local villagers.524 IPK = 601.1. HPH operations in East Kutai went into decline while IPK logging expanded (Figure 4).664 0 0 0 49 256 Paraserianth es f 0 0 0 501 321 0 0 0 0 0 0 0 1 Jan 2 Feb 3 March 4 April 5 May 6 June 7 July 8 Aug 9 Sept 10 Oct 11 Nov 12 Dec Subtotal 198.310 1. only 2 HPH concessionaries secured RKT work plans and continued to operate in 2004 (i. some of them operating multiple logging units (Table 19.065 26. HPH In contrast to Berau and other districts in East Kalimantan. In the Wahau-Kombeng area.075 37.719 54 139.909 27. in 2002 the company suspended its HPH operations and focused on IPK logging.
427 14.857 1.000 200. Sanggata While this disparity is minor.Figure 4.148 Oct 1.862 3.062 22.449 4.928 1.018 1.598 April 0 May 6.923 Mar 4.128 5.614 2.176 1. 207.978 2.993 2.167 18.218 1.402 4.405 m3 of logs that had been extracted in East Kutai.084 30.825 Total 33.156 3. 2001-2003 700.069 3.164 5.043 237.971 4.253 7.061 5.953 1.232 2.412 8. slightly in excess of what they reported as the production output – i.360 5.963 1. HPH-IPK roundwood production in East Kutai.e.011 6.424 18.700 653 1.000 500.157 1.166 25.000 Vol (m3) 400.530 4.989 2.314 7.813 41.741 653 24.000 300.590 35.598 4.931 2.085 24.343 4. Reported transport of HPH logs in East Kutai in 2003 No 1 2 3 4 5 6 7 8 9 10 Company Hanurata Manumbar Hanurata Kelolokan Porodisa Bengalon Porodisa Sangata Sima Agung Segara Indochem Segara Timber KTW Penambangan Jan 4.358 5.386 Month/m3 June July 3.021 6.734 Nov 4.018 3.011 3.476 28.000 0 2001 2002 2003 HPH IPK Source: Dinas Kehutanan East Kutai.505 5.534 (difference: 29.881 m3) (Table 21).405 Source: Dinas Kehutanan East Kutai.604 Intertropic Aditama 11 Basuimex 12 Narkata Rimba 13 DSN 14 Inhutani I Skl 15 Melapi Timber Gunung Gajah 16 Abadi 17 Loka Dwihutani Raya TOTAL 25.244 -1. Table 21. Sanggata In 2003.783 1.695 Aug 6.974 2.726 Dec 4.106 41.384 4.420 5.960 4.978 4.972 2. Interviews and field investigations in 47 .020 1.119 Sept 4.232 1.330 28.766 6.501 46.118 7.641 4.083 3.000 100.219 8.952 3.036 2.021 11. HPH companies transported 237.860 2.194 8.651 4.167 83.408 2.368 3.789 8.151 2.225 25.501 20.320 2.926 3. the main problem with HPH concession holders who have shifted to IPK operations is that logging out of block is widespread.234 7.000 600.915 Feb 8.121 6.824 1.
410 27.100 3.2.407 13. Hanurata Coy Ltd PT. Mandu Palma Lestari 3 4 5 6 7 8 9 10 11 12 13 14 15 PT.690 178.000 1. Table 22.716 m3 (Table 22).277 200 1.000 7.Wahau-Kombeng clearly show that current IPK ventures by PT Oceanic Timber Products and PT Narkata Rimbah log well beyond the allocated territory.307. Inhutani II (PT. SLJ Permit renewal Rubber Salvage logging Leftovers from landclearing for HTI PT.740 200.741 ha of forest with the production target of 1.119 233. 7. SLJ Leftovers from landclearing for HTI PT.750 10.352 6. Oceanic Timber Products Inc Koperasi Karyawan PT. Ancalong Sandaran Sangkulirang Sangkulirang Sangkulirang Bontang Bontang Sangkulirang Telen Sangkulirang Ma.995 47. Ancalong Ma.656 36. Wana Kaltim Lestari PT. the district government of East Kutai (Bupati) issued at least 35 IPKs covering 153. Sanggata Between 2001 and 2004.860 6. Wahau Sangkulirang Sangkulirang Sangkulirang 3. OTP PT.470 21.000 31. Wahau 107. Provincial IPK permits in East Kutai active in 2004 No Company Permit date Location Area (ha) Production target (m3) IPK Objective 1 PT.716 Sangkulirang Sangkulirang Sangkulirang Ma.042 54.336 ha (some permits dating back to 2001) with the cumulative 20012004 production target of 1. IPK logging permits in East Kutai come in two types: province-level permits and permits issued by the district government. Sumalindo Lestari Jaya PT. Indominco) PT. 48 .307.000 2. As of 2004.793 84. Inhutani II (PT. IPK As in Berau.663 m3 of logs (Table 23).130 10. manipulate production reports and understate log transport8. Long Bagun Prima Sawit 16 LKMD Desa Persiapan Mukti Sari 17 LKMD Desa Batu Lepoq 18 19 20 21 PT. 8 Wahau.090 Oil palm Permit renewal Permit renewal Oil palm Oil palm Salvage logging Salvage logging Salvage logging Settlement expansion HTI Permit renewal HTI -Trans Coal mine Coal mine Oil palm Rubber Oil palm Oil palm Oil palm Permit renewal Leftovers from landclearing for HTI PT. there were at least 21 provincial IPK permits in effect that covered 107.237 35.000 100 200 15.440 24.199 35.814 6. Ancalong Ma.000 2. Dharma Satya Nusantara PT.900 77.650 2.494. Bulungan Sarana 36.776 593 3.2.250 59. Etam Bersama 2 PT.404 53.000 2. Kitadin) Koperasi Mandu Saka Lestari Koperasi Telaga Mandiri Koperasi Perindam Kerayaan Jaya PT.850 33. Inhutani I Sangkurilang CV Alfath Yayasan Fastabiqul Khairat Koperasi Primer Karya Baru Total 14-Jun-01 16-Jul-02 30-Dec-02 14-Feb-02 18-Jul-02 20-Feb-02 6-Dec-01 7-Jul-02 22-Oct-01 26-Sep-01 5-Sep-02 13-Nov-01 13-Nov-01 13-Nov-01 1-Oct-01 11-Dec-01 11-Jan-02 17-Feb-03 8-Apr-02 14-Nov-02 3-May-02 14-Jun-02 14-May-02 16-Sep-02 24-Sep-02 10-Aug-01 Sangkulirang Sangkulirang Sangkulirang Sangkulirang Sangkulirang Telen Ma. Nehes Liahbing – July 2004. Miau Baru.866 566 445 9.686 9.065 1.430 22.336 Source: Dinas Kehutanan East Kutai.000 800 700 1. Kiani Lestari PT.
193 23.45/HK/IX/2003 363/02. Borneo Karya Mandiri PT.Table 23. Unit Balikpapan PT.188.005 62.000 39.697 49.188.000 3.45HK/III/2003 64.000 2.45/HK/IX/2003 452/02.188.45/HK/XII/2003 97/02.000 2.880 71. Nadila Indodaya PT.455 no data 11.45HK/IV/2003 62/02.708 52.200 800 1.45/HK/IX/03 238 tahun 2002 452/503/BKT/DK-VIII/02 Date 11-Feb-02 11-Feb-02 13-Aug-02 19-Sep-03 19-Jul-02 22-Dec-02 4-Jun-03 24-May-03 26-Mar-03 16-Mar-03 24-Mar-03 29-Jul-03 24-Mar-03 21-Mar-03 26-Mar-03 5-Sep-03 27-Feb-04 27-Mar-03 11-Mar-04 3-Mar-04 2-Jul-02 21-Oct-02 1-Apr-03 4-Jun-03 20-Jun-02 8-Aug-02 7-Apr-04 17-Sep-02 31-Jul-03 2-Jul-03 19-Sep-03 19-Sep-03 31-Dec-03 8-Mar-04 19-Sep-03 8-Aug-02 13-Aug-02 Location Sandaran Sandaran Sangkulirang Renewal Kongbeng Renewal Sangkulirang Sangkulirang Sandaran Kongbeng Sangkulirang Bengalon Sangkulirang Sangkulirang Sangkulirang Sandaran Sangkulirang Sangkulirang Sangkulirang Kaliorang Bengalon Sangkulirang Sangkulirang Ma.315 26.188. both provincial and district IPKs cumulatively reported the production of 601.A/02.B/02.500 47. Inhutani I.886 2.100 1.45HK/IX/2003 57/02.663 Source: Dinas Kehutanan East Kutai.188.a/02.188.188. Kalimarau CV.001 47. Soko Joyo Makmur PT. 2001-2004 No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Company PT.188.025 7.042 20.188.45/HK/IX/2003 224 tahun 2002 444/02.920 58.188.320 1. However.45HK/III/2003 343/02.779 41.750 49.000 1.200 3. shipping exceeded production by 69. Pertanian Sangkulirang Permai Kop Serba Usaha Tunas Jaya Kop.B/02.188.564 1.188.856 m3 of logs in the district – thus.000 1.500 3.45/HK/III/2004 246 tahun 2002 193.45/HKVII/2003 204/02.45/HK/III/2003 91/02.280 44.000 1. Putra Kalimantan Permai PT.398 14.000 2.45/HK/III/03 78/02.188. Kertha Nugraha Kop.085 106. Min Sut Lekut Kop.116 m3 (Table 24).45HKIII/203 279/02.500 100 2.740 m3.000 1.45/HK/II/04 92.188. IPK operators reported to have shipped 670.494. Kalimantan Bolivia Maloiindo PT.200 2.45/HK/IV/2003 241/02. Cinta Hutan Lestari Kop.000 667 2. Serba Usaha Warga Rimba CV Sinar Meranti Kop.45HK/VI/2003 143/02.45/HK/IV/04 258 tahun 2002 282/02.45/HK/III/03 68.600 1. This discrepancy may seem minor.799 76. IPK permits issued by East Kutai District (Bupati).45/HK/XII/2003 75.188.188.000 67.850 50.45/HK/V/2003 92/02. Sima Agung PT.188.45HKVI/2003 239 tahun 2002 115/02. Sumber Jaya Abadi CV. Bumi Etam Sejahtera Kop. Batu Lepoq Lestari Kop.240 36.000 538 3. Etam Bersama Lestari CV Alfat CV.188.000 1.188.741 Area (ha) 47.45HKIV/03 145 /02.200 2.188.920 27.45/HK/IV/2004 365/02.45HK/III/2004 67/02. Karya Pembangunan Kop Bina Usaha Pelita Warga Kop.670 50.000 4.100 39. In the same year.460 55. Nelayan Kakap Putih Kop. Ardi Jaya CV. only 39 out of 66 IPK holders reported shipping of logs.A tahun 2002 68/02.316 135.890 30.500 1. Telaga Mandiri KUT Elang Mentari Kop.188. Kutai Timur Prima PT. Kutai Inovasi Utama CV. Some IPK operations were 49 .188.200 400 1.45/HK/VII/2003 364/02.000 1. Pertanian Semoga Jaya Kop.Ancalong 153.967 15. Labbaika Kop.284 20.188.188.Wahau Sangkulirang Telen Renewal Kongbeng Sandaran Kaliorang Kaliorang Bengalon Sangkulirang Sangkulirang Bengalon Telen Ma.500 1. Putra Daya Kaltim PT.594 30.188. Sanggata In 2003.188.188.000 2. Bumi Ulayat Indah Lestari KUD Marga Jaya Total Permit 101 tahun 2002 426/522/Bup-Kutim/2002 456/503/BUP-Kutim/IX/02 362/02. Karya Bakti Kop. Binakarya Nuansa Sejahtera PT.312 7.994 44.500 Target production (m3) no data no data 78.000 500 5.45/HK/VII/2003 144/02.
Fastabiqul Khairt Bumi Etam Sejahtera Sumalindo LJ Cinta Hutan L Kop.457 0 10.803 0 0 896 4.020 41.359 5.840 0 0 1. EBL LKMD Bt Lepoq CV Wana Bhakti CV.378 0 0 7.363 5. BKIM PT. Soko Joyo Ke.024 0 1.795 0 0 12.364 3.148 0 1.426 0 21.575 1.453 6. July-September 2004.068 0 0 0 0 0 0 0 2. IPKs continue to be issued by district authorities.778 10.197 1.848 0 0 12.969 0 0 0 0 0 0 0 0 0 0 0 0 0 2.607 0 1. OTP Dun TP Kopkar Rimba K OTP PT.097 0 0 0 0 0 3. Kalimarau Jan 2.600 0 0 Oct 1.150 5.978 4.probably not active.854 7.638 5. Table 24.240 56.049 4.249 2.953 56.114 5.363 4.059 0 0 0 2.863 3.607 0 0 1.194 1.345 0 0 1.367 0 0 3.478 820 16. PKP Y. Inhutani I Skl PT.068 3.906 13.658 2.566 1.874 5.591 68.338 52.815 0 0 0 0 0 0 0 Total 8.603 19.574 50.913 2.359 78.080 0 0 2.593 0 3.029 0 1.255 868 0 256 0 2.094 4.617 0 3.289 0 3.324 0 3.026 43.362 Feb 5.543 0 0 0 0 14.963 69.178 0 15.147 8.859 0 0 0 0 0 0 0 0 0 0 May 0 4.384 0 1. MPL PT.469 24.019 0 0 0 0 0 Mar 0 0 0 8. Reported transport of IPK logs in East Kutai in 2003 No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 Company PT.034 21. Alfath Kop Mandu S BKNS LKMD Mukti PT.815 6.731 0 0 0 0 0 0 0 3.249 0 0 0 0 3.613 10.469 7.821 10.842 11.593 19.815 1.705 0 4.046 11.174 513 0 0 0 0 0 0 0 0 0 0 0 Sept 0 9.003 3.467 78.145 30.103 1.112 8.821 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3.427 0 0 4.842 3.590 1.321 41.271 0 0 0 0 0 0 0 0 0 0 0 0 2.126 49.688 2.453 47. Sanggata Besides the production-shipping discrepancy. Marga Jaya Kiani Lestari KUT Elang Mentari Sbr Jaya Abadi KT.058 0 2.329 0 0 0 0 0 0 0 0 0 2.802 18.447 0 0 0 0 0 0 0 0 0 2.397 0 0 8.565 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Apr 0 0 0 2.033 83.736 5.746 0 0 0 0 0 0 0 0 0 0 0 0 Nov 0 0 0 4.819 0 0 0 0 0 0 0 0 20. Long Bangun PT.408 0 2.835 3.679 1. OTP Marah TP Kopkar Marah OTP PT.619 4.873 7.365 2.935 38. 50 .306 15.809 3.524 2.619 0 0 1.748 0 2.284 0 0 0 0 1.373 0 0 0 0 0 0 0 0 0 0 0 0 0 2.221 6.002 1.923 1.437 0 0 12. Beringin Jy. a good number operated but officially pretended to be inactive9.958 0 0 0 0 0 0 0 0 1.041 4.249 0 0 0 0 0 0 2.149 5.151 0 0 0 1.576 53.166 0 0 0 0 0 0 0 0 7.801 140.856 Source: Dinas Kehutanan East Kutai.440 0 1. the problems with IPK operations in East Kutai are twofold: 1) As of 2004.097 2.932 0 0 608 2.205 0 1.449 1.206 7.730 11.291 16.171 0 0 0 0 7.073 0 0 0 1.564 0 0 7.683 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1.475 0 15. but according to forestry insiders in East Kutai (the Wahau-Kombeng area).573 670.230 0 0 Month/m3 June July 0 0 0 0 2.968 5.730 0 0 3.525 28.014 3.526 3.171 46.169 0 1.914 0 0 607 6. Tani Tiga Tawai OP Telaga M Bumi Ulayat Indah L Kopkarya Pemb Kop Primer Karya Br CV.199 0 6.106 3.362 TOTAL 0 0 0 0 0 0 1.420 1.497 2.454 0 0 0 6. in direct violation of the 9 Interviews with IPK operators in Wahau-Kombeng area.237 4.998 0 0 0 0 0 0 0 0 3. WKL PT.194 1.526 0 0 0 0 0 0 0 0 0 Dec 0 6. Skt HPHH Long Wehea PDKT IHPHH Long Salimin SMS Kop Karya Bhakti Kop Semoga Jaya PT.699 1.022 0 0 Aug 0 4.614 0 8.044 742 0 2.863 3.169 2.573 0 11.927 4.
500 ha and 47. 51 .130 m3 per year (see Table 25). The last 2-3 years have seen the arrival of “truck logging” teams from Samarinda and from as far as Banjarmasin (South Kalimantan) and Kotawaringin (Central Kalimantan).3. In the Wahau-Kombeng area. the sample had the manpower of 116 loggers who.000 ha respectively and are located on the ridges of Gunung Kulat and Gunung Beriun near the border with Berau.2. Such logging teams have become increasingly more active in recent years. PT Narkata Rimbah was investigated by the provincial Forestry and Police authorities for logging outside the area of its IPK permits and for failing to make progress with community plantation projects. In 2004. woodworking industries in East Kutai (sawmills and moulding) depend entirely on raw material (either square or round logs) delivered by small-scale logging teams. Cumulatively. Sentiang Indah (Miau Baru). 7. The last two licenses cover 27. a sample of 11 small-scale logging teams has been studied.830 m3 of round and square logs per month.central government regulations revoking Bupatis’ authority to issue such permits and 2) IPK licenses are often issued for dubious plantation schemes (mainly oil palm). In September 2004. A prime example of this are IPKs operated by PT Narkata Rimbah. Cumulatively. the company carried out logging on behalf of at least 4 village cooperatives in Wahau-Kombeng: Putra Dayak Kalimantan (Miau Baru). the production target of these IPKs reaches hundreds of thousands of m3. Innovative winching methods are also used for loading the logs onto trucks. employing ingenious methods of hauling the logs to the roadside using rear wheels of the truck as a winch. produced about 3. The truck loggers deliver round logs and square logs to sawmills. Small-scale logging teams As in Berau. using 45 chainsaws. Pancasila Abadi (Nehes Liahbing) and Borneo Prima (Nehes Liahbing). small-scale logging was carried out by locals largely along major waterways. Prior to 2000. or 42.
M. Tik 6 Yuda Nehes. 225 chainsaws and producing 19. Rp.000 m3 of sawn timber year (see section 7.000/5 months Independent. Rp. Liahbing Gentung River. Since there are 31 woodworking mills in the Wahau-Kombeng area with the installed production capacity of 105. Wahau 12 30 600 Sawmills in M. East Kutai. 20. Wahau Independent 1 Independent 1 45 2 116 60 3. Liahbing SP 2 8 20 800 7 Samikun SP 1 8 Anwar SP 2 Km 47 from M Wahau in ex Basuimex concession GGA concession Independent 3 Independent 8 20 400 9 120 Sawmills in SP. M. A sample of small-scale logging teams near Muara Wahau. Wahau Sawmills in SP. M.2. Wahau 2 Siman Jabdan Gentung River 3 Yanto Jabdan Gentung River 1 4 4 Kleasong Nehes.830 2 60 Sawmills in SP. Rp.000. 2. Wahau Sawmills in SP. 2004 No Name of the team 1 Jaim Origin Jabdan Location Gentung River Financing Independent. Wahau Sawmills in SP2. 13 buffalos 3 6 120 Number of Number of chainsaws loggers in team 1 4 Production m3/month 600 Sawmills in M. M.000/6 months + 12 chainsaws Independent.750. Selek River inside GGA concession Selek River inside GGA concession Jembatan Tiga on the road to Samarinda 5 M. 2.1 below).000. totaling 580 loggers. M. 2004. Wahau 1 4 400 Jainudin (Koramil 350 M. in order to feed these mills there must be about 55 teams active in the area.000 + ketinting + 1 chainsaw Agus and Roby (Chinese from Samarinda).000. then on to Samarinda Sawmills in M. 1. Wahau 9 Ajis SP 1 10 Wingdyang Dyaklai 11 Wungsam Miau Baru GGA concession Km 21. M.000 + ketingting + 1 chainsaw Independent. 52 .Wahau). Rp.Table 25. Wahau Sales Destination Sawmills in M. 60.100 m3 per month or 210. Wahau TOTAL Source: CIFOR survey.000 m3 per year.000 + ketingting + 1 chainsaw Independent.500. Km 47 in ex Basuimex concession (in the direction of Gergaji Mountain) Km 41 in ex Basuimex concession Km 41 in ex Basuimex concession Independent 6 15 320 Sawmills in SP. Rp.
the sourcing of raw material and production activities of this plywood mill were not studied as part of this project. In addition. 7. particularly in Sanggata. Illegalities associated with wood-processing industries in the northern part of East Kutai The woodworking sector in East Kutai is mainly comprised of sawmills and moulding mills. there are 31 woodworking mills active in the Wahau-Kombeng area (see Appendix 10). Due to the fact that the focus of field investigations was on the area of Wahau-Kombeng.000 m3 per year. The official district register is not listing the largest sawn timber and moulding producer in East Kutai – PT Putra Bengalon Wood10.1. However.000 m3 of sawn timber and moulding. In fact. the Forestry and Trade-Industry Offices in Sanggata seem to be aware of only 1 sawmill in Kombeng and none in Wahau. centered largely in Sanggata and Bengalon (Table 26).3.7. East Kutai also possesses one plywood mill located in Sangkulirang – PT Pacific Bontang Raya – with the installed annual production capacity of 90. Some of the latter also act as timber kiosks.3. 10 Provincial forestry sources estimate this mill’s annual production capacity at up to 70. Sawmills and moulding Official records show that as of 2004 there were 48 woodworking mills in East Kutai. there are reasons to believe the real number of active mills is substantially higher. 53 .
Panambangan Sawmill Bansaw Bansaw Meduai Bakti H.440 1.800 no official data Ambo Dalle Suparman Jumran Waridi Moh.000 no official data no official data no official data no official data no official data no official data no official data no official data no official data no official data no official data no official data no official data no official data no official data no official data no official data no official data no official data 360 1. While it is possible that some mills were temporarily (or permanently) not active. East Kutai The officially reported production of sawn timber in 2003 was 58.Table 26. Kalimantan Lestari CV. Karim H. It is interesting to note.500 3. Bahtera Agung CV.000 2.080 360 360 360 1. Porodisa PT.080 360 360 360 24 540 540 1. Jaya Usaha Meubel Abadi A.950 2. Rimba Mas Plaju Tanjung Manis Indah PT. 17 OcSawmill 17-Oct-02 Sawmill 6-May-03 Sawmill 3-Apr-03 Sawmill 6-May-03 Sawmill Sawmill Sawmill Sawmill Sawmill Sawmill Sawmill Sawmill Sawmill Sawmill Sawmill Sawmill Sawmill Sawmill Sawmill Sawmill Sawmill Sawmill Sawmill Sawmill 2001 moulding 2000 moulding 2002 moulding 2001 moulding 2001 moulding moulding moulding moulding moulding moulding moulding moulding moulding moulding moulding moulding moulding Sawmill moulding Sawmill moulding moulding Installed capacity (m3/year) 3. however.500 2.440 1. sawmill sector insiders in East Kutai (the Wahau-Kombeng area) indicate it is a “standard operational procedure” for many sawmills to pretend not to be producing in order to avoid unwanted attention as well as formal/informal tax burden11. Sukamdani Angah Udin Zaenal H. Pasifik Bintang Jaya PT. Nur Ali H.800 1. The official record of sawn timber and moulding mills in East Kutai in 2004 No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 Company CV.800 1. Nusantara Kop. Slamat Arif Rani M.561 m3 (Table 27). Aripin Jaya Raya UD.000 2. Putra Bengalon Wood PT. Abd. Warkasi Sairoji Rachmad Danis Rais Sahide Burhanudin M. Surya Graha Sakti PT. Yunus Bahruni Aidil Fitriansyah Agus Sasongko Enggal Syahbudin Fauzi Location Sangkulirang Kombeng Benggalon Sangkulirang Sangkulirang Sangkulirang Sangkulirang Bengalon Bengalon Bengalon Bengalon Bengalon Bengalon Bengalon Bengalon Bengalon Bengalon Bengalon Sangkulirang Sangkulirang Telen Telen Ma. Hanurata Coy.A Hairun Jaubi Syarief Zuldani Budiman Molek Budiman Molek Budiman Molek Drs. 11 Interviews with sawmill operators in Wahau.500 18. Fadilah Adi Putra Jaya Shaleh Sawmill Yahya Kusuma Meubel Owner/manager Comelius Rantelangi Balan Laway Soegianto Hatta Norjali E. Bengkal Sangkulirang Sangkulirang Sangkulirang Sangata Sangata Sangata Sangata Sangata Sangata Sangata Sangata Sangata Sangata Sangata Sangata Sangata Sangata Sangata Sangata Sangata Sangata Sangata Sangata Sangata Sangata Type of Established industry 14-Sep-02 Sawmill 4-Sep-02 Sawmill 10 Jan 01. Yunus Sumber Rejeki Mulia Meubel Meubel Enggal Syahbudin Meubel PT.080 360 900 360 1. Leken Meren PT. Thamri Akap Teguh H. July-September 2004. that this figure is based on 24 reporting mills only. Basuki Andy Moulding Meubel Sangata Mandiri Burhanudin Ray Meubel Teguh H.Slamat Arif / Rani M. Sumber Meranti Sakti PT. 54 . Aripin Sunarto Sri Rahmawati Sahrani Muchsin Antai Shaleh Yahya Suyatno Source: Dinas Perdagangan dan Perindustrian. Lima-lima Empat Sekawan Meubel Rukun Dwi Tunggal Lingga Jaya Moulding Sekawan Meubel sukma Jaya UD. Ltd UD. Kalimantan Wana Sakti PT.
therefore. Landang TOTAL Jan 322 1.189 Sept 1. 2003 No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Company Surya Citra Abadi KNL PO.048 9.794 Total 1.073 743 266 668 547 1.556 5. Harapan Prima Leken Meren CV Nusantara PBR PBW Mitra Utama S Rancang Bangun Lestari Kop Warta Jaya Wardana Agus Sumardi Pmd Pancasila CV Kalindo H.669 Apr 810 2.182 145 503 592 602 1. that 31 mills located in the Wahau-Kombeng area have about 14 bandsaws. 46.294 266 159 5.541 May 1.497 331 298 80 3.204 5.720 463 969 669 211 5. Ate Jaya Bahtera Agung Tanjung Manis I Lestari Sejati KSU Rahayu L EA. therefore. However. This alone is nearly double the official figure for the production of sawn timber in the district.561 Source: Trade and Industry Office.377 979 437 106 745 979 212 50 376 166 448 697 260 58. 14 circular saws.439 m3 of annual sawn timber production in East Kutai goes unrecorded.760 m3 of timber per month or 52.978 Month (m3) June July 530 1.105 9.Table 27.124 6.087 772 728 144 4.576 631 507 204 620 122 106 212 3.834 2.544 551 382 748 829 95 382 104 5.016 Dec 548 607 702 335 503 1.582 1.544 888 684 3. 28 circular saws.728 71 103 150 164 6. the real figure is likely to be significantly higher as there is at least one other large woodworking center in East Kutai – in Sebulu – that does not feature in official statistics.909 191 4. The sample sawmills had a total of 7 bandsaws.664 1.522 1. East Kutai Out of the total of 31 sawmills in Wahau-Kombeng.360 m3 per year (Table 28).346 552 694 942 1.517 6.146 1.760 Oct 764 331 359 244 1. 83 workers and generated 4. Sawn timber production in East Kutai.461 12.758 260 50 72 140 260 5. 55 . It can be approximated.000 m3 of sawn timber per year.124 177 367 467 1.379 Feb 465 692 163 416 125 166 2.903 Nov 1. Hairun Adil Makmur SMS Surya Graha Sakti UD.199 Aug 554 1. a sample of 15 have been studied in detail. At the very least. labor force of about 171 people and produce about 105.027 Mar 408 843 262 629 101 50 376 2.026 1.
000. 460. 400. U 300. 600. U 10 Jelebug Jelabug Selabing 2 M. B 360. East Kutai.000 5 1997 Markasi (Banjar) Markasi M. any supplier. 600. while the rest is shipped to Surabaya as well as abroad to Malaysia. 700000 9 Kep Sekolah Hasnan SP 1 1 M. has agreed upon monthly deliveries Square logs Purchases from any supplier.000.000/m3) for shipping to Surabaya 13 Habib Bambang SP 2 1 K. 600. M. B.000. K. has agreed upon monthly d li i Square logs Purchases from any supplier. U Square and round logs SDA 4 1998 Iksan SP 4 1 2 M. U 380. U Square logs Purchases from 300.000 600 500.000. M.Samsi (orang wahau) Selabing 1 K.000. has agreed upon monthly Square logs d li i Purchases from 300.000.000.000 6 Habib Jamaludin SP 2 Wahau 1 M.000. B 380.000. 400. Minor amounts of sawn timber are also transported by truck from Muara Wahau to Bengalon (Rp 150. A sample of 15 sawmills operating in Muara Wahau. M.000 agreed upon monthly 100 450000. 600. K. 500.000. has agreed upon monthly deliveries Logs Purchases from any supplier Purchases from any supplier & has logging teams with 15 h i Purchases from any supplier. M. any supplier. B Logs Purchases from any supplier Purchases from any supplier & has logging teams with 15 chainsaws 360. 600.000.000. 400. 56 . 500. K. agreed upon 500. any supplier.Wage Square logs Purchases from any supplier 600 500. 600.000 100 450000. Husin 2 K. 600. has 400. has 400. U 100 450000.000.000 240 500.000 2 1999 H.000 130 8 H. 600. 800. has agreed upon monthly deliveries 400. 600. Nurung H. U Square and round logs 360. K for Keruing and U for Ulin.000. has 400.000.000.000 monthly d li i Square logs Purchases from 380.000 Production m3/month Price/m3 Sales 1999 H. U 11 Yusuf Selabing 2 M.000 300.000.000 600 500.000. K.000 600 500.000.000 130 3 2004 Teleah Teleah (Dabeq village head) H.000. 600. Ida Bp. 2004 Equipment No 1 Established Owener Manager Wongso Location SP 2 Wahau Bandsaw 1 Circle Species B.000. K. 700000 130 130 12 Jalani (Polsek Wahau) Mr X Selabing 1 M.000 TOTAL 7 14 4.000. U Square logs Purchases from 380.760 Source: CIFOR survey. Wahau 1 M.000. Nurung SP 1 2 M. has 400. About half of the timber is consumed in Samarinda.000 14 (cina malaysia) Agus SP 2 (Surabaya) 1 K. M. any supplier. B. 450.Wage Wongso SP 2 Wahau Dabeq 1 K.000. U 100 450.000 agreed upon monthly d li i Square logs Purchases from 380. most of the time by river. 600. M.000 15 H. Note: M stands for Meranti. has agreed upon monthly deliveries Square logs Purchases from any supplier.000. K. 700. any supplier. K.000 600 500. 600.000. K Form Raw material Origin Price/m3 430.000. 500. 400. K.Table 28.000.000 600 500. K. 2004. 600. 700000 Nearly all sawn timber produced in Muara Wahau is shipped to Samarinda.000. Ida SP 1 1 M. B.000 7 H. B Logs 360.000 agreed upon monthly deliveries Square logs Purchases from any supplier.000.
Most of it is shipped to Samarinda by river. As the water level was low due to dry weather conditions. 12 This was corroborated by boat operators in Wahau river port (pelabuhan). 57 . an equal number reportedly operates unregistered. it is assumed the river traffic was at the annual low during the period under observation and that it intensifies with the onset of the rainy season12. Some of this timber is subsequently transported to Java. The cost of transporting sawn timber by boat to Samarinda is Rp 250.000 per m3. 2. There are 45 registered boats in Wahau that are used to transport sawn timber.445 m3 of sawn timber was shipped by boats to Samarinda (Table 29). During 2 weeks of monitoring in Wahau in July 2004. each subject to the quota of maximum 3 trips per boat per 2 months. There is a queue system for timber boat operators. An insignificant amount is transported by trucks to Bengalon on the coast.The entire output of the woodworking sector in Wahau-Kombeng is shipped to Samarinda.
B K.000 Koramil + Polsek 1.000 Koramil + Polsek 1.000. Timber shipments by boat from Wahau to Samarinda. B for Bangkirai. the movement of sawn timber within and outside of East Kutai is watched closely by the Police and Military units stationed along the main transportation arteries.000.000 Koramil + Polsek 1.000 Source: CIFOR survey 2004 58 . July 2004 No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Departure date 14-Jul 14-Jul 16-Jul 17-Jul 19-Jul 14-Jul 14-Jul 14-Jul 14-Jul 14-Jul 19-Jul 15-Jul 15-Jul 27-Jul Load Name of boat Usaha Bersama Putra Kelinjau Air Bunga I Putra Diana Berkat Usaha 1 Roni Putra A Roni Putra B Air Bunga II Air Bunga III Telaga Putra A Tongkang Berkat Usaha II dinasti Telaga Putra B Timber species K. Samsi Sawmill H.000 Koramil + Polsek 1.000. B K. Samsi Sawmill Wongso Wage Sawmill H. B B K. Passage fee system for sawn timber on the route Wahau-Samarinda Wahau-Samarinda transit points Starting point/Wahau-Kombeng Post 1 Post 2 Post 3 Post 4 Post 5 Post 6 Post 7 Location SDC M. B K.000. B K.000 Koramil + Polsek 400.Table 29.4 billion in informal tax for the security personnel each year. Samsi Sawmill H. B.000 Koramil + Polsek 1.000. B K.000 m3 of sawn timber shipped by river each year from Wahau to Samarinda alone adds up to Rp 3.Wahau Muara Bengkal Muara Ancalong Senyiur Sebulu Senoni Tenggarong Passage fee collectors Amount (Rp) Koramil 75.samsi TOTAL 2. Habib Anwar Sawmill H. Table 30. The reason for this careful monitoring is “passage fees” extracted at several strategically located check-points (Table 30). B K. B K. B K. Note: K stands for Keruing.000 Koramil + Polsek 1.000. The 105. Samsi Sawmill Wongso Wage Sawmill Wongso Wage Husin + Wongso (40 m3) Habib Anwar Habib H. While each year substantial volumes of sawn timber production are not reflected in district statistics.445 Source: Survey CIFOR 2003. B K. U Destination Vol (m3) 200 200 200 200 80 200 200 200 200 210 200 60 200 95 Samarinda Samarinda Samarinda Samarinda Samarinda Samarinda Samarinda Samarinda Samarinda Samarinda Samarinda Samarinda Samarinda Samarinda Origins of the shipment Sawmill H. B B K. U for Ulin.
The illegalities can be summarized as follows: Logging operations cutting out of block Logging companies pretending to be stagnant while in fact they extract timber Land-clearing (IPK) permits issued for dubious plantation schemes Unlicensed small-scale logging Log/sawn timber production is under-reported and shipping documents are illegally altered Logging and woodworking enterprises in both districts routinely evade taxation. Logging as well as woodworking enterprises engage in tax evasion Below.8. HTI operations (revenue gained) According to the Provincial Finance Office (Dinas Pendapatan Daerah). the district will receive Rp 16 billion in DR.65 billion in PSDH tax revenue on 521. HPH. SUMMARY AND ANALYSIS Illegal forestry activities are widespread in both extractive as well as processing sectors in Berau and East Kutai districts.1. IPK and HTI operations in Berau illegally extracted and shipped approximately 1.179. IPK. Berau’s government also generated Rp 1. It is anticipated that in 2004. IPK and HTI license holders. In the same year. Timber industry insiders say the real figure is significantly higher as production/shipping underreporting is “a standard operational procedure.876 m3 of logs. The total value of DR tax on Berau’s roundwood production in 2003 was about Rp 71 billion. Approximately 40 percent of this amount is divided between the province and the district of origin.300 per m3 of logs). HPH. IPK. the province of East Kalimantan and the central government in Jakarta. 32 percent. The Rp 22 billion that Berau received in 2003 constitutes about 31% of the total value of DR revenue generated that year.” Counted at the 59 . In 2003. society/livelihoods and the environment. Impact of illegal forest activities on district economy BERAU DISTRICT HPH. the legal forestry activities are juxtaposed with illegal operations in order to examine their comparative impact on district economy. in 2003 Berau collected Rp 14.69 billion. 8. Of this amount. entered Berau’s budget while the rest was divided between other districts.2 billion from the above volume of timber through Retribusi Produksi district tax (Rp 2.695 m3 of roundwood produced by HPH. the district also received Rp 22 billion in Reforestation Fund (DR). or Rp 4. HTI operations (revenue lost) Between 1996 and 2003.
4 billion (equivalent to 228.711 m3 of untaxed logs) Berau’s share of PSDH in 2003: Rp 4.695 m3 x Rp 50. or IPPK/IPKTM license holders that have been identified over the last few years.000. in 2003 large-scale licensed logging activities in Berau generated the following output of logs: Table 31. this does not seem to have been the case with DR.357 164.000 See Table 6 60 .142. which was duly extracted on the total log production.695 When juxtaposed with the district financial data.000 Remarks PT Mahardika Insan Mulia PT Karya Lestari 2003 See Table 6 2.65 billion PSDH that should have been collected (521. these numbers indicate a serious loss of PSDH tax revenue incurred by the district in 2003. the market value of the logs taken illegally out of Berau over that period of time is a staggering Rp 590 billion (well over $ 70 million). In terms of other lost tax revenue on this volume of timber (i.179.68 billion Berau’s share of PSDH if it was fully collected: Rp 8.000.000): Rp 26.000 2004 1. DR. The 1.000 Year Market value (Rp) 13. For the select few cases of illegal logging activities by HPH. 2003 Type of logging HPH IPK HTI Total Source: Dinas Kehutanan and UPTD Berau Production (m3) 120.200. As already indicated (see Table 2 and Table 11). IPK. PSDH and DR).08 billion Uncollected PSDH: Rp 11. RP (Rp) 4. Documented HPH/IPK illegal logging cases in Berau. the numbers are equally impressive. the approximate loss estimate is as follows: Table 32.600.582 521.752 244.000 m3 ($ 50) for the last few years. 2000-2004 Company Illegally extracted volume (m3) 22.600.66 billion While the collection of PSDH was clearly a problem in 2003.e.876 m3 of logs shipped illegally out of Berau between 1996 and 2003 resulted in the loss of approximately Rp 219 billion – Rp 160 billion in reforestation fund (DR) and Rp 59 billion in PSDH timber royalty.000 Lost tax revenue PSDH. The key figures to illustrate this loss are as follows: PSDH collected in Berau in 2003: Rp14.34 billion Berau’s lost share of PSDH in 2003: Rp 3.average domestic price of Rp 500. Production per type of large-scale logging license in Berau.200.000 376.
000 per m3.000 36.800.000.000 See Table 6 40.700 2000/2004 4.832. PSDH is Rp 50.400.800. Third Party Contribution) – a one time payment of Rp 200.000. RP stands for a district tax called Retribusi Produksi and it is Rp 2.000 4. 48/2000.000.449.000 2003/2004 19.980.PT Hutan Alam Kalimantan PT Karya Lestari Jaya 33.000 Total 189. IPPK/IPKTM operations (revenue gained) Since the onset of IPPK/IPKTM policy in Berau in 1999.216.200. The legal IPKTM production target of 6.932 113.448 2003/2004 15.620.000 This is a conservative estimate based on timber volumes seized by the Police in 2004 only This is a conservative estimate based solely on IPK production target only (legality of which is dubious).784 2002-2004 35. It is likely that in reality a far greater area is involved because most IPPK/IPKTM permits have had area and production target additions.000 per m3.270.000.500).000 m3 of logs.000.000 6.868.000 per hectare of the concession – and RP (Retribusi Produksi.000 per m3 of IPPK/IPKTM logs.900. 61 . while intesive logging is also conducted out of block Filed survey revealed between 2002 and 2004 PT Taurus extracted about 65. Based on Perda No.969 ha of forest that were to yield nearly 1.158.213.000 11. Production Fee) in the amount of Rp 10.6 million m3 of logs. at least 207 small-scale logging permits have been issued. which provided the district’s legal framework for small-scale concession logging.000 7.000 Timber trade insiders in Berau estimate between 60 and 70 percent of LKJ's production has been illegal PT Bhakti Praja 7. covering at least 46.400 Note: DR is $16 per m3 ($1 = Rp 8.300 per m3 of HPH/IPK logs or Rp 10.532. IPPK/IPKTM operations were subject to two types of district taxes: SPK (Sumbangan Pihak Ketiga.664.216 m3 was subtracted from that PT Meranti Samarinda Kalimantan 26.000 2000/2004 24.959.910.400 PT Taurus 58.521.000 1.
than 207 IPPK/IPKTM permits issued in Berau between 1999 and 2001 generated about Rp 2.8-0.000 m3 and 380. IPPK/IPKTM operations (revenue lost) As mentioned earlier.5-3. A similar rate is applicable to water-based transport of timber. Research on small concession logging in Berau in 2000 and 2004 has shown that successful IPPK/IPKTM applications were associated with unofficial payments of Rp 10 million per permit (Obidzinski and Suramenggala 2000). therefore.380.6 billion in unofficial tax income for district officials. between 350.8 billion RP tax.07 billion in informal fees of this kind. Cumulatively. In addition. it can be estimated that IPPK/IPKTM logging in Berau contributed at least Rp 20.2.Taking into consideration the 2000-2001 period only for which firm IPPK/IPKTM data are available.300 per m3: Rp 0. small-scale loggers pay Rp 50. the annual production by small-scale loggers of 350. carries the following domestic market price tag and tax value: Market value: Rp 210-228 billion Uncollected DR-PSDH tax: Rp 65.1 billion in SPK tax. the target production of 1.697 m3 would have produced Rp 13.9 billion 13 SPK tax is applicable only to the original application permits and not to area or production extensions. At issue is the wording of District Regulation (Perda) No. The implementation of Perda no.000 m3 of log annually.4.000 per approximately 5 m3 of timber to district authorities (usually Police) for a safe passage. 62 . Small-scale logging (revenue lost) Small scale illegal logging in Berau. the 183 permits issued during that time for 35. Since these concessions operated until the end of 2003. 48/2000 is said to have resulted in the loss of DR-PSDH tax revenue in the amount of about Rp 88 billion (Kompas 2004).573 ha of forest would have generated about Rp 7. Small-scale logging (revenue gained) As indicated in section 6. it is possible than another Rp 10 billion was generated annually in the form of RP tax in 2002 and 200313. In total. It can be inferred.1-70.7 billion Uncollected District fee Retribusi Produksi of Rp 2. Berau’s branch of the provincial forestry service (UPTD) and Berau’s Bupati Masjuni have been criticized for exempting IPPK/IPKTM license holders from DR and PSDH taxes (Kompas 2004). 48 of 2000.9 billion to the district’s finances during 2000-2001.000-380. which is seen as providing a loophole for district logging enterprises to avoid these key forestry taxes.000 m3 of logs in Berau generate about Rp 3.
000 2000 2001 2002 Total 16.2 billion per annum Uncollected Retribusi Pengelolaan: Rp 1.680.507 131.000 Source: BPS Berau (2000.000 17.120. while unreported timber volumes and the lost RP (Retribusi Pengelolaan) tax revenue do not seem excessive (about 67. meaning that production of these products was consistently underreported. 2001. Market value and Retribusi Pengelolaan tax losses from undocumented shipments of sawn timber/moulding in Berau. these products are subject to district tax called RP (Retribusi Pengelolaan) amounting to Rp 10.413.000 per m3. 0.929.429. As a result.000 50. Pajak Bumi dan Bangunan) that cumulatively average Rp.120.Woodworking industries (revenue gained) According to the official statistics. Looking at only a 3-year period between 2000 and 2002. the market value of the unaccounted for sawn timber is significant (Table 33). in 2003 sawmills and moulding mills in Berau generated Rp 0. estimated at 219. Since 2000. A similar amount of Retribusi Pengelolaan on sawn timber and moulding is likely to be collected in 2004. this value can easily double.89 billion in 2003 and Rp 1.933 67.087.67 billion respectively).000 m3 and Rp 0. There are virtually no financial benefits for Berau stemming from the operations of Kiani Kertas pulp and paper mill.969 52. in major domestic consumer markets in Java.000 229. Woodworking industries (revenue lost) As shown in section 6. moulding shipped (m3) 28.330. 2000-2002 Year Sawn timber. moulding produced (m3) 7. The above numbers become staggering once the real production of sawn timber and moulding in Berau is considered. moulding shipped (m3) 21.028 m3 of timber products.519 27.687 49. 2002) for production and shipping of sawn timber and moulding.912 22. The company pays symbolic annual fees for the use of water as well as ground tax (PBB.880. in 2003 Berau’s sawmill and moulding industry produced 31.950 m3 (and expected to be roughly the same in 2004) carries the following market and tax values: Market value: Rp 167.87 billion in 2004 63 .000 229. The real 2003 production of sawn timber/moulding in Berau. Table 33.150 Sawn timber.680.3. over the last 12 years (and probably much longer) the officially recorded export of sawn timber/moulding from Berau has consistently exceeded the reported production volumes.163 Excess of sawn timber.057 29.080.4 billion.1.000 per m3.574 64.130.000 17.000 670.013 Market value (Rp) Uncollected RP district taxe (Rp) 211.3 billion of Retribusi Pengelolaan tax. While in East Kalimantan the price of sawn timber is estimated at Rp 760.168 22.
Together with 901 m3 annually extracted for ship-building. The major economic loss associated with the operations of PT Kiani Kertas pulp and paper mill in Berau is the fact that the enterprise continues to benefit from a range of excessive privileges. Generating vast income from mineral resources. In contrast to other districts in East Kalimantan. timber kiosks obtain their raw material from chainsaw operators working in the proximity of main towns in Berau. its total budget was Rp 828. East Kutai’s PAD has two main district tax categories: Pajak Daerah (district tax) and Retribusi Daerah (district fees).3 billion. A considerable part of Kiani’s debt ($ 480 million) was sold by IBRA to Bank Mandiri and a group of private investors. but in 2003 it generated only Rp 1. obtained while the former President Suharto was in power. oil production and other mineral exploration royalties. it totaled only Rp 6. but they do not affect the forestry sector.6 billion. coal mining. Forestry’s contribution to PAD has been minimal. Kiani Kertas has cost Indonesian state banks (and therefore Indonesian taxpayers) at least $ 300 million in unpaid bank loans and another $ 100 million in reforestation fund (DR). 64 . In 2003. but it is not being collected. All these privileges. in one strike erasing a range of questions about the past borrowing and accounting practices. PAD’s “other” category also comprises Provisi Pihak Ketiga tax (similar to Berau’s SPK – Sumbangan Pihak Ketiga). the mill secured a 10-year holiday on corporate income tax and a permanent waiver on the payment of import and export duties for all capital goods. EAST KUTAI DISTRICT East Kutai is one of the richest districts in Indonesia.As explained earlier. Locally generated income (PAD) has been relatively insignificant. are still in effect. PAD includes only one forestry related tax called IHPH (Iuran HPH. The vast financial resources generated by mining are augmented by the General Allocation Fund (DAU) and Special Allocation Fund (DAK) dispensed by the central government.975 m3. East Kutai seems to consider forestry of little importance for budgetary purposes.4 billion. the local government does not impose any district taxes on the production of logs or sawn timber.2 billion per year in informal tax. the timber felled and processed for timber kiosks generates Rp 0. The majority of its wealth comes from a share in natural gas production. In 2003. Their 2003 production/sales were approximately 18. or less than 1 percent of the total district budget (Dinas Pendapatan Kutai Timur 2003). nearly all of it from non-forestry enterprises. The continuing corporate income tax holiday and a permanent waiver on import and export duties for all capital goods mean that Berau is receiving no tax revenue from Kiani Kertas’ operations. The same production/sales volume is projected for 2004. In addition to soft bank loans. or HPH tax).
This in turn means that more than half of the production.547 m3 of logs out of the total HPH/IPK roundwood production of 809. While in the past HPH concessions were the main sources of this tax revenue. there are serious losses associated with HPH/IPK operations in East Kutai.000/m3. As a result: 14 15 East Kutai district is entitled to 32 percent of PSDH annual totals. Or. PSDH and DR was not collected on a fairly large part of the district’s HPH and IPK log production15.717 m3. PSDH revenues collected in East Kutai. this means that the tax was collected on 341.264 m3. was not taxed. they were collected but did not enter the district’s budget. Sanggata HPH/IPK (revenues lost) Despite an impressive growth of PSDH tax revenue over the last four years. In 2003. The disparity between the reported production and shipping of HPH/IPK roundwood in the district in 2003. 2000-2003 18 16 14 12 Rp billion 10 8 6 4 2 0 2000 2001 2002 2003 PSDH Source: Dinas Pendapatan East Kutai. can be viewed as insignificant in this context.1 billion in PSDH tax. indeed. rising from about Rp 3 billion in 2000 to Rp 17 billion in 200314 (Figure 5).HPH/IPK (revenues gained) The PSDH revenue collection in East Kutai has been growing steadily over the last few years. East Kutai District Income Office (Dinas Pendapatan) reported collecting Rp 17. At Rp 50. or 467. Figure 5. 65 . since 2002 IPKs have become the dominant means of log production and PSDH revenue. amounting to 100.000 m3. In 2003.
Woodworking industries (revenue lost) Generating nearly all of its income from natural gas.000): Rp 110 billion (district’s approximate share Rp 34. This rate applies both to water and land-based transport.4 billion in PSDH and Rp 63. PSDH collected in East Kutai was Rp17.000 per approximately 5 m3 of timber (round or square logs) to Police (Kapolsek) or Military (Koramil) for safe passage to sawmills. Small-scale logging (revenue lost) Small-scale loggers in Wahau-Kombeng produce at least 210. SUMMARY Berau District 16 The total PSDH revenue is taken as an indication of the volume of timber subject to taxation in 2003.264 m3 x Rp 50. or 31 percent) East Kutai’s lost share of PSDH and DR in 2003: Rp 7.4 billion per year.5 billion (district’s share Rp 13 billion) In 2003. Such informal fees on the Wahau-Samarinda route generate Rp 3. or were misappropriated In 2003. 32 percent of total) PSDH that should have been collected (809. DR collected in East Kutai Rp 46. 66 . Bengalon and Sanggata. Woodworking industries (revenue gained) Some government agencies. oil and mineral exploration royalties.5 billion in DR tax revenue went uncollected.5 billion.5 billion.000): Rp 40.Nearly Rp 23.6 billion in uncollected DR. impose informal taxes on sawn timber transported from the hinterland to Samarinda.1 billion. small-scale loggers pay Rp 50. which means Rp 10.5 billion in uncollected PSDH and Rp 28.000 m3 of logs to local mills generate about Rp 2.5 billion and Rp 19.6 billion respectively Small-scale logging (revenue gained) As in Berau. East Kutai does not impose any official taxes on woodworking industries. or 31 percent)16 DR that should have been collected (809.000 m3 of logs per year. This means that in the Wahau-Kombeng area.1 billion in unofficial tax for the security forces.264 x Rp 136. the annual delivery of 210. particularly the Police and the Military.5 billion in DR (districts approximate share Rp 14.1 billion (district’s share Rp 5.
There is also a significant number of unregistered sawmills in the district. 88 billion for the period 2000-2003 by three to obtain a yearly average. underreporting production and/or manipulating log transport records. HTI. and sawmill/moulding operations. manipulating production and/or transport records.4 103. IPPK/IPKTM.65 1. Substantial volumes of timber are annually extracted by small-scale logging teams. losses resulting from such practices in Berau outweigh the gains as the former go into hundreds of billion of Rupiah mainly in uncollected taxes on HPH. It is clear that over the long term. Revenues gained and lost in Berau’s forestry sector. 67 . The comparison between the economic benefits and the costs associated with all forestry operations in Berau are illustrated below.89 0 3.3a 0 14.2 71 12. Table 34. Many mills pretend not o be active.24 0.Illegal logging/forestry activities in Berau are predominantly in the form of HPH and IPK operations logging out of block.03b 1. b This estimate is based on the information that on average each of 37 sawn timber and moulding mills in Berau operates 11 months a year and each has a monthly “informal budget” of Rp 5 million.38 0 0 109.6 0 0 0 65.2 0.8 0 10 29. 2003 (in Rp billion) Revenue collected HPH/IPK/HTI PSDH Retribusi Produksi DR IPPK/IPKTM DR-PSDH Retribusi Produksi Small-scale logging teams Informal tax DR-SPDH Retribusi Produksi Sawmills and moulding Retribusi Pengelolaan Informal tax Timber kiosks and ship building Informal tax Pulp and paper Water tax.1 0. IPK.3 2.15 0 0 Revenue lost Note: a This number has been derived by dividing the official figure of lost DR-PSDH of Rp. while in fact they operate as usual. PBB tax TOTAL 0.
was Rp 109. is not literally lost. while in fact they operate as usual. 3) the legal basis for IPK permits in East Kutai is questionable as Bupati is not allowed (by the central government) to issue such permits any more. or nearly 2 times the district’s gains. the losses amounted to at least Rp 126 billion. In 2003. or bribes) was Rp 103. illegal logging/forestry activities in East Kutai are widespread. and 6) many sawmills are unregistered and the reported production is a fraction of the real output.38 billion Without informal fees. PSDH and RP taxes in the licensed sector as well as those forfeited in the unlicensed sector. They appear in several forms: 1) IPK and HPH operations logging out of block. the official revenue collected was Rp 97.55 billion The informal fees (or bribes) extracted from the forestry sector was approximately Rp 6.The key points emerging from the gain/loss analysis in Berau’s forestry sector as of 2003 are as follows: Revenue collected (including informal fees. It is clear that in East Kutai financial/economic losses resulting from illegal activities in the forestry sector are significant and they far outweigh the gains. 68 .24 billion. 4) IPKs are often issued for dubious plantation schemes. however.33 billion. this is very likely an underestimate as figures for informal fees from HPH/IPK/HTI operations are not available The revenue lost. underreporting of production and/or manipulating log transport records. IPK and small-scale logging (Table 35). This amount. mainly in uncollected tax revenue on HPH. 2) IPK enterprises pretending not to be active. in the form of uncollected DR. However. A good part of it is appropriated by individuals and government institutions in position to do so The lost forestry revenue in 2003 was equal to about a quarter of Berau’s budget for that year EAST KUTAI DISTRICT Similarly to Berau’s case.
As in Berau.e.5a 23.6 0 17.1 46.4 63. The key points emerging from the gain/loss analysis East Kutai’s forestry sector in 2003 are as follows: Revenue collected (including informal fees. which is dominated by the income from mining (oil. A good part of it is appropriated by individuals and government institutions in position to do so The lost forestry revenue is equal to about one-seventh of the total district budget. the official revenue was Rp 63. this amount is not literally lost.1 10. or bribes) was Rp 69.5 28.4 69.5 billion The informal fees (or bribes) extracted from the forestry sector were at least Rp 5. Revenue collection and loss in the forestry sector in East Kutai. PSDH taxes from licensed and unlicensed logging operations. coal) 69 . 2003 (in Rp billion) Revenue collected HPH/IPK PSDH DR Small-scale logging teams PSDH DR Informal tax Sawmills and moulding Informal tax TOTAL 3.547 m3 of logs officially subject to other (i.Table 35. PSDH) taxation was transferred to East Kutai. This figure is likely a gross underestimate as it is based on informal taxation on logs and sawn timber in select parts of East Kutai only The revenue lost. in the form of uncollected DR.1 0 126 0 0 2. natural gas.6 billion.1 billion Without informal fees. was Rp 126 billion.5 Revenue lost Note: a The amount of DR revenue gained is based on the approximation that about 31 percent of the total DR revenue generated from 341.
HPH and IPK employment in Berau. 7 and 8). If these employment figures are linked to the production by HPH and IPK license holders in Berau in 1999/2000 (1.2. in 1999/2000 HPH and IPK operations in Berau supported 1.600 1.000 Jobs Borongan Daily Permanent 800 600 400 200 0 1999/2000 2001 2002 2003 Source: Dinas Kehutanan Kalimantan Timur 2000 70 . 1. it means that each HPH and IPK employee was associated with the production of 841 m3 of logs per year. Impact of illegal forest activities on livelihoods in Berau and East Kutai In the context of livelihood strategies.400 1.363 jobs (Dinas Kehutanan Kalimantan Timur 2000:46).166 were permanent jobs.072 m3). 1999/2000-2003 1.200 1.147. If this employee/production ratio is assumed as constant. it is possible to approximate the fluctuation of HPH/IPK labor over the last few years (Figures 6. BERAU DISTRICT HPH and IPK logging According to official statistics.8. Figure 6. Of these. the main significance of logging and woodworking industries in Berau and East Kutai is in created employment opportunities. 32 daily jobs and 165 output based jobs (borongan).
The fall in the number of logging jobs has been caused by two factors: 1) declining number of active HPH concessionaries and 2) phasing out of IPPK/IPKTM district logging permits. As a result. IPK-based employment in Berau. the significance of logging-related employment in Berau is small within the framework of the district’s economy.000 800 Jobs Borongan Daily Permanent 600 400 200 0 1999/2000 2001 2002 2003 Source: Dinas Kehutanan Kalimantan Timur 2000 The number of jobs created by the licensed logging sector in Berau has never been great. HPH-related employment in Berau. 1999/2000-2003 600 500 400 Jobs Borongan Daily Permanent 300 200 100 0 1999/2000 2001 2002 2003 Source: Dinas Kehutanan Kalimantan Timur 2000 Figure 8.400 in 2001 and since then they have declined rapidly. The logging jobs peaked at about 1. for instance.Figure 7. In 2002.7 percent of 71 .200 1. 1999/2000-2003 1. the total of 893 HPH/IPK jobs constituted only about 2.
the employment in Berau’s agricultural sector17, or merely 1.5% of the district’s total employment (BPS Berau 2002). While the number of logging jobs has been small and is falling, such jobs could still be a useful source of employment for the rural population. However, their utility is limited by by the fact that 85.5% of logging jobs in Berau are permanent jobs, while only 14.5% is either borongan or daily output-based employment. The borongan and daily employment are the employment categories usually accessible to the local people (in situ population, villagers). However, between 1999/2000 and 2003, borongan and daily employment generated by HPH and IPK license holders in Berau ranged from the high of only 216 jobs (2001) to the low of 67 jobs (2003) only. The majority of permanent jobs are “skilled jobs”, meaning they are held by the outsiders (town-based population, immigrants). As a result, HPH/IPK logging is not a significant source of employment for the rural population in Berau. HTI plantations Employment opportunities generated by HTI timber plantations are negligible. As of 2003-2004, HTI operations in the district reportedly supported about 250-300 jobs annually18. Small-scale logging teams In 2003, small-scale logging teams operating in Berau employed around 3,000 people. This is far more jobs than the number generated either by HPH/IPK logging, HTI plantation operations or both. The operations of small-scale logging teams have been intensifying in the district over the last few years. In 2000, it was estimated that such teams hired just over 2,000 loggers, producing around 200,000 m3 of wood annually (Obidzinski et al 2001). By 2003, the number of jobs linked to small-scale logging increased to approximately 3,000. The growth of employment in small-scale logging teams can be attributed to a number of factors: Work opportunities in small-scale logging are a welcome alternative (or supplement) to the nearly non-existent employment in the formal logging sector (HPH, IPK) Work arrangements are flexible – i.e. people can work a few months a year, whenever they have spare time from other tasks or as an alternative income option if other sources of subsistence (agriculture, trade etc) fail Working as a small-scale logger can be financially rewarding if operations run smoothly Rising demand for timber within Berau, particularly in urban areas around Tanjung Redeb
Agriculture in Berau consists of food crops, plantation estates, fisheries, husbandry and forestry. Interviews with Tanjung Redeb Hutani and Sumalindo Lestari Jaya I staff, April-July 2004.
Wood-working industries When Kiani Kertas pulp and paper mill was opened in Berau in 1997, there were high hopes that the mill would become a major source of employment for the district’s population. The mill project did create a lot of jobs during the 4-year construction period (1993-1997), stimulating annual inmigration of up to 10-20% of the district population (Pemkab Berau 2001:14). Once Kiani Kertas became operational, the employment available at the mill site settled at around 1,410 workers (385 in production operations, 518 in maintenance and 507 in site services) (Botha 2002:42). While this is still a substantial pool of jobs, its main limitation is that approximately 70 percent of the employment (987 jobs) at Kiani Kertas are skilled positions for which Berau residents are unlikely to qualify (Botha 2002:42). This means the remaining 423 unskilled jobs are the only employment opportunities Berau residents are likely to obtain per year. In 2003-2004, the unlicensed woodworking sector – sawmills and moulding mills – annually employed 393 people. The timber kiosks provided employment for about 124 people. The construction of wooden ships, boats etc additionally absorbs about 256 people each year in the district (Table 36). Table 36. Employment generated by licensed and unlicensed forestry sector in Berau, 2003/2004 Employment Licensed logging sector HPH/IPK 434 HTI 250-300 Unlicensed logging sector Small-scale logging teams 3,000 Licensed woodworking sector Kiani Kertas pulp and paper mill 1,410 (70 percent are skilled jobs) Unlicensed woodworking sector Sawmills, moulding 393 Timber kiosks 124 Ship-building 256 Total licensed forestry sector (logging + 2,094-2,144 woodworking) Total unlicensed forestry sector (logging + 3,773 woodworking) Total forestry sector (licensed + unlicensed) 5,867-5,917 The important points emerging from the table above are as follows: Employment generated by unlicensed logging teams is over four times the size of licensed logging The licensed woodworking sector’s labor force is twice the size of employment in the unlicensed woodworking sector, mainly due to the size of Kiani Kertas pulp and paper mill
However, in terms of unskilled jobs, the unlicensed woodworking provides nearly twice as many jobs as Kiani Kertas The unlicensed forestry sector is nearly twice the size of the licensed one, interms of jobs EAST KUTAI DISTRICT HPH and IPK logging According to the provincial statistics, in 1999/2000 HPH and IPK logging operations in East Kutai generated 2,237 jobs19 (Dinas Kehutanan Kalimantan Timur 2000:46). Of those, 1,084 were permanent jobs, 570 daily jobs and 583 output based jobs (borongan). If these employment figures are linked to the production by HPH and IPK license holders in East Kutai in 1999/2000 (339,902 m3), it means that each HPH and IPK employee was associated with the production of 152 m3 per year. Assuming this employee/production ratio as constant, the HPH/IPK employment dynamics can be illustrated as follows (Tables 9, 10 and 11). Figure 9. Logging-based employment (HPH, IPK) in East Kutai, 1999/2000-2003
8,000 7,000 6,000 5,000
Borongan Daily Permanent
4,000 3,000 2,000 1,000 0 1999/2000 2001 2002 2003
Source: Dinas Kehutanan Kalimantan Timur 2000
In 2000, the District of East Kutai did not exist yet and the administration of the province’s forest was still in the hands of the branches of the provincial forestry service (CDK, Cabang Dinas Kehutanan). The area of today’s East Kutai District comprised 2 CDK: CDK Sangkulirang and a part of CDK Mahakam Ilir. The logging employment figures for Mahakam Ilir for 1999/2000 are not available. As a result, the estimate of production/employment ratio (m3/person) in 1999/2000 for the present-day East Kutai is based on the figures for CDK Sangkulirang only.
HPH employment was strong on its own until the end of 2001.000 in 2003. HPH-related employment in East Kutai. for which it has allocated 1. The logging jobs of this kind peaked at over 7. the number of jobs created by licensed logging in East Kutai is significant. 1999/2000-2003 4500 4000 3500 3000 Jobs 2500 2000 1500 1000 500 0 1999/2000 2001 2002 2003 IPK Borongan IPK Daily IPK Permanent Source: Dinas Kehutanan Kalimantan Timur 2000 In comparison to Berau. The decline of HPHs and the growth of IPK logging jobs is associated with the emphasis East Kutai is placing on the development of agro-business/agro-industry sector (mainly oil palm).Figure 10. 1999/2000-2003 3500 3000 2500 Jobs 2000 1500 1000 500 0 1999/2000 HPH Borongan HPH Daily HPH Permanent 2001 2002 2003 Source: Dinas Kehutanan Kalimantan Timur 2000 Figure 11. which increased from just over 800 jobs in 2001 to more than 3. To a significant degree this growth was fueled by a tendency among HPH concessionaries to switch to much less legally-demanding IPK operations.000 jobs in 2002 and stayed well above 5.800 in 2002. IPK-related employment in East Kutai. The subsequent decline was offset by a spectacular growth of IPK jobs.3 75 .
As borongan and daily employment categories are most accessible to the locals.million ha of land.600 HPH/IPK jobs were available to the rural East Kutai residents.5 percent of all jobs are borongan or daily output-based employment.561 m3 in 2003 would generate about 95 jobs annually.5% of the district’s total employment (BPS Kutai Timur 2002). Since the official district records enumerate 47 other mills in the district (plus the fact that the sawmill centers of Sebulu and Bengalon/Sangkulirang have at least as many unregistered sawmills each as Wahau-Kombeng). Small-scale logging The study in Wahau-Kombeng has shown there are at least 580 people (55 teams) working on the annual basis in small-scale logging in the area. in 2003 approximately 2. employing 600-700 people. the total of just over 7. forest clearing cannot be sustained in a long term. there may be well over 100 woodworking mills operating in East Kutai.000 people working in small-scale logging teams throughout the district on annual basis. logging related employment in East Kutai is not very significant but much more so than in Berau. As a result. Woodworking sector (licenced and unlicenced) The woodworking sector in Wahau-Kombeng annually employs about 171 workers who produce 105. about 51.000 m3 of sawn timber and moulding. it could be approximated that the reported sawn timber production of 58. there could be well in excess of 2. IPK employment (and logging employment as a whole) is certain to decline in East Kutai over the next few years. as well as the fact that the sawmill centers of Sebulu and Bengalon/Sangkulirang have at least as many unregistered sawmills each as Wahau-Kombeng. 76 . It may be that the intensity of production in Wahau is higher than elsewhere in East Kutai and therefore it may not be representative of the district as a whole. However. As important as the numbers is the structure of logging-related employment in East Kutai. However.000 HPH/IPK jobs constituted about 6. Based on this production/employment relationship (615 m3 per person per year). This is a significant source of employment for the rural population in the district. for instance. Since the official records enumerate 47 mills in the districts other than those in Wahau-Kombeng. On average. These teams feed the local woodworking sector. In 2002. Within the framework of the district’s economy. the 2003 sawn timber production figures for East Kutai come from 24 reporting mills only. which is comprised of 31 sawn timber/moulding mills.
000 m3 of logs to 31 sawmills that produce 105.605 Total forestry sector (licensed + unlicensed) 7. b This is an extrapolation from the situation in the Wahau-Kombeng area where 55 logging teams (about 550 loggers) annually supply 210. The important points emerging from the table above are as follows: Licensed logging operations (HPH/IPK) are by far the most dominant source of employment in the forestry sector About 74 percent (or 3.000 m3 of wood products (production/employment ratio: 615 m3/person/year). Note: a About 74 percent of these jobs (or 3.414 Total unlicensed forestry sector (logging + woodworking) 2. moulding 505-605c Total licensed forestry sector (logging + woodworking) 5.Table 36.953) were generated by IPKs. 2003/2004 Employment Licensed logging sector HPH/IPK 5.505-2. this pool of jobs is likely to be available for a few years only HPH jobs (1.000 m3 of wood products.366) are significantly outnumbered by unlicensed logging operations The licensed (reporting) woodworking sector’s labor force is very small – 95 jobs The not-reporting (illegal) woodworking sector is 5-6 times the size of the reporting one The licensed forestry sector is more than twice the size of the unlicensed one. soil and water resources.3. Since these are short-term land-clearing operations.319a Unlicensed logging sector Small-scale logging teams 2.000b Licensed woodworking sector Reporting woodworking mills 95 Unlicensed woodworking sector Other sawmills. Impact of illegal logging on environment in both districts BERAU DISTRICT The impact of both licensed and unlicensed forestry activities is having a negative impact on Berau’s forests. 77 . Employment generated by licensed and unlicensed forestry sector in East Kutai by category.953) of licensed logging jobs come from IPK enterprises.919-8. again primarily due to disproportionately large number of short-term IPK jobs 8. although opinions are divided about the severity of the problem. where 31 sawmills employ 171 people and annually produce 105. b This is an extrapolation from the situation in the Wahau-Kombeng area.019 Source: CIFOR survey 2004.
bfmp. it took about 27 years (1970-1997) for 127.2 million ha in 2002 (BPS Berau 2002). there is indeed a cause for concern. the EU’s BFMP (Berau Forest Management Project) project estimated the amount of forest lost in the district between 1997 and 2000 was approximately 127. or by placing it in the context of the current forest cover in the district. This means the 78 . pointing to a significant acceleration in deforestation rate in the district (Figure 12). A more recent study in the concession area of PT Hutan Sanggam Labanan Lestari (formerly a part of Inhutani I) reported that between 1996 and 2000 deforestation rate in this part of Berau was about 1. Yijun and Atmopawiro 2003). the same area was lost only within 3 years. Figure 12. Deforestation in Berau 1997-2000 Source: www.In 2001-2002. large-scale concession logging operations in Berau extract about 22 m3 of timber per ha (Dinas Kehutanan Kalimantan Timur 2000).91 percent in annual deforestation rate. officially estimated at 2. translating into the annual deforestation rate of 42. The significance of this figure can be considered from the point of view of the history of forest cover change in Berau.id If viewed against the background of the overall forest cover in Berau. the reported 42.500 ha in annual forest loss amounts to approximately 1. According to the official forestry statistics.500 ha of forest to be deforested.500 ha. If viewed historically. Prior to 1997.or. Mantel et al 2002).500 ha (Steenis 2001.71 percent per year (Dahal et al 2002. After 1997.
river sedimentation and the risk of flooding (Mantel 2001:11). the Kutai National Park.000 ha of forest. The 1982/83 fires caused mainly by negligent HPH operations razed hundreds of thousands of hectares in parts of the Mahakam basin as well as on the coast. In the dry season. This contributes to soil erosion.628 ha. The park has been destroyed by a combination of factors. As of 2002. To this day. While well below the dangerous levels of deforestation in other parts of East Kalimantan or Sumatra.000 ha were located in the Production and Limited Production Forest and 200. Vast tracts of HTI plantations in Wahau (PT Kiani Lestari. there were at least 890.8 percent of the total forest cover in the district. what makes this figure potentially dangerous is in clustering of such logging activities. As small-scale logging teams extract only about 10 m3 of timber per ha. the district’s port often becomes inaccessible to larger vessels. among particularly negatively affected was the Wahau area in the western part of East Kutai. is steadily deteriorating.965 m3) would have been generated from at least 23. the Wahau area as well as the region between Wahau and Bengalon on the coast is covered by hundreds of thousands of hectares of burnt stumps.713 and 61. 79 . This area constitutes between 2.000 ha in conservation areas (BPS Kutai Timur 2002). May-September 2004. of which 690. only about 62. both licenced and unlicenced. EAST KUTAI DISTRICT East Kutai district is facing far more serious deforestation and forest degradation problems than Berau. PT Sumalindo) were consumed by flames as well as large areas of adjacent natural forest. their 2003 production (350. HPH logging. particularly in lower parts of the Segah watershed.000 and 38. the 1997/98 forest fires also consumed large areas of the forest. Concentrations of small-scale illegal logging activities along passable roads. In addition to the Mahakam basin.000 m3) would have come from between 35. small-scale logging and exploration for coal deposits. As the Kutai National Park is nearing the state of 20 Interviews with district port authorities in Tanjung Redeb. has been increasing over the last several years as well20. This is particularly the case in the middle and lower parts of the Segah (and to a lesser extent Kelay) watersheds.403 ha of degraded forest in the district.713 ha of forest.7 and 2. In 2000. The man-made forest fires have historically been a major force behind destruction and/or degradation of the forest in East Kutai. result in locally high pressure on the forest.total 2003 log production in the district (521. Berau River and Talisayan seaboard. The largest conservation area in East Kutai. The sedimentation of the Segah and Berau Rivers. it could be assumed with a reasonable degree of confidence that between 58. key to Berau’s water-based transportation and trade. With the planned development of a new port in Berau.713 ha of forest in Berau is annually affected by logging. Although not nearly as extensive.205 ha still had undamaged forest cover (Kompas 2004b). including: migrant settlements. PT Barito Pacific. HTI development. Cumulatively. dredging of the main river corridor from Tanjung Redeb to Berau’s delta will become a regular necessity.000-380. Established in the early 1990s. the park’s original area was 198.
4. woodworking) in Berau and East Kutai is their economic significance as a source of enormous rents – well over Rp 100 billion annually in each district. District Forestry Bureau and other institutions. The Essam road is nothing short of a mega project and it has serious environmental implications. Since Essam’s HPH concession has been non-active for over 2 years now. bushmeat hunters etc. The only feasible way to access the concession and extract timber was to link it by road to Muara Wahau in East Kutai. district officials (Bupati) have been considering writing off the remaining 50. however. In 1992. 8. As a result. but is located in the southern part of Malinau District. Essam’s concession was separated from Wahau by the extensive Belayan-Klinjau-Telen protection forest. an unbeatable opportunity for quick enrichment for those who can take advantage of it. mainly oil palm (Kompas 2004a). The other factor behind the forest loss and forest degradation in East Kutai is land clearing by IPK enterprises.000 ha HPH concession that borders with East Kutai.000-60. The concession is currently stagnant but by constructing the road it has opened this fragile region to intrusion by commercial NTFP (gaharu. IPK licenses are continuing to be issued by district authorities (even though the central government regulations prohibit this) and the allocated forest areas to be cleared are large. PT Essam Timber. for various district government institutions. The vast riches available from illegal forest activities in Berau and East Kutai cause competition and conflict among the key players seeking to benefit from them – e. In some parts it reaches the elevation of over 2. While the road link permit might be a product of the New Order forestry politics. A prime example of this is the activities of PT Essam Timber. the road was completed in 2000 (well into the reformasi and decentralization period) and it is surprising how little attention and/or external scrutiny this project has attracted. Factors facilitating illegal forest activities in Berau and East Kutai and how to mitigate them The main driving force behind illegal forest activities (logging. Constantly maneuvering to 80 . As this is unlikely to happen. The road cuts through one of the last (and largest) pristine areas of sub-mountaine and mountaine forest in East Kutai (and East Kalimantan as a whole). East Kutai’s forest is also threatened by HPH operations. gall stone) collectors. Unfortunately. the district authorities plan to clear 1. was granted a 350.destruction.g. The company worked for 5 years to complete the 200 km corridor road.3 million ha of land/forest for large-scale plantations. District/Province UPTD. the company was given a special permission by the provincial and national forestry authorities to construct a corridor road through the protection forest. District/Province Police. This renders forestry a gold mine for rentseekers. This huge pool of money is an important source for personal enrichment. To accomplish this.000 ha and focusing conservation efforts elsewhere (Kompas 2005). the activities of PT Essam Timber should be closely watched to monitor the risks this company posses to this vast and fragile region. a subsidiary of the Kalimanis Group.100 meters above the sea level. The expansion of IPK logging over last few years is directly related to East Kutai’s plans to become the center of agro-business and agro-industry in East Kalimantan. as well as institutional budgetary augmentation. technically its license could/should be withdrawn. Without much trouble. private companies and communities. gold miners.
far outweigh the risks (applicable legal sanctions) or other costs (environment). the official detection. vast rents generated through misappropriation. in East Kutai the unlicensed forestry sector is an important provider of jobs in the rural parts of the district. The findings of this project indicate that in order to counter the illegal logging problem in both districts. flooding. The scramble for rents from illegal forest activities hampers the cooperation between different government institutions in Berau and East Kutai and fundamentally undermines forest governance in both districts. these parties engage in shifting alliances to undermine the opponent(s) in whichever way possible. but there is little urgency to do anything (unless forest fires. such measures alone are unlikely to succeed because the benefits from illegal forestry activities. issue of restructuring the enormous overcapacity of Indonesia’s woodworking industries which drives the insatiable demand for logs 2) Operationalize bilateral agreements between Indonesia and timber importing countries to eliminate illegal timber trade 3) Generate incentives for Indonesian timber producers to adhere to the legal standard through tenure security and certification schemes 4) Help synchronize the forestry legal framework and strengthen tenure security for local communities 81 . The unlicensed logging by small-scale logging teams in Berau is nearly four times the size of licensed logging. unlicensed woodworking provides nearly two times as many unskilled jobs as the licensed one. but there is a sense in the district that not much can be done but write off the already damaged or degraded forest areas and focus on agro-development and conservation in the remaining remote forest areas. illegal forest activities are posing a serious threat to forest resources in both districts. a concerted effort on a range of fronts is necessary to even the disparity between the benefits of illegal forestry activities and costs/risks associated with them (including stricter monitoring. In Berau. but little as yet is being done to contain it. However.maximize their respective shares. In East Kutai deforestation and forest degradation are far more severe. yet critical. Overall. Similarly. deforestation is understood as a potential problem. From the livelihoods perspective. In order to narrow the gap between the costs and benefits of illegal forest activities in both districts. as Berau’s forests are still generally perceived to be in comparatively good condition. under-collecting or non-collecting of the official forestry tax revenue. Environmentally. prevention and suppression measures need to be complemented by a range of other initiatives pursued simultaneously: 1) Maintain the spotlight on a difficult. soils erosion and river sedimentation take a dramatic turn for worse). the unlicensed forestry sector in Berau is nearly two times the size of the licensed one. prevention and enforcement measures by the security apparatus and judicial system). The employment generated by illegal forest activities (in the addition to economic rents) is a major obstacle preventing these illegalities from being seriously tackled by the law enforcement authorities. illegal forestry sector (logging and woodworking) is an important source of employment in both districts.
5) Support grass-root movements to pressure for greater accountability and transparency in the district forestry sector. 82 . prevention and suppression operations by the government’s law enforcement agencies work in tandem with these additional initiatives and the grass-root pressure factor would result in a more potent tool with which to limit illegal logging and other illegal forest activities in both districts. Making the on-going detection.
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APPENDIX 1 Administrative map of East Kalimantan Province 86 .
APPENDIX 2 Berau District 87 .
APPENDIX 3 Forest concession companies in Berau and East Kutai 88 .
APPENDIX 4 Overlap between forestry and mining opetrations in Berau 89 .
APPENDIX 5 Talisayan sub-district 90 .
APPENDIX 6 PT Karya Lestari Jaya 91 .
APPENDIX 7 PT Berau Timber 92 .
APPENDIX 8 PT MSK Timber 93 .
APPENDIX 9 PT Taurus 94 .
APPENDIX 10 Berau and the northern part of East Kutai districts 95 .
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