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New forestry fees await
finance minister’s signature

The government will soon raise the forestry fee for mining, oil and gas exploration and production activities by 33 percent to Rp 4 million (US$412) per hectare per year from the previous Rp 3 million in a bid to increase the
government’s non-tax revenues from the forestry sector, Forestry Minister Zulkifli Hasan said in Jakarta on Thursday.

Zulkifli said that the ministry was awaiting the finance minister’s signature to implement the new regulation that would replace the 2008 regulation on forest fees, which was imposed on forest areas utilized for mining, oil and gas exploration or other commercial purposes.

“All relevant ministries have agreed on the new tariff, so we hope that the revised regulation is put into effect this year,” he told reporters during a forestry expo in Jakarta.

Zulkifli said that the government decided to raise the fee to boost the state’s non-tax income from the forestry sector to between Rp 4 trillion and Rp 6 trillion this year and the subsequent year, compared to Rp 3 trillion in 2012.

According to the 1999 Forestry Law, activity in forest areas is prohibited until forestry permits, popularly called borrow-to-use permits are issued.

The ministry, according to its website, has issued 471 permits for mining exploration covering 2.45 million hectares of forest area and 377 permits for exploitation covering a total forest area of 370,883 hectares as of February
this year.

“The mining companies have long benefited from the country’s forests and they are operating on a vast amount of forest area, so we decided to charge them a more reasonable fee for any detrimental effects they could have caused to the forest. We have calculated a new fee that won’t burden the existing companies,” the minister said

The vice chairman of the Indonesia Mining Association (IMA), Tony Wenas, however, did not agree with the Minister, saying that the increase would further hurt mining companies, which had suffered financial setbacks due to falling commodity prices.

“The government is planning to increase the forest fee by more than 30 percent and such a figure is too high,” Tony said.

Tony said that the increase would especially hurt companies that might still have to wait three to five years before entering production and reaping actual benefits, but have to pay such a high annual fee.

He said that it was true that the new fee will not halt companies from operating, but combined with complicated permit procedure, the new fee would cost the companies a lot.

“We might be able to accept the new fee willingly if only the government eases the complex procedures of requesting new permits, which can take three to five years, and clearly defines the areas that we are obliged to pay the fee for,” Tony said.

“We are sometimes required to pay for more hectares than we actually use, and in such a situation, a fee increase would be unfair.”

Among big companies that will likely be affected by the law include US-based gold miner Freeport, which operates on 212,950 hectares of forest, and PT Newmont Nusa Tenggara, which operates on 87,540 hectares.

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