THE POLITICS OF EXTINCTION
Executive Summary  
Introduction  
A Future Without Forests?  
The Orangutan Crisis  
The Timber Barons  
  • Summary
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  • The History
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  • Habitat Destruction
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  • Plywood Pirates
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  • FM - The Inefficiencies
  • FM - The Illegalities
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  • The Paper Problem
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  • Example: PT TEL
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  • Example: Barito Pacific
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  • Example: Sinar Mas
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  • Example: APRIL
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  • An Uncertain Future
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    Palm Oil  
    The Timber Barons - Forest Management - The Inefficiencies


    Indonesia's forestry practices are rife with inefficiencies in both logging and wood processing, resulting in a wastage of one-third of the total harvest (8 million m3 and 3 million m3 respectively). The 500 kilometres of logging roads in one large East Kalimantan concession involved the clearance of 40 000 hectares.

    Indonesia's forestry practices are governed by the "Selective Cutting and Replanting System" (Tebang Pilih Tanam Indonesia-TPTI), the objective of which was to allow a steady flow of timber to be extracted over a 35-year rotation period with a stipulation that only trees with a diameter over 50 cm at breast height were available for felling. Despite the requirements stipulated under this system, neither "pre-logging inventories" nor "post-logging residual stand inventories" are conducted properly or reported truthfully. A 1994 World Bank report stated that only 2.2% of forest logged in the country had ever been subject to the legally required residual stand inventory. Furthermore, over-cutting within annual cutting plans and re-cutting at more frequent intervals than the 35-year cycle is not uncommon; companies are given 20-year leases and there is no incentive to adhere to a lengthier cutting cycle. In 1996, it was reported that 111 concessions had been revoked since the early 1970s due to poor forest management.

    The TPTI system based extraction fees on removals rather than on the number of commercial trees in the stand, encouraging leaseholders to fell only the most valuable trees. However, since the royalty system was "a flat ad valorem (proportional) rate, with no distinction for species, grade or size, loggers have little incentive to protect immature, inferior or less marketable varieties with little after-tax stumpage value", especially if they could reduce extraction costs. As a result, heavy damage to the remaining trees often occurs - an average of 50% but perhaps as much as 70% of the remaining trees may be damaged by logging. Furthermore, compaction of the soils caused by logging activity undermines the potential for natural regeneration upon which the TPTI depends. This greatly reduces the forests' value undermining incentives for protection from encroachment and fires.

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