Decentralization of Forest Administration in Indonesia, Implications ...

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buyers, alike, to distinguish between legally and illegally harvested timber. The
Ministry responded by requiring all logs being transported to be accompanied by an
official timber transport document (Surat Keterangan Sahnya Hasil Hutan, SKSHH),
which was standardized across Indonesia, certifying that the logs had been harvested
legally by a legitimate license-holder. In most districts, the log transport documents
are issued by a branch of the Provincial Forestry Service; in some, however, they are
issued by the district-level Dinas Kehutanan. Significantly, they must be endorsed at
both the point of origin and at the point of destination, thereby making it difficult for
authorities in a single jurisdiction to circumvent the legal process.
More generally, the tensions generated between the MoF and district
governments since the onset of decentralization have raised important questions
about what is legal and what is illegal in Indonesia’s forestry sector (Patlis 2004).
Indeed, many of the perda issued by district governments to regulate timber
production within their jurisdictions directly contradict regulations issued by the
MoF, thereby appearing to authorize practices that the central government considers
to be illegal. The fact that there has not been a clear mechanism for resolving such
legal-regulatory contradictions in a timely manner has been a major impediment to
Indonesia’s decentralization process (Patlis 2004). Resosudarmo (2003) notes that
in 2000, some district leaders argued that they were not bound by decrees issued
by the MoF because the Indonesian People’s Consultative Assembly (MPR) had
made no mention of ministerial decrees when it formally elucidated the nation’s
legal hierarchy. 5 However, the Minister of Justice and Human Rights, when asked to
clarify this point in February 2001, issued a directive stating that in fact ministerial
decrees carry greater legal authority than regional regulations. As discussed below,
MoF has used the superior authority embedded in ministerial decrees to rescind much
of the authority over the licensing of timber extraction that was transferred to and/or
assumed by district governments in 1999 and 2000.
5.5 Challenges for HPH Timber Concession-Holders
The distribution of small-scale timber extraction and forest conversion permits by
district governments has placed considerable pressures on large-scale concessionholders
in many parts of Indonesia. In some timber producing provinces, forestry
officials blamed the sizeable volumes of cheap logs generated by HPHH and IPPK
permit-holders as being a major factor keeping timber prices at historically low
levels through much of 2000 and 2001 (Kompas, November 22, 2001). In November
2001, for instance, log prices in East Kalimantan ranged between Rp 300,000 and
Rp 400,000 per m 3 , down from Rp 1.0 - 1.5 million per m 3 just 18 months earlier.
Substantial volumes of large-diameter logs were reported to be sitting along the
province’s waterways due to the saturated market conditions. While Indonesian
forestry conglomerates might normally have benefited from the ready availability of
cheap logs under decentralization, they were often been unable to do so during the
early years of Indonesia’s decentralization process because international plywood
prices also hit historic lows, falling to US$ 240 per m 3 in mid-2001 from US$ 370 in
mid-1999 (ITTO 2001, 1999).