Decentralization of Forest Administration in Indonesia, Implications ...

Moira Moeliono and Ahmad Dermawan 117
In many areas, local communities are also now able to negotiate with timber, plantation,
and mining companies to obtain at least a portion of the benefits from forest resources.
There are commonly several types of community demands, including for instance the
payment of ‘entrance’ fees to land and forests claimed by the community; volume-based
payments for each cubic meter of timber harvested; compensation for infrastructure and
plantation development; and other forms of land-use compensation (Tokede et al. 2005).
Contracts between companies and communities typically consist of a list of proposed
community benefits and company activities, and is usually finalized and notarized before
being signed by representatives from both parties. Some villages have also negotiated
with companies for the development of public services and infrastructure in addition to
financial payments. These include, for instance, educational facilities, communal housing
and the provision of health services (Palmer 2004).
In many regions, local elites have become brokers in negotiating profit-sharing
and management partnerships in the name of local communities (Yasmi et al. 2005). As
such, the benefits associated with such agreements are often not distributed equitably
among community members. Variations in such contracts may result from the degree
of community participation in the negotiation process, the nature of the relationship
between the village elites involved in the negotiations and the community members they
(purportedly) represent, the degree of contract compliance by the companies involved,
and the degree of enforcement of the contract (and the mechanisms available for this) by
the communities (Palmer 2004).
There are different ways of how cooperative or small-scale permit-holders distribute
benefits among members, as well as some variations in benefits across villages that
participated in small-scale timber harvesting or forest conversion agreements (Palmer
2004; Tokede et al. 2005). Company-community agreements based on IPPK permits (Ijin
Pemanfaatan dan Pemungutan Kayu) negotiated in Malinau appear to have a ‘fixed’ fee
limit of up to Rp 50,000 per m 3 of timber harvested. There was flexibility in the provision
of social facilities and financial payments by the companies or investors involved, which
appeared to be dependent on the needs and demands of each individual community and the
size of the logging area. While the provisions for non-cash benefits varied, cash benefits
for the villages and logging rules for the IPPK companies were the same (Palmer 2004). In
Manokwari, communities dealing with HPH concession-holders generally have received
lower rates of compensation than those dealing with non-HPH investors. In 2004, HPH
concession-holders typically contributed Rp 50,000 per m 3 of timber, while non-HPH
investors were willing to pay up to 200,000 per m 3 of compensation (Tokede et al. 2005).
However, local communities generally have not been the ultimate beneficiary of
decentralized timber harvesting, in spite of what the theory may have suggested. Smallscale
timber permits, for instance, have often been granted to local cooperatives, in which
individuals or households from the community might be members. However, usually
lacking access to capital and equipment, these cooperatives have often had to collaborate
with outside investors – either individual entrepreneurs or companies, at times including
HPH-holders. The cooperative’s position in the negotiation process has often been weak
(Tokede et al. 2005; Alqadrie et al. 2002; Barr et al. 2001; McCarthy 2001b). For example,
in Sintang (West Kalimantan), communities received a fee from 35,000-50,000 per m 3 of
timber or only about 9% of the market value of Shorea spp., the most common timber
species cut (Yasmi et al. 2005).