Decentralization of Forest Administration in Indonesia, Implications ...

Barr, C. et al. 127
became decentralized. At the local level, district timber permits became an important
form of patronage for Bupatis, who often used them to secure political loyalties among
key constituencies and to finance election campaigns and other initiatives.
In many forest-rich regions, district governments also sought to obtain a larger
portion of the profits associated with HPH (or IUPHHK) timber concessions, most
of which had been allocated by the central government during the New Order period.
District officials did so both by imposing new taxes and fees on HPH-holders and, in
some cases, by requiring timber concessionaires to enter into partnerships with districtowned
enterprises and/or local cooperatives or community groups. In some cases, district
governments pressured HPH-holders to enter into such agreements by allocating HPHH
or IPPK permits in areas that overlapped with the concession-holder’s own cutting
blocks. Some concession-holders voluntarily entered into partnerships with small-scale
timber operators using district harvesting permits. Such arrangements frequently enabled
the HPH-holder to reduce both its operational risks and its costs within the context of
an uncertain business environment and, in some cases, a dwindling forest resource base.
Such arrangements also frequently enabled timber companies to circumvent selective
harvesting requirements and to avoid paying the PSDH and DR fees.
There are indications that the distribution of large numbers of small-scale timber
permits by district governments may have facilitated illegal logging in some regions.
Indeed, it was often the case that district governments allocated HPHH and IPPK
permits (and other types of timber licenses) for areas that were much larger than the
district forestry bureaucracy could effectively monitor. Many districts issued dozens of
such permits during 1999 and 2000, for instance, in spite of the fact that they did not
have a functional District Forestry Service until mid-2003. Moreover, in northern East
Kalimantan and perhaps other regions, the allocation of district timber permits triggered
a flood of heavy equipment into the region, much of which came across the border from
Malaysia. Industry officials speculated that the tractors, trucks, and bulldozers that were
brought into these regions would be used to clear much larger areas of forest than the
district government had approved.
Almost immediately after Bupatis began to issue large numbers of district timber
permits in 1999 and 2000, the MoF began taking aggressive measures to stop the
allocation of such permits within the Forest Estate. These efforts intensified in 2002
with the issuance of Government Regulation 34/2002 and a series of accompanying
ministerial decrees. Collectively, these regulations rolled back much of the authority over
forest administration that had been transferred to (or assumed by) district governments
in the preceding years, and reconcentrated this in the hands of the MoF. Since 2003,
the allocation by district governments of timber licenses of any size within the Forest
Estate has largely ceased. Moreover, the MoF has recently formed a team to evaluate
timber licenses still in use that were previously issued either by Bupatis or Governors,
and to revoke these permits if they are determined to have been issued in violation of the
Ministry’s regulations.
Central government officials have frequently justified this process of recentralization
in the forestry sector by arguing that district governments have allowed (or worse,
encouraged) widespread illegal logging and unsustainable forest management practices
within their jurisdictions. They frequently describe the allocation of district timber