Decentralization of Forest Administration in Indonesia, Implications ...

Christopher Barr 25
this way, banjir kap strongly foreshadowed the widespread allocation of small-scale
logging and forest conversion permits by district governments during 1999-2000, at
the height of decentralization in the forestry sector.
In contrast to larger concessionaires, the hundreds of small-scale logging
ventures that sprung up during 1967-1970 generally employed non-mechanized
harvesting techniques and traditional methods of transporting logs along river
systems during monsoon floods – hence becoming known as banjir kap, or ‘log flood’
enterprises (Peluso 1983; Manning 1971). In doing so, banjir kap ventures generally
established logging activities with a minimal amount of start-up capital and operated
at only a fraction of the cost of the mechanized foreign or larger domestic timber
companies. Through the first four years after the timber sector was opened to private
investment, these small provincial and locally based logging operations generated
a very significant portion of the nation’s overall timber production. During 1968-
1970, banjir kap enterprises accounted for 60% of the reported log production in East
Kalimantan (Manning 1971).
Perhaps not surprisingly, larger concession-holders quickly became irritated
with the proliferation of banjir kap. Due to weak coordination among the national,
provincial, and district governments, HPHs distributed by forestry officials in
Jakarta often overlapped with the smaller concessions allocated by provincial and
district authorities (Sacerdoti 1979b). Moreover, because the small, provincial and
locally based enterprises were able to operate with fixed costs well below those of
mechanized operations, they often sold their logs at lower prices than those sought by
the larger producers (Peluso 1983).
2.5 Centralized Control and Log Exports in the 1970s
With the encouragement of larger, mechanized timber companies, the national
government took steps in 1970 and 1971 to eradicate banjir kap. Specifically,
President Soeharto issued a decree revoking the authority of provincial governments
to distribute even small-scale forest exploitation permits, and requiring that all logging
concessions in operation be at least 50,000 ha in area. The national government
justified these measures on both environmental and economic grounds. On the one
hand, Jakarta’s forestry planners maintained that banjir kap operations were generally
indiscriminate in their logging practices and, due to their size, virtually impossible
to monitor. 14 On the other hand, they argued that such small-scale enterprises would
not make long-term investments in wood processing (as the HPH contract required
of larger timber companies) and that even for the short-term, banjir kap could not
maintain the levels of profitability that they had held for the previous four years
(Peluso 1983).
Within the state apparatus, the centralization of the concession-distribution
process substantially increased the leverage that Indonesia’s central leadership was
able to exert over provincial and district governments. In terms of formal revenue
flows, it effectively concentrated control over the HPH license fee, as well as the
multitude of lesser fees associated with the licensing process, into the hands of the
national forestry bureaucracy. More significantly, the consolidation of Jakarta’s