Decentralization of Forest Administration in Indonesia, Implications ...

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Ida Aju Pradnja Resosudarmo, Christopher Barr, Ahmad Dermawan, and John McCarthy 83 the district’s forests. 31 Likewise in Kapuas Hulu, the district government collected Rp 50,000 or about US$ 5.8 per vehicle from each truck that transported timber from the district to the neighboring country of Malaysia (Dermawan 2004). District authorities acknowledged that the border between the two countries is supposed to be under the central government’s authority. However, they argued that since the central government does little to monitor or regulate the cross-border timber trade, district officials could not do much in terms of dealing with the problems associated with Indonesian logs being transported out to Malaysia, unless they imposed such a charge on timber being taken out of the district. The amount of Rp 50,000 per truck was a result of negotiations between the district government and those transporting the timber (Dermawan 2004). In addition to imposing new taxes and fees on timber production, some district and provincial governments have sought to generate PAD by establishing regional government-owned forestry enterprises (BUMD). In Berau, for instance, the district government formed a BUMD called PT Hutan Sanggam Labanan Lestari in 2002 (Obidzinski and Barr 2003). District officials have used this company to secure equity shares in several existing HPH timber concessions. The most notable example to date has been Berau district’s acquisition (through PT Hutan Sanggam Labanan Lestari) of majority shares in an 83,250 ha block of the HPH concession held by the state-owned forestry enterprise PT Inhutani I. To expand PAD levels, many district and provincial governments have actively sought to attract new investment to their regions. They have done so, in many cases, by making areas of previously unexploited forest available for timber extraction, and demarcating large areas for plantation development. Districts in both East and West Kalimantan, in particular, have taken advantage of their proximity to the east Malaysian states of Sabah and Sarawak by issuing large numbers of HPHH and IPPK permits to ventures involving Malaysian investors (Samsu et al. 2004; Obidzinski and Barr 2003; Alqadrie et al. 2001; Barr et al. 2001). Some districts have also sought to identify ways to obtain new forest-based revenues through the promotion of eco-tourism or through participation in schemes providing financial compensation for forest protection and the provision of environmental services. Malinau district, for example, has sought to identify ways that the district can draw on the unique cultural and ecological features of Kayan Mentarang National Park to generate tourism revenues (Barr et al. 2001). Similarly, some districts have sought to secure payments for environmental services associated with forests in their jurisdictions, including the maintenance of conservation areas which continue to be administered by the central government. For instance, the Kapuas Hulu district government in West Kalimantan declared itself to be a ‘conservation district’ in October 2003, and announced that it was seeking compensation for the fact that 55% of its territory is classified as protected areas (Dermawan 2004). To date, however, these efforts have apparently yielded very little, if anything, in terms of new revenues for the district budget.
84 Fiscal Balancing and the Redistribution of Forest Revenues Endnotes 1 Silver et al. (2001) note that through the 1980s and 1990s, there were numerous calls to convert the SDO into a locally administered block grant. However, these “were never given serious consideration by the Central Government, because this change would have disrupted local and central government administrative relationships in a fundamental way, and there was no support for this in the New Order government [at the national level].” 2 Some of the most significant taxes collected by regional governments included, for instance, taxes on motor vehicles, entertainment, hotels, and restaurants, while some of the most lucrative fees included market charges, health service charges, and building permits (see Devas 1989). 3 Regulation 59/1998 on Tariffs on Non-tax State Revenues Applicable for the MoF and Estate Crops (Peraturan Pemerintah No. 59/1998 tentang Tarif atas Jenis Penerimaan Negara Bukan Pajak yang Berlaku pada Departemen Kehutanan dan Perkebunan). 4 Regulation 51/1998 on Forest Resource Rent Provision (Peraturan Pemerintah No. 51/1998 tentang Provisi Sumber Daya Hutan), further revised by Regulation 74/1999. 5 Ministry of Industry and Trade Decree 258/MPP/Kep/6/1998 on of Reference Prices for the Calculation of Forest Resource Rent Provision (Keputusan Menteri Perindustrian dan Perdagangan No. 258/MPP/Kep/6/1998 tentang Penetapan Besarnya Harga Patokan untuk Perhitungan Provisi Sumber Daya Hutan). 6 The Reforestation Fund was originally named Forest Guarantee Fund (Dana Jaminan Reboisasi) when it was initiated with Presidential Decree 35/1980. It was restructured under Presidential Decree 31/1989 and renamed Reforestation Fund (Dana Reboisasi) in 1989. 7 Based on Presidential Decree 24/1997. In 1998, the DR fee was set at Rp 80,000 per m 3 for meranti with a diameter of 50 cm and above (Presidential Decree 32/1998). 8 The uses of DR, for non-forestry purposes were based on Presidential Instructions. In this sense, the characteristics of the Funds, as a state non-budgetary fund, gave the then President Soeharto a significant degree of control over its use, rather than the MoF. 9 The implementing regulations of Law 20/1997, concerning forestry levies, include Regulation 22/1997, Regulations 51/1998, 52/1998, and 59/1998; and Regulations 74/1999 and 92/1999. 10 Under Regulation 55/2005 on Balancing Funds, the IHPH appears to have been replaced by the IIUPHH (Iuran Izin Usaha Pemanfaatan Hasil Hutan, or Commercial Forest Products Utilization Permit Fee), as defined under Regulation 34/2002. To avoid confusion, the discussion in this chapter uses the term IHPH, except where noted to distinguish between the IHPH and IIUPHH. 11 Regulations and procedures related to regional borrowing are further specified in Regulation 107/2000 on Regional Borrowing, enacted November 10, 2000. 12 For a detailed analysis of Indonesia’s new regulations on borrowing by regional governments, see Lewis (2003). 13 These include, for instance, Ministry of Finance Decree 99/KMK.07/2001 and Ministry of Finance Decree 579/KMK.07/2003. 14 Under the column for ‘IHPH +PSDH’, revenues collected by the central government include PSDH, IHPH, and IHPHTI. 15 For the period 2001-2002, the central government’s DR revenues include both receipts and interest. For 2003, the data source provided no information as to whether or not the figures presented include interest. 16 DR transfers to the regions are aggregated for the provinces and districts/municipalities, as some of the data were reported in this manner. However, funds designated for the districts and municipalities were transferred directly to those governments by the Ministry of Finance.
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Decentralization of Forest Administ
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National Library of Indonesia Catal
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iv 4.5 Forest Revenue Sharing 69 4.
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Preface Indonesia is currently ente
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Acknowledgements This study is base
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Abbreviations AAC ACIAR ADEKSI APBD
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IPHHBK IPHHK IPJL IPK IPKR IPKMA IP
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Glossary Adat, customary or traditi
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Forests and Decentralization in Ind
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10 Forests and Decentralization in
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Chapter 2 Forest Administration and
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20 Forest Administration and Forest
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References Agrawal, A., Ostrom, E.
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136 References Casson, A. 2001a. De
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138 References GFW/FWI. 2002. The S
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140 References Manurung, E. G. T.,
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142 References Ribot, J. C. 2002. L
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144 References Van Zorge Report. 20
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146 Annex 1. Timeline of events tha
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148 Annex 1. Timeline of events tha
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Annex 2 Indonesian Laws and Regulat
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152 Annex 2. Indonesian Legislation
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154 Annex 2. Indonesian Legislation
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156 Annex 3. Distribution of Shared
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Since the collapse of Soeharto’s
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