In the ini­tial phase, the per­mit for log prod­uct export is granted to wood prod­ucts cer­ti­fied by the Indone­sian Eco­la­bel­ing Insti­tute (LEI) and For­est Stew­ard­ship Coun­cil (FSC).
The above state­ment is excerpted from an arti­cle pub­lished by Bis­nis Indone­sia, Tues­day, May 25, 2010 on the forestry industry‘s demand for the gov­ern­ment to open the log prod­ucts export gate. Log prod­ucts export can be selec­tively car­ried out under a strict law enforcement.

Full arti­cle:

VAT on log prod­ucts are to be removed, Log export to wait for the study result
JAKARTA, May 25, 2010, Bis­nis Indonesia:VAT on log prod­ucts as stated in Law No.42/2009 on VAT and lux­ury sales tax, will be removed.

The Min­is­ter of Forestry, Zulk­i­fli Hasan, said that the min­istry had coor­di­nated with the Min­is­ter of Finance to sign a reg­u­la­tion to remove VAT imposed on log products.

“Mrs. Ani (the Min­is­ter of Finance, Sri Mulyani), prior to her res­ig­na­tion, had agreed to can­cel VAT for log prod­ucts. The reg­u­la­tion will take effect this month. This is good as it will not put any bur­den on the indus­try. Raw mate­ri­als are not sup­posed to be taxed. Tax should be imposed only for end-products,” he said yesterday.

Zulk­i­fli said that the VAT removal will pro­vide oppor­tu­ni­ties for the indus­try to increase for­est prod­ucts’ pro­duc­tion and com­pet­i­tive­ness. VAT on log prod­ucts has reduced for­est prod­ucts com­pet­i­tive­ness par­tic­u­larly prod­ucts resulted by the com­mu­nity forest.

“We keep on improv­ing the com­pet­i­tive­ness,” he emphasized.

Forestry sec­tor indus­try play­ers had com­plained about VAT on log and other for­est prod­ucts as the gov­ern­ment imposed Law No. 42/2009 on VAT and lux­ury sales tax.

Log export
On the other hand, the gov­ern­ment has taken into account the demand from forestry indus­try to open the door of log prod­ucts export.

Prior to pro­vid­ing rec­om­men­da­tion to open the export door for this for­est com­mod­ity, the Min­istry of Forestry will con­duct a study related to the impact of log prod­ucts export on the per­for­mance of com­mu­nity wood industry.

Two econ­o­mists, Sudar­sono and Chatib Basri, are requested to per­form the study. It is expected that the study is will be com­pleted by the end of the year.

“The macro­eco­nomic impacts were stud­ied in 2006. How­ever, the impact of log prod­ucts export on com­mu­nity wood indus­tries is yet to be per­formed. We hope that we will be able to com­plete the study this year,” said the Direc­tor Gen­eral of For­est Prod­uct Devel­op­ment of the Min­istry of Forestry, Hadi Daryanto, yesterday.

Accord­ing to him, export per­mit for log prod­ucts could be pri­or­i­tized only for wood of the finest qual­ity from the type that so far has not gained wide mar­ket share.

After that, he added, pri­or­i­ties could be given for wood prod­ucts extracted from com­mu­nity forests or com­mu­nity plan­ta­tion forests esti­mated to be pro­duced within the next 6 years.

“The study can be fin­ished this year. How­ever, in terms of when the log prod­ucts export door will be offi­cially opened by the gov­ern­ment, it will have to wait for the result of the study,” explained Hadi.

The Exec­u­tive Direc­tor of Perum Per­hutani, Upik Ros­alina Waslin, said that Indone­sia could poten­tially loose an income of IDR 750 from log prod­ucts export.

There­fore, Perum Per­hutani hopes that the gov­ern­ment could pro­vide sup­port to open the export door for spe­cific teak logs in order to increase the industry’s con­tri­bu­tion to the country’s income.

“In the inter­na­tional auc­tion mar­ket, teak log of fancy spec­i­fi­ca­tion can be sold up to IDR 20 mil­lion per cubic meter. The price is very much higher than the local mar­ket price of IDR 9–10 mil­lion per cubic meter.”

The Vice Head of the Asso­ci­a­tion of Indone­sian For­est Con­ces­sion­aires, Salahud­din Sam­petoed­ing, has recently voiced the con­ces­sion­aires’ wish for the gov­ern­ment to open the export door for log prod­ucts of which are unab­sorbed by the industry.

Log prod­ucts export will be selec­tively car­ried out along with strict law enforcement.

“Ini­tially, the export per­mit will be granted for teak logs from Perum Per­hutani (A3 wood), plan­ta­tion for­est wood, nat­ural for­est wood man­aged by con­ces­sion­ary per­mit hold­ers of whom are cer­ti­fied by the Indone­sian Eco­la­bel­ing Insti­tute (LEI) and For­est Stew­ard­ship Coun­cil (FSC),” he empha­sized. By Erwin Tambunan