Papua to ban timber and crude palm oil exports next year

Laurel Teo, Business Times 10 Dec 07;
This could help raise incomes, safeguard forest reserves

STARTING next year, Indonesia's Papua province will ban the export of raw timber and crude palm oil (CPO), which must first be processed into downstream products before they can be shipped out of the remote region.

The surprise decision was announced late last week by Papua governor Barnabas Suebu on the sidelines of the United Nations (UN) climate change conference taking place on Bali island.

He said the policy would be ratified by Papua's local government next month.

Under this new regulation, raw materials such as timber and CPO must be processed into value-added products such as furniture, cooking oil or biofuel, before they can be exported.

But the rule will not be retroactive, and will apply only to new investments in forestry and palm plantation projects, he said. Those who are already in the business of timber and CPO exports can continue to do so.

'This is an effort not only to raise the income level of our society and the region as a whole, but also to safeguard our forest reserves for the future,' the governor explained, in a report published in business daily Kontan.

Separately, he also announce a plan by Papua to offer seven million hectares of pristine rainforest under a pay-and-preserve plan to help the world deal with global warming.

Mr Suebu hoped the new export ban would help stimulate the province's manufacturing sector and launch new industries. 'We want to create new fields of jobs with added value for Papua,' he added.

Situated at the eastern-most tip of Indonesia bordering the country of Papua New Guinea, Papua is immensely rich in natural resources like minerals and timber, but has long lagged behind other regions in terms of development.

The province is about as large as California, and is covered by vast stretches of virgin rain forest totalling some 42 million hectares, which make up almost a quarter of Indonesia's total forested area of 180 million hectares.

Of the 42 million hectares, only half are meant to be conserved. Another 30 per cent are classified as 'production forests', with the remaining slated for conservation and other land usages.

With vast swathes of virgin forests in Sumatra, Kalimantan and Java already gone to make way for logging and oil palm cultivation, Papua is increasingly viewed by hungry investors as the 'final frontier' of untouched land.

Meanwhile, business groups in Indonesia appear to be stunned by Papua's latest decision. A number of them have asked that the deadline be delayed, with some noting that the new rule could be premature, given that Papua's infrastructure is still not ready to support more complex industries.

Said Akmaluddin Hasibuan, head of Indonesian Palm Oil Producers' Association (Gapki): 'The Papuan provincial government is free to develop the manufacturing industry. But don't ban the export of raw materials until the basic infrastructure is ready for CPO processing industries.'