Indonesia Forest Moratorium To Reduce Uncertainty For Planter

Source: Reuters
May 20, 2011
By Olivia Rondonuwu and Michael Taylor

Indonesia’s government plans toreveal long-awaited details of a two-year moratorium on new permits to clear primary forest on Friday, giving clarity to
plantation and mining firms worried the ban will hit their expansion plans.

The moratorium ordered a freeze on new permits to log or convert 64 million hectares (158 million acres) of primary forests and peatlands, but it was not clear whether existing permits would be exempted or whether there would be any compensation for protected land.

“I appealed to the government that non-forest areas shouldnot be included in the moratorium,” said Joko Supriyono, secretary general at the Indonesian Palm Oil Association (Gapki). “The impact of the moratorium, even though they postponed the signing, was uncertainty,” he told Reuters.

He said this uncertainty had led to expansion in 2010 of 300,000 hectares of palm oil plantations in the world’s top palmoil producing nation, reduced from  a minimum 500,000 hectares in recent years.

The moratorium, delayed by five months from a planned January start, was signed into law on Thursday in an effort to reduce greenhouse gas emissions from deforestation under a $1 billion climate deal with Norway. Given the long delay there had been uncertainty over whether it would be signed at all.

Shares of Indonesia-listed plantation firms mostly rose on Friday to outperform a steady Jakarta index . Astra Agro Lestari and Bakrie Sumatera were up 1.1 percent, while SMART <SMAR.JK climbed 4.7 percent, though Gozco  fell 1.3 percent.

Gozco’s palm oil production is expected to rise more than  30 percent this year and it has permits for 56 percent of its landbank, but expansion in the rest could be hit by the moratorium, an executive told Reuters on Thursday.

A previous moratorium draft seen by Reuters said it would exempt the extension of old permits, projects given permits in principle by the forestry ministry, and issuance of permits to log secondary non-peatland forests or convert degraded land.

The draft version also exempted projects to develop energy supplies such as geothermal power, as well a huge food plantation project in the lushly forested Papua province, since the government sees both energy and food security as critical.

The forestry ministry has defined primary forest as forest that has grown naturally for hundreds of years, of which there is estimated to be around 44 million hectares in a sprawling tropical archipelago where illegal logging is common.

“The two-year moratorium is an opportunity to review and strengthen Indonesia’s policies such as land reconciliation and greenhouse gas measurements,” said Daud Dharsono, chief executive of SMART, adding he supported the moratorium.    (Writing by Neil Chatterjee; Editing by Ramthan Hussain)
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