Project
Forests at the Crossroads
Indonesia has some of the most important and biodiverse forests in the world. But the future of...
IT has been a whole month since the Bahtera Ana 2 vessel docked at the Mandewa Port in Kampung Gaka, Kaimana, West Papua. The 4,000-cubic-meter capacity ship parked at the harbor of Prabu Alaska, a company owning forest concession rights (HPH) in West Papua, is askew because of the timber cargo at its stern. “Production was stalled because it has rained incessantly,” said Rante, a staff-member of Prabu Alaska at the end of April.
Rante’s explanation was totally opposite to that of Prabu Alaska’s Public Relations Manager, Dirgan Laberis. He said the company had not yet sold any of the timber it harvested in 2020 and 2021 because they had not completely fulfilled the rights of customary tribes in compensation for timber taken from their lands.
Whistleblowers and others in possession of sensitive information of public concern can now securely and confidentially share tips, documents, and data with the Pulitzer Center’s Rainforest Investigations Network (RIN), its editors, and journalists.
Compensation to customary peoples is one of the important conditions HPH-owning companies in Papua need to fulfill to obtain a timber legality certificate. In West Papua, this particular condition is strengthened by a governor ruling determining the compensation tariff for each cubic meter of timber from trees harvested from customary land. A company may sell their wood only after obtaining a timber legality certificate from the certification board.
If timber supplies were not stalled by bad weather, said Rante, the Bahtera Ana 2 would already have sailed and shipped off the 4,000 cubic meters of ironwood (Intsia bijuga) timber to Tanjung Perak Port in Surabaya, East Java. Before being exported to the United States of America, China, Australia, and India, the thousands of cubic meters of timber would have been processed in plants in East Java.
According to timber supply reports at the environment and forestry ministry (KLHK), scores of companies have received Prabu Alaska timber directly throughout 2019-2020. In 2019, these were the Jasa Mitra Abadi, Alam Lestari Jaya Salbach, Aneka Wood Profil Indah, Hutan Lestari Mukti Perkasa, Iswa Timber, Korindo Abadi, Mitra Usaha Raya, and Nusantara Timber Pratama.
In 2020, Prabu Alaska shipped timber to Jasa Mitra Abadi, Iswa Timber, Surabaya Trading & Co, Alam Beserta Kita, Alam Lestari Jaya Salbach, Balikpapan, Kayumas Podo Agung, Nusantara Timber Pratama, and Gema Lestari Indonesia. All those companies are based in East Java, except for Balikpapan Forest Industries, which is located in East Kalimantan.
Of 86,086 cubic meters of timber produced by Prabu Alaska in 2019, only 6,202 cubic meters, or 7.20 percent, was sent to processing plants in Papua. The following year, all of the 96,226 cubic meters of timber flowed out of Papua, to Java and Kalimantan.
Shipment of timber to outside of Papua violates West Papua Governor Regulation No. 51/2018, which states that timber companies may only ship half of their timber volume to outside of Papua, while the other half has to be processed by Papuan plants to boost the local economy. Violating this ruling means a fine of 10 times the forestry resource provision (PSDH) calculated from the timber volume surplus.
The PSDH tariff for the ironwood timber is Rp185,000 per cubic meter, 10 percent of the suggested selling price, as governed in the Environment and Forestry Minister Regulation No. P.64/2017. Thus, in 2019, because the timber volume that was not sent to Papuan timber companies amounted to 37,748.16 cubic meters, Prabu Alaska in fact should pay fines to the West Papua Provincial Government totaling Rp6.9 billion. Again in 2020, the fine would have been larger: Rp8.9 billion.
Prabu Alaska Director Adi Gunawan refused to comment on these violations. Through his secretary, Santi, he said he was currently focused on putting his company in order. Chief of the West Papua Forestry Office Hendrik Runaweri said Prabu Alaska was permitted to sell all its timber outside of Papua because it was building a processing plant in Fakfak. In the island of Papua, the only large timber processing plant is located only in the Papua Province, owned by Korindo Group and Sinar Wijaya. “The governor issued the permit for us to sell more than 50 percent of our timber to outside of Papua,” said Hendrik.
Violation of the ruling to sell timber outside of Papua was conducted not only by Prabu Alaska. Teluk Bintuni Mina Agro Karya, which runs a 237,750 hectare HPH in West Papua, also shipped 56.5 percent of its timber to processing plants outside of Papua in 2020. Teluk Bintuni’s management made the excuse that their timber quota surplus sales in 2020 came from their production of the year before. “Our inter-island log sales do not exceed 50 percent,” said Teluk Bintuni Director Pakat Ginting.
This matter of quota violation in turn makes these HPH-owning companies problematic as regards taxation payment. There are two types of timber taxes these companies need to pay. Aside from the PSDH, there is the reforestation fund to reimburse deforestation elsewhere. Meanwhile, the PSDH tariff is in rupiah, while the reforestation fund is paid in US dollars
The basis of the two types of taxes are timber ‘cubication’. The PSDH and the reforestation fund data based on production documents and sales data of several HPH-owning companies in Papua do not match. Prabu Alaska, for instance, only paid PSDH and reforestation funds for 66,666 cubic meters of timber. Yet the company’s 2020 timber production reached 96,266 cubic meters.
If the PSDH tariff is Rp2,200 to Rp920,000 per cubic meter and the reforestation fund is US$4 to US$16, Prabu Alaska’s payment for the two taxes last year fell short by Rp1.8 to Rp34 billion. And this is only one company. The reforestation fund required by the Indonesian government since 1998 is part of the effort to balance out tree volumes in the nation’s forests.
A cross-check between the PSDH and the reforestation fund of Teluk Bintuni and Tunas Timber Lestari, both subsidiaries of South Korean corporation Korindo Group, also does not match. In 2020, Teluk Bintuni produced 114,228 cubic meters of timber, but only paid PSDH and reforestation funds for 111,831 cubic meters. The same applied to Tunas Timber, which underpaid by 5,000 cubic meters.
Budi Nugraha, consultant to Prabu Alaska, who is in charge of the office in Kaimana, used the excuse of a sales surplus in their 2019 production for the under payment of taxation. Meanwhile, Pakat Ginting from Teluk Bintuni claimed he had registered his tax payment data into the environment and forestry ministry data system. “We guarantee there is no payment lack,” he said.
In fact, problems from timber harvesting from felling blocks to shipping of the wood to processing plants has not hampered the flow of timber from Papua. The key to timber legality verification lies in the certification institution. The main problem remains the same: consultants in these institutions are paid by HPH-owning companies to audit their operations.
This conflict of interest has never been resolved by the timber legality verification system (SVLK), which is hailed as a foolproof system to prevent illegal timber. The SVLK name has even been upgraded to the legality and sustainability verification system. Without placement of an independent certification body, the glaring hole within the SVLK will remain.
Since it leaves the cargo docks, timber from concessions of all the HPH-owning companies will continue to flow out to processing plants in Java and Kalimantan. From Gresik and Surabaya, most of Prabu Alaska’s timber is then sent to China and India.
Iswa Timber, for instance, exports 5,567 cubic meters of ironwood furniture to India and China at an export value of US$3.9million, or around Rp55.5 billion. At its factory in the village of Segoro Madu, Gresik, East Java, one can observe huge logs lying around in the company’s yard. Latif, a security guard, did not allow Tempo to meet the company’s head on Tuesday, November 2. He said his boss was not in the office. “The management already received the letter from Tempo,” he said. “We will contact you.”
Besides being shipped to East Java, Prabu Alaska sent their timber to fulfill the needs of Balikpapan Forest Industries (BFI) in 2020, totaling 3,365.33 cubic meters. This subsidiary of the Korindo Group in East Kalimantan is one of the timber suppliers to Sumitomo Forestry Indonesia. “We checked the timber we received from Indonesia, and it complied with the SVLK,” said Yuuko Iizuka, General Manager of the Conservation Department of Sumitomo Forestry in Japan.
As stated by West Papua Forestry Office Chief Hendrik Runaweri, wood processing plants in Papua are owned among others by the Korindo Group in Asiki, Boven Digoel. Besides accepting timber from outside the group, Korindo Abadi also accommodates timber production from subsidiaries of the corporation. Processed timber is then exported to many countries, predominantly the Middle East, including Saudi Arabia, the United Emirates, Oman, and Qatar. A small portion of the wood is sold to South Korea, Belgium, and the United States of America.
Throughout 2019, Korindo Abadi received Tunas Timber Lestari products amounting to 76,699 cubic meters. Also some timber from Inocin Abadi, which produced 51,154.6 cubic meters. In their report to the environment ministry, Inocin claimed a part of its timber was supplied to several craftspeople in Boven Digoel and Merauke. Thus, in its company documents in 2019-2020, Korindo claimed all their timber was processed in Papua.
According to Advocacy Manager of the Pusaka Bentala Foundation, Tigor Hutapea, Korindo’s claim of supplying wood to local craftspeople was odd because smalltime craftspeople in the two regencies receive wood from the local community, not from huge HPH companies such as Korindo’s subsidiaries. “Local business people approach the customary tribes directly to buy wood. They would bring laborers to cut down trees, process them into blocks of wood, then sell them in town.”
Tigor’s suspicion was confirmed by former shipping division staff-member of the Korindo Group in Asiki, Hasan—not his real name. The 51-year-old man said his company supplied timber to its other subsidiaries outside of Papua, such as in Kalimantan and Maluku. “It’s never entered into legal documents,” he said.
Hasan’s claim was confirmed by several craftspeople in Boven Digoel and Merauke. Adi Muslimin, owner of a furniture maker and enterprise in Merauke, claimed he has never received timber from Korindo or any other company. “I have never heard of any other entity obtaining timber from Korindo,” he said. “We get our supply from the customary community that owns the land.”
Chief of the Kinggo clan of the Mandobo tribe, Petrus Kinggo, said the same thing. The community, he said, negotiates with small and medium timber traders. In this way, said Petrus, the community selects wood type and measurements only from ready-to-be felled trees, which are then sold to the furniture artisans.
In Papua, the flow of wood from logging activities is most important because the Papua governor issued Regulation No. 18/2010, which prohibits all timber from Papua forests be processed outside the island. This violation, according to Chapter 18, can result in annulment of the work permit.
Korindo Group Public Relations Manager Yulian Mohammad Riza said all company operations comply with Indonesian government and Papua regulations. He admitted that his company received timber from Prabu Alaska. “But the timber has fulfilled its legality aspects evidenced by the SVLK and the PHPL (sustainable forest management) certificates,” he said through a written response on July 29. “All the wood we produce is exported legally, in compliance to V-Legal certification regulations.”
Outside the two companies, Korindo Abadi obtained timber supplies from Wukirasari, a subsidiary of Sinar Wijaya Group. Wukirasari manages a concession of 116,320 hectares until 2052. The owner of Sinar Wijaya took over the company from Ting Ting Hung, alias Paulus George Hung, who was included in the blacklist of illegal logging during the tenure of Forestry Minister M.S. Kaban in 2006.
