Skip to main content
SpringerLink
Log in

Forestry Industry (Logging, HTI, Plywood, Pulp, and Paper)

  • Chapter
Forest Resources Management in Indonesia (1968-2004)

  • 690 Accesses

Abstract

This chapter discusses the state as the main actor in forestry management under the Soeharto government. When Soeharto came to power in 1966, after then-president Soekarno stepped down, he launched an economic program aimed at dragging his country out of the economic backwardness suffered by Indonesia, with high inflation and extreme debt. The forestry sector, based on the 1967 Foreign and Domestic Investment and Forestry Act, was a major part of the economic agenda to develop logging exports from 1968 to the 1970s, the plywood industry in the 1980s and 1990s, and the pulp and paper industry. The logging and industrial timber plantation (HTI) concession areas are in production forest. The Ministry of Forestry provides about 60 million ha of production forest. The first part of this chapter begins with the establishment of the 1967 Foreign Investment and Forestry Act, inviting private businessmen from foreign and domestic sources to become the main actors in the forestry sector by providing logging concessions and supporting the setting up of plywood, industrial timber plantations (HTI) and pulp and paper industries. The Soeharto regime obtained huge foreign exchange earnings from the forestry industry to a total of almost US$3 billion in 1990 alone, the second largest national income after the oil and gas sector. Therefore, several significant issues related to the forestry industry under the Soeharto government era are discussed in this chapter, chronologically through: (1) the introduction of logging forest concessions (HPH); (2) the plywood industry from the 1970s to the 1990s; (3) industrial timber plantations (Hutan Tanaman Industri/HTI); (4) the pulp and paper industry since the end of 1980s; and (5) the impact of the forestry industry on social conflict regarding land disputes between private companies and the local people.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Forestry management requires not only a detailed knowledge of how trees behave, individually and collectively, when subject to various kinds of intervention; it also requires a clear understanding of the functions the forest is to serve, and the priorities accorded to those several functions for example, to provide recreation and amenity services, protect farmland and shelter wild life, and to produce timber. But the optimum of each service requires single-purpose management. For further information, see Jack Westoby, The Introduction to World Forestry: People and Their Trees, Massachusetts, The Estate of Jack Westoby 1989: 33–34.

  2. 2.

    Further information, see Eksekutif Data Strategis Kehutanan 2003 (Forestry Strategic Data Executive), Kementerian Kehutanan, Jakarta, p. 3.

  3. 3.

    Land conflicts occurred in many districts in Sumatra, Kalimantan, Sulawesi, and Irian Jaya (Papua). These land conflicts usually occurred because of macro mapping from logging concession--> holders annexing the customary forest rights of the local people. See Tjitrajaya, Iwan, “Differential Access to Resources and Conflict Resolution in a Forest Concession in Irian Jaya,” in Ekonesia: A Journal of Indonesian Human Ecology, Anthropological Ecology Development, The Indonesian University, Vo. 1, No. 1, 1993; Hidayat, Herman, Empowering Economic Communities Through Village Forest Development (Bina Desa Hutan): In Case of Muara Gusik-->, Kutai-->, East Kalimantan-->, in ANALISIS, Journal of CSIS, Jakarta, September, 1997.

  4. 4.

    Interview with Herman Prayudi (staff of APHI-->: Logging Holders Association) June 11 and 19, 2001 in Jakarta, concerning foreign investors in the forestry sector--> in Indonesia.

  5. 5.

    The term “Indonesiaisation”is related to the economic ownership policy. It means reducing the number of foreign investor shares in companies and transferring some of their shares to domestic capitalists.

  6. 6.

    Malari demonstration: Malari is an Indonesian term referring to the demonstration that occurred on January 15, 1974 in Jakarta.

  7. 7.

    Pribumi means indigenous Indonesian. Initially, under the Soeharto regime-->, the pribumi firms had very limited access to economic resources, such as those in the forestry, mining, and fishery sectors.

  8. 8.

    See Bank of Indonesia report, Financial Year 1973/1974, pp. 19.

  9. 9.

    Cited by Samego, Indria, interviewed with Koentjono, marketing Executive of Kayu Lapis Indonesia, February 8, 1991.

  10. 10.

    Bob Hasan--> is the adopted son of General Gatot Soebroto, a senior army officer who helped the then-Colonel Soeharto. Liem Sioe Liong (father of Anthony Salim) controls companies in many sectors from banking, the forestry sector-->, palm oil, the automotive and motorcycle assembling industry, Cibinong cement, wheat imports, and more. He was introduced to Soeharto in the 1950s, when Soeharto become head of the regional army in Semarang and became close friends with Soeharto when he came to power--> in 1966.

  11. 11.

    Liem Sioe Liong is familiarly called by the Indonesian name “Soedono Salim”. He was born in 1916 in Fuqing, China. He owned 225, the largest company in Indonesia since 1980s (See Sato Yuri, Op Cit., pp. 122).

  12. 12.

    Interview with Ibrahim Madylao (former activist and secretary general of the Islamic Students Association in the 1950s), on March 15, 2000.

  13. 13.

    Meranti--> wood is one the most favorable trees for the plywood industry’s raw material. It grows profusely in Sumatra and Kalimantan. See also R. Coats, “Indonesian Timber”, in Pacific Research, Vol. 2, No. 4, 1971, p. 9.

  14. 14.

    The statistic recorded that in the mid 1960s almost 95 % of Indonesian wood-panel commodities were imported from abroad. There were five mills, two in Java, one in Sulawesi, and two in North Sumatra. Their production was very small.

  15. 15.

    See Paul Zach, “Indonesia’s timber take root”, in Far Eastern Economic Review, November 10, 1978, p. 57.

  16. 16.

    This regulation, familiarly known as Surat Keputusan Bersama Empat Dirjen (SKBED), was issued on April 22, 1981. The additional notes of the Director General of Forestry, May 4, 1981, stated that this regulation encouraged those who were not able to comply with the minimum conditions of developing wood-processing industries (less than 250,000 m3 of allowable cut forest) to merge with others.

  17. 17.

    Interview with Simon, marketing manager of Barito Pacific--> plywood industries, June19, 2001, in Jakarta.

  18. 18.

    The former figure is derived from the FEER (Far Eastern Economic Review), 2 December 1977, p. 66. For the latter, see UNIDO, Indonesia Industry Sector Study, 1983, p. 67.

  19. 19.

    For further information see Bruce Glassburner and Mark Poffenberger, “Survey on Recent Developments”, in BIES (Bulletin of Indonesian Economic Studies), Vol. 19, No. 3, 1983, p. 1.

  20. 20.

    See: Economists intelligence Unit, Indonesia Annual Supplement, 1981, p. 5.

  21. 21.

    See Toshihiko Kinoshita,“Japanese Investment in Indonesia: Problem and Prospects,” BIES, 22,1, April 1986. He analyzed that this policy has affected the joint-venture projects between Indonesia and Japan-->.

  22. 22.

    For further discussion on the state’s macroeconomic policy during the first years of the Third Repelita, see Arndt, “Survey of Recent Developments,” BIES, Vol. 19, No. 1, 1983.

  23. 23.

    For discussion on the role of buyers in determining the price of wood from Southeast Asian forests, see: Paul Gigot and others in “The fall of the Forests,” FEER, 30 November, 1979.

  24. 24.

    See SKEPHI (an NGO--> on Environmental and Forest Advocation in Jakarata), “Menjual Warisan Kita: Komersialisasi Hutan Indonesia,” Jakarta, 1990, p. 46.

  25. 25.

    Based on Mackie, conglomeration refers “to economic groups,” which recently have become the main actor--> in economic transformations in regional perspective, in Hal Hill and Terry Hull (Eds.) Indonesia Assessment 1990, Political and Social Change Monograph 11, Department of Political and Social Change, Research School of Pacific Studies, ANU, Canberra, 1990, p. 108.

  26. 26.

    For a further list of acquisitions in the forestry sector-->, see Wibisono, Christianto, Forestry Indonesia, PDBI, Jakarta, 1988, pp. 216–217.

  27. 27.

    See Lindsay, “The Indonesian log export ban: An estimation of foregone export earnings,” BIES, Vol. 25, No. 2, 1989, p. 113.

  28. 28.

    Due to the positive impact of the log ban in 1984/1985, Indonesia has been able to replace some Asian producers such as Japan-->, South Korea, and Taiwan-->. See, for example, Dedy AS, Bermand and Radu Malem, “Mengantisipasi Ancaman kayu Tropis” (Tropical wood threat and anticipation), Business News, No. 66, Tahun II/1991, pp. 1–6.

  29. 29.

    “Secondary producers” are countries that import tropical timber in raw form, process it domestically, and then re-export it, for example, South Korea and Taiwan-->, which do not have substantial stocks of tropical timber but are competitive in certain types of wood processing.

  30. 30.

    For further information, see Untung Iskandar and Agung Nugraha, Politik Pengelolaan Sumber Daya Hutan: Issue dan Agenda Mendesak (Political Management on Forest Resources: Issue and Urgent Agenda), Debut Pres, Jogjakarta, 2004, pp. 75.

  31. 31.

    My impression of Finantara Company in Sanggau district, West Kalimantan in July 1997, that management of HTI was well-organized and fruitful result, because this company supported local people for “social and economic” empowering program. See Haba and Hidayat (Eds.), The Impact of HTI’s Development on Local people, LIPI, 1998.

  32. 32.

    The interview was carried out with Mohammad Mansur, head of Presidium Pulp and Paper Association Indonesia, Cikini Jakarta on July 6, 2001.

  33. 33.

    For further information, see The Pulp and Paper Industry in Indonesia: Its Current State and Prospects, Jakarta, Data Consult, November, 1990, pp. 132–136.

  34. 34.

    Further information in terms of pulp and paper factories, integration and nonintegration, see Studi tentang Industri dan Pemasaran Kertas dan Pulp di Indonesia, Research Report the CIC Consulting Group, Jakarta, 1995, pp. 7–10.

  35. 35.

    Barr, Christopher, “The political-economy of fiber, finance, and debt in Indonesia’s pulp and paper industries,” in The Indonesian Quarterly, Vol. XXIX No. 2, 2001, pp. 182.

  36. 36.

    See Won Jeong-Ho (ed.) (1999), Conflicts Resolution: Dynamics, Process and Structure, Brookfield USA, Ashgate Publishing Company, pp. 4–5.

  37. 37.

    See Haba and Hidayat (Eds.), Alternative Model for Social Problem for Forest Squatters: A Case Study of ITCI --> Company and Muara Gusik --> Community, LIPI, PMB, 1997, p. 2.

  38. 38.

    Interview with Longgena Ginting, expert on forestry issues, Walhi-->’s executive director, on April 10 and July 5, 2001.

References

  • Arief A (1994) Hutan: Hakikat dan Pengaruhnya Terhadap Lingkungan (Forest: Essence and It Impacts on Environment). Obor Press, Jakarta

    Google Scholar 

  • Asosiasi Pengusaha Kayu Lapis Indonesia (APKINDO) Report. 1984. Jakarta

    Google Scholar 

  • Barber CV, Schweithelm J (eds) (2000) Trial by fire: forest fires and forest policy in Indonesia’s era of crisis and reform. World Resource Institute (WRI), Washington

    Google Scholar 

  • Barr C (2001) The political economy of fiber, finance and debt in Indonesia’s pulp and paper industries. Indones Q XXIV(2):31–48

    Google Scholar 

  • Chamber R (1994) Challenging the professions: frontiers for rural development. Intermediate Technology Publications, London

    Google Scholar 

  • Dauvergne P (1997) Shadows in the forest: Japan and the politics of timber in southeast Asia. Massachusetts Institute Technology Press, Cambridge, MA

    Google Scholar 

  • Effendi E (ed) (2004) Politik Ekonomi Kayu Antar Generasi Presiden [Timber politic throughout presidential generations]. Greenomics Press, Jakarta

    Google Scholar 

  • Food and Agricultural Organization (FAO). Report. 1993

    Google Scholar 

  • Hill H (1966) The Indonesian economy since 1966. Cambridge University Press, London

    Google Scholar 

  • Hurst P (1990) Rainforest politics: ecological destruction in South-East Asia. Zed Books Press, London

    Google Scholar 

  • Iskandar U, Nugraha A (2004) Politik Pengelolaan Sumber Daya Hutan [Political management on forest resources]. Debut Press, Jogjakarta

    Google Scholar 

  • Jepma CJ (1995) Tropical deforestation: a socio-economic approach. Earthscan Press, London

    Google Scholar 

  • Mackie JAC (ed) (1976) The Chinese in Indonesia. University Press of Hawaii in Association with Australian Institute of International Affairs, Sydney

    Google Scholar 

  • Nugroho T (1994) Hutan Tanaman Industri: Kajian dan Implementasinya [Industrial timber plantation: it studies and implementation]. Walhi Press, Jakarta

    Google Scholar 

  • Repetto R, Gillis M (eds) (1998) Public policies and the misuse of forest resource. Cambridge University Press, London

    Google Scholar 

  • Robinson R (1986) The rise of capital in Indonesia. Allen and Unwin Press, Sydney

    Google Scholar 

  • Sardjono MA (2004) Mosaik Sosiologis Kehutanan: Masyarakat Lokal, Politik, dan Kelestarian Sumberdaya [Forestry in sociological review: local community, politics and sustainable natural forest]. Debut Press, Jogjakarta

    Google Scholar 

  • Vargas DM (1985) The interface of customary and national land law in East Kalimantan. Ph.D dissertation, Yale University

    Google Scholar 

  • Westoby J (1989) The introduction to world forestry: people and their trees. The Estate of Jack Westoby Press, London

    Google Scholar 

  • Won Jeong H (ed) (1999) Conflict resolution: dynamics, process and structure. Ashgate Publishing Company, Brookfield

    Google Scholar 

  • Yevri D (1992) Perjalanan Secarik Kertas (The travel a sheet of paper). Report of Jakarta, Walhi

    Google Scholar 

  • Croats R (1971) Indonesian timber. Pac Res 2(4):9

    Google Scholar 

  • Dedy AS et al (1991) Mengantisipasi Ancaman Kayu Tropis [To anticipate and challenge of tropical wood]. Business News. No. 66. The Second Year II

    Google Scholar 

  • Dove MR (1985) The agro ecological mythology of the Javanese and political economy of Indonesia. Indonesia 39:1–36

    Article  Google Scholar 

  • Eksekutif Data Strategis Kehutanan 2003. Department of Forestry, Jakarta

    Google Scholar 

  • Far Eastern Economic Review (FEER), 4 July 1975

    Google Scholar 

  • Far Eastern Economic Review (FEER), 2 Dec 1977

    Google Scholar 

  • Gigot P et al (1979) The fall of forest in Far Eastern Economic Review (FEER), Nov 30

    Google Scholar 

  • Glassburger, Poffenberger (1983) Bull Indones Econ (BIES) XIX(3):22

    Google Scholar 

  • Haba J, Hidayat H (eds) (1997) Pengaruh Pembangunan Hutan Tanaman Industri atas Masyarakat Lokal [The impact of HTI’s development toward local people]. Center for Social and Cultural Studies. LIPI, Jakarta

    Google Scholar 

  • Hidayat H (1997) Empowering community economies through the logging concession company guidance of forest village program: a case study of Muara Gusik village, Muara Kedang District, Kutai Regency, East Kalimantan. Analisis J. CSIS. September. Jakarta

    Google Scholar 

  • Hill H (1966) The Indonesian economy since 1966. Cambridge University Press, London

    Google Scholar 

  • Jenkins D (1984) Soeharto and his generals: Indonesian military politics 1975–1983. Cornell Modern Indonesia Project, Ithaca

    Google Scholar 

  • Kinoshita T (1986) Japanese investment in Indonesia: problem and prospects. Bull Indones Econ 22(1):34

    Article  Google Scholar 

  • Kohler KG (1972) Wood processing in East Kalimantan: a case study of industrialization and foreign investment in Indonesia. Bull Indones Econ Stud 8(3):93–129

    Article  Google Scholar 

  • Kompas 21 January 1975

    Google Scholar 

  • Kompas 17 July 1978

    Google Scholar 

  • Kompas 3 February 1983

    Google Scholar 

  • Kompas 24 August 1991

    Google Scholar 

  • Lindsay (1989) The Indonesian log export ban: an estimation of foreign export earnings. Bull Indones Econ Stud 25(2):113

    Google Scholar 

  • Majalah Tropis (Tropical Magazine) (1999a) May. Jakarta

    Google Scholar 

  • Majalah Tropis (Tropical Magazine). No. 9, August 1999

    Google Scholar 

  • Majalah Tropis (Tropical Magazine) (2000) September. Jakarta

    Google Scholar 

  • Ministry of Forestry Report. 2000. Jakarta

    Google Scholar 

  • Ministry of Industry and Trade Report. 2001. Jakarta

    Google Scholar 

  • Moertono, S (1974) State and statecraft in old Java: a study of the later mataram period, 16th to 19th century. Cornell University Southeast Asia Program, Ithaca. Modern Indonesia Project. Monograph. No. 43

    Google Scholar 

  • Myers N (1991) Tropical forests: present status and future outlook. Clim Change 19:3–32

    Article  CAS  Google Scholar 

  • Nurjaya, IN (2001) Pengelolaan Hutan dalam Perspektif Otonomi Daerah: Wacana Ilmu Hukum [Forest management in regional autonomy perspectives: from law science discourses] in Duta Rimba, February

    Google Scholar 

  • Nurtanto (1986) Masalah dan Prospek Kayu Lapis Indonesia [The problem and prospect of plywood Indonesia] EKI 34(3):336

    Google Scholar 

  • Peluso NL (1992) The political ecology of extraction and extractive reserves. In East Kalimantan, Indonesia. Dev Chang 23(4):49–74

    Article  Google Scholar 

  • Rice R (1983) The origins of basic economic idea and their impact on new order policies. Bull Indones Econ Stud 19(2):60–82

    Article  Google Scholar 

  • Samego I (1992) State-led industrialization in neopartrimonial state: the plywood industry in the new order Indonesia. PhD thesis, The Filnders University of South Australia

    Google Scholar 

  • Samego I (ed) (1997) Bila ABRI Berbisnis (When Indonesian military was involved in business?). Mizan, Bandung

    Google Scholar 

  • SKEPHI (NGOs on Environmental and Forest Advocation) (1990) Menjual Warisan Kita: Komersialisasi Hutan Indonesia [To sell our Heritage: commercialization on Indonesia Forestry]. Jakarta

    Google Scholar 

  • The CIC Consulting Group (1995) Studi tentang Industri dan Pemasaran Kertas dan Pulp di Indonesia (Pulp and paper industry studies and its marketing). Jakarta

    Google Scholar 

  • The Directory (1999) Indonesian pulp and paper. Jakarta

    Google Scholar 

  • The Jakarta Post 14 January 1985

    Google Scholar 

  • The Pulp and Paper Industry in Indonesia: Its Current State and Prospects. 1990. Data Consult Inc., Jakarta

    Google Scholar 

  • Tjitrajaya I (1993) Differential access to resources and conflict resolution in a forest development in Irian Jaya/Papua. In: EKONESIA, Anthropology Ecology Development, The Indonesian University

    Google Scholar 

  • Wibisono C (1988) Forestry Indonesia. Pusat Data Bisnis Indonesia (PDBI, Jakarta, pp 216–217

    Google Scholar 

  • World Bank Report (1999) Oil palm plantation in many provinces in Indonesia. New-York

    Google Scholar 

  • World Resources Institute (WRI) Report. 1990. 2001. Washington, DC

    Google Scholar 

  • World Resources Institute (WRI) report (2001)

    Google Scholar 

  • Zach, P (1978) Indonesia’s Timber take root. Far Eastern Economic Review November 10, p 57

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Indonesian Institute of Sciences (LIPI), Jakarta, Indonesia

    Herman Hidayat

Authors
  1. Herman Hidayat
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

Copyright information

© 2016 Springer Science+Business Media Singapore

About this chapter

Cite this chapter

Hidayat, H. (2016). Forestry Industry (Logging, HTI, Plywood, Pulp, and Paper). In: Forest Resources Management in Indonesia (1968-2004). Springer, Singapore. https://doi.org/10.1007/978-981-287-745-1_3

Download citation

Publish with us

Policies and ethics

Search

Navigation