management objectives.  If these objectives are met, investments in forestry (e.g., timber 

harvesting) would be able to compete with other land uses where a comparative advantage 

exists and will contribute appropriately to the primary national goal of sustainable development 

(NRMP Report No. 58). 

2.3  Institutional and Ecosystem Management Issues   

The underlying problems associated with natural forest management policy undeniably are 

difficult to resolve given that several institutions compete for control of forest land use.  The 

differing goals of stakeholders compound this problem.  Central government agencies, 

corporate private concessionaires, local government, local residents, and NGO's tend to have 

strong views on the fate of the forest resources, which the National Constitution proclaims 

belongs to all Indonesians.  Among the numerous government and non government 

stakeholders, some have a disproportionate influence on policymakers, while others are barely 

recognized or lack any decision making authority (NRMP Report No. 58).  

The Ministry of Forestry and Estate Crops (MoFr) issues the majority of, but not all, forestry 

policies. Policies which influence forest utilization are also issued by the Ministries of 

Agriculture, Mines, Trade and Industry, and Finance.  Policies emanating from these various 

institutions may lack complementarity or be in direct conflict.  For example, the MoFr regulates 

forest management, land use, and transport of forest products.  However, conversion of forest 

land to agricultural use is increasingly sought by the Ministry of Agriculture.  The Ministry of 

Mines has an obvious interest in the mineral wealth underlying the forest cover.  MoFr and 

Bappenas/Bappeda often disagree over land use designations during the spatial planning 

process. While the Ministry of Trade and Industry has established mandatory marketing 

agencies for plywood and rattan, its Directorate General responsible for small scale industry 

has sought deregulation of inter island shipping of rattan and the export of rattan webbing.  The 

Ministry of Finance would prefer that all timber royalties (e.g., IHH) enter general budget 

accounts rather than allow funds to be allocated for specific applications under the control of 

another ministry.  Examples of multiple management and conflicting views are mirrored in these 

same ministries at the provincial and regional government levels.  Moreover, the central, 

provincial and regional administrations all seek greater control over regulations and a larger 

share of royalties.  For example, provincial and local municipal government agencies are 

inclined to view favorably the conversion of natural forest to agricultural production, given 

specific local pressures and costs borne by extraction and control of forestry revenues by 

central government (NRMP Report No. 58). 

Forest concessionaires and industry oppose increases in royalties and other payments. They 

complain of excessive compliance and bureaucratic costs of forestry regulations.  Because of 

inefficiencies and high costs, the MoFr inspection system is, for the most part, discredited and 

ignored by the forest concessionaires.  A few concessions are managed well, but the tendency 

is to regard all with suspicion.  Furthermore, insufficient emphasis is placed on incentives to 

reward the better forest managers.  This promotes distrust but often collusion between the two 

groups, concessionaires or contractors on the one hand and government forest managers 

(NRMP Report No. 58). 

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