During the HTI program's initial implementation, Curran (1992) investigated the early sites 

during surveys of West Kalimantan in 1991 92 for NRMP. From 1990 to 1991 in West 

Kalimantan, 1,158,750 hectares of HTI licenses were granted, ranging in size from 7,600 to 

315,000 hectares.  The 1991 area assigned to clear cutting for industrial estate planting was 

143,151 hectares.  One concern regarding the placement of timber estates on concessions is 

the extent that they may undermine or conflict with natural production forest management. The 

observed negative impacts that may arise from this are discussed below. 

Some manipulation of sites is made by companies that have reported low standing volumes 

within a concession and thereby have its classification changed to unproductive or conversion 

land.  The official criterion of 20 m

3

 per hectare for unproductive land classification is actively 

debated among forestry officials.  For sites classified as unproductive land, large financial gains 

were generated solely from the sale of timber obtained from clearing land for plantations.  

Combined with the region's current timber shortages for industrial requirements and expansion 

of massive wood processing factories, HTI site selection was extremely vulnerable to 

misreporting and political influence. The timber produced from preparing timber estates 

generated one million cubic meters more than the most generous target for concession forests.  

This estimate was based solely on the area designated for conversion to plantations (e.g., oil 

palm) in 1992 93.  

Insufficient consultation with local communities over appropriation of plantation land and 

location of transmigration villages precipitated considerable tensions and conflict with land use 

and traditional ownership claims.  To compound the problem, proposed locations were often in 

conflict with current land use status as demarcated by central government agencies.    

Many HPH's are reluctant investors into industrial estates, especially those in remote areas with 

associated high transport costs to mills, because of perceived low profitability. Some of the 

reasons for this may relate to the uncertainty associated with the life span of plantations and the 

productivity of HTI, which had not been tested in the West Kalimantan sites. Preliminary 

evaluations of HTI profitability suggested that these concerns were highly relevant; conservative 

economic analysis with optimal ecological conditions produced significant losses per hectare 

and negative returns on investment Curran (1992).  These negative economic results during the 

first cycle occurred even with the provision of significant government subsidies for plantation 

establishment. 

Establishing industrial estates in concessions creates a number of risks to natural forest cover.  

Risks can arise from the methods of site clearing, often involving the use of inexperienced 

transmigrants, and from the associated population increase in areas adjacent to natural forests.  

Site clearing generally involved burning large areas (average 6000 hectares per burn) and using 

labor who are unknowledgeable about local climatic and ecological conditions. This practice 

greatly increased the risk of fire escaping to surrounding farms and natural production forests.  

With HTI agreements covering 6 20 years, there was uncertainty over the production capacity of 

plantations to provide sufficient revenues over the project life. Transmigrant families and 

villagers often must expand their existing small subsistence farm plots or open new plots in 

logged natural forest. 

Investments into industrial processing capacity have led to development of a harvestable 

resources base to provide necessary raw materials.  In West Kalimantan, establishment of only 

20,000 hectares of HTI annually was expected.  Even with a wood shortage for established 

processing industries, further industrial investment in wood processing was planned.  Resulting 

from establishment of large scale HTI areas, land clearing for plantations has provided 

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