Problem overview:

     Awareness and visions: Industrial Plantation Forest (IPF) is a government programme, which is intended to sustain the forest development employing rebonization practices.

     Policies and measures: The government issued Dana Reboisasi, or DR as incentive for private companies to participate in IPF. However, such incentives have been misused.

Background:

     Role and assessments of policy measures and modalities for environment assessment for integrating environmental considerations into economic policy making.

     Rebonization of forest resources through industrial plantation: Since 1990 a concept of Industrial Plantation Forest (IPF) has been introduced under Government Regulation No.7/1990. The Government of Indonesia (GOI), through Ministry of Forestry, encourages the rebonization with incentives to private timber companies, which are interested in developing IPF.

     Requirement for supporting regulations: A few years after, operational activities had been developed, but needed favorable supports, such as: additional regulations to get a permit for user rights of IPF.

     Requesting for rebonization fund: The IPF shows some progress during the implementation phase. However, the concept has been used and misused. Companies, which carry out forestry businesses, can formulate a proposal requesting for rebonization funds (Dana Reboisasi, or DR) to utilize and develop IPF. Once the proposal has been accepted by the Ministry of Forestry, the company can have access to DR.

     Purposefully misusing the fund: Unfortunately, most frequently the companies do not use the funds solely for developing IPF, instead the money has been utilized for other activities, which are not related to the proposal. In fact, when the IPF was unsuccessful, the company would file a report as a failure to develop the IPF. The truth is, the fund has been used for other illegal activities.

     Deceitful actions by companies to avoid returning fund credits: In extreme cases, several local and regional NGOs found that the company intentionally burnt the area of IPF (and blaming on the local community living around the area). The accident of the burnt IPF may be able to avoid the compulsory return credit for DR to the GOI.

     Lack of cooperation from government enterprises: Another issue arises when the GOI, through the Directorate General for Land Reboization and Rehabilitation, requests for government enterprises to be involved with the programme, and none of them were interested. Questions arise of whether the government enterprises were actually attempting to avoid the programme.

     Ineffectiveness and non-transparency of the system: Several independent units or NGOs conducted some studies and found the system was not transparent, especially in the proposal acceptance procedure. Needless to say, companies would rather prefer to apply for credit bank than DR, hence, demonstrating ineffectiveness of incentive system.

     Reformation of IPF: Later on, the Government of Indonesia declared a reformation, and the IPF programme has been improving, in terms of procedural mechanism for programme application, since.