Illegal logging costs Indonesia $7b

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PeruIllegal logging and mismanagement of Indonesia’s forestry industry may have prevented more than $7 billion flowing to state coffers from 2007 to 2011, costing the government more than its health budget, Human Rights Watch said.

In contrast, the Indonesian government’s 2011 revenue from timber royalties and reforestation fees was $300 million, said Emily Harwell, the lead author of a report released by Human Rights Watch.

“This is a very conservative estimate,” Harwell, a partner at Natural Capital Advisors LLC, said at a briefing in Jakarta on November 8 of lost revenue. “The calculation doesn’t include any wood that’s smuggled.”

The report indicates weak governance is chipping away at revenues in the world’s fourth-most populous nation, as budget and current-account deficits this year hurt the rupiah. In 2011, revenue missed from forestry totaled more than $2 billion, exceeding the government’s health spending for that year, New York-based Human Rights Watch said in the report.

The report calculated how much wood was used by industries such as pulp, furniture and saw mills, and compared it with the available legal supply of timber, Harwell said. The supply of legal timber was “considerably smaller than what you need to produce that amount of products,” Harwell said, adding that from the missing supply she was able to calculate the lost fees.

Indonesia ranked 118 among 176 countries on Transparency International’s 2012 corruption perceptions index, undermining the investment appeal of Southeast Asia’s largest economy. Facing slowing growth, the government is trying to narrow budget and trade gaps by curbing state spending and easing restrictions on investment in some industries.

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Reading Time: 2 minutes

Illegal logging and mismanagement of Indonesia’s forestry industry may have prevented more than $7 billion flowing to state coffers from 2007 to 2011, costing the government more than its health budget, Human Rights Watch said.

Reading Time: 2 minutes

PeruIllegal logging and mismanagement of Indonesia’s forestry industry may have prevented more than $7 billion flowing to state coffers from 2007 to 2011, costing the government more than its health budget, Human Rights Watch said.

In contrast, the Indonesian government’s 2011 revenue from timber royalties and reforestation fees was $300 million, said Emily Harwell, the lead author of a report released by Human Rights Watch.

“This is a very conservative estimate,” Harwell, a partner at Natural Capital Advisors LLC, said at a briefing in Jakarta on November 8 of lost revenue. “The calculation doesn’t include any wood that’s smuggled.”

The report indicates weak governance is chipping away at revenues in the world’s fourth-most populous nation, as budget and current-account deficits this year hurt the rupiah. In 2011, revenue missed from forestry totaled more than $2 billion, exceeding the government’s health spending for that year, New York-based Human Rights Watch said in the report.

The report calculated how much wood was used by industries such as pulp, furniture and saw mills, and compared it with the available legal supply of timber, Harwell said. The supply of legal timber was “considerably smaller than what you need to produce that amount of products,” Harwell said, adding that from the missing supply she was able to calculate the lost fees.

Indonesia ranked 118 among 176 countries on Transparency International’s 2012 corruption perceptions index, undermining the investment appeal of Southeast Asia’s largest economy. Facing slowing growth, the government is trying to narrow budget and trade gaps by curbing state spending and easing restrictions on investment in some industries.

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