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The government will set up a state-owned financing company to
channel funds into the development of forestry plantations in areas
with critical soil conditions as part of the reforestation effort,
Forestry Minister M.S. Kaban said Monday in Jakarta.
"The decree on the establishment of the company will be jointly issued
by the Forestry Ministry and the Finance Ministry on Feb. 2," he told
reporters after meeting with Finance Minister Sri Mulyani at her office.
The government has allocated Rp 9.7 trillion (about US$1 billion) from
its reforestation fund to support the new company's financing program,
"The money will be used to finance the development of forestry
plantations across the country," Kaban said, adding that with the
funding provided by the new company, the area of forestry plantations
could rise to 5.4 million hectares by 2014.
"With this program, forest protection will be rendered more effective,"
he said.
He said that cooperatives, forestry firms, individuals and farmers'
groups would be allowed to borrow from the company based on maturities
of up to seven years.
"They will be able to repay the money after harvesting," he explained.
He added that the company's operations would be guided by commercial
principals.
Indonesia has allocated 95 million of its approximately 141 million
hectares of forests for commercial purposes. The country is currently
the ninth biggest pulp producer in the world.
Environmental groups have long voiced concerns over the level of
deforestation, which is said to amount to more than 1 million hectares
annually.
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