April 14, 2020

COVID-19 economic stimulus for forestry sector put forward

JAKARTA ( - The Indonesian Environment and Forestry Ministry has reaffirmed that it is seeking to implement affordable measures to prevent lay-offs in the forestry business sector due to the severe impact of COVID-19, from upstream to downstream, which employs around 1.55 million workers.

An economic stimulus package proposed by Minister Siti Nurbaya in early April for consideration and approval includes efforts to maintain the forestry business at a certain level so that it can survive for the duration of the indefinite period caused by COVID-19. 

The Ministry's Secretary General Bambang Hendroyono elaborated on this in writing to (Apr 13).

“This economic stimulus package was established after absorbing various proposals from numerous relevant business stakeholders about the ongoing impacts of COVID-19 on the forestry business,” he explained.  

The secretary general pointed out that the economic stimulus package includes payment relief for non-tax obligations, such as reforestation funds paid in rupiah currency at a stable rate, including payment of the reforestation funds and the provision of forest resources in installments.  

“Other relief measures include the provision of a stimulus in the form of a reduction in tax rates at certain levels on certain tax items, which will allow the forestry sector to continue operating during the COVID-19 situation,” Hendroyono added. 

These relief measures, according to him, are necessary because of the decline in exports of forestry products to countries affected by COVID-19, which has resulted in revenues from the forestry business sector dropping to alarming levels.

In the upstream sector, which involves a lot of workers, a decline in the replanting of pulpwood plantations - covering an area of 150,000 hectares or about twice the size of Singapore - is anticipated by the ministry, as is a decrease in production due to the COVID-19 pandemic, the end of which remains uncertain. 

The following photos show an expanse of pulpwood plantations which serve as a source of fiber supply for the pulpwood industry in Sumatra. Operations in this sector have been significantly affected by COVID-19.

The secretary general stressed that the proposed economic stimulus package went further, also including a delay in loan payments for one year, given the ongoing economic impact of COVID-19 on the forestry sector.

“In addition, it was also proposed that the government provide electricity subsidies so that forestry companies, upstream and downstream, can give direct cash assistance to their employees, including this year's Eid al-Fitr Allowance,” he confirmed.

Forestry business association responds

Executive Director of the Indonesian Forestry Business Association (APHI) Purwadi Soeprihanto explained in a written response to (Apr13) that the upstream and downstream forestry sectors are facing severe pressure due to the COVID-19 pandemic.

“The main destination countries for the export of forestry products, namely China, the United States, Japan, the European Union and South Korea, are all severely affected by COVID-19, so of course this is having a negative impact on export performance to these countries,” he detailed.   

“We, and all forestry business stakeholders, would like to express our appreciation and gratitude to the Minister of Environment and Forestry Siti Nurbaya and her team who have responded so quickly to the current situation,” Soeprihanto added.

He also conveyed his appreciation and gratitude to other relevant ministries which have welcomed and supported the proposed economic stimulus package from Minister Nurbaya.

“This heavy pressure really requires fiscal and non-fiscal relaxation from the government in the form of deregulation and subsidies at a certain level so that the forestry business sector can survive in the face of this blow from COVID-19,” the APHI executive director wrote.