Government Regulation No. 6/2007 on forest arrangement and formulation of forest management plan as well as forest exploitation

1A FOREST ARRANGEMENT AND FORMULATION OF FOREST MANAGEMENT PLAN AS WELL AS FOREST EXPLOITATION (Government Regulation No. 6/2007 dated January 8, 2007) BYTHE GRACE OF GOD ALMIGHTY, THE PRESIDENT OFTHE REPUBLIC OFINDONESIA, Considering: a. that in the framework of implementing the provisions of Articles 22,39,66 and 80 of Law No, 41/1999 on Forestry and following the promulgation of Govern ment Regulation No. 34/2002 on Forest Arrangement and Formulation of Forest Management, Forest Exploitation and Forest Area Utilization Plans; b. that in the framework of driving up the growth of sustainable national development, it is necessary to take strategic measures capable of boosting the growth of investments, accelerating timber estate development, controlling fore~t rl"gradation and enhancing national economy, including economy of communities inside and arund forests through dereguiatlon and debureaucratization on the basis of the principles of good governance and sustain able forest management; c. that Government Regulation No. 34/2002 on Forest Arrangementand Formulation of ForestManagement, Forest Exploitation and Forest Area Utilization Plans has not been fully capable of facilitating the need as meant in letter b; d. that based on the considerations as meant in letters band c, it is necessary to stipulate a new govern ment regulation on forest arrangement and formula tion of forest management plan as well as forest exploitation; In view of; 1. Article 5 paragraph (2) and Article 33 paragraph (3) Business News 7529/6-29-2007 of the Constitution of 19~5; 2. Law No. 41/1999 on Forestry (Statute Book of 1999 No. 167, supplement to Statute soo« NO. 3888) as already amended by Law No. 19/2004 on Stipulation of Government Regulation in Lieu of Law No. 1/2004 on the Amendment to Law No. 41/1999 regarding Forestry to Become A Law (Statute Book of 2004 No. 116, SlIrp'"m"nt to Stat"t" Book No. 4412); DECIDES: To stipulate: THE GOVERNMENT REGULATION ON FOREST ARRANGEMENT AND FORMULATION OF FOREST MANAGEMENT PLAN AS WELL AS FOREST EXPLOITA TION. CHAPTER I GENERAL PROVISION Article 1 Referred to in this government regulation as: 1. Forest Management Totality hereinafter caued KPH is a forest management area in accordance with the basic function and designation, which can be managed efficiently and in a sustainable manner. 2. Head of KPH shall be leader, holder of authority and personnel in charge of forest management in the managed area. 3, Forest Arrangement is <In actiVity of designing forest management unit, covering activities of classification of forest resources in eccordance with the types of ecosystemand potentials contained inside with a view of obtaining maximal hen"fit for the people in a sus tainable manner. 4. Forest . , .... 4. Forest Exploitation is an activity of utilizing forest area, environmental services, timber and non timber forest products optimally and fairly for the people's wellfare by preserving the sustainability. 5. Area Exploitation is an activity of utilizing the growth space 50 es to obtain environmental, social and economic benefits optimally without reducing the main function. 6. Utilization of Environmental Service is an activity of utilizing potentials of environmental services with out destroying the environment and reducing the main function. 7. Utilization ofTimber Forest Products is an activity of utilizing and expioiting forest products in the form of timber without destroying the environment and reducing the main function. 8. Utilization of Non-Timber Forest Products is an activ ity of utilizing and exploiting forest products in the form of non-timber without destroying the environ ment and reduclnq the main function. 9. Collection of Timber and/or Non-Timber Forest Pro ducts is an activity of taking forest products in the form of either timber and/or non-timber with certain limit, size and/or volume. lO.License to Exploit Forest is a license issued by the authorized official consisting of business license to utilize area, business license to utilize environmental service, businesslicenseto utilize timber and/or non timber forest products and license to collect timber and/or non-timber forest products in forest areas already stipulated. 11.BusinessLicense to Utilize Area, hereinafter abbre viated to IUPK is a business license granted to utilize area in protected forests and/or production forests. l2.Business License to Utilize Environmental Service, hereinafter abbreviated to IUPJLis a businesslicense Business News7529/6-29-2007 2A issued to utilize environmental services in in protected forests and/or production forests. 13.Business License to Utilize Timber Forest Products, hereinafter called IUPHHK and/or Business License to Utilize Non-Timber Forest Products, hereinafter co-lied IUPHHBK is a business license issued to utilize forest products in the form of timber and/or non tim ber inside natural forests in production forests through activity of harvesting or felling, enrinchrnent, preservation and marketing. 14.IUPHHK of Ecosystem Restoration Inside Natural Forest is a business license issued to build area inside natural forest in production forest having important ecosystem so that the function and repre sentation can be preservedthrough activities of main taining, protecting and restoring forest ecosystem including planting, enrichment, separation, ahlmal breeding, wild release of flora and fauna to restore biologicalsubstances(flora and fauna)as well as non biologica substances (soil, climate and topography) in an area to the original kind so that biological equi librium and their ecosystems can be achieved. 15.IUPHHK and/or IUPHHBK inside timber estate is a business license issued to utilize forest products in the form of timber and/or non-timber inside timber estate in production forest through actiVities of land preparation, seedling, planting, maintaining, harvest ing and marketing. 16.Licenseto Collect Timber Forest Products, hereinaf ter abbreviated to IPHHK IS a license to take forest products in the form of timber in production forests through activities of harvesting, transporting, and marketing for a specified period and in a specified volume. 17.Licenseto Collect Non-Timber Forest Products, here inafter abbreviated to IPHHK is a license to take forest products In the Form of non-timber in protected forests and/or production forests, among others, rattan, honey, fruits, resins, medicinal herbs for a specified period and In a specified volume. 18. Industrial ..... l8.Industrial Timber Estate, hereinafter abbreviated to HTl is timber estate in production forest, which IS built by groups of forestry industry to enhance potential and quality of production forests byapply ing sylViculture in the framework offulfiUing the need of forest product industries for raw materials. 19.5maliholder Timber Estate, hereinafter abbreviated to HTR is timber estate in production forest, whiCh is built by groups of communities to enhance potential and quality of production forests by applying sylviculture in the framework ofassuring the conser vation of forest resources. 20.Timber Estate Resulting from Rehabilitation, herein after abbreviated to HTHRis timber estate in produc tion forest, which is built through actiVity of rehabili tating land and forest in production forest area to res tore, preserve and enhance function of land and fo rest in the framework of maintaining their supporting potential, productiVity and role as life burrer system. 21.Sylvicuiture system is a forest cultivation system or system of forest planting techniques, starting from selecting seeds, sowing, planting, maintaining plant And harvastinq. 22.Concession Forest is forest located in land charged with land title. 23.Communal Forest is a state forest With the main utilization directed to empower communities. 24.Rural Forest is a state forest not yet charged With license/right, which is managed by Village and utilized for welfare of the Village. 25.Contribution to Forest Utilization Business License, hereinafter abbreviated to IIUPH is a levy imposed on holder or business license to utilize forest in a certain forest area. 26.Forest Royalty, hereinafter called PSDH is a levy imposed on licensee as compensation for the intrin sic value of forest products collected from the state forests. BusinessNews 7529/6-29-2007 3A 27.Reforestation Fund, hereinafter abbreviated to DR is a certain amount of fund collected trom holders ot IUPHHK inside natural forest in production forests to reforestate and rehabilitate forests. 28.Individuals are Indonesian citizens capable of acting le9ally. 29.Certiflcate of Legitimacy of Forest Product is documents which constitute evidences of legality of forest products in every segmnent of actiVity in administration of forest products. 30.Primary Industry of Timber Forest Product Is the processinq of logs and/or timber chip raw-materi als into semi-finished goods or finished goods. 31.Primary Industry of Non-Timber Forest Product is the processing of forest products in the form of non timber into semi-finished goods or finished goods. 32.Minlster is the Minister in charge of forestry affairs. Article 2 Forest arrangement in the formulation of forest management plan as well as forest exploitation consti tutes part of forest management. A:rticle 3 (l)Forest arrangement and formulation of forest management plan as well as forest exploitation throughout forest areas constitute authority of the government and regional governments. (2)The whole forest areas as meant in paragraph (1) consist of 3 (three) main functions of forests, namely: a. conservation forest; h. protected forest; and c. production forest. (3)The forest areas as meant in paragraph (2) are divided into KPH, which becomes part of fortification of the national, provincial and regental/municipal forest management system. Article 4 ...... Article 1 (l)The government can delegate the implementation of forest management as meant in Article 2 to state owned enterprises operating in the torestry sector. (2)Directors of the state-owned enterprises operating in the forestry sector that secure delegation of au thority to implement the forest management as meant in paragraph (l) establish organizations of KPH and appoint heads of KPH. (3)Th" uuplernenteuon of forest meneqement by state owned enterprises execludes from the public author ity. (4) The implementation of forest management by state owned enterprises in the forest sector as meant in paragraph (1) is ruled in a special government regu lation. CHAPTER II FOREST MANAGEMENT TOTALITY Article 5 The forest management totality (KPH) as meant in Article 3 paragraph (3) covers: a. Conservation KPH (KPHK); b. Protected KPH (KPHL); c. Production KPH (KPHP). Article 6 (l)KPH as meant in Article 5 is stipulated in one Or several main functions of forest and in an adminis tration territory or inter-admininistrative territory of administration. (2)ln the case of one KPH consisting of more than one main function of forest, stipulation of KPH as meant in paragraph (1) is based on the function which is dominant in the size. Article 7 (l)The Minister stipulates the size of KPH "rca by observing efficiency and effectiveness of forest management in one territory of river stream area (DAS) or one territorial totality of ecosystem. BUSiness News 7529/6-29-2007 4A (2)Further provisions on procedures for stipulating the size of one KPH as meant in paragraph (1) are regu lated by a regulation of the Minister. (3)Provisions on the establishment and procedures for stipulation of KPH as meant in Article 6 are regu lated on the basis of provisions of legislation. Article 8 (l)The government and/or provincial governments and/ or regentaljmunicipal governments in accordance With their respective scopes of autnorttv stipUlate organizations of KPH. (2)The organizations of KPH stipulated by the govern ment as meant in paragraph (1) cover organizations of: a. KPHK; or b. KPHL and KPHP having inter-provincial working area. (3}The organizations of KPH stipulated by the provin cial governments as meant in paragraph (1) cover organizations of KPHL and inter-reqental/rnunlctpal KPHL. (4)The organizations of KPHstipulated by the regentalj municipal governments as meant in paragraph (1) cover organizations of KPHL and KPHP inside reuental/rnunldpal tertitory. (5)The establishment of organizations of KPH as meant in peraqrnphs (1), (2) and (3) is based on guidance, criteria and standards. (6) Further provisions on the gUidance, Criteriaand stan dards of the establishment of organization of KPH as meant in paragraph (5) are stipulated by a regula tion of the Minister. Article 9 (l)Organizations of KPH have the follOWing tasks and functions: a. performing forest management, which covers: 1. forest ...•.. 1. forest arrangement and formulation of forest management plan; 2. forest exploitation; 3. utilization of forest area; 4. forest rehabilitation and reclamation; and 5. forest protection and natural conservation. b. elaborating national, provincial and regentalf municipal forestry policies for implementing; c. undertaking activities of forest management in their respectiveterritories, starting from the plan ning, organization, implementing, and supervision as well as controlling; d. monitoring and evaluating the implementation of activloties of forest management in their respec tive territories; e. opening investment opportunities for supporting the accomplishment of forest management objectives. (2) Further provisions on tasks and functions of the organizarions of KPH as meant in paragraph (1) let ter a point 1 and point 2 are regulated by a regula tion of the Minister on the basis of thi< government regulation. (3)Further provtsions on tasks and runcuons uF the organizations of KPH as meant in paragraph (1) letter a points 3, 4 and 5 are regulated separately in another government regulation. Article 10 (l)The government, provincial governments and regental/municipal governments in accordancewith their respective scopes of authority are responsible for the development of KPH and their infrastructure. (2)The development fund of KPH comes from: a. APBN; b. APBDi and/or c. Other non-binding fund in accordance with the provisions of legislation. CHAPTER III FOREST ARRANGEMENT AND FORMULATION OF FOREST MANAGEMENT PLAN Business News7529/6-29-2007 SA Article 11 (l)The forest arrangement as meant In Article 2 Is executed in every KPH in the whole forest areas. (2)1n certain locations inside the forest areas as meant in Article 3 paragraph (2), the government can stipu late thE> locations as communal forest, traditiona I forest, rural forest or forest area with special purpose (KGHDTK). (3)1n forest arrangement actiVity, KPH must observe the certain areas as meant in paragraph (2). Article 12 (1 ) Adivities of forest arrangement in KPH consist of: a. border arrangement; b. forest inventorying; c. division into block or zone; d. division into cluster and sub-cluster; and e. mapping. (2)Results of the activities as meant in paragraph (1) are in the form of lnventorvlnq offorest arragement formulated in the form of book and map of KPH arrangement. (3)The actiVitiesas meant in paragraph (1) are executed by organizations of KPH. Article 13 (1) Heads of KPH formulate forest management plans on the basis of results of the activities as meant in Article 12 paragraph (2) by referring to national, provlnclal and regentalfmunicipal forestry plans and paying attention to aspirations, cultural values of lo cal communities as well as environmental condition. (2)The forest management plan as meant in paragraph (1) includes: a. long-term forest management plan; and b. short-term forest management plan. (3)The long-term forest management plan as meant in paragraph (2) letter a is formulated by heads of KPH. (4Hhe ..... (4)The long-term forest management plan as meant in paragraph (3) contains the fOllowing elements: a. objectives to be achieved by KPH; b. encountering condition; and c. strategies as well as feasibility of forest manage ment development, covering forest arrangement, exploitation and the use of forest areas, forest rehabilitation and reclamation and forest protec tion and nature conservation. (5)The short-term forest management plan as meant in paragraph (2) letter b is formulated by officials appointed by heads of KPH. (6)The short-term forest management plan as meant in paragraph (5) contains the following elements: a. objectives of sustainable forest management in the scale of the said KPH; b. evaluation of results of the previous short-term plan; c. targets to be achieved; d. database and information; e. activities to be implemented; f. status of balance of forest resources; g. monitoring, evaluation and controlling of activi lies; and h. participation of parties. (7) The short-term forest management plan is formu lated on the basis of the long-term forest manage ment plan. Article 14 (l)The Minister, governors or regents/mayors or appointed officials in accordance with their respec tive scopes of authority ratify the long-term forest management plan formulated by heads of KPH as meant in Article 13 paragraph (3). (2) Heads of KPH ratify the short-term forest manage ment plan formulated by the officials appointed by heads of KPH as meant in Article 13 paragraph (5). Article 15 (l)The long-term forest management plan as meant in Business News 7529/G-29-2007 6A Article 14 paragraph (1) must be ratified by the r-unrster in not later than 5 (five) years as from the Jate of establishment of organizations of KPH. (2)ln the territory of KPH already having the long-term forest management plan as meant in paragraph (1), activities of forest exploitation can be executed by license to exploit forests. (3)ln the territory of KPH not yet having the long-term forest management plan as meant in paragraph (l)in 5 (five) years, activities of forest exploitation can be executed on the basis of national forestry plan. (4)Further provisions on the forest management plan as meant in paragraph (1) are regulated by a regu lation of the Minister. Article 16 The Minister appoints forestry institutions to formulate plans and activities of forest arrangement in KPH territories where organization of KPH has not been established. CHAPTER IV FOREST EXPLOITATION Part One Forest Exploitation Article 17 (l)Forest exploitation asums at obtaining benefits of forest products and services optimally, fairly and in a sustainable manner for the people's welfare. (2)The forest exploitation as meant in paragraph (1) can be executed through activities of: a. utilization of areas; b. utilization of environmental services; c. utilization of timber and non-timber forest pro ducts; d. collection of timber and non-timber forest pro ducts. (3)Forest exploitation is executed on the basis of the forest management plans as meant in Articles 13, 14, 15 and 16. Article 18 Article 18 The forest exploitation as meant in Article 17 can be executed in the whole forest areas as meant in Article 3 paragraph (2), namely areas of: a. conservation forests,excluding wildlife reserve, jungle zone, and core zone in national park; b. protected forests; and c. production forests. Article 19 Everyactivity of the forest exploitation.as meant in Article 17 paragraph (2)must be accompanied by licensesto exploit forest, covering: a. IUPK; b. IUPJl; c. IUPHHK; d. IUPHHBK; e. IPHHK; and f. IPHHBK. Article 20 (l)The licensesto exploit forest as meant in Article 19 can be transferred after securing written approval from licensors. (2)The areas lof licenses to exploit forests cannot be used as guarantee, collateral or guaranted for other parties. Article 21 (1 )In cert~in territorie" the Minister can asslqn head, of KPH to implement forest exploitation, including sales of upright. (2)The implementation of forest exploitation, including sales of upright in the certain territories as meant in paragraph(1) is basedon guidance,criteria and stan dards of forest exploitation of certain territories. (3) Further provisions on the gUidance, criteria and standards of forest exploitation of certain territories as meant In paragraph (1) are regulated by a regu lation of the Minister. part TWO Forest Exploitation in Conservation Forest Business News7529/6-29-2007 7A Article 22 In conservation forests, the issuance of the licenses to exploit forests as meant in Article 17 must be In accordance with provisions of legislation. Part Three Forest ExplOitation in Protected Forest Paragraph 1 General Article 23 (1) Forest exploitation in the protected forest as meant in Article 1.7can be executed through activities of: a. utilization of areas; b. utilization of environmental services; or {c. wllection of non-tnnber fo,e~l products. (2)Inside protecting blocks in protected forests, the activities of forest exploitation as meant in paragraph (1) cannot be executed. Paragraph 2 Utilization of Areas in Protected Forest Article 24 (1) Utilization of areas in the protected forests as meant in Article 23 paragraph (1) letter a is executed through, among others, business activities of: a. cultivation of medicinal herbs; b. cultivation of decorative plants; c. cultivation of mushrooms; d. cultivation of honey; e. breeding of wild animals; f. rehabilitation of animals; or g. cultivation of feed greneries. (2) The business activities of utilization of areas in the protected forests as meant in paragraph (l)are executed with the provision: a. not reducing, changing or eliminating their main functions; b. limited land processing; c. not resulting in negative impacts on biophysics and socia economy; d. not using mechanicalequipment and heavyequip ment; and/or e. not buildiny r"<;Ilili,,,"lid illf,,,slr ucture changing landscape. (31 Further ..... (3) Further provisions on the business activities of utili zation ot areas in the protected torests as meant in paragraph (1) are regulated by a regulation of the Minister. Paragraph 3 Utilization of Environmental Services in Protected Forest Article 25 (l)The utilization of environmental services in the pro tected forests as meant in Article 23 paragraph (1) letter b is executed through, among other, business activities of: a. utilization of water current service; b. utilization of water c. eco tourism; d. protection of biological diversity; e. rescue and protection of environment; or f. absorption and/or storage of carbon. (2) Business activities of environmental service utiliza tion in the protected forests are executed with the provision that the activities are not: a. reducing, changing or eliminating the main func tion; h. changing landscape; and c. affecting equilibrium of envlronrnentat compo nents. (3)Holders of licenses, in undertaking business activi ties of utilization of water current services and water in the protected forests must pay compensation for the government. (4) Further provisions on business activities of utiliza tion of environmental services in the protected forests as meant in paragraphs (1), (2) and (3) are regulated by a regulation of the Minister. Paragraph 4 Collection of Non-Timber Forest Products in Protected Forest Article 26 (1) Non-timber forest products collected in the protected forests as meant in Article 23 paragraph (1) letter c are, among others: Business News 7529/6-29-2007 8A a. rattan; b. honey; C. resin; d. frults: e. mushroom; or f. swallow nest. (2)The collection of non-timber forest products in the protected forests is executed with the provision that: 6. the collected non-timber forest products must nave been available naturally; b. the activity does not damage the environment; and c. the activity does not reduce, change or eliminate the main function. (3)The collection of non-timber forest products in the protected forests may be executed by only commu nities around the forests. (4)ln the protected forests, prohition applies to: a. collection of non-timber forest products in a quan tity exceeding the sustainable productiVity; b. collection of forest products protected by the law. (5) Further provisions on collection of non-timber forest products in the protected forests as meant in para graphs (2), (3) and (4) are regulated by a regulation of the Minister. Paragraph 5 License to Utilize Forest in Protected Forest Article 27 (1)One license to utilize area in the protected forests as meant in Article 23 paragraph (1) letter a can in clude several business licenses to cultivate medici nal herbs, decorative plants, mushroom and bee. (2) Licensorsare prohibited from issuing more license in locations of utilization of area or environmental ser vices in the protected forests as meant in Article 23 paragraph (1) letters a and b, already securing li cense to utilize forests, unless otherwise license to collect non-timber forest products (IPHHBK) as meants in Article 23 paragraph (1) letter c can be issued with different commodities. Paragraph G... , , 9A Paragraph 6 Validity Periodof License to Exploit Forests In Protected Forest Article 28 (l)The validity period of IUPK In the protected forests as meant in Article 23 paragraph (1) letter a, in accrdancewith business line, is maximally 10 (ten) years. (2)IUPK in the protected forests as meant in paragraph (1) is extendable,based on perlodlcal (annual) evalu ation by licensors. (3)IUPK as meant in paragraph (1) is issued with the provision as follows: a. maximally 50 (fifty) hectares for every license; b. maXimally 2 (two) licensesfor every individual or cooperative in every regency/city. Article 29 (l)The validity period of IUPJL in the protected forests as meant in Article 23 paragraph (1) letter b is dis tinguished by businessactivities: a. in the case of the utilizatiQn of water current ser vice, maximally 25 (twenty five) years; b. in the case of the utilization of water, maximally 10 (ten) years with maximum volume 20% (twenty percent) of the debit; c. in the case of eco-tourism, maximally 35 (thirty five) years with the maximum area 10% (ten per cent) of the utilization block; d. in the case of protection of biological diversity, maximally 50 (fifty) years with the size accordmg the Investment need; e. in the case of environmental rescue and protec tion, the period and size are in accordance with the need; f. In the case of carbon absorption and/or storing, maXimally 30 (thirty) years with the size accord ing to the investment need. (2)IUPJL in the protected forests as meant in paragraph (1) letter a up to letter f can be extended on the basisof periodical (annual) evaluation by licensors. Business News 7529/6-29-2007 Article 30 (l)The validity perod of IPHHBK in the protected forests as meant In Article 23 paragraph (1) letter c, in accordancewith location, quantity and kind of the collected non-timber forest products is rnaxlmallvone year, except the collection of swallow nest, the validily period is mexlruatly 5 (flve) years. (2)IPHHBK in the protected forests as meant in paragraph (1) can be extended on the basis of evaluation executed evrey six months, except the collection of swallow nest wherein the periodical evaluation is executed every year. Part Four Forest Utilization in Production Forest Paragraph 1 General Article 31 (1)In the production forests, the forest utilization as meant in Article 17 paragraph (1) is executed on the basis of principles to manage forest In sustainable manner and enhance their main function. (2)Utilization of forests in the production forests as meant in paragraph (1) is executed through, among others: a. Business activities to utilize area; b. Business activities to utilize environmental services; c. Business activities to utilize timber forest products in natural forests; d. Business actiVities to utilize non-timber forest products in natural forests; e. Business activities to utilize non-timber forest products in timber estate; f. Collection of timber forest products in natural forests; g. Collection of non-timber forest products in natural forests; h. Collection of non-timber forest products in timber estate. Paragraph 2 Utilization of Area in Production Forest Article 32 ...... lOA Article 32 (l)Utilization of area in the production forests asmeant in Article 31 paragraph (2) letter a is executed through, among others,: a. business activity to cultivatemedicinal herbs; b. business activity to cultivatedecorative plants; C. business activityto cultivatemushroom; d. business activity to cultivatehoney; e. busines activity to breedanimal; and f. business activityto cultivateswallow nest. (2)Utllization of area in the production forests asmeant in paragraph (1) 'isnot limitedandcanbegranted in the form of otherbusinesses with the provision that: a. the size of processng area is limited; b. theactivitydoes not bringaboutnegative impact on biophysic andsoeio economy; C. mechanical equipment andheavy eqUipment are not used; and d. the i1t:ense holders do not build facility endinfra structurechanging landscape. (3)Further provisions on the utilization of area In the production forestasmeantIn paragraps (1) and(2) are regulated bya regulation of the Minister. Paragraph 3 Utilization of Environmental services in Production Forest Article 33 (1)Theutilization of environmental services in the pro duction forests as meantin Article31 paragraph (1) letter b is executed through, among other, business activities of: a. utilization of watercurrent service; b. utilization of water; c. ecotourtsm; d. protection of biological diversity; e. rescue andprotection of e'lvironment; or f. absorption and/or storage of carbon. (2}The utilization of environmental service in the production forests as meant in paragraph (1) is not limitedand can begranted in the form of otherbusi ness with the provision that the activity is not: a. changing landscape; Business News 7529/6-29-2007 b. affecting equilibrium of environmental compo nents; and/or c. reducing the meln function. (3)Holders of licenses, in undertaking business activi tiesof unuzanon of watercurrentsefYcices andwater in the production forests mustpaycompensation for the government. (4)Further provisions on business activities of utiliza tion of environmental services in the production forests as meant in paragraphs (1), (2) and (3) are regUlated by a regulation of the Minister. Paragraph 4 Utlljzation of Timber Forest Products Inside Natural Forest in Production forest Article34 (1)Utilization of timber forest products inside natural forest in the production forests as meant in ArtiCle 31 paragraph (2) letter c can be executed through business activities: a. utilization of timber-forestproducts; or b. utilization of timber forest productof ecosystem rp~toration. (2)Utilization of timber forest products inside natural forest in the production forests as meant In para graph (1) can be done one sylviculture system or more in accordance with characteristicS of forest resources and their enVironments. Article35 (1)Utilization of timber forest products inside natural forest in the production forestasmeantin Article34 paragraph (1) letter a covers activities ofharvesting, enrinchment, planting, maintenance, security and marketing of output, in accordance with the stipu latedforest management plan. (2)Utllization of timber forest products of ecosystem restoratlun lnslde natural forest ;n the production forest as meant in Articie 34 paragraph (1) letter b cover activities of maintenance, protection and restoration of forest ecosystem, including planting, enrichment enrichment, selection, animal breeding, wild release of flora and fauna. (3)Further provisionson the utilization of timber forest products and utilization of timber forest products of ecosystem restoration inside natural forests in the production forest as meant in paragraphs (1) and (2) are regulated by a regulation of the Minister. Article 36 (l)The utilization of timber forest products of ecosys tem restoration inside natural forest in the production forests as meant in Article 34 paragraph (1) letter b only can be executed With the provi sion that: a. the production forest must be located in one forest area totality; b. the size and location of production forest area remain productive but it's not feasible to utilize for one unit of business license; and c. unproductive production forest area must be in the form of empty land, grasses and/or bushes. (2)1n the case of ecosystem restoration inside natural forest not yet resulting equlibrium, IUPK, IUPJL or IUPHHBK in production forest can be issued. (3)In the case of ecosystem restoration inside natural forest already resulting equilibrium, IUPHHK in pro duction forest can be issued. (4)IUPK, IUPJL, 1UPHHK or 1UPHHBK as meant in para graphs (2) and (3) is issuedto private businessenti ties (BUMS). (5)Further provisionson the utilization of timber forest products of ecosystem restoration inside natural forest as meant in paragraphs (2), (3) and (4) are regulated by a regulation of the Minister. Paragraph 5 Utilization of Timber Forest Products inside Timber Estate in Production Forest Article 37 Utlization of timber forest products inside susmess News752.9/6-2.9-2.007 llA timber estate in the production forests as meant in Article 31 paragraph (2) letter d can be done in: a. Hl1; b. HTRj or c. HTHR. Article 38 {l)In the production forests, utilization of timber forest products in Hl1 inside the timber estate as meant in Article 37 letter a can be done by one sylViculture system or more, in accordance with characteristics uf forest resourcesand their environments. (2)Utilization of timber forest products in Hl1 inside timber estate covers activities of land preparation, seedling, planting, maintenance, harvesting and marketing. (3) Utilization of timber forest products in Hl1 is done in unproductive production forests. (4)Plants resulting from IUPHHK in HTI constitute assets of holders of business licenses and can be used as coliateral as long as their business licenses remain valid. (S)The government, in accordance with provisions of legislation, can set up financial institutions to support the building or HTI. (6)Further provisions on the utilization of timber forest products in Hl1 inside the timber estate as meant in paragraphs(1) and (2) are regulated by a regulation of the Mini~ter. Article 39 (1)I11production rur~sls, tile utllzetlon of timber forest products in HTI inside timber estate as meant in Article 38 can be in the form of: a. plants of the same kind: and b. plants of various kinds. (2)Further provislons on the plants of the same kind andvariouskindsas meant in paragraph(1) are regu lated by a regulation of the Minister. Article 40 ...•• Article 40 (l)The Minister, inside timber estate in production forests, allocatesand stipulates certain areasto build HTRon the basisof recommendations of KPH or the appointed officials. (2)ln production forest, the utilization of timber forest products in HTRinside the timber estate as meant in Article 37 letter b can be done by one sylViculture system or more, in accordance with characteristics of forest resources and their environments. (3) The utilization of timber forest products In HTR inside the timber estate as meant in paragraph (2) covers activities of land preparation, seedling, planting, maintenance, harvesting and marketing. (4)The utilization of timber forest products in HTR inside the timber estate as meant in paragraph (2) is done in unproductive production forests. (5) Plants resulting from IUPHHK in HTR constitute assets of holders of business licenses and can be used as collateral as long as their business licenses remain valid. (6)The government, in accordance with provisions of legislation, can set up financial institutions to support the building of HTR. (7) Further provisionson the utilization of timber forest products in HTRinside the timber estate as meant in paragraph (2) up to paragraph (6) are regulated by a regulation of the Minister. Article 41 (l)ln production forests, the utilization of timber forest products in HTRinside the timber estate as meant in Article 40 paragraph (2) can be in the form of: a. plants of the same kind; and b. plants of various kinds. (2)ln order to protect rights of HTR inside timber estate, the Minister stipulates the basic selling price of timber in HTR. Business News7529/6-29-2007 12A (3)Further provisions on the plants of the same kind and various kinds as well as stipulation of the basic price are regulated by a regulation of the Minister. Article 42 (l)ln production forests, based on KPH Management Plan, the utilization of timber forest products in HTHR inside the timber estate as meant in Article 37 letter c is realized through the sales of upright. (2)The selling of upright as meant in paragraph (1) includes activities of harvesting, security and mar keting. (3)The selling of upright as meant in paragraph (1) is done in one totality of cluster size recommended by heads of KPH or officials appointed by the Minister. (4)lnside forest area in HTHRwhere upright has been sold, the Millis'le, 0' the appointed officials can issue IUPHHK in HTI or IUPHHK in HTR to individuals, cooperatives, BUMN and BUMS. (5)The utilization of timber forest products in HTI or HTR by individuals, cooperatives, BUMN or BUMS is done in accordance with the actiVities as meant in Article 38 or Article 40. (6)BUMN, BUMS, BUMD, cooperatives or individuals as license holders must pay the collected upright price in accordance with provisions of legislation. (7)Tn case of members of cooperatives havinq invest ment upon rehabilitation, the collected upright price as meant in paragraph (6) must be paid by the respective members in accordance with the respec tive amounts of investment after operating profit is shared proportionally with the government, provln cialgovernments or regental/municipal governments. (R)Further provisions on the sales of upright, payment of upright price and sharng of the profit as emant in paragraph (1) and paragraph (7) are regulated by a regulation of the Minister. Paragraph 6 .•••• 13A Paragraph 6 Utilizationof Non-Timber ForestProducts Inside Natural ForestIn Production Forest Article 13 (1)Utilizationof non-timber forest products insidenatu ral forest in the production forest as meant in Article 31 paragraph (2) letter e is, among others, the utili zation of: a. rattan, sago, thatch palm, bamboo, covering the activities of planting, harvesting, enrichment, maintenance, security and marketing of output; b. resin, wood bark, leaf, fruit or seed, gaharu, covering the activities of harvesting,enrichment, maintenance, security and marketing of output. (2)Further provisions on the utilization of non-timber forest products in natural forests as meant in para graph (1) are regulated by a requlatlonof the Minis ter. Paragraph 7 Utilizationof Non-Timber ForestProducts Inside Timber EstateIn Production Forest Article 44 (1)Utilization of non-timber forest products tnside timber estate in the production forest as meant in Article 31 paragraph (2) letter f is, among others, the utilization of: a. rattan, sago, thatch palm, bamboo, covering the activities of planting, harvesting, enrichment, maintenance, security and marketing of output; b. resin, wood bark, leaf, fruit or seed, gaharu, covering the activities of harvesting,enrichment, maintenance, security and marketing of output. (2)The utilization of non-timber forest products in the timber estate as meant in paragraph (1) alsocan be applied to timber estate resulting from activities of rehabilitation. (3)Further provisions on the utilization of non-timber forest products In timber estate as meant in para Business News 7529/6-29·2007 graph (1) are requlated by a regulationof the Minis ter. Paragraph S Collection of Timber ForestProducts Inside Natural Forest in Production Forest Article 45 (1) Collection of timber forest products inside natural forest in the production forest as meant in Article 31 paragraph (2) letter g is granted to meet the need for building publicfacilitiesof local community groups with the provision that the collected timber product is maximally 50 (fifty) cubicmetersand is not traded. (2)Collectionof of timber forest products insidenatural for-est in the production forest as meant in Article 31 paragraph (2) letter g is granted to meet the needof indiViduals with the provision that the collected timber productis maXimally 20 (twenty) cubiC meters and is not traded. (3)Further provisions on Collection of of timber forest products inside natural forest in the production forest as meant in paragraphs (1) and (2) are regUlated lly a regUlation of the Minister. Paragraph 9 Collection of Non-Timber ForestProducts Inside Natural ForestIn Production Forest Article '16 (l)Collection of non-timber forest products insidenatu ral forest in the production forests as meant in Ar ticle 31 paragraph (2) letter h aims at fulfilling the need of local communities and the products can be traded. (2)The collected non-timber forest productsinsidenatu ral forest in the production forests as meant in para graph (1) can be in the form of rattan, h.oney, resin, fruits Drseeds, leafs, gaharu, wood barks,medicinal herbsand tubers with the provision that the collected products are maximally 20 (twenty) tons per every family. (3) Colleninn '." (3)Collection of non-timber forest products inside the natural forest as meant in paragraph (I), which is applied to wild plants and/or animals must be in accordance with the provisions of legislation. (4) Further provisions on the collection of non-timber forest products inside natural forest as meant in para graphs (1) and (2) are ruled by a regulation of the Minister. Paragraph 10 Collection of Non-Timber Fore,t Products Inside Timber Estate In Production Forest Article 47 (l)Collection of non-timber forest products inside timber estate in the production forests as meant in Article 31 paragraph (2) letter i aims at fUlfilling the need of local communities and the products can be traded. 14A Article 48 (1) Every activity of utilization of forest in the produc tion forest as meant n Artide 31 paragraph (1) must be accompanied by license to exploit. (2)Licensors are prohibited from issuing license: a. inside working area of state-owned companies operating in the forestry sector already securing delegation of authority to undertake the forest management as meant in Article 4. b. Inside forest areas already charged with the busi ness license to utilize forest as meant in Article 31 paragraph (2) letter a up to letter f. (3)Licensors can issue IPHHBK as meant in Article 31 paragraph (2) letters g, h and I inside forest areas already charged with businessIicensto utilize forestrs with different commodities. (2)Collection of non-timber forest products inside tim ber estate in the production forests as meant in para graph (1) also can be applied to timber estate resulting from rehabilitation. (3)The collected non-timber forest products inside tim ber estate as meant in paragraph (1) can be in the form of rattan, honey, resin, fruits or seeds, leafs, gaharu, wood barks, medicinal herbs and tubers with the provision that the collected products are maxi mally 20 (twenty) tons per every family. (4) Collection of non-timber forest products inside the timber estate as meant in paragraph (I), which is applied to wild plants and/or animals must be in accordance with the provisions of legislation. (5)Further provisions on the collection of non-timber forest products inside timber estate as meant in para graphs (1) and (2) are ruled by a regulation of the Minister. Paragraph 11 License to Exploit Forest In Production Forest Business News 7529/6-29-2007 (4)IUPHHK can be executed by one sylviculture system or more, in accordance with characteristics of forest resources and their environments. (5) Further provisions on the licensing as meant in para graphs (2), (3) and (4) are ruled by a r'ilgulation of the Minister. Paragraph 12 Validity Period of License to Exploit Forests in Production Forest Article 49 (1)The validity period of WPK in the production forests as meant in Article 31 paragraph (2) letter a, in accrdance with business line, is maximally 5 (five) years and can be extended. (2)IUPK is extended on the basis of evaluation executed by licensors every year. (3)IUPK as meant in paragraph (1) is issued with the provision as follows: a. maximally 50 (fifty) hectares for every license; b. rnaxlmallv 2 (two) licenses for every individual or cooperative in every regency/city. Article 50 " " . Article 50 (l)The validity periodof IUPJL in the production forests as meant in Article 33 paragraph (1) is stipulated as follows: a. in the case of the utilization of water current ser vice, maximally 25 (twenty five) years with the maximum value20% (twenty percent)of the avail able debit of surface water, provided that the utilization doesnot reduce public right; b. in the case of the utilization of water, maximally 10 (ten) years with maximum volume 20% (twenty percent) of the debit of water; c. in the case of eco-tourtsrn, maximally 35 (thirty five) years with the maximum area 10% (ten percent) of the utilization 'block; d. in the case of protection of biological diversity, maximally 50 (fifty) years with the sizeaccording the investment need; e. in the case of environmental rescue and protec tion, the period and size are in accordance with the need; f. in the case of carbon absorption and/or storing. maximally30 (thirty) years with the sizeaccord ing to the investment need. (2)IUPJLasmeant in paragraph(1) can beextendedon the basis of evaluationexecutedby licensors every 5 (five) years. Article 51 (l)nle validity perodof IUPHHK Insidenatural forest in the production forests as meant in Article 34 para graph (1) letter a, is maximally one 55 (fifty five) years. (2)IUPHHK in the production forests as meant in para graph (1) can be extended by the Minister on the basis of evaluationexecuted every 5 (five) years. Article 52 (l)The validity periodof IUPHHK of ecosystem restora tion inside natural frest in the production frests as meant in Article 34 paragraph (1) letter b is maxi mally 100 (one hundred) years. Business News 7529/6-29-2007 15A (2)lUPHHK of ecosystem restoration inside natural forest is evaluated by the Ministerevery5 (five) years as the basis for continuation of the license. (3)IUPHHK of ecosystem restoration inside natural forest isonlygrantedat onceandcannotbeextended. Article 53 (l)The validity period of IUPHHK in HTI inside timber estate in the production forest as meant in Article 37 letter a is maximally 100 (one hundred) years. (2)IUPHHK in HTI inside timbere estate is evaluatedby the Ministerevery 5 (five) yearsas the basis for con tinuation of the license. (3)IUPHHK in HTI inside timber estate is only granted at once and cannot be extended. Article 54 (l)The validity period of IUPHHK in HTR inside timber estatp in thp production forpst as meant In Article 37 letter b is maximally 100 (one hundred) years. (2)IUPHHK In HTRInsidetlmbere estate Isevaluatedby the Ministerevery 5 (five) yearsas the basis for con tinuation of the license. (3)IUPHHK in HTRinside timber estate is only granted at once and cannot be extended. Article55 The validity period of IUPHHK in HTHR inside timber estate in the production forests as meant in Article 37 letter c is maxlmanv one year and can be extended by the Minister on the basis of evaluation executed every 6 (six) months. Article 56 The validity period of IUPHHBK inside natural forest in the production forests as meant in Article 43 paragraph (l)is maximally 10 (ten) years and can be extended by licensors on the basis of evaluation executed every year. Article 57 . .. " Article 57 The validity period of IUPHHBK inside timber estate in the production forests as meant in Article 44 paragraph (1) is maximally 10 (ten) years and can be extended by licensorson the basisof evaluation executed every year. Article 58 The validity period of IPIIIIDI< inside timber es tate in the production forests as meant in Article 47 is maximally 2 (two) yealS and can be extended by licen sors on the basis of evaluation executed every 6 (six) months. Article S9 (l)The validity period of IPHHK am:! IPHHBKinside natu ral forest in the production forest as meant in Articles 45 and 46 is maximally one year. (2)IPHHK as meant in paragraph (1) cannot be extended. (3)IPHHBK as meant in paragraph (1) can be extended by licensors on the basis of evaluation executed every 6 (six) months. Part Five Authority To License Article 60 (1) IUPK is issued by: a. regents/mayors, in forest areas located inside their jurisdiction with a copy made available to the Minister, governors and heads of KPH; b. governors, in inter-regency/city forest areas Inside their jurisdictions with a copy made avail able to the Minister, regents/mayors and heads of KPH; c. the minister, in inter-provincial forest areas with a copy made available to governors, regents/ mayors and heads of KPH; d. the minister in areas already charged with IUPHHK of ecosystem restoraton inside natural forests in the production forests not yet achieving ecosys Business News 7529/6-29-2007 16A tem equlibrium with a copy made available to governors, regents/mayors and heads of KPH. (2)IUPI< as meant in paragraph (1) is issued on the basis of quldance, criteria and standards. (3) Further proVisionson gUidance, criteria and standards of the issuance of IUPK as meant in paragraph (2) are ruled by a regulaton of the Minister. Article 61 (l)IUPJL is issued by: a. regents/mayors, in forest areas located inside their jurisdiction with a copy made available to the Minister, governors and heads of KPH; b. governors, in inter-regency/city forest areas inside their jurisdictions with a copy made avail able to the Minister, regents/mayors and heads of KPH; c. the minister, in inter-provincial forest areas with a copy made available to governors, regents/ mayors and heads of KPH; d. the minister in areas already charged with IUPHHK of ecosystem restoraton inside natural forests in the production forests not yet achieving ecosys tem equlibrium with a copy made available to governors, regentsfmaynrs and heads of KPH. (2)IUPK as meant in paragraph (1) is issued on the basis of guidance, criteria and standards. (3) Further provisions on guidance. criteria and standards of the issuance of IUPK as meant in paragraph (2) are ruled by a requlaton of the Minister. Article 62 (l)IUPHHK in natural forests is issued by the Minister on the basis of recommendation from governors, already securing consideration from regents/mayors. (2)IUPHHK of ecosystem restoration inside natural fo rest is issued by the Minister with a copy made avail able to governors, regents/mayors and heads of KPH. (3) IUPHHK ..... (3)IUPHHK in HTI inside naturalforests is issued bythe Minister on the basis of recommendation from governors, already securing consideration from r",y",nts/mayors. 17A is issued by: a. regents/mayors, inareas inside natural forests or tim berestate located inside their jurisdiction witha copy made avanaute to theMinister, govelllorsand heads of KPH; (4)IUPHHK In HTR inside timber estate is Issued by the Minister and the issuance can be delegated to governors. (5)IUPHHK In HTHR inside timber estate is issued by the Minister or the appointed official on the basis of recommendation from governors, already securing consideration from regents/mayors. Article63 IUPHHBK In natural forests Is Issued by: a. regents/mayors, Inforest areas located inside their jurisdiction with a copymade available to the Minis ter, governors and heads of KPHi b. governors, in inter-regency/city forest areas inside their jurisdictions with a copy made available to the Minister, regents/mayors and heads of KPH; c. the minister, In inter-provincial forest areas with a copy made available to governors, regents/mayors and heads of KPH Article 64 IPHHK Is issued by: a. regents/mayors, in forest areas located inside their jurisdiction with a copy made available to the Minis ter, governors and heads of KPH; b. governors, in inter-regency/city forest areas inside their jurisdictions with a copy made available to the Minister, regents(mayors and heads of KPH; c. the minister, in inter-provincial forest areas with a copy made available to governors, regents/mayors and heads of KPH Article 65 IPHHBK inside natural forests or timber estate Business News 7529/6-29-2007 b. governors, in areas inside inter-regency/city natural forests or timberestatelocated in their jurisdictions with a copy made available to the Minister, regents/ mayors and heads of KPH. Article66 (l)IUPK, IUPJL, IUPHHK, IUPHHBK, IPHHKand IPHHBK asmeant In Article60 up to arllcle 65 are tssued on the basis of the basis of gUidance, criteriaandstan dards. (2)Further provisions onguidance, criteria andstandards of the Issuance of IUPK as meant in paragraph (2) are ruled by a regulaton of the Minister. PartSix Subjects of License Holders Article67 (l)IUPK can be issued to: a. individuals; or b. cooperatives. (2)IUPJL can be issued to: a. indiViduals; b. cooperatives; c. BUMS Indonesia; d. BUMN; or e. BUMD. (3)IUPHHK inside naturalforest in the production forest can be issued to: a. individuals; b. cooperatives; c. BUMS Indonesia; d. BUMN; or e. BUMD. (4) IUPHHK ..... (4)IUPHHK in HTI inside timber estatecanbe issued to: a. cooperatives; b. BUMS Indonesia; c. BUMN; or d. BUMD. (S)IUPHHK in HTR inside timber estate can be issued to: a. individuals; or b. cooperatives. (6)IUPHHK in HTHR insidetimber estatecan be issued to: a. individuals; b. cooperatives; c. BUMS Indonesia; d. BUMN; or e. BUMD. (7)IUPHHK inside natural forest or timberestate in the production forests can be issued to; a. individuals; b. cooperatives; c. BUMS Indonesia; d. BUMN; or e. BUMD. (B)IPHHK inside natural forest in the production forest can be issued to: a. individuals; or b. cooperatives. (9)IPHHBK inside natural forest in the production forest can be issued to: a. individuals; or b. cooperatives. (10)IPHHBK inside timber estate in the production forest can be issued to: a. individuals; or b. cooperatives. 18A PartSeven Procedures and Requirements for Applying for License Article 68 (l)IUPK, lUPJL, IUPHHK in natural forests, lUPHHK in timber estate, IUPHHBK, IPHHK and IPHHBK are issued by means of submittingapplication. (2)IUPHHK in natural forestsasmeantin paragraph (1) is issued by selecting applicants and status of the requested forest areas. (3)Furtherprovisions on procedures for applying for the business license as meant in paragraphs (1) and (2) are ruled by a regulation of the Minister. Article 69 In the case of activities of forest utilization being potential potential to change landscape and influ ence the environment, environmental impact analysis (AMDAL needs to be executed in accordance With the provisions of legislation. Part Eight Rights and Obligations of Holders of license to ExploitForest Article 70 (1)Every holderof business license to exploit forest is righteous to undertake activitiesandobtainbenefits from the business output in accordance with the obtained license. (2)Holders of IUPHHK in HTI inside the timberestateas meant in Article 38, haVing good performance, are righteous to obtain priority to secure IUPHHK HTI in othersurrounding locations and/ordifferentlocations as long asthe locations havenot been charged with business license to exploit forest. (3)Holders of IUPHHK in HTR inside the timber estate as meant in Article 40 are righteous to obtain accompanying in the frameworkof institutional forti ficationby regents or the appointed official. Business News 7529/6-29-2007 (41 Holders ...... ~4) Holders of IUPHHK in HTHR in the form of the co operatives as meant in Article 42 paragraph (7) obtain production-sharing right in accordance with the amount of investment spent for activities of forest rehabilitation. (5)Further provisionson rights of holders OfIUPHHK as meant In paragraphs (2), (3) and (4) are ruled by a regulation of the Minister. Article 71 Every holder of business license to exploit forest is obliged to: a. formulate action plan for the whole working area in accordancewith the validity period of license on the basis of forest management plan prepared by KPH; 19A g. implement sylviculture system in accordance with local condition; h. pay contribution or fund in accordance with the provisions of legislation. ArtiCle 7l (1) Besidesfulfilling the obligations as emant in Article 72, BUMN, BUMD, BUMS, holders of IUPJL, IUPHHK and IUPHHBK are obliged to cooperate With local community cooperatives in not later than one year after the license is received. (2)Further provisionson the cooperatioas meant in para graph (l)are ruled by a regulation of the Minister. b. undertake concrete activities in the field in not later than: 1) 6 (six) months as from the date of issuance of business license to utilize forest area, environ mental services and non-timber forest products; 2) one month as from the date of issuance of license to collect forest products; 3) one year in the case of IUPHHK inside natural forest, IUPHHK of ecosytem restoration inside natural forest or timber estate; or 4) 6 (slx) months as from the date of issuance of license to sell upright of forest products inside forests resulting from rehabilitation. c. arrange borders of working areas in not later than one year as from the date of issuance of IUPHHK inside natural forest and timber estate; d. protect forest in the working area; e. perform financial administration of businessactivity in accordance With the torestry accountancy standards in force for holders of business license to exploit forest; f. employ professionals in the forestry sector and other personnel fulfilling requirements in accordancewith the need; Business News7529/6-29-2007 Article 73 (l)Besides executing the obligation as meant in Articles 71 and 72, holders of IUPHHK inside natural forest are obliged to: a. formulate long-term business plan for exploiting timber forest products (RKUPHHK) for the whole working area In not later than one year after the date of issuance of the license and submit the plan to the Minister or the appointed official for approving; b. formulate annual action plan (RKT) on the basis of RKUPHHK as meant in letter a for ratification by head of KPH or official appointed by the Minis ter; C. SUbmit RKT In not later than 2 (two) lTIuIILhs before RKT is effective; d. administer forest products; e. measure or verify forest products; f. provide and supply timber raw materials to primary indllstrips of forest products; and g. convey report on performance of license holders periodically to the Minister. (2)ln the case of RKTas meant in paragraph (1) letter b fulfilling the criteria and indicators stipulated by the Minister, holders of IUPHHKinside natural forest can be given authority and responsibility to under take self approval (implempnt the plan without rati fication from the authorized official). (3) RKUPHHK ..... (3) RKUPHHK is formulated for a period of 10 (ten) years by observing long-term manaqement plan of KPH. (4)RKUPHHK is evaluated every 5 (five) years by license holders and reported to head of KPH or officials appointed by the Minister. (5) Besides fulfilling the obligation as meant in Articles 71 and 72, holders of IUPHHKof ecosystem restora tion inside natural forest are obliged to: a, formulate RKUPHHK in ecosystem restoration forests inside natural forests in the production fUle5L ill accordance wiLh LI,e validiLy peuod of license and must be completed in not later than one year after the license is issued; b. in areas where ecosystem equilibrium has not been achieved: 1) formulate business plan for utilizing areas, environmental services and/or non-timber forest products for the whole working areas in accordance with the validity period of license and must be completed in not later than one year after the license is Issued for submitting to the Minister or the appointed official for securing approval. 2) Formulate Annual Action Plan (RKT) for the utilization of areas, environmental services and/or non-timber forest products on the basisof businessplan for utilizing areas, envi ronmental services and/or non-timber forest products and ratified by head of KPH or official appointed by the Minister. c. in areas Where ecosystem equilibrium has been achieved: 1) formulate business plan for utilizing timber forest products (RKUPHHK) for for the whole working areas in accordance with the validity period of license and must be completed in not later than one year after the license is issued for submitting to the Minister or the appointed offlclal for securing approval; Business News 7529/6-29-2007 lOA 2) formulate RKTfor utilzing timber forest prod ucts on the basis of RKUPHHK and ratified by head of KPH or official appointed by the Minis ter. d. to implement RKT as meant in letter b point 2) and letter c point 2), which becomes their uthority and responsibility if they have met the crltcrlc and indicators sttpuleted by the Minister without needing ratification from the authorized official (self-approval); e. administer forest products In the harvesting period; f. measure or verify forest products in the harvestig period; and g. convey performance report periodically to the Minister. Article 74 Besides fulfilling the obligation as meant in Ar ticle 71, Article 72 and Article 73 paragraph (1) up to paragraph (4), holders of IUPHHK in natural forest are prohibited from: a. felling tree exceeding the tolerable target as high 5% (five percent) of the total target of volume stipu lated in RKT; b. felling tree exceeding the tolerable target as high as 3% (three percent) of the volume per kind of tree stipulated in RKTi Co felling tree before RKT is ratified; d. felling tree for making corridor before license is obtained or contravening license to build corridor; e. felling tree below the permitted diameter limit; f. felling tree outside the permitted felling block; g. felling tree to build road for transport lane of tree outside RKTblock, unlessotherwise securing license from the authorized official; and/or h. leaVingworking area. ARTICLE 75 .... (TO BE CONTINUED) ===( AL )=== 19A FOREST ARRANGEMENT AND FORMULATION OF FOREST MANAGEMENT PLAN AS WELL AS FOREST EXPLOITATION (Government Regulation No. 6/2007 dated January 8, 2007) [ Continued from Business News No. 7529 pages lA - 20A J Article 75 (l)Besides fUlfilling the obligations as meant in Articles 71 and 72, holders of IUPHHK in HTI inside timber estate are obliged to: a. formulate long-term business plan for exploita tion of timber forest products (RKUPHHK) for the whole working areas, which must be completed ill not later than one year after the date of issu ance of the license and submitted to the Minister or appointed officials to secure approval; b. formulate annual action plan (RKT) on the basis of RKUPHHK for ratification by by head of KPH or official appointed by the Minister; c. submit RKT in not later than 2 (two) months before RKTcomes into effect; d. ronnulate RKUPHHK for a period of ten years by observing long-term management plan of KPH; e. undertake forest product administration; f. measuring or verifying forest products; g. undertakingsilvyculture systemin accordance with the developed location and kind of plants; h. provtde and supply timber materials to forest based product industries; i. provioe area maximaIlly 5% (five percent) of the total area as life plant space for area of partner ship with local communities; j. plant at least 50% (fifty percent) of the planting area for holders of IUPHHK in HTI inside timber estate on the basis of cirde in not later than 5 (five) years as from the date of issuance of the license; and k. convey penodtcei performance report to the Minister. (2)ln the case of RKTas meant in paragraph (1) letter b fulfilling the criteria and indicators stipulated by the Minister, holders of nIPHHK In HTI can be nlven authority and responsibility to implement the plan without ratification from the authorized official (self approval). Business News 7532/7-6-2007 (3) Besides fUlfilling the obligations as meant in para graph (1) letters e, f, g, hand j, holders of IUPH.HK in HTR inside timber estate are obliged to: a. formulate long-term business plan for exploita tion of timber forest products (RKUPHHK) for the whole working areas, which must be completed in not later than one year after the date of lssu "nee of the license and submitted to regents or appointed officials to secure approval; b. formulate annual action plan (RKT), which is sub mitted in not later than 2 (two) months before the said RKTcomes into effect; c. implement RKT as meant in paragraph (3) letter b, becoming their authority and responsibility if the criteria and indicators stipulated by the Minis ter have been fulfilled, with ratification from the authorized official (self approval); and d. convey periodical performance report to the Minister. (4) Holders of IUPHHK in HTHRinside timber estate are obliged to formulate RKT for submitting in not later than 2 (two) months after the date of issuance of the license or before the current year RKT ends for ratification by heads of KPH or officials appointed by the Minister. (5) Besides fulfilling the obligations as meant in Articles 71,72 and 71 paragraph (1) and paragraph (4), hold ers of IUPHHK in timber estate are prohibited from: a. felling tree to make corridor before the license is obtained or by ways contravening the license to make corridor; and/or b. leavlnq the working area. Article 76 Besides fulfilling the obligations as meant in Articles 71 and 72, holders of IUPHHBK are obliged to: a. formulate long-term action plan for exploitation of non-timber forest products (RKUPHHBK) for the whole working ..... 20A working areas, which must be completed in not later than one year after the date of issuance of the license and submit it to governors or regents/ mayors in accordance wth the scopes of authority to secure approval; b. formulate annual action plan (RKT) based on RKUPHHBK for ratification to heads of KPH or offi cials appointed by governors or regents/mayors; c. submit RKT in not later than 2 (two) months before the said RKTcomes into effect; d. undertake administration of non-timber forest products; and e. verify non-timber forest products. Article 77 (1) Besides fulfilling the obligations as meant in Article 71, holders Of IPHHK are obliged lu: a. collect forest products in one month as from the date of issuanceof the license; b. collect forest products in accordance with the issued license; c. protect forest from disturbances damaging forest around their settlement; d. formulate plan for collection of timber forest pro ducts needed for ratification by head of KPH or officials appointed by regents/mayors; and e. measure and verify forest products. (2) Besides fulfilling the obligation as meant in paragraph (1), holders of IPHHK are prohibited from collecting forest products in a quantity exceeding 5% (five percent) of the target of volume per kind of forest products mentioned in the license. Article 78 Holders of IPHHBKare prohibited from collect ing forest products in a quantity exceeding 5% (five percent) of the target of volume per kind of forest products mentioned in the license. Part Nine Forest Exploitation Contribution and fund Business News7532/7-6-2007 Article 79 (1) Forest-exploitation contribution and fund constitute non-tax state revenue coming from forest resources, composed of: a. IIUPH; b. PSDH; c. DR; d. Selling proceeds of uprights; e. Levy on eco tourism exploitation; f. Revenue from levy on tourist visit to tourism forest area, national park, wildlife reserves and marine tourism park; g. Contribution to intake/catching and transport of legallyunprotected wild animalsand natural plants as well as looting of hunted animals; h. Revenue from fine against violation of forest exploitation; I. Revenue from legally protected plants and wild animals taken from the nature and breeding; and j. Revenue from settlement service of forest product transport document. (2)JIUPH as meant in paragraph (2) letter a is Imposed on holders of business license to exploit forest on the basis of size of forest stipulated in the license. (3)IlUPH as meant in paragraph (2) letter a is collected at once when the business license is issued. (4)PSDH as meant in paragraph (1) letter b is imposed on holders of: a. IUPK; b. IUPJL; c. IUPHHK and/or UPHHBK inside natural forest; d. IUPHHKand/or IUPHHBK inside timber estate; or e. IPHHKand/or IPHHBK. (S)DR as meant in paragraph (1) letter c is Imposedon holders of IUPHHKinside the natural forest as meant in Article 34. (G)Selling proceeds of upright is imposed nn IUPHHKin HTHR inside the timber estate as meant in Article 42 paragraph (1) and KPH obtaining the assignment as meant in Article 21 paragraph (1). (7\ ElJrther ~ u (7) rurther provisions on procedures for imposition, col Iectiou, payment and remittance of the forest exploi tation contributions and fund as meant in paragraph (1) are regulated by a regulation of the Minister. Article 80 (l)Coilection of PSDH and DR from timber forest products resulting from natural forests and collecton of PSDH from timber forest products resulting from timber estate is based on production reports. (2)COllecron of PSDH from non-timber forest products resulting from natural forest or timber estate is based on production reports. (3)Collection of PSDH as meant in paragraph (2) does not applv to; a. forest products resulting from traditional' forests utilized by traditional communities and not traded; b. timber forest products directly used by local com munities and not traded; or c. timber torest products resulting from concession forests/communal forests. (4)DR as meant in oaraoraoh (1) is not imposed on: a, Timber forest products resulting from timber estate; b. Forest products rcsultinq from traditional forests utilized by traditional communities and not traded; c. timber forest products directly used by local com munities and not traded; or d. timber forest products resulting from concession forests/communal forests. Part Ten Extension and Termination of l.iCI'nsp Paragraph 1 Extension of License Article 51 (l)IUPK, IUPJL, lUPHHK, IUPHHBK and IPHHBK can be extended, in exception for: a. lUPHHK of ecosystem restoration in natural forests; b. IlJPHHK in HTI inside timber estate; c. IUPHHK in HTR inside timber estate. BusinessNews 7532/7-5-2007 21A (Z)[very eppllcetion for extension must be submitted ill not later than one tenth of the remaining validity period of the license. (3)In the case of licensee not submitting the applica tion as meant in paragraph (2) upon the expiration of the license, licensor issues a decision on termina tion of the license. (4)10 the case of the application for extension of license already fUlfilling the requirement as meant in para graph (2), the rouowmq provrsions apply: a. the extension of lUPK, lUPJL, lUPHHBK and IPHHBK is issued by: 1) regents/mayors, in forest areas located in their jurisdiction, with a copy made avilable to the Minister, governors and heads of KPH; 2) governors, in inter-regental/municipal forest areas located in their jurisdiction, with a copy made evetleble to the Minister, regents/ mayors and heads of KPH; and 3) the Minister, in inter-provincial forest areas, with a copy made available to governors, regents/mayors and heads of KPH. b. the extension of IUPHHK inside natural forest or lUPHHK in HTHR inside timber estate is issued by the Minister or the appointed official on the basis of recommendation from governors, after Secur ing considerations from regents/mayors. (5)further provisions on procedures and requirements for the extension of license as meant in paragraph (4) are ruled by a regulation of the Minister. Paragraph 2 Termination of License Article 82 (1) forest exploitation license becomes void in the case of; a. validity period of license expired; b. license.is revoked by licensor as penalty against licensee; c. license is given back by licensee by written state ment to licensor before the validity period of license expires; or d. me d. the target of size, volume or weight permitted in the forest product exploitation license has been achieved. (2) Before the license is declared void as meant in para graph (1) letters a, band c, licensor conducts audit first. (3)The termination of the licenseas meant in paragraphs (1) and (2) does not exempt the licensee from the obligation to settle the whole financial liabilities as well as fulfill other obligations stlpulated by the government, provincial governments, and regental/ municipal governments. 22A through development of capacity and provision of access in the framework of enhancing their welfare. (2)The localcommunity empowerment as meant in para graph (1) constitutes obligation of the government, provincial governments and regental/municipal governments with the implementation becoming responsibility of heads of KPH. Article 84 The local community empowerment as meant in Article 84 paragraph (1) can be realized through: a. rural forest; b. social forest; or c. partnership. (4)Upon the termination of the licenseas meant in para graph (1) letters a, band c, in the case of IUPHHK being located inside natural forests, both im movable goods and plants already planted in the working area wholly become the state asset. (S)Upon the termination of the licenseas meant in para graph (1) letters a, band c, in the case of lUPHHK being located inside timber estate, immovable goods becomethe state asset, while plants already planted inside the working area become assets of the licensee. (6)Following the termination of the license as meant in paragraph (1), the government, provincial govern mentsor regental/municipal governments are not res ponsible to liabilities of the licenseeto the third party. (7)Further provisions on the termination of license as meant in paragraphs (2), (3) and (5) are ruled by a requlatlon of the Minister. Part Eleven Local Community Empowerment Paragraph 1 General Article 83 (l)ln order to obtain benefits of forest resources opti mally and fairly, local community is empowered Business News7532/7-6-2007 Paragraph 2 Rural Forest Article 85 The rural forest as meant in Article 84 letter a can be provided in protected forest and production forest. Article 86 (l)The Minister stipulates working area of rural forest on the basis of recommendation of regents/mayors in accordance with the criteria stipulated and management plan formulated by heads of KPH or the appointed officials. (2)Further provisions on stipulation of the criteria and procedures for stipulating the working area of rural forest as meant in paragraph (1) are ruled by a regu lation of the Minister. Article 87 (1) Localcommunity empowerment through rural forest is realized by granting exploitation right to rural institutions. (2)The exploitation right of rural forest as meant in pa ragraph (1) coversactivities of area arrangement, for mulation of area management plan, utilization of fo rest as well as rehabilitation and protection of forest. (31The ..... 23A (3)The utilizatation of rurai forest as meant in para graph (2), which is located in: a. protected forest, covers activities of utilization of area, environmental services, collection of non timber forest products; b. production forest, covers activities of utilization of area, environmental services, timber and non timber forest products, collection of timber and non-timber forest products. (4) Further provisions on the exploitation right of rural forest as meant in paragraphs (1) and (2) are ruled by a regulation of the Minister. Article 88 (l)ln granting the exploitation right of rural forest as meant in Article 87 paragraph (1), the government, provincial governments or regental/municipal go vernments in accordancewith their respective scopes of authority facilitate Institutional development, busi nessdevelopment, technology counseling, education and training as well as access to the market. (2) Further provisionson the facilitation as meant in para graph (1) are ruled by a regulation of the Minister. Article 89 (l)Based on stirtJl~tion of th" working area of rural forest as meant in Article 86 paragraph (1) and facilitation as meant in Article 88: a. the Minister Issues IUPHHKinside forest area with a copy made available to governors, regents/ mayors and heads of KPH; b. governors, besides the facilitation as meant in Article 88 paragraph (1), issuesexploitation right of rural forest. (2)ln certain conditions, the Minister can delegate the Issuance of lUPHHKas meant in paragraph (1) letter a to governors. (3)Rural institutions as holders of the exploitation right of rural forest are obliged to manage forest in accor dance with the sustainable forest management prin ciples mentioned in rural regulations. Business News7532/7-6-2007 (4)Rural institutions formulate rural-forest management plan along with heads of KPH or the appointed offi cials as part of forest management plan. (5) Further provisions on delegation of authority to issue lUPHHK and formulation of the rural-forest maneqement plan <IS meant in paraqrephs (2) and (4) are ruled by a regulation of the Minister. Article 90 (l)Exploitation right of rural forest is not a propietary right to forest area and cannot be transferred or collaterized as well as cannot change status and func tion of forest area. (2)The forest area stipulated as rural forest cannot be used for Interests outside the forest management plan and must be managed on the basis of sustain able forest management principles. Article 91 (1)Every form of utilization of forest products in the exploitation right of rural forest is subject to PSDH and/or DR. (2) Rural institutions as holrlers of th" l'x[Jloltation right of rural forest are obliged to: a. formulate action plan for the exploitation right of rural forest during the validity perod of the exploitation right of rural forest; b. arrange borders of the exploitation right of rural forest; c. administer forest products. (3) Further provisions on the obligation as meant in para graph (2) are ruled by a regulation of the Minister. Paragraph 3 SociaI Forest Article 92 (l)The social forest as meant in Article 84 letter b can be provided in: a. conservation forest, except natural reserves and core zone of national park; b. protected forest; or c. production forest. (21 Further ..... 24A (2) Further provisions on social forest in the conserva tion forest as meant in paragraph (1) letter a are regulated in a specific government regulation. Article 93 (l)The Minister stipulates working area of the social forest as meant in Article 92 paragraph (1) on the basisof recommendationfrom regents/mayors at the request of local communities in accordance with management plan formulated by heads of KPH or the appointed official. (2) Further provisions on stipulation of the social forest as meant In paragraph (1) are regulated by a regu lation Ofthe Minister. Article 94 (1) Local community empowerment through the social forest as meant in Article 84 letter b is done thr')ugh the issuance of huslness Iicpnse to pxploit social forest. (2)The business licenseto exploit social forest as meant in paragraph (1), which is located in: a. protected forest, covers activities of utilization of area, environmental services, collection of non timber forest products; b. production forest, covers activities of utilization of area, environmental services, timber and non timber forest products, collection of timber and non-limber forest products. (3)Further provisions on the local community empo werment as meant in paragraphs (1) and (2) are ruled by a regulation of the Minister. Article 95 (l)ln granting the exploitation right of rural forest as meant in Article 94 paragraph (I), the government, provincial governments or regental/municipal governments in accordance with their respective scopes of authority facilitate institutional develop ment, business development, technology counseling, education and training as well as access to the mar ket as well as foster and control. Business News7532/7-6-2007 (2) Further provisionson the facilitation as meant in para graph (1) are ruled by a regulation of the Minister. Article 96 (1) Based on stipulation of the working area as meant in Article 93 paragraph (1) and facilitation as meant in Article 95 paragraph (1): a. the Minister issues lUPHHK Insidesocial forest in working area of social forest with a copy made available to governors, regents/mayors and heads of KPH; b. governors, in working area of inter-regental/ municipal social area in their jurisdiction and regents/mayors in working area of social forest mside their Jurisdiction Issue business license to exploit area, plant timber forest plants, utilize environmental services, utilize timber and non timber forest products and collect timber and non timber forest products. c. The license issued by governors is made avail able to the minister, regents/mayors and heads of KPH and license issued by regents/mayors is made available to the Minister, governors and heads of KPH. (2)ln certain conditions, the Minister can delegate the issuance of lUPHHKas meant in paragraph (1) letter a to governors. (3)lUPHHK inside the social forest as meant in para graph (1) letter 0 i~ granted to groups of communi ties in the form of cooperatives. (4)The business licenseto exploit social forest as meant in paragraph (1) letter b Is granted to local commu nity groups. (5) Holders of business license to exploit social forest are obliged to manage forest in accordance with the sustainable forest management principles, besides undertaking forest exploitation. (6)The business licenseto exploit social forest as meant in paragraph (1) letter b is granted for a period of 35 (thirty five) years and can be extended. (7) The ..... 25A (7)The business license to exploit social forest is issued on the basis of gUidelines, crteria and standards. (8)Further provisions on guidelines, criteria, standards for the issuance of the business license to exploit social forest as meant in paragraph (7) are regu lated by a regulation of the Minister. Article 97 (1) Business License to exploit soclcl forest is not a propietary right to forest area and cannot be trans ferred or collaterized as well as cannot change sta tus dlUJ runcuon of forest area. (2)The forest area stipulated as rural social forest can not be used for interests outside the forest manage ment plan and must be managed on the basis of sustainable forest management principles. Article 98 (1)Every holder of IUPHHK inside social forest is sub ject to PSDH and/or DR. (2) Every holder of IUPHHKinside social forest is obliged to: a. formulate action plan for IUPHHK inside social forest during the validity perod of the license; b. arrange borders of IUPHHK inside social forest; c. protect forest; d, administer forest prodllcts. (3)Further provisionson the obligation as meant in para graph (2) arc ruled by a regulation of the Minister. Paragraph 4 Partnership Article 99 (1) Local communities can be empowered through the partnership as meant In Article 84 letter c, in the case of: a. the forest area being already provided with license to exploit forest;or b. the forest area being already provided with forest exploitation right for state-owned enter prise in the foresty sector. (2)The minister, governors or regents/mayors in accor dance with their respective scopes of authority are BUSiness News 7532/7-6-2007 obliged to facilitate the establishment of partnership between local communities and holders of business license to exploit forest or holders of forest exploita tion right. (3)The partnership as meant in paragraph (1) is real ized on the basis of agreement between holders of business license to exploit forest or holders of forest exploitation right and local communities. (4) Localcommunity empowerment through partnership does not change authority of holders of license to exploit forest or holders of exploitation right to local communities. (5) Further provisions on local community empowerment through the partnership as meant in paragraph (1) are ruled by a regulaton of the Minister. CHAPTER V CONCESSION FOREST Article 100 {l)Concession forest can be stipulated as forest having the follOWing functions: a. conservation; b. protection; or c. production. (2)Concession forest is exploited by holders of right to the land in accordance with the function. (3)The exploitation of concession forest as meant in ,,,,,,,gr,,ph (2) aims at contributing optimal benefits to the right holders without reducing the function. (4)Further provision on the exploitation of concession forest as meant in paragraph (1) are ruled by a regulaton of the Minister, Article 101 The government stipulates concession forest having the runcuon of conservation and protection by giVing compensation. Article 102 (l)Status of concession forest haVing the function of conservation and/or protection can be changed into forest area. (2)In .... , (2)In the case of concession forest being stipulated to become the protected forest area or conservation forest area as meant in paragraph (1), the govern ment gives compensation for right holders in accor dance with the provisions of legislation. Article 103 The government, provincial governments or regental/municipal governments in accordancewith their respective scopes of authority are obliged to develop concession forest through facilitation, institutional forti fication and business system, CHAPTER VI FOREST-PRODUCT PRIMARY INDUSTRY Part One General Article 104 (1) Forest-product primary industry aims at: a. increasing added value of forest products; b. utilizing raw materials efficiently; c. creating job opportunity; d. realizng efficient, productive and highly competi tive industry; ... preventing forest resources from damaging and environmental pollution; and f. safeguarding raw materials in the framework of sustolnablc forest management. (2)Forest-product primary industry consists of: a. timber-forest-product primary industry; b. non-timber-forest-product orimary industry. (3)The licensecapacity of forest-product primary indus try does not exceed the supporting potential of sus tainable forest management. (4)Sources of raw materials of forest-product primary industry can come from natural forest, timber estate, concession forest, plantations in the torm of timber and the import. Article lOS (l)The minister is authorized to reguiate, foster and develop forest-product primary industry covering the whole industries: a. processing log Into sawn timber; b. processing log into wood chip, veneer, plywood, laminated veneer lumber; and BUSineSS News 7532/7-6-2007 26A c. processing non-timber raw materials directly col lected from forest. (2)In exercisklg the authority as meant in paragraph (1), the Minister coordinates with the minister in charge of industrial affairs. Part Two Licensing of Timber-Forest-Product Primary Industry Article 106 (l)Every timber-forest-product primary industry must have industrial business license. (2) Expansion of timber-forest-product primary industry must have license to expand industrial business. Article 107 (l)The industrial business licenseand license to expand timber and non-timber forest product primary industry as meant in Articles 108 and 111 can be granted to: a. individual; b. cooperative; c. Indonesia private company (BUMSIndonesia); d. State-owned company (BUMN); e. Regionaladministration-owned company (BUMD). (2)Business license of timber sewing industry with a production capacity up to 2,000 (two tbousand) cu bic meters per annum can be granted to: a. individual; or b. cooperative. (3)Industrial registry number of non-timber forest pro duct primary industry of timber estate can be issued to: a. individuals; or b. cooperative; (4)Further provisions on non-timber forest product primary Industry of Ilrnber estate dIe ruled by" regu lation of the Minister. Article 108 (1) Industrial business license and licenseto expand tim ber-forest-product primary industry are valid as long as the industry remains operating. (2)Timber-forest-product primary industry is evaluated every 3 (three) years at the minimum. (3\ The (3)The evaluation as meant in paragraph (2) is based on evaluation guidelines. (4) Further provisions on quldellnes on evaluation of the timber-forest-product primary industry as meant in paragraph (2) are ruled by a regulation of the Minis ter. Article 109 To meet their need for raw materials, holders of business license of timber-forest-product primary industry can develop concessionforest or cooperate with holders of concession forest. Part Three Procedures and Requirements for Application for Business License of Timber Forest Product Primary Industry Article 110 (l)Application for industrial business license and license to expand tim her-forest product primary industry as meant in Article 107 is submitted to the Minister, in the case of: a. timber sewing industry haVing a production ca pacity of above 6,000 (six thousand) cubic meters per annum with a copy made available to the Mini::;tcr in charge of industrial affairs, governors/ and regents/mayors; b. timber forest product industry processing directly logs into wood chips, veneer, plywood, laminated veneer lumber (LVL) with a production capacity of above 6,000 (six thousand) cubic meters per annum with a copy made available to the Minis ter in charge of industrial affairs, governors, and regents/mayors. (2)Application for industrial business license and license to expand timber-forest product primary industry is submitted to governors, in the case ot: a. timber sewing industry havlnq a production ca pacity of up to 6,000 (six thousand) cubic meters per annum with a copy made available to the Minister and regents/mayors. b. timber forest product industry processing directly iogs into wood chips, veneer, plywood, laminated veneer lumber (LVL) with a production capacity of up to 6,000 (six thousand) cubic meters per annum with a copy made available to the Minis ter and regents/mayors. BusinessNews 7532/7-6-2007 27A (3) Further provisions on requirements for application for business license and license to expand timber forest product primary industry as meant in para graphs (1) and (2) are ruled by a regulation of the Minister. Part Four Licensing of Non-Timber Forest Product Primary Industry Article 111 (1) SmaIi-scale non-timber forest product primary indus try must have industrial registry number to obtain industrial business license. (2)The establishment or expansion of medium- and large-scale non-timber forest product primary indus try must have industrial business license or expan sion license. (3) Further provisions on business license of non-timber forest product primary industry as meant in para graphs (1) and (2) are ruled by a regulation of the Minister. Article 112 (l)Registry number of non-timber forest product pri mary industry, business license and Iicenc;e to P)( pand non-timber forest product primary industry apply as long as the industry operates in accordance with the provisions in this government regulation and are evaluated every 3 (three)-years at the minimum. (2)The evaluation as meant in paragraph (1) is based on evaluation guidelines. (3) FUlther provisions on guidelines on evaluation of the non-timber-forest-product primary industry as meant in paragraph (2) are ruled by a regulation of the Minister. Part Five procedures and Requirements for Application for Industrial Business License of Non-Timber Forest Product primary Industry Article 113 (l)Application for registry number of non-timber-forest product primary industry, industrial business license and license to expand non-timber-forest product pri mary industry is submitted to regents/mayors. (2)The . (2)The application as meant in paragraph (1) must be accompanied by the stipulated requirements. (3)Further provisions on the requirements for registry number of non-timber-forest product primary indus try, industrial business license and license to expand non-timber-forest productprimary industry are ruled by a regulation of the Minister. Part Six Right and Obligation of Licensee ArticlE:> 114 (l)Every holder of business license of timber and non timber forest product primary industry is entitled to service from licensor. (2)Further provisions on rights of the licensee as meant In paragraph (1) are ruled uy a regulation of the Minister. Article 115 (l)Holders of business license of timber and non timber forest product primary industry are obliged: a. to undertake industrial business in accordance with the license; b. to submit expansion license if the expansion of production exceeds 30% (thirty percent) of the permitted production capacity; c. to formulate and convey plan for fulfillment of industrial raw materials IR.PBBI) evey year; d. to formulate and convey annual report on real ization of fulfillment and the use of raw materials as well as production; e. to make and convey report on mutation of log (LKMB) or report on mutation of non-timber forest product (LMHHBK); f. to make and convey report on mutation of processed forest products (LMHHO); g. to undertake industrial business activities in accordance with the license; h. to report periodically activities and results of their industry to licensor and institutions authorized to foster and develop forest product primary indus try; i. to empdoy personnel having certificate to mea sure and verify forest products in the case of the industry having a capacity of up to 6,000 m3 (six thousand cubic meters) per annum unless the Business News 7532{7-6-2007 28A licensee has personnel having certificate to mea sure and verify forest products; and j. to have personnel having certificate to measure and verify forest products, in the case of timber forest product industry having a capacity of ahove 6,000 m3 (six thousand cubic meters) per anhum. (2) Provisionson fulfillment of the obligations gf holders of business license of tim her and non-timber forp<t product primary industry as meant in paragraph (1) are ruled by a regulation of the Minister. Article 116 (l)Besides implementing the obligations as meant in Article 115, holders of business license of timber and non-timber forest product prlmary industry are pro hibited from: c. eX~dIILHIlY illl.lu~Lridl business wiLhuuL llcense; b. moving location of industrial business without li cense; c. undertaking activities potential to pollute and dam age the environment which exceed the tolerable limit of environmental quality standard; d. receiving, collecting or processing raw materials of forest products resulting from illegal sources; or e. undertaking industrial activities contravening the issued license. CHAPTER VIII DISTRIBUTION AND MARKETING OF FOREST PRODUCT Article 117 (l)In the framework of protecting the state right to forest products and forest conservation, the market ing of forest products is controlled through adminls tration of forest products. (2)Authorized officers stipulate kinds, measure volume/ weight and/or calculate the quantity of all forest pro ducts resulting from state forests. (3)Authorized officers can verify the forest products resulting from the state forests as meant in para graph (2). (4) PhysiCS of the forest products in the form of logs already passing the activities as meant in paragraph (2) are marked. (5) Further..... 29A (5)Further provisions on administration of forest pro ducts resulting from state forests, be they natural forests and timber estate, are ruled by a regulatiof of the Minister. Article 118 (1)AII forest products resulting from the concession for ests have their kinds stipulated, volume/weight mea sures and quantity calculated. (2)Further provisions on stipulation of kind, measuring of volume/weight and calculation of quantity as meant in paragraph (1) are ruled by a regulation of the Minister. Article 119 Transport, control or ownership of forest pro ducts resulting from the state forests must be furnished with documents which constitute certificate of legitimacy of the forest products, effective and used for carrying forest products inside the territory of the Repubiic of Indonesia. Article 120 (l)The documents as meant in Article 119 must he suit able to the physics of the carried forest products. (2)Conformance of the physics of forest products as meant in paragraph (1) is stipulated on the basis of forest product measuring and verification methods, in accordance with the Indonesian National Standard (SNI). (3) Measuring and verification of forest products must be executed by technical officers having qualifica tion of forest product verifier. Article 121 (1) The minister is authorized to regulate, foster and develop the marketing of timber anti nun-limbe, forest products, which have not been processed, to the domestic market and forest product primary in dustry as raw matenats. (2) Besides regulating, fostering and developing the marketing of timber and non-timber forest products as meant in paragraph (1), the authority resides in the minister in charge of trading affairs by observing recommendation of the Minister. BusinessNews 7532/7-6-2007 (3) Further provisions on regulation, fostering and development of the marketing of timber and non timber forest products as meant in paragraph (1) are ruied in a regulation of the Minister. Article 122 The authority to reoulate the export of forest products is regulated by the Minister in charge of trading affairs on the basis of recommendation of the Minister. CHAPTER VIII FOSTERING AND CONTROLLING Article 171 (l)In order to ensure the orderly forest arrangement and formuiation of forest management plan as well as forest exploitation: a. the Minister authorizes to foster and control foresty policies implemented by governors, regents/ mayors and/or heads of I<PH; b. governors authorize to foster and control forestry policies implemented by regents/mayor and/or heads of KPH. (2)The minister, governors and regents/mayors in ac cordance With their respective scopes of authority foster and control the implementation of forest ar rangement and formulation of forest management plan, as weil as forest exploitation implemented by heads of KPH, forest exploiters and/or forest procuctprocessors. Article 124 t l)The fostering as meant in Article 123 paragraphs (1) and (2) covers: a. guidance; b. counseling; c. training; d. directive; and/or e. supervision. (2)The provisionofthe gUidance as meant In paragraph (1) letter " is directed to the implem'lntation of forest arrangement and formulation of forest man agement plan as well as forest exploitation. (3)The provision of the counseling as meant in para graph (1) letter b is directed to the formulation of proceoures and worklny arranqemeut. (4lThe 30A (4)The provision of the training as meant in paragraph (1) letter cis directedto human resources and appa ratuses. (5)The provision of the directive as meant in paragraph (1) letter d covers activities of formulation of plans and programs. (6lThe supervision as meant in paragraph (1) letter e is directed to the implementation of forest arrangenient and formulation of forest management plan as well as forest expioitation. Article 125 (l)The control as meant in Article 123 paragraphs (1) and (2) covers activities of: a. monitoring; and/or b. evaluation. (2)The monitoring as meant in paragraph (1) letter a constitutes an activity to obtain data and Informa tion, policies and implementation of forest manage ment. (3)The evaluation as menat in paragraph (1) letter b constitutes an activity to evaluate the success of implementation of sustainable forest management, namely forest arrangement and formulation of forest management plan as well as forest exoloita tion, which is executed periodically in accordancewith the kind of license. Article 126 Further provisions on the fostering and control as meant in Articles 124 and 125 are regulated by a regulation of the Minister. CHAPTER IX ADMINISTRATIVE SANCTION AGAINSTHOLDERS OF BUSINESS LICENSE TO EXPLOIT i=OREST AND BUSINESS LICENSE OF FOREST PRODUCT PRIMARY INDUSTRY Part One General Article 127 In order to assurethe status, forest sustainability and conservation of forest function, every holder of busi ness licenseto exploit frest or industrial business license Business News 7532/7-6-2007 of fores product primary industry violating the provision in Article 78 of Law No. 41/1999 on Forestry is subject to administrative sanction. Part Two Administrative Sanction Article 128 (l)The administrative sanction as meant in Article 127 can be in the form of: a. suspension of administrative service; b. suspension of activity in the field; c. fine; or d. revocation of license. (2)The administrative sanction as meant in paragraph (1) is imposed by licensors in accordance with their respective scopes of authority as meant in Article 60 up to Article 65, excluding the administrative sanc tion in the form of fine, which is imposed by the Minister. (3)The administrative fine as meant in paragraph (1) letter c constitutes non-tax state revenue (PNBP) remitted to the State Cash. Article 129 The administrative sanction in the form of sus pension of administrative service as meant in Article 128 paragraph (1) letter a is imposed on: a. holders ofIUPHHI< inside natural forest in productoon forests that violate the provisions as meant in Article 73 paragraph (1) letters f, g or paragraph (4); b. holders of IUPHHK of ecosystem restoration inside natural forest in production forest that violate the pro vision as meant in Article 73 paragraph (5) letter g; c. holders of IUPHHK in HTI or HTR inside timber es tate in production forest mar Violate the provisons as meant in Article 75 paragraph (1) letter a, letter d, letter h, letter I, letter k or paragraph (3) letter c. Article 130 The administrative sanction in the form of sus pension of activity in the field as meant in Article 128 paragraph (1) letter b is Imposed on: a. holders of IUPK or IUPJL of forest violating the pro visions as menat in Article 71 letter a, c, d, e, f or letter h; b. holders ..... 31A b. holders of IUPHHK inside natural forest in produc tion forest Violating the provision in Article 11 letter a, c, d, e, f or letter h; c. holders of IUPHHK of ecosystem restoration inside natural forest in production forest violating the pro vision. as meant in Article 71 letter a. c, d. e, f or letter h; d. holders of exploitation right of rural forest in pro tected forest or production forest violating the provi sion as meant in Article 91 paragraph (1); e. holders of exploitation right of rural forest Violating the provision as meant in Article 91 paragraph (2) letter a, letter n or tetter c; f. holders of IUPHHK of sociai forest Violating the pro vision as meant in Article 98 paragraph (2) letter a, letter b or letter c. Article 131 (1)The administrative sanction in the form of suspen sion of arimlnlstratlve servicf' as meant in Article 129 and suspension of activity in the field as meant in Article 130 is imposed for a period of one year as from the date of imposition of the sanction. (2)The administrative sanction as meant in paragraph (1) can be revoked at anytime if the licenseefulfilled the obligation in one year as from the date of impo sition of sanction. (3)In the case of the obligation as meant in paragraph (1) being not fulfilled in one year as from the date of imposition of the sanctign, the licensee is still given written warning maximatly3 (three) times sequently in a period of 30 working days for every warning. (4)The license is revoked unless the licensee fulfills the obllqction after the vlllidity period of the third writ ten warning expires. Article 132 The administrative sanction in the form of the fine as meant in Article 128 paragraph (1) letter c is imposed on: Business News7532/7-6-2007 a. holders of IUPHHK inside natural forest in produc tion forests that Violate the provisions as meant in Article 73 paragraph (1) letter c, letter e, Article 74 letter a or letter b with the obligation to pay fine as much as 10 (ten) times of PSDH or 10 (ten) times of the basic price of wood; b. holders of IUPHHK inside natural forest in produc tion forests that Violate the provisions as meant in Article 74 letter C, letter d, letter e, letter f or letter g with the obligation to pay fine as much as 15 (fif teen) times of the basic price of wood; c. holders of IUPHHK of ecosystem restoration inside natural forest in production forest vilating the provl sion as meant In Article 73 paragraph (5) letter r with the obligation to pay fine as much as 10 (ten) times of PSDH or 10.(ten) times ofthe basic price of wood; d. holders of IUPHHK in HTI or HTR inside timber es tate in production forest violating the provision as meant in Article 75 paragraph (1) letter c, f or para graph (3) with the obligation obligation to pay fine as much as 10 (ten) times of the basic price of wood; e. holders of IUPHHK in HTR inside timber estate in production forest vaolating the provision as meant in Article 75 paragraph (5) letter a or letter b with the obligation to pay fine as much as 15 (fifteen) times of PSDH; f. holders of IUPHHBK violating the provision as meant in Article 76 letter c or lettere with the obligation to pay fine as much as 10 (ten) times of PSDH or 10 (ten) times of the basic price of wood; g. holders of IUPHHKviolating the provision as meant in Article 71 letter b point 2), Article 77 paragraph (1) letter c, letter d or letter e with the obligation t pay fine as much as 5 (five) times of PSDH for the excessof forest products; h. hold"rs of IPHHK or IPHHBK violatinq the provision as meant in Article 77 paragraph (2) or Article 8 with the obligation to pay fine as much as 10 (ten) times of PSDH for the excess of forest products. Article 133 Article 133 The administrative sanction in the form of revo cation of license as meant in Article 128 paragraph (1) letter d is imposed on, a. holders of IUPK or IUPJL violating the provision as meant in Article 20, Article 71 letter b point 1, or Article 74 letter h, penal provision as meant In Ar ticle 78 of Law No. 41/1999 on forestry or declared bankrupt by the district court; b. BUMN, BUMD or BUMS as holders of IUPJL Violating the provision as menat in Article 72 paragraph (1); c. Holders of IUPHHK inside natural forest in produc tion forest violating the provisions as meant In Ar ticle 20, Article 71 letter b point 3), letter g, Article 73 paragraph (1) letter a, letter b, letter d, Article 74 letter f, letter h, the penal provision as meant in Ar ticle 78 of Law No. 41/1999 on forestry or declared bankrupt by the district court; o. Holders of IUPHHKof ecosystem restoration inside natural forest in production forest Violating the pro visionsas meant in Article 20, Article 71 letter b point 3), letter g, Article 73 paragraph (5) letter a, letter b point 1), ietter b point 2), letter c point 1), letter c point 2), letter c, the penal provision as meant in Article 78 of Law No. 41/1999 on forestry or declared bankrupt by the district court; e. BUMN, BUMD or BUMS as holders of IUPHHK inside natural forest or IUPHHK of ecosystem restoration inside natural forest in production forest violating the provision as meant in Article 72 paragraph (1); f. Holdersof lUPHHK in HTI inside timber estate In pro duction forest violating Violating the provisions as meant in Article 20, Article 71 letter b point 3), letter g, Article 75 paragraph (1) letter a, letter b, letter e, letter j, paragraph (5) letter b, , the penal provision as meant in Article 78 of Law No. 41/1999 on for estry or declared bankrupt by the district court; Business News 7532/7·6-2007 32A g. Holders of IUPHHK in HTR inside timber estate in production forest violating the provisions as meant in Article 20, Article 71 letter b point 3), letter g, Article 75 paragraph (3) letter a, letter b, paragraph (5) letter b, the penal provision as meant in Article 78 of Law No. 41/1999 on forestry or declared bank rupt by the district court; g. Holders of IUPHHK in HTHR violating the provision as meant in Article 71 letter b point 4); i. BUMN, BUMD or eUES as holders of IUPHHBK violat ing the provision as meant in Article 72 paragraph (1); j. Holders of IPHHK or IPHHBKviolating the provisions as meant in Article 20, Article 71 letter I or the penal provision as meant in Articlf' 78 of Law No. 41/1999 on forestry k, Holdersof IUPHHBK Violating the provision as meant in Article 76 letter a, letter b or letter d; I. Holders of IUPHHK inside social forest in conserva tion forest, except wildlife reserve or core zone in national park or protected forest or production forest violating the provision as meant in Article 97 paragraph (1), (2) or Article 98 paragraph (2) letter d; m. Holders of exploitation right of rural forest Violating the provision as meant in Article 90 paragraph (1), paragraph (2) or Article 91 paragraph (2) letter d; n, Holders of IUPHHK of social forest violating the pro vision as meant in Article 97 paragraph (I), para graph (2) or Article 98 paragraph (2) letter d. ARTICLE 134 ..... (TO BE CONTINUED) ===( Al )=== 20A FOREST ARRANGEMENT AND FORMULATION OF FOREST MANAGEMENT PLAN AS WELL AS FOREST EXPLOITATION (Government Regulation No. 6/2007 dated January 8, 2007) [Continued from Business News No. 7531 pages 19A - 32A J Article 134 (1) In order to provide opportunity for holders of IUPK, IUPJL, natural IUPHHK, IUPHH of ecosystem resto ration in natural forest, IUPHHK In HD, IUPHHK In HTR, IUPHHK in HTHR, IUPHHK in social forest, IUPHHBK, IPHHKor IPHHBKto fulfill their obligation before the Iicene as meant in Article 133 is revoked, they are given first written warning for three times consecutively in a period of 30 (thirty) days for every warning, except revocation of license attributable to the penal sanction as as meant in Article 78 of Law No. 41/1999 on forestry or being declared banckrupt by district court. (2) The revocation of the license as meant in paragraph (1) is executed after the validity period of the third written warning expires but the Iicencee does not fulfill the obligation, Part Three Admnustretlve Sanction Against Holders of Business Licenseof Forest-Product Primary Industry Article 135 Holders of business licenses of forest-product primary industry violating the provisions as meant in Article 115 and 116 are subject to administrative sanc tions in the form of: a. suspension of industrial business; b. suspension of service provision; or c. revocation of industrial business license. Article 136 The administrative sanction in the form of sus pension of industrial business as meant in Article 135 letter a is imposed on: a. holdersof business licensesof forest-product primary industry violating the provision as meant in Article 135 paragraph (1) letter I or letter j; b. suspension of industrial business as meant in para graph (l)is imposed until the license holder can ful fill their obligations. Business News7533-7534/7-11-2007 Article 137 The administrative sanction in the form of suspension of service provision as meant in Article 135 letter b is imposed on: a. holders of businesslicensesof forest-product primary industry violating the provision as meant in Article 115 paragraph (1) letter c, letter d, letter e, letter f or letter h: b. suspension of service provision as meant in para graph (1) is Imposed until the license holder can ful fill their obligations. Article 138 (l)The administrative sanction in the form of revoca tion of industrial business license as meant in Article 135 letter c is Imposedon holders of business licenses of forest-product primary industry violating the pro visiun dS meant in Article 115 pdrdyraplr (1) letter d, letter b, letter g, Article 116 letter a, letter b, letter c or letter d or letter e. (2) Revocation of the industrial businesslicenseas meant in paragraph (1) is done after the licensor issues written warning three times. (3)The written warning as meant in paragraph (2) is conveyed at a time interval of 30 (thirty) working days respectively. (4) Revocation of business license of industries violating the provision as meant in Article 116 letter d is preceded by temporary freezing and the license Is revoked until legally fixed court decision is issued. Part Four Procedures for Imposing Administrative Sanction Article 139 Proceduresfor imposing administrative sanction on holders of license to exploit forest, undertake busi ness of forest-product primary industry and distribute forest products as meant in Article 135 up to Article 138 are regulated by a regulation of the Minister. CHAPTER X ..... CHAPTER X TRANSmONAL Article 140 Following the stipulation of this government regulation: a. forest concession (HPH), forest-product collection right (HPHH) or IUPHHK issued on the basis of the provisionsof legislation before this government regu lation is stipulated remains valid until the license or right expires; b. Business license of forest-product primary industry or industrial registry number issued on the basis of the provisions of legislation before this government regulation is slifJulaleu remains veltd until the license or registry number expires; c. Applications for HPH or IUPHHKinside natural forest or timber estate, including application for extension of licenseand application for new license,which have not embarked on the principal approval level are settled in accordance With the provisions in this governmpnt n::l:glllrition; d. In the caseof the settlement of applications for HPH or IUPHII1< inside natural forest or timber estate, including application for extension of license and application for new license,which have not embarked on the principal approval level, the licensing process must adjust to the provisionsin this government regu lation in not later than 3 (three) months; e. Authority to arrange forest and formulate forest management as well as exploit forest already delegated by the government to state-owned enter prises remains effective and the implementation is adjusted to this governmElnt regulation; f. Resultsof forest arrangement so far executed on the basisof Government RegulationNo. 34/2002, as long as KPH have been established, are enforced inside the KPH; g. Results of forest arrangement executed by the authorized institutions before Government Regula tion No. 34/2002 is stipulated are directed to the Business News7533-7534/7-11-2007 21A establishment of KPH; h. Policies or programs already executed previously in the framework of empowering community stili continue and the implementation must adjust to the provisions in this government regulation; and i. Social forests already built so far, or in the course of building or already securing provisional license are recognized and subsequently adjusted to the provi sions in this government regulation. Article 141 Stipulation of the whole area of KPH as meant in Articles 6 end 7 is settled in not later than 2 (two) years as from the date of enforcement of this govern ment regulation. CHAPTER XI CONCLUSION Article 142 With the enforcement of this government regu lation, Government Regulation No. 34/2002 on Forest Arrangement and Formulation of Plans for Managing Forests, Exploiting Forestsand UtiliZingForestArea (Stat ute BOOK of 2002 No. 66, Supplement to StatutI' Ronk No. 4206) is revoked and declared null and void. Article 143 With the enforcement of this government regu lation, all legislation which constitute technical direc tives for Government Regulation No. 34/2002 on Forest Arrangement and Formulation of Plans for Managing Forests, Exploiting Forestsand Utilizing ForestArea (Stat ute Book of 2002 No. 66, Supplement to Statute Book No. 4206) are declared to remain effective as long as they rlo not rontravena the provisions in this govern ment regulation. Article 144 The government regulation comes into force as from the date of stlpulatlon. For public cognizance, the government regula tion shall be published by placing it in State Gazette of the Republic of Indonesia. 22A Ratified in Jakarta On January 8,2007 THE PRESIDENT OF THE REPUBLIC F INDONESIA Sgd DR. H. SUSILO BAMBANG YUDHOYONO Promulgated in Jakarta On January 8,2007 THE MINISTEROF LAW AND HUMAN RIGHT Sgd HAMID AWALUDDIN STATUTE BOOK OF THE REPUBLIC OF INDONESIA YEAR 2007 NUMBER 22 ELUCIDATION ON GOVERNMENT REGULATION NO. 6/2007 REGARDING FOREST ARRANGEMENT AND FORMULATION OF FOREST MANAGEMENT PLAN AS WELL AS FOREST EXPLOITATION GENERAL SinceIndonesia is given and obtaining mandate from the Almighty God natural resource in the rorrn of invaluable forests, the forests must be managed and exploited properly on the basis of noble character as worship and manifestation of thankfulness to the Almighty God. Forests and forest area, play role in harmoniz ing and balancing global environment so that the linkage to international communities becomes very Important by prtonuzmq to national Interests. In Iela tlon thereto, forest must be managed in a sustainable manner for the people's welfare. Inside areas of convertible production forests and the use of forest areas under leasehold status, licensesto exploit timber/licenses to Pliploit non-timber forest products can be issued by using the provisions on business licensesto exploit timber or non-timber forest products In natural forests as regulated in this govern ment regulation. In the framework of managing forests to obtain the optimal benefit from forest and and forest areas for the people's welfare, principally all forests and forest areas must be managed by observing their nature, characterstics and prime as well as may not change in the principal functions, namely conservation, protection and production, In relation thereto, equilibrium of the three functions must be preserved in the management of forests. The recent forest condition is increasingly apprehensive, reflected by the rising growth of forest degradation, less developed investments In the forestry sector, low progress of timber estate development, less controllable illegal logging and illegaltrade, decreasing economy of communities inside and around forests, rising size of improperly managed forest areas so that strategic measures in the form of deregulation and debureaucratization need to be taken. Basedon Government Regulation No. 34/2002, provisons on Forest Arrangement and Formulation of Plans for ManagingForests, Exploiting Forests and Using Forest Areas have been regulated as the implementa tion of provlsluns of Chapters V, VII and XV of Law No. 41/1999 on Forestry. Especially for the use of forest areas on the basis of Government Regulation No. 34/2002, further provl slonsare to be regulated by a presidential decree. How ever, pursuant to the provision of Article 39 of Law No. 41/1999 on Forestry, sustances of the use of forest area are further regulated by a government requlation, In relation thereto, the substances are no longer regulated in this government regulation but in a special govern ment regulation. During four years as from the date of promul gation, the government regulation is deemed not yet fully capable of driving the growth of conducive invest ment climate and enhancing socio economic capacity of communities inside and around forests. The condition is attributable mainly to the weak forest management apparatuses, such as the absence of comprehensive legislation ruling institutional deve lopment of forest manaqernent Law No. 41/1999 on Forestry mandates the establishment of forest management areas in the level of management units, which have not been regulated in Government Regulation No. 34/2002 so that the imple mentation cannot work properly even cause many improperly manaqed forest areas (open access). Business News 7533-7534/7-11-2007 In view . , , , , 23A In view of the aforementioned circumstances, it is necessaryto regulate promptly forest management in accordanceWith the sustainable forest management principles through the building of Forest Management Unity (KPH) as well as regulaton of the management of forests, concession forest and forest-product primary industries. KPH, which are built, constitute the smallest forest managementtotality in accordancewith their prin cipal functions and designation manageable efficiently, in sustainable manners, which is accountable for the implementation of forest arrangement and formulation of forest management plans as well as forest manage ment operation. In order to realize sustainable forest manage ment, the whole forest areas are broken down into KPH. KPH can be in the form of Conservation Forest Manage ment Totality (KPHK), Protected Forest Management Totality (KPHL) and Production Forest Management Totality (KPHP). In the framework of implementing forest management, covering forest arrangement, formulation of forest management plan, forest exploitation, community empowerment, forest rehabilitation and reclamation as well as forest protection and nature conservation, the government can delegate to state owned enterprises operating in the forestry sector. Following the stipulation of Law No. 32/2004 on Regional Arlmioi.tration. a gov",rnm",nt recutatton ruling the sharing of public adminstration affairs in the forestry sector has been formulated and in a bid to ob tain synergy, the improvement of Government Regula tion No. 34/2002 needsto be adjusted to the provisions requlated in Law No. 32/2004, mainly in connection with the division of tasks, responsibility and authority in the forestry sector. In a bid to further drive up investments in the forestry sector, this government regulation rules activi ties which constitute incentives to business communi ties, particularly in the timber estate development sector. Based on the above mentioned reasons, it is necessary to re-regulate Government RegulationNo. 34/ 2002 by stipulating a government regulation on forest D. ,,,In-arc l\1,oIMC::: 7t:;":t~ 7t::1.417· 11 I()n7 arrangementand formulation of forest managementplan as well as forest exploitation. Government Regulation NO. 32/2004 is improved by observlnq principles of good governance, populism, pro-growth and investment. ARTICLE BYARTICLE Article 1 Sufficiently clear Article 2 Forest management covers activities of: a. forest arrangement and rorrmnanon Of forest management plan; b. forest exploitation; c. forest area utilization; d. forest rehabilitation and reclamation: as well e. forest protection and nature conservation. Regulation on the use of forest areas, forest rehabilitation and reclamation as well as forest protec tiUII alld ueture conservation is ruled separately by legislation. Article 3 Sufficiently clear Article 4 Paragraphs (1) and (2) Sufficiently clear Paragraph (3) The public authority Includes: a. appointment and stipulation of forest area; b. validation of forest area; c. leasehold of forest area; d. exchange of forest area; e. change in status and function of forest area; f. process and production of forest area exchange, leashold protocol; g. the Issuanceof forest exploitation licenseto thc third party with regards to the management of forests located in their working area; h. activities related to forestry civil servant investiga tor. Paragraph (4) ..... 24A Paragraph (4) Sufficiently clear Article 5 Sufficiently clear Article6 Paragraph (1) Sufficiently clear Paragraph (2) Function dominant Insize means that Inthe case of an area of KPH consisting of more than forest func tions, such as foresthavingproduction and protection functions, and if the area of any of the forest function, e.g. production function, isbiggeror dominates thearea of the protection function, KPH is called Production KPH (KPHP). Stipulation of name of KPH onthe basis of func tion dominant ;n size aims at ensuring effective and effident management. Article7 Sufficiently clear Article 8 Paragraph (1) In stipulating organization of KPH, particularly in connection With human resources, the government, provincial governments or regental/municipal govern ments must observe, among others, requirements for vocational competence issued by profession certifica tion institution in the forestry sectoror recognition by the Minister. Paragraph (2) In the case of an area of production forest or protected forest located il'l a territory of province andl or regencyIcitygrouping in KPHI<, stipulation is doneby the gQvernment. Paragraph (3) up to paragraph (5) Sufficiently clear Paragraph (6) The regulation of thE! Minister also rules provi sions on capability, competence and territorial organi zation of KPH. Business News 7533-753'\/7-11-2007 Article 9 Sufficiently clear Article10 Activityto build KPH andinfrastructure includes the establishment of education and training instituton, certification of human resources, conflictmanagement, forestsecurity and eradIcation of illegal logging. Artide 11 Paragraph (1) FOrest arrangement means an actIVity to orga nizeworkIng areaof KPH in accordance with character istics of KPH and rights of communities so that the planning, and management of KPH cen be Implemented effectively and efficiently. Paragraph (2) Certain areais a specified areainside producton forest areas, protected forest areas andlor conserva tion for.."t ar..a", can be stiplllat"o as rural fOrf'st, social forest, traditional forestor forestareafor special purpose, so that the existence of the area is insepa rablefrom sustainable forest management principles. Paragraph (3) Sufficiently clear Article12 Sufficiently clear Article13 Paragraph (1) up to paragraph (3) SuffiCiently clear Paragraph (4) Letters a and IJ SuffiCiently clear letter c Strategy and feasibility of forest management development is analyzed from aspects of areamanage ment, forest management and institutional arrangement. Forestmanagement development isdirected tooptimize the functions of production and services of forest resources andtheir environment, either timber produc tion, non-timber production or environmental services throu9h the main activities, such as utilization, emoowennent ..... empowerment of communities as well as environmental conservation which constitutes a totality of activities. Paragraph (5) Sufficiently clear Paragraph (6) Letter a up to letter e SUfficiently clear Letter f Balance of forest resources means a kind of information which can describe forest resource reserves through comparison of the utilization, including the loss of forest resources to restoraton, including natural recovery of forest resources so as to be able to ascer tain whether forest resource reserves are surplus or deficit compared to the previous condition. Letter g Sufficiently dear Letter h Parties mean KPH, authorized government rep resentatives as well as representatives of communities receiving benefitsand impactsof the managementof KPH. Participation of parties can be in the form of conveyance of information as the lowest participation level up to involvement of parties in every phase of for mulation of forest management planning. Paragraph (7) Sufficiently clear Article 14 Sufficiently clear Article 15 Paragraph (1) up to paragraph (3) Sufficiently clear 2SA Article 20 Paragraph (1) The definition of transfer in this provlslon is limited to the transfer of exploitation license from licensee to other party through transaction. The definition of transfer of exploitation license like what BUMS Indonesia can execute, is acquisition of shares mostly or wholly, causing corporate control to change. Paragraph (2) Sufficiently clear Article 21 Palayraph (1) Certain area means forest area whose situation and condition have not been attractive to the third party for developing exploitation business so that the govern ment needs to assign KPH to utilize it. Paragraphs (2) and (3) Sufficiently clear Article 22 Legislation means legislation in the field of bio logical resource and ecosystem conservation. Article 23 Paragraph (1) Forest exploitation in protected forests aims at enhancing welfare of ccommunities, particularly local communities, concurrently generating awarenessof com munities of preserving and enhancing the functions of protected forests as mandate to preserve natural resources and environment for the present and future generations. Paragraph (2) Sufficiently clear Paragraph (4) Issues regulated In the regulation of the Minis ter Include quldelines on formulation and procedures for ratification of forest management plan. Article 16 up to Article 19 Sufficiently clear Business News 7533-7534/7-11-2007 Article 24 Paragraph (1) Sufficiently clear Paragraph (2) Letter a Sufficiently clear Letter b ..... Letterb Limite land processing (minimum tillage) isnon mechanical and traditional land processing, letter c up to letter e Sufficiently clear Paragraph (3) Sufficiently clear Article 25 Paragraph (1) Sufficiently clear Paragr"ph (2) Potentials ofenvironmental services in protected forest can be in the form of: a, water regulation; b. provision of natural beauty; c. provision of biological diversitysources.or d. carbon absorption andstorage, The environmental elements are biological substances such as dynamism of flora and fauna, phytogeography and non-biological substances such as physical and chemical characteristics of soli, stone, hydrography, temperature and humidity. Paragraph (3) Compensation means paying a certainamount of fund for the utilization of water and water current services for preserving and rehabilitating water catchment ,,,e,,. Thecompensatory fund coming from the utili zation of waterandwater currentservice is remittedto the State cazh and regulated in accordance with the provisions of legislation, Paragraph (4) Issues regulated in the regulation of the Minis ter include criteria, gUidelines, procedures for utilizing enVironmental services andImposing andcollecting com pensatory fund. Article 26 Paragraph (1) up to paragraph (3) Sufficiently clear 26A Paragraph (4) Sustainable productiVity capability means annul addition to size (volume, weight, quantity) of popula tion per kind of non-timberforest product. Paragraph (5) Sufficiently clear Articles 27 and 28 Sufficiently clear Article 29 Paragraph (1) Lettera up to letter c Sufficiently clear Letterd ElTorts to protectbiological diversity inClude pro tection, utilizationof water arrangement and ecotour ism services, Letters e and f SuffiCiently clear Paragraph (2) Sufficiently clear Articles 30 and 31 SuffiCiently clear Article 32 Par'lgr"pn (1) Exploitation of area in production forestincludes the utilization of growth space without disturbing the mainfunction. Paragraphs (2) and (3) Sufficiently clear Article33 paragraph (1) Sufficiently dear Paragraph (2) Lettera Sufficiently clear Business News 7533-7534/7-11-2007 letter b .... . Letter b Environmental substances are biological and non-biological substancesas well as ecosystem process, among others, dynamism of flora and fauna population and phytogeography. Letter c Sufficiently clear Paragraph (3) Compensation means paying a certain amount of fund for the utilization of water and water current services for preserving and rehabilitating water catchment area. The compensatory fund coming from the utili zation of water and water current service is remitted to the State Cash and regulated in accordance with the provisions of legislation. Paragraph (4) Sufficiently clear Article 34 Paragraph (1) Letter a Sufficiently clear Letter b Exploitation of timber forest products resulting from ecosystem restoretlon inside natural forests is di rected to return biological and non-biological resources in an area by the original species so as to achieve bio logical and ecosystem equilibrium. Paragraph (2) Sufficiently clear Article 35 Sufficiently clear Article 36 Paragraph (1) Stipulation of production forest potentials is based on general description of vegetation of forest Business News 7533-7534/7-11-2007 27A areas and vegetatron covering is based on landsat image and number of trees. Paragraph (2) Sufficiently clear Paragraph (3) Achieving biological equilibrium means that in the case of activities to return biotic and abiotic substances being already executed, harvesting can be executed on the time. Paragraphs (4) and (5) Sufficiently clear Article 37 Exploitation of timber forest product inside tim ber estate is prevlouslv called Timber Estate Concession (HPHT)or Industrial Timber Estate Concession (HPHTI). Exploildlion of limber forest products inside lim ber estate upon harvesting the result can be done by means of complete felling with replanting or complete felling with artificial rejuvenation. Article 38 Sufficiently c1ea r Article 39 Paragraph (1) Letter a Plants of the same kind mean timber forest plants only consisting of one kind (species) along with varieties. Letter b Plantsof various kinds mean timber forest plants combined with annual timber cultivation plants or other kinds stipulated by the Minister. Paragraph (2) Sufficiently clear ARTICLE 40 ..... ( TO BE CONTINUED) ===( AL )=== l1A FOREST ARRANGEMENT AND FORMULATION OF FOREST MANAGEMENT PLAN AS WELL AS FOREST EXPLOITATION (Government Regulation No. 6/2007 dated January 8, 2007) [ Continuf'd from Bustnes« News No. 7533 - 7534 pages 20A - 27A] Article 40 Paragraph (1) up to paragraph (6) Sufficiently clear Paragroph (7) Issues ruled in the regulation of the Minister include: a. size of area; b. building and development plan; c. criteria for location: d. legal relations among parties; and e. citeria for individuals, groups or cooperatives obtain ing HTR license. Article 41 Paragraph (1) Letter a Plants of the same kind mean timber forest plants only consisting of one kind (species) along with varieties. Letter b Plants of various kindsmean timber forest plants combined with annual timber cultivation plants or other kinds stipulated by the Minister. Paragraphs (2) and (3) Sufficiently clear Article 42 up to article 44 Sufficiently clear Article 45 Paragraph (1) The quota of volume granted in the collection of limber forest products is adjusted to the need of public facilities. Paragraph (2) The quota of volume granted in the collection of timber forest products is adjusted to the need of house. susrness News7535/7-tJ-2007 Paragraph (3) Sufficiently clear Articles 46 and 47 Sufficiently clear Article 48 ~aragraph (1) up to paragraph (3) Sufficiently clear Paragraph (4) Exploitation of timber forest products inside natural forest or timber estate is based on the adopted sylviculture system management so as to enable area of forest exploitation business to operate effectively to cover forest area formerly belonging to felling area and non-forest area which are impossible to manage economically and in a sustainable manner if they are managed lndlvldually, Paragraph (5) Sufficiently clear Articles 49 and 50 Sufficiently clear Article 51 Paragraph (1) In the case of licensee seeking market demand for timber estate deemed economical to fell, the licenseereports to the Minister to undertake the felling. Paragraph (2) Sufficiently clear Article 52 up to Article 61 Sufficiently clear Article 62 Paragraph (1) The Minister can delegate authority to issue IUPHHK inside natural furest ill production forest to regions .. ' .a regions gradually and selectively, dependent on readi ness of the regions viewed from institutionol aspect, vision or mission. paragraph (2) Sufficiently clear Paragraph (3) Governor in the provincial territory, regent/ mayor in a regental/municipal territory. Paragraphs (4) and (5) Sufficiently clear Article 63 up to Article 65 Sufficiently clear Article 66 Paragraph (1) Sufficiently clear Paragraph (2) Issues ruled in the regulation of the Minister include recommendations of the authorized officials, requirements tor subjects deserving to license, and size which can be granted as well as partnership require ments. Article 67 Paragraph (1) Individuals mean individuals domiciled inside or around forest. Cooperative means local community coopera tive operating In the forestry business line. Paragraph (2) Letters a and b Sufficiently clear Letter c BUMS Indonesia as limited liability company in the form of Indonesian statutory body, though the capi tal comes from foreign investors or foreign capital, can be given IUPJL in the form of rehabilitation and rescue ot area and land or Improvement uf the environment. Letters d and e Sufficiently clear 12A Paragraph (4) Letter a Sufficiently clear Letter b BUMS Indonesia as limited liability company in the form of Indonesian statutory body, though the capi tal comes from foreign investors or foreign capital, can be given IUPHHK in timber estate (HTI) inside timber estate in production forest. Letters c and d Sufficiently clear Paragraph (5) cooperative meanscooperative operatmg In mi cro, small- or medium-scale business, which is built by local community. Paragraph (6) up to paragraph (10) Sufficiently clear Article 68 Paragraph (1) Sufficiently clear Paragraph (2) Selecting applicants means selection of require ments, such as administrative requirements, technical requirements for proposals, financial requirements and socio economic benefit and market prospect analysis. Selecting status of forest area means evalua tion of status of area, covering potential of area to possibilities that exploitation of forest products in the form of timber can be executed or accessibility can be developed. Aspect to be evaluated in the status of forest area include vacant land, grass field, and/or bushes In area of production forest, topography With maximum elevation of 25% (twenty five percent) and topography with elevation ranging from 8% (eight percent) to 25% (twenty five percent) must be followed by land conser vation pro!Jr"m~. Paragraph (3) Sufficiently clear Business News 7535/7-13-2007 Article 69 . , ... Article 69 sufficiently clear Article 70 Paragraph (1) Sufficiently clear Paragraph (2) Good performance in this provision is reflected by recognition from independent appraisal institution accredited by the Minister. Paragraph (3) Sufficiently clear Paragraph (4) Production sharing between cooperative andthe government, provincial governmentor regental/munici pal government is done proportionally by counting the amountof Investment spentby the respective partiesin the forest rehabilitatioactivity. Paragraph (5) In regulating the rightsof the licensee, the regu lation of the Minister must consider interests or the economic growth of communities and prevent unfair congglomeration. Article 71 Letter a Theactionplancontains, amongothers, aspects of business sustainability, environmental equilibrium and soclo economy. Letter b Concrete activity means activity to supply mechanical equipment minimally accounting for 50% (fifty percent) of the stipulated equipmentto the workng area as well as build facility and infrastructure, in the case of holderof IUPHHK. Letter c Sufficiently clear 13A b. preventingor overcoming forest fire; c. provldtnq forest security facilitiesand Infrastructure; d. preventing anybodyfrom hunting wild animals and/ or protected animals; e. preventing illegalexploitation and/or utilizationand/ or occupation of forest area; f. preventing anybodyfrom squatterlng forest area; g. preventing pest and disease; and/or h. building forest security unit. Letter e Sufficientlyclear Letter f Forestry professionals meanfurestry scholarsor medium technical personnel, covering graduates of seniorhigh forestry school(SKMA), forestry diploma,as well as personnel resulting from forestry education and training courses, among others, graders, cruisers arnJ scalers. other personnel means specialists in the envi ronmental, sodaI, economic and legal affairs. Letter g up to letter i Sufficientlyclear Articlp n Paragraph (1) Model of cooperationcan be in the form of par ticipating interest or business cooperation in segment of forest-productexploitation business activity. Activities of business cooperation in segmentof forest-product exploitation business include arrangement of borders of working area, blockand workingclusters, opening of forest area, harvesting of forest products, land preparation, refining, inventorying of forest pro duct potential, procurementof seeds andparentstocks, plantlnqand enrichment, release, transport, processing of forestproducts, marketing of forest products andother supporting activitles, Paragraph (2) Sufficientlyclear Letter d Forest protection includes: a. preventing anybody from harvesting tree without license; Business News 7535/7··13 2007 Article 73 Paragraph (1) Sufficiently clear ParagraQbJ2l .•.. P<lrayr<llJh (2) FUlfilling the criteria and indicators stipulated by the Minister means securing certificate of sustain able forest management mandatorily or voluntarily. Paragraph (3) RKUPPHK is made on the basis of ten-year inventorying by the licensee on th ebasis of gUidelines stipulated by the Minister. Paragraph (4) Sufficiently dear paragraph (5) Letter a Sufficiently clear teter b Point 1 Sufficiently clear Point 2 RKT is submitted in not later than 2 (two) months before RKTcomes into effect. Letter c Point 1 Sufficiently clear Point 2 RKT is submitted In not later than 2 (two) months before RKTcomes into effect. Letter d up to letter g SUfficiently clear Article 74 Sufficiently clear Article 75 Letter a RKUPPHK is made on the basis of ten-year in ventorying by the licensee on th ebasis of gUidelines stipulated by the Minister. Letter b up to letter h SUfficiently clear Business News 7535/7-13-2007 14A Letter i Providing area maximally 5% (five percent) is intended to open opportunity for communities inside and around area of IUPHHK HTI to take part actively in the development of HTI. Letter j 50% (fifty percent) of the planting size which must be planted for 5 (five) years means: SO% x size of area x 5 years circle (year) Letter k SUfficiently clear Paragraph (2) SurridenLly clear Paragraph (3) Formulation of RKUPHHK and RKT in HTR is facilitated by head of KPH or official appointed by the Minister. Paragraph (4) Sufficiently clear Paragraph (5) Letter a Sufficiently clear Letter b Including criteria for leaVingworking area or job before the license expires is as follows: a. instrument or equipment fur undertaking activities is not provided; b. the available instrument or equipment is not working; c. permanent employee is no longer available in the working area; or d. exploitation activity is nothing. Article 76 up to article 78 Sufficiently clear Article 79 Paragraph (l) Sufficiently clear Paragraph (Zl ..... 15A Paragraph (2) Licensee means holder of: a. IUPK; b. IUPJL; c. IUPHHK and/or IUPHHBK in natural forest; d. IUPHHK of natural-forest ecosystem restoration; e. IUPHHK and/or IUPHHBK in timber estate. Paragraph (3) up to paragraph (7) Sufficiently clear Article 80 Paragraph (1) Production report includes report on harvesting outcomes. Paragraph (2) up to paragraph (4) Sufficiently clear Article 81 Paragraph (1) up to paragraph (4) Sufficiently clear Paragraph (S) Issues ruled in the regulation of the Minister includes mechanism and procedures, period, criteria and standard. Article 82 Paragraph (1) Letter a Sufficiently clear Letter b Field inspection is executed before the license ls revoketL Letter c Written statement is accompanied by clear rea sons. Letter d Sufficiently clear Paragraph (2) Audit is executed to evaluate the fulfillment of obliqetlons by the licensee. BusinessNews 7535/7-13-2007 Paragraph (3) In order to settle financial obligations of licen sees having license expired, the government, provincial government or regental/municipal government can take forcefuld actions, such as confiscating movable goods belonging to the licensees in accordance with the provi sions of legislation. Paragraph (4) Movable goods continue belonging to thelic ensee. Paragraph (5) After the licenseexpires, the planted.plents must be felled promptly and in the case of the plants already fUlfilling the felling period in accordance with circle, not later than one year as From the date of expiration of license and if the plants are not felled, they become state asset. Paragraph (6) The third party means, among others" creditor or business partner. The government counts the value of uprights/ plants developed by the llcensee as corporate asset, particularly in the beginning of timber estate develop ment, starting from vacant land or grass field and not starting from conversion of natural forest through li cense to utilize timber. Paragraph (7) Sufficiently clear Article 83 Paragraph (1) Local community means social unity consisting of Indonesian citizens liVing inside and/or around forest, domiciled inside or around forest area having social com munity with the same source of income dependent on forest and their activities can influence forest ecosystem. Paragraph (2) Empowerment is executed by KPH as long as KPH has been established. In the case of KPH being not yet established, empowerment is done by forestry institutions in region. The obligations to empower cover, among others ..... others, accompanying of formulation of management planof community empowerment areaas well as forti fication of capacity or institution. Article 84 Local community empowerment: a. In forest area not yet charged with forest exploita tion license or forestexploitation right isdone through rural forest and social forest. b. In forest area already charged with forest exploita tion license or forestexploitation right isdonethrough partnership model. Articles 85 and 86 Sufficiently clear Article 87 Paragraph (1) up to paragraph (3) SUfficiently clear Paragraph (4) Issues regulated in the regulation of the Minis ter include: a. rights and obligations or nolcers or rural rurest management rights; b. abolition of rural forest management rights; c. administrative sanction against holders ut rural forest management rights; and d. standards and criteria for rural forest accountability. Article88 Paragraph (1) Business development means enhancement of capability of rural institutionsInforest exploitation busi nesses, throughamong others counseling, supervision, education and training, guiding, access to market and capital. Paragraph (2) Sufficiently clear Article 89 Paragraph (1) Sufficiently clear Paragraph (2) Certain conditions mean, among others, readi ness of the region viewedfrom ill~litutlon~1 aspect. Business News 7535/7-13-2007 16A Paragraph (3) In managing rural forest, rural institutionscan form cooperatives. Paragraphs (4) and (S) Sufficiently clear Article 90 up to article 92 SuffiCiently clear Article93 paragraph (1) Sufficiently clear Paragraph (2) The regulation of the Minister rules among others, stipulation of criteria for social forest area. Article 94 5ufficiently clear Article 95 Paragraph (1) Institutional development means enhancement of capability of communities in the forest exploitation institution through, among others, counseling, supervi sion, education and training <1S well as guiding. Business development meansenhancement of capability of rural institutionsin forestexploitation busi nesses, throughamongotherscounseling, supervision, education and training, guiding, access to market and capital. Paragraph (2) Sufficiently clear Article 96 Paragraph (1) Letter a Utilization of timber forest productstarts from actiVities of planting,maintenance, harvesting andmar keting. Holders of IUPHHK in social forestareonly per mittedto utilizeproducts of timber forests resulting from their planting. Letters band c Sufficiently clear earagraph (2) .•.•. Paragraph (2) Certain conditions mean, among others, readi ness of the region viewed from institutional aspect. Paragraph (3) up to paragraph (7) Sufficiently clear Paragraph (8) The regulation of the Minister rules, among others: a. procedures for issuing license to exploit social forest reflecting partiality to local communities; b. criteria for groups of communities obtaining business license to exploit rorest by regent; c. rights and obligations of holders of business license to exploit social forest; d. nullttlcatlon of license and extension of business license to exploit social forest; e. administrative sanctions against holders of business license to exploit social forest; and f. standards and criteria for social forest accountabil ity. Articles 97 and 98 Sufficiently clear Article 99 paragraph (l) Partnership means cooperation between local communities and holders of business license to exploit forest or holders of forest exploitation, rights by prin ciples of equity and mutual benefiting. Paragraph (2) Facilitation includes helping settle conflict and forming partnership. Paragraph (3) up to paragraph (5) Sufficiently clear Article 100 paragraph (1) Concession forest located in land charged with right is commonly called smallholder forest. Paragraph (2) Exploitation of concession forest can be in the Business News 7535/7-13-2007 17A form of exploitation of timber forest products, non timber forest products and environmental services. Paragraphs (3) and (4) Sufficiently clear Article 101 The provision of compensation can be in the form of development program priority through soft loan subsidy, relief of service and accompanying. Article 102 Paragraph (1) Sufflclently clear Paragraph (2) Change in status of concession forest into forest area is based on agreement between owners and the government. Article 103 Facilitating concession forest development can be in the form of accompanying, counseling, training, guiding, provision of information, socialization, capital assistance and relief of service for exploiting products of concession forest or other incentives. Artlel" 104 Paragraph (1) Forest product primary-industry means down stream forest-product industries as meant in law No. 41/1999 on Forestry. Efficient use of raw materials means the use of raw materials to minimize waste and produce highly valuable products. Paragraph (2) up to paragraph (4) Sufficiently clear Article 105 up to article 108 Sufficiently clear Article 109 Cooperation with concession forest holders means that holders of industrial licensescan collect tim ber from plantations or land belonging to communities, mainly communities around the industries. Article 110 Article 110up to article 112 Sufficiently clear Arllcle 113 Paragraph (1) Authority of regent/mayor to issue registry number of non-timber forest product primary industry, business license and expansion license of non-timber forest-product primary industry still abides by provisions on business lines closed and conditionally opened for investments. Paragraphs (2) and (3) Sufficiently clear Article 114 Sufficiently clear Article 115 Paragraph (1) Letter a Business license of timbe, and non-timber forest-product primary industry contains, among others, the obligation to formulate and report plan for fulfillment of industrial rawmaterials (RPBBI) every year, truthfUlly and completely. Letterb Sufficiently clear Letterc RPBBI constitutes a controlling system of raw material supply, which mustbeformulated andconveyed by holders of industrial business licenses processing directly timber and non-timber forest products. Letter d up to letter h Sufficiently clear Letter i Employing means that if anIndustry hasflu cer tified graderandscaler, the industrycan cooperate With other industry having the specialists by means of employing the relevant in the industry. Letterj Sufficiently clear Business News 7535/7-13-2007 l8A Paragraph (2) Sufficiently clear Article 116 Lettera Industrialexpansion covers activity to add kinds of productand capeotv above30% (thirty percent) of the owned license. Letter b up to letter e Sufficiently clear Article 117 Paragraph (1) The administration of forest products cover, among others, actiVity to administer production plan, harvest or fell, label, measure and verify, carry/distrib ute as well as pile up, process andconvey report. Paragraph (2) up to paragraph (5) Sufficiently clear Article 118 Paragraph (1) Forest products resulting from concession forest indude timber coming from land charged with landtitle. Paragraph (2) Sufficiently clear Article 119 Equipped collectively means that the transport, control or ownership of forest product physically must be accompanied and furnished with legitimate docu ments on the same time and place asevidence andmay notbesupplemented later (on differenttimeand place), legitimate documents andphysics of forestproducts must always affix In the transport, control and ownership. Article 120 paragraphs (1) and (2) Sufficiently clear Paragraph (3) Measuring andverification of forest products and executed by graderand scalerwith a view of obtaining accurate andtechnically accountable results. Article 121 Article 121 Paragraph (10 Marketing of forest products is done to fulfill the need of raw materials of industries and communi ties in the framework of sustainable forest management. Paragraphs (2) and (3) Sufficiently clear Article 122 Sufficiently clear Article 123 Paragraph (1) The policy covers regulation or stipulation of gUidelines in activities of forest arrangement and for mulation of for,,<t management plan as well as forest exploitation. The policy covers formulation and imple mentation. Paragraph (2) Sufficiently clear Article 124 Sufficiently clear Article 125 Paragraphs (1) and (2) Sufficiently clear Paragraph (3) The success of sustainable forest management is reflected by performance of forest management mea sured by criteria and indicators of sustainable forest management, which are proven by certificate of sustainable forest management by the Minister, on the basis of results of evaluation by independent appraiser institution. Paragraph (4) The regulation of the Minister rules among ethers, criteria and standards of forest arrangement and formulation of forest management plan as well as forest exploitation. Articles 126 and 127 Sufficiently clear BusinessNews 7535/7-13-2007 19A Article 128 Imposition of sanction is based on score of vio lation. Violation belonging to serious category is subject to sanction of revocation, light category is subject to administrative sanction n the form of fine and lighter violation is subject to sanction of suspension of activity and/or administrative service. In order to realize general principles of good governance (AUPB), especially for Violation of serious violation with sanction of revocation, warning is issued three time consecutively before the license is revoked. Fulfiliment of the sanction does not eliminate the obligation of licensee to pay levies in the forestry sector, in accordance with legislation. Article 129 up to article 139 Sufficiently clear Article 140 Letter a up to letter g Sufficiently clear Letter h The policy or program previously executed in the framework of community empowerment is, among others, social forestry. Letter i Sufficiently clear Article 141 Stipulation of KPH by the Minister is followed up by institutional building of KPH. The Minister stipulates priority of institutional development of KPH in accordance with the need and condition of forest management. Article 142 up to article 144 Sufficiently clear SUPPLEMENT TO STATUTE BOOK OF THE REPUBLIC OF INDONESIA NO. 4696 ===( AL )===