Corruption and forest revenues in Papua

This paper notes that under a sustainable, well-managed, logging regime, Papua – the most densely forested part of Indonesia – can potentially contribute substantial forest revenues for socio-economic development. Yet, it remains the poorest region in the country, in part due to widespread corruption involving public and private actors.The paper argues that, reforming the management of these resources – specifically, introducing accountability and transparency into the collection of forest revenues – is a key precondition for welfare improvements in the region. The relationship between forest products actually produced and resulting government revenues must be clearly established if the proper financial resources are to be made available for poverty alleviation.The paper makes the following recommendations to the Indonesioan government and to international donors:To Indonesian authorities:

the government – at national, provincial, and district level – should address corruption in forest revenues through specific changes to the current revenue management system
the Ministry of Finance should introduce a proper accounting system for the payment of forestry fees and produce an annual financial report that includes a forestry revenue report
the Supreme Audit Board should verify the adequacy of this forest revenue accounting system and provide an audit opinion on the adequacy of forest revenues
the Ministry of Finance should become actively involved in the control of wood production via its control of the payment of forestry fees
law enforcement agencies (particularly the Indonesian Anti-Corruption Commission) should begin active investigations at all levels of the forest revenue management system

To Donors:

support the implementation of an Integrated Law Enforcement Approach (ILEA) to the Indonesian forestry sector
provide capacity building assistance for government agencies involved in implementing ILEA
provide technology to government agencies and civil society actors involved in monitoring logging activities in remote forest areas
provide technical assistance to government agencies for producing credible financial and timber production reports