AUTHORIZED TRANSLATION [NATIONAL CREST] PRESIDENT OF THE REPUBLIC OF INDONESIA GOVERNMENT REGULATION OF THE REPUBLIC OF INDONESIA NUMBER 34 OF 2002

REGARDING FOREST ARRANGEMENT AND FOREST MANAGEMENT, FOREST UTILIZATION AND FOREST AREA USE PLANNING THE PRESIDENT OF THE REPUBLIC OF INDONESIA, Considering : that for implementation of Chapters V, VII and XV of Law Number 41 of 1999 regarding Forestry, it is necessary to issue Government Regulation on Forest Management and Forest Management, Forest Utilization and Forest Area Use Planning. In view of : 1. Article 5 paragraph (2) and Article 33 paragraph (3) of Constitution 1945 as already amended by virtue of the Third Amendment to Constitution 1945; 2. Law Number 5 of 1960 regarding Agrarian Policy (State Gazette of the Republic of Indonesia of 1960 Number 104, Supplement to State Gazette Number 2034); 3. Law Number 5 of 1990 regarding Conservation of Bio Natural Resources and Ecosystem thereof (State Gazette of the Republic of Indonesia of 1990 Number 49, Supplement to State Gazette Number 3419); 4. Law Number 24 of 1992 regarding Spatial Plan (State Gazette of the Republic of Indonesia of 1992 . Number. 115, Supplement to State Gazette Number 3501); 5. Law Number 23 of 1997 regarding Environmental Management (State Gazette of the Republic of Indonesia of 1997 Number 68, Supplement to State Gazette Number 3699); 6. Law Number 22 of 1999 regarding Decentralization (State Gazette of the Republic of Indonesia.of 1990 Number 49, Supplement to State Gazette Number 3419): 7. Law Number 41 of 1999 regarding Forestry (State Gazette of the Republic of Indonesia of 1999 Number 167, Supplement to State Gazette Number 3888): 8. Law Number 18 of 200 I regarding Special Autonomy for Special Region Province of Aceh as Nanggroe Aceh Darussalam Province (State Gazette of the Republic of Indonesia of 2001 Number 114, Supplement to State Gazette Number 4131 ): 9. Law Number 21 of 2001 regarding Special Autonomy for Papua Province (State Gazette of the Republic of Indonesia of 2001 Number 135. Supplement to State Gazette Number 4151). HAS DECIDED: To Stipulate : GOVERNMENT REGULATION ON FOREST ARRANGEMENT AND FOREST MANAGEMENT, FOREST UTILIZATION AND FOREST AREA USE PLANNING.

CHAPTER I GENERAL Article 1 In this Government Regulation: 1. Forest Arrangement shall mean design of forest management unit, covering the forest resources grouping by type of ecosystem and potential contained therein for maximum sustainable benefit to the community. 2. Forest utilization shall mean any activities to utilize forest areas, environmental service, timber and non timber forest produce optimally and fairly for sustainable community welfare; 3. Protected forest area utilization shall mean any operation to use protected forest area without prejudice to its major function. 4. Production forest area utilization shall mean any operation to use growing !?pace for optimum environmental, social and economic benefits without prejudice to its major function. 5. Environment service utilization in protected forest shall mean any business operation utilizing environmental service potential without damage to environment and prejudice to forest major function. 6. Environment service utilization in production forest shall mean any business operation utilizing environmental service potential without damage to the environment and prejudice to forest major function. 7. Timber forest produce utilization shall mean any business operation utilizing and exploiting timber forest produce without damage to the environment and prejudice to forest major function. 8. Non timber forest produce utilization shall mean any business operation utilizing and exploiting non timber forest produce without damage to the environment and prejudice to the forest major function 9. Timber and or non timber forest product collection shall mean any forms of activity to collect timber and or non timber forest produce without damage to environment and prejudice to the forest major function. 10. Forest utilization permits shall mean permits issued by competent official and consisting of area utilization permits, environment service utilization permits, timber and or non timber forest produce utilization permits and timber and or non timber forest product collection permits in the designated forest areas. 11. Area utilization permit shall mean operation permit to utilize protected forest and or production forest area. 12. Environment Service Utilization Permit shall mean operation permit to utilize environment of protected forest and or production forest. 13. Timber and or non timber Forest Product Utilization Permit shall mean permit to utilize production forest of which the activities consist of harvesting or logging, planting, maintenance, security, processing and marketing of timber and or non timber forest produce. 14. Timber and or non timber Forest Produce Utilization Permit in timber estate shall mean permit to utilize production forest of which the activities consist of land preparation, nursery, planting, maintenance, security. harvesting and logging, processing and marketing of timber and non timber forest produce. 15. Timber forest produce collection permit shall mean permit to collect timber forest produce comprising harvesting, transportation, processing and marketing for a definite term and at definite volume within production forest. 16. Non timber forest produce collection permit shall mean permit in any forms of activity to collect non timber forest produce such as rattan, honey, fruits, resin, medicinal herbs and so forth within the protected and or production forests. 17. Forest utilization permit shall consist of area utilization permit. environment service utilization permit, timber and non timber forest products utilization permit. 18. Forest area use shall mean any activity to use forest area for construction beyond forestry activities without changing major status and function of such forest area. 19. Certificate of Forest Produce Legality (SKSHH) shall mean document stating legality of transportation, control and ownership of forest produce as evidence of forest produce legality granted by the official so appointed.

20. Forest Utilization Permit Dues (IIUPH) shall mean charges collection imposed on permit holder of forest utilization of a certain forest area paid in a lumpsum upon issue of permit. 21. Forest Resources Fees (PSDH) shall mean charges imposed as the intrinsic value replacement of forest produce collected from the state forest. 22. Afforestation Fund (DR) shall mean fund collected from permit holder of forest products utilization permit of natural forest in terms of timber, for afforestation, forest rehabilitation and supporting activities thereof. 23. Individual shall mean any member of local community who is legally capacitate and a Citizen of the Republic of Indonesia. 24. Cooperatives shall mean corporate body with individuals as members or cooperative corporate body operating based on cooperative principles and simultaneously serving as community economic movement based on familiar principle. 25. Timber forest produce primary industry shall mean processing of log and or chipped timber to the semi finished and finished products. 26. Non timber forest product primary industry shall mean processing of non timber forest produce to semi finished and finished products. 27. Minister shall mean the Minister in charge of Forestry. Article 2 (1) Forest arrangement and forest management, forest utilization and forest area use planning shall become a part of the forest management activities. (2) Activities in the forest arrangement and forest management, forest utilization and forest area use planning as referred to in paragraph (1) shall be implemented in forest territory in terms of Conservation Forest Management Unit or Unity (KPHK), Protected Forest Management Unit or Unity (KPHL) and Production Forest Management Unit and Unity (KPHP). Article 3 (1) Forest arrangement and forest management, forest utilization and forest area use planning as referred to in Article 2 shall become the authority of the Central Government and Local Administration. (2) The Government may delegate activities in forest arrangement and forest planning as well as forest utilization and forest area use as referred to in paragraph (2) in a certain territory or for a certain activity to the State Enterprises dealing with forestry. Article 4 (1) For research, development, forestry education and training, religion and culture the Minister shall stipulate forest arrangement and forest management, forest utilization and specially designated forest use planning. (2) Forest arrangement and forest management, forest utilization and specially designated forest area use planning as referred to in paragraph (1) for: a. research and development can be delegated to institutions dealing with research and development; b. education and training be delegated to institutions dealing with education and training; c. religion and culture can be delivered to institutions dealing with religious and cultural activities: (3) Forest arrangement and forest management, forest utilization and specially designated forest area use planning as referred to in paragraph (2) shall be stipulated by the Minister. (4) Provisions on forest arrangement and forest management, forest utilization and specially designated forest area use planning as referred to in paragraphs (1) and (2) shall be stipulated by virtue of Decree of Minister.

CHAPTER II FOREST ARRANGEMENT AND FOREST MANAGEMENT PLANNING Part One Forest Arrangement Paragraph 1 General Article 5 (1) Forest arrangement as referred to in Article 2 shall be made at each forest management unit in all forest areas. (2) Forest areas as referred to in paragraph (I) shall include: a. conservation forests; b. protected forest; and c. production forest. Paragraph 2 Forest Arrangement in Conservation Forest Article 6 Conservation forests as referred to in Article 5 paragraph (2) item a shall consist of: a. nature reserve forest area: b. nature preserve forest area: and c. hunting resort. Article 7 (1) Forest arrangement in nature reserve forest areas as referred to in Article 6 item a shall consist of: a. nature preserve forest arrangement; and b. wildlife reserve forest arrangement. (2) Nature preserve forest arrangement as referred to in paragraph (1) item a shall contain the following activities: a. determination of boundaries of arranged forest; b. inventory taking and identification of area potential and condition; c. inventory taking and identification of problems in the area and surrounding territory; d. forest history; and e. measuring and mapping. (3) Wildlife reserve forest arrangement as referred to in paragraph 1 item b not only includes activities as referred to in paragraph (2) but also: a. division of areas to blocks; and b. block pegging. Article 8 (1) Forest arrangement in natural preservation forest area as referred to in Article 6 item b shall consist of: a. national park; b. forest park; and c. natural resort. (2) Forest arrangement in national park area as referred to in paragraph (1) item a shall be made at each management unit containing the following activities: a. determination of boundaries of arranged forest; b. inventory taking, identification and history of area condition; c. collection of social, economic and cultural data in the area and its surrounding; d. division of area to zones; e. zone pegging; and

f.

measuring and mapping.

(3) Division of area to zones as referred to in paragraph (2) item d shall consist of: a. core zone; b. utilization zone; and c. other zones. Article 9 (1) Forest arrangement in forest park area as referred to in Article 8 paragraph ( I ) item b shall be made at each management unit containing the following activities: a. determination of boundaries of arranged forest; b. inventory taking, identification and history of area condition; c. collection of social, economic and cultural data in the area and its surrounding; d. division of area to blocks; e. block pegging; and f. measuring and mapping. (2) Division of area to blocks as referred to in paragraph (1) item d shall consist of: a. utilization block: b. plant collection block; c. protection block; and d. other blocks. Article 10 (1) Forest arrangement in natural resort area as referred to in Article 8 paragraph (I) item c shall be made at each management unit containing the following activities: a. determination of boundaries of arranged forest; b. inventory taking, identification and history of area condition; c. collection of social, economic and cultural data in the area and its surrounding; d. division of area to blocks; e. block pegging; and f. measuring and mapping. (2) Division of area to blocks as referred to in paragraph (1) item d shall consist of: a. intensive utilization block; b. limited utilization block; and c. other blocks. Article 11 (1) Forest arrangement in hunting resort as referred to in Article 6 item c shall be made at each management unit containing the following activities: a. determination of boundaries of arranged forest; b. inventory taking, identification and history of area condition; c. collection of social, economic and cultural data in the forest and its surrounding; d. division of forest to blocks; e. block pegging; and f. measuring and mapping. (2) Division of forest to blocks as referred to in paragraph (1) item d shall consist of: a. hunting block; b. utilization block; c. wildlife development block; and d. other blocks.

Paragraph 3 Forest Arrangement in Protected Forest Article 12 (1) Forest arrangement in protected forest as referred to in Article 5 paragraph (2) item b shall be made at each management unit containing the following activities: a. determination of boundaries of arranged forest; b. inventory taking, identification and history of area condition; . c. collection of social, economic and cultural data in the forest and its surrounding: d. division of forest to blocks; e. registration; f. measuring and mapping. (2) Division of forest to blocks as referred to in paragraph (1) item d shall consist of: a. protection block; b. utilization block; c. other blocks. Paragraph 4 Forest Arrangement in Production Forest Article 13 (1) Forest arrangement in production forest as referred to in Article 5 paragraph (2) item c shall contain the following activities: a. determination of boundaries of arranged forest; b. inventory taking of forest potential and condition shall cover: 1. type. potential and distribution of flora: 2. type, population and habitat of fauna; 3. design of area extent boundary route and boundary within forest area, and enclave boundary design; 4. social, economic and cultural aspects of community; 5. land status, use and coverage~ 6. type of land, field gradient and topography; 7. climate: 8. human resources (demography): 9. hydrologic condition, landscape and natural phenomena. c. forest history; d. division of forest to blocks and plots; e. block and plot pegging: f. territory opening and management facilities; g. registration: and h. measuring and mapping. (2) Division of blocks to working plots as referred to in paragraph (I) item e shall take into account: a. area extent; b. forest produce potential; and d. ecosystem conformity. Part Two Forest Management Planning Article 14 (1) Forest management plan shall be made based on forest arrangement at each forest management unit or unity as referred to in Articles 8 through 13, by taking into account community's aspiration, participation and cultural value as well as environmental condition. (2) Forest management planning as referred to in paragraph (1) shall comprise: a. long term forest management plan containing macro activity plan regarding guidelines, orientation as well as principles of forest management to attain objective of forest

management within 20 (twenty) years shall be prepared by agency responsible for Provincial forestry and ratified by the Minister; b. medium term forest management plan containing outline of long term forest management planning within of 5 (five) years shall be prepared by agency responsible for Provincial forestry and ratified by the Minister; c. short term forest management plan containing detailed operational plan being elaboration of management plan within I (one) year shall be prepared by agency responsible for Provincial forestry and ratified by the Governor: (3) Forest management plan as referred to in paragraph (2) shall contain planning, organizing, implementation, evaluation, control, supervision being basis of forest management activities. (4) Guidelines on forest management planning as referred to in paragraph (2) shall be stipulated by virtue of Decree of Minister. CHAPTER III FOREST UTILIZATION Part One General Article 15 (1) Forest utilization as referred to in Article 2 shall be aimed at obtaining optimum benefit for fair welfare of the entire community by maintaining forest preservation. (2) Sustainable forest utilization as referred to in paragraph (1) shall fulfill .criteria and indicators of sustainable management. (3) Criteria and indicators as referred to in paragraph (2) shall include economic, social and ecological aspects. (4) Criteria and indicators as referred to in paragraph (3) shall be stipulated by virtue of Decree of Minister. . Article 16 . Forest utilization as referred to in Article 15 can be made at any forest areas unless nature preserve forest, core zone and jungle zone at national park. Part Two Forest Utilization in Conservation Forest Article 17 Forest utilization in conservation forest shall be stipulated by virtue of the prevailing legislation. Part Three Forest Utilization in Protected Forest Paragraph 1 General Article 18 (1) Forest utilization in protected forest can be in terms of: a. area utilization: b. environmental service utilization; or c. non timber forest produce collection. (2) Forest utilization in protected forest as referred to in paragraph (1) can only be made in utilization block.

Paragraph 2 Area Utilization in Protected Forest Article 19 (1) Area utilization in protected forest as referred to in Article 18 paragraph (1) item a shall be in terms of any kinds of business using the area without prejudice to its major function. (2) Area utilization as referred to in paragraph (1) shall comprise: a. medicinal herbs culture; b. ornamental plant culture; c. mushroom culture; d. bee culture; e. wildlife breeding culture; or f. swallow nest culture. . (3) The implementation of area utilization in protected forest shall not: a. use any mechanical and heavy equipment; b. construct any permanent facility and infrastructure; and/or c. disturb the area function. (4) Medicinal herbs, ornamental plant and mushroom culture as referred to in paragraph (2) items a, band c shall comprise nursery, planting, maintenance, harvesting, security, processing and marketing. (5) Bee culture as referred to in paragraph (2) letter d shall comprise construction of bee hive, maintenance, harvesting, security, processing and marketing. (6) Wildlife breeding culture as referred to in paragraph (2) item e shall comprise wildlife reproduction and or growing. (7) Swallow nest culture as referred to in paragraph (2) item f shall comprise maintenance, harvesting and security as well as marketing. Paragraph 3 Environmental Service Utilization in Protected Forest Article 20 (1) Environmental service utilization as referred to in Article 18 paragraph (1) item b shall be any business utilizing environmental service potential without damage to the environment and prejudice to its major. (2) In environmental service potential utilization as referred to in paragraph (l) no facility nor infrastructure which may change the landscape shall be constructed. (3) Utilization of environmental service in protected forest as referred to in paragraph (I) shall be in terms of among others: a. natural resort; b. challenging sport resort; c. water utilization; d. carbon trade; or e. forest and environment salvation. Paragraph 4 Non Timber Forest Produce Collection in Protected Forest Article 21 (1) Non timber forest produce collection in protected forest as referred to in Article 18 paragraph (1) item c can be made by collecting the existing non timber forest produce in natural manner without harming its major function.

(2) Non timber forest produce collection in protected forest as referred to in paragraph (I) shall be among others: a. taking rattan; b. taking honey: c. picking fruits and various other forest produce: or d. unprotected wild fauna traditional hunting. (3) The community shall not collect any forest produce which is legally restricted. Paragraph 5 Permit of Forest Utilization in Protected Forest Article 22 (1) Forest utilization in protected forest as referred to in Article 18 paragraph (1) shall be subject to permit. (2) Permit of forest utilization in protected forest as referred to in paragraph (I) shall consist of: a. permit of area utilization in protected forest; b. permit of environmental service utilization in protected forest; c. permit of non timber forest produce collection In protected forest. (3) No permit of forest utilization in protected forest can be granted in any forest area already furnished with forest utilization permit. (4) No permit of forest utilization in protected forest can be transferred without any written consent of the issuing agency. (5) The area already furnished with forest utilization permit in protected forest shall not serve as any collateral nor be encumbered. Article 23 (1) The permit of area utilization in protected forest as referred to in Article 22 paragraph (2) item a shall be effective for no longer than 5 (five) years for a maximum extent of 50 (fifty) hectares. (2) The permit of environmental service utilization in protected forest as referred to in Article 22 paragraph (2) item b shall be effective for no longer than 10 (ten) years for a maximum extent of 1000 (one thousand) hectares. (3) The permit of non timber forest produce collection in protected forest as referred to in Article 22 paragraph (2) item c shall be effective for no longer than 1 (one) year provided that it is within the given quantity, type and location. . Article 24 (1) The Minister shall stipulate treatment for area utilization, environmental service utilization and non timber forest produce collection according to business location and or type. (2) The stipulation of treatment for area utilization as referred to in paragraph (1) shall be as follows: a. no tree logging; b. non eroding land tilling technique; c. non-use of pesticide and insecticide; d. non-use of mechanical equipment; and e. operation below gradient of 25%. (3) Stipulation on treatment for environmental service utilization as referred to in paragraph (I) shall not change the landscape and environment as well as procure conservation of the environment preservation supporting elements.

(4) Stipulation on treatment of non timber forest produce as referred to in paragraph (I) shall be as follows: a. no tree logging; b. no disturbance to collected potential preservation; and c. no mechanical equipment. Part Four Forest Utilization in Production Forest Paragraph 1 General Article 25 (1) Forest utilization in production forest shall be made by maintaining preservation of and improvement in its major function. (2) Forest utilization in production forest may be in terms of: a. area utilization; b. environmental service utilization; c. timber forest produce utilization; . d. non timber forest produce utilization; e. timber forest produce collection; or f. non timber forest produce collection. Paragraph 2 Area Utilization in Production Forest Article 26 (1) Area utilization in production forest as referred to in Article 25 paragraph (2) item a shall be made by utilizing the growth space not disturbing major function of the area. (2) Area utilization as referred to in paragraph (1) shall be in terms of among others: a. medicinal herbs culture: b. ornamental plants culture; c. under vegetation food crops culture; d. mushroom culture; e. bee culture; f. wildlife breeding or culture: or g. swallow nests culture. (3) Medicinal herbs, ornamental plants and food crops culture in production forest as referred to in paragraph 2 items a, b, and c shal1 include nursery, planting, maintenance, security, harvesting, processing and marketing. (4) Bee culture in production forest as referred to in paragraph (2) item e shall include making of bee hives, maintenance, harvesting and security. (5) Wildlife culture in production forest as referred to in paragraph (2) item f shall be reproduction and or growing of wildlife in production forest. (6) Swallow nests culture in production forest as referred to in paragraph (2) item g shall include maintenance, security and harvesting. Paragraph 3 Environmental Service Utilization in Production Forest Article 27 (1) Environmental service utilization in production forest as referred to in Article 25 paragraph (2) item b shall be any forms of business in utilizing environmental service potential without damaging landscape and environment.

(2) Environmental service utilization in production forest as referred to in paragraph (1) shall be in terms of: a. natural resort; b. challenging sport; c. water utilization; d. carbon trade; or e. forest and environment salvation. Paragraph 4 Timber and Non Timber Forest Produce Utilization in Production Forest Article 28 Timber and Non-timber Forest Produce Utilization in Production Forest as referred to in Article 25 paragraph (2) items c and d shall consist of: a. timber and or non-timber forest produce utilization in natural forest shall also be referred to as natural forest utilization; b. timber and or non-timber forest produce utilization in timber estate shall also be referred to as timber estate utilization. Article 29 (1) Timber forest produce utilization in natural forest as referred to in Article 28 item a shall comprise logging, transportation, planting, maintenance, security, processing and produce marketing. (2) Timber forest produce utilization in natural forest can only be made at the forest area with potential for timber forest produce utilization. (3) Criteria of natural forest potential which can be utilized as referred to in paragraph (2) shall be stipulated by virtue of Decree of Minister. (4) The natural forest area which does not fulfill the criteria of potential for timber forest produce utilization shall be rehabilitated. (5) Non timber forest produce utilization in natural forest as referred to in Article 28 item a can be in terms of among others of utilization of: a. rattan. sago, thatch palm, bamboo including felling, rejuvenation, maintenance. security. processing and produce marketing. b. resin, tree bark, leaf, fruit or seed, including harvesting, maintenance, processing, produce marketing. (6) Further provisions on timber and or non-timber forest produce utilization in natural forest as referred to in paragraphs (l), (2) and (5) shall be stipulated by virtue of Decree of Minister. Article 30 (1) Timber and or non-timber forest produce utilization in timber estate as referred to in Article 28 item b shall comprise land preparation, nursery, planting, maintenance, security, harvesting or produce felling, processing and marketing. (2) Timber and or non-timber forest produce utilization in timber estate may be in terms of: a. similar species; and b. mix of various species. (3) Forest produce utilization in timber estate shall be made at empty land, sedge grass field and or bushes in production forest.

(4) Further provisions as referred to in paragraphs (1) and (2) shall be stipulated by virtue of Decree of Minister. Article 31 In case of forest area use in production forest area which will be furnished with forest utilization permit, the Minister shall coordinate the same with the relevant agencies. Paragraph 5 Forest Produce Collection in Production Forest Article 32 (1) Timber forest produce collection as referred to in Article 25 paragraph (2) item e shall be aimed at fulfilling the individual needs and or serving as public facility for people living around the forest. (2) Non-timber forest produce collection in referred to in Article 25 paragraph (2) item f can be for commercial purposes. (3) Non-timber forest produce collection in production forest as referred to in paragraph (2) shall be among others collection of rattan, honey, resin, fruits or seeds, leaves, plants under vegetation. (4) Non-timber forest produce collection as referred to in paragraph (2) for plants and wildlife shall be stipulated pursuant to the prevailing legislation. (5) Timber and non-timber forest produce collection in production forest as referred to in Article 25 paragraph (2) items e and f shall comprise the following activities: a. timber forest produce collection from natural forest; and b. non-timber forest produce collection from natural forest. (6) Further provisions as referred to in paragraphs (1) and (2) shall be stipulated by virtue of Decree of Minister. Paragraph 6 Permit of Forest Utilization in Protected Forest Article 33 (1) Forest utilization in production forest as referred to in Article 25 paragraph (2) shall be subject to permit. (2) Permit of forest utilization in production forest as referred to in paragraph (I) shall consist of: a. area utilization permit; b. environmental service utilization permit: c. timber forest produce utilization permit; d. non timber forest produce utilization permit; e. timber forest produce collection permit: f. non-timber forest produce collection permit: (3) Timber and non-timber forest produce utilization permits as referred to in paragraph (1) items c and d shall not be issued for any area already furnished with timber and nontimber forest produce utilization permit or timber forest produce collection permit. Article 34 (1) Permit of forest utilization in production forest cannot be transferred without any written consent of the issuing agency. (2) Permit of forest utilization in production forest shall not constitute any proprietary right to forest area.

(3) Any forest area furnished with permit of forest utilization in production forest cannot be made as collateral nor encumbered to any other party. (4) Plants produced from permit of forest produce utilization in timber estate can become collateral provided the permit is still effective. Article 35 (1) Permit of area utilization in production forest as referred to in Article 33 paragraph (2) item a shall be effective for not more than 5 (five) years provided that: a. maximum extent is 50 (fifty) hectares; b. each individual or cooperative may have maximum 2 (two) permits in 1 (one) District/Town; (2) Permit of environmental service utilization in production forest as referred to in Article 33 paragraph (2) item b shall be effective for not more than 10 (ten) years provided that: a. maximum extent is 1000 (one thousand) hectares: b. each individual, cooperative, state-enterprise, regional-state enterprise or Indonesian private-company may have maximum 2 (two) permits in 1 (one) Province; (3) Permit of timber forest produce utilization in natural forest as referred to in Article 33 paragraph (2) item c shall be effective for not more than 55 (fifty five) years. (4) The permit of non-timber forest produce utilization in natural forest as referred to in Article 33 paragraph (2) item d shall be effective for not more than 10 (ten) years. (5) The permit of forest produce utilization in timber estate as referred to in Article 33 paragraph (2) items c and d shall be effective for not more than 100 (one hundred) years. (6) The timber and non-timber forest produce collection permit as referred to in Article 33 paragraph (2) items e and f shall be effective for not more than 1 (one) year provided that: a. maximum extent is 20 (twenty) m3 for timber forest produce collection from direct felling; b. maximum is 20 (twenty) tons for non timber forest produce. Part Five Permit Paragraph 1 Permit Holder Article 36 (1) Area utilization permit can be granted to: a. individual: and b. cooperative. (2) Environmental service utilization permit can be granted to: a. individual; b. cooperative. c. Indonesian Private-Company; and d. State-Enterprise and Regional-State Enterprise. (3) Timber forest produce utilization permit can be granted to: a. individual: b. cooperative. c. Indonesian Private-Company; and d. State-Enterprise and Regional-State Enterprise. (4) Non-timber forest produce utilization permit can be granted to: a. individual;

b. cooperative. c. Indonesian Private-Company; and d. State-Enterprise and Regional-State Enterprise. (5) Timber forest produce collection permit canoe granted to: a. individual; and b. cooperative. (6) Non-timber forest produce collection permit can be granted to: a. individual; and b. cooperative. Paragraph 2 Permit Issuing Authorities Article 37 Area utilization permit shall be granted by: a. District Head or Mayor with carbon copies to Minister, Governor or the agency being responsible for local forestry if within district/town territory; b. Governor with carbon copies to Minister, District Head or Mayor and agency being responsible for local forestry if within cross district/town area in one province; c. Minister with carbon copies to Governor and District Head or Mayor if within the crossprovincial area. Article 38 Timber and non timber forest produce collection permit shall granted by: a. District Head or Mayor with carbon copies to Minister, Governor or agency being responsible for local forestry if within the district/town territory; b. Governor with carbon copies to Minister, District Head or Mayor and agency being responsible for local forestry if within cross district/town area in one province; c. Minister with carbon copies to Governor and District Head or Mayor if within the crossprovincial area. Article 39 Environment service utilization permit shall be granted by: a. District Head or Mayor with carbon copies to Minister, Governor or agency being responsible for local forestry if within the district/town territory; b. Governor with carbon copies to Minister, District Head or Mayor and agency being responsible for local forestry if within cross district/town area in one province; d. Minister with carbon copies to Governor and District Head or Mayor if within the crossprovincial area. Article 40 Permit of non-timber forest produce utilization in natural forest shall be granted by: a. District Head or Mayor with carbon copies to Minister, Governor or agency being responsible for local forestry if within the district/town territory; b. Governor with carbon copies to Minister, District Head or Mayor and agency being responsible for local forestry if within cross district/town area in one province; c. Minister with carbon copies to Governor and District Head or Mayor if within the crossprovincial area. Article 41 Permit of non-timber forest produce utilization permit in timber estate shall be granted by: a. District Head or Mayor with carbon copies to Minister, Governor or agency being responsible for local forestry if within the district/town territory;

b. Governor with carbon copies to Minister, District Head or Mayor and agency being responsible for local forestry if within cross district/town area in one province; c. Minister with carbon copies to Governor and District Head or Mayor if within the crossprovincial area. Article 42 Permit of timber forest produce utilization in natural forest or timber estate shall be granted by the Minister based on the recommendation of District Head of Mayor and Governor. Paragraph 4 Procedure for and Requirements of Application for Permit Article 43 (1) Area utilization permit, environmental service utilization permit, non-timber forest produce utilization permit and timber and or non-timber forest produce collection permit shall be granted by filing an application. (2) Application for permit as referred to in paragraph (1) shall be as follows: a. Application for permit as referred to in Articles 37, 38, 39, 40 and 41 shall be filed to District Head or Mayor with carbon copies to Minister, Governor and agency being responsible for local forestry. b. application for permit as referred to in Articles 37, 38, 39, 40 and 41 shall be filed to Governor with carbon copies to Minister, District Head or Mayor and agency being responsible for local forestry. c. Application for permit as referred to in Articles 37, 38, 39, 40 and 41 shall be filed to the Minister with carbon copies to Governor, District Head or Mayor and agency being responsible for local forestry. (3) Plant of timber forest produce utilization in natural forest or timber estate as referred to in Article 42 shall be granted through tender. (4) The tender as referred to in paragraph (3) shall be made by the Minister. (5) Requirements of application for forest utilization permit tender of timber forest produce utilization as referred to in paragraphs (1) and (3) shall be stipulated by virtue of decree of the Minister. Article 44 Bidding in timber forest produce utilization permit tender as referred to in Article 42 shall be stipulated as follows: a. The Minister shall stipulate criteria of production forest which can be tendered, area status and bidders; b. The Minister shall extensively announce extent of forest area to tender; c. the interested parties shall file requests for becoming bidders; d. the bidders shall be given opportunity to make site visit and seek for necessary data: e. the Minister shall stipulate the awardee. Article 45 Any permit of forest utilization with change of landscape and impact on environment shall require Analysis on Environmental Impacts pursuant to the prevailing legislation. Part Six Rights and Obligations of Forest Utilization Permit Holders Paragraph 1 Rights of Forest Utilization Permit Holders Article 46 (1) Each forest utilization permit holder shall be entitled to operate as licensed.

(2) In the operation as referred to in paragraph (1), the forest utilization permit holder shall be entitled to take benefit from its business yields. Paragraph 2 Obligations of Forest Utilization Permit Holder Article 47 (1) Each forest utilization permit holder shall: a. prepare action plan of the entire work area for the permit effectiveness period; b. start concrete field activities at the latest 3 (three) months as of the permit issue; c. peg the working area at the latest 3 months as of the permit issue unless for forest produce collection permit; d. make periodic progress report; e. protect the work area against any disturbance: f. for permit holder in terms of Corporate Body, manage finance pursuant to the prevailing forestry accounting standard; g. employ the professionals in forestry and other qualified workers according to need; h. pay Forest Resources Fee (PSDH). (2) Holder of area utilization permit or environmental service permit shall in addition to performing the obligations as referred to in paragraph (I) pay Forest Utilization Permit Dues (IIUPH). (3) State-Enterprises, Regional-State Enterprises and Private Companies being holders of environmental service permits shall in addition to performing the obligations as referred to in paragraphs (1) and (2) cooperate with local cooperative in not later than 1 (one) year after recei ving the permits. (4) Holders of permit of timber forest produce utilization permit in natural forest or timber estate shall in addition to performing the obligations as referred to in paragraph (1): a. pay Forest Utilization Permit Dues (IIUPH); b. prepare: 1. Action Plan of Timber Forest Produce Utilization (RKUPHHK) for all work areas for the effectiveness period of permit in not later than 1 (one) year after the permit issue; 2. the First 5-(five)-Year Action Plan in not later than 3 (three) months as of ratification of RKUPHHK); 3. annual Action Plan filed in not later than 2 (two) months prior to start of that of the current year to file to the Minister for approval. c. manage the forest produce administration; d. measure or test forest produce; e. pay Afforestation Fund; f. apply silviculture system by location and species to develop; g. provide and supply timber raw materials for forest produce primary industry. (5) Holders of permit of non-timber forest produce utilization permit shall in addition to performing the obligations as referred to in paragraph (1): a. pay Forest Utilization Permit Due (IIUPH); b. prepare: 1. Action Plan of Non-timber Forest Produce Utilization (RKUPHHBK) for 10 (ten) years in not later than 1 (one) year after the permit issue; 2. The First 5-(five)-Year Action Plan in not later than 3 (three) months as of ratification of RKUPHHBK: 3. Annual Action Plan, filed in not later than 2 (two) months prior to the start of that of current year. c. manage non-timber forest produce administration; d. measure and test non-timber forest produce; e. ensure raw material supply for of non-timber forest produce primary industry;

(6) State-Enterprises. Regional-State Enterprises and Private-Companies being holders of timber and or non timber forest produce utilization permits shall in addition to performing the obligations as referred to in paragraphs (1) and (4) and (5) cooperate with local cooperative community in not later than 1 (one) year after receiving the permits. (7) Cooperation as referred to in paragraphs (3) and (6) shall be in terms of: a. placement; b. business cooperation in forest produce utilization. (8) Holders of forest produce utilization permit shall cultivate timber estate at least 50% (fifty) percent of total vegetation extent based on planting cycle of area extent within not later than 5 (five) years as of the issue of forest produce utilization permit. Paragraph 3 Forest Utilization Dues Article 48 (1) Forest Utilization Dues being non tax state revenue originating from forest resources shall consist of: a. Forest Utilization Permit Dues (IIUPH); b. Forest Resources Fee (PSDH): and c. Afforestation Fund (DR). (2) Forest Utilization Permit Dues (IIUPH) as referred to in paragraph (1) item a shall be imposed on the holders of forest utilization permit based on extent of forest given in that permit. (3) Forest Utilization Permit Dues (IIUPH) as referred to in paragraph (1) shall be collected in a lumpsum upon permit issue. (4) Forest Resources Fee (PSDH) as referred to in paragraph (1) letter b shall be imposed on the holders of forest utilization permit. (5) Forest Resources Fee (PSDH) collection of timber forest produce originating from natural forest shall be based on: a. cruising report of trees to fell for medium log; b. production report for log; c. plotting remainder report; and d. other forest produce report. (6) Forest Resources Fee (PSDH) collection of timber forest produce originating from timber estate shall be based on cruising report of trees to fell. (7) Each timber and non-timber forest produce originating from forest area use permit or forest area undergoing any designation change to non-forest area and charged by the title to land shall be subject to Forest Resources Fee (PSDH) and or Afforestation Fund (DR). (8) Provisions on imposition. collection, payment, management, supervision and control of lIUPH, PSDH and DR as referred to in paragraph (1) shall be stipulated by virtue of the prevailing legislation. Part Seven Permit Nullification Article 49 (1) Forest utilization permit can be nullified in case of: a. expiration; b. revocation by issuing authority as sanction; c. return of permit by the permit holder with the written statement to the issuing authority prior to expiration thereof; or

d. attainment of allowable volume or weight in the forest produce collection permit. (2) Before receiving the returned permit as referred to in paragraph (1) item c, comprehensive audit shall first be made. (3) Based on the audit as referred to in paragraph (2), the issuing authority may accept or accept conditionally or deny the permit return. (4) Nullification of permit based on paragraph (1) shall not release the permit holder from: a. paying all financial liabilities and fulfilling other obligations stipulated by the Government or Local Administration: b. executing all given provisions in relation to the expiration of permit in accordance with the prevailing provision. (5) Upon the nullification of permit as referred to in paragraph (1) immovable goods and or plants already built and or planted within the work area shall become the state' s property. (6) Upon nullification of permit as referred to in paragraph (1) the Government and or Local Administration shall not be responsible for obligations of the permit holder to any third party. Part Eight Extension of Permit Article 50 (1) Area utilization permit, environmental service utilization permit, timber and non-timber forest produce utilization permit, and timber and non-timber forest produce collection permit can be extended if expired. (2) Permit extension as referred to in paragraph (1) can be granted in case of fulfilling of permit extension requirements as follows: a. for area utilization permit, environment service permit, non timber forest produce utilization permit as well as timber and non-timber forest produce collection permit, evaluation of performance of permit holder stipulated by the Minister; b. for permit of timber forest produce utilization in natural forest or permit of timber forest produce utilization permit in timber estate, evaluation of performance of permit holder by the Minister and for sustainable forest utilization certificate from the Minister. (3) To request for permit extension already fulfilling the requirements as referred to in paragraph (2), the following provision shall apply: a. extension of area utilization permit, environmental service permit, non timber forest produce utilization permit and timber and non-timber forest produce collection permit shall be granted by: 1) District Head/Mayor with carbon copies to Minister, Governor and agency being responsible for local forestry if within the territory of district/town; 2) Governor with carbon copies to Minister, District Head Mayor and agency being responsible for local forestry if cross-district/town territory in one province; 3) Minister with carbon copies to Governor and District Head/Mayor if cross provincial area. b. extension of permit of timber forest produce utilization in natural forest or permit of timber forest produce utilization in timber estate shall be granted by the Minister after recommendation from District Head/Mayor and Governor. (4) Request for extension of timber forest produce utilization permit not fulfilling the requirements as referred to in paragraph (2) item b shall be denied and the work area thereof shall be offered in tender by the Minister. (5) Procedure for and requirements of permit extension as referred to in paragraph (2) item b and paragraph (4) shall be stipulated by virtue of decree of Minister.

Part Nine Empowerment of Local Community in and or around Forest Article 51 (1) Empowerment of local community in and or around forest shall be aimed at improving the ability of the community institutional capability in forest utilization. (2) The Government and or Local Administration shall facilitate improvement in community institutional capability as referred to in paragraph (). (3) Further provisions as referred to in paragraphs (1) and (2) shall be stipulated by virtue of Decree of Minister. CHAPTER IV FOREST PRODUCE PRIMARY INDUSTRY Part One General Article 52 (1) Forest produce primary industry shall be aimed at: a. increasing value added of forest produce: and b. using raw materials efficiently. (2) Forest produce primary industry shall consist of: a. timber forest produce primary industry: and b. non-timber forest product primary industry. (3) Capacity of forest produce primary industry permit shall not exceed sustainable forest bearing capacity. (4) Raw material source of forest produce primary industry may originate from natural forest, timber estate. title forest and timber yield of plantation. Article 53 Arrangement, promotion and development of forest produce primary industry shall be aimed at: a. realizing efficient, productive and highly competitive industry; b. preventing damage to forest resources and environmental pollution; c. securing sources of raw material for sustainable forest management. Article 54 (1) Authority of arrangement, promotion and development of forest produce primary industry shall be stipulated by the Minister in respect of all industries dealing with: a. processing log to sawn wood; b. processing log to chips, veneer. plywood, laminating veneer lumber; and c. processing non timber raw material directly collected from forest. (2) Authority of arrangement. promotion and development of forest produce industry regulated by the Minister being responsible for industry shall include all industries other than those as referred to in paragraph (I). (3) To preserve forest resources and continuous raw materials supply, each pulp and paper industry development shall timber estate. (4) In addition to paragraph (3), to fulfill raw materials for pulp and paper industry, permit holders can cooperate with timber forest produce utilization permit holders and or import the raw materials.

Article 55 (1) Industrial operation permits and timber and non-timber forest produce primary industry expansion permits can be granted to: a. individuals: b. cooperatives: c. State-Enterprises: d. Regional-State Enterprises; e. Indonesian Private-Companies. (2) Sawmill operation permits with annual production capacity up to 2000 (two thousand) cubic meter can be granted to: a. individuals; b. cooperatives. (3) Industrial registration certificates for small-scale non timber forest produce primary industry can be granted to: a. individuals; b. cooperatives. (4) Provisions on forest produce primary industry criteria as referred to in paragraphs (1), (2) and (3) shall be stipulated by virtue of Decree of the Minister. Part Two Timber Forest Produce Primary Industry Permit Article 56 Each establishment or expansion of timber forest produce primary industry shall require industrial operation permit or expansion permit for timber forest produce primary industry. Article 57 (1) Industrial operation permit and timber forest produce primary industry expansion permit shall be effective indefinitely pursuant to provisions of this Government Regulation. (2) Evaluation of timber forest produce primary industry shall be made at least quarterly. (3) Criteria of and procedure for evaluation of timber forest produce primary industry shall be stipulated by virtue of decree of Minister. Part Three Procedure for and Requirements of Request for Timber Forest Produce Primary Industry Operation Permit Article 58 (1) Request for timber forest produce primary industry operation permit and expansion permit for: a. sawmill with annual production capacity up to 6000 (six thousand) cubic meters shall be filed to Governor with carbon copies to Minister and District Head/Mayor. b. Timber forest produce primary industry directly processing log and or chip to chip timber, veneer and plywood as well as laminating veneer lumber with annual production capacity up to 6000 (six thousand) cubic meter shall be filed to Governor with carbon copies to Minister and District Head/Mayor. c. Timber forest produce primary industry directly processing log and or chip to sew log, chip timber, veneer and plywood as well as laminating veneer lumber with annual production capacity up to 6000 (six thousand) cubic meter shall be filed to Minister with carbon copies to Minister being responsible for industrial affairs and Governor. d. all forest produce industries as referred to in items a. b and c shall be filed to the Minister being responsible for industrial affairs with carbon copies to the Minister, Governor and District Head/Mayor.

(2) Requirements of request for timber forest produce primary industry operation permit and expansion permit as referred to in paragraph (I) items a, band c shall be stipulated by virtue of Decree of Minister. Article 59 (1) Request for timber forest produce primary industry operation permit and or expansion permit as referred to in Article 58 paragraph (I) items a. band c shall be furnished _withcontinuous timber raw material supply guarantee. (2) Provisions on continuous timber raw material security guarantee as referred to in paragraph (I) shall be stipulated by virtue of Decree of Minister. Part Four Non Timber Forest Produce Primary Industry Permit Article 60 (1) Any small-scale non-timber forest produce primary industries shall have the industrial registration certificates treated as industrial operation permits. (2) Each establishment or expansion of medium and large scale non timber forest produce primary industry shall have industrial operation permit or expansion permit (3) Further provisions on non timber forest produce primary industry operation permit as referred to in paragraphs (1) and (2) shall be stipulated by virtue of Decree of Minister. Article 61 (1) Small-scale non timber forest produce primary industry registration certificate, industrial operation permit and non timber forest produce primary industry expansion permit shall be effective for indefinite term pursuant to provisions of this Government Regulation. (2) Performance evaluation of non timber forest produce primary industry shall be made every 3 (three) years. (3) Guidelines on performance evaluation of non timber forest produce primary industry as referred to in paragraph (2) shall be stipulated by virtue of Decree of Minister. Part Five Procedure for and Requirements of Non-Timber Forest Produce Primary Industry Operation Permit Article 62 (1) Request for small-scale non-timber forest produce primary industry registration certificate, non timber forest produce primary industry operation permit and expansion permit there of shall be filed to the Governor with carbon copies to Minister and District Head/Mayor. (2) Requirements of small-scale non timber forest produce primary industry registration certificate, non timber forest produce primary industry operation permit and expansion permit shall be stipulated by virtue of Decree of Minister. Article 63 Request for small-scale non timber forest produce primary industry registration certificate, non timber forest produce primary industry operation permit and expansion permit as referred to in Article 62 shall be furnished with the explanation of fulfillment and origin of raw materials.

Part Six Permit Issuing Authority Article 64 (1) Operation permit for sawmill with annual production capacity up to 6000 (six thousand) cubic meters and small-scale, medium-scale and large-scale non timber forest produce primary industry registration certificate shall be granted by Governor by taking into account technical suggestions and consideration from the authority being responsible for forestry affairs at district/town and approval from the Minister. (2) Timber forest produce primary industry operation permit and expansion permit directly processing log and or chip timber to chip wood, veneer and plywood, laminating veneer lumber with annual production capacity up to 6000 (six thousand) cubic meters shall be granted by Governor by taking into account technical suggestions and consideration from the authority being responsible for forestry affairs at district/town and approval from the Minister. (3) Timber forest produce primary industry operation permit and expansion permit directly processing log and or chip to sawn wood, chip wood, veneer and plywood, laminating veneer lumber with annual production capacity up to 6000 (six thousand) cubic meters shall be granted by Minister by taking into account the consideration of Governor. (4) All forest produce primary industry operation permits other than those as referred to in paragraphs (1), (2) and (3) shall be granted by the Minister being responsible for industry affairs by taking into account considerations of Minister and Governor. Part Seven Rights and Obligations of Permit Holder Article 65 Each holder of timber and non timber forest produce primary industry operation permit shall be entitled to: a. security of business in running its business; and or b. services from the Government and Local Administration. Article 66 (1) Timber and non timber forest produce primary industry operation permit holders shall: a. run their business in accordance with their permits: b. prepare and submit Annual Industry Raw Materials Fulfillment Plan (RPBBI); c. assist in empowering the community around the industrial location: d. submit periodic report to permit issuing authority and agency authorized to promote and develop forest produce primary industry. (2) Further provisions on obligations of timber and non-timber forest produce primary industry operation permit holders as referred to in paragraph (I) shall be stipulated by virtue of Decree of Minister. CHAPTER V TITLE FOREST Article 67 (1) Title forest shall be forest situated on a piece of land charged with title to land. (2) Title forest as referred to in paragraph (1) shall be proven by the title or right to the land. Article 68 Title forest shall be utilized by title holder.

Article 69 (1) Utilization of title forest functioning as conservation and protection shall be made in accordance with the prevailing legislation. (2) The status of title forest functioning as conservation and protection as referred to as paragraph (I) can be changed to forest area. (3) In the event the status of title forest is changed to forest area as referred to in paragraph (2) the Government shall compensate the title holder in accordance with the prevailing legislation. (4) In the event the title forest functions as conservation or protected area the Government can provide incentive for the title holder. Article 70 (1) In respect of utilization of title forest functioning as production forest, any activity to produce the forest produce in accordance with the potential and land bearing capacity can be performed. (2) Government. Provincial Administration. District or Town Administration shall develop title forest through the institutional development. Article 71 (1) Title forest utilization guidelines as referred to in Article 68 shall be stipulated by virtue of Decree of Minister. (2) District or Town Administration shall stipulate implementing directives of title forest utilization based on utilization guideline as referred to in paragraph (1). CHAPTER VI FOREST AREA USE Article 72 (1) Forest area use shall be aimed at arranging use of any part of forest area selectively for development outside the forestry without changing status and function. (2) Forest area use for development outside forestry can only be made within: a. protected forest; and b. production forest. (3) Forest area use as referred to in paragraph (2) shall include the use for: a. strategic purpose: and or b. limited public interest. (4) Forest area use for strategic purpose as referred to in paragraph (3) item a shall include: a. religious interest; b. defense and security: c. mining: d. power development and renewable energy technology installation; e. telecommunication network construction; or f. water supply network construction. (5) Forest area use for limited public interest as referred to in paragraph (3) item b shall include construction of among others: a. public road and railways: b. water supply and or sewer: c. drainage;

d. e. f. g. h.

water reservoir; public facilities; telecommunication repeater: radio station; and television relay station.

(6) Forest area use as referred to in paragraphs (4) and (5) shall be further stipulated by virtue of Decree of President. CHAPTER VII FOREST PRODUCE DISTRIBUTION AND MARKETING Article 73 (1) To protect the state's rights to the forest produce and forest conservation, forest produce distribution and marketing shall be made through the forest produce administration. (2) All forest produce originating from state forest shall be measured and tested by the competent officer. (3) The physical timber forest produce already measured and tested as referred to in paragraph (2) shall be marked for legality. Article 74 (1) Forest produce originating from title forest shall be subject to measuring and type determination. (2) Measurement and forest produce type determination as referred to in paragraph (1) shall be made by the competent officer. (3) Forest produce already measured as referred to in paragraph (2) shall be provided with Certificate of Origin (SKAU) issued by Village Head or official of equal rank and the certificate shall serve as forest produce legality certificate. Article 75 (1) Each transportation. control or ownership of forest produce shall be furnished with forest produce legality certificate issued by the competent official. (2) Each transportation of forest produce as referred to in paragraph (1) shall be made to addressee written in Forest Produce Legality Certificate (SKSHH) or Plant and Wildlife Transportation Certificate (SA TS). (3) In case of difference between substance of forest produce legality certificate document as referred to in paragraph (1) and physical condition of type, quantity and volume of forest produce, the forest produce shall be declared not having any legal certificate. (4) Documents to furnish with the transported. controlled or owned forest produce as referred to in paragraph (1) shall be: a. Forest Product Legality Certificate (SKSHH) for forest produce originating from the state forest; b. Plant and Wildlife Transportation Certificate (SA TS) for plants and wildlife: c. Certificate of Origin (SKAU) for forest produce originating from title forest. (5) SKSHH, SATS or SKAU shall be valid and used for transporting the timber and non timber forest produce or plant and wildlife within the territory of the Republic of Indonesia. (6) Blank form of SKSHH and SATS shall be printed by the Printing Company so appointed by Minister.

(7) Further provisions on forest produce administration as referred to in Article 73 paragraph (1) shall be stipulated by virtue of Decree of Minister. Article 76 Forest produce in terms of Jog and chip timber raw material shall not be exported. Article 77 (1) Authority to arrange. promote and develop marketing of timber and non-timber forest produce not processed yet to domestic market and forest produce primary industry as raw material shall be with the Minister. (2) Authority to arrange. promote and develop marketing of timber and non-timber processed forest product to overseas market shall be with the Minister being responsible for trading by taking into account considerations of the Minister. (3) Provisions on arrangement, promotion and development of timber and non-timber forest produce marketing as referred to in paragraph (1) shall be stipulated by the Minister. Article 78 (1) In case the transported, controlled or owned forest produce is not furnished with any forest produce legality certificate, it shall be declared illegal. (2) Illegal forest produce as referred to in paragraph (1) shall be processed in accordance with the prevailing legislation. (3) Illegal forest produce as referred to in paragraph (2) shall be auctioned. (4) Auction yield of illegal forest product as referred to in paragraph (3) already having the force of law shall be allocated partly to incentive for the deserving party in saving the state wealth. (5) Provisions on incentive providing for the deserving party in saving the state wealth as referred to in paragraphs (3) and (4) shall be arranged by virtue of Joint Decree of the Minister and the Minister being responsible for finance. CHAPTER VIII PROMOTION, CONTROL AND SUPERVISION Part One General Article 79 (1) For orderly forest arrangement and forest arrangement planning and forest management, forest utilization and forest area use planning the Minister shall be authorized to promote, control and supervise policy of Governor and District Head or Mayor. (2) Minister, Governor and District Head or Mayor shall promote, control and supervise forest arrangement plan implementation and forest management. forest utilization and forest area use planning by third party. Part Two Promotion and Control Article 80 (1) Promotion as referred to in Article 79 paragraph (1) shall include provision of: a. guidelines; b. counseling; c. training: d. direction; and or

e. supervision. (2) Provision of guidelines as referred to in paragraph (1) item a shall be aimed at organizing forest arrangement and forest management, forest utilization and forest area use planning by Provincial and or District or Town Administration including accountability, report and evaluation of performance of Governor and District Head or Mayor. (3) Provision of counseling as referred to in paragraph (1) item b shall be aimed at preparing procedure and work system. (4) Provision of training as referred to in paragraph (1) item c shall be aimed at administrative resources. (5) Provision of direction as referred to in paragraph (1) item d shall include planning. and national-scale activities. (6) Supervision as referred to in paragraph (1) item e shall be aimed at performing a part of forest administration activities delegated to Provincial, District or Town Administration. Article 81 (1) Control as referred to in Article 79 paragraph (2) shall include: a. monitoring; b. evaluation; and or c. follow up. (2) Monitoring as referred to in paragraph (1) item a shall be any activity to collect data and information. policy and implementation of forest management. (3) Evaluation as referred to in paragraph (1) item b shall be any activity to periodically evaluate success of sustainable forest management by type of permit. (4) Follow up as referred to in paragraph (I) item c shall be follow up of monitoring and evaluation findings for improved forest policy and management. (5) Provisions on periodic evaluation of success of sustainable forest management as referred to in paragraph (3) shall be stipulated by virtue of Decree of Minister. Article 82 (1) Results of control by District Head/Mayor and Governor as referred to in Article 79 paragraph (2) shall be followed up by third party. (2) The third party shall report result of control follow up to the District Head or Mayor and Governor. (3) The District Head/Mayor and Governor shall report the result of control follow up to the Minister. Article 83 (1) Follow up of control result can be in terms of: a. admonition; and or b. cancellation. (2) Admonition as referred to in paragraph (1) item a shall be made by the Minister, Governor and District Head or Mayor. (3) Cancellation as referred to in paragraph (1) item b relating to regional regulation shall be issued by the Minister of Home Affairs at the recommendation of the Minister.

(4) Cancellation as referred to in paragraph (1) item b regarding forest utilization permit shall be issued by the permit issuing authority. Article 84 Promotion and control guidelines as referred to in Articles 79 through 83 shall be stipulated by virtue of Decree of Minister. Part Three Supervision Article 85 Provisions on supervision as referred to in Article 79 paragraph (2) shall be stipulated in a separate Government Regulation. CHAPTER IX ADMINISTRATIVE SANCTION UPON HOLDERS OF FOREST UTILIZATION PERMIT AND FOREST PRODUCE PRIMARY INDUSTRY OPERATION PERMIT Part One General Article 86 To ensure status, forest area preservation and forest function preservation, each holder of forest utilization permit and forest produce primary industry operation permit shall in case of violating of the provisions outside penal provisions as provided in Article 78 of Law Number 41 of 1999 regarding Forestry be subject to administrative sanction. Article 87 (1) Administrative sanctions as referred to in Article 86 shall be in terms of: a. suspension of administrative service; b. suspension of field activity; c. administrative penalty; d. work area reduction; or e. permit revocation. (2) Administrative penalty as referred to in paragraph (1) item c shall be non tax state revenue paid to the State Treasury Office. Part Two Administrative Sanction of Forest Utilization Permit Article 88 Holders of forest produce utilization operation permit or forest produce collection permit shall be subject to administrative sanction in terms of suspension of SKSHH document service in case of failure to prepare and submit report as stipulated. Article 89 Holders of area utilization permit, environmental service permit, forest produce utilization permit or forest produce collection permit shall be subject to administrative sanction in terms of suspension of field activity in case of: a. failure to administer the work area border: b. use of work equipment at quantity and or type not in accordance with the permit: c. failure to employ professionals in forestry and or others according to need.

Article 90 (1) Administrative sanction in terms of suspension of administrative service and field activity as referred to in Article 87 paragraph (1) items a and b shall be for 1 (one) year as of imposition of sanction. (2) In case prior to the period of 1 (one) year as referred to in paragraph (1) the permit holder has fulfilled the obligations, the sanction shall be lifted. (3) In case the permit holder does not fulfill his obligations within 1 (one) year the permit can be revoked after 3 (three) prior written warnings respectively effective for 30 (thirty) working days. Article 91 (1) Holders of timber forest produce utilization permit in natural forest shall be subject to administrative sanction in terms of penalty of: a. 10 (ten) times of PSDH for: 1. logging product exceeding the target tolerance of 5% (five percent) and total volume target stipulated in Annual Action Plan (RKT); 2. logging product exceeding the target tolerance of 3% (three percent) and total volume target per type of log stipulated in Annual Action Plan (RKT); or b. 15 (fifteen) times of PSDH against volume of: 1. logging product prior to ratification of Annual Action Plan; 2. logging product in the frame work of making corridor without consent or not in accordance with that contained in the relevant permit; 3. logging product below the allowable logging diameter; 4. logging product from outside the permitted logging block; or 5. logging product in the frame work of hauling road construction outside the block of Annual Action Plan without consent. c. 20 (twenty) times of PSDH against. volume of: 1. timber from logging of trees designated as core tree without consent; 2. timber from logging of core trees without consent; or 3. timber from repeat logging without consent. (2) Holders of timber forest utilization permit in timber estate shall. be subject to administrative penalty of 15 (fifteen) times of PSDH against volume of logging product originating from the corridor making without consent. (3) Holders of timber and or non timber forest produce collection permit shall be subject to administrative penalty of 10 (ten) times of PSDH against forest produce exceeding 5% (five percent) of volume target per type of forest produce stipulated in the permit. Article 92 (1) Holders of area utilization permit or environmental service utilization permit shall be subject to administrative sanction in terms of work area reduction to maximum 20% (twenty percent) of working area, in case of: a. non fulfillment of production target in accordance with the ratified action plan; and or b. failure to secure the working area from various forest disturbance in accordance with the action plan. (2) Holders of forest produce utilization permit shall be subject to administrative sanction in terms of work area reduction to maximum 20% (twenty percent) of working area, in case of: a. contract or transfer of all business activities to other party without any written consent from permit issuing authority; b. failure to plant in accordance with the planting action plan already stipulated; and or c. failure to arrange the financial administration in accordance with forestry accounting standard effective on timber forest produce utilization permit.

(3) Work area reduction as referred to in paragraphs (1) and (2) shall be made after 3 (three) written warnings of respectively effectively for 30 (thirty) working days. Article 93 (1) Area utilization permit, environmental service permit or forest produce utilization permit can be revoked in case the permit holder: a. fails to cooperate with cooperatives of the community around the forest; b. fails to commence concrete operation within 180 (one hundred eighty) days as of the permit issue; c. fails to pay forestry charges in accordance with the prevailing legislation; d. abandons work area and works prior to permit expiration; e. transfer its operation permit to any other party without written consent from the permit issuing authority; or f. is subject to penal sanction in accordance with Article 78 of Law Number 41 of 1999 regarding Forestry. (2) Besides violating paragraph (1) forest produce utilization permit can be revoked in case the permit holder: a. fails to implement silviculture system stipulated by the Minister; b. fails to fulfill liability to pay Afforestation Fund (DR) of timber forest produce in natural forest; or c. fails to submit Annual Action Plan (RKT), Five-Year Action Plan (RKL) or Forest Produce Action Plan within the given period. (3) Forest produce collection permit can be revoked in case the permit holder: a. fails to pay charges of Forest Resource Fee (PSDH); b. fails to collect forest produce within 1 (one) month after issue of forest produce collection permit; c. transfers the forest produce collection permit to any other party without written consent from the permit issuing authority: d. collects the forest produce not in accordance with that stipulated in the permit: or e. is subject to penal sanction in accordance with Article 78 of Law Number 41 of 1999 regarding Forestry. (4) Revocation of area utilization permit, environmental service permit or forest produce utilization permit on the ground as referred to in paragraph (1) items a. b, c and d and paragraph (2) shall be made after 3 (three) written warnings by the permit issuing authority respectively effective for 30 (thirty) working days. (5) Revocation of area utilization permit, environmental service permit or forest produce utilization permit on the ground as referred to in paragraph (1) items e and f shall be made without any prior warning. (6) Revocation of forest produce collection permit as referred to in paragraph (3) items a and b shall be made after 3 (three) written warnings respectively effective for 10 (ten) working days. (7) Revocation of forest produce collection permit on the ground as referred to in paragraph (3) items c and e shall be made without any prior warning. Part Three Administrative Sanction for Forest Produce Primary Industry Permit Holders Article 94 Forest produce primary industry permit holders violating this Government Regulation shall be subject to administrative sanction in terms of: a. industrial operation suspension:

b. document service suspension; or c. industrial operation permit revocation. Article 95 (1) Administrative sanction in terms of industrial operation suspension as referred to in Article 94 item a shall be imposed in case the permit holder: a. fails to prepare and submit Industrial Raw Material Fulfillment Plan (RPBI) within the given period; b. fails to employ forest produce measuring and testing personnel. (2) Sanction in terms of industrial operation suspension as referred to in paragraph (1) shall be imposed until the permit holder can fulfill its obligations. Article 96 (1) Administrative sanction in terms of suspension of service rendering of Forest Produce Legality Certificate (SKSHH) for industrial operation as referred to in Article 94 item b shall be imposed in case the permit holder: a. fails to prepare and submit Log Movement Report (LMKB) or Non-timber Forest Produce Movement Report (LMHHBK); or b. fails to prepare and submit Processed Forest Produce Movement Report (LMHHO). (2) Sanction in terms of suspension of service rendering of Forest Produce Legality Certificate (SKSHH) as referred to in paragraph (1) shall be imposed until the permit holder fulfills its obligations. Article 97 (1) Administrative sanction in terms of industrial operation permit revocation as referred to in Article 94 item c shall be imposed in case the permit holder: a. expands the industrial operation without consent; b. relocates industrial operation without consent; c. pollutes and damages environment exceeding the environment quality standard; d. accommodates or processes forest produce raw materials originating from illegal raw material sources; or e. performs industrial activities not in accordance with provisions in the permit. (2) Revocation of industrial operation permit on the ground as referred to in paragraph (1) items a, band c shall be made after 3 (three) written warnings by the permit issuing authority respectively effective for 30 (thirty) working days. (3) Revocation of industrial operation permit on the ground as referred to in paragraph (I) item d shall be made after court order is absolute. Part Four Procedure for Administrative Sanction Imposition Article 98 Procedure for administrative sanction imposition of forest utilization permit or forest produce primary industry permit as referred to in Articles 87 through 97 shall be stipulated by virtue of Decree of Minister. CHAPTER X TRANSITIONAL PROVISIONS Article 99 By stipulation of the Government Regulation: a. Forest Concession Right (HPH) and Forest Produce Collection Right granted based on the legislation prior to the stipulation hereof shall remain effective until their expiration:

b. Forest produce primary industry permit, industrial registration certificate permit granted based on legislation prior to stipulation of this Government Regulation shall remain effective. c. Application for extension or new application for timber HPH in natural forest and timber estate already given agreement in principle shall be processed by filing request. d. Application for extension or new application for timber HPH in natural forest and timber estate not yet given any agreement in principle shall be processed by auction as provided herein. e. The authority of forest arrangement and forest management, forest utilization and forest area use planning already delegated by the Government to the State-Enterprises shall remain effective but its implementation is adjusted to this Government Regulation. CHAPTER XI CLOSING PROVISIONS Article 100 By stipulation hereof Government Regulation Number 6 of 1999 regarding Forest Exploitation and Forest Produce Collection in Production Forest shall become null and void. Article 101 By stipulation of this Government Regulation. Implementing directive of Government Regulation Number 6 of 1999 regarding Forest Exploitation and Forest Produce Collection in Production Forest shall still remain effective provided not in contravention of this Government Regulation nor revoked or changed by the implementing directives hereunder. Article 102 This Government Regulation shall become effective as of the date of stipulation. For public cognizance, it is instructed to promulgate this Government Regulation by publishing the same in the State Gazette of the Republic of Indonesia. Stipulated in Jakarta On June 8, 2002 PRESIDENT OF THE REPUBLIC OF INDONESIA, [signed] MEGAWATI SOEKARNOPURI STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 66 OF 2002

ELUCIDATION OF GOVERTMENT REGULATION OF THE REPUBLIC OF INDONESIA NUMBER 34 OF 2002 REGARDING FOREST ARRANGEMENT AND FOREST MANAGEMENT, FOREST UTILIZATION AND FOREST AREA USE PLANNING GENERAL Indonesian people are granted with and entrusted by the One Supreme God of natural wealth in terms of invaluable forest, therefore it should be managed and utilized properly based on noble moral as a religious service and realization of gratitude to the One Supreme God. In the frame work of forest management for optimum benefit from forest and forest area for community welfare, principally all forest and forest areas can be managed by taking into account nature, characteristics and priority thereof without changing their major functions namely conservation, protection and production. Forest management shall maintain equilibrium of those three functions. By the effectiveness of Law Number 41 of 1999 regarding Forestry, Articles 22, 27, 29, 33, 34, 36, 37 and 38 on Forest Arrangement and Forest Management, Forest Utilization and Forest Area Use Planning shall be made by granting area utilization permit, environmental service utilization permit, timber and non-timber forest produce utilization and timber and non-timber forest produce collection permit as well as forest area loan use permit. Therefore besides having the utilization right the permit holders shall also be responsible for all kinds of disturbance and damage to the forest and forest areas entrusted to them. Convertible production -forest and forest. area under loan use status can be provided with timber utilization/non-timber forest produce utilization permits based on provisions on timber and non-timber forest produce utilization permit in natural forest as stipulated herein. For fair peoples economy development, small and medium scale business as well as cooperatives will be given ample opportunity to utilize forest. State-Enterprises. Regional-State Enterprises and Indonesian Private Companies as well as Cooperatives provided with operation permits in forestry shall cooperate with local operatives and periodically empower them to become tough, independent and professional cooperative business units in arrangement to be able to keep up with the other economic actors. To secure attainment of goal and target, the Government and Local Administration shall supervise forest utilization. To give legal basis for forest arrangement and forest management, forest utilization and forest area use planning on equitable basis, it is necessary to stipulate a Government Regulation. BY ARTICLE Article 1 Self-explanatory Article 2 Paragraph (1) Forest management shall include: a. forest management and forest management planning: b. forest utilization and forest area use; c. forest rehabilitation and reclamation; and d. forest protection and natural conservation. This Government Regulation shall only stipulates the forest arrangement and forest management, as well as forest utilization and forest area use planning.

While forest rehabilitation and reclamation as well as forest protection and natural conservation shall be provided in a separate Government Regulation. Paragraph (2) Self-explanatory Article 3 Paragraph (1) Self-explanatory Paragraph (2) Delegation of forest arrangement and forest management, forest utilization and forest use planning in any particular territory and or activity forest shall take into account regional characteristics and social and environmental condition closely relating to forest conservation and community's interest and requiring special management capability. Delegation of authority to such State Enterprises shall not include public and general administrative authority. Article 4 Paragraph (1) Forest arrangement and forest management, forest utilization and specially designated forest area use planning can be determined in conservation, protected and production forests. Paragraph (2) Self-explanatory Paragraph (3) Forest arrangement and forest management. Forest utilization and specially designated forest area use planning shall be made by using the permit as provided herein. Paragraph (4) Self-explanatory Article 5 Paragraph (1) Forest arrangement shall be initial activity in managing forest including management unit design by taking into account community's rights and forest condition, grouping forest resources in accordance with ecosystem and forest potential. block plotting. Paragraph (2) Self-explanatory Article 6 Self-explanatory Article 7 Paragraph (1) Item a Nature preserve forest arrangement with nature borders design and existence thereof shall not be changed and remain as intact as when its condition is created. Item b Self-explanatory Paragraph (2) Determination of arranged management area borders shall be based on the management unit map. Management plan can be furnished with area spatial plan reflecting function empowerment such as permanent location to monitor bio natural resources and ecosystem in the interest of educational scientific research including research and education management facilities location. Paragraph (3) Area division to blocks shall be adjusted to area potential and condition consisting among others habitat rehabilitation, population rehabilitation, habitat and fauna population promotion blocks and other blocks shall be adjusted to the preservation needs of bio natural resources and ecosystem thereof. Article 8 Paragraph (1)

Self-explanatory Paragraph (2) Self-explanatory Paragraph (3) Item a Core zone shall be any part of national park which can only be utilized in the interest of research and development supporting utilization, science, education and or supporting culture and as source of germ of life. Item b Utilization zone shall be any part of national park which can only be utilized for natural resort and recreation, research and development supporting utilization, education and culture supporting activities. Item c Other zones shall be those outside core zone and utilization zone which due to their function and condition are stipulated as particular zones such as jungle zone, traditional utilization zone, rehabilitation zone and so forth. Article 9 Paragraph (1) Vide elucidation of Article 7 paragraph (2) Paragraph (2) Item a Utilization block shall be designated for natural resort including tourism facilities and infrastructure construction. Item b Plant collection block shall be designated for plants collection. Item c Protection block shall be designated for protecting species of flora and fauna against impacts of such activity. Item d Other blocks shall be the part of great forest park area having other condition thereby requiring special treatment for example traditional utilization block, rehabilitation blocks and so forth. Article 10 Paragraph (1) Vide elucidation of Article 7 paragraph (2). Paragraph (2) Item a Intensive utilization block shall be any part of natural resort utilized as natural tourist attraction including fulfillment of facilities and infrastructure thereof. Item b. Limited utilization block shall be any part of natural resort utilized for natural tourist attraction with special or particular activities. Item c Other block shall be any part of natural resort of which the condition and potential should be specially functioned, for example protection and rehabilitation blocks. Article 11 Paragraph (1) Self-explanatory Paragraph (2) Item a Hunting block shall be the part of hunting park area designated for hunting activity. Item b Utilization block shall be any part of hunting resort designated for fulfillment of hunting resort facilities and infrastructure. Item c . Fauna development block shall be any part of hunting resort required fauna to breed.

Item d Other block shall be any part of hunting resort suitable with field condition designated for special activities for example safeguarding fauna and human beings. Article 12 Paragraph (1) Self-explanatory Paragraph (2) Item a Self-explanatory Item b It is possible to make forest utilization and forest area use activities in utilization block. Item c It is possible to make rehabilitation activities in other blocks due to forest fire or any act damaging forest. Article 13 Paragraph (1) Item a Self-explanatory Item b Inventory taking findings contained in minutes used in the interest of forest arrangement and forest management, forest utilization and forest area use planning. Item c Production forest history making shall be inventory taking in the frame work of collecting data of condition, potential and other in block and plot. Item d Division of production forest to blocks by taking into account forest potential and condition in the frame work of forest utilization, forest area use, forest reclamation as well as forest protection and nature conservation. Area division to blocks and block division to plots shall be. in accordance with the forest potential and condition. Item e Self-explanatory Item f Forest area clearing shall be forest management infrastructure construction and not clan area zoning but to facilitate forest management such as for inspection or patrolling road. Item g Registration shall be recording of forest area compartmentalization, history making and clearing result. Item h Self-explanatory Paragraph (2) Self-explanatory Article 14 Self-explanatory Article 15 Paragraph (1) Self-explanatory Paragraph (2) Self-explanatory Paragraph (3) Criteria of sustainable forest management covering economic, social and ecological. aspects shall among others include: a. established forest area; b. sustainable production; c. social benefits for the community around the forest; and d. environment supporting life buffer system.

Paragraph (4) Self-explanatory Article 16 Self-explanatory Article 17 Forest utilization in conservation forest shall include: a. forest utilization in nature reserve area; b. forest utilization in natural preservation area; and c. hunting resort. Prevailing legislation shall be that concerning natural tourism in national park utilization zone, great forest resort, natural resort and hunted animal hunting. Article 18 Paragraph (1) Forest utilization in protected forest shall be intended to improve community welfare especially those around the forest as well as encourage the community awareness of maintaining and improving protected forest function as a mandate to realize the natural resources and environment conservation for the present and coming generation. Paragraph (2) Self-explanatory Article 19 Paragraph (1) Self-explanatory Paragraph (2) Decision on area utilization permit in protected forest can include medicinal herbs culture, ornamental plant culture, mushroom and bee culture. Paragraph (3) Self-explanatory Paragraph (4) Self-explanatory Paragraph (5) Self-explanatory Paragraph (6) For wildlife breeding within the protected forest, facilities and infrastructure can be constructed in terms of cages or semi natural facilities and infrastructure. Wildlife for breeding is obtained from the nature in accordance with the prevailing legislation. Paragraph (7) Swallow nest culture is made naturally among other inside caves without constructing any facility and infrastructure. Article 20 Paragraph (1) Self-explanatory Paragraph (2) Self-explanatory Paragraph (3) Item a Natural resort business shall be any business of utilizing convenience potential and natural landscape beauty. In natural resort business semi permanent facilities and infrastructure can be constructed. Item b In running the challenging sport business. the permit holder can use natural facilities and infrastructure but shall not be allowed to construct any facility and infrastructure. The challenge sport business at protected forest shall comprise among others mountain biking, rafting, rock climbing, hiking. Item c Water utilization business is made on natural water source. To support the water utilization business. only water pipeline can be constructed. While for water treatment the same shall be constructed in protected forest.

Water utilization business does not include that for non commercial purpose or daily life of the community around the forest. Item d Carbon trade shall be carbon absorption and or storage service rendering by forest including keeping, maintaining and rehabilitating forest ecosystem. Carbon trade can be made in all forest functions in state forest and or title forest. Carbon trade can be made between the Government and carbon emitting industry. both in investment in carbon absorption and or storage capacity improvement projects,. carbon emission prevention from forest and compensation for loss of other benefit relating to said service rendering. Item e Forest and environment salvation shall be any effort in terms of rehabilitation and or salvation of area and land. Forest and environment salvation is not commercial nor constitutes compensation to save or rehabilitate the environment. Article 21 Paragraph (1) Non timber forest produce collection in protected forest shall only be made by the community around the forest to fulfill the daily economic life. Paragraph (2) Wildlife hunting in protected forest shall essentially be hunting unprotected wildlife potential. To fulfill the daily need, the community around the forest can make traditional hunting using traditional equipment. Paragraph (3) The said legislation shall be that in bio resources conservation and ecosystem thereof. Article 22 Paragraph (1) Self-explanatory Paragraph (2) Self-explanatory Paragraph (3) That which cannot be provided with permit in the area already charge with forest utilization permit shall include forest produce collection permit with limited volume. For example in any part of protected forest with landscape beauty and or uniqueness to develop the natural resort can be provided with environmental service permit, but not otherwise. Paragraph (4) Self-explanatory Paragraph (5) Self-explanatory Article 23 Paragraph (1) Self-explanatory Paragraph (2) Self-explanatory Paragraph (3) Particular amount shall apply to each type of non timber forest produce such as honey, rattan and so forth. The location will not overlap with area utilization and or environmental service utilization of natural resort permits. Article 24 Paragraph (1) Self-explanatory Paragraph (2) Self-explanatory Paragraph (3) Self-explanatory

Paragraph (4) Item a Self-explanatory Item b To preserve the forest produce. collection of non timber forest produce shall not exceed growth potential available at the nature. Item c Self-explanatory Article 25 Self-explanatory Article 26 Paragraph (1) Self-explanatory Paragraph (2) Area utilization in production forest in terms of medicinal herbs culture. ornamental plant culture, food crops culture, mushroom culture and bee culture can be granted in one permit. Paragraph (3) Processing and marketing shall be made outside production forest. Paragraph (4) Self-explanatory Paragraph (5) For fauna breeding in production forest, facilities and infrastructure can be constructed in terms of fences and base camps. Wild fauna for culture and breeding can be obtained from the nature in accordance with the prevailing legislation Paragraph (6) Self-explanatory Article 27 Paragraph (1) Self-explanatory Paragraph (2) Item a Natural resort business comprises of business to utilize landscape and environmental beauty potential. No facility and infrastructure of natural resort business in production forest can be constructed. Item b Challenging sport business in protected forest includes mountain biking, rafting, rock climbing, hiking and cross country. Facility and infrastructure can be constructed for challenging sport business. Item c Water utilization shall be made at from or passed through the forest facility and infrastructure of water reservoir and channeling can be constructed. Item d Self-explanatory Item e Forest and environment salvation shall be any effort in terms of rehabilitation and or salvation of area and land. Forest and environment salvation is not commercial in nature nor constitutes compensation to save or rehabilitate the environment. Article 28 Item a Timber and non timber forest produce utilization in natural forest was formerly called Forest Concession (HPH). Basically timber forest produce utilization in natural forest is only granted for selected timber and non-timber logging based on forest preservation with the obligation to implement natural and artificial rejuvenation naturally or and forest maintenance. Item b

Timber and non-timber forest produce utilization in natural was formerly called Timber Estate. Timber forest produce utilization in timber estate basically upon harvesting can be made with full logging with re-cultivation or the same as definition of full logging with artificial rejuvenation. Article 29 Self-explanatory Article 30 Paragraph (1) Non timber plant shall be in terms of sago, timber, rattan and so forth. Paragraph (2) Item a Self-explanatory Item b Mixed plants shall be mixed plants forest plant commodity species. Paragraph (3) Self-explanatory Paragraph (4) Self-explanatory Article 31 Relevant authority shall be among others authority being responsible for energy and mineral resources. Article 32 Paragraph (1) Total volume given in timber forest produce collection shall be adjusted to need of household and public facilities. Paragraph (2) Self-explanatory Paragraph (3) Self-explanatory Paragraph (4) Self-explanatory Paragraph (5) Self-explanatory Paragraph (6) Self-explanatory Article 33 Self-explanatory Article 34 Paragraph (1) Transferred shall mean limited to sale and purchase. Paragraph (2) Self-explanatory Paragraph (3) Self-explanatory Paragraph (4) Self-explanatory Article 35 Paragraph (1) Self-explanatory Paragraph (2) Self-explanatory Paragraph (3) Self-explanatory Paragraph (4) Self-explanatory Paragraph (5) The period shall be adjusted to the major plant species plan. Paragraph (6) Item a

Such amount does not include those generated from logging waste and naturally falling trees. Item b Quantity and weight of each species shall be adjusted to non timber forest produce potential. Article 36 Paragraph (1) Individual provided with area utilization permit or collection permit shall be individual being within or around the forest. Cooperative shall be that of local community dealing with forestry business. Paragraph (2) Item a Self-explanatory Item b Self-explanatory Item c Environmental service utilization permit in terms of rehabilitation and area and land salvation or environment rehabilitation can be provided to investors or foreign investors in terms of limited liability company of Indonesian corporate body. Item d Self-explanatory Paragraph (3) Timber forest produce utilization permit in timber estate can provided to investors or foreign investors in terms of limited liability company of Indonesian corporate body. Paragraph (4) Self-explanatory. Paragraph (5) Self-explanatory. Paragraph (6) Self-explanatory. Article 37 Self-explanatory. Article 38 Self-explanatory. Article 39 Self-explanatory. Article 40 Self-explanatory. Article 41 Self-explanatory. Article 42 Minister can gradually and selectively delegate his authority in issuing permit of timber forest produce utilization in natural forest or permit of timber forest produce utilization in timber estate to regions, depending on the preparedness of the relevant region both in institutional. vision or mission point of view. Article 43 Self-explanatory. Article 44 Self-explanatory Article 45 Self-explanatory Article 46 Self-explanatory Article 47 Paragraph (1) Item a Self-explanatory Item b

By actual activities we mean import of mechanical equipment of at least 50% of the stipulated equipment unit to the working area and construction of facilities and infrastructures for timber forest produce utilization permit holders. Item c Self-explanatory Item d Self-explanatory Item e Forest protection includes 1) prevention of illegal logging; 2) prevention or extinguishing of forest fire; 3) provision of forest security facilities and infrastructures: 4) prevention of wildlife and protected animals hunting: 5) prevention of illegal forest tilling and/or use and/or occupation; 6) prevention of forest encroachment; and/or 7) prevention against pest and diseases. Item f Self-explanatory Item g By forestry professional we mean Graduates in Forestry and middle technical personnel graduating from Forestry Senior High School (SKMA). Forestry Diploma Program, and forestry education and training among others graders, cruisers and scalers. While other personnel are experts in social, economic and legal discip lines. Item h PSDH is paid before forest produce is transported or processed or used. Paragraph (2) Forest Produce Utilization Dues shall be fully paid before permit issue. Paragraph (3) Self-explanatory Paragraph (4) Item a Self-explanatory Item b Self-explanatory Item c Self-explanatory Item d Self-explanatory. Item e Self-explanatory. Item f Silviculture system shall be forest culture system or technique started with seed selection, nursery, planting, plant maintenance and harvesting. Item g Self-explanatory. Paragraph (5) Self-explanatory Paragraph (6) Self-explanatory Paragraph (7) Item a Self-explanatory Item b Cooperation in forest produce utilization in terms of work area border arrangement. block border and work plot border, forest area clearing, forest produce logging or harvesting, land preparation, leveling, inventory taking of forest product potential, seed, procurement, planting and enrichment,

clearing, transportation, forest produce processing, marketing and other supporting activities. Paragraph (8) 50% (fifty percent) of plant area to plant for 5 (five) years namely: 50% x 5 years x area extent Cycle (year) Article 48 Paragraph (1) Self-explanatory Paragraph (2) Self-explanatory Paragraph (3) Self-explanatory Paragraph (4) Self-explanatory Paragraph (5) Self-explanatory Paragraph (6) Self-explanatory Paragraph (7) Changed by land title can be in terms of certificate such as proprietary right. concession, use permit. Paragraph (8) Self-explanatory Article 49 Paragraph (1) Item a Self-explanatory Item b Before revoking the permit, field inspection shall be first made. Item c Written statement shall be furnished clear reasons. Item d Self-explanatory Paragraph (2) Self-explanatory Paragraph (3) Self-explanatory Paragraph (4) Item a In case upon the permit expiration or revocation the permit holder fails to pay financial liabilities and other, the Government or Administration can use force by sequestrating movable goods owned by the permit holder in accordance with the prevailing legislation. Item b Self-explanatory. Paragraph (5) Movable goods shall remain the property of the permit holder. Paragraph (6) Third party shall be creditor. business partner. Article 50 Self-explanatory. Article 51 Paragraph (1) Local community shall be the community within and or around the forest being a unity of social community based on similarity of forest dependent livelihood, history, binding to residence as well as social life order in institutional forum. Empowerment of local community shall be any effort to improve the ability and independence in utilizing the forest. Realization of community empowerment can be made through community forest.

Paragraph (2) Facilitation by the Government and or Regional Administration shall be implemented in accordance with its authority among others through acknowledgement of legal status, institutionalism strengthening, production counseling, technology counseling, education and training, access to market as well as title granting in utilization. Paragraph (3) Self-explanatory. Article 52 Paragraph (1) Forest produce primary industry shall be forest produce upstream industry as referred to in Law Number 41 of 1999 regarding Forestry. The Definition of effective use of raw material shall be the use of raw material to minimize waste and produce high-value products. Paragraph (2) Self-explanatory. Paragraph (3) To fulfill the need for raw material of forest produce primary industry, sustainable forest bearing capacity should be taken into account. Paragraph (4) . In particular cases to increase competitiveness, import of primary industry raw material can be made. Article 53 Self-explanatory. Article 54 Self-explanatory. Article 55 Paragraph (1) Self-explanatory. Paragraph (2) Sawmill industry with annual production capacity up to 2000 (two thousand) cubic meter shall only be designated for fulfilling domestic need. Paragraph (3) Self-explanatory. Paragraph (4) Self-explanatory. Article 56 Self-explanatory. Article 57 Self-explanatory. Article 58 Self-explanatory. Article 59 Paragraph (1) Timber raw material supply may originate from: a. sustainably managed natural forest; b. timber estate; c. title forest; d. plantation produced timber: and or e. other legal sources; such as import. Paragraph (2) Self-explanatory Article 60 Self-explanatory. Article 61 Self-explanatory. Article 62 Self-explanatory. Article 63 Self-explanatory.

Article 64 Paragraph (1) Self-explanatory. Paragraph (2) Self-explanatory. Paragraph (3) Self-explanatory. Paragraph (4) Technical consideration from the Minister shall be given in the frame work of continuous raw material supply. Consideration from the Governor shall be provided in the frame work of synchronization of territory construction and development. Article 65 Business certainty shall be certainty in business activity, business time and business legal security. Article 66 Paragraph (1) Item a Self-explanatory. Item b Those required to develop and submit RPBBI shall be industry directly processing timber and non-timber forest produce. RPBBI shall constitute raw material supply control system. Item c Self-explanatory. Item d Self-explanatory. Paragraph (2) Self-explanatory. Article 67 Paragraph (1) Self-explanatory. Paragraph (2) Land title shall serve as evidence of right to land in terms of among others certificate (Title Deed, Concession Permit, Use Permit). Article 68 Self-explanatory. Article 69 Self-explanatory. Article 70 Paragraph (1) Self-explanatory. Paragraph (2) Institutional development shall be made through assistance, service and support in terms of technical assistance, training and financial aid. Article 71 Self-explanatory. Article 72 Paragraph (1) Self-explanatory. Paragraph (2) Self-explanatory. Paragraph (3) Item a Development with strategic purpose shall be any activity of forest area use with significant influence on national economic growth, public welfare for both the present and future generation and or in the frame work of maintaining unity of the territory of the Republic of Indonesia. Item a

Limited public interest shall be interest of community of all strata of which development implementation shall be made and controlled by the government authorities or community groups and not being used to make profit. Paragraph (4) Item a Self-explanatory. Item b Self-explanatory. Item c Mining activities shall include general, oil and gas as well as geothermal mining activities. Item d Power activity shall be anything relating to supply (generation and distribution) and utilization of power. Renewable energy technology facility shall include Solar cell Plant (PL TS), Hydroelectric Plant (PL TB). Minihydroelectric Generator (PLTM) and Micro-hydroelectric Plant (PLTMH) as well as geothermal utilization. Item e Self-explanatory. Item f Self-explanatory. Paragraph (5) Self-explanatory. Paragraph (6) Self-explanatory. Article 73 Paragraph (1) Forest produce administration shall include production, harvesting or logging, marking, measurement and testing, transportation/circulation and storage, processing and reporting planning administration. Paragraph (2) Self-explanatory. Paragraph (3) Self-explanatory. Article 74 Paragraph (1) Definition of forest produce from title forest shall include timber from land charged with title. Paragraph (2) Self-explanatory. Paragraph (3) Village Head or official of equal rank shall issue certificate of origin. Article 75 Paragraph (1) Definition of "jointly furnished" shall be that each transportation, control or ownership of forest produce shall be accompanied with and physically furnished with legal documents at the same time and place as the evidence and not later (at the same time and place) physically. Paragraph (2) Self-explanatory. Paragraph (3) Self-explanatory. Paragraph (4) Item a Self-explanatory. Item b Self-explanatory. Item c

Use of Certificate of Origin shall include timber and non-timber originating from plantation, compound, dry field and so forth. Paragraph (5) Self-explanatory. Paragraph (6) Self-explanatory. Paragraph (7) Self-explanatory. Article 76 Export prohibition shall be made to minimize pressure to forest. Article 77 Paragraph (1) Forest produce marketing shall be made to fulfill the need for industrial raw materials and of the community in the framework of sustainable forest management. Paragraph (2) Self-explanatory. Paragraph (3) Self-explanatory. Article 78 Paragraph (1) Self-explanatory. Paragraph (2) Status of illegal forest produce shall considered, sequestrated or expropriated goods. Paragraph (3) Self-explanatory. Paragraph (4) Self-explanatory. Paragraph (5) Self-explanatory. Article 79 Paragraph (1) Policy shall be arrangement of or guidelines on forest arrangement and forest management, forest utilization and forest area use planning. Paragraph (2) Definition of third party shall be State-Enterprises, Regional State Enterprises. Private-Companies, individuals, cooperatives. Article 80 Self-explanatory. Article 81 Paragraph (1) Self-explanatory. Paragraph (2) Self-explanatory. Paragraph (3) Success in sustainable forest management shall be reflected by the performance of forest management measured by virtue of criteria and indicators of sustainable forest management proven by the sustainable forest management certificate by an independent appraising institution accredited by the Minister. Paragraph (4) Self-explanatory. Paragraph (5) Self-explanatory. Article 82 Self-explanatory. Article 83 Paragraph (1) Self-explanatory. Paragraph (2)

Admonition shall be initial measure as the basis for correction or sanction imposition. Paragraph (3) Self-explanatory. Paragraph (4) Nullification of forest utilization permit shall be made in case the permit issue is not in accordance with this Government Regulation. Article 84 Self-explanatory. Article 85 Self-explanatory. Article 86 Self-explanatory. Article 87 Paragraph (1) Sanction imposition shall be based on severity of violation. Gross violation category shall be subject to revocation, being medium work area reduction, minor administrative sanction in terms of penalty while the lighter category shall be activity cessation and or administration service cessation. To realize the good governance principles, especially for gross violation category with sanction in terms of revocation or medium category with sanction of reduction of area previously at the control of permit holder shall be preceded with 3 (three) consecutive warnings. Fulfillment of sanction imposition shall not release the permit hold r from liability to pay the charges in accordance with the provision. Paragraph (2) Self-explanatory Article 88 Self-explanatory. Article 89 Item a Self-explanatory. Item b Work equipment being used shall not cause any damage to forest and conservation. Item c Self-explanatory. Article 90 Self-explanatory. Article 91 Self-explanatory. Article 92 Paragraph (1) Item a Holder of area utilization permit or environmental service utilization permit shall not be subject to administrative sanction in terms of work area reduction to maximum of 20% (Twenty percent) provided the permit holder can prove that the non fulfillment of obligation is caused by force majeure. Definition of force majeure shall include earthquake, flood and or fire. Item b Self-explanatory. Paragraph (2) Self-explanatory. Paragraph (3) Self-explanatory. Article 93 Paragraph (1) Item a Self-explanatory. Item b

Self-explanatory. Item c Self-explanatory. Item d Criteria of abandoning work area or work prior to the permit expiration shall be: 1) non-availability of devices or equipment to operate; 2) availability of devices and equipment but not functioning any longer. 3) Absence of permanent workers; or 4) no activity in the framework of implementing the issued operation permit. Item e Self-explanatory Item f Self-explanatory Paragraph (2) Self-explanatory. Paragraph (3) Self-explanatory. Paragraph (4) Self-explanatory. Paragraph (5) Self-explanatory. Paragraph (6) Self-explanatory Paragraph (7) Self-explanatory Article 94 Self-explanatory Article 95 Self-explanatory Article 96 Paragraph (1) Item a Self-explanatory Item b Processed Forest Produce Movement Report (LMHHO) shall be report containing production, procurement, marketing in the home country and overseas as well as own use of processed forest produce. Paragraph (2) Self-explanatory Article 97 Paragraph (1) Item a Self-explanatory Item b Self-explanatory Item c Damage to environment exceeding environment quality standard shall be subject to sanction in accordance with the prevailing legislation. Item d Self-explanatory Item e Self-explanatory Paragraph (2) Self-explanatory Paragraph (3) Self-explanatory Article 98 Self-explanatory

Article 99 Self-explanatory Article 100 Self-explanatory Article 101 Self-explanatory. Article 102 Self-explanatory. SUPPLEMENT TO STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 4206