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Different from Simangunsong 2004, national statistics report that the amount of labor absorbed in forestry industries and forest businesses in 2000 was 3.1 million people,
with an average annual income of IDR 7.3 million per person for those working in Forest Concession HPH and IDR 3.3 million per person for those working in processing
industries BPS, 2000.
In general forestry has played a major role in regional development through logging roads which provide access to remote areas for local communities, through the provision of
work opportunities, and through an increase in regional government and community income.
II.2. Strategic environmental conditions
a. Forestry decentralization
Act Number 221999 on Regional Autonomy largely shifted authority for the coordination of regional level government programs from provincial to regional
governments. This has obvious implications for forestry sector development programs. Regional governments have greater authority in implementing forest related programs
including technical assistance, and forest development financing, giving the regencies greater authority in carrying out sectoral programs.
However, because regional governments have been given increased authority while their capacity is still underdeveloped, implementation of sectoral and area programs have
been slow. Also, without coordination being undertaken by provincial governments, communication between the central and regional government has not been smooth.
To anticipate this situation, the Center for Regional Development Control Pusat Pengendalian Pembangunan Regional, Pusdal was established to coordinate and
communicate forestry programs between regional, provincial and central governments. In 2005 the government had established four Pusdal Sumatra, Java and Nusa Tenggara,
Kalimantan, and Eastern Indonesia Region.
Other sectors also face coordination difficulty in development and this created pressure to replace Act No. 221999 with Act No. 322004. This newer regulation does not
segregate the authorities of regional, provincial and central governments but requires a common effort in administering national governance. This is based on three main principles:
1. Government Efficiency; 2. Externalities;
3. Accountability This change has implications for forestry development. The responsibility for
coordinating at the regional level, which formerly was held by the Pusdal institutions, is given back to the provincial level. The Pusdal institutions continue to concentrate on
coordinating development activities between provinces in certain regions such as Sumatra and Kalimantan.
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The unique characteristics and priorities of each region complicate the integration of regional and central level programs. For this reason the decentralization process is carried
out in phases, taking into account the capacity of each region.
b. Decentralization of fiscal policy
