| This study examines the efficiency performance of the industrial timber plantation in Indonesia using panel data from 1994 to 1998. Thirty-two companies from four provinces were involved in this study. Empirical results from the stochastic frontier model showed that the level of technical efficiency is found to be clearly dependent upon the vertical integration of the company with a holding company, number of field workers, and amount of equipment used. However, the variable of land is somewhat inconclusive in determining planting performance. This may indicate the nature of existing overlapped interests over the land between companies and local people. Moreover, it is surprising that skilled workers and other input costs appear to have a significant inverse effect on the planting performance. Meanwhile, administration workers and the financial support provided by the government to the plantation companies do not account for variations in the planting performance.; Empirical results from an inefficiency model showed that the presence of a self-financed scheme and the involvement of local people contribute significant inefficiency. Meanwhile, medium-scale and large-scale plantation companies together with pulp schemes were found to contribute to higher efficiency. The estimated technical efficiencies of the plantation firms vary widely, ranging from 0.12 to 0.93, and 0.13 to 0.93, with mean value of about 0.60 for both analyses. On average, the firm did not make any improvements in terms of efficiency level as the time progressed from 1994 to 1998.; It appears that reconsideration of the existence of a self-financed scheme and government financial support from reforestation funds for the plantation program might be a primary concern to reform the program. Policies which consolidate holdings, efficient schemes and the welfare of local people and migrant workers, as well as the availability of field workers, should be deliberately considered to improve efficiency. Given the current level of technology, the transmigration scheme on small-scale firms does not appear to be efficient. |
