Burnt trees are seen in a peatland area near Teluk Meranti village in Pelalawan, in Indonesia's Riau province. Home to about 10 percent of the world's rainforests, deforestation in Indonesia occurred at an average rate of 1.08 million hectares a year between 2000 and 2005, according to the Ministry of Forestry.
Image by: REUTERS/Beawiharta

Vast tracts of the sprawling Indonesian archipelago are covered in trees, including some of the world's most biodiverse tropical rainforest that is home to endangered animals such as orangutans, tigers and elephants.

But swathes have been chopped down by palm oil, mining and timber companies in Southeast Asia's top economy, which has become the world's third-biggest carbon emitter as a result.

Under a $1-billion conservation deal with Norway, President Susilo Bambang Yudhoyono two years ago signed the moratorium, which bans new logging permits for primary, or virgin, forest, defined as forest not logged in recent history.

On Wednesday, the government confirmed Yudhoyono had signed a two-year extension, as had been widely expected, and the moratorium would remain in its original form.

"The extension on the moratorium of new permits will be in place for two years from when the presidential instruction is issued," said a statement from the cabinet secretariat, which deals with presidential decrees.

Yudhoyono signed the extension on Monday, it said.

The ban applies to new permits for primary forests and peatlands with the exception of projects already approved by the forestry minister and others considered vital, such as for power production, it said.

Indonesia, the world's top producer of palm oil that is used in many everyday items from soap to biscuits, has faced fierce industry pressure over the moratorium.

"The moratorium has already had negative effects on the economy, not just in the palm oil industry but the timber industry as well," said Fadhil Hasan from the Indonesian Palm Oil Association.

Green groups have also been highly critical, despite government claims it is reducing the rate of deforestation.

"Companies and local governments have found all sorts of ways to get around the ban," Friends of the Earth campaigner Zenzi Suhadi said.