Sustainable forest trade in Indonesia

Geographical location:

Asia/Pacific > Southeast Asia > Indonesia

Floating logs from illegal logging on a river in front of a saw mill near Sembuluh. Central Kalimantan, Indonesia.
© WWF-Canon / Alain COMPOST

Summary

Indonesia’s forests are the second largest natural tropical forests in the world. But illegal logging of this natural resource is being lost at an alarming rate. The government of Indonesia is working on a number of initiatives with international organizations and NGOs, including WWF, to encourage trade in timber from legal and sustainable sources.

WWF and its partners are supporting the Indonesia government, private sector and civil society in an effort to reduce trade in illegal timber and non-sustainable practices in the forestry sector, particularly through the promotion of forest certification.

Background

Law-abiding forest enterprises cannot compete with cheap timber from illegal operations, which heavily distort trade and undermine legitimate business. Illegal logging is also often closely associated with corruption and organised crime. Through the loss of tax revenues, illegal logging has a huge economic and social impact, causing an estimated economic loss of USD 4 billion annually.

Illegal logging aggravates the loss of biodiversity,for instance through logging of protected areas. It can contribute to deforestation, forest fires and the illegal exploitation of wildlife. It also has negative impacts on the livelihoods of forest-dependent people.

For the last 30 years the forests of Indonesia have been overexploited as a resource for export oriented industry, mainly plywood, pulp and paper and sawn timber. The forest resources were always perceived to be vast in relation to industry capacity and wasteful practices were adopted with a focus on short term profit maximisation rather than sustainability. Although donor support to the forest sector has been substantial, little has been gained and basic land use planning and sustainable forest management practices are not widely adopted.

Illicit activities in the Indonesian forestry take many forms ranging from smuggling and theft to exploitation above the prescribed limits. Temporary shutdowns are used as an excuse not to pay taxes even though operations continue without interruption. Logging is also being continued in concessions where harvesting rights have expired. Some operators claim they will convert the cleared forestland into oil palm or other plantations, but this is rarely carried out. Fictitious schemes are reported to represent state losses of IDR 3.5 trillion in East Kalimantan alone. A common practice is understatement of production figures and manipulation of shipping records. It is for this reason that official figures on production and consumption of logs do not tally.

The current situation is regarded as serious. The recent economic crisis, the land and forest fires of 1998/99, decentralization of government to district level, and the over capacity of domestic industry previously referred to, has created a confused situation which provides opportunities for illegal logging. Consequently, illegal logging is now at its highest ever level.

Illegal logging in Indonesia clearly has an international dimension. Demand for timber within the region is high and is expected to remain so. The Government of Indonesia is trying to encourage trade in timber from legal and sustainable sources but incentives to act illegally are high. Against this background, several international initiatives are underway to try and reduce the trade in illegal timber. This includes a number of international organizations and Non Governmental Organisations (NGOs) working with the private sector to promote forest certification and provide verification services.

Objectives

Overall objective:
The overall objective of the EC-Indonesia FLEGT support project is to promote the role of forests in the sustainable and equitable development of Indonesia.

The specific purpose of the EC-Indonesia FLEGT support project is to support and encourage the Government of Indonesia, the private sector and civil society to create the appropriate enabling conditions that are conducive to reducing trade in illegal timber and non-sustainable practices in the forestry sector.

Solution

The project will assist with harmonizing conflicting laws that currently hinder the process of law enforcement. It will promote the dissemination of accurate information to civil society, NGOs and the wood industry on all aspects of the extent and condition of the forest and forest industries. The project will strengthen governance at all levels through awareness raising and capacity building and, importantly, it will empower communities at a local level in key areas currently at risk from illegal and unsustainable management practices.

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