FORESTRY RISK PROFILE This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of NEPCon and can in no way be taken to reflect the views of the European Union. This Country Risk Profile has been produced for educational and informational purposes only. NEPCon is not liable for any reliance placed on this document, or any financial or other loss caused as a result of reliance in information contained within. The information contained in the guideline is accurate, to the best of the knowledge of NEPCon, as of the date of publishing. Indonesia’s trade in timber Timber legality in Indonesia Indonesia has a forest area of 94.4 mill ha (2010) which covers 52% of its land area. In recent decades, Indonesia has experienced a high level of deforestation, the biggest cause is the establishment of oil palm plantations (Mongaby 2013). Indonesia currently has a moratorium on awarding new licenses for logging in natural forests and on peat land (Austin et al. 2012). Historically, Indonesia has often been associated with high levels of illegal logging, however, the past decade has seen major progress to reduce illegal activities in the forest sector mainly through the efforts under the Indonesian-EU VPA process. As part of the VPA process, the Indonesian Government has implemented a national timber legality assurance system (TLAS), which includes forest level auditing, supply chain control and licensing of timber exports for legality called the SVLK system (Sistem Verifikasi Legalitas Kayu). The application of SVLK is mandatory for all forest management units and industries and for all export destinations - currently all active plantations, natural forest concessions and Perum Perhutani areas are under SVLK, and a large amount of the private forest owners (smallholders) use a Supplier Self Declaration of Conformance (SDoC). Even though the SVLK system has provided a significant improvement of the system to control illegal logging in Indonesia, the sys- tem is still under joint assessment by the EU and Indonesia and buyers of Indonesian timber should therefore still conduct due diligence on timber products from Indonesia even if are accompanied by a V-Legal Document. Indonesia Common Native Species Shorea spp. (Meranti, Bangkirai, Yellow balau) Intsia Bijuga (Merbau) Gonystylus bancanus, Baill. (Ramin) Dialium spp. (Keranji) Eusideroxylon Zwageri T (Ulin) Heritiera tarrietia (Palapi) Common plantation species Acacia mangium (Brown sal- wood) Paraserianthes Falcatari (Sengon) Acacia crassicarpa (Wattle, Sal- wood) Tectonis Grandis (Teak) Swietenia macrophylla (Mahogany) Tamarindus indica (Tamarind wood) Albizia saman (Suar wood) Pinus spp. Eucalyptus spp. Forest statistics Illegal timber risk summary Main species risk at a glance NATIVE SPECIES All species from natural forest are SPECIFIED risk. Eusideroxylon Zwageri T (Ulin) SPECIFIED Madhuca spp. (Bitis) SPECIFIED Gonystylus bancanus, Baill. (Ramin) SPECIFIED Taxus wallichiana (Himalayan yew) SPECIFIED Magnolia liliifera (Talauma candollei) SPECIFIED Gyrinops spp. (Agarwood) SPECIFIED Aquilaria (Agarwood) SPECIFIED Diospyros (Ebony/Persimmon) SPECIFIED 0 Highly corrupt 100 Very clean 34 in 2014 I LOG EXPORT BAN - Log and large dimension sawn timber export ban in place since 2001. Corruption Perception Index Transparency International’s Corruption Perceptions Index ranks countries/territories based on how corrupt their public sector is perceived to be. A country or territory’s score indicates the perceived level of public sector corruption on a scale of 0 – 100. 53% Forrest Cover Area % forest area % total area Primary forest 46.7 mill ha 47.0% 24.8% Secondary forest 46.4 mill ha 47.0% 24.7% Planted forest 4.9 mill ha 5.0% 2.6% Total forest area 98.0 mill ha 53.2% Total land area 187.8 mill ha Uncertified 95.4% total forest area Note that SVLK verification is mandatory, but not included in this graph FSC FM: 2% LEI FM: 1.9% PEFC FM: <0.01% VPA STATUS—Agreement in force since May 2014. Still under evalu- ation by the EU. Product Unit 2010 2011 2012 2013 Ind. roundwood Mill US$ 7.4 17.9 17.1 7.9 Sawnwood Mill US$ 313.4 456.2 416.7 267.4 Veneer Mill US$ 26.2 34.9 33.9 31.4 Plywood Mill US$ 1,635.3 1,783.0 1,728.3 1,769.3 Furniture Mill US$ 1,205.6 903.9 1,111.2 1,197.4 Imports Value Ind. roundwood Mill US$ 22.3 16.4 13.3 13.6 Sawnwood Mill US$ 95.3 111.4 103.9 79.6 Veneer Mill US$ 24.4 33.5 35.5 36.7 Plywood Mill US$ 61.1 66.9 70.5 57.1 Exports Value Sources: ITTO Annual Review Statistics Database http://www.itto.int/annual_review_output/, http://comtrade.un.org/data/ Ver 2.0 (January 2016) More information For more information, references, examples of documentation and other Forestry Risk Profiles visit our website: http://www.nepcon.net/forestry-risk-profiles Source: pefc.org; fsc.org, lei.org.id Source: Ministry of Forestry Statistics 2013—http://www.dephut.go.id/uploads/files/2fba7c7da8536e31671e3bb84f141195.pdf
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FORESTRY RISK PROFILE
This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of NEPCon and can in no way be taken to reflect the views of the European Union.
This Country Risk Profile has been produced for educational and informational purposes only. NEPCon is not liable for any reliance placed on this document, or any financial or other loss caused as a result of
reliance in information contained within. The information contained in the guideline is accurate, to the best of the knowledge of NEPCon, as of the date of publishing.
Indonesia’s trade in timber
Timber legality in Indonesia
Indonesia has a forest area of 94.4 mill ha (2010) which covers 52% of its land area. In recent decades, Indonesia has experienced a high level of deforestation, the biggest cause is the establishment of oil palm plantations (Mongaby 2013). Indonesia currently has a moratorium on awarding new licenses for logging in natural forests and on peat land (Austin et al. 2012). Historically, Indonesia has often been associated with high levels of illegal logging, however, the past decade has seen major progress to reduce illegal activities in the forest sector mainly through the efforts under the Indonesian-EU VPA process. As part of the VPA process, the Indonesian Government has implemented a national timber legality assurance system (TLAS), which includes forest level auditing, supply chain control and licensing of timber exports for legality called the SVLK system (Sistem Verifikasi Legalitas Kayu). The application of SVLK is mandatory for all forest management units and industries and for all export destinations - currently all active plantations, natural forest concessions and Perum Perhutani areas are under SVLK, and a large amount of the private forest owners (smallholders) use a Supplier Self Declaration of Conformance (SDoC). Even though the SVLK system has provided a significant improvement of the system to control illegal logging in Indonesia, the sys-tem is still under joint assessment by the EU and Indonesia and buyers of Indonesian timber should therefore still conduct due diligence on timber products from Indonesia even if are accompanied by a V-Legal Document.
LOG EXPORT BAN - Log and large dimension sawn timber export ban in place since 2001.
Corruption Perception Index
Transparency International’s Corruption Perceptions Index ranks countries/territories based on how corrupt their public sector is perceived to be. A country or territory’s score indicates the perceived level of public sector corruption on a scale of 0 – 100.
53% Forrest Cover
Area % forest
area % total
area Primary forest 46.7 mill ha 47.0% 24.8%
Secondary forest 46.4 mill ha 47.0% 24.7%
Planted forest 4.9 mill ha 5.0% 2.6%
Total forest area 98.0 mill ha 53.2%
Total land area 187.8 mill ha
Uncertified
95.4% total forest area Note that SVLK verification is
mandatory, but not included in this
graph
FSC FM: 2%
LEI FM: 1.9%
PEFC FM: <0.01%
VPA STATUS—Agreement in force since May 2014. Still under evalu-ation by the EU.
More information For more information, references, examples of documentation and other Forestry Risk Profiles visit our website:
http://www.nepcon.net/forestry-risk-profiles
Source: pefc.org; fsc.org, lei.org.id
Source: Ministry of Forestry Statistics 2013—http://www.dephut.go.id/uploads/files/2fba7c7da8536e31671e3bb84f141195.pdf
FORESTRY RISK PROFILE
This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of NEPCon and can in no way be taken to reflect the views of the European Union.
This Country Risk Profile has been produced for educational and informational purposes only. NEPCon is not liable for any reliance placed on this document, or any financial or other loss caused as a result of
reliance in information contained within. The information contained in the guideline is accurate, to the best of the knowledge of NEPCon, as of the date of publishing.
Legally required documents
Illegal logging in Indonesia Domestic Material
While various sources of data all indicate that there have been improvements in tackling illegal logging in Indonesia, they also show that illegal practices remain widespread (Hoare and Wellesley, 2014; Luttrell et al. 2011; UNODC 2010; HRW 2013, Nellemann 2012):
Non-compliance with legal requirements for forest companies and low levels of law enforcement.
Logging outside felling permit area. Logging not consistent with management plan/legislation
(e.g. greater volumes than permitted, logging under/oversized trees, logging on steep slopes and near streams) and bribery of government officials to approve such logging practices.
Logging in protected areas. Lack of fair/impartial allocation of licenses, allocation
processes are subject to significant risk of corruption. Lack of tax payments or under-payment. High levels of corruption, with specific reports of corruption
in the forest sector. Lack of Environmental Impact Assessments. Forgery of documents for illegal processing and export. False customs declarations on amount, or dimensions of
exported timber. Violation of rights of local communities. In terms of the use of SVLK certification to indicate legality, it is underlined that, at the time of writing, there are still certain challenges concerning the nationwide role out of the system, and some risks in its implementation. The EU and Indonesia address these challenges through a joint action plan on advancement of VPA implementation. Annex 1 outlines these issues and ways in which SVLK certification status can be verified through the supply chain. Imported material
Illegal wood products have been found to be smuggled to bordering countries without payment of fees, contributions or tax, only to be re-exported back to Indonesia (FAO 2012; FAO 2009; ITTO 2012). Currently imported material has not been included under the SVLK system, and therefore is considered a gap in the system. However, the Indonesian Government is working on a due diligence system that includes legality evaluation of imported material, which should be mandatory from 1st January 2016.
Export
1. Bill of lading 2. Certificate of origin 3. Proforma Invoice 4. PEB (Pemberitahuan Export
Barang) – Export Declaration
5. V-Legal Document
Supply chain risks
Supply chain risks can be considered to be high due to corrup-tion and reports of the usage of forged documents for illegal processing and export (UNODC 2010). Much has been reported with regards to illegal export of wood products through Malaysia to China, sold as of Malaysian origin (UNODC 2010). Laundering of illegal logs also occurs through the Philippines, Papua New Guinea and Singapore. Indonesia has introduced new legislation and its own Timber Legality Verification System. The country still receives criticism from both NGOs and the EU rapporteur for weak governance & enforcement (EP 2013; HRW 2013; EU FLEGT Facility 2012) and for not addressing key drivers of deforestation. However, subsequent revisions of the SVLK system has managed to solve many of the issues raised.
Options to mitigate risk An option is to purchase timber from Indonesia that is covered by a credible certification scheme, such as FSC. With minor ex-emptions, all exports from Indonesia require SVLK certification. SVLK certification is mandatory for most timber exports since 1st January 2015 - the existence of a V-Legal Document may therefore be used as an indication of legal compliance. If the timber is uncertified or not accompanied by a V-Legal Docu-ment, the high level of risk will mean that extensive risk mitiga-tion will be necessary. This may include supply chain verification detailed to forest level, including audits of each level of the sup-ply chain by a credible third party auditor.
Low risk timber in Indonesia? It is considered that timber originating from plantations in general carries less risk, than timber from natural forest. However, the ability to verify SVLK certification status through the supply chain provides a good way to verify integrity of certification claims (See annex IV).
CITES and protected species The following tree species are found in natural forest in Country and covered by CITES (Appendix I, II or III):
2. Log list 3. SVLK certificate or SDOC 4. SKAU (Surat Keterangan Asal Usul Kayu)
– from private forest 5. Log list attached to SKAU 6. Transport slip (Nota Angkutan) 7. Transporting license for processed wood—
FAKO (Faktur Angkutan kayu Olahan)
FORESTRY RISK PROFILE
This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of NEPCon and can in no way be taken to reflect the views of the European Union.
This Country Risk Profile has been produced for educational and informational purposes only. NEPCon is not liable for any reliance placed on this document, or any financial or other loss caused as a result of
reliance in information contained within. The information contained in the guideline is accurate, to the best of the knowledge of NEPCon, as of the date of publishing.
References Anti Forest-Mafia Coalition (2014): SVLK flawed: An independent evaluation of Indonesia’s timber legality certification system. http://
eyesontheforest.or.id/attach/Anti%20Forest%20Mafia%20Coalition%20(18Mar14)%20SVLK%20Flawed%20FINAL.pdf Austin, K.; Sheppard, S. and Stolle, F. (2012): “Indonesia’s Moratorium on New Forest Concessions: Key Findings and Next Steps”. WRI
Working Paper. World Resources Institute, Washington DC. Available online at http://www.wri.org/publication/indonesia-moratorium-on-new-forest-concessions
Baser, J.; Sarre, A.; Poore, D. and Johnson, S. (2011): Status of Tropical Forest Management 2011. ITTO Technical Series No 38. Inter-national Tropical Timber Organization, Yokohama, Japan
Bisnis (2013): ULR: http://industri.bisnis.com/read/20130803/99/154852/impor-kayu-bulat-melonjak-1144, visited February 4th 2014 EP (2013): DRAFT RECOMMENDATION on the draft Council decision on the conclusion of the Voluntary Partnership Agreement between
the European Union and the Republic of Indonesia on forest law enforcement, governance and trade in timber products into the European Union (11767/1/2013 – C7-0344/2013 – 2013/0205(NLE)) Committee on International Trade
EU FLEGT Facility (2012): Indonesia: Scoping baseline information for Forest Law Enforcement, Governance and Trade. Jakarta, URL: http://www.illegal-logging.info/sites/default/files/uploads/baselinestudyindonesiafinal.pdf.
European Commission (2014): Results of Joint Assessment of The Indonesian Timber Legality Assurance System. Public summary. http://silk.dephut.go.id/app/Upload/informasisvlk/20150327/1b7ffe58296768120882761a06e3b8a5.pdf
FAO (2010): Global Forest Resources Assessment 2010. FAO Forestry Paper 163. Food and Agriculture Organization of United Nations. Rome
FAO (2012): URL: http://www.fao.org/forestry/country/57478/en/idn/, visited November 18th 2013 FAO (2015): URL: http://faostat.fao.org/site/628/DesktopDefault.aspx?PageID=628, visited 19 January 2015. FAO (2009): ASIA-PACIFIC FORESTRY SECTOR OUTLOOK STUDY II. WORKING PAPER SERIES. Working Paper No. APFSOS II/
WP/2009/13. INDONESIA FORESTRY OUTLOOK STUDY. Center for Forestry Planning and Statistics Ministry of Forestry. FOOD AND AGRI-CULTURE ORGANIZATION OF THE UNITED NATIONS, REGIONAL OFFICE FOR ASIA AND THE PACIFIC. Bangkok, 2009
Hoare, A. and Wellesley, L. (2014): Illegal Logging and Related Trade The Response in Indonesia. A Chatham House assessment. http://www.chathamhouse.org/sites/files/chathamhouse/field/field_document/20141029IllegalLoggingIndonesiaHoareWellesleyFinal.pdf
HRW (2013): The Dark Side of Green Growth. Human Rights Impacts of Weak Governance in Indonesia´s Forestry Sector. Human Rights Watch, USA. ULR: http://www.hrw.org/sites/default/files/reports/indonesia0713webwcover_1.pdf, visited 4 April 2014
ITTO stat (2013): http://www.itto.int/annual_review_output/, visited April 4th 2014 ITTO (2012): Annual Review and Assessment of the World Timber Situation 2012. International Tropical Timber Organization, Japan.
Prepared by the Economic Information and Market Intelligence Java Nola (2010): ULR: http://www.java-nola.com/categories/index.cfm/cat/34, visited November 26th 2013 Joint Implementation Committee (2015): Records of Discussion, JOINT IMPLEMENTATION COMMITTEE, Jakarta, 8 July 2015. http://
silk.dephut.go.id/app/Upload/informasisvlk/20150718/b2dafe1a58e50d6a0577cd2b73db560a.pdf Joint Implementation Committee (2015): Summary of Indonesia-European Union Action Plan on the Advancement of VPA Implementation
JPIK (2014): SVLK in the eye of the monitor. Independent Monitoring and a review of the implementation of the timber legality verifica-tion system 2011-2013. http://loggingoff.info/sites/loggingoff.info/files/JPIK(2014)%20SVLKmonitoringReport.pdf
Luttrell, C.; Obidzinski, K.; Brockhaus, M.; Muharrom, E.; Petkova, E.; Wardell, A. and Halperin, J. (2011): Lessons for REDD+ from measures to control illegal logging in Indonesia. United Nations Office on Drugs and Crime and Center for International Forestry Research, Jakarta and Bogor, Indonesia. ULR: http://www.cifor.org/publications/pdf_files/WPapers/WP74Obidzinski.pdf, visited November 26th 2013
Mongabay (2013): URL: http://news.mongabay.com/2013/0514-indonesia-renews-moratorium.html, visited November 26th 2013 Mongabay (2013): ‘Palm oil now biggest cause of deforestation in Indonesia’. URL: http://news.mongabay.com/2013/0903-rspo-vs-
greenpeace-palm-oil-deforestation.html. Visited 15 April 2015. Nellemann, C. (2012): Green Carbon, Black Trade: Illegal Logging, Tax Fraud and Laundering in the Worlds Tropical Forests. A Rapid
Response Assessment. INTERPOL Environmental Crime Programme (eds). United Nations Environment Programme, GRID-Arendal UN Comtrade Database: http://comtrade.un.org/data/, visited December 15th 2015 UNODC (2010): The Globalization of Crime – An Transnational Organised Crime Threat Assessment. Page: 161-172. United Nations Office
on Drugs and Crime, Vienna. http://www.unodc.org/documents/data-and-analysis/tocta/TOCTA_Report_2010_low_res.pdf, Wikipedia (n.d.): Indonesia. http://en.wikipedia.org/wiki/Indonesia, visited November 23rd 2013 Woodkiandko (nd.d): Wood species in Indonesia, ULR: http://woodkiandko.blogspot.dk/p/wood-species-in-indonesia.html, visited Decem-
ber 3rd 2013
Other Resources SILK website: http://silk.dephut.go.id/ - verify SVLK certificates. Indonesia Independent Forest Monitoring Network (JPIK) http://jpik.or.id/ Indonesia Multistakeholder Forestry Programme (MFP) http://www.mfp.or.id/index.php/id/ National online-tracking system at each stage of the supply chain from the forest concession until intermediate log-yard and primary
