World Rainforest Movement

Illegal Timber in Indonesia: Experiments with Legal Verification

Jakarta, we have a problem!
Indonesia has a major problem with illegal logging. New Minister for Forests, Malam Sambat Kaban, calls illegal logging a ‘wild cancer’. ‘If this ‘virus’ is not eradicated soon…’ he says, the country’s forests would only survive another 15 years. He cites statistics that 60 million of the country’s 120 million hectares of forests have already been degraded or destroyed, most in the last 20 years. Some 2.8 million hectares are still being ruined each year. His answer is law enforcement and reforestation, but local NGOs say the main solution would be to close the excessive pulp factories, sawmills and plywood plants, which have the capacity to chomp through about 80 million cubic metres of timber a year.

Based on comparisons of the country’s ‘annual allowable cut’ with the amount of timber actually entering mills, NGOs and researchers monitoring logging in Indonesia estimate that at least 60-80% of Indonesia’s timber is ‘illegal’. But that is just in terms of one legal requirement – acquiring a permit to cut the timber. Once you trawl through all of the nearly 900 laws that relate to forests in Indonesia and check if they are applied, you realise that the amount of ‘legal’ logging going on is much less.

Research by the World Agroforestry Centre (ICRAF) shows that, for a start, the legal status of forest zones under the jurisdiction of the Forestry Department is extremely uncertain. Only some 12% of the forest zone has yet been gazetted – the process by which forest areas are classified, their boundaries surveyed and agreed by interdepartmental teams and then officially registered as State Forests. ICRAF research also shows that, even where gazettement has occurred, the legal status of the ‘forests’ may be disputed – many of the required procedures for setting the boundaries have been rushed through without due consultation with local village leaders, to check that the designated forests do not overlap areas where people have rights.

Notwithstanding the fact that the Forestry Department has never bothered to run through the legal process which gives it the authority to issue concessions, the great majority of the country’s forests have been handed over to companies for logging and plantations. It is estimated that about 600 logging concessions (HPH) have to date been issued in Indonesia, with the most extant licenses active at any one time being about 450, in the late 1980s. Since the 1990s, there has been a steep decline in the numbers of active HPH. There are about 270 today. The main reason for the decline is that many parts of Indonesia have already been logged out. Most concessionaires have also not bothered to go through the legal process of ‘delineation’, a procedure aimed to further clarify that their concessions do not overlap lands of other users. ICRAF data show that only some 8% of forest concessions have been properly delineated by the companies that have been given logging licences, meaning most concessions should be forfeit.

Faced with global criticism of the prevalence of destructive logging and illegality, the Government of Indonesia has embarked on a number of initiatives to curb these illegalities. These include signing a Memorandum of Understanding (MoU) in 2003 on Cooperation to Improve Forest Law Enforcement and Governance and to Combat Illegal Logging and the International Trade in Illegally Logged Timber and Wood Products signed between the UK Government, represented by the Department of Environment, Forestry and Rural Affairs and the Department for International Development (DfID), and by the Indonesian Ministry of Forestry.

Under the MoU, British customs officials and procurement officers would be allowed to refuse any Indonesian timbers or wood products that could not prove they were legal. DfID is funding efforts in Indonesia to meet this requirement. But which laws would suppliers have to comply with and how would they prove it? Two years on, the search for a manageable system for ‘verifying legality’ still shows no results, not so much because people haven’t been trying but because no one can find a logging concession that can pass the test.

Conscious Pilot:
Ask which laws are most important in deciding what constitutes ‘legal’ logging and you get different replies from different people. Foresters are more concerned that regulations on technical management and cutting permits are in order. Conservationists focus on logging that violates laws on protected areas and threatened and endangered species. Those trying to curb forestry corruption highlight the laws controlling hectarage, bidding procedures, tax payments and stumpage fees. Regional governments insist that forestry laws (which remain highly centralised) be brought into conformity with other laws, which entrust natural resources to local authorities. Those who champion indigenous peoples and sustainable development emphasise laws that protect communities’ rights, amongst which the laws requiring forest gazettement and concession delineation are critical, mainly because the Indonesian government has never developed any other process for registering and protecting customary rights.

In 2004, The Nature Conservancy (TNC), with funds from DfID and USAID, announced it was testing a draft ‘Legality Standard’, which incorporates the most important of these laws. TNC has also piloted a way of bar coding timber so it can be tracked from cutting block, down river and through mills and plywood plants to export shipments. A local consortium of forest activists, Pokja Hutan, has alleged that timbers from outside these concessions get mixed up with those from the concession areas. Meanwhile experimental audits have shown that even collaborating companies, keen to be cleared as ‘legal’, have not been able to show they are complying with the law. Auditors also note that ascertaining whether communities within concessions have agreed to forest zoning and concession boundaries is very difficult. In fact, many independent certification bodies admit that probably no concessions in Indonesia have been established with the consent of local communities, even though this is now legally required.

Another BRIK in the wall:
One response from the Indonesian Government has been to set up the Badan Revitalisasi Industri Kayu (BRIK – Indonesian Institute for the Revitalisation of the Timber Industry), which was established in 2002 as a para-statal agency charged with monitoring and verifying the legality of timber. To qualify for a legality certificate (ETPIK) issued by BRIK, companies must show: that all timbers coming into their mills are accompanied by transportation permits (SKSHH); how much timber the mill used; and how much processed timber it produced. Using these figures BRIK claims it is able to show that a mill is using only authorised timber and can issue a certificate accordingly. BRIK has claimed that Indonesian mills produce 50-60 million cubic metres of legal roundwood equivalent, even though the current Annual Allowable Cut from active concessions is only 5.5 million m3. BRIK explains the difference by stating that the other 45-55 million m3 come from legal sources such as forest conversion, clearance of old oil palm plantations, rubber wood and from home gardens. No one else believes this.

The government claims that ETPIK certificates provide a guarantee of the legality of processed timbers. Development agencies and timber traders have different views. They characterise BRIK as: ‘untransparent’, ‘questionable’ and ‘not credible’. It is notorious that the crucial SKSHH certificates, on which the whole BRIK system relies, are readily available on the black market. Although the BRIK system has some merits – it is highly computerised and so, in the right hands, could offer a useful tool for tracking timbers – it is unlikely to reassure discerning buyers.

Don’t be Phased:
In May 2005, the World Bank-WWF ‘Forest Alliance’ announced its new targets for forests. By 2015 they hope to secure: 25 million hectares of new forest protected areas; 75 million hectares of improved management in forest protected areas; 100 million hectares of forests under certification; 100 million hectares of community forest management and; 100 million hectares of forests in a step-wise process of certification.

One of the WWF’s main vehicles for achieving this last target is the Global Forest and Trade Network, the local chapter of which in Indonesia is called Nusa Hijau, a project of WWF-Indonesia. Like other parts of GFTN, Nusa Hijau aims to help Indonesian concessionaires link to buyers while they gradually but progressively improve their forest management through a ‘step wise approach’ from mere legality through improved forest management to full certification. The Nusa Hijau process, which uses a simplified version of the TNC/DfID Legality Standard in its initial check list, has, so far, not managed to recruit a single company to become a member. It’s the same problem: no concessionaires can prove they are legal. WWF is however keen to work with local communities to help them resolve their differences with loggers.

LOV is just a three letter word:
An alternative approach is being tried by the Lembaga Ekolabel Indonesia (LEI) which has also developed a national timber certification scheme somewhat similar to, but less rigorous than, the FSC. Under its pilot ‘Legal Origin Verification’ (LOV) system, auditors licensed by LEI identify the sources of timber entering a mill and classify it according to whether it comes from forestry concessions, areas subject to clear-felling licences, district level clear-felling licences or from unknown sources. The exercise has been piloted with two major mills, Asia Pulp and Paper and Indo-Kiat. LEI does not consider LOV to be ‘legal certification’, merely a mechanism that provides partial information about wood origin, and it leaves it to buyers to decide if timber from such sources is acceptable or not.

‘Ten Steps to Heaven’:
Meanwhile, the World Bank has its own ‘Systemic 10 Step Program to curb illegal logging’, known affectionately by NGOs as ‘10 Steps to Heaven’. Step 2 of the plan is to ‘identify legal sources of timber’ through agreement on a definition of legal timber. Taking into account ICRAF’s findings, the Bank rightly requires the Forestry Department to proceed with the delineation, demarcation and gazettement of forests to ‘legitimate and establish certainty for recognized legal sources’. The trouble is, at current rates, the Forestry Department is unlikely to complete this task until 2045!

Dr. Who?
WALHI, the Indonesian Environment Forum and local chapter of Friends of the Earth, which has been calling for a moratorium on industrial logging since 2001, is sceptical of the whole approach. Industrial logging moratoriums (currently in place in Aceh and Papua) are needed throughout the country, WALHI argues, to allow space for the development of a transparent and accountable forest management system that respects community rights. Destructive logging, they point out, is happening inside and outside concessions. Most of the forest loss of the past 20 years has been in concessions. The challenge is not to make logging legal but to make it sustainable. WALHI is concerned that focusing on identifying ‘legal logging’ merely legitimates the current system, and will perpetuate the deals going on under the table, by which concessions are handed out as perks to political cronies in exchange for handsome payments to forestry officials and political parties’ election campaign funds. The real political economy of logging – for which all the legal cover is mere papering the cracks – can only be tackled by stopping the concession system itself. According to this analysis, Kaban’s ‘virus’ infects the whole forestry regime and only major surgery holds out any hope. So long as the doctors all disagree on the nature of the disease and its cure, the prognosis for the patient looks bleak.

By: Marcus Colchester, Forest Peoples Programme, e-mail:, Sources: FPP study for TNC see: : World Bank, A Systemic 10 Step Program to Curb Illegal Logging and Improve Law Enforcement in Indonesia. (draft August 2005): Jakarta Post 15 August 2005.