Certification Rift in Indonesia

Forest management certification originated in the 1980s in an effort to mediate two opposing groups: tropical timber companies and exporters on one side and the critical consumer in importing countries on the other side. While the former wanted to continue exploiting tropical forests and trade in the products freely, the latter wanted to curb forest degradation by boycotting tropical timber products. The boycotting consumers assumed that all tropical timber exploitation was destructive and unsustainable. It was no surprise that such generalization met strong opposition from the producers, who intensively campaigned for the sustainability of their managed forests. The campaigns, in the eyes of critical consumer were non-objective advertisements and self-defense.

Following the prolonged conflict, both groups felt the need of a mediator (an independent third party) who ensure that a forest was sustainably managed. Certification accreditors such as the Forest Stewardship Council (FSC) and Lembaga Ekolabel Indonesia (LEI) were born to accommodate the need (Counsell et al, 2002). George Monbiot (2000), an environmental observer, was so optimistic about the birth of the bodies that he said “this shows that despite their limited strength, consumers can press the companies to be more capable than the weakening governments.”

These accreditors set standards, principles and criteria that a given forest management unit has to comply with to obtain certification. Meanwhile, assessment of the performance of a given forest management unit is outsourced to certification bodies/certifiers in accordance with standards referred to by their accreditors. In the course of its development, certification is applied not only to tropical forests, which are threatened by large-scale exploitation, but also to other kinds of forest throughout the world. This broad range application cannot be separated from international anti-forest destruction and awareness raising campaigns that coloured the 1990s.

Much disturbed by the rampant protests, campaigns and demonstrations, several major furniture and timber product retailers in Europe saw certification as an effective tool to demonstrate their environmental concern and to raise their companies’ image. Then, demand for certified timber increased enormously and certification has become a fast-growing business.

Several major timber traders, facilitated by WWF, agreed in 1990 to create a market network for certified timber and then targeted on trade in only certified timber and timber products in 1995. The target could not be achieved, however, because there was not enough certified timber to fulfill the market demand. Observing this, FSC developed a ‘fast growth’ strategy and attempted to certify as many forests as possible in a short time. Indonesia, not surprisingly, became the country with the highest certification potential and was poised to be a major supplier of certified timber and timber products (DtE, 2001 and Counsell et al, 2002).

Certification Controversy: FSC’s Experience
Need for sustainable forest certification has created its own market and business. Accreditors and certifiers can be taken as the “seller” and the forest management units and timber mills as the “buyer”. As in any market, sellers compete with each other to sell their products. Sellers (certifiers in this case) will do their best to attract buyers and avoid being “too rigid or demanding” in relation to the standards of forest management set by the accreditors. Eventually, the competition leads to a ‘race to the bottom’ by certifiers lowering standards in order to win contracts or satisfy the expectations of funding agencies. The laxness includes conducting minimum assessment on the principles and criteria a forest management unit must comply with. Very often, logging operations are certified on the basis that, whilst not perfect at the time of assessment, they are granted a FSC-backed certificate in the expectation that they will improve in years to come. The criteria not yet fulfilled are labeled a corrective action request (CAR), which must be fulfilled later. However, the hoped-for improvements rarely happen (Counsell et al, 2002).

The certifier’s “naughtiness” could be avoided if high-class accreditors such as FSC had monitoring and complaint procedures as well as adequate sanctions. Unfortunately, in the view of many international NGOs, FSC’s monitoring over certifier’s performance is very weak. It is no wonder given that one of FSC’s major revenue sources is the certifiers themselves; moreover, who else will help FSC succeed in forest certification but its accredited certifiers?

NGOs concerned about the performance of the FSC Secretariat and the quality of FSC endorsed certificates have put forward recommendations to improve the system and the administration in order to avoid conflicts of interest among the certification-related stakeholders and to increase the credibility of FSC’s logo attached to various forest products. So far, in it’s response to the recommendations and the 157-page study of cases, FSC has expressed it’s acknowledgement of the significance of the issues raised and has promised to follow them through and improve it’s monitoring performance. To the disappointment of many NGOs, no changes or improvements in the system and administration have been made.

Eventually, as the most credible forest certification accrediting body (FERN 2001), FSC shifted its original purpose; to become a consumer’s control mechanism against the timber market, follow-up on the boycott launched to improve tropical forest management and curb timber trade by destructive large-scale operations, and, at the same time, to provide incentives for community-based small-scale forest management. It is not expected that FSC’s forest certification can become such a tool (Counsell et al, 2002). Statistics show that FSC’s forest certification has been mostly applied to temperate and boreal forests (87%), not tropical ones. And only 3% of FSC forest certification has been applied to communal land (FSC 2006).

Certification in Indonesia
Controversies over FSC certification have arisen throughout the world and have seemed to be a part of the certification’s system, politics and business. When forest certification began in Indonesia, through FSC’s scheme and later LEI’s, controversies also arose. At first, certification of forests and chain of custody (CoC), developed very well until protests emerged and many certificates were withdrawn (except that of PT Diamond Raya Timber). Certification entered into a quiet improvement period and now appears to be rising again. The certification table below provides the ups and downs of certification in Indonesia: from more than 2 million hectares in 1990, down to 163,488 hectares in 2000 to almost nil in 2003 (only one forest certification encompassing 90,957 hectares; and rose again in March 2006 (710,000 hectares).

The certification rift in Indonesia cannot be separated from national forest mismanagement. Everybody has well acknowledged the destructive forest management under the New Order Regime. Post-New Order governments have the legacy of multi-dimensional problems obviously seen by the people and the media: social conflicts, massive illegal logging and illegal encroachment, and ecological disasters such as species extinction, floods and landslides, drought and forest fires.

At the bottom lie the roots of problems waiting to be addressed, especially policies regarding natural resource tenure and management in Indonesia. Flawed policies lead to flawed laws and regulations regarding natural resource management, forests included. These problems date back to the colonial period when the ruling Dutch took over agrarian resources from the holders of communal rights; indigenous peoples, ethnic groups, village communities and other communal groups. Communities under colonial rule, who had their own traditional tenurial systems, had to relinquish their rights over natural resources. It was when Indonesia gained it’s independence that the people’s rights over natural resources were to be restructured through Basic Agrarian Law (BAL). BAL was intended to change the colonial system with an independent one and to bring social justice, prosperity and advancement to the people by restructuring the tenure, designation, management and utilization of agrarian resources.

This aim was never fully accomplished as the New Order Regime took control and adopted an economy-driven natural resource management strategy which did not provide for people’s participation in tenure, designation, management and utilization of agrarian resources (Wignjosoebroto et al, 1998). With the introduction of BAL, the New Order government separated forest resources from other agrarian resources and the Ministry of Forestry was given absolute control over designation, licensing and management of forests, meaning that indigenous and local people were deprived of their rights over forest resources they depended on.

Furthermore, flawed forestry regulations were advantageously used by some governmental, political and military elites to enrich themselves. It is no wonder that the monitoring was very weak and government policies were oriented to large-scale forest concessions such as HPH (natural forests) and HTI (plantation forests), which promised enormous and rapidly-generated profit rather than community-based forest management. This is a primary cause of massive illegal logging and frequent forest fires (Nababan 2004 and FWI/GFW 2002).

These are the roots of the problems surrounding forest management in Indonesia which many hope will be addressed by timber certification. The current certification rift in Indonesia is compounded by both these legacies and the inherent problems with certification mentioned above.

Certification supporters assume that bad forest management in Indonesia can be gradually improved through examples of good forest management and, later, through certification. Rather than waiting a long time for changes in policies, they assume that certification will drive forest managers to perform better than what is expected by the existing regulations. The hope, then, is that certification can pressure the government to improve forestry policies and regulations.

On the other hand, opposing groups predict that certification of HPHs and this will reinforce the assumption that there is nothing wrong with forestry policies and regulations in Indonesia. In their opinion, it is the roots of the problems (the bad policies and regulations) that must be addressed first, before certification can take place. Nonetheless, both groups express no objection to certification of community-based forest management (DtE 2001, Colchester 2004, Muhtaman and Prasetyo 2004).
The rift is well represented by the issue and suspension of certificates.

The Suspended, the Certified, and the Would-Be Certified
At first, SmartWood certified all of Perum Perhutani’s 2 million-plus hectare production forests in Java to provide an example and model of sustainable forest practices. The birth of FSC’s standards changed the certification standards and certification in Java had to be applied to management units (KPH) at the district level (Donovan 2001). Under the new system, SmartWood certified six KPHs between 1998-2000. The 1998 economic crisis and subsequent political reform have uncovered all the problems not obvious in the previous periods, i.e. a social fire hidden behind the statistics of forest management. Several years later saw widespread forest looting and violence in Java, and eventually Perum Perhutani could no longer preserve their forests sustainably. Despite rampant protests in 1997 it was only in 2001-2002 that SmartWood suspended Perhutani’s certificates.

Protests against certification included certification methodologies, unclear references to FSC principles and criteria, weak public control and participation, and the exclusion of the names of participants interviewed during the assessment. SmartWood’s certification was also considered non-compliant with some of FSC’s principles, including violation of local community and worker rights, failure in securing sustainable products, and the use of violence in resolving conflicts (ARuPA 2000 and Counsell et al, 2002).

The suspension had serious implications for timber processing companies holding CoC certicates which relied on supply from certified KPHs. In 2003, SmartWood withdrew or suspended 37 CoC certificates (FWI Jawa 2006).

In 2003, SmartWood suspended forest and CoC certificates granted in 2000 to PT Xylo Pratama Inda, a pencial slate producer, due to a discovery that it received supply from sources whose legality was questionable (DtE 2001, Muhtaman and Prasetyo 2004). In the same year, there was only one certificate holder in Indonesia (PT Diamond Raya Timber), which wasan HPH controlling 90,957 hectares of forest in Riau. DRT is also the first certified forest management unit under FSC-LEI Joint Certification Protocol (JCP), which stipulates that a forest management unit should comply with both FSC-LEI standards to obtain certification.

Unlike Perhutani, whose certificates were suspended following protests (the suspension was considered late, reflecting weak FSC monitoring of it’s accredited certifier, SmartWood) DRT has held it’s certificate up to now.

Rejection of DRT’s certification emerged as several NGOs saw the compensation given to DRT for the taken-over land as unfair. DRT did negotiate compensation with the local community. This, in the certifier’s opinion, indicated the company’s genuine attempt to resolve conflict with the local community. However, some NGOs thought that the compensation scheme was imposed on the local community, who had no other option: they accepted the compensation or received nothing in return for their land. In addition, DRT also had to deal with massive illegal logging within it’s concession and boundary disputes. Finally, DRT’s concession lies in a high conservation value forest (HCVF) which harbours rare species, such as ramin and the Sumatran tiger (DtE 2001 and Colchester 2004).

Complaints and rejection were officially delivered by national and international NGOs to both the certifier (SGS) and the accreditor (FSC). Nineteen months later, the certifier responded to complaints and asked DRT to conduct corrective actions. Counsell (2002) observed that, “Overall, SGS’s response was not adequate and does not touch the core of the problems generated.” However, DRT’s certificate was not suspended.

The controversy over DRT’s certification added fuel to the anti-industrial level certification in Indonesia. The anti-certification movement culminated in 2001 when WALH, along with 144 NGOs and CSOs throughout Indonesia, called for a moratorium on certification in Indonesia. To many NGOs and CSOs, large-scale forest operations such as DRT should not be certified given the fact that FSC principles stipulate clarity of tenure and land designation as well as absence of rights conflicts with local communities. The principles are unlikely to be fulfilled as Indonesia’s law does not recognize local community rights in state forest. There is a concern that certification of HPHs will only legitimize industrial forestry systems that will deprive local communities of their rights to their own resources (a fundamental problem in Indonesian forest degradation). From this viewpoint, certification represents a counter-productive effort towards forestry reform, including the restoration of indigenous people’s rights and the total revision of the HPH system (Counsell 2002).

Two years later, in early 2003, WALHI and AMAN published their study on the application of FSC Principle’s #2 and #3 in Indonesia. The study reveals the weakness in recognition of indigenous people’s rights in Indonesian law, in the forest concession system and in certified forests. It also describes how the state’s repressive measures against indigenous peoples and the displacement of indigenous peoples have disenfranchised them to exercise their free and informed consent. This is the result of the common practice of paying law enforcement to resolve land conflicts. The study also reveals the striking fact that only 10% of the area called state forest has been completely delineated and gazetted, meaning that all HPHs and HTIs in Indonesia are practically illegal. In the absence of clear legal mechanisms recognizing customary rights or of other means of securing the equality of indigenous peoples in negotiations with forest managers, the study recommends the termination of forest certification in Indonesia (AMAN/WALHI 2003 and Colchester 2004).

Controversies over large-scale forest operations certification, such as those of DRT and Perhutani, have more or less discredited the image and reputation of certifiers and accreditors; not only FSC but also LEI, which awarded DRT with a bronze certification. It was the critiques and protests that forced FSC and LEI to concentrate in the following years on certification of community-based forest management, where conflicts are minimal. LEI has developed certification of sustainable community-based management (PHBML), while FSC concentrated on it’s Small and Low Intensity Managed Forest (SLIM-F) scheme. After several trial projects, LEI and Mutu Agung Lestari (certifier) certified two forests in Sumberrejo Village and Selopuro Village in Wonogiri, central Java, together encompassing 812 hectares. Not long afterwards, SmartWood certified a 374 hectare forest managed by Koperasi Hutan Jaya Lestari (KHJL) in Konawe Selatan, South-East Sulawesi, under the SLIM-F scheme.

These three certified community-based forest operations marked a new era in forest certification in Indonesia as they met no protest or rejection. It should be noted, however, that while community-based forest certification is not free from problems (lack of buyer interest due to minimal promotion, lack of capacity to fulfill industrial demand, lack of continuous supply guarantee, and high per unit cost of certification) it demonstrates that communities can manage their own forests in a sustainable way (FWI Jawa 2006). This would create a substantial impact if Indonesia only applied community-based forest certification, so that it could be said that only local communities can manage forests in a sustainable way. Subsequent developments, however, seemed to be far from such an expectation.

In 2005, SmartWood certified PTErna Djuliawati, a HPH encompassing 184,000 hectares in Central Kalimantan. The next year, in early 2006, SmartWood certified PT Summalindo Jaya Lestari II and PT Intracawood Manufacturing, two HPHs encompassing 270,000 and 150,000 hectares respectively in East Kalimantan. At the same time, LEI awarded sustainable plantation forest certification to Riau Andalan Pulp & Paper (RAPP), an HTI covering 164,000 hectares in Riau. The certification of two HPHs, RAPP and Summalindo Jaya Lestari II met strong protests regarding the certification processes, poor public participation, tenurial conflicts and the FPIC, and allegations of illegally-sourced supply (Coalition of NGOs For Forest 2006 and Colchester 2006).
Using a soccer match as analogy, large-scale forest management (HPH and HTI) certification has beaten community-based certification by a ‘score’ 501 – 1, in terms of area. However, time and again, large-scale operations are condemned by local people and NGOs alike for failing to abide by certification standards. This, then, leads us to a pertinent question: if communities are capable of managing forests sustainably, why are large-scale operations not? This question involves the credibility of certification and accreditation bodies as much as the operating companies themselves, and has been the source of much criticism since certification began in Indonesia.

It is hard to determine the future outlook for forest certification in Indonesia based on what has happened so far. Addressing the complexity of forest certification in Indonesia, Marcus Colchester (2004), the Director of the Forest Peoples Programme, and who is also studying forest certification in Indonesia, said, “After all, whether certification will be accepted depends on the quality of participation in decision-making, assessing activities, and the way objection and complaints are addressed. It is unfortunate that in Indonesia, due to many reasons, community’s participation at all levels is very low and community’s interests cannot be accommodated, so that certification brings about more conflicts than improvement to forest practices. Field studies show that only a small number of communities, even in those areas to be certified, know very little of what certification is about, and fewer even know about FSC’s principles and criteria, and almost none are able to use the official complaint procedures. Meanwhile, Indonesia’s NGOs have a huge responsibility to enforce the standards and monitor the assessment activities and ensure that local problems are properly addressed and taken care of. Given the urgent problems, and the possible ignorance of accreditors and certifiers towards concerns raised by Indonesia’s NGOs, the NGOs will possibly have hard times to spend time and energy to monitor the certification and must seek other ways to reform forest and land tenure regime.”

One way by which local and indigenous people can increase their level of participation in the certification process is to become part of the accreditor organizations and then actively influence the inside processes. As for FSC in Indonesia, no national network has been in place and it is still unknown whether such a network will be established. Meanwhile, LEI has structurally been transformed into a constituent-based organization, within which the community chamber makes up the largest portion. With this “transformation” LEI’s certification will not only serve as a market incentive mechanism but will also expectedly open new room for fair and just negotiation among all forest stakeholders. A question to be raised is if the farmers in Selopuro and Sumberrejo, whose forests have been certified for two years, have to wait for market incentives, how much longer will the community have to wait until LEI can effectively encourage fairer and more equitable forestry policies?
After all, talking about the course of certification in Indonesia is talking about more than 2.7 million hectares of forests, which once held (and later suspended) and which are still holding their certificates; roughly 2.7% of Indonesia’s total forest area. Increasing the level of participation and position of local and indigenous people in forest tenure and management in all of Indonesia’s forests (as mandated by the constitution that all natural resources are managed to the maximum benefit of the people) is another story and another harsh road.

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