FLEGT License Implementation Must be Accompanied by Governance Improvement Sustainability in the Forestry Sector and Its Trade


On 21 April 2016, the President of Indonesia Joko Widodo, European Commission President Jean-Claude Juncker, and President of the European Council Donald Tusk issued a joint statement that the European Union and Indonesia have agreed to immediately undertake steps toward implementation of the first FLEGT licensing scheme, which is an effort from both parties to reduce illegal logging and promote the trade of legal timber.

The FLEGT licensing scheme implementation is one of the main achievements of the Voluntary Partnership Agreement (VPA) between Indonesia and the European Union on Forest Law Enforcement, Governance, and Trade (FLEGT) that was signed in 2013 and ratified in 2014. The latest development in Indonesia was the issuance of Decree of Minister of Commerce No. 25 of 2016 which ensured that all timber products from Indonesia must comply with timber legality assurance system (TLAS) indicated by the issuance of the V-Legal Document for exported timber products. This timber legality assurance is known in Indonesia as the Sistem Verifikasi Legalitas Kayu (SVLK) and is implemented throughout the entire timber trade framework between Indonesia and the European Union. The enforcement of the FLEGT License is expected not only to strengthen the economic value of timber trade between Indonesia and the European Union, but also as a sustainable improvement for better governance, especially in the forestry sector and its trade.

This development must be appreciated and regarded as a show of earnestness by all parties in Indonesia and the European Union as a joint effort to face illegal timber trade and forest degradation. However, it must be noted that trade incentives will not be achieved if stakeholders do not work together to build and maintain credibility and prepare mitigation safeguards for the spill-over negative impacts that may occur due to this FLEGT licensing implementation (such as in the event of certain divergences), especially toward indigenous and local communities whose livelihoods come from and also depend on the presence and protection of the forests.

There are still challenges in forestry governance and law enforcement that must be resolved for continuous improvement and enhancement. Issues pertaining information transparency, boundaries in forest tenure/utilization and management, conflicts, environment degradation through forest conversion, corruption and forms of maladministration are still taking place. In addition, this timber legality assurance system itself must be further challenged to achieve sustainable forest protection.

11Mei2016_JPIK_boxTLAS’ credibility as a timber legality assurance system will greatly depend on how the system achieves its own accountability. In this sense the Government’s role is crucial, especially in ensuring that monitoring and law enforcement is effective in the event of divergences. It must be known that this homework of building accountability – and therefore credibility – is imperative as one of the main focus for real improvements, especially regarding the government’s efforts in responding to reports of violations submitted by independent monitoring agencies within the TLAS scheme. If accountability and law enforcement is not implemented in an effective manner, this will not only erode credibility, but also becomes a mistaken incentive and thus developing a rent-seeking behaviour in the certified timber market. Within the same context, monitoring is not only to be borne by the Indonesian side, but the European Union must also take the same measures to ensure this legal timber trade, through timber product trade transparency between Indonesia and the European Union, and the concrete, effective and stringent implementation of the EU Timber Regulation (EUTR) in all European Union member countries (originating from any countries).

Based on the above situation, Indonesian civil society groups recommend the Government of Indonesia, Government of the European Union, and businesses in the forestry sector and its trade in Indonesia to:
1. Strengthen the credibility of the timber legality assurance system through accountability and effective and firm law enforcement.
a. The Government of Indonesia must show the accountability of the timber legality by ensuring legal certainty in monitoring and law enforcement of non-compliances that are the findings of assessment/verifications or independent monitoring.
b. The Government of Indonesia must ensure information disclosure by creating public information access to Independent Monitoring Agencies as provided in the VPA annex. The Government of Indonesia must also strengthen the Timber Legality Information System by including information that can be accessed by the public on law enforcement conducted by the Government on these findings regarding violations or non-compliances.
c. The Government of Indonesia must ensure multi-stakeholder participation in assurance system adaptation/strengthening, which includes standards (criteria, indicators and verifiers) as well as TLAS implementation guidelines.
d. The Government of Indonesia along with businesses in the forestry sector and its trade must strengthen policy and regulation implementation to ensure timber legality assurance as well as export and import must ensure there are no illegal timber laundering or dubious gaps in the legality of timber.

2. Ensure that timber legality assurance system implementation also applies to domestic markets and provide benefits for small-scale businesses, and sure steps to mitigate potentially negative impacts due to implementation of the timber legality assurance system and FLEGT licensing.
a. The Government of Indonesia must develop more constructive efforts so that this system can be used by all businesses in the forestry sector and its trade. Government facility for certification must be strengthened to reach all public including community-based forest management units and small-scale timber industries.
b. The Government of Indonesia must assess and improve public services regarding licensing including business and land permits, especially for community and small-scale businesses for community timber utilization that are considered as negligible risks.
c. The Government of Indonesia must push for policies and regulations on government goods/services procurement for timber and timber products with timber legality assurance through TLAS for the domestic market.
d. The Government of Indonesia along with the European Union Government must undertake concrete mitigation measures of potential impacts of poor VPA implementation that will be identified in the VPA Impact Monitoring.

3. Reform regulations and policies to protect the rights and access of forest communities as one of the stakeholders, and to improve policies to mitigate deforestation and environmental degradation.
a. The Government of Indonesia must assess and improve policies and regulations regarding forest governance and community governance, including recognition of indigenous peoples’ rights and improving access to forest and land for indigenous and local communities.
b. The Government of Indonesia must review and revise spatial plan in the forestry sector that can potentially exacerbate land and forest degradation.
c. The Government of Indonesia must utilize this FLEGT Licensing momentum for greater good; including conducting parallel efforts to resolve conflicts, boundaries, human rights violations, and prosecuting perpetrators behind large-scale forest degradation or environmental losses, especially those caused by illegal forest conversion or those causing negative impacts towards communities and environment.

4. Push for the strengthening of Independent Market Monitoring (IMM) implementation as part of the VPA, and strengthening implementation of the European Union Timber Regulation (EUTR).
a. As part of the IMM preparedness within VPA and EUTR strengthening, the European Union must develop a more detailed information system which is accessible to public regarding timber and timber product trade, especially timber products originating from Indonesia.
b. EUTR strengthening must be supported through more robust monitoring and law enforcement mechanisms by the European Union by ensuring follow up of illegal timber trade information as well as monitoring results conducted by independent monitoring agencies. This also serves to prevent timber laundering through certain third countries before entering the European Union.
c. The governments of European Union member countries along with businesses must ensure to only accept legal timber and timber products. Information on EUTR law enforcement in European Union member countries must be consolidated in an information system accessible to the public, so that developments in EUTR implementation can be monitored together.
d. Indonesia and the European Union must build a more effective law enforcement framework to combat illegal timber trade, whether through mutual legal assistance or by attempting to restore state losses due to forestry crimes or illegal timber trade.
e. The European Union bears the same amount of responsibility for improvement efforts as well as sustainable strengthening in good governance, law enforcement, and trade of Indonesia’s forestry sector as stated in the IMM and EUTR, whether through partnership scheme between governments or cooperation between private sector/businesses.

Bogor, 11 May 2016

Independent Forestry Moniroting Network (Jaringan Pemantauan Independen Kehutanan – JPIK), Forest Watch Indonesia (FWI), Indonesian Ecolabel Institute (Lembaga Ekolabel Indonesia – LEI), Indonesia Center for Environment Law (ICEL), World Wide Fund Indonesia (WWF Indonesia), Eyes on the Forest (EoF), Indigenous Peoples’ Alliance of the Archipelago (Aliansi Masyarakat Adat Nusantara – AMAN), AURIGA, Coalition of Aceh Rainforest Movement (Koalisi Peduli Hutan Aceh – KPHA)


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