Indonesia has a carrot to end illegal logging; now it needs a stick

The heavily forested nation has a system of incentives in place to discourage illegal logging, but is that enough, ask WRI experts.

Local villagers float past a pile of illegally logged trees in Central Kalimantan, Indonesia
Local villagers float past a pile of illegally logged trees in Central Kalimantan, Indonesia. Constant and stricter enforcement could help put an end to illegal logging. Image: Department of Foreign Affairs and Trade, CC BY 2.0

Indonesia’s illegal logging problem has deep roots. The heavily forested nation supplied 219 million cubic metres of unreported or illegally sourced timber from 1991 to 2014. This is equal to more than 2.3 million hectares of deforestation, an area 32 times the size of Singapore. It also cost the country $6.5-9 billion in uncollected non-tax revenues between 2003-2014, more than a quarter of the country’s infrastructure budget for 2018!

While the government has taken steps in recent years to crack down on illegal logging, it’s clear that ending illicit activity in the country’s forests will require a more concerted effort.


<p>Illegal logs impounded in Riau, Indonesia. Photo by Sofi Mardiah/CIFOR</p>

Illegal logs impounded in Riau, Indonesia. Photo by Sofi Mardiah/CIFOR


The need to enforce the law

Indonesia established the Timber Legality Assurance System (TLAS) in 2009, mandating that all operators in the timber supply chain harvest from sustainably managed forests. And in 2016, the country issued its first Forest Law Enforcement, Governance and Trade (FLEGT) timber export licences. The FLEGT licences complement the TLAS by providing an economic incentive to producers, providing their shipments a “green lane” into the European Union (EU), a major timber market, and exempting them from the due diligence procedures non-licensed EU timber imports must follow.

The licences are a major carrot, as they allow Indonesian exporters to enjoy a competitive advantage in the EU market. Indonesia exported $1.08 billion worth of wood to the EU by October of 2017, far surpassing exports in 2015 ($ 872.2 million) and 2016 ($868.8 million).

Yet it’s clear that these initiatives alone aren’t enough to curb Indonesia’s illegal logging problem. The Environmental Investigation Agency’s (EIA) and the Indonesian Forest Monitoring Network’s (Jaringan Pemantau Independen Kehutanan/JPIK)’s 2014 Permitting Crime report found that some TLAS-licensed companies are involved in “timber laundering,” mixing illegally sourced woods with legal timber.

Today, these woods could potentially be exported to the EU as FLEGT-licensed timber. Just recently, Koalisi Anti Mafia Hutan (Coalition of Anti Forest Mafia) found seven TLAS-licensed companies in the country’s Papua province that allegedly received illegally cut timber from pristine forest and violated supply chain regulations. Papua holds around a third of Indonesia’s remaining rainforest.

This illicit behaviour persists due to several factors: certification bodies (CB) are issuing TLAS certificates without proper assessments, clear legal consequences for violations are lacking, the boundaries of timber operations are often unclear, and Indonesia faces severe monitoring and human resource constraints in enforcing timber legality laws.


<p>Indonesian teak wood. Photo by Deanna Ramsay/CIFOR</p>

 Indonesian teak wood. Photo by Deanna Ramsay/CIFOR


For example, under the TLAS monitoring system, independent monitors are entitled to investigate and report findings to the CBs, which operate under the supervision of the National Accreditation Committee and the Ministry of Environment and Forestry (MoEF). While administrative sanctions have been imposed for TLAS noncompliance, such as when CBs cancelled companies’ TLAS certification and the MoEF revoked or suspended CBs’ operating permits, there is no public record on the total number of revoked TLAS certificates and CB permits.

And where law enforcement does exist, it’s oftentimes lacking in consistency and fairness. For instance, the court sentenced Labora Sitorus, a renowned illegal logger in Papua, to just two years’ imprisonment and an IDR 50 million ($3,700) fine despite allegations that he laundered IDR 1.5 trillion ($111 million) of illegal timber trade money. On the other hand, Grandma Asyani, an elderly woman who allegedly took 38 teak logs from the State Forestry Firm (Perhutani), was sentenced to one-year imprisonment and an IDR 500 million ($37,000) fine.

A better system for cracking down on illegal logging

The Directorate General of Sustainable Forest Management at the MoEF has opined that consistent TLAS compliance, including the application of strict sanctions for violators, is essential for upholding Indonesia’s reputation as a legal wood producer. Now that Indonesia’s government has put forward some carrots for illegal logging through TLAS and FLEGT, it’s time to start strengthening the “sticks” that can crack down on those not complying.

First, it is essential that the House of Representatives establishes adequately severe sanctions for TLAS violators. In the United States, for example, the government amended the Lacey Act in 2008 to ban the import and trade of illegally sourced wood and provides sanctions including imprisonment and fines.

The government should emphasise a fact-based rather than document-based assessment approach, including frequent monitoring of compliance after companies receive certification.

The degree of penalties depends on whether violators did everything possible to ensure the product was legally obtained. According to a Union of Concerned Scientists study, imports of illegal wood to the United States have declined by 32-44 per cent from 2007 to 2013, five years after the Lacey amendment.

Second, the government must strengthen the TLAS assessment. By law, CBs are required to assess a broad spectrum of factors, such as concession boundaries, indigenous rights, wildlife conservation measures and labor standards, before granting a TLAS certificate.

According to a National Forestry Council (Dewan Kehutanan Nasional/ DKN)’s policy brief, however, TLAS assessments are mostly based on timber businesses providing a checklist of documents (such as concession permits, Standard Operating Procedures on protecting wildlife, etc). CBs rarely assess how businesses obtained these documents, or if they’re actually applying these policies in practice. The government should emphasise a fact-based rather than document-based assessment approach, including frequent monitoring of compliance after companies receive certification.

Rooting out illegal logging in Indonesia

Eradicating illegal logging is no easy task, and Indonesia is by no means the only country bedeviled by the problem. While the government has done well in providing a positive incentive for timber producers through FLEGT licences, it needs to be complemented with more rigorous law enforcement. Indonesia’s globally important forests depend on it.

Josefhine is Communications Coordinator at WRI Indonesia’s office, and Kenny Cetera is a Wahana Riset Indonesia Researcher at WRI Indonesia. This post is republished from the WRI blog

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