The Indonesian Government has issued a regulation to come into force on 27 May 2020 which will drastically undermine the credibility of its legal timber supplies to international markets.
This regulation will scrap the need for Indonesian timber exports to have a license (called V-Legal Documents) guaranteeing it is from legal sources – thereby risking a boom in illegal logging and the smuggling of stolen timber out of the country.
As part of our response, EIA has produced this short briefing on the current situation, with supporting documents (below).
Infographic (click to enlarge)
We are also monitoring the situation and will be providing any relevant updates as things develop during the coming weeks. The immediate goal is to urge the Indonesian Ministry of Trade and the Coordinating Ministry of Economic Affairs to revoke their proposed Trade Minister Regulation P15/2020.
This law will violate Indonesia’s guarantee to keep standards in place which effectively lock stolen wood out of the country’s supply chains.
The Indonesian Government argues that the abolition of a V-Legal Documents is necessary to increase economic competitiveness – and that it is especially needed now to further mitigate the anticipated negative impacts of the ongoing global coronavirus pandemic on the country’s economy.
But by implementing this new regulation, Indonesia is losing its unique market reputation as a supplier of legal timber, a standard which has been followed by other producer countries such as Vietnam, a major competitor to Indonesia and currently in negotiations with the EU. In addition, timber legality legislation is now in place with consuming countries such as, Australia, the EU, Japan, South Korea, the USA and, most recently, China, which is revising its forest law to address illegally sourced timber.
In addition, questions are being asked as to whether the V-Legal Document requirement can simply be abandoned under the agreed terms of the EU/Indonesia Voluntary Partnership Agreement (VPA). This legally binding trade agreement signed in 2013 should guarantee all wood is from legal sources. It is implemented through Indonesia’s timber legality assurance system (SVLK), which includes export licences attesting legality.
At the height of the illegal logging era in the 2000s, Indonesia lost 40 trillion rupiah (approximately $4.35 billion) annually, with an associated loss of forest area in the region of 2.8 million hectares per year and 80 per cent of the timber exported was estimated to be illegal. Since the introduction and enforcement of regulations, especially the national timber legality assurance system (SVLK), these numbers have been in steady decline.
Despite this success, the Indonesian SVLK still needs support to improve effectiveness as the system continues to be exploited; last year alone, the Directorate General of Law Enforcement of the Ministry of Environment and Forestry (DG Gakkum) seized 455 containers of illegal timber, for example.
Relaxing legality requirements may well re-incentivise the illegal logging sector further, thus exacerbating the ongoing illicit timber trade.