On May 11, 2020, Indonesian Ministry of Trade Regulation 45/2020 revoked Regulation 15/2020, which was to take effect on May 27. The revoked regulation would have eliminated the requirement for timber and wood product exports to be verified as legal through the V-Legal system, a core tenet of Indonesia’s Timber Legality Verification System (Sistem Verifikasi Legalitas Kayu/ SVLK) and domestic fulfilment of the EU Forest Law Enforcement, Governance and Trade initiative’s (FLEGT) Voluntary Partnership Agreement (VPA).
What happened and why was the regulation made, and then revoked? And more importantly, what are the lessons learned for enforcing timber legality in Indonesia and throughout the world?
Indonesia is the only country to operationalise licencing for FLEGT. In that sense, it is a pioneer of an approach to address illegal logging, and it was the first of many countries to operationalise a VPA with the EU. Eight other countries have signed VPAs, and six are currently negotiating VPAs. Indonesia issued its first forest FLEGT licence on November 15, 2016 to much fanfare, with proponents suggesting, “A FLEGT license guarantees that timber has been harvested, processed and exported in accordance with national laws. Indonesia is the first exporting country to mandate that its timber complies with certain legal requirements to be exported. The FLEGT license, thus, is a regulatory approach to suppress illegal logging” (Tresia, 2016). Although the impetus was to align EU Timber Regulation, the verification system applied to all exports of specified timber and wood products, as specified in Article 10 of the VPA.
In an interview with Tempo magazine, the Ministry of Trade Secretary-General explained that the cancellation of the requirement to verify the legality of wood products would not have meant that there were no legality requirements, but that the verification of legality is no longer a requirement for export. For imports to the EU, operators at the point of entry would still have needed to demonstrate that the imported products were legal, which under the FLEGT-Certificate programme as a ‘green light” where no further due diligence was required by the importer. The EU’s official response to the Ministry of Trade was that "the grounds exist for the invocation on the suspension of the VPA" and that Indonesia-EU VPA would be “unilaterally and unacceptably affected” by Regulation 15/2020.
There were reactions to regulation 15/2020 both in favour and against. Some claimed that this sudden cancellation of the verification system would result in an increase in illegal logging, while others were supportive as the relaxation of verification requirements would make Indonesian producers more competitive. HIMKI, a national furniture association, had signalled a cancellation of SVLK several months before the policy change took place, but is in favour of reforming, not cancelling the system, with a primary concern for smallholders.
Dala, in partnership with the University East Anglia, University Gadhah Mada, Kwame Nkrumah University of Science and Technology, and Vietnamese Academy for Social Sciences, studied FLEGT from 2016 to 2019. We found that smaller producers were unable to comply with the rigorous system, meaning they either went out of business, changed the products they produced or conducted business illegally. In the case of Indonesia, smaller producers were often forced to use larger producers’ permits (ironically driving them to conduct business illegally). Ultimately, larger producers were able to thrive and smaller producers faltered. The system also served to further entrench state control over forest resources, having negative implications for claimants fo forest rights that were not aligned with the state. We said that FLEGT wasn’t all bad, but was based in the same neo-liberal logics of past failed attempts to address environmental issues through market-based mechanisms. Ultimately, the collapse of the Indonesia timber verification system would have been an extreme validation of what we found, but even the teetering within the Ministry of Trade, especially against the Ministry of Environment and Forestry, which has been officially in favour of timber legality verification, mirror many of our findings. As a research project, we never took a position that FLEGT should be cancelled, but we signalled in several papers that there were weaknesses that presented fissures in the systems and dissent among some actors in the global timber production network that could jeopardise its ultimate effectiveness.
FLEGT has been a main EU strategy to address illegal logging and climate change. Past initiatives by exporting countries such as log export bans have proven ineffective, and although Indonesia has had a logging moratorium in place since 2011, it has not lived up to its expectations due to a lack of enforcement. In the last three years, however, Indonesia has seen a reduction in deforestation rates, which could be related to improved implementation of the now permanent moratorium of converting forestland. Deforestation remains a major problem in rainforests throughout the world. Australia, Japan have been developing regulations similar to the EU Timber Regulations, and the US has a regulation in place, but none have been as extensive as the EU in terms of reaching out to exporting countries to facilitate compliance.
We now reflect that at very least these policy tensions should be a wake-up call to policy-makers, not only in Indonesia but throughout the world, to consider the ways that FLEGT can be improved in the absence of a politically-accepted alternative mechanism to address illegal logging. This clearly means that there is room for improvement. Cancelling timber legality verification without a suitable replacement might have been, as many commenters noted, disastrous for forests. Timber legality verification is only one of a number of tools that can be used to reduce deforestation. In countries where implementation has begun, policies and programmes often fail to accommodate the constraints that small producers have to participate in markets, and do not address the omnipresent failure of the state to recognise land tenure security of indigenous people in meaningful ways.
Thanks to Dala’s own Prof Ahmad Maryudi (a leading timber legality researcher) for helping out with this post.