A national policy dialogue co-hosted by the Center for International Forestry Research (CIFOR) on 13 July brought together more than 200 policy makers, scientists, business owners, craftsmen and more to discuss the potential benefits of FLEGT (Forest, Law Enforcement, Governance and Trade) licenses for small and medium enterprises in Jakarta, Indonesia.
Read the press release here.
Watch highlights from the event here.
FLEGT licenses enable businesses to export timber to the EU without the need for further due diligence checks by importers. Requirements for the license recognize Indonesia’s success in introducing a Timber Legality Assurance System (Sistem Verifikasi Legalitas Kayu, SVLK), making it even easier for Indonesia to export certified legal timber to the EU.
Indonesia is the first country to introduce FLEGT licenses, having taken up the system in November 2016. It is the only country to have started issuing the licenses among the six countries which have signed a Voluntary Partnership Agreement with the European Union under the FLEGT Action Plan.
Larger businesses in Indonesia are already taking advantage of the arrangement, but small and medium enterprises (SMEs) have yet to fully leverage the opportunity to access global markets. A focus of discussion at the policy dialogue was how researchers, government, civil society and others could better support small businesses in particular to obtain and benefit from SVLK and FLEGT certification.
Indonesia’s timber exports are valued at USD 11 billion annually, including pulp and paper, plywood and furniture. President Joko Widodo expects furniture product exports, dominated by SMEs, to triple from USD 1.5 billion to USD 5 billion from 2016 to 2021. Maximizing the use of FLEGT licenses could improve not only Indonesia’s timber exports, but also the livelihoods of millions of people dependent on SMEs.
“The need for legal wood is not only because of global demand, but because it is mandated in the Indonesian Constitution that resources must be managed sustainably, and in an environmentally friendly way,” said CIFOR scientist Herry Purnomo.
He added that Indonesian producers should not only be aiming for legality for overseas markets, but for the domestic market as well.
“The market is huge, and the government can take the lead in public procurement, which has been initiated but is not widespread yet,” he said.
The dialogue in Jakarta was co-hosted by the Center for International Forestry Research (CIFOR) in collaboration with the Indonesian Ministry of Environment and Forestry (MoEF) and the Jepara Small-scale Furniture Producer Association (APKJ), with the support of the UK Department for International Development (DFID).
Some key recommendations and conclusions emerged from the discussions for further action by SMEs and business associations, researchers and governments. The following points were presented for follow-up action in the final session:
For SMEs and business associations:
- Conduct a participative evaluation of the main obstacles facing SMEs for SVLK/FLEGT compliance, and communicate the findings to policy makers
- Exchange information and knowledge to improve awareness among SMEs on the costs and benefits of SVLK/FLEGT and strategies to improve efficiency
- Synergize efforts of large-scale exporters and SMEs/associations on SVLK/FLEGT compliance
- Improve consumer awareness, and campaign for legal wood
- Eradicate stigma and change the prevailing mindset that administrative compliance is a burden, when in fact it is mandatory
- Involve larger numbers of small-scale industries in associations, to improve access to business empowerment and development resources and facilities
- Initiate a legal wood market for all actors and scales
- Conduct a study on how to improve SVLK/FLEGT requirements
- Participate in equipping business actors, especially SMEs, for FLEGT compliance
- Equip government officers to enforce laws and regulations, and to guide or mentor SMEs
- Campaign for legal wood in domestic markets via mass media, social media and events
National and sub-national government
- Sub-national governments need to develop regional regulations (Perda) to support SMEs to achieve SVLK/FLEGT compliance, including with technical guidance – see the example of a Perda in Jepara
- Introduce smart policies that are consistent in enforcing regulations both internally (among government agencies and officers) and externally (involving business actors)
- Distribute information equally among all government agencies internally (with human resources) as well as externally (with business actors)
- Conduct sustainable close mentoring (education) by government, including the phase after SVLK certification, and produce resilient SMEs
- Encourage procurement of legal wood, and especially from SMEs, in the public and private sectors
- Enforce non-discriminative policies that reach the grassroots
- Introduce innovative financial policies that aim to improve export value from USD 1.3 billion to USD 5 billion annually, as targeted by President Jokowi
- Prioritize law enforcement along the value chains, from wood producers to sawmills