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Indonesia - On the eve of discussions in Jakarta about local wood enterprises and Forest Law Enforcement, Governance and Trade (FLEGT) licensing, CIFOR scientist Herry Purnomo discusses the importance of this pioneering certification system for small industry, livelihoods and forests in Indonesia.

Why is FLEGT so important for small and medium-sized enterprises (SMEs) in Indonesia?

The FLEGT license certifies that wood has been legally sourced and eases exports to the European Union (EU). It is new for Indonesia, as it was just approved at the end of last year. What we need is to maximize the use of these licenses, particularly for SMEs, because this is a great opportunity for Indonesia to boost its exports of timber, not only to the EU but to other countries that develop the mechanism. Timber legality is the first prominent step to ensure the sustainability of forests.

What is happening with FLEGT licensing currently, for example in Jepara where you have been working for many years?

We hope more and more people will get FLEGT licenses. In Jepara, which is a center of the wooden furniture trade in Indonesia, I know about 300 enterprises that have obtained the license. But there are thousands of artisans and small industries in that part of Central Java and we need to figure out how to spread this kind of opportunity.

From a government perspective, they should facilitate SMEs to get certified because some are lacking the capacity and the money to obtain certification on their own. So there are two ways to approach this, from the SMEs to see this as an opportunity to improve their livelihoods, and from the government to be more proactive.

   A man rests at his wood carving business in Jepara, Central Java. Dita Alangkara/CIFOR

How is the FLEGT licensing process working now?

The government has a small program to motivate SMEs to get certification that the wood they are using was harvested legally – a first step in FLEGT licensing. In Jepara about 4-5 years ago CIFOR and other parties facilitated a certification for some small enterprises as a group, but now those companies do so more often individually.

What I’m suggesting is that it is good for the government to take the lead at the initial stage of such ventures, and once these small business owners see the benefit they can proceed on their own.

How does a small business get a FLEGT license? Who needs to be brought to the table in these discussions?

The Ministry of Forestry and the Environment maintains the database and processes the permits. But the local government supports the certification as well, which is why we are working together with the Ministry and local government to help SMEs get FLEGT licensing. The National Development Planning Agency (BAPPENAS) also has a role to play as they support planning and financing of SMEs in the country.

If a business has fulfilled all the legal requirements, like possessing permits that they use legal timber, then the process won’t take too long. But many small enterprises don’t keep good documentation so it can take quite awhile. Once that is done, SMEs will also find it is easier to access bank loans because they will have the necessary supporting documentation. So there is an indirect benefit of getting such licensing with better access to finance.

   Historical records dating back to the 7th century BCE describe the abundance of teak forests in Central Java, and the Javanese consider teak a species apart from other types of wood. Murdani Usman/CIFOR
   Logs are transported to sawmills in Jepara, Central Java, by truck, to be used by the craftsmen of the area for furniture, ornate carvings and other skilled artisanal work. Dita Alangkara/CIFOR
   Craftsmen carve patterns into wood from a paper template in Jepara, Central Java, in 2009. Murdani Usman/CIFOR Murdani Usman/CIFOR
   Women sand chairs in Jepara, Central Java, in 2009. Murdani Usman/CIFOR Murdani Usman/CIFOR

Can you point to any FLEGT success stories?

Pak Abdul Latief started as a very small business owner but his enterprise has now grown, and Pak Yoyok’s business was small and is now becoming bigger and bigger. Several larger companies we’ve observed have also grown, with their primary consumers now in Europe.

The total exports of wooden Jepara furniture also increased from USD 115 in 2014 to USD 150 million in 2015 due to, among other things, the Timber Legality Assurance System or SVLK, which was the Indonesian name for the FLEGT license before FLEGT started. So the evidence is there that FLEGT can boost livelihoods. But businesses need to be prepared for the licensing process.

At the national level of course not all exports are going to the EU but to countries like Australia or the US that have their own requirements, or to India or China that do not. FLEGT helps to ensure the sustainability of Indonesia’s forests, but such regulations are not yet applied across the board.

   A young girl stands among split planks of teak in Jepara, Central Java. Dita Alangkara for CIFOR

Why are these discussions important for Indonesia?

Indonesia is still the only country in the world with a FLEGT mechanism. So Indonesia can be a case study for other countries to see how SMEs can benefit from FLEGT licensing. We need to build that kind of strong case.

In Jepara there is a local law, which we facilitated in its development, to strengthen FLEGT and SMEs, and now we are observing its implementation. With this dialogue we will try to show other regencies how important such laws are, and including budgeting for local SMEs to get FLEGT licensing.

At the national level, we need to understand that legality through FLEGT is the way to sustain Indonesian forests and improve livelihoods. Challenges certainly exist, like the cost of licensing, whether the licensing is for upstream forest management only and not for downstream industries, and lack of real policy support at the local level. That is why we need to share knowledge, experience and unify our efforts to tackle those challenges, deploy strategies to maximize FLEGT license use and improve support from central and local governments to obtain FLEGT compliance for wooden industries.

By bringing together people from small associations of furniture and wood producers, from finance, from industry, from local and national government and from the various ministries, we all can work together to support this licensing, which will increase exports, improve livelihoods and conserve forests in Indonesia.

   Men operate a wood shaper in Jepara, Central Java. Dita Alangkara/CIFOR
   Women use a machine to work furniture parts in Jepara in 2012. Companies can employ hundreds of specialized workers for specific phases of the production chain. Dita Alangkara/CIFOR
   This carved wood will become part of a larger piece that will eventually hit the showrooms of Jepara and beyond. Improved governance and efficiency can position small-scale producers in a greater role within the value chain, helping such enterprises thrive. Dita Alangkara/CIFOR
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For more information on this topic, please contact Herry Purnomo at h.purnomo@cgiar.org.
This research was supported by UKAID.
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Topic(s) :   Illegal logging Timber legality Community forestry Rights

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