Indonesia backtracks on decision to relax wood export terms

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Indonesia has backtracked on a decision to relax export requirements for timber products. ENVIRONMENT MINISTRY

Indonesia has backtracked on a decision to relax export requirements for timber products months after issuing a deregulation policy that environmental groups criticised for threatening to put sustainable timber trade at risk.

On May 11, the Ministry of Trade issued a regulation annulling its previous regulation in February that scrapped the requirement for Indonesian companies to secure the so-called V-legal documents, which indicate that timber products being shipped come from legal sources.

V-legal licensing has represented an important tool of the timber legality verification system (SVLK) managed by the Ministry of Environment and Forestry, which has helped improve Indonesia’s reputation in global sustainable timber trade.

The trade ministry previously defended its February decision – which was supposed to take effect on May 27 – by saying that it only regulated the export requirements for timber products and would not affect the entire SVLK system.

Its director for agricultural and forestry product exports, Sulistyawati, confirmed that the new regulation annulled the previous policy and, therefore, exporters needed to again secure the V-legal documents.

“This change is based on suggestions by the ministry in charge of [environmental affairs],” said Sulistyawati.

The environment ministry’s secretary-general Bambang Hendroyono did not respond to a request for comment.

The SVLK system and its requirements have long divided timber-related industries, with big wood product exporters saying the SVLK increased global market trust and small and medium furniture producers saying the requirements prevented their businesses from entering overseas markets.

Association of Indonesian Forest Concessionaires (APHI) executive director Purwadi Soeprianto welcomed the new regulation on reinstating the V-legal documents as an export requirement.

The association, he said, supported the SVLK because it reduced illegal logging, which eventually made competition fairer and increased forest sustainability.

“Almost all of Indonesia’s timber export [markets] prefer consuming eco-friendly products. The SVLK answers this particular preference of international consumers,” said Purwadi.

Indonesian Furniture and Craft Association (HIMKI) secretary-general Abdul Sobur denounced the decision to backtrack, saying that the SVLK was a counterproductive policy that had put a heavy burden on small businesses.

Around 5,000 downstream-level exporters, mostly small and medium companies like furniture businesses, were struggling with the costs needed to meet the SLVK requirements, including roughly 30 million rupiah ($2,100) per company to obtain an SLVK certificate and around 20 million rupiah per year for timber surveillance, he said.

They must also secure a V-legal export declaration, which costs around 300,000 rupiah per shipping container.

“The SVLK should have only been applied to upstream industries, not downstream industries [such as furniture businesses], because the former tend to use [raw] materials directly obtained from forests. Even if it is legal, there is always room for illegal logging,” said Sobur.

Activists who previously criticised the scrapping of the V-legal licence, calling it a setback for forest protection since it was supposed to act as the last stand for the inspection of timber product exports, welcomed the reinstatement with caution.

Indonesian Independent Forest Monitoring Network (JPIK) activist Muhamad Kosar said the brouhaha over timber deregulation had shown that the government should improve its internal coordination before issuing a policy.

“This incident is real proof of how weak coordination is among Cabinet members,” he said.

The trade ministry claimed that the scrapping of the V-legal licence was intended to support small and medium companies, but some activists said the government should instead look for other solutions without weakening the SVLK system.

Forest Watch Indonesia campaigner Agung Ady said another issue might arise regarding wood product exports as the Environment and Forestry Ministry sought ways to relax policies on forestry as part of efforts to reduce the impacts of Covid-19 on the economy.

In a letter sent to the Office of Coordinating Economic Minister following the issuance of the trade ministry’s February regulation, the environment ministry requested that the government reinstate the V-legal licensing, but with an increase in the amount of lumber allowed for export.

Agung said such a plan could instead have adverse effects by reducing supply of the domestic timber industry while encouraging logging.