Potential of Collaboration of Forest Management Units (FMUs) with Indonesia and Japanese Companies in Forest and Peatland Restoration
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1 INDONESIA - JAPAN 60TH ANNIVERSARY SEMINAR FOR FOREST SECTOR Changing Paradigm of Forestry Policy in Indonesia: Toward Promotion of Community-based Sustainable Forest Management Potential of Collaboration of Forest Management Units (FMUs) with Indonesia and Japanese Companies in Forest and Peatland Restoration Tokyo, 28 June 2018 Japan Forest Technology Association (JAFTA) Kuno Hiromitsu (kuno.hiromitsu@jafta.or.jp) 26/06/2018 RI-JP 60YR Anniv. Seminar_Session II_JAFTA_28Jun
2 Outline 1. Prolog: Reviews on Backgrounds and Expected Outcome of Seminar 2. Role of Investment & Business with FMUs in Forest/Peatland Restoration 3. Examples of Potential of Forest ESG 1) Investment and SDGs 2) Business with FMUs 1) ESG: Environment-Social-Governance 2) SDGs: Sustainable Development Goals 26/06/2018 RI-JP 60YR Anniv. Seminar_Session II_JAFTA_28Jun
3 1. Reviews on Backgrounds & Expected Outcome of Seminar 1.1. Outline of Japan Forest Technology Association (JAFTA) Founded in 1921 Basic Public Service based on Experiences, Knowledge, Technology Information: For enhancement of forester s spirt and capacity to members and publics Expertise/consultancy services as well as research & development to contribute to global environment protection: By Technology for Sustainable Development of Harmony of People-Forest-Environment Training Courses Forest Information Analysis Technology Journal Forest Technology to Members 26/06/2018 RI-JP 60YR Anniv. Seminar_Session II_JAFTA_28Jun
4 1.2. Examples of Service Area and Experiences Changing Needs 1. Forest Inventory and Monitoring Tropical forest inventory (Some Provinces; MoF-FA of Japan) REDD+ Planning Surveys (West Kalimantan; MoEF-JICA) 2. Forest Rehabilitation and Forest Business Model Development Forest rehabilitation of Alang-alang Grassland & F/S for Industrial Tree Plantation (South Sumatera; MoF-JICA) National Park Rehabilitation Degraded by Forest Fire (Lampung; MoF-FA of Japan) 3. Watershed Management and Nature Capital Based Solutions for Resilience Citarik Sub-watershed Management (West Jawa; MoHA-JBIC) Social Forestry for Watershed Management (Bengkulu/ NTT; MoF-JICA/JBIC) 4. Solution Development to Deforestation Causes and Sustainable Supply Chain Management Indonesia-Japan Action Plan for Tackling Illegal-logging (Some Provinces; MoF-FA of Japan) Peatland Fire Prevention (Riau & West Kalimantan; MoEF-JICA) Increasing Needs: Sustainable Business and Finance Development for Sustainable Forest Management by Community Training for Community Business Development in Forest Fire Prevention (2015): Making handbags with Pandan Leaves from peatland forest Drafting Sustainable Investment and Finance Guide for Forest & Peatland Restoration (2017): with Financial Services Authority (OJK) 26/06/2018 RI-JP 60YR Anniv. Seminar_Session II_JAFTA_28Jun
5 1.3. Basic Strategy of 60 Year Anniversary Activities for Sustainable Forest Management by Forestry Attaché 1 st Forest Sector Seminar (June 2018) Indonesian Festival at Hibiya Park (July 2018) 2 nd Forest Sector Seminar (Oct./Nov. 2018) Targets: Stakeholders concerned with forest Main purposes: To know the changing Indonesian forest sector from Timber-based to Community-based Sustainable Forest Management in partnership FMUs Targets: Consumers and non-forest sectors Main purposes: To know Non Timber Forest Product/NTFP (e.g. for Food, Drink, Cosmetic, Utensil, Drugs) and Ecosystem Service/Environmental Service/ ES (e.g. Tourism, Carbon Off-set Trade) from Forests in Indonesia Targets: Potential investors and business developers concerned with Community-based NTFP Business in partnership with FMUs Main purposes: To facilitate matching business to business and investment to Community-based NTFP/ES Business in partnership with FMUs 26/06/2018 RI-JP 60YR Anniv. Seminar_Session II_JAFTA_28Jun
6 2. Role of Investment & Business with FMUs in Forest/Peatland Restoration 2.1. FMUs to Prevent Open Access(important causes of unplanned deforestation) Production Forest Community Empowered Area: e.g. Village Forest (HD) Community Plantation Forest (HTR) Community Empowered Forest (Hkm) Customary Forest (HA) Center of village/ settlement: Far from forests Villagers are difficult to early detection and reporting Production Ecosystem Concession Restoration Licensed Area: e.g. Concession Natural Forest Licensed Area Business (IUPHHK- Almost all of HA) Protected Plantation Forest Zone for HCV Business (IUPHHK- HT) (except NTFP Non-timber Production) Business (IUPHHBK) <Unused> Protected Zone for HCV etc.<unused> Peat land Few persons in field Many Open Access Risk even in Production Forest No Licensed Area <Unused> Unpermitted land users from outside 26/06/2018 RI-JP 60YR Anniv. Seminar_Session II_JAFTA_28Jun
7 2.2. FMUs to Prevent Open Access to Unused Sites in State Forest Land W. KALIMANTAN More Fire Outbreaks in Non Active FMUs Fire and Haze Disasters in 2015 E. KALIMANTAN RIAU NO JAMBI S. SUMATRA C. KALIMANTAN S. KALIMANTAN Fire Damaged Area in 2015 Sources: KemenLHK, 2016 Burned area (Ha) Province Total Peat Mineral 1 Riau 110,025 73, ,293 2 Jambi 68,493 55, ,890 3 S. Sumatra 327, , ,833 4 W. Kalimantan 31,773 60,578 92,351 5 C. Kalimantan 441, , ,888 6 S. Kalimantan 12, , ,258 7 E. Kalimantan 11,006 64,997 76,003 8 Papua 38, , ,161 Total 926,085 1,716,392 2,642,477 7 Priority Province Total target PAPUA 26/06/2018 RI-JP 60YR Anniv. Seminar_Session II_JAFTA_28Jun.2018 KPHP (Not yet organized by 2015/ Burned in 2015 [>500ha]) KPHL (Not yet organized by 2015/ Burned in 2015 [>500ha]) Riau 32 14/22 0/1 Jambi 17 5/7 0/1 S. Sumatra 24 6/12 0/1 W. Kalimantan 34 7/10 1/1 C. Kalimantan 33 10/17 2/4 S. Kalimantan 11 0/4 0/0 Papua 56 6/6 1/1 Total /78 4/9 Source: Dit. RPPWPH, Ditjen. PK-TL. Jun
8 FMU manages in partnership with private enterprises Potential of ESG Investment & SDGs Business in partnership with Indonesian Large-scale Enterprises 2.3. FMUs to Manage Local Landscape Production Concession Licensed Area Ecosystem Restoration Concession Licensed Area Outside of State Forest Area: E.g. Settlement Production Forest FMU HQ FMU directly manages. Potential of ESG Investment & SDGs Business in partnership with Community by NTFP/ ES Business FMU Field Office Protection Forest Community-empowered Area FMU manages in partnership with communities/ community-based business group Potential of ESG Investment & SDGs Business in partnership with Local Small/ Medium-scale Enterprises. 26/06/2018 RI-JP 60YR Anniv. Seminar_Session II_JAFTA_28Jun
9 Ministry of Environment & Forestry 2.4. FMUs to Balance Economic-Social-Ecosystem Aspects National Budget If becomes Independent Public Service Agency (BLU) Ministry of Home Affairs Provincial Government (Local Autonomy) Budget from Provincial Government Conservation Forest FMU HQ (Head) Production/ Protection Forest FMU HQ (Head) Other sources* Field Office (Resort) Remuneration/ Service & Product Tariff Credit/Debt and Profit Deposit Investment (e.g. establishing legal entity) Cooperation * Sources: Modified from KLHK Panduan Pola Pengelolaan Keuangan Badan Layanan Umum Daerah Menju Kemandirian KPH. pp /06/2018 (Field & Community) RI-JP 60YR Anniv. Seminar_Session II_JAFTA_28Jun
10 3. Examples of Potential of Forest ESG Investment and SDGs Business with FMUs 3.1. FMUs Developing Commodity/ Services Major Use Examples of Commodity Regions/ Islands 1) Total Numbers of FMUs 2) Sweets Honey, Palm Sugar SM, K, B, NTB, SL, M 55 Oil/ Fat Coconut, Kayu Putih, Kemiri, Kenari, Candle Nuts, Pine SM, K, B, NTB, SL, NTT, M, P 44 Materials Bamboo, Rubber, Rotan SM, K, B, NTB, SL, P 36 Seasoning Asam, Andaliman, Kepayang, Gingers, Sinnamon, Pepper, Lemongrass, SM, K, NTB, SL, M, P 25 Aroma Clove, Agarwood, Damar, Kemenyang SM, K, SL, NTT, M, P 24 ES Mineral Water, Env. Service, Tourism SM, K, J, SL, NTB, NTT 19 Food Upland Rice, Rice, Maize, Sago, Cashew, Fern SM, K, SL, P 18 Coffee Coffee SM, K, SL, 10 Fruits Avocado, Pineapple, Durian, Asam Gelugur SM, K, SL, 9 Coloring Jernang, Pinang SM, NTT, P 7 Medicine/ Buah Merah, Daun Gatal, Mashohi, Pasak Tonic Bumi SM, P 6 Fuel Charcoal, Wood Pellet, Bio-ethanol SM, K, NTB, SL, 4 Fiber Silk J, SL 3 Fisheries Fish, Shell K 2 Others Sulfur, Compost, Elephant Grass SM, K, B, NTB, NTT, P 7 Sources: Modified from KLHK Laporan Kinerja pp ) SM: Sumatera, K: Kalimantan, J: Jawa, B: Bali, SL: Sulawasi, NTB: Nusa Tenggara Barat, NTT: Nusa Tenggara Timur, M: Maluku, P: Papua 2) Except Conservation Forest FMUsa 26/06/2018 RI-JP 60YR Anniv. Seminar_Session II_JAFTA_28Jun
11 3.2. Example of FMU s Potential: Rubber & ES Little damaged No-licensed Area Licensed Area No-Productiolicensed Forest Area Protection Forest National Park Village Forest Area (Damaged by Fire in 2015) Nolicensed Area FMU HQ Office Damaged by Fire in 2015 Community Rubber Plantations 26/06/2018 RI-JP 60YR Anniv. Seminar_Session II_JAFTA_28Jun
12 3.3. A Proposed Investment Model to FMU s SDGs Business Seminar From Readiness to Actions: Private Investment Seminar for Peatland Restoration in Indonesia FMU s NTFP Production in Partnership with Community Business Japanese Companies Finance Indonesian Companies/ SPC 26/06/2018 Funding MOU Environmental Contribution (e.g. GHG Emission Reduction) Quality Control Sustainable Supply Chain (e.g. Marketing in Indonesia/ Export) FMU (and Indonesian Concessionaire Company) Management Advice/ Monitoring/ Reporting/ Verification Community Business Entity (Village Business Entity[BUMDes]/ Corporative/ Community Group etc. など ) Community Empowerment NTFP Production NTFP Cultivation NTFP Harvest Market Assurance External HR Agro-forestry Nursery & Tree Planting Intercropping RI-JP 60YR Anniv. Seminar_Session II_JAFTA_28Jun.2018 No tree clearing No fire No peat subsidence Early Detection/ Report 12
13 Private-Public Partnership Fund e.g. Center of EF Finance, MoEF Joint Steering Committee (involving Indonesian Academies/ NGOs) 3.4. A Proposed Scheme of Indonesia-Japan Forest ESG Investment Initiatives through FMUs Finance (include. Issuing Green Bond) (Consortium of ) Japanese Financial Institutions Guarantee MoF/ MoEF in Indonesia- Japanese Authorities e.g. Financial Institutions MRV of Due Diligence Investment Japanese Investors Individuals Institutional/ Asset Manager Corporate Finance (Guarantee to ) Corporate/ Project Finance FUMs/ Special Purpose Company of FMUs Community Business Entity MRV Forest ESG Investment Coordination Secretariat: (Consortium of ) Expertise/ Consultancy Institutions Joint Advisory Committee (involving Japanese Academies/ NGOs) Business Partnership 26/06/2018 RI-JP 60YR Anniv. Seminar_Session II_JAFTA_28Jun.2018 (Consortium of ) Japanese Private Companies 13
14 Thank you for attention. Terima kasih. Arigatogozaimasu. 26/06/2018 RI-JP 60YR Anniv. Seminar_Session II_JAFTA_28Jun
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