Promoting Trade of Legal Timber through Implementation of SVLK and FLEGT-VPA

MINISTRY OF ENVIRONMENT AND FORESTRY REPUBLIC OF INDONESIA Promoting Trade of Legal Timber through Implementation of SVLK and FLEGT-VPA Ministry of Environment and Forestry Republic of Indonesia The 12th Meeting of APEC EGILAT, Ho Chi Minh City Vietnam, 20-21 August 2017

SVLK Development & FLEGT-VPA Progress MINISTRY OF ENVIRONMENT AND FORESTRY REPUBLIC OF INDONESIA 2003-2009 SVLK Development 2009 Forestry Regulation on SVLK 2012 Trade Regulation on SVLK 2013 SILK online 2014 2015 FLEGT-VPA Joint Declaration Ratification on SVLK Acceleration 23 March 2015 Import Regulation 2001 Bali FLEG Declaration 2007 RI-EU FLEGT-VPA initiated 2011 Negotiation Concluded 2013 Signing RI-EU FLEGT-VPA EUTR Take into Force 2014 EU Ratification 15 Nov 2016 FLEGT Licensing

MINISTRY OF ENVIRONMENT AND FORESTRY REPUBLIC OF INDONESIA

MINISTRY OF ENVIRONMENT AND FORESTRY REPUBLIC OF INDONESIA SFM Certification ( S-PHPL ) Forest/FME Mandatory Assessment by independent accreditated Certification Body (LPPHPL) Timber Legality Certification ( S-LK ) Forest/FME Industry; Trader Mandatory Verification by independent accreditated Certification Body (LVLK)

SVLK Scope MINISTRY OF ENVIRONMENT AND FORESTRY REPUBLIC OF INDONESIA Legality & Sustainability Stateforests Finished Products Legality Private forests Primary Industry Legal Secondary Industry V-Legal Document (FLEGT License) Via SVLK Online Legalit y Imported timber Legal Market

SCHEME OF INDONESIAN TLAS Government Monitoring Stipulation Complaint Complaint National Accreditation Body Complaint CSOS - Independent Monitoring Accreditation Certificate SFM-C TL-C Accreditation Audit CABs/ Conformity Assessment Body Appeal Appeal Auditees On Farm and Off Farm V-Legal Issuance MoEF - LIU Due Diligence Complaint Export Import

SVLK Standards and Guidelines SFM/Sustainability Certification 4 Standards (Concessions of Natural, Plantation Forests & Ecosystem Restoration, and Management Rights by State Owned Enterprise/Perhutani) Timber Legality Certification * Forest/FMEs 4 Standards (concessions of state-owned forests, state-owned forests managed by communities, private forests, and timber utilization in non-forest zone within state-owned lands) * Industry, traders 6 Standards (large industries, medium & small-scale industries, household industries/craftsmen, timber depot, non-producer exporter) Guidelines 18 Guidelines (verification process, recruitment of etc)

Online Timber Administration System For Concessions of natural and plantation forest at State owned Forets: Use barcode tracking e-skshhk (transport documents)realtime tracking Security by system Transport documents printed by users

Timber Administration for Private Forests Transport document ( Nota Angkutan ) Issued by land owner Information on rights to land is inserted Function as Self Declaration of Compliance Nota Angkutan (transport document) Timber Depot Nota Angkutan Lanjutan (transport document) Harvesting Location Nota Angkutan verified by primary industry (census) Primary Industry Privately-owned forest trees: planted/cultivated in privately-owned land Species: - commercial species: teak, mahogany - fast-growing species : sengon (Falcataria), jabon (Antocephalus) - fruit trees Verification/validation Nota Perusahaan (transport document) Secondary Industry/ Consumer

Integrated On Line Information System on Forest Management Timber Tracking System Non-Tax State Revenue Industrial Raw Material Supply Plan E-Monitoring and SVLK Certification, Evaluation Export, Import

ONLINE DUE DILIGENCE MECHANISM FOR IMPORTED TIMBER & TIMBER PRODUCTS DUE DILIGENCE PROCESS (Inventory, Administrative Requirements Inventory of imported material) IMPORTER Request Access Denied Approved SFM and/or timber legality certificate OR Letter from Country of Origin on SFM and/or legality of timber/ timber products RISK ANALYSIS Article 10 (1) c LOGIN FILLING DUE DILIGENCE FORMAT IMPORT DECLARATION (Due Diligence result is attached) Denied Approved 7 WD OR Country Specific Guidelines (CSG) OR Mutual Recognize Agreement (MRA) RISK MITIGATION Article 10 (1) d Import Recommendation Request OR FLEGT-Licence RECOMMENDATION Approved/ Denied 3 WD

1800 Illegal Logging Cases in Indonesia 2005-2017 KEMENTERIAN LINGKUNGAN HIDUP DAN KEHUTANAN 1600 1400 1200 1000 800 1705 25 million ha certified and 3249 wood manufacturers certified since 2010 600 400 720 478 * up to May 2017 Source: DG of Fenvironment and Forestry Law Enforcement, MoEF 200 0 220 151 98 59 75 70 29 43 65 16 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*

Brussels, 21 April 2016

First Trial Shipment Timber Export to Antwerp using V-legal, 23 October 2012 First Shipment using FLEGT Licence to Antwerp 15 November 2016 FLEGT License Celebration 24 November 2016 Acceptance of Indonesia FLEGT License for Timber Products of by Minister of Foreign Affairs Brussels, 30 November 2016

V-LEGAL DOCUMENT AS FLEGT LICENCE SINCE NOVEMBER 15, 2016 FLEGT Invoice number & barcode NOTE: Issued by the licensing authority through the online SILK system (also connected real-time with the online trade system/inatrade and the single window Customs system/insw). Issued per invoice = per shipment. Issued only for SVLK (IDN TLAS) certificate holder.

ATTACHMENT OF A LICENCE FLEGT Barcode cross-reference of the licence number Attached if more than one product in a shipment. Describe box 8 to box 16 of each product Secure with the barcode in the bottom of the page.

Reality against Expectations MINISTRY OF ENVIRONMENT AND FORESTRY REPUBLIC OF INDONESIA Expectations Improved forest governance Reduced IL and ITT YES Significantly Realized? YES Starting NOT YET Notes Market acceptance Buyer still request other certifications Improved market access (vis a vis voluntary certification) Waiting for the result of Independent market Monitoring. It also depends on the implementation of due diligence in EU. Increased export Based on early data from LIU Reduced cost (of exporting)?? For some Products Premium price??

Challenges MINISTRY OF ENVIRONMENT AND FORESTRY REPUBLIC OF INDONESIA A small subset still against the system Cost of certification issue More small producers to be certified Demand of real impacts, e.g. better price, no need of other certifications Further evidence on the implementation of due diligence (that it is not easier than using FLEGT-Licence in entering EU market) Technical issues: carelessness in filling form, taking for granted on the weight tolerance, misinterpretation of HS codes, information inconsistency (across the various documents, e.g. bill of lading, invoice, etc.)

Concluding Note MINISTRY OF ENVIRONMENT AND FORESTRY REPUBLIC OF INDONESIA The job has not yet done, several issues remain to be addressed: maintain the credibility of the TLAS, domestic procurement policy, supports for smallholders, etc. More effort at the demand sides is determining the future path: promotion, procurement policy, consistently close entrance of unknown/ uncertified illegal timber, better access and price appreciation.

KEMENTERIAN LINGKUNGAN HIDUP DAN KEHUTANAN