Back-Door Relaxation of Legal Timber Scheme Weakens Forest Governance Reform, Threatens EU Market Access for Indonesia’s Furniture Exports, and Undermines Brand Indonesia

Jakarta & London, 2 November 2015. The last minute exemption of 15 product-groups from Indonesia’s timber legality verification system (SVLK) threatens to block EU market access for these products, delay or sabotage a long-negotiated EU-Indonesia timber trade agreement, and undermine Indonesia’s forest industry reputation, NGOs have warned.

The warning, from Indonesia’s Independent Forest Monitoring Network (JPIK) and the London-based Environmental Investigation Agency (EIA), followings the 19 October passage of Trade Minister Regulation No 89/M-DAG/PER/10/2015, which substantially weakens the SVLK.

Under Indonesia’s SVLK (Sistem Verifikasi Legalitas Kayu – Timber Legality Verification System), all wood products exporters’ operations must be audited for compliance against a legality standard covering raw material inputs and factory or trade practices. Positive audit results are rewarded with so-called VLK certificates enabling them to acquire a “V-Legal document”, an export license legally required to export wood products.

While this system applies to exports to all markets, it is also the foundation of a long-negotiated Voluntary Partnership Agreement (VPA) between Indonesia and the EU. Once the VPA is activated, timber products without associated V-Legal documents will be rejected at EU ports, and cannot be sold on the EU market. Similarly, products accompanies by V-Legal documents will also be exempted from the EU Timber Regulation (EUTR), which prohibits illegal wood in the EU and requires EU companies to conduct due diligence on wood products purchases. As such, V-Legal documents are the crucial key for Indonesian exporters seeking to unlock EU market access.

The new regulation permanently exempts all exporters of 15 wood product customs codes (HS Codes) from the requirement to undergo SVLK audits, while maintaining their ability to export. While exempted companies – many of which have multi-million dollar exports – must still use SVLK certified wood, no checks that they do so will be required, providing significant opportunities for laundering uncertified or illegal wood into supply chains.

The Ministry of Trade exemptions have been vociferously opposed by Indonesia’s Ministry of Environment and Forestry, and have similarly prompted the EU’s Ambassador to Indonesia to raised concerns in a 23 October letter to the Trade Minister.

“The Trade Minister Regulation introduces structural inconsistencies in Indonesia’s long-term efforts to improve forest governance through implementation of the Timber Legality Verification System (SVLK), and threatens the proposed scope and timeframe for the implementation of the Indonesia-EU Voluntary Partnership Agreement (VPA)” stated Zainuri Hasyim, JPIK National Coordinator.

Faith Doherty, Forest Campaign Leader at EIA agreed, saying “the Trade Ministry Regulation introduces an eleventh-hour back-door exemption for an elite group of companies with friends in high places. It violates the aims and mechanisms underpinning both the SVLK and the VPA. The consequence is that either the VPA must be re-negotiated, the SVLK licensing system must be re-designed, or the exempted companies are structurally blocked from accessing the EU market. This bad regulation – ironically produced to hasten de-regulation – needs to be ammended immediately.”

The Indonesian Government is planning to announce VPA implementation as a headline offering at the UN climate change talks in Paris in December, at a time when major forest fires in Indonesia have produced more carbon emissions than Japan does in a year, and which have on occasion surpassed the daily emissions output of the entire United States.

 

For further information:

Zainuri Hasyim (zhasyim@gmail.com; 0811 754409)

Mardi Minangsari (minangsari@gmail.com; 0811 111918)

Faith Doherty (FaithDoherty@eia-international.org;  +44 (0) 207 3547960)

 

Editor’s note:

  • JPIK (Jaringan Pemantau Independen Kehutanan) is an independent Forest Monitoring Network established on 23 September 2010 by a network of 29 NGOs stretching from Aceh to Papua. JPIK’s core mandate is to monitor and strengthen the SVLK and its implementation, as a key tool in bringing about better forestry and trade governance.
  • EIA (Environmental Investigation Agency) is an independent UK-based campaigning organisation committed to bringing about change that protects the natural world from environmental crime and abuse.
  • The SVLK (Timber Legality Verification System) is a mandatory requirement for all timber producers, processors and exporters to be independently audited for compliance with a Legality Verification standard that includes criteria, indicators, verifiers, verification methods, and assessment norms developed through a multistalkeholder negotiation process.
  • V-Legal documents certify that timber products for export fulfill the timber legality verification standard embodied in the SVLK.
  • A Timber Legality Verification Agencies (LVLKs) are independent legal entities that verify timber legality against the SVLK and issue V-Legal Documents under license from the Ministry of Environment and Forestry.
  • The Voluntary Partnership Agreement (VPA) is a major component of the 2003 EU Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan. The Indonesia-EU VPA and has been negotiated by the Government of Indonesia and the European Union since 2007, was signed on September 30, 2013, and ratified by both parties in 2014.

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