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Open Letter of the Indonesian Civil Society Coalition to the President of the Republic of Indonesia for the Revocation or Revision of the Regulation of the Minister of Trade No. 15 of 2020 concerning Provisions on the Export of Forestry Industry Products

Open Letter of the Indonesian Civil Society Coalition to the President of the Republic of Indonesia for the Revocation or Revision of the Regulation of the Minister of Trade No. 15 of 2020 concerning Provisions on the Export of Forestry Industry Products

On March 20, 2020, a civil society coalition consisting of a number of organizations throughout Indonesia sent an open letter to the President of the Republic of Indonesia to revoke or revise Minister of Trade Regulation No. 15 of 2020 concerning Provisions on the Export of Forestry Industry Products.

Civil society coalition has an active role in monitoring the implementation of the Timber Legality Verification System (SVLK), for the realization of good and sustainable forest governance. Since 2003, a part of the coalition has been involved in the process of preparing the SVLK, and has played an active role in activities organized by the Ministry of Environment and Forestry related to monitoring and strengthening the SVLK, since it was implemented on 10 September 2010. Why care about SVLK? Because SVLK marks a long history for Indonesia in its efforts to reform the forestry sector and forest governance, when branded / regarded as a country that does not care about forest sustainability. Illegal logging or ILLlegal Logging (IL), which results in forest destruction, damages the reputation of Indonesian wood products, and has an impact on a ‘boycott’ of Indonesian wood products.

As Mr. President knows, SVLK is currently considered by some parties to be an impediment to investment, whereas SVLK is an instrument to encourage forestry management in a better direction by preventing the circulation of illegal logging. Through the Minister of Trade Regulation dated February 27, 2020 Number 15 Year 2020 (Permendag 15/2020) concerning Provisions on the Export of Forestry Industry Products, V-Legal Documents which become the standard for timber legality verification according to SVLK regulations are no longer an export requirement for forestry industry products. Minister of Trade Regulation 15/2020 does not comply with the Law of the Republic of Indonesia Number 18 Year 2013 concerning Prevention and Eradication of Forest Destruction, where the Government is responsible for preventing and eradicating forest destruction and can carry out international cooperation in preventing trade and / or illegal timber washing. In addition, the Minister of Trade Regulation 15/2020 is also not in accordance with the Minister of Environment Regulation No. 30/2016 which requires V-Legal Documents as one of the export documents for wood products. Through the issuance of Permendag 15/2020, the Ministry of Trade is ignoring the efforts and roles of KLHK and other stakeholders, including civil society in protecting the environment while ensuring that natural resource management, especially timber, is carried out and sustainable.

Based on available data, the value of Indonesian wood furniture exports depends on the market asking for legality, meaning SVLK is the key to increasing the value of exports. In 2019 alone, from the value of Indonesia’s wood furniture exports amounting to 1.4 billion USD, 1.2 billion USD will come from countries that demand legality guarantees (FLEGT Independent Market Monitoring, 2020). Other data states, 41 percent of wood furniture exports from Jepara Regency are exported to Europe and 33.2 percent to countries that continue to encourage the strengthening of the legality of the wood they import. The number of SMEs that have successfully become exporters in Jepara has increased due to market demand for timber legality guarantees from 219 to 386 SMIs, up 82 percent from 2013 to 2018. Eliminating the obligation of V-Legal / SVLK Documents in the export process of Indonesian wood products will weaken the competitiveness of Indonesian export products and not the right stimulus.

If the current situation continues until the enactment of the Minister of Trade Regulation 15/2020 on May 26, 2020, the civil society coalition views the decline of forest governance in Indonesia and the loss of downstream industry incentives that have made improvements. Business actors who have commitment to sustainable management are seen as being underestimated and are only played with by changing various regulations and policies that cause legal uncertainty.

As Mr. President knows, Indonesia has signed and subsequently ratified the Forest Law Enforcement and Voluntary Partnership Agreement (FLEGT-VPA) with the European Union (EU) in 2014, a bilateral trade agreement that is legally binding for a country that is legally binding sign it. This agreement aims to ensure that only Indonesian legal timber and wood products can be exported / traded to the European Union. Furthermore, Article 10 of the VPA stipulates that Indonesia also applies SVLK for wood that is exported to non-EU countries and sold on the domestic market. The impact of eliminating V-Legal documents as export requirements in the Minister of Trade Regulation 15/2020 caused Indonesia to violate the VPA agreement.

Based on this, the civil society coalition appealed to Mr. Joko Widodo, President of the Republic of Indonesia to order the revocation or revision of the Permendag 15/2020 bearing in mind:

  1. Not in accordance with the Law of the Republic of Indonesia Number 18 of 2013, because it weakens efforts to improve forest governance, reduce forest destruction and illegal logging.
  2. Not in accordance with PermenLHK 30/2016 and has the potential to cause legal uncertainty and business uncertainty.
  3. Causing Indonesia to violate FLEGT-VPA commitments with the European Union in accordance with Presidential Decree 21/2014 on the Agreement on Voluntary Partnerships between the Republic of Indonesia and the European Union on Law Enforcement of Forestry, Management and Trade of Wood Products to the European Union, which has an impact on the loss of the green path of trading wood products Indonesia to the European Union.
  4. The decline in the competitiveness of exports of forestry industry products with other wood producing countries is due to the fact that several other countries such as Vietnam, for example, have signed a VPA with the European Union and immediately implemented timber legality certification.
  5. Declining image of forest governance and the reputation of Indonesian wood products in the international arena.
  6. Loss of trust from business and investment actors who have been obedient to TIMBER LEGALITY ASSURANCE SYSTEM implementation.