A. Background
Illegal logging in Indonesia reached its peak after the fall of President Soeharto and the reform era began. The economic crisis and legal uncertainty after the transition of power are well utilized by a number of people who have the influence to exploit forest resources, especially tropical timber which has high commercial value. During the peak period of illegal logging, the highest rate of natural forest loss occurred in Indonesia, which was around 2 million ha (FWI / GFW, 2001) and based on a study conducted by CIFOR in 2004, an estimated 80% of Indonesian timber came from illegal sources.

The rise of illegal logging in Indonesia is one of the causes of damage to forest conditions and has caused tremendous losses. The Indonesian Corruption Watch (ICW) study during the period 2004-2010 stated that, state losses due to illegal logging in Indonesia reached Rp. 169.7 trillion. This amount is obtained from the calculation of state revenues from the Land and Building Tax sector and a number of permits and royalties. This loss does not include loss of biological natural resources and losses caused by natural disasters triggered by forest destruction. Forest destruction also has a direct impact on the loss of people’s livelihoods that live in and around the forest and trigger social conflicts.

Government efforts in combating illegal logging and illegal timber trade, as well as the realization of good forest governance, is one of them by implementing the Timber Legality Verification System (SVLK). This system is developed through a multi-stakeholder process that is expected to be a step-by-step approach towards sustainable forest management and provides guarantees for the legality of the source of wood circulating and traded on the domestic and international markets. SVLK is central in a partnership agreement (voluntary partnership agreement) between Indonesia and the European Union because it is used as a guarantee system for timber legality. Under this system, all products covered by the agreement must have a legal license in order to enter the EU market.

The Indonesian government imposed the SVLK in 2009 with the issuance of Minister of Forestry Regulation No. P.38 / Menhut-II / 2009, and began implementing it in September 2010. Compliance with SVLK is mandatory for all companies in the forestry sector. As of September 2015, there were at least 1,957 certificates issued by certification bodies (Table 1). The total number of certificates is believed to not cover all permit holders. Until now there are still permit holders operating without having a timber legality certificate.

Table 1. Number of License Holders in the Forestry Sector and SVLK Certificate Ownership until September 2015


Source: IUPHHK-HT, HA, RE data from the spatial basis book for forestry, November 2014. September 2015 JPIK compilation ownership certificate data from various sources

In order to ensure compliance with the SVLK, then the Network of Independent Forestry Monitors (JPIK), Forest Watch Indonesia (FWI) and its regional partners, monitored 2 (two) companies of industrial timber plantations (HTI / IUPHHK-HT) that have certificates Sustainable Production Forest Management (S-PHPL), namely PT. Toba Pulp Lestari in North Sumatra and PT. Adindo Hutani Lestari in North Kalimantan. In addition, searches were also conducted for HPH / IUPHHK-HA companies that did not yet have a certificate, namely PT. Mohtra Agung Persada in North Maluku. Including wood industries which are suspected of accommodating timber sourced from PT. Mohtra Agung Persada and IPK companies whose legal legality is still questionable.

B. Violations of the Timber Legality Verification System (SVLK)

B.1. Upstream Violations (concessions)

Based on field findings, a number of violations were still found by companies that already had certificates. Tenure conflicts still occur due to the absence of a socialization process and comprehensive consultation in terms of free prior and informed consent requests that are still a major problem. PT. Toba Pulp Lestari has logged incense forests which are customary forests, where previously there was a joint management agreement between the company and the community (Appendix Figure 1). This situation is exacerbated by the lack of certainty of ownership of forest areas due to the incomplete process of boundary demarcation and inauguration of the area. Other field findings are logging practices in protected areas, such as river boundaries and green lines (Appendix Figure 2). While the field findings related to the performance of PT. Adindo Hutani Lestari is logging natural forests and destruction of peatlands (Appendix Figure 3).

The information in Table 2 below is the field findings that show the non-compliance with SVLK carried out by the 2 HTI companies.

Table 2. Field Findings of Non-Compliance of Two HTI Companies with SVLK