The IKM’s view of SVLK implementation

The IKM’s view of SVLK implementation

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The enactment of the SVLK in mandatory in 2009 and implemented in 2010 clearly had a good impact on the forestry industry, especially the furniture Small and Medium Industries (IKM) in the country. Since the SVLK was implemented in 2013, the export value of Indonesian wood products increased from USD10.4 billion to USD10.6 billion in 2015. This record is based on data from the Timber Legality Information System managed by the Ministry of Environment and Forestry (KLHK), and connected with INATRADE and Indonesia National Single Window (INSW).

The views of various elements of the SVLK which are considered burdensome, turned out to be different from the views of UD Romansa Jati – as one of the IKMs – who considered the SVLK to facilitate the IKM in carrying out its business.

UD Romansa Jati believes that IKMs that have SVLK certificates are more calm in carrying out their business activities because they have complied with mandatory government regulations on timber legality. In addition to exporting products, IKMs that have SVLK certificates can export directly because they already have the legality documents needed when exporting.

SVLK also has an impact on the bargaining position of companies in the eyes of national and international buyers. “Buyers are more selective in buying products that do not adversely affect environmental conditions. In international markets, for example, certified wood products are more in demand in Europe and America, where environmental issues are very important in the country, ”explained Wibi Hanata Janitra, manager of UD Romansa Jati.

From an economic standpoint, SVLK is able to be a savior amid the lack of trust of international buyers of Indonesian wood products, especially Europe, given the many negative events regarding forest management in Indonesia which have become international market sentiments. This is in line with market demands that require a certified product.

Data from the Ministry of Industry notes that there are 1,634 IKM furniture exporters, 70% of IKM exporters already have SVLK certificates. The implementation of the FLEGT license since 15 November 2016 has increasingly emphasized the quality of SVLK that is recognized worldwide, specifically the European Union.

As of November 23, 2016 Indonesia has issued 845 FLEGT licenses with the aim of 24 countries in the EU valued at USD 24,961,503.17, consisting of panel products, furniture, woodworking, crafts, chips, paper and tools. It was noted that panel products ranked first with a value of USD 11,923,104.61, followed by furniture products with a value of USD 7,250,380.63.