Indonesia: Transparency in the Forestry sector

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• Indonesia Transparency in the Forestry sector
• Fred Stolle
• World Resources Institute
• Forest Team

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Overview

• Indonesia's Forests
• New Incentives for Good Forest Governance and
  Transparency
• Forest Governance in Indonesia
• Steps towards better Forest Governance and
  Transparency

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Overview

• Indonesias forests
• Forest Governance in Indonesia
• Steps towards better Forest Governance and
  transparency
• New Incentives for Good Forest Governance and
  Transparency

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The Indonesian situation
Indonesia Area 200 million ha (compared to USA
900 million ha) Population 210 Million
(compared to USA 300 million) Forest land
approx 200 M ha Forest Cover approx 100 M ha
Deforestation rate 1 - 2 million ha /yr
Revenue collected from forest concessions around
200 million US
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Global forest cover
Source FAO-FRA 2005
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Southeast /Asia Forest Cover Change
Source FAO-FRA 2005
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1980-1990
Status of Indonesias Forests
1980-1990
The total volume of roundwood exports reported by
the Indonesia Ministry of Forestry in 2000 was
only 10,700 m3 However, reported imports by trade
partners was 1,445,400 m3
1990-now
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Overview

• Indonesias forests
• Forest Governance in Indonesia
• Steps towards better Forest Governance and
  transparency
• New Incentives for Good Forest Governance and
  Transparency

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Global greenhouse gas emissions by country (WRI)
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(No Transcript)
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East-Kalimantan
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Indonesia New Incentives
For the Province of East-Kalimantan At a price
of carbon around 10 U per metric ton, reducing
deforestation inside National Parks would
generate 36 million dollars /yr In 2006 the
total budget for National Parks for
East-Kalimantan of approximately 5 million US
province
Petrova, Stolle, Brown 2006
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Indonesia New Incentives
What are the challenges?

• Permanence
• Leakage
• Baseline data
• Check of status (monitoring)
• Incentives
• Missed targets
• Payment distribution
• Institutional set-up

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Overview

• Indonesias forests
• Forest Governance in Indonesia
• Steps towards better Forest Governance and
  transparency
• New Incentives for Good Forest Governance and
  Transparency

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Forest Governance issues

• Outside Forestry
• Over-Regulation and Rent-Seeking
• Technology Trends Present Opportunities and
  Hamper Efficiency
• Rights and Access
• Conflict, and Inequity
• Decentralization and Management
• Community Livelihood Promotion and poverty
  alleviation
• Employment Possibilities
• Land Use Rationalization

• Forestry
• Industrial Forest Crime
• Resource Availability is Declining
• Debt and Overcapacity Impede Competitiveness
• Balancing Supply and Demand
• Distribution of Forests and Poverty
• Plantations
• Forest Loss

Derived from WB 2006
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Problems dont stop in the forest

• Losses in rural livelihoods and ecosystem goods
  and services.
• Losses in public revenues from illegal logging.
  More than a billion US in revenue was lost to
  illegal logging practices in 2004
• Losses in access to profitable timber markets and
  investment in the sector. Poor governance in the
  forest sector has deterred

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Why work on forest governance?

• Forest are an important resource in Indonesia
  70 of land poverty reduction economic growth
  environmental services
• Establishing forest sector governance sets a
  precedent for other sectors. Forestry is a
  microcosm of governance issues, and if governance
  is delivered in the forestry sector, this
  demonstrates that it is possible to establish.
• Establishing good governance and curbing
  corruption are among the top priorities set forth
  by President SBY and are emphasized in recent
  instructions to his new team of economic
  ministers.

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Overview

• Indonesias forests
• Forest Governance in Indonesia
• Steps towards better Forest Governance and
  transparency
• New Incentives for Good Forest Governance and
  Transparency

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Work with the Ministry of Forestry in cooperation
with the World BankFOMASForest Monitoring and
Assessment SystemNot a system but a process
FOMAS
If you cant measure it, you cant manage it
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Forest Governance and Transparency

• FOMAS focuses on developing a decision-making
• environment where reliable, accurate and current
• information on forest and timber resources and
• related decisions are continuously and publicly
• available to the general public (Transparency),
• take actions to combat illegal logging and
• strengthen law enforcement.

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Accurate timely forest cover change maps
All Forest Management units Polygons (Logging
concessions, Plantations, National Parks etc)
Accountability
Decisions support
Governance
Law enforcement
Transparency
Transparent National yearly updated Database
FOMAS
This is not a data exercise but the use of data
to improve governance issues
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With, and in the Ministry, and in cooperation
with NGOs
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MoF Commitment to Transparency
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Digitize official data
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Atlas of
Fires in Indonesia in 2006
Provide decision making tools
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Draft Disclosure Policy Plans

• The disclosure policy will provide the foundation
  for public access to forest information, and for
  public scrutiny of MoF decisions and policies.
• The policy will divide forest sector information
  into three categories

1. Confidential
2. Official Use Only
3. Publicly Available

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Status of Indonesias Forests
Maps and data are the result of preliminary
analysis carried out by the Indonesian Ministry
of Forestry in cooperation with SDSU, UMD, NASA,
USGS, ESF, WB and WRI.
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Forest Landscape Objective
Legal
Illegal ?
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New revenue distribution

• Concessions permit Tax (IHPH, IUHPH)
• This is a one time concessions rights tax
• The Regions gets 80 of the Tax while the Central
  government gets 20
• The tax to the regions (the 80) is split in 16
  go to province and 64 to producing district
• Royalty right to regional level (PSDH) (so again
  80)
• This is a yearly tax
• Regional gets 80 and 20 to central government
• 16 to province, 32to producing district, and 32
  to other districts in the province.
• The Dana Rebosisasi fund (DR)
• This is a yearly tax
• 40 go to National and 60 to producing district

These taxes together would earn in 2006 (in
million US) 0.6 (IHPH) 86.8 (PSDH) 110.4
(DR) 197
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Berau District
Lost Revenue 110 Billion Rp Or 11 million US On
a population of 200,000
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Policy Options

• Accuracy, Availability and Transparency
• Curb over-capacity
• Ensure legal supply
• Monitoring
• Planning and incentives
• Law enforcement
• Social forestry
• Land tenure issues
• Fire prevention
• Certification