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Indonesia

Indonesia is a country spread across thousands of islands in Southeast Asia. Indonesia has a tropical climate and is a major producer of timber. The country is facing several environmental issues with deforestation being one of the most prominent. Historically, the main drivers of deforestation have been palm oil and pulp wood production, logging and mining. Indonesia’s rates of deforestation have slowed significantly in recent years (2016-2021), largely due to reductions in commodity-driven expansion. In 2016, Indonesia became the first country to issue FLEGT licenses to export timber products to the European Union under the Voluntary Partnership Agreement (VPA). Although the Government of Indonesia has taken steps to maintain the FLEGT licensing system, reports of illegal logging persist. Despite an overall decline in deforestation, several key provinces with primary forests and peatlands have seen increases in forest loss. In 2019, a permanent moratorium was put in place, banning the clearing of primary forests and peatland areas.

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Last updated: February 2024

Forest Management

Forest Governance

According to Law No. 41/1999, all Indonesian forest lands are controlled by the government and most forest lands are owned by the government. Due to its decentralized system, these areas are typically managed by public administrators and business entities with limited ownership rights. Indonesia’s regulatory mechanisms for community-based forest management authorize several community owned forests: Village Forests (Hutan Desas), Community Forests (Hutan Kemasyarakatan), Community Timber Plantations (Hutan Tanaman Rakyat), and Company-Community partnership arrangements (Kemitraan). In 2015 the national government announced its intentions to distribute 12.7 million ha of forest to local people.

Indonesia is a decentralized democratic republic, in which district governments and municipalities provide most governmental services. However, the ultimate authority over the management of forests lies at the national level. A patchwork regime of laws and regulations continues to create confusion between operators and authorities, especially about land tenure issues and permitting procedures for concessions. Despite the conflict and overlap of authority amongst the different layers of government, there are several national policies that form the basis of Indonesia's forest governance regime.

The following agencies/ministries oversee regulation and management of forest lands and products in Indonesia:

Transparency

Freedom of Information Act of Indonesia (Law No. 14/2008) (2008): This Act makes it mandatory for every public institution to develop regulations outlining how the public can access different pieces of information. The categories of are: (1) information available and actively disseminated on a regular basis; (2) information that should be made public immediately; (3) information that is always available and provided upon request, and (4) restricted or confidential information. However, concession maps are not public under the FOIA of Indonesia.

For information regarding transparency and risk scores in Indonesia, head to these links:

Laws and Regulations

Forest Laws

  • Law No. 41/1999 on Forestry (1999): Regulates the management of forests in Indonesia and includes some conservation-oriented policies. It divides forests into three categories: Conservation Forests, Protection Forests and Production Forests. It also empowers the Ministry of Forestry to determine and manage Indonesia’s National Forest Estate (Kawasan Hutan). 
  • Law No. 18/2013 on the Prevention and Eradication of Forest Destruction (2013): Strengthens law enforcement by providing additional legal certainty and defining penalties for those engaged in forest destruction. The law defines which activities are banned for individuals and organized groups who log in forests, organizations involved in the illegal timber trade, and officials engaged in falsifying permits.
  • Law No. 6/2014 on Villages (2014): Expands the authority of villages to manage their own assets and natural resources, revenue and administration. It specifically reallocates a specific portion of the State budget to village administrations, providing all of Indonesia’s villages with annual discretionary funding for making local improvements that support poverty alleviation, health, education and infrastructure development.  
  • Law No. 6/2023 on the Stipulation of the Government Regulation in Lieu of Law No. 2/2022 on Job Creation (2023): This law amended several provisions under Law No. 41/1999 and Law No. 18/2013, including its criminal provision. The Law also prioritizes the use of administrative sanctions to address forest destructive activities, especially for small-scale activities conducted by the locals living in or surrounding the forest area. This Act contains similar provisions with Law No. 11/2020 on Job Creation, which was previously repealed by the Constitutional Court.
  • Presidential Instruction No. 5/2019 concerning concerning Termination of the Granting of New Permits and Improving Governance of Primary Natural Forests and Peatlands (2019): Makes permanent the business license moratorium on primary forest and peatlands, which was initiated in 2011. This presidential instruction suspends the issuance of new harvesting licenses in primary forest and peatland areas and forms part of the Government’s implementation plan for Indonesia’s policy to reduce emissions from deforestation and degradation (REDD+). It excludes licenses that were obtained before May 2011 and licenses used for geothermal/oil energy mining. It also does not protect secondary forests.
  • Government Regulation No. 23/2021 on Forest Maintenance (2021): Provides an elaboration of the new regulatory framework as it pertains to classification of state-controlled forest lands and the harvesting, processing, and marketing of forest products. The national government is given far-reaching powers to control timber extraction in Production Forests, and it gives the Minister of Forestry the power to grant all commercial timber utilization permits. The Ministry is the lead authority for approving any processing mill permits, regulating trade, transport, and distribution of forest products. Export of forest products and timber is managed by the Ministry of Industry and Trade. 
  • MoEF Regulation No. 8/2021 on the Governance and the Making of Forest Management Plan, as well as Forest Use on Protected Forest and Production Forest (2021): Regulates the procedures to record an inventory of tree standing stock. Ensures that natural forest concession holders prepare long term business plans (RKU) and an annual working plan (RKT). The inventory, RKU, and RKT are mandatory and must be submitted before harvesting can be initiated.

Processing/Manufacturing Laws

  • Law No. 32/2009 on Environmental Protection and Management (2009): Issuing forest management licenses is conditional on the completion of an environmental impact assessment (AMDAL) required for all plantation forests, pulp and paper industries and other woodworking industries. This law outlines all the requirements for an AMDAL.
  • MoEF Regulation No. 8/2021 on the Governance and the Making of Forest Management Plan, as well as Forest Use on Protected Forest and Production Forest (2021): Aims to ensure that all timber processing companies are subject to stated conditions within the laws and regulations, including the maintenance of records to demonstrate that processing quotas have been respected. Stipulates the obligation of primary industries to report log inputs and outputs using the MoEF preferred format. The online database system, RPBBI Database of Timber Industry, records the origins of raw timber as input materials for the industry. Dictates the measurement and testing of forest products to protect state rights, the quality of forest products from the ecological and economical point of view and improve forest products competitiveness and sustainable management of forests. Measurement and testing shall be carried out by officers to determine the type, volume, and weight of all forest products from state or private forests. Provides procedures for the measurement and evaluation of forest products.

Transport Laws

Tax Laws

Trade Laws

Criminal Laws

Bilateral Agreements

CITES

The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) is an international agreement among governments whose purpose is to ensure that the international trade of wild animals and plant species does not threaten the survival of these species. It is up to each country to draft their own domestic legislation to comply with its CITES obligations. Indonesia signed onto the Convention in 1978.  

In 2022, the MoEF issued the MoEF Regulation No. 20 of 2022 on the Distribution of Timber listed on the Appendix of Convention on International Trade in Endangered Species of Wild Fauna and Flora. Some of the Appendix II timber species that are commercially traded in Indonesia are Ramin (Gonystylyus bancanus) and Sonokeling/rosewood (Dalbergia latifolia).

Species under the protection of CITES are listed under three Appendices based on how threatened they are by international trade. The species listed in Appendix I are the most endangered and international trade of these species is prohibited unless the purpose of import is noncommercial. The species listed in Appendix II are tightly controlled in international trade and may be authorized with an export permit or re-export certificate. Appendix III lists species at the request of a Party that needs other countries’ cooperation to regulate the trade in the species. International trade in Appendix III is allowed with appropriate permits or certificates.

If you don’t know if the species you are interested in sourcing from this country is CITES listed, please check this link. If the species is listed, please use this database to identify the National CITES Authority. In Indonesia, the CITES managing authority is the Ministry of Environment and Forestry (MoEF).

Forest Resources

Resources Overview

In 2001, Indonesia had 93.8 Mha of primary forest, extending over 50% of its land area.

According to Law No. 41/1999, Indonesia divides its forest resources into two categories (Article 5):

  • State forests: Consists of forest located on lands in which no title exists.
    • In cases in which the State forest is located in the territory of a community (upholding customary acts), the forest is known as customs-related forest.
  • Titled forests: Consists of forests located on lands that are titled.

Forests are further divided by their primary functions (Article 1):

  • Conservation forests: Comprise of nature reserve forest areas, nature conservation forest areas and hunting parks.
  • Protection forests: Comprise of forest area intended for protective purposes, including the protection of water systems, flood prevention, erosion control, maintenance of soil fertility and the prevention of sea water intrusion.
  • Production forests: Comprise of forest area whose main functions are to produce forest products.