World Timber Market Concerns About the Status of The Indonesian Minister of Trade Regulation on Timber Product Export Provisions (Permendag 15/2020)

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Bogor, 8 May 2020 – Timber buyers from the European Union (EU) have asked the Indonesian Government about the implementation of Minister of Trade Regulation No. 15 of 2020 (Permendag 15/2020) concerning Provisions on theExport of Forestry Industry Products. Not only buyers of wood products from the European Union reacted in response tothis regulation, but also followed by buyers from the United States (US) and Australia. The issuance of Permendag 15/2020 has made the parties that oversee the Timber Legality Verification System (SVLK) e.g. industry associations, the Timber Legality Verification Institute (LVLK), academics, and Non-Government Organizations (NGOs) criticise thepolicy.

Executive Director of Kaoem TelapakAbu Meridian, stated that the issuance of Permendag 15/2020 has provoked various reactions from several associations from outside and within Indonesia. These reactions include the President ofthe Timber Importers Group of Fedustria, Belgium; CEI-Bois – the European Confederation of the Belgian Woodworking Industries; the British Timber Trade Federation; Federlegno Arredo (importers from Italy); the International Wood Product Association (IWPA) of the United States; the Australian Timber Importers Federation (ATIF); IndonesianAssociation of Sawn Timber and Processed Timber (ISWA); and Indonesian Furniture and Handicraft Industry Association (ASMINDO).

Indonesian timber industry associations i.e. ISWA and ASMINDO have also sent open letters to the government. Both ISWA and ASMINDO requested that the Government conduct a review of and cancel Minister of Trade Regulation 15/2020.

“The government should hear the aspirations of business associations from the EU, US and Australia regarding Minister of Trade Regulation 15/2020. Domestic business associations such as ISWA and ASMINDO have also expressed their opinions on the Minister of Trade Regulation 15/2020. We all really hope that the Government canaccommodate the voices of business units that want to maintain SVLK, “Abu added.

Trade data has shown that there has been a substantial increase after using the V-legal Document and SVLK System. Since Indonesia and the EU signed the Voluntary Partnership Agreement (VPA), the export value of Indonesian wood products to the international market has increased from USD 6.05 billion in 2013 to USD 11.6 billion at the end of 2019. If Permendag 15/2020 continues to be implemented, Indonesia will potentially lose export markets to the European Union which in 2019 are valued at USD 1,093 billion.1

The Center for the Study of Forestry History and Policy (Sebijak Institute) Faculty of Forestry, Gajah Mada University (UGM) conducted a quick survey. The rapid survey was conducted on April 17-24, 2020, and was answered by 151 respondents. From the survey results it was found that 46 percent of respondents stated that the impact of deleting V-Legal documents would cause business players to lose buyers because there was no proof of legality, Indonesian wood products would be questioned and their value drop, as well as competitiveness with other countries and competition among exporters in Indonesia also decreasing.

Kaoem Telapak firmly asked the President of the Republic of Indonesia, Joko Widodo, to immediately revoke Minister of Trade Regulation 15/2020, the implementation of which will be soon. Abu reiterated that Indonesia would lose its competitiveness in the eyes of the international community and it would impact on global diplomacy, because it would damage Indonesia’s reputation which was inconsistent with the agreed global policies.

“The Sebijak Institute study reinforces how SVLK must be maintained. The government must listen to the requests from domestic and foreign industries requesting that V-Legal Documents be retained. The implementation of SVLK has helped increase the competitiveness of Indonesian wood products in the International Market, “Abu concluded.

—Done—

Contact person:

Abu Meridian (Kaoem Telapak | abu.meridian@kaoemtelapak.org | +62823-1160-0535

Editor’s Note:

  1. The Timber Legality Verification System (SVLK) aims to ensure that wood and wood products come from legal sources. Legal certainty is seen as the first step towards sustainable forest management, and with continued efforts it is hoped that all wood products in Indonesia will be produced from sustainable forest management.
  2. FLEGT VPA is a bilateral agreement between the European Union (EU) and wood exporting countries, with the aim ofimproving governance in the forestry sector and ensuring that only legal timber and wood products are exported to the EU from partner countries.

Based on the Corruption Eradication Commission (KPK), all wood production from state- managed forests is recorded inthe Forest Product Management Information System (SIPUHH) on the Ministry of Environment and Forestry (KLHK)website implemented since 2016. SIPUHH results found that:

  1. Over the past two decades, Kaoem Telapak and EIA have been heavily involved in exposing illegal timber theft, trafficking and publishing reports on illegal logging of Merbau in Papua and West Papua such as Labora Sitorus (2013)Rogue Traders (2009), and The Last Frontier (in 2005).
  2. Indonesian products licensed or SVLK certified provide the biggest advantage in the import of EU tropical wood products in 2019, and bring the name of Indonesia to be ranked first in the European Union. FLEGT Independent Market Monitoring (FLEGTIMM) data for 2019 can be downloaded at the link https://www.flegtimm.eu/index.php/eu-market-oveview

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