A ROADMAP TO VPA: INDONESIA CASE

1. A ROADMAP TO VPA: INDONESIA CASE Agus Setyarso UK-INA MoU Program Facilitator asetyar@yahoo.com

2. ORGANISATION OF THE PRESENTATION • VPA in the framework of FLEG and FLEGT • Domestic context in Indonesia: How VPA is treated (and governed) • Assessment of the drivers of changes • Investment on systems’ development to get prepared in VPA negotiation • Drawing the roadmap

3. VPA in the framework of FLEG and FLEGT FLEG Asia: Bali Declaration and the follow ups in Indonesia • High-level expression of political will • Judicial (Modify and streamline laws and regulations,Determine law enforcement priorities, Develop swift prosecution, judgments and enforcement, Strengthen penalties and sanctions against illegal activities, Rewards for responsible behavior/motivation, Recognized complaints mechanisms w/protection for claimants and due process, Independent monitoring, Integration of customary law into formal law, Capacity building for legislative, executive and judicial institutions at the local level)

4. Decentralization • Institution and Capacity Building • Concession Policy • Conservation and Protected Areas • Public Awareness, Transparency, and Participation • Bilateral Actions (Transboundary cooperation for protected areas, Voluntary agreements for combating trade in illegal timber and forest)

5. The EU FLEGT Action Plan It proposes supply-side and demand-side measures to combat illegal logging and associated trade: • Development co-operation • Measures to control the trade in illegally-harvested timber • Green public procurement • Private sector initiatives • Financing and investment

6. FLEGT licensing scheme • COUNCIL REGULATION (EC) No 2173/2005 of 20 December 2005 on the establishment of a FLEGT licensing scheme for imports of timber into the European Community • Article 1 1. This Regulation establishes a Community set of rules for the import of certain timber products for the purposes of implementing the FLEGT licensing scheme. 2. The licensing scheme shall be implemented through Partnership Agreements with timber producing countries. 3. This Regulation shall apply to imports of timber products set out in Annexes II and III from partner countries listed in Annex I.

7. Article 9 Two years after the entry into force of the first Partnership Agreement the Commission shall present the Council with a report on the implementation of this Regulation, based in particular on the synthesis reports referred to in Article 8(3) and on the reviews of Partnership Agreements. This report shall be accompanied, where appropriate, by proposals for improvement of the FLEGT licensing scheme.

8. Diagram of legality assurance system

9. VPA IN FLEG ASIA AND EU-FLEGT BALI DECLARATION MoF PRIORITY POLICIES contribution Forestry system In transition MEASURES UK-INA MoU IDN VPA Exercises in MoU Action Plan IL AND TRADE ENVIRONMENT Exercises in MoU Action Plan EU ACTION PLAN EU VPA Exercises in MoU Action Plan

10. Domestic context in Indonesia: How VPA is treated (and governed) • Missing link between commitment and actions – measures were not systematically designed and monitored • Re-construction of framework condition in the transition of governance systems used most of the energy • Economic recovery has been in conflict with sustainable development  Inclusion of pulp and paper not prefered • VPA: a goal, an instrument, a requirement, or a constraint? • Where is the VPA position in the forestry governance?

11. Issues raised in the VPA pre-workshop Local government representatives • stressed the need to put the essential of the social function of forests into the VPA, • and the need to have economic (income) generating activities for local people living in and around the forest.

12. Issues… Private sector representatives • questioned the possible benefit of the VPA • raised their fear of discrimination, • argued about needed disincentives for non-VPA countries • (SFM or any) certification tend to be a financial burden and less an incentives to their business.

13. BRIK • IDN has already a well developed and traceable log tracking system to ensure the legality of all timber traded. However, in the media the information on illegal logging is blown out of proportion. • the illegal logging issue should focus more on up-stream problems (in the forest) rather than down-stream problem (in forest product trade). • it would be better to put the VPA as a scheme for combating illegal logging and not as a trade scheme.

14. Concession holder • Controlling illegal logging tends to be a serious impediment for a legal company practicing legal activities. • Good companies have been put with suspicious entities under the same approach. • Current activities led to a serious shortage of timber • Questioned whether the VPA can be a solution to the problem or another burden.

15. Civil society group • arguments: (1) forest is seriously degraded, (2) industries experience difficulties in round-wood supply, (3) international prices for IDN forest products are declining significantly. • VPA can be a way for IDN to response to the situation and it is hence important for IDN to decide on its position to the VPA. • The VPA can be a good opportunity for IDN

16. Government • VPA can be seen as an option which can only be responded in a way that IDN is ready to enter to the negotiation process now or later, but not by refusing it. • VPA should be seen as a tool for showing to the world that IDN is not a lenient country in regard to illegal logging and related activities. • VPA is too important to be ignored.

17. Donors’ view (?) • Apparently perceived that BRIK and APKINDO have wanted donors to believe that the Indonesian plywood sector is financially struggling.   • BRIK and APKINDO hope international bodies will feel sorry for them, and not insist on reforms, for example, higher forest revenues, a break-up of the plywood monopoly, and most recently, tougher anti-illegal logging and trade mechanisms aimed at the processing sector.

18. ASPIRATION EXTRACTED FROM NATIONAL WORKSHOP ON VPA • Questioning VPA • Support single legality standard and verification of legality of timber • Little knowledge on VPA negotiation • More discussion on framework condition (forestry system, economic performance, illegal logging, global issues, SFM)

19. ASPIRATION MAP EXTRACTED FROM NATIONAL WORKSHOP ON VPA (38 interventions)

20. ASPIRATION MAP EXTRACTED FROM NATINAL WORKSHOP ON VPA BUT ADDRESSING ISSUES BEYOND VPA (45 interventions)

21. Group IExpected achievement through VPA • Incentives for industry • In Indonesia • In consumers’ countries • Sanctions to EU importers who deal with unidentified wood • Support IDN in preparing and implementing legality standard • Urged MAL to follow same process • Cost effective • Measures to eliminate timber laundering • Link all EU member states to VPA • Extent product coverage • Develop information sharing

22. Group IIMatters to be clarified (22 points)

23. Group IIIProcedures for IDN to prepare VPA • Conduct internal discussions within each stakeholder group (April-June 2006)  one meeting in MoF this week • Public consultations – stakeholder groups to consult respective constituent (July 2006)  not likely happens • Organize regional multi-stakeholder dialogues (September 2006)  not likely happens • Conduct 2nd national meeting on VPA (October 2006)  might be happening

24. DRAWING THE ROADMAP

25. Assessment on the drivers of changes • SFM in economic, social and environmental dimensions are well accepted – good public image that can be used as starting leverage • But, understanding and knowledge are not well maintained • Different economic interests in forest industry have not been bound in long term sustainability • Policy decision makers and related implementing units need to get equipped with stronger leaderships • Civil society network need to be consolidated

26. Investment on systems’ development to get prepared in VPA negotiation • Investment on hard-infrastructure in licensing system • Investment on soft-infrastructure • Investment on mobilizing forest productive and economic units • Investment on capacity building and governance • How to secure the needed investment?

27. Sustainable forestry development Promoting SFM trough certification Global values Eliminating illegal logging and associated trade Other efforts Voluntary partnership agreement politics VPA management? Domestic perspective Civil society industry governance Knowledge pool Facilitation Motivation Networking Drivers for changes leaderships Political economy Investment On business incentives Investment on Systems development Investment On governance Investment On licensing

28. DO NOT STOP HERE: How to get everything aligned?

29. Demand for alignment • Aligning investments through national and international supports • Aligning changes through stronger leaderships • Aligning governance: national and sub-national levels – incentive policies and regulations • Aligning industry: market incentives, stepwise to legal compliance? • Aligning civil society network – public image, public pressure, and public support • Align all: legality standard, legal compliance verification, independent monitoring, knowledge pool and share.

30. Assessment on current deliveries for alignment (0-100 scale) • Aligning investments through national and international supports – 10 • Aligning changes through stronger leaderships – 10 • Aligning governance: national and sub-national levels – incentive policies and regulations – 20 • Aligning industry: market incentives, stepwise to legal compliance? – 10 • Aligning civil society network – public image, public pressure, and public support – 30% • Align all: legality standard, legal compliance verification, independent monitoring, knowledge pool and share, business, governance – 10

31. Concluded remark With clear roadmap and consistent alignment, VPA will be taking effects by 2008