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

1. Indonesia: Transparency in the Forestry sector Fred Stolle World Resources Institute Forest Team

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

3. Overview • Indonesia’s forests • Forest Governance in Indonesia • Steps towards better Forest Governance and transparency • New Incentives for Good Forest Governance and Transparency

4. 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$ 4

5. Global forest cover Source FAO-FRA 2005

6. Southeast /Asia Forest Cover Change Source FAO-FRA 2005

7. Status of Indonesia’s Forests 1980-1990 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

8. Overview • Indonesia’s forests • Forest Governance in Indonesia • Steps towards better Forest Governance and transparency • New Incentives for Good Forest Governance and Transparency

9. Global greenhouse gas emissions by country (WRI)

11. East-Kalimantan

12. 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

13. Indonesia New Incentives What are the challenges? • Permanence • Leakage • Baseline data • Check of status (monitoring) • Incentives • Missed targets • Payment distribution • Institutional set-up

14. Overview • Indonesia’s forests • Forest Governance in Indonesia • Steps towards better Forest Governance and transparency • New Incentives for Good Forest Governance and Transparency

15. 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

16. Problems don’t 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

17. 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.

18. Overview • Indonesia’s forests • Forest Governance in Indonesia • Steps towards better Forest Governance and transparency • New Incentives for Good Forest Governance and Transparency

19. FOMAS Work with the Ministry of Forestry in cooperation with the World BankFOMASForest Monitoring and Assessment SystemNot a system but a process “If you can’t measure it, you can’t manage it”

20. 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.

21. + 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

22. With, and in the Ministry, and in cooperation with NGO’s

23. MoF Commitment to Transparency

24. Digitize official data

25. Provide decision making tools Atlas of Fires in Indonesia in 2006

26. 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: • Confidential • Official Use Only • Publicly Available

27. Status of Indonesia’s 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.

28. Forest Landscape Objective Legal Illegal ?

29. 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, 32%to 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

30. Berau District Lost Revenue 110 Billion Rp Or 11 million US$ On a population of 200,000

31. Accurate timely maps Forest Management Units Source: World Bank 2006 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