Legal and illegal logging

West Kalimantan illegal logging - credit Rhett Butler

Direct drivers – Legal and illegal logging

Logging involves cutting down trees and selling the timber for use as lumber in construction, for manufacturing wood products such as furniture, and to make fibre pulp which is used to produce paper and paper products such as tissue and cardboard. It is recognized as one of the most significant causes of forest loss and degradation in Indonesia. Of the approximately 6.6 million ha of forest destroyed in Indonesia between 2000 and 2010, logging concessions have been estimated to account for 1.8 million ha, and the expansion of plantations of fast growing trees destined to produce fibre pulp for 1.9 million ha.

The scale of the issue is indicated by the significant contribution the sector makes to the national economy. In 2009 the combined value of forestry (silviculture and harvesting), wood manufacturing, and the pulp and paper industry was worth approximately US$21 billion, or roughly 3.5 percent of Indonesia’s Gross Domestic Product. Of this, forestry contributed US$5.1 billion (0.8 percent of GDP), wood and wood manufacturing US$9 billion (1.4 percent of GDP), and the pulp and paper industry US$6.9 billion (1.2 percent of GDP). In 2010, wood products and pulp and paper represented around 6 percent of total exports and 9 percent of non-mineral exports.

Until the 1970s nearly all logging in Indonesia was on a small scale, and largely directed at extracting valuable tree species such as teak (Tectona grandis) and Ramin (Gonystylus spp.). Deforestation intensified in the 1970s, when forest areas were identified as a resource to be exploited on an industrial scale to support national economic development, and accelerated in the 1980s when some 62 million ha of forest was allocated by Suharto’s New Order Government to powerful conglomerates. Dry lowland forest suffered particularly badly as it provided a source of valuable timber which was more accessible than that in mountainous or swampy areas.

Although the export of unprocessed logs was banned in 1985 and rough-sawn timber in 1992, the conglomerates moved to establish significant plywood processing operations, substantial volumes of wood continued to be smuggled unprocessed through neighbouring countries, and production capacity in the pulp and paper industry, which became dominated by three conglomerates, increased exponentially. Indonesia is now the world’s ninth largest fibre pulp producer and the 11th largest paper producer with combined exports worth over US$2 billion in 2013. It is estimated that approximately 90 percent of wood consumed by Indonesia’s pulp and paper industry is derived from native, rather than planted, forests.

Massive exports of unprocessed logs resumed between 1998 and 2001 when Indonesia reduced export taxes from 200 percent to 10 percent as part of an agreement with the International Monetary Fund following the 1998 financial crisis, but in late 2001 log exports were banned again, and in 2003 SVLK certification – a system designed to ensure the legality of traded timber – was introduced, which became mandatory in 2010. Further, in May 2011, a two year moratorium on the granting of new concession licences for logging and conversion of primary natural forest and peatlands was announced.

Despite these recent positive moves, illegal logging, which is more destructive than legal logging, remains rampant in Indonesia and makes any accurate assessment of the social or environmental impacts of logging difficult. In 1998, a joint UK-Indonesian study suggested that about 40 percent of throughput in the sector was illegal. In 2006, the World Bank found that up to two-thirds of production was based on suspect or undocumented timber sources, representing an annual loss to the nation of US$3 billion. In 2011, Human Rights Watch assessed losses from illegal logging (i.e. losses in fees from timber cut without proper permits, from the use of artificially low prices in calculating royalties, and from uncollected fees) at more than US$2 billion.

Beyond loss of state revenues, increases in greenhouse gas emissions, and reduced carbon storage capacity of forests and peatland, uncontrolled logging damages bio-diversity, fragments the forest affecting animal habitats, food availability and migration patterns detrimentally, and contributes to soil and soil nutrient erosion, and catastrophic flooding and landslides. Bringing logging under control, and ensuring that fibre pulp plantations are only established on degraded land, are vital to reduce environmental destruction and protect people and their livelihoods.

National and international pressure has had some success in encouraging a number of Indonesia’s top pulp and paper producers to reduce their clearance of natural forest and use only existing plantations and degraded land for production. Certification schemes, such as Indonesia’s Timber Legality Verification System (SVLK), which came into effect in September 2010, also have an important role to play. SLVK requires all timber producers and processors to be audited against set standards to ensure legality. Poor understanding of the scheme has meant that it has not yet been fully implemented, but ensuring that these new tools to monitor private sector commitments are enacted, that existing commitments towards sustainability are met, and that lagging companies revise their approaches, are vital to slow Indonesia’s alarming rates of forest loss.