A ROADMAP TO VPA:A ROADMAP TO VPA: INDONESIA CASEINDONESIA CASE

Agus SetyarsoAgus Setyarso

UK-INA MoU Program FacilitatorUK-INA MoU Program Facilitator

asetyar@yahoo.comasetyar@yahoo.com

ORGANISATION OF THE ORGANISATION OF THE PRESENTATIONPRESENTATION

VPA in the framework of FLEG and VPA in the framework of FLEG and FLEGTFLEGT

Domestic context in Indonesia: How VPA Domestic context in Indonesia: How VPA is treated (and governed)is treated (and governed)

Assessment of the drivers of changesAssessment of the drivers of changes Investment on systems’ development to Investment on systems’ development to

get prepared in VPA negotiationget prepared in VPA negotiationDrawing the roadmapDrawing the roadmap

VPA in the framework of FLEG and FLEGTVPA in the framework of FLEG and FLEGT

FLEG Asia: Bali Declaration and the follow ups FLEG Asia: Bali Declaration and the follow ups in Indonesiain Indonesia High-level expression of political willHigh-level expression of political will Judicial (Judicial (Modify and streamline laws and regulations,Modify and streamline laws and regulations,

Determine law enforcement priorities, Develop swift Determine law enforcement priorities, Develop swift prosecution, judgments and enforcement, Strengthen prosecution, judgments and enforcement, Strengthen penalties and sanctions against illegal activities, penalties and sanctions against illegal activities, Rewards for responsible behavior/motivation,Rewards for responsible behavior/motivation, Recognized complaints mechanisms w/protection for Recognized complaints mechanisms w/protection for claimants and due process, claimants and due process, Independent monitoringIndependent monitoring, , Integration of customary law into formal lawIntegration of customary law into formal law, Capacity , Capacity building for legislative, executive and judicial building for legislative, executive and judicial institutions at the local level) institutions at the local level)

DecentralizationDecentralization Institution and Capacity BuildingInstitution and Capacity Building Concession PolicyConcession Policy Conservation and Protected AreasConservation and Protected Areas Public Awareness, Transparency, and Public Awareness, Transparency, and

ParticipationParticipation Bilateral ActionsBilateral Actions (Transboundary (Transboundary

cooperation for protected areas, cooperation for protected areas, Voluntary Voluntary agreements for combating trade in illegal agreements for combating trade in illegal timber and foresttimber and forest) )

The EU FLEGT Action PlanThe EU FLEGT Action Plan

It proposes It proposes supply-sidesupply-side and and demand-sidedemand-side measures to measures to combat illegal logging and associated trade:combat illegal logging and associated trade:

Development co-operationDevelopment co-operation

Measures to control the trade in illegally-harvested Measures to control the trade in illegally-harvested timbertimber

Green public procurementGreen public procurement

Private sector initiativesPrivate sector initiatives

Financing and investmentFinancing and investment

FLEGT licensing schemeFLEGT licensing scheme COUNCIL REGULATION (EC) No 2173/2005 of 20 COUNCIL REGULATION (EC) No 2173/2005 of 20

December 2005 on the establishment of a FLEGT December 2005 on the establishment of a FLEGT licensing scheme for imports of timber into the licensing scheme for imports of timber into the European CommunityEuropean Community

Article 1Article 11. This Regulation establishes a Community set of rules for 1. This Regulation establishes a Community set of rules for

the import of certain timber products for the purposes of the import of certain timber products for the purposes of implementing the FLEGT licensing scheme.implementing the FLEGT licensing scheme.

2. The licensing scheme shall be implemented through 2. The licensing scheme shall be implemented through Partnership Agreements with timber producing countries.Partnership Agreements with timber producing countries.

3. This Regulation shall apply to imports of timber products 3. This Regulation shall apply to imports of timber products set out in Annexes II and III from partner countries listed in set out in Annexes II and III from partner countries listed in Annex I.Annex I.

Article 9Article 9

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

Diagram of legality assurance systemDiagram of legality assurance system

EU ACTION PLAN

EUVPA

Forestry system In transition

IDNVPA

BALI DECLARATIONMoF PRIORITY POLICIES

MEASURES UK-INAMoU

IL AND TRADEENVIRONMENT

Exercises in MoU Action Plan

contribution

VPA IN FLEG ASIA AND EU-FLEGT

Exercises in MoU Action Plan

Exercises in MoU Action Plan

Domestic context in Indonesia: Domestic context in Indonesia: How VPA is treated (and governed)How VPA is treated (and governed)

Missing link between commitment and actions – Missing link between commitment and actions – measures were not systematically designed and measures were not systematically designed and monitoredmonitored

Re-construction of framework condition in the transition Re-construction of framework condition in the transition of governance systems used most of the energyof governance systems used most of the energy

Economic recovery has been in conflict with sustainable Economic recovery has been in conflict with sustainable development development Inclusion of pulp and paper not prefered Inclusion of pulp and paper not prefered

VPA: a goal, an instrument, a requirement, or a VPA: a goal, an instrument, a requirement, or a constraintconstraint??

Where is the VPA position in the forestry governance?Where is the VPA position in the forestry governance?

Issues raised in the VPA pre-Issues raised in the VPA pre-workshopworkshop

Local governmentLocal government representatives representatives stressed the need to put the essential of stressed the need to put the essential of

the social function of forests into the VPA, the social function of forests into the VPA, and the need to have economic (income) and the need to have economic (income)

generating activities for local people living generating activities for local people living in and around the forest.in and around the forest.

Issues…Issues…

Private sectorPrivate sector representatives representatives questioned the possible benefit of the VPA questioned the possible benefit of the VPA raised their fear of discrimination, raised their fear of discrimination, argued about needed disincentives for argued about needed disincentives for

non-VPA countriesnon-VPA countries (SFM or any) certification tend to be a (SFM or any) certification tend to be a

financial burden and less an incentives to financial burden and less an incentives to their business. their business.

BRIKBRIK IDN has already a well developed and traceable IDN has already a well developed and traceable

log tracking system to ensure the legality of all log tracking system to ensure the legality of all timber traded. However, in the media the timber traded. However, in the media the information on illegal logging is blown out of information on illegal logging is blown out of proportion. proportion.

the illegal logging issue should focus more on the illegal logging issue should focus more on up-stream problems (in the forest) rather than up-stream problems (in the forest) rather than down-stream problem (in forest product trade). down-stream problem (in forest product trade).

it would be better to put the VPA as a scheme it would be better to put the VPA as a scheme for combating illegal logging and not as a trade for combating illegal logging and not as a trade scheme. scheme.

Concession holderConcession holder Controlling illegal logging tends to be a serious Controlling illegal logging tends to be a serious

impediment for a legal company practicing legal impediment for a legal company practicing legal activities. activities.

Good companies have been put with suspicious Good companies have been put with suspicious entities under the same approach. entities under the same approach.

Current activities led to a serious shortage of Current activities led to a serious shortage of timber timber

Questioned whether the VPA can be a solution Questioned whether the VPA can be a solution to the problem or another burden.to the problem or another burden.

Civil society group Civil society group arguments: (1) forest is seriously degraded, arguments: (1) forest is seriously degraded,

(2) industries experience difficulties in (2) industries experience difficulties in round-wood supply, (3) international prices round-wood supply, (3) international prices for IDN forest products are declining for IDN forest products are declining significantly. significantly.

VPA can be a way for IDN to response to VPA can be a way for IDN to response to the situation and it is hence important for the situation and it is hence important for IDN to decide on its position to the VPA. IDN to decide on its position to the VPA.

The VPA can be a good opportunity for IDNThe VPA can be a good opportunity for IDN

Government Government VPA can be seen as an option which can only VPA can be seen as an option which can only

be responded in a way that IDN is ready to enter be responded in a way that IDN is ready to enter to the negotiation process now or later, but not to the negotiation process now or later, but not by refusing it. by refusing it.

VPA should be seen as a tool for showing to the VPA should be seen as a tool for showing to the world that IDN is not a lenient country in regard world that IDN is not a lenient country in regard to illegal logging and related activities. to illegal logging and related activities.

VPA is too important to be ignored. VPA is too important to be ignored.

Donors’ view (?)Donors’ view (?) Apparently perceived that BRIK and APKINDO Apparently perceived that BRIK and APKINDO

have wanted donors to believe that the have wanted donors to believe that the Indonesian plywood sector is financially Indonesian plywood sector is financially struggling.  struggling.  

BRIK and APKINDO hope international bodies BRIK and APKINDO hope international bodies will feel sorry for them, and not insist on reforms, will feel sorry for them, and not insist on reforms, for example, higher forest revenues, a break-up for example, higher forest revenues, a break-up of the plywood monopoly, and most of the plywood monopoly, and most recently, tougher anti-illegal logging and trade recently, tougher anti-illegal logging and trade mechanisms aimed at the processing sector.mechanisms aimed at the processing sector.

ASPIRATION EXTRACTED FROM NATIONAL WORKSHOP ON VPA

Questioning VPAQuestioning VPASupport single legality standard and Support single legality standard and

verification of legality of timberverification of legality of timberLittle knowledge on VPA negotiationLittle knowledge on VPA negotiationMore discussion on framework condition More discussion on framework condition

(forestry system, economic performance, (forestry system, economic performance, illegal logging, global issues, SFM)illegal logging, global issues, SFM)

PARTYPARTY QUESTIONQUESTION EXPECTATEXPECTATIONION

LEGALITYLEGALITY NEGOTIATINEGOTIATIONON

TRADETRADE

ECEC 11 11 11

MoFMoF 11 11

TelapakTelapak 22 11

LEILEI 44 11

BRIKBRIK 66 22(BRIK (BRIK

system)system)

44

FloorFloor 66 44 33

ASPIRATION MAP EXTRACTED FROM NATIONAL WORKSHOP ON VPA

(38 interventions)

PARTYPARTY ILLEGALILLEGAL

LOGGINGLOGGING

ECONOMICECONOMIC

PERFORMANCEPERFORMANCE

SFMSFM FORESTRYFORESTRY

SYSTEMSYSTEM

GOBALGOBAL

ISSUEISSUE

ECEC 11

MoFMoF 22 22 44

TelapakTelapak 22 66 66 11

LEILEI 33 22 11

BRIKBRIK 33 55 55(incentives)(incentives)

11

FloorFloor 11

ASPIRATION MAP EXTRACTED FROM NATINAL WORKSHOP ON VPA

BUT ADDRESSING ISSUES BEYOND VPA(45 interventions)

Group IGroup IExpected achievement through VPAExpected achievement through VPA

Incentives for industryIncentives for industry In IndonesiaIn Indonesia In consumers’ countriesIn consumers’ countries

Sanctions to EU importers who deal with unidentified Sanctions to EU importers who deal with unidentified woodwood

Support IDN in preparing and implementing legality Support IDN in preparing and implementing legality standardstandard

Urged MAL to follow same processUrged MAL to follow same process Cost effectiveCost effective Measures to eliminate timber launderingMeasures to eliminate timber laundering Link all EU member states to VPALink all EU member states to VPA Extent product coverageExtent product coverage Develop information sharingDevelop information sharing

Group IIGroup IIMatters to be clarified (22 points)Matters to be clarified (22 points)

Group of issuesGroup of issues Number of Number of issuesissues

Core issues on VPACore issues on VPA 1010

Related issuesRelated issues 44

Not directly related with Not directly related with VPAVPA

22

Issues on EU-sideIssues on EU-side 66

Group IIIGroup IIIProcedures for IDN to prepare VPAProcedures for IDN to prepare VPA

Conduct internal discussions within each Conduct internal discussions within each stakeholder group (April-June 2006) stakeholder group (April-June 2006) one one meeting in MoF this weekmeeting in MoF this week

Public consultations – stakeholder groups to Public consultations – stakeholder groups to consult respective constituent (July 2006) consult respective constituent (July 2006) not not likely happenslikely happens

Organize regional multi-stakeholder dialogues Organize regional multi-stakeholder dialogues (September 2006) (September 2006) not likely happens not likely happens

Conduct 2Conduct 2ndnd national meeting on VPA (October national meeting on VPA (October 2006) 2006) might be happening might be happening

DRAWING THE ROADMAPDRAWING THE ROADMAP

Assessment on the drivers of Assessment on the drivers of changeschanges

SFM in economic, social and environmental dimensions SFM in economic, social and environmental dimensions are well accepted – good are well accepted – good public imagepublic image that can be used that can be used as starting leverageas starting leverage

But, But, understanding and knowledgeunderstanding and knowledge are not well are not well maintainedmaintained

Different Different economic interestseconomic interests in forest industry have not in forest industry have not been bound in long term sustainabilitybeen bound in long term sustainability

Policy decision makers and related implementing units Policy decision makers and related implementing units need to get equipped with stronger need to get equipped with stronger leadershipsleaderships

Civil society Civil society networknetwork need to be consolidated need to be consolidated

Investment on systems’ development to Investment on systems’ development to get prepared in VPA negotiationget prepared in VPA negotiation

Investment on hard-infrastructure in Investment on hard-infrastructure in licensing systemlicensing system

Investment on soft-infrastructureInvestment on soft-infrastructure Investment on mobilizing forest productive Investment on mobilizing forest productive

and economic unitsand economic units Investment on capacity building and Investment on capacity building and

governancegovernanceHow to secure the needed investment?How to secure the needed investment?

Sustainable forestry development

Global values

Promoting SFM trough certification

Eliminating illegal logging and associated trade

Voluntary partnership agreementOther efforts

Domestic perspectivegovernance

politics

industry

Drivers for changes

Investment on Systems development

VPA management?

Knowledgepool leaderships

FacilitationMotivation

Networking Political economy

Civil society

InvestmentOn governance

InvestmentOn licensing

InvestmentOn business

incentives

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

Demand for alignmentDemand for alignment Aligning investments through national and international Aligning investments through national and international

supports supports Aligning changes through stronger leadershipsAligning changes through stronger leaderships Aligning governance: national and sub-national levels – Aligning governance: national and sub-national levels –

incentive policies and regulationsincentive policies and regulations Aligning industry: market incentives, stepwise to legal Aligning industry: market incentives, stepwise to legal

compliance?compliance? Aligning civil society network – public image, public Aligning civil society network – public image, public

pressure, and public supportpressure, and public support Align all: legality standard, legal compliance verification, Align all: legality standard, legal compliance verification,

independent monitoring, knowledge pool and share.independent monitoring, knowledge pool and share.

Assessment on current deliveries for Assessment on current deliveries for alignment (0-100 scale)alignment (0-100 scale)

Aligning investments through national and international Aligning investments through national and international supports – supports – 1010

Aligning changes through stronger leaderships – Aligning changes through stronger leaderships – 1010 Aligning governance: national and sub-national levels – Aligning governance: national and sub-national levels –

incentive policies and regulations – incentive policies and regulations – 2200 Aligning industry: market incentives, stepwise to legal compliance?Aligning industry: market incentives, stepwise to legal compliance?

– – 1010 Aligning civil society network – public image, public Aligning civil society network – public image, public

pressure, and public support – pressure, and public support – 30%30% Align all: legality standard, legal compliance verification, Align all: legality standard, legal compliance verification,

independent monitoring, knowledge pool and share, business, independent monitoring, knowledge pool and share, business,

governancegovernance – – 1010

Concluded remarkConcluded remark

With clear roadmap and consistent With clear roadmap and consistent alignment, VPA will be taking effects alignment, VPA will be taking effects

by 2008by 2008