Indonesia’s timber industry is known for having the only legality system in the world that’s robust enough to be recognized by the European Union.
And now, the country is in the process of revising that timber legality system by adding sustainability components such as geolocation so that its timbers could still be exported to the EU without much due diligence at European ports.
But experts say the revision might not be enough because timbers from deforestation are still allowed in the system, and because there’s still a lack of data transparency, which prevents civil society organizations from monitoring timber trade effectively.
Last year, the minister of environment and forestry issued a regulation that changed the name of the system from Indonesia’s Timber Legality Verification System to Indonesia’s Sustainability and Legality Verification System, which still uses the acronym of SVLK.
In the past, the system was designed only to ensure that all timbers produced in Indonesia were from legal sources, not from illegal deforestation.
Under the new regulation, the SVLK system now also verifies whether or not a forestry product — not only timbers but also non-timber products — is sourced sustainably.
Since the issuance of the regulation last year, the forestry ministry is in the process of issuing new guidelines on how to implement the new system so it can cover both legality and sustainability aspects, according to Agus Justianto, the ministry’s director-general of sustainable forest management.
“The rebranding of SVLK reiterates the commitment of Indonesia towards effort to achieve sustainable forest government and to supply the market base with legally harvested and sustainable timber and forest product,” he said during an event in Berlin in September.
Sigit Pramono, the head of the ministry’s forest products export-import directorate, said the new SVLK is established not only to develop the country’s timber industry, but also to anticipate a proposed deforestation-free regulation by the EU.
The regulation aims to curb global deforestation caused by EU’s import of timbers and various agricultural commodities like palm oil and soy by banning the trade of commodities from illegal sources and deforestation within the European market.
The EU is one of the world’s biggest contributors to deforestation due to its imports of timbers and various agricultural commodities like palm oil and soy, second only to China, as it’s responsible for 16% of tropical deforestation associated with international trade.
The EU expected to finalize the legislation by the end of 2022 and pass it by 2023.
“It’s okay for the [EU] no-deforestation regulation to exist, but we strengthen SVLK so that it could meet the requirements that will be set [by the EU],” Sigit said on the sideline of an event in September in Jakarta. “[So] when [the regulation] is implemented, there’d be no issues [of compliance from Indonesia’s timbers].”
The EU has accepted Indonesia’s SVLK as a system that meets the bloc of European countries’ requirements for legal timber.
This means that any Indonesian timbers entering the European market are recognized as being legal without having to go through separate due diligence processes at ports. So far, Indonesia is the only country in the world whose timber legality system is recognized by the EU and thus enjoys the privilege of being exempt from due diligence.
However, once the EU bill is passed into law and comes into effect, Indonesia’s timber will no longer have those perks, since the EU only recognized Indonesia’s timbers as being legal but not yet sustainable.
This is where the new SVLK will come into play, Sigit said.
Indonesia’s ambassador to Germany, Arif Havas Oegroseno, said the previous SVLK did incorporate sustainability aspects, but the system was promoted more as a legal verification system.
“There’s a complaint from the industry that SVLK [is] only known for legality, not sustainability, although if we look closely, it covers both legality and sustainability,” he said during the event in Berlin.
With the rebranding, SVLK will have its sustainability components strengthened by adding requirements stipulated by the EU in its no-deforestation regulation, Sigit said.
“We won’t give SVLK certificates if they [timber producers] conduct deforestation,” he said.
These new requirements set by the EU include an obligation for operators to provide the geographic coordinates, or geolocation, of all the plots of land where the relevant commodities and products are produced.
The EU calls this new requirement “a major innovation” compared with its existing timber regulation, which only prohibits the placing of illegally harvested timber and timber products on the EU market, but not timbers sourced from deforestation and forest degradation.
“As deforestation is linked to land-use change, monitoring deforestation requires a precise link between the commodity or product placed on or exported from the EU market and the plot of land where it was grown or raised,” the EU said in its proposal of the regulation.
Sigit said the requirement for timber producers to include the geographic coordinates of their plots of land will be included in the guideline of the new SVLK.
And in the new SVLK, the sustainability aspect of a producer’s operation will be verified, he added.
In the old SVLK, which had a requirement for producers to source their timbers sustainably, there was no verification process, according to Sigit.
Timber producers only had to submit their sustainability operational plans to the government, he said.
With the new SVLK, there’s a verification process to make sure the sustainability plans are truly carried out, Sigit said.
By strengthening the SVLK’s sustainability aspects, the government hoped Indonesia’s timbers would not have to go through long due diligence processes when they entered Europe, he said.
“Hopefully businesses are not too worried about it [the new EU deforestation regulation] as long as they comply with existing regulations, including the one [SVLK guideline] that we’re revising,” Sigit said.
Wiradadi Soeprayogo from Indonesia’s association of furniture and handicraft businesses, HIMKI, said that the old SVLK should be enough since Indonesia had been developing the system for more than a decade in order for the EU to accept it.
By adding additional requirements as stipulated by the EU, it will only add burden in terms of cost to producers, which will hit small businesses the hardest, he said.
But as long as the new SVLK doesn’t make it more difficult for furniture producers to get their timbers, then it’s fine, Wiradadi added.
A forestry expert from the EU who’s familiar with the ongoing process of the EU deforestation bill said strengthening SVLK could work in favor of Indonesia.
The expert, who requested anonymity, said rebranding SVLK as a system that verifies not only timber legality but also sustainability could lead to more market recognition for Indonesia’s timbers.
“The European market can see it [SVLK] as a solid indicator [for legal and sustainable timbers],” they told Mongabay in Brussels.
While the market could recognize SVLK, it’s going to be difficult for the EU government to recognize SVLK as a system that ensures Indonesia’s timbers are being sourced from non-deforested areas, according to Mardi Minangsari, the head of Indonesian NGO Kaoem Telapak.
Even if the new SVLK strengthens sustainability aspects of Indonesia’s timbers, it still doesn’t require timbers and their products to be sourced from non-deforested areas, she said.
“There are still timbers from the conversion of forests that enter [Indonesia’s] supply chain, and that also enter SVLK,” Mardi said during a recent discussion in Jakarta. “In SVLK, there’s a standard for timber utilization permits [IPK] and that timbers come from land and forest clearance.”
Therefore, it’s likely the EU will recognize the new SVLK as meeting only the requirement for legality, but not for zero deforestation, she said.
The new SVLK is also still lacking in data transparency, something that will throw doubt over the government claim that Indonesia’s timbers are sustainably sourced, according to Greenpeace Indonesia senior forest campaigner Syahrul Fitra.
He said the Ministry of Environment and Forestry is still withholding data related to the forestry sector that could help civil society organizations in monitoring the timber industry, such as companies’ work plans.
“As long as data in the ministry is still closed off [to the public], the role of independent forest monitoring, which is a luxury in SVLK, will remain limited,” Syahrul told Mongabay. “So the public will not be able to monitor.”
He also criticized the development of the new SVLK for not involving the civil society.
“I don’t see the ministry develops [the new SVLK] in a participatory manner, especially since the ministry still withhold spatial information [from the public] until today,” Syahrul said.
This lack of transparency has resulted in loopholes in the SVLK, with illegal timbers still capable of entering the supply chain, he said.
“The system is not strong enough to prevent illegal timber trade,” Syahrul said.
Despite the criticisms, rebranding SVLK still could help Indonesia in getting its timbers into the European market, the expert who requested anonymity said.
They said the new SVLK could result in Indonesia being categorized as a low-risk country in terms of deforestation under a benchmarking system to be set up by the EU.
Under the new deforestation regulation, the EU will establish a system that assigns to third and EU countries a level of risk related to deforestation (low, standard or high).
The risk category would determine the level of specific obligations for operators and member states’ authorities to carry out inspections and controls. This would mean enhanced monitoring for high-risk countries and simplified due diligence for low-risk countries.
So if the Indonesian government has finished developing the new SVLK by issuing the guideline, it could be used by officials to argue that Indonesia should be categorized as a low-risk country and thus enjoy fewer due diligence processes for the country’s timbers, the expert said.
“When Indonesia will be assessed [by the EU] for the risk of deforestation, the system [SVLK] will be assessed, and perhaps it will be proven that the system doesn’t only verify legality, but also sustainability,” the expert said. “So Indonesia is a low-risk country then.”