1. MINISTRY OF FORESTRY OF INDONESIA
INDONESIA IS READY TO SUPPLY LEGAL TIMBER TO THE WORLD MARKET Updating SVLK
Interactive Market Dialogue
Joint Presentations by:
Dr. Dwi Sudharto, Mr. Achmad Edi Nugroho, and Dr. Willistra Danny
Seoul, November 26th, 2013
Distinguished Guests, Ladies and Gentlemen.
Let us move on to the presentation.
As I said earlier, three presenters will be speaking.

2. Presentation Structure
THE POLICY (Dr. Dwi Sudharto)
Why is Indonesia committed to promote legal timber?
How does Indonesia meet the commitment?
How did Indonesia develop its SVLK?
THE SYSTEM (Mr. Achmad Edi Nugroho)
How credible is SVLK to provide assurance to Indonesia Timber Legality?
EXPORT MECHANISM AND THE PROGRESS (Dr. Willistra Danny)
How is the progress ?
CLOSURE (Dr. Dwi Sudharto)
What’s Next?
I will start the presentation on the policy, followed by Mr. Achmad Edi Nugroho and Dr. Willistra Danny. They will be talking about the system, the export mechanism and the progress, respectively, before I conclude the presentation.

3. Why is Indonesia committed to promote legal timber?
Promoting legal timber sustain Indonesia’s forests
Sustainability of the forest resources enables to:
Support sustainable development of the country (economics, social/cultural and environmental)
Contibute to tackle climate change
Meet increasing demand for legal products from sustainable managed forests
Alleviate poverty
Now allow me to kick off the presentation by asking a question of why we are committed to sustain our forest resources. WHY?
Sustaining our forest resources enables us to support our sustainable development in terms of economics, social, cultural and the environmental. It also contributes to tackling global climate change. It is also a way for Indonesia to meet the increasing demand for legal timber products harvested from sustainable managed forests. Good forestry businesses will also help alleviate the poverty for people living in and around the forests.

4. The Indonesian Forest Area
Function
Areas (Mi. Ha)
Conservation Forests
27.19
Protection Forests
30.54
Production Forests
30.81
Limited Production Forests
27.97
Convertible Production Forests
17,92
Total
134.43
as of December 2012 designation
More than 17,000 islands
Sustainable forest management is very important for Indonesia as you can see from this slide. This illustrates the landscape of Indonesian archipelagoes. With its more than 17,000 islands and total land area of more than 181 million hectares, Indonesia has more than 134 million hectares of forest area, or more than 70% of its landmass. Indonesian state forest area is broadly divided into: conservation and protection forests amounting to more than 57 million hectares, production forest for long-term production of timber of around 58 million hectares, and just below 18 million hectares of forest area which can be converted into non-forestry purposes such as settlement development, oil-palm plantation and the like.
million ha land area
mi ha of forest land
(70% of landmass)

5. How does Indonesia meet the commitment?
Now, how can we meet our commitment?

6. ILLEGAL LOGGING AND ILLEGAL TRADE
HARD APPROACH
SOFT APPROACH
In the past, Indonesia was accused to have been the hot-spot of illegal logging and associated illegal timber trade. We have been taking a hard approach to handle it through law enforcement. Illegal logging cases have significantly decreased; nevertheless, suspicion was still pointed out as a report said that 80% of Indonesian timber products have been illegally sourced. There may still cases of illegal logging especially at the border area, but the logs have been smuggled out of the country. Therefore, Indonesia takes also a soft approach to improve the governance in forestry sector and to prove that the remaining in-country timber products can be verified as sourced from legal and sustainable sources. This soft-approach is what we call by implementing the Indonesian Timber Legality Assurance System, now famous as the SVLK.

7. Illegal Logging Cases (2005 – 2012)
HARD APPROACH
Illegal Logging Cases (2005 – 2012)
This graph shows the declining trends of forestry crime cases in particular illegal logging. This indicates that efforts undertaken by the Government can control pressure on the forests. Notice that the year 2006 was the peak period where there were more than sixteen hundred illegal logging cases. In , the cases dropped until below one hundred cases.
Sumber: Dit. PHH (2013)

8. Why TLAS/SVLK?
To tackle illegal logging and associate trade promote legal wood trade.
To support sustainable economic development.
To conserve uniquely mega-biodiversity in Indonesia and address climate change (REDD+)
To support poverty eradication
For us, SVLK is not just to ensure better forestry governance but is also a means to promote legal timber trade, complement to the efforts to tackling illegal logging. In addition, SVLK is also needed to support sustainable development, conserve the Indonesian unique mega-biodiversity and support poverty alleviation.

9. Transparency (Credibility)
Principles of SVLK
Good Governance
Representativeness
Transparency (Credibility)
SVLK was developed under the principles of good governance, representativeness and transparency.
For years, the Indonesian forestry stake-holders have been working together to develop the principles, criteria, indicators and verifiers to assess and verify the forest and timber business units. SVLK was developed to improve the governance in forestry sector by involving as many stake-holder representatives as possible to ensure that the system, standard, mechanism and procedure are transparent. With these principles, it is expected that SVLK is acceptable nation-wide, and globally recognized as credible.

10. Objects of SVLK 4
Small-scale Private Forestland
Forest Concession/ Forest Management Right Holder (ie. Perum Perhutani) 6 3
VLK
Other Permits 2
Community-based forests
VLK
SFM
VLK 5
INDUSTRY
HANDICRAFTER
EXPORTER
VLK 1
The Forestry Minister’s regulation requires that all types of forest business, big and small, community-based forests, forest conversion permits, small-scale privately owned forestland, to be certified for their sustainability.
VLK 6
Timber Marketer
VLK

11. Secondary industry/ Finish products Privately- owned forestland
Scope of SVLK
State- owned forests
Finish Products
Secondary industry/ Finish products
V-Legal
Privately- owned forestland
Primary industry
This covers forests within the forestry zones as well as privately owned forestland. However, confiscated timber is not allowed to enter the supply chain, meaning that this kind of raw material is segregated from the SVLK to ensure the traceability of the timber supply. In addition, all primary and secondary or down-stream timber-based industries shall also be holding legality certificates. A timber industry holding a legality certificate or the SVLK certificate is allowed to export their products. To ensure there is no suspicious raw material entering the supply, a final check is carried out prior to each and every shipment. The shipment is then accompanied with a V-Legal document as an export license.
NOW, I WILL ASK PAK EDI NUGROHO TO CONTINUE THE PRESENTATION
Export
Confiscated timber

12. How credible is SVLK to provide assurance to Indonesia Timber Legality?
Thank you Pak Dwi.
I will be focusing my presentation on the SYSTEM.
Hopefully then it will answer your question: “How is the credibility of SVLK?”

13. Business Unit Management
Institutional of SVLK
accreditation body, independent
based on ISO (International Accreditiation - PAC, IAF, APLAC, ILAC)
KAN/NAC
independent forest monitoring (IFM)
, JPIK (IFM Network) was established consisting 29 NGOs, perform monitoring public service in forestry sector.
NGO/CSO
Independent Assessment/Verification Bodies.
Accreditated by ISO & ISO/IEC Guide 65
CAB (LP&VI)
The institutional set up of the SVLK can be divided into five main components: KAN or the National Accreditation Body is the institution to provide accreditation to the conformity assessment bodies. The KAN is an independent body with its international accreditation and membership such as the Pacific Accreditation Committee, International Accreditation Forum etc.
The conformity assessment bodies (CAB) are independent assessment and/or verification bodies, accredited by the KAN using ISO for sustainable forest management performance assessment bodies and ISO/IEC Guide 65 for legality verification bodies. These CABs assess the performance and the legality of the business units.
The forest and timber business units are the forest management units (on farm) as well as timber-related industries (off-farm).
The government is just the regulator and facilitator, the main role of which is just to ensure that the system is working properly. Another important role is on the issuance of the standard, criteria and indicators of the assessment and verification, after it is discussed and agreed among the stake-holders representatives.
One important element of the SVLK is the recognition of civil society organizations and individuals to monitor the implementation of SVLK. Many NGOs now link each other in an Independent Forest Monitoring Network.
On Farm & Off Farm
Business Unit Management
Regulator & facilitator
Government

14. Example of a certificate
Now, let me show you one example of Legality (SVLK) Certificate obtained by a forest management unit. This certificate was issued by SUCOFINDO, one of the verification bodies.

15. SFM Audit Bodies(accredited using ISO 17021)
No.
Name
No. Accreditation 1.
PT. Ayamaru Certification
LPPHPL-001-IDN 2.
PT. Sarbi International Certification
LPPHPL-004-IDN 3.
PT. SUCOFINDO SBU (SICS)
LPPHPL-005-IDN 4.
PT. Almasentra Certification
LPPHPL-006-IDN 5.
PT. Rensa Global Trust
LPPHPL-007-IDN 6.
PT. Forescitra Sejahtera
LPPHPL-009-IDN 7.
PT. Mutuagung Lestari
LPPHPL-008-IDN 8.
PT. Nusa Bakti Mandiri
LPPHPL-010-IDN 9.
PT. Equality Indonesia
LPPHPL-013-IDN
10.
PT. Multima Krida Cipta
LPPHPL-015-IDN
11.
PT. TUV International Indonesia
LPPHPL-016-IDN
12.
PT. Global Resource Sertifikasi
LPPHPL-017-IDN
13.
PT. Transtra Permada
LPPHPL-018-IDN
14.
PT. Trustindo Prima Karya
LPPHPL-019-IDN
From the next two slides you will see the fourteen Sustainable Forest Management audit bodies and the eleven legality verification bodies accredited by the National Accreditation Body or KAN.

16. Legality Verification Bodies (Accredited using ISO/IEC Guide 65)
No.
N a m e
No. Accreditation 1.
PT. BRIK
LVLK-001-IDN 2.
PT. Sucofindo
LVLK-002-IDN 3.
PT. Mutuagung Lestari
LVLK-003-IDN 4.
PT. Mutu Hijau Indonesia
LVLK-004-IDN 5.
PT. TUV International Indonesia
LVLK-005-IDN 6.
PT. Equality Indonesia
LVLK-006-IDN 7.
PT. Sarbi Moerhani Lestari
LVLK-007-IDN 8.
PT. SGS Indonesia
LVLK-008-IDN 9
PT. Trastra Permada
LVLK-009-IDN 10
PT. Trustindo Prima Karya
LVLK-010-IDN 11
PT. Ayamaru Certification
LVLK-011-IDN 12
PT. PCU Indonesia
LVLK–012-IDN
13.
PT. Global Resources Sertification
LVLK-013-IDN
14.
PT. SCS Indonesia
LVLK-014-IDN
These are the accredited legality verification bodies.
NOW, I WILL LET Dr. Willistra Danny TO TAKE THE FLOOR

17. The Progress of SVLK ? Thank you Pak Edi.
I am going to brief you all the progress of the certification for forest and industry as well as the issuance of V-Legal document or we can say the shipment or export of Indonesian timber products worldwide.
Before that, I will explain the export mechanism and how the V-Legal Document Issued

18. Customs at COUNTRY DESTINATION
ISSUANCE of V-Legal Document 5
See our website:
V-LEGAL Document
PRINTED BY LVLK 4 6
I – VB
/LVLK /
SILK/TLIS
ONLINE
LIU - M O F
Competent Authority 1 1 2 3
This slide shows the mechanism to export the timber products. A timber industry or exporter holding the SVLK certificate first apply to the respective Verification Body for a V-Legal document. The Verification Body, following a final checking and inputting the information on the V-Legal form, will send the draft V-Legal document to the Timber Legality Information System located in the Ministry of Forestry Office, which will immediately forward the document to the INATRADE of the Ministry of Trade. If everything is clear, the INATRADE will endorse the export and inform the Indonesian National Single Window at the Indonesian Customs office and also inform back to the Timber Legality Information System at the Ministry of Forestry which will immediately forward the endorsement to the verification body and allow them to print the V-Legal document.
To observe in more detail on how this system is working and to get information such as the companies holding the SVLK certificates, the name of accredited verification bodies, the various standard and so on, you may click our web in silk.dephut.go.id. 3 2 7
IMPORTERS
EXPORTERS
Customs at COUNTRY DESTINATION 1 2 3

19. V-Legal Document Export license document for timber products
Valid for 26 HS-Codes since 1st January 2013, and all over 40 HS-Codes starts on January 1st, (Trade Minister Regulation No. 64/2012)
Issued by Legality Verification Bodies
Issued for every invoice to exporters having an official legality certificate (or through inspection for exporters who have not yet held certificate)
Next is a V-Legal document, which is functioned as an export license document. This is also issued by conformity assessment bodies or the verification bodies in this case.
Notice that information inputted in this document covers all information needed by major markets including the USA with the declaration, the EUTR and the Japanese Goho-Wood.

20. SILK ONLINE : http://silk.dephut.go.id
This Figure is the front page of our website
This website is available for English and Indonesia

21. Tabel 1. Progress of Certification ( Nov. 18th, 2013)
Type of Certification
Certified (unit&ha)
Failed (unit&ha)
Process (unit&ha)
Total (unit&ha) 1.
SFM Certificate (Natural forest, plantation forest, forest mgmt unit)
137
(14,471,038) 41
(1,665,946) 20
(1,360,535)
193
(17,497,519) 2.
Legality Certificate (Natural forest, plantation forest) 77
(3,118,735) 3.
Legality Certificate in Community Forest 19
(9.729) - 1
(324)
(10.053) 4.
Legality Certificate for timber-based industry
618 28
120
765
This table shows you the progress of certification up until 18 November, 2013.
Notice that 137 management units of natural and plantation forest concession holders have been certified. It covers the forest area of 14.5 million hectares.
In addition, 77 forest concessionaires have held legality certificate, plus 19 privately land.
In industry side, more than 600 industries have received legality certificate, allowing them to export their products.
Notice also that not all of the certification processes ended up with certification; some were failed. Our evaluation showed that the main reason for the failure to pass the certification was due to administrative reasons and not due to the illegality of the timber supply.

22. ISSUANCE OF V-Legal DOCUMENTS (as of Nov 26th, 2013: 8am)
TOTAL ISSUANCE
COUNTRY OF DESTINATION
DESTINED TO THE UE
HS CODE
PORT OF LOADING
PORT OF DISCHARGE
WEIGHT
VALUE (USD)
This slide shows that as of November the 26th at 8 O’clock, we have issued more than thousands V-Legal documents for the shipment of timber products to ... countries of destination in ports of discharge. The export value is around .... billion USD since January this year.

23. Value of Export per Region (USD) ( January – October 2013)
Europe
US$ 8,730,350 (0.18%)
European Union
US$ : 478,356,246
(9.65%)
Asia
US$ : 3,759,981,871 (75.89%)
North America
US$ : 383,701,983
(7.74%)
Oceania
US$ : 226,731,528 (4.58%)
South America
US$ : 14,813,665
(0.30%)
This data analysis shows that most of the export (75.89 %) goes to the Asian Countries ie: China, Japan dan Republic of Korea. The European Union and The United States in the second and third biggest market. Important to note that there is no export drop for the period of January to October this year, compared to the same period last year.
Africa
US$ : 82,498,330
(1.67%)
Total : US$ 4,954,813,975

24. 10 Biggest Export Destination by Weight (Kg): Jan– Oct 2013
SAUDI ARABIA, 172,800,065
2.65%
TAIWAN, 212,530,413
3.25%
BANGLADESH,
137,120, %
AUSTRALIA,
124,341,794
1.90%
USA, 282,283,271
4.32% 7
MALAYSIA,
106,776, %
INDIA, 288,172,477
4.41% 6 8 5 9 4 10 3 1
In line with the previous slide that Asia is the main export destination for Indonesian forest product industry, this chart shows that based on weight, Japan is the second Indonesian timber product export destination after China; placed third followed by Republik of Korea, India and so on.
REPUBLIC OF KOREA, 630,233,325
9.65% 2
CHINA, 2,779,278,100
42.56%
JAPAN, 735,604,121
11.26%
Total : 6,530,287,778

25. 10 Biggest Export Destination by Value (USD): Jan– Oct 2013
SAUDI ARABIA, 162,853,760
3.29%
INDIA, 150,737,248
3.04%
UNITED KINGDOM, 113,406,606
2.29%
TAIWAN, 174,564,308
3.52%
AUSTRALIA, 191,368,991
3.86% 7
GERMANY,
98,048,897
1.98% 6 8 5
UNITED STATES OF AMERICA, 337,518,714
6.81% 9 10 4 3 1
Similarly, based on value; China, Japan and Korea are the most important export markets for Indonesian timber products. 2
REPUBLIC OF KOREA, 376,392,084
7.60%
CHINA, 1,392,203,216
28.01%
JAPAN, 867,084,566
17.50%
Total : US$ 4,954,813,975

26. % Product type of export to Korea by value (US$) : Jan- Oct 2013
Total Value :
USD 376,392,085
In terms of kind of product export to Japan based on value, more than 64 % dominated by pulp.
THANK YOU AND I WILL GIVE BACK THE FLOOR TO DR. DWI SUDHARTO

27. Thank you Pak Edi and Pak Willis.
Ladies and Gentlemen,
As a result of hard work and lengthy preparation, discussion and negotiation, Indonesia and the European Union has finally signed the FLEGT-VPA in Brussels on September 30th, 2013.
Indonesian side was represented by the Minister of Forestry, Mr. Zulkifli Hasan. The European Union was represented by the Commissioner on the Environment, Mr. Janez Potočnik, and Mr. Valentinas Mazuronis, the Minister of Environment of the Republic of Lithuania, representing the Presidency of the European Union.

28. WHAT NEXT AND EXPECTATIONS:
SVLK is a credible system that provides assurance to the legality of imported timber. We trust SVLK will lead our country to attain a sustainable legal timber supply.
We need market recognition and acceptance of SVLK certified timber, plus V-Legal (export license) document
We will continue to promote and negotiate SVLK system that complies with the importing countries timber trade law. Hence, will minimize trade obstacles to both exporting and importing countries.
Major markets to adopt regulation to avoid the entrance of illegally harvested timber products to their countries.
Considering Japan as a major importer country pay a great concern on the issue of illegal timber, Indonesia expects to discuss and negotiate trade instrument.
Together both countries can lead the world to the new era of legal timber trade.
SVLK is a credible system that assure the Indonesian timber product export to the world market.
Now it is just fair if we put high expection that the market recognize SVLK.
It is also of important for other countries to adopt a regulation to avoid the trade of illegally harvested timber products. The regulation should be non-discriminatory to ensure that no illegal timber is traded.
Japan is a major importer country with a great concern on the issue of illegal timber. Indonesia, on the other side, is among the biggest timber producers. Together Japan and Indonesia may lead the world on the trade of legally certified timber products.

29. Closing Message If you are concerned about Deforestation
Climate change
Combating illegal logging
Stopping the trade in illegal timber
Please buy legal timber
Ladies and Gentlemen,
If you are concerned about deforestation,
If you are concerned about climate change,
If you are concerned about illegal logging,
And if you are concerned about the trade in legal timber, …
Please buy legal timber only . . .

30. INDONESIAN WOOD = LEGAL WOOD
Thank You
INDONESIAN WOOD = LEGAL WOOD
Thank you very much.