Contribution of Forestry to Poverty Alleviation - APFNet

forest revenue-sharing (royalties, reforestation fund) allows for more funds for local development and
forest rehabilitation in areas affected by logging and plantations development, although to what extent
the benefits will accrue to the poor depends on local capacity to access and allocate the fund for longterm
development and reforestation.
Addressing issues on tenure and management rights for communities living and around forests is among
the key challenges to reducing rural poverty. With the value of forests still largely weighed in terms of
commercial and market opportunities, community forestry will remain of lesser importance in forest
management priorities. The forest policy and management framework’s heavy orientation toward largescale,
capital-intensive commercial forest operations will continue to critically limit the potential for
community forestry to be developed further and make significant contributions to poverty alleviation.
Existing policies are not supportive of tenure reforms in the form of transferring ownership to the local
communities or fully recognizing adat claims to customary forests. Policy reforms over the past decade
are not genuinely addressing secure tenure of indigenous and local communities, but are more focused on
benefit-sharing over the utilization of forest lands and resources. Private forests and outgrower schemes
with fair benefit-sharing can benefit from the high market demand for wood and wood products.
International market trends and demand for wood and wood products is one of the key factors
significantly affecting the forestry sector in Indonesia. The increasing global market demand for wood
and related products, especially with the rapid economic growth in China and India, will continue to
make considerable demands on Indonesia’s natural forests, as state and private companies relying on
forest clearing for their operations take advantage of the growing opportunities to supply the market
demand. It is projected that the global demand for plywood, sawn timber, moulding and furniture will
continue to rise (MoF 2006a). However, the wood processing industries in the country—plywood,
veneer and block board, sawnwood—are likely to continue to face shortfalls in the wood supply
until 2017 (MoF 2009). In turn, this high demand for tropical timber and wood products will define
how forests will be allocated in the country, which means continuing priority placed on timber and
plantations development.
The MoF’s program of establishing nine million hectares of plantations for industrial wood in
state forest zones by 2016 for Indonesia’s pulp and paper industry is not likely to reach the target
and contribute to local poverty reduction. Progress in establishing 60% of the total target through
industrial community-based timber plantations in Sumatra and Kalimantan has not been proceeding
rapidly as expected owing to the unattractive economic benefits for local communities. On the other
hand, progress in establishing traditional large-scale industrial plantations (40%) is being hindered by
issues and conflicts between companies and local communities in many areas, i.e., over land claims and
adequate compensation. Employment to be generated through the expansion of plantations can have
minimal impacts to reducing poverty, considering the low labor demand of plantation development
relative to local unemployment and the livelihoods that may be displaced and the lack of long-term
security in employment in plantations development. Private forests will meet some of the demand for
woods, ensuring markets and income for private forest owners but, with the development of sustainable
timber supplies still unable to keep apace with the industry’s demand, the expansion of the pulp industry
would mean huge costs in terms of the natural forests and peatlands.
Certification may be less effective in checking illegally sourced products for China and India, because
these rising markets do not have strict environmental standards. Likewise, oil palm plantations are one
of the main causes of forest loss in Indonesia, and it is likely that additional land requirements will
result in an acceleration of deforestation in the country (WG-CCD 2007).
With the forestry crisis, a number of Indonesian timber companies have collapsed or are facing severe
pressure because of economic difficulties and “adverse publicity due to social and environmental
problems caused by the industry performance” (Eriantono 2010). Further, plywood, panelwood and
pulp and paper industries are beset by shortage of raw materials and negative public image in relation
to the exploitation of natural forests (Ibid.). The forestry crisis will continue to threaten some forest
industries, which will lead to loss of a number of jobs, as affected companies, both large- and small-scale,
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