Forest Governance: How Indonesia and Vietnam are Responding to Illegal Logging

A view of a forest land clearing in South Aceh, Indonesia. Photo: Getty Images
A view of a forest land clearing in South Aceh, Indonesia. Photo: Getty Images

Illegal logging and the associated trade is a major cause of deforestation and forest degradation and accounts for a large proportion of forest sector activities around the world. Trade in illegal timber can be highly lucrative and involves the buying and selling of timber which may have been harvested, transported or processed illicitly.

This year, Vietnam became the seventh country to conclude negotiations with the European Union for a Voluntary Partnership Agreement (VPA). The agreement aims to tackle illegal logging, improve forest governance and promote trade in verified and licensed legal timber products from Vietnam to European and international markets. Earlier in 2017, Indonesia – one of the world’s largest timber exporters – became the first country to officially issue licensed timber under the agreement.

Indonesian and Vietnamese experts from the government, private and civil society sectors speak to Gitika Bhardwaj about the state of the trade.

Why is forest governance important to Indonesia and Vietnam?

Putera Parthama, Ministry of Environment and Forestry, Indonesia: For Indonesia, forests, which cover two-thirds of the entire land area of Indonesia, are a very important natural resource. We need to manage it sustainably while having the forests serve multiple functions – social, economic and environmental – but only good governance will help us to realize that.

Nguyen Tuong Vân, Forestry Administration, Vietnam: Forest governance is very important for Vietnam because when you talk about forest governance you are also talking about the legislative system in general: you are talking about improving the institutional arrangements that allow everyone to participate in negotiations to implement laws and regulations.

Vũ Thi Bích Hop, Centre for Sustainable Rural Development, Vietnam: Forest governance is quite a new concept for Vietnam – it has only been talked of over the last five years. But it has brought with it some key principles of governance – transparency, accountability and participation – which are very important. In the past, the Vietnamese government’s decision-making was very centralized – top-down – but with the participatory approach the negotiation process instigated, it has changed now to a bottom-up system: people are now at the core of the process.

Why did both southeast Asian countries decide to negotiate the agreement with the European Union?

Putera Parthama: There is a stigma associated with Indonesia that we are not doing well at managing our forests and illegal logging is a massive [issue]. We want to remove that stigma and show that we are changing: we are managing our forests sustainably and we are doing it now. The VPA has given us a doorway to do that.

Nguyen Tuong Vân: Vietnam wanted to be a part of the VPA because of the importance of our exporter market: we knew that negotiating with the EU would help promote our exporter market across Europe. It was also an opportunity to improve Vietnam’s forest governance, set up the timber legality assurance system (TLAS) and increase the competitiveness of our timber industry in EU markets as well as in worldwide markets.

What have been the biggest impacts of the agreements domestically so far?

Putera Parthama: In Indonesia, the first notable outcome has been the improvement in forest governance. In the past we were less transparent, now we are almost 100 per cent transparent to the public about our policies, regulations and what we are doing with our forests. Also the multi-stakeholder fashion of working, which we began with negotiating the deal, is becoming our way of doing things. In this way, the VPA has helped us to unite almost all of the stakeholders related to forests – united to realize the goal we have to protect our forests.

Jago Wadley, Senior Forest Campaigner, Environmental Investigation Agency: I agree. In Indonesia, one of the major impacts has been a really rich involvement of civil society and good interactions between the government and civil society. In a way it’s been a part of the reform process within Indonesia, which it’s been going through since the fall of Suharto at the turn of the century. The world has seen how the Indonesian government has reaped the returns from inviting civil society in a really credible way.

I think the simplification of the legal base has also been useful. Something like 900 laws which regulated timber production and trade has now boiled that down into one legal instrument. So that’s been really productive. Overall Indonesia has moved from a country where there was 80 per cent illegality [in the timber trade], to a country where in theory all timber production is independently verified to comply with the law. So that’s an enormous change in any country and the VPA has been instrumental in incentivising those reforms in Indonesia.

In Vietnam, to be honest not much happened for a long time. For the first five years Vietnam effectively refused to even discuss regulating timber imports. They felt it was either too complex or that it was too commercially damaging for their sector. So for a long time the VPA went nowhere. In Vietnam, the TLAS that was drafted was not fit for purpose. So it has been with some relief that in the last 18 months or so there’s been significant progress with Vietnam being willing to ultimately discuss the core issues.

Tran Le Huy, Forest Products Association of Binh Dinh, Vietnam: The main impact in Vietnam so far has been that the negotiation process has resulted in Vietnam regulating its domestic market which includes 90 million people. To improve forest governance and reform the timber industry, Vietnam needed to focus on revising its laws and policies that were longer relevant to its economy especially in the forest sector.

Forest Governance: How Indonesia and Vietnam are Responding to Illegal Logging

How have the negotiations helped domestic stakeholders interact with each other?

Vũ Thi Bích Hop: In Vietnam, this is the first initiative that started to involve civil society and be a compulsory part of the negotiations. We have conducted the livelihood impact assessment, community consultation and readiness assessment for SMEs on timber legality compliance. This is the first time the government has invited us and responded to us which is a big advantage of the initiative.

Jago Wadley: In Indonesia there has been credible, full stakeholder participation. The NGO and civil society sectors are active and empowered: they have a voice and they were able to get a seat at the negotiating table.

In Vietnam, I’m not sure that is the same situation. Even though there has been civil society participation in consultations, we have been informed by those civil society actors on the ground that there are things that are off the table for them to be engaged in. Domestic civil society within Vietnam never felt it was allowed to discuss imported timber or to do any investigative reporting that might bring information to bear. So there has not been such a credible multi-stakeholder process in Vietnam in that respect.

Interestingly, in Indonesia, the texts of the agreement and the texts of the TLAS have always been transparently available for discussion, amendment and development within a multi-stakeholder process. But in Vietnam, the VPA text was not published until the day it was initialled and we had to access it though accessing leaked copies. So there has been a substantial difference in transparency between the two processes.

Can you think of any shortcomings in the way the process has been conducted? How could it have been improved?

Putera Parthama: I would prefer the process to have been done in a step-wise fashion meaning we wouldn’t have to wait until it is perfect and then agree to implement it. It took almost seven years of negotiations, which did not give a good sign to businesses. ‘Is this real?’ and more questions like this added to a growing sentiment that everything was all to entertain the other party. However, if we did it in a step-wise fashion, meaning it’s not perfect yet but let’s do it, and while doing it, improve the system, it would have been better.

Jago Wadley: There are shortcomings in all processes, nothing is perfect. Some elements of the TLAS in Indonesia could be tightened up to make it more difficult for auditors to be flexible in their interpretation of compliance.

In Vietnam again we’re yet to see what the legislation will be and how well it will be implemented but transparency and civil society participation has been a shortcoming in Vietnam’s VPA. If you compare it to Indonesia, it was a very top-down deal. However, if the agreement is effective in preventing illegal timber flowing into Vietnam then it might be an acceptable outcome.

Looking ahead, how do you expect the agreements to influence both countries?

Putera Parthama: In Indonesia, we expect the improvements in forest governance to continue. We will be able to help manage forests in a better way and motivate people to plant trees. There are testimonies from individuals who have started to experience the impacts. It does not mean the job has been done – we still need to accelerate everything towards our goal. Some exporters for example have explained that with the VPA going live and with the Forest Law Enforcement, Governance and Trade (FLEGT) licenses there, it is now much easier to enter the market by being more confident when the buyer asks, ‘Are your products legal?’ and they proudly mention, ‘Yes we are FLEGT certified and we are fully legal.’

Jago Wadley: In Indonesia we expect to, in general, be an ongoing governance safeguard – to prevent the backsliding into systemic illegality in the forestry sector. There are still issues in Indonesia with conversion timber – the agricultural sector is far less regulated and scrutinized than the forestry sector but the agricultural sector produces a lot of timber from the conversion of forests – things like oil palm plantations or mines. So there is a hope that the SVLK can be more rigorously applied in those high environmentally damaging sectors.

In Vietnam our hope is twofold. The countries Vietnam currently steals timber from will no longer have their timber stolen by Vietnam. The other hope is that China learns from what Vietnam has pledged to do, and hopefully will do, and understands that it can and should and must do the same thing. We see real scope that the model Vietnam is looking to adopt being replicable in China, which is in a very similar situation as a major processing hub with very little domestic sources of raw material.

Nguyen Tuong Vân: I hope the VPA can bring new thinking about forest governance in Vietnam. To implement the VPA the government of Vietnam will need to devise legislation to reflect our commitment in terms of managing imported timber, the company classifications and verifications of exports and also the FLEGT licences. New legislation will then influence our businesses. There might be some SMEs that need to put more effort in their supply chains to ensure timber legality. SMEs have found it more difficult than bigger companies which has been negative. But the positive is we can access the EU market and build trust with our trade partners.

From the government’s point of view there is more work to do with setting up the system and providing industry guidelines for households and local communities. And for civil society organizations, there is more work for us to do too but in the end all of this will bring better forest governance and promote sustainable forest management in our country by attacking illegal logging.

Estimated percentage of imports of timber- and paper-sector products at high risk of illegality in Vietnam.
Estimated percentage of imports of timber- and paper-sector products at high risk of illegality in Vietnam.

Where do you think efforts to improve forest governance and the timber industry should be focused in future?
Putera Parthama: For Indonesia, the buyers and consumers are still not very aware of FLEGT licencing. I would say it is one of the most, if not the most, demanding certifying scheme available. So we need to promote it further and we ask the EU to give more attention to that, to promote FLEGT in European countries too.

Jago Wadley: In Indonesia I think forest governance needs to be significantly strengthened in the land and concession allocation processes and in the initial planning processes too. There are still major contradictions in provincial spatial plans and national spatial plans and there are still tensions between ministries looking to control major areas of land and the rent-seeking opportunities they provide. Historically they have provided a legal plurality that has particularly affected the oil palm sector and the timber that comes from that forest clearance. So Indonesia’s main challenge is spatial planning and enforcing the laws that are in place for permit allocation and concession development.

In Vietnam we have yet to see the legislation that Vietnam has promised to pass in terms of the due diligence legislation for imported timber. Assuming that legislation is good enough to meet the terms of the VPA, and assuming it is widely enough applied across the country, I think the issue will be whether or not the agencies responsible for verification can be trusted.

Corruption is also an enormous issue in Vietnam. The recent illegal trade flow that we exposed from Cambodia into Vietnam shows systematic corruption – every cubic metre involves about $45 of corrupt payments to government officials in Vietnam. Those officials work for the very agencies that will enforce the TLAS under the VPA so there needs to be a significant anti-corruption drive within those agencies for stakeholders to really be confident that implementation will be good enough.

If a country was embarking on the negotiating process with the EU today what would be your advice?
Jago Wadley: My advice would be to very openly invite civil society into the TLAS development process and the legality definition development process. Be willing to reform your laws so that your environmental standards are higher. Those things will make it easier to come to an agreement on a legal base that can be applied in a way that will have a positive environmental outcome.

Transparency is core. If governments are not willing to make data available for monitoring by either government agencies or civil society then they effectively fail to take an opportunity that exists in independent forest monitoring.

Finally, don’t think it will be fast. These are complex agreements that are very unusual. Governments are effectively agreeing to put restrictions on their rights to market access – inherently a thing that governments don’t like to do. So these are complex agreements that should not be expected to be signed and implemented in a couple of years. These are complex reform processes that do take time to capitalize on.

Putera Parthama: Trade negotiations among countries will never be easy. Also start involving all stakeholders from the beginning. None should be left. I have to admit there are a small number of stakeholders who are still against these things so we should have done better in Indonesia from the beginning. There are always conflicting perceptions amongst stakeholders whenever we are making policy, agreements and regulations about forests and we really need to understand that - to have a delicate balance. We cannot always focus on tropical forests being conserved totally - they are also there for the wealth of the people. It is always difficult creating any agreement on forests.

Vũ Thi Bích Hop: Everything cannot be perfect. So far FLEGT has been a participatory process and stakeholder engagement is good. However, full stakeholder engagement takes time as well as human and financial resources. For example, how can we represent the millions of households in every corner with limited resources? Each region has its own characteristics, limitations and issues which is why the comments we have taken to the official negotiations have not fully reflected all communities. The hope in Vietnam is concluding the negotiations will be the starting point and will help the government to address these important issues.

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