The EU timber license may be the key for Indonesian small-scale exporters

In Jepara, Central Java, Indonesia, workers complete the assembly of furniture. Photo credit: Murdani Usman/CIFOR

In November 2016, Indonesia began issuing FLEGT licenses, standing for Forest, Law Enforcement, Governance and Trade, and allowing Indonesian timber exports to enter the European Union (EU) market without importers conducting due diligence checks. Penetrating the EU’s market may also serve Indonesian exporters as a reference for entering other markets that enforce the legality of timber as well, such as the United States (U.S.), Japan, and Australia.

The Timber Legality Assurance System (SVLK), is required under Indonesian law for all wood products to be exported, and all Indonesian exporters who qualify for SVLK can go on to obtain the FLEGT license automatically and export their products to the EU.

President of Indonesia, Joko Widodo, anticipates the exports of furniture to triple from US$1.5 billion to US$5 billion from 20167 to 2021, and using the FLEGT licenses have the potential to not only improve Indonesia’s timber exports, but also the lives of the millions of people who depend on the small and medium-sized enterprises (SMEs) that dominate the nation’s furniture sector.

However, much more work is necessary in order to make it easier for SMEs to adhere to the verification requirements under SVLK and FLEGT.

“Local governments should facilitate finance regulations to make it accessible for SMEs,” Herry Purnomo, a scientist at the Centre for International Forestry Research (CIFOR), said. “For example, furniture business owners cannot use their own house as a workshop, because it is residential property, but they cannot afford industrial property either. Local governments should be adaptive to this sort of situations.”

Further upgrades and improvements to the FLEGT licensing will be seen in the future, in order to aid SMEs with compliance and to eliminate excessive requirements that make it difficult for them to compete with larger exporters. Additionally, the EU will also look and analyse the similarities that exist between the FLEGT license, the U.S.’s Lacey Act of Amendment of 2008, as well as Australia’s Illegal Logging Prohibition Act of 2012.

 

Source: Centre for International Forestry Research