Industry News

Indonesia will be first country to export FLEGT licensed timber as from November 2016

Indonesia and the European Union today agreed that from 15 November 2016 Indonesia can issue ‘FLEGT’ licences to verified legal timber products it exports to the EU. 

The decision makes Indonesia the first country in the world to achieve this major milestone in the global effort to combat illegal logging and associated illegal timber trade. 

This agreement was made at the 5th Joint Implementation Committee, which oversees the implementation of the Indonesia-EU Forest Law Enforcement, Governance and Trade - Voluntary Partnership Agreement (FLEGT VPA). Indonesia and the EU signed the Agreement in Brussels on 30 September 2013, completing negotiations of the VPA. 

Indonesia has developed a system for assuring that all timber products harvested or imported, transported, traded, processed and exported comply with national laws on environmental, social and economic aspects identified by stakeholders from government, the private sector and civil society. The country’s timber legality assurance system, called Sistem Verifikasi Legalitas Kayu (SVLK), is subject to independent monitoring by civil society and periodic evaluation by an independent auditor. The implementation of the FLEGT licence means that the Indonesian SVLK meets the requirements of the VPA with the EU. 

“Indonesia has achieved great progress in bringing its forest sector under control and improving transparency, participation and other aspects of good forest governance through a process of dialogue and compromise among all stakeholder groups,” said Putera Parthama, Director General of Sustainable Forest Management at Indonesia’s Ministry of Environment and Forestry, and co-chair of the JIC. “By addressing legality we have built the foundation for sustainable forest management and action to address climate change. We have met the high certification standards of the EU.”

In addition to improving governance and increasing government revenues, the FLEGT licence benefits timber traders. FLEGT-licensed products automatically meet the requirements of the EU Timber Regulation, which prohibits operators in the EU from placing illegally harvested timber and products derived from illegal timber on the EU market. EU operators can therefore place FLEGT-licensed timber on the EU market without doing due diligence. 

The JIC also agreed on joint activities until the end of 2017 through which the EU and Indonesia will oversee the continual improvement of Indonesia’s timber legality assurance system and wider VPA implementation. The plan will address continuation of the multistakeholder process, data collection, independent forest monitoring, enforcement, and monitoring the EU market for FLEGT-licenced timber products. 

“The decision to begin FLEGT licensing is a landmark achievement in a partnership that links EU businesses and consumers with legal traders in Indonesia,” said Vincent Guérend, the EU Ambassador to Indonesia and co-chair of the JIC. “By guaranteeing legality, FLEGT licences should not only make business more efficient for traders in both Indonesia and the EU but also strengthen governance and ensure fairness to all forest stakeholders. They are the result of increasing transparency and better accountability and stakeholder participation in decisions about forests. Today, all of Indonesia’s timber exports are from independently audited factories and forests.” 

The EU has already completed internal procedures to recognise FLEGT licences from Indonesia. Competent authorities and timber importers in the 28 EU Member States are now preparing to receive the world's first shipments of FLEGT-licensed timber.

A report on the JIC meeting will be published on the websites of the Indonesia’s Ministry of Environment and Forestryand the EU Delegation to Indonesia, the EU FLEGT Facility and the Multistakeholder Forestry Programme.

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Indonesia sets 5-year target for wood exports at US $5 bn

As reported by the International Tropical Timber Organization (ITTO), the Indonesian government has set a target for wood product exports at US $5 billion (£3.7 bn) in five years.

Statistics from the Ministry of Industry showed that the export value of wood and rattan furniture was US$1.9 billion in 2014, rising to US$2 billion in 2015.

To help the private sector achieve the five-year target, Airlangga Hartanto, the Indonesian Minister of Industry, indicated that an all-out effort to encourage investment in the timber, furniture and national craft industries will be made along with a synergy of policies to realise the US$5 billion target. 

Mr Hartanto said his aim is to boost and strengthen the competitiveness of Indonesia's small and medium-sized industries so that they can compete with imported goods.

However, a big boost to the manufacturing sector in Indonesia would be needed if it is to contribute more than the current 20% to GDP, according to an analysis by Indonesia’s dependence on commodity exports makes it vulnerable to external threats.

Data from Indonesia's Industry Ministry explained that the domestic industry is growing at a slower pace than Indonesia's overall economy.


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Hardwood imports from the EU down 4% in first five months of 2016

The market share of UK hardwood imports coming from the EU is shrinking, says the latest TTF Statistical Bulletin.

As reported by the Timber Trade Federation, in the five months to May 2016 - before the result of the EU referendum was known - the percentage of hardwood imports from the EU was 49%, down from the 53% in 2015

The main global supply country of hardwood to the UK remains the US accounting for around 25% of total imported volume.

Other main suppliers include Estonia and Italy for temperate hardwood; Cameroon and Malaysia for tropical hardwood.

Significantly, the great majority of tropical imports (78%) are supplied by non-EU countries, but large amount of volumes are transhipped to the UK through EU member countries like the Netherlands and Germany.


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Cameroon Ministry of Forestry publishes data on illegal logging activities

The Ministry of Forestry and Wildlife’s National Control Brigade for Control Operations of Cameroon has recently published data on illegal logging activities.

According to the report, in the first quarter of 2016, Cameroon suspended the licences of four logging companies, issued 35 other companies with warning notices and generated 54.2 million FCFA (£71.5 million) in fines related to illegal operations in the forest sector.

The publication of such information is related to Cameroon's Voluntary Partnership Agreement (VPA) with the EU, which aims to address illegal logging by improving forest governance and promoting trade in legal timber products to EU markets.

The quarterly register presents information on cases of illegality in the forest sector and on sanctions imposed against companies.

The four companies whose licences were temporarily suspended are: SITAF, SCDC, South & FILS and SOFIE. The Head of the National Control Brigade for Control Operations, Ella Ondoua Ambroise Rodrigue, said the suspensions would be lifted if the logging companies paid fines levied on them.

According to Chatham House, "in Cameroon the area of production forest independently verified as legally compliant or of legal origin doubled between 2006 and 2009. However, illegal logging remains widespread in the country."

Cameroon tops the list of tropical hardwood suppliers to the UK market: in 2016 to date, 12,529 m3 of Cameroonian timber have been imported to the United Kingdom.



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Myanmar national logging ban to run until Spring 2017

The new Government of Myanmar has agreed a temporary national logging ban and a 10-year logging ban in the Pegu Yoma region.

The national logging ban will run until the end of March 2017, in effect closing the forests for one complete logging season. All exports of round logs from the country have been banned since April 2014.

For the duration of the new national ban, Myanmar will rely on stockpiled timber to supply its domestic wood processing industry and the international market; current stockpiles are sufficient to meet current demand for up to three years.

Access to these stockpiles will be controlled by the Myanmar Timber Enterprise (MTE), a Government entity, and the London-based Environmental Investigation Agency (EIA) stressed the importance of having controls in place to ensure full chain-of-custody for all stockpile sales to prevent illegally logged timber being laundered through the system.

As denounced by the EIA, between 2010-15, Myanmar lost 546,000 hectares of forests, about 8.5 per cent of its forest cover; only Brazil and Indonesia have worse rates.

A further reform expected to be announced by the Government will prohibit private companies from logging in the country. The MTE previously sub-contracted to private sector firms to carry out logging, many of which had close ties to the former military government and which played a key role in over-harvesting.

Faith Doherty, Team Leader of EIA’s Forests Campaign, said: “This is a decision that demonstrates clear intent to tackle corruption within the forestry sector by Myanmar’s National League for Democracy-led Government, which only came to power in March. Of course, there is no one-policy solution to the problem and much work remains to be done, but this is a hugely encouraging and an optimistic place to start.”


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