Development impact on health and livelihoods
Indonesia’s forest resources and watersheds are not contributing as they should to poverty reduction, economic and social development, and environmental sustainability. Instead, forest areas are threatened with degradation, fragmentation and destruction. A quarter of the “state forest area” lacks tree cover. In recent years, Indonesia has been losing up to 2 million hectares annually, mainly due to illegal cutting and land conversion fueled by excess processing capacity and a lack of effective management and law enforcement. Forest loss undermines rural livelihoods, ecosystem services and Indonesia’s ability to meet poverty alleviation goals. Poor forest governance damages the investment climate, rural economic potential, and Indonesia’s competitiveness and international reputation. Forest crime exacerbates problems of budget and fiscal balance, and diverts public revenues that could be better spent on poverty reduction and development goals. As Indonesia moves from transition to stabilization and growth, there is a tremendous opportunity to help the government find new ways of managing forest areas in partnership with local communities, contributing to democracy, justice, equity, rural sector investment, jobs and growth.
Root causes
Indonesian legislation establishes clear goals for the forest sector: economic output, equitable distribution of benefits to improve people’s welfare, watershed protection, and conservation. These goals are consistent with the Bank’s policy on forest management, which is built on three interrelated objectives: harnessing the potential of forests to reduce poverty, integrating forests in sustainable economic development, and protecting global forest values. However, Indonesia is not succeeding in meeting these goals, especially in the areas of sustainability and equity. The Bank’s objective is to assist the Government of Indonesia (GOI) to deliver on its own stated forest management goals and commitments and to promote wider policy dialogue among forest sector stakeholders
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Government strategy
Indonesia ’s forest sector has been in crisis for some time, yet many observers and analysts believe the continued donor support to forestry is essential and the likelihood of successful outcomes is higher now than at any time in the past. This is because democratization and decentralization of government are creating positive political pressures. Indonesia’s popularly elected President is committed to good governance and fighting corruption. Attitudes and roles among government, big business and civil society are changing. Central policy-making is more consultative and transparent. Local governments are becoming more responsive and accountable. Civil society and business are repositioning for more constructive relationships. In the Department of Forestry, a gradual process of evolution and reform is resulting in new opportunities for meaningful engagement.
Bank and other key donor assistance
In the forest sector, the Bank’s assistance strategy during the past three years has aimed at improved management and governance to support governments and communities in sustainable forest management, conservation, development and dialogue. The Bank can best assist Indonesia in two main ways: first, supporting improved policies and management practices to help Indonesia deliver on its own goals and commitments; and second, promoting greater dialogue among stakeholders to ensure that the goals of forest management are clear, realistic, and widely agreed upon.
Strategic gaps in government strategy and donor response
While Indonesia’s legal framework is reasonable, its policies and management practices are often not consistent with that framework. Good management must be built on accountable institutions, rule of law, and sound policies. Steps toward more structured forest management will help to create the predictability, transparency, and accountability needed for improved governance. There are opportunities to focus on augmenting existing reforms, supporting champions, providing analytical support for new approaches, and clarifying the policy and regulatory environment.
Reforms are needed to: make information transparently available; support Government-led initiatives on illegal logging and industrial restructuring; protect existing conservation areas; clarify roles, responsibilities, and incentives under decentralization; and support dialogue and partnerships. At the same time, there is a need to recognize that past approaches have not been effective and that new ways of doing business are needed to achieve a new level of engagement and effectiveness. |
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