New report: forestry industry uses 30 percent wood from unsustainable sources

EoF News / 18 February 2015

EoF News (PEKANBARU)—A recent report highlighting gap on timber supply sustainability found that estimated 30 percent of wood used by Indonesia’s industrial forestry sector comes from illegal sources.

Forest Trends (FT) and Anti-Forest Mafia Coalition (Koalisi Anti Mafia Hutan/KAMH) launched a report in Jakarta Tuesday (17/2/2015) and recommended the Ministry of Environment and Forestry to revise their forestry development strategy by incorporating some very important elements: not allowing a capacity increase in processing, not adding new licenses for forestry industry and industrial plantation forest (HTI) concessions, and improving HTI productivity.

“A performance audit on the HTI is a must, in addition to the continuation of the implementation of improvements in governance to prevent corruption in the forestry sector," Grahat Nagara, spokesperson of KAMH said.  

More than 30 percent of wood used by Indonesia’s industrial forest sector stems from the unreported clear-cutting of natural forests and other illegal sources instead of legal tree plantations and well-managed logging concessions, according to a new study analyzing Indonesian Ministry of Forestry and timber industry data to assess the sustainability of the country’s booming pulp and paper industry.

The report also finds that if the country’s pulp and paper mills were to operate at full capacity, and if companies were to go forward with plans for a multi- billion dollar investment in new mills, the industry would need to double its legal supply of wood to meet demand.

The study, Indonesia’s Legal Timber Supply Gap and Implications for Expansion of Milling Capacity, by the Anti Forest-Mafia Coalition, an alliance of Indonesian civil society organizations, and Forest Trends, a Washington-based non-governmental organization, found that the plantation sector is dramatically underperforming. In 2007, the Ministry of Forestry predicted that by 2014, plantations would be producing at almost twice the rate reportedly achieved.  

Furthermore, the report found that the primary source of legal wood in Indonesia, industrial forestry plantations, which produce fast-growing species of trees like acacia, are currently unsustainable.

"The core of the Anti-Forest Mafia Coalition’s research is to evaluate the adequacy of the legal timber supply for the growing Indonesian forestry industry,” said Grahat. “We conducted research for the report that indicates that large-scale enterprises consume more wood than available legal timber supply for production."

“There are indications that the government is losing funds as a result of this. Assuming no payments were made to government on any of the wood in the 'illegal’ gap, for 2014 about $250 million was lost in reforestation fees and some $153 million lost in stumpage, a total of $403 million in losses."

The new report comes as industry leaders push ahead with plans to build new pulp mills—even though current processing capacity in Indonesia already exceeds the legal supply of pulpwood.  For example, Asia Pulp and Paper (APP) plans to build a US$2.6-billion pulp mill in South Sumatra by 2016. This mill—the largest in Indonesia—is financed in part by a US$1.8 billion loan from China Development Bank, and is expected to produce two million tonnes of pulp and 500,000 tonnes of tissue annually. APP also plans mills in Kalimantan and Papua, as does Barito Pacific in South Sumatra, PT Djarum in Kalimantan and Medco in Papua, representing more than US$12 billion in investments.   

Full report download here