Based on the 2003 census, Indonesia’s population was 220 million people. CIFOR 2004 and BPS 2000 describe that about 48.8 million people live around forests and about 10.2 million of them are poor. Six million people are directly dependent on the forest as the source of earnings, of which 3.4 million work in the private sector of forestry. Traditionally, a lot of people earn their living by using different forest products, both wood and non-wood ones such as rattan, resin, agarwood, and honey. Education and health conditions of people living around forests are generally not as good as in urban areas. Access to facilities are relatively low. Among others, the sanitation system of housing complexes is poor. As the population density of the forest communities increases, the social quality of the people generally declines. Efforts to improve the social condition of the forest communities have been promoted by the Government, including through: Forest Community Development by 169 forest concession companies outside Java, Community Based Forest Management by Perhutani State Enterprise Java, and Community Forestry. In 2003 Forest Community Development was carried out in 267 villages with 20,542 households, and Community Forestry covered 50,644 hectares. The Social Forestry Program was launched by the President on 2 July 2003 in Palangkaraya. This program was meant to give opportunities for local communities as actors or main partners in the management of forest resources. Up to now institutional facilitation has been carried out in 7 provinces, through establishment of productive business groups and development of inter-sector plans of activities.


Commercial utilisation of forests, especially natural forests, which started in 1967, has put forestry as an important sector in the national economy. Indonesia managed to lead in the world tropical timber export, including through export of logs, sawntimber, plywood, and other wood products. During the period 1992 – 1997 Indonesia’s foreign exchange earnings from forestry was US16.0 billion, which on annual average contribute 3.5 of the GDP BPS, 2004. In 2003 forestry export was officially reported at US 6.6 billion or about 13.7 of the total non-oil-and-gas export. It comprised US 2.8 billion from exports of plywood and sawnwood, US 2.4 billion from pulp and paper, US 1.1 billion from furniture, and the rest was from other processed wood. However, it was estimated that it could reach US 8.0 billion when including unrecorded exports CIFOR, 2003. The golden era of forest industries has declined since 1990. This is shown among others by the decline in the number of forest concession companies from 560 companies with permited production of 27 million m3 in 1990, to 270 companies with permited production of 23.8 million m3 in 2002. The decline continued in 2003 with permited production of 6.8 milion m3 in 2003 and 5.8 million m3 in 2004. Realisation of log production from different sources of production from 1997-2003 is shown in Figure 6. 8 Government’s income from Reforestation Fund, Interest of the Reforestation Fund, Forest Product Fees, Plantation Forest Concession Fees, Natural Forest Concession Fees, Export of Wildlife, Fine from Forest Utilisation Infringement, as well as Nature Tourism Enterprise Levies in 1999 was IDR 3.33 trillion, and in 2003 IDR 2,72 trillion. Figure 7. Forest utilization from 1989 to 2003 decline both in area and the number of business enterprises. The number of forest utilisation enterprises in 2003 was 267, which declined by 52.1 from that of 1989 Figure 8. Figure7. Trends of Forestry Non-Tax Income 3, 33 3, 02 3, 30 5 2, 92 9 2, 72 3 - 500 1,000 1,500 2,000 2,500 3,000 3,500 B illio n R u p ia h 9900 2000 2001 2002 2003 Years Figure 6. Realisation of Log Production 29.15 19.03 25.27 13.8 11.55 9.62 11.71 5 10 15 20 25 30 35 1997 1998 1999 2000 2001 2002 2003 Vo lu m e M il l m 3 29.15 19.03 25.27 13.8 11.55 9.62 11.71 5 10 15 20 25 30 35 1997 1998 1999 2000 2001 2002 2003 Vo lu m e M il l m 3 9 Figure 9. Non-Wood Forest Products Rattan Wood processing industries in 2003 were 1881 in number, comprising: 1,618 sawmills with a total capacity of 11.048 million m3; 107 plymills with a total capacity of 9.43 million m3; 6 pulpmills with a total capacity of 3.98 million m3, 78 blockboard industries with a total capacity of 2.08 million m3; and 73 other wood working industries with a total capacity of 3.15 million m3. However, the decline of forestry industries’ contribution was balanced by increase of the non-wood forest products’ contribution rattan, charcoal, and resin, which amounted US 8.4 million in 1999 and increased to US 19.74 million in 2002. The contribuiton of trade in wildlife and plants in 1999 was US 61.3 thousands, which sharply increased to US 3.34 million in 2003 Figure 9. -1 .0 6 -1

8. 35

-2 0. 81 -2

9. 15

-2 9. 43 -5 .6 -5 .5 9 -4 .9 5 2. 81 4. 54 4. 24 2. 17 3. 12 4. 24 -30 -20 -10 10 20 30 40 50 60 70 89 90 91 92 93 94 95 96 97 98 99 1 2 3 100 200 300 400 500 600 700 Cumulat ive Change of Ext ent of For est Consession Ext ent of Forest Consessions Number of Forest Consessions Figure 8. Trends of Forest Utilisation Licenses 10 Figure 11. Progress of Industrial Forest Plantation Reforestation in 1999 covered 12,102 hectares and in 2003 it increased to 52,200 hectares. Forest and Land Rehabilitation through the National Campaign for Forest and Land Rehabilitation Gerhan up to 2004 covered 252 thousand hectares Figure 10. Industrial Forest Plantation Development has also shown encouraging progress, though implementation has been relatively slow. From 1989 to 2003, 96 Industrial Forest Plantation companies were given licenses, which covered 5.4 million hectares. However, up to 2004 the implementation only covered 3.12 million hectares. Figure 11 In 2000, employment in the forestry sector from planting, harvesting, to the industries involved 3,092,470 people, with average income in forest concession companies of IDR 7.3 millionyearperson, and in the industries it was IDR 3.3 millionyearperson BPS, 2000. Forestry development has contributed significantly to local development. This is shown by the increased access to isolated areas because of availability of forest harvesting roads for the forest communities, increased employment opportunities, and increased income of the local government and local people. Figure 10. Rehabilitation

0.12 0.47 0.66

0.86 1.25

1.55 1.88

2.27 2.53

2.72 2.85 2.94

3.00 3.12


0.12 0.35

0.19 0.21

0.39 0.30

0.33 0.39

0.27 0.18

0.14 0.08

0.07 0.12

0.54 - 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Years E xte n t M illio n H ec ta re - 0.10 0.20 0.30 0.40 0.50 0.60 E xte n t M illio n H ec ta re Cumulative Extent of Industrial Plantation Forest Number of Industrial Plantation Forest 11


In accordance with Decree of Minister of Forestry No. 123Kpts-II2001, the organisation of the Ministry of Forestry comprises Secretariat General, Inspectorate General, Directorate General of Forest Production, Directorate Geneal of Land Rehabilitation and Social Forestry, Directorate General of Forest Protection and Nature Conservation, Agency of Forestry Planning, Agency of Forestry Research and Development, and Minister’s Senior Advisers Figure 12. According to Act No. 41 of 1999 concerning Forestry and Act No. 32 of 2004 concerning Local Government, forest governance at sub-national levels consists of: 1. Decentralisationtransfer of authority and responsibility to Provinces and DistrictMunicipalities; 2. Deconcentration that is managed by technical implementing units of the Ministry of Forestry; 3. Assistantship, i.e. implementation of Central Government’s tasks by Sub-National Governments. In the implementation of the deconstration, the Ministry of Forestry has Technical Implementing Units TIUs that comprise TIUs for Watershed Management 31 unit; TIUs for Forest Area Stabilisation 11 units; TIUs for Natural Resources Conservation 32 units, TIUs for National Parks 33 units, TIUs for Certification of Forest Products Graders 17 units, TIUs for Watershed Technology Research and Development 2 units, TIUs for Plantation Forest Research and Development 2 units, TIUs for Forestry Research and Development 8 units, TIUs for Sericulture 1 unit, TIUs for Seed Technology 1 unit, TIUs for Forestry Education and Training 7 units, and TIUs for Seed and Forest Plantation 6 units. In order to achieve synchronisation and coordination of forestry development planning and implementation between national and sub-national goverenments, by issuing Decree of Minister of Forestry No. SK. 103Menhut-II2004 the Ministry of Forestry has established Centres for Regional Forestry Development for four regions: Region I covers Sumatra; Region II covers Jawa, Bali, and Nusa Tenggara; Region III covers Kalimantan; and Region IV covers Sulawesi, Maluku and Papua. As of May 2004 the Ministry of Forestry had 14,875 staff, comprising 3,392 at the headquarters and 11,483 at the technical implementing units. In terms of education, almost 70 are graduates from primary school to senior high schools Figure 13 and 43 are aged between 37-46 years Figure 14. In terms of career, 54 are from grades I and II Figure 15, MINISTER OF FORESTRY INSPECTORATE GENERAL SECRETARIAT GENERAL DIRECTORATE GENERAL OF FOREST PROTECTION AND NATURE CONSERVATION DIRECTORATE GENERAL OF LAND REHABILITATION AND SOCIAL FORESTRY DIRECTORATE GENERAL OF FOREST PRODUCTION AGENCY OF FORESTRY PLANNING AGENCY OF FORESTRY RESEARCH AND DEVELOPMENT Figure 12. Organisation Structure of the Ministry of Forestry 12 Elementary School 4.38 Ph.D 0.53 Master 3.97 Junior High School 3.54 Senior High School 61.84 Undergraduate 21.77 Diploma 3.97 Diploma 3.97 Senior High School 61.84 Ph.D 0.53 Undergraduate 21.77 Master 3.97 Elementary School 4.38 Junior High School 3.54 37-46 43 46 27 36 30 Grade II 51.58 Grade III 40.62 Grade IV 5.20 Male 70.40 Female 29.60 Male 86.70 Female 13.30 - 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 Headquarter Technical Implementing Unit Grade I 2.61 and gender wise there are less female than male staff, both at the national and sub-national levels Figure 16. Figure 13. Education Background Figure 14. Age of Staff Figure 15. Career Levels of Staff Figure 16. Staff at Headquarters and Technical Implementing Units As of end of 2004 forestry sector development, policies and activities are based on the following laws and regulation, among others: 1. Act No. 5 of 1990 concerning Natural Resources Conservation and Its Ecosystems; 2. Act No. 24 of 1992 concerning Spatial Planning; 3. Act No. 41 of 1999 concerning Forestry which ammended Act No. 5 of 1967; 4. Act No. 25 of 2004 concerning National Development Planning System; 5. Act No. 32 of 2004 concerning Local Government which ammended Act No. 22 of 1999; 6. Act No. 34 of 2004 concerning Financial Distribution Between Central and Sub-National Governments which ammended Act No. 25 of 1999; 7. Government Regulations which elaborate Act No. 41 of 1999, including: Government Regulation No. 34 of 2002 concerning Forest Administration, Forest Management Planning, Forest Utilization, and Forest Lands Use for Non-Forestry Purposes; Government Regulation No. 35 of 2002 concerning Reforestation Fund; Government Regulation No. 44 of 2004 concerning Forestry Planning; Government Regulation No. 45 of 2004 concerning Forest Protection. To provide the institutions that develop among the communities, and to promote human resources and research, the Government has allocated forest areas with special puposes. Currently there are 22 such forest areas , all for research puposes. 13


The target of forestry development in 2009 is expected in line with the national development target of “Unity Indonesia Cabinet” such as 6.6 of economic growthyear, empowering development of the riel sector, revitalization of agricultural sector include forestry and fishery, and empowerment of economic communities. Those developments concern to overcome the national priority problems that are poverty reduction, labour absorbtion, improvement of invesment and export, law enforcement, and combating corruption, and these can be achieved through several targets as follow: A. Improvement of living quality and welfare of the people by establishing Watersheds Management System which provides sustainability of water preservation for whole sectors. These target can be achieved by : 1. Preparation of macros data such as forest cover, forest resources potential timber and non timber, forest resources balance, in which packaged spatial and non spatial form, and accessible for public; 2. Forest area designation and marine conservation are issued by the Minister of Forestry throughout Indonesia; 3. Forests and land rehabilitation in the 282 priority Watersheds for 5.0 million hectare with proportioning 60 within the forest, and 40 outside the forest; 4. Establishment of civil technic construstion that established in the representative location of the 282 priority Watersheds for controlling flood, erosion, sedimentation, and landslide. B. Improvement of community access on productive resources and capitals, diversification of community economics, and involvement of community participations. These target can be achieved by : 1. Development of forest plantation increases the labour absorption by 7 each year; 2. Land and forest rahabilitation within 282 priority Watersheds is fully provided by stakeholders, and absorps labour by 10; 3. Development of 20 National Park models increases the labour absorption and community income by 5; 4. Management of 200 conservation area will absorp the local labours; 5. Commercial endanger-species breeding is developed; 6. Development of utilization of flora, fauna, and environmental services increases the labour absorption by 4; 7. Improvement of research and technology increases participation and forestry bussiness by 4, and the research results are accessible by public;