Being legal and formal? Opportunities and challenges of the timber legality verification system for smallscale furniture producers in Indonesia
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Over the last decade, Indonesia has made significant strides in improving forest governance. The Government of Indonesia (GoI) has made curbing illegal logging a strategic goal within the Ministry of Forestry's long-term plan. One of the main milestones in improving forest governance in Indonesia is signing the Voluntary Partnership Agreement (VPA) with the European Union and being the first country that obtains the FLEGT license. The GoI has developed a timber legality assurance system called Timber Legality Verification System (<i>Sistem Verifikasi Legalitas Kayu</i> - SVLK). This system enables tracking a piece of timber back until the origin and ensure its legality. One major issue that remains under contention is how small actors should be included in the SVLK system. This paper attempts to assess the financial implications of SVLK certification for small operators in Indonesia. We found that while there are opportunities for smallscale producers to access the international market by having SVLK certificate, they face challenges to become formal entities. Moreover, they are hampered by the scale needed to enable them to meet the demand from global buyers. The paper aims to generate lessons for Indonesia to deal with small operators' inclusion into the FLEGT process and other countries seeking similar VPA arrangements with the EU to draw lessons from Indonesia as the first country that has obtained FLEGT license.
Keywords: Value chain, Illegal trade, Policies, Policies, Research
ID: 3486706