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Low-Carbon Policies on Forest and Land Use Sector

The Government of Indonesia has issued national policies and action plan for reducing emission from land use change and forestry defined in the Presidential Regulation Number 61/2011. In general there are four main policies and actions toward low carbon (Boer 2012). First is accelerating establishment of forest management unit (FMU) to improve the management of land and forest resources in all forest areas. Second is pushing adoption of sustainable management practices in production forests by implementing mandatory forest certification systems. Third is reducing dependency on natural forests in meeting wood demands through acceleration of establishment of timber plantation on community lands and state lands and enhancement of sink through restoration of production forests ecosystem and land rehabilitation. Fourth is reducing pressure on natural forest through optimization of the use of land and improvement of land productivity. To support the implementation of these policies and actions, it is crucial to develop financing/ incentive policies and development of financing system that can support their adoption and implementation by related stakeholders.

Forest Management Units (FMUs)

Key factors driving deforestation in Indonesia might originate from forestry sector and also from outside the forestry sector. These factors intermingle in complex processes, which are difficult to separate, which includes long drought period and characteristics of land that are rich in mineral resources but susceptible to fire interlink with management practices as well as political decision and economical considerations in the allocation of land uses, its utilizations and enforcement of rules. They both intend to pursue the goal of national development in forms of economical growth, political stability, as well as social equity and ecological sustainability. It is difficult to identify which key driver comes first and further stimulates the emergences of others. Some key drivers observed from current practices and have consequences on land use and land cover changes are forest fire, logging, timber plantation, agriculture expansion, mining, and political administration expansion.

Establishment of forest management unit (FMU) at site level has been considered as a prioritized program for improving management of forest resources and controlling deforestation and forest degradation. Urgency of FMU development especially outside Java[1] is driven by the fact that (Nugroho et al. 2011):

1. Intensive management of forest resource at site level is required as mandated by Act No. 41 Year 1999 on Forestry which states that “All forests within the territory of the Republic of Indonesia, including natural resources contained therein is controlled by the State for the greatest prosperity of the people”.

2. Management of forest resources given to the private sector through the licensing mechanism for forest (IUPHH) has limited time, and when it is over, the forest area becomes unmanaged. In addition, nature of the transfer of rights to holders of the license also required close monitoring from government over the behavior of the license holders.

3. Many of investments for land and forest rehabilitation implemented in forest area (GERHAN) often fail as due to the absence of manager in the site who will manage the maintenance of the planted trees.

4. Programs for giving access to public in playing active role in managing forest resources such as community-based plantation forest (HTR), village forest, and community forest (HKm) are slowly realized, due to the absence of companion at the implementation level.

Duties and functions of the FMU (PP. 6/2007 jo PP. 3/2008) include (1) implementing management of forest resources which includes forest arrangement and management plan, utilization of forest area and resources, rehabilitation and reclamation of forest area, and protection and conservation of forest area;

(2) translating national, provincial, and district/city forest policy to be implemented at site level; (3) implementing forest management activities in the region starting from planning, organizing, implementing, and monitoring and control; and

(4) implementing the monitoring and the assessment of implementation forest management activities in its territory and opening investment opportunities to support the achievement of forest management objectives.

FMU is targeted to be developed 600 units throughout forest area, and by February 2014, only 120 units were established. However, operationalization of these first 120 units remains problematic (Nugroho et al. 2014). Some of the problems include:

1. Scope and authorities of FMU in managing forest area. FMU authority is actually very powerful, but this is supported by a number of different regulations, not summarized in one single regulation. So KPH management team is not functioning optimally. As an example, annual working plan of concession holder (RKT) should be approved via KPH once a respective area has established its KPH. Articles 71–78 of government law No. 6/2007 regulate this issue. However, none of RKT now is submitted to KPH. Its function on monitoring and evaluation of concessions does not work. Therefore, it is necessary to compile a list authority of KPH mandated by regulations and laws and issue a strategic regulation on this.

2. Capacity of stakeholders and supports from local government (Province/district) are still diverse. Dynamics of local politics also very much influence their commitments in running FMU.

3. Sectoral ego does exist. There is a doubt that some functions of forestry-related agencies will be taken over by FMU.

4. Regulation No. 23/2014 about local government authority on forestry issue (incl. KPHP and FMU for protection forest (KPHL)) results a concurrent between central government and provincial government (Article 14 (1)). The regulation also indicates less role of district government. However, sites are located within administrative authority of district government.

5. Many FMUs have been legalized by MoF decree, yet do not have any organization at site level (8 out of 120 units).

6. Barriers in regulating concessions incl. RHL and issue of coordination between FMU and concession holders.

7. Independence of FMU needs to be improved. A number of regulations such as No. 61/2007 about technical guidance of general service budget management (PPK – BLUD).

8. Lack of human resources and funding.

9. Need a synchronized policy and coordination among Echelon 1 at ministry of forestry to support operationalization of FMU.

10. Socialization of FMU development has been concentrated to forestry agency at provincial level. While communication on FMU policies by central government has not touched strategic decision making at local level.

11. Mechanism on national budget is not flexible for supporting FMU.

12. Land tenure conflicts as a consequence of non-FMU area rights. Local community often claims those areas. Ministry of forestry has very weak power on this type of areas.

13. Lack of leadership and entrepreneurship in FMU directors/heads.

As mentioned above (Problem No. 7), FMU independence is needed because often local government, i.e., majorly ask for benefits – specifically financial benefits

Table 9.1 Budget management at BLUD and non-BLUD working units

Source: Nugroho et al. (2014)

of KPH for their district. On the other side, running FMU needs independent financial support. State budget is limited, while to develop FMU as a full business entity will violate main objective of FMU. Proper format of FMU would be a quasigovernment body like BLUD. Central government should pay attention more on strategic regulation for this PPK BLUD then.

According to the ministry of domestic affairs regulation No. 61/2007, BLUD is SKPD or nonprofit working unit under local government, which is established to support and provide services for the respective areas. BLUD has flexibility in budget management compared to conventional working units (Table 9.1). Legal procedure for retribution mechanism of BLUD is also rather less complicated compared to conventional working units (Regulation No. 28/2009). Retribution mechanism usually should be supported by local regulation – approved by DPRD (local parliament) but for BLUD only need major or governor decree.

In terms of giving more authority to FMU, based on inputs from local stakeholders, FMU which currently is only authorized to manage state forest area should also be given authority to manage non-forest area (CER Indonesia and CCAP 2010). By giving this authority, FMU can assist in managing REDD activities both within and outside forest areas. FMU should take the form of BLUD (Badan Layanan Umum Daerah – Local Service Unit). Having effective, strong, and independent FMU might be a key factor to the success of implementation of sustainable forest management.

  • [1] FMU had already existed long before in all forest area in Java under the management of State Forest Company Perum Perhutani and called KPH (Kesatuan Pemangku Hutan)
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