Indonesia’s Forestry Ministry wants to rebuild the economics of its forest estate around multi-enterprise forestry, a scheme it estimates can generate up to 10 times the value of conventional timber-reliant business models. That is according to Laksmi Wijayanti, Director General of Sustainable Forest Management, who told a Jakarta media briefing that the low economic value of standing forest remains the central obstacle to keeping it standing.
The palm oil comparison cuts deepest, with a study by IPB University’s Faculty of Forestry and Environment putting the direct value of forest at Rp4 million per hectare per year, one-tenth of the Rp40 million earned by oil palm on the same land. “We hope that with multi-enterprise schemes, that value will increase tenfold,” Wijayanti said, arguing that conversion pressure follows directly from that gap.
Under the scheme, holders of Indonesia’s 29 million hectares of forestry concessions earn from timber, non-timber forest products, agroforestry, environmental services, ecotourism, and carbon trading. Operators already running the model have set aside 100,000 hectares for community partnerships, whilst a separate 12-million-hectare social forestry program widens community access to forest management.
None of it is new on paper, with multi-business forestry born from the 2020 Job Creation Law and Government Regulation 23 of 2021, which first let concession holders diversify beyond wood. What has changed is the urgency, with wood-based products from natural forests posting stagnant growth that Wijayanti says has depressed profitability and long-term investment in forest management.
Forestry Minister Raja Juli Antoni has since staked national numbers on the model, projecting in May that coffee- and cocoa-led schemes will add Rp418 trillion in export value by 2045, create employment for 3.8 million people and absorb 25 million tonnes of carbon dioxide equivalent. Pilot landscapes stretch from Bukit Tiga Puluh in Jambi to Kubu Raya in West Kalimantan and the Peusangan elephant corridor in Aceh.
It comes as the ministry signed a memorandum of understanding with the Forest Stewardship Council on Tuesday, 30 June, creating a joint audit that runs the SVLK timber legality system and FSC certification through a single assessment, from forest management units to exporters and importers. “By developing the joint SVLK-FSC audit mechanism, we are aligning existing efforts,” FSC Director General Subhra Bhattacharjee said.
For Australian buyers, that audit covers the same Indonesian supply chains where FSC certification was suspended at two merbau suppliers and terminated at a third this month. Merbau remains the country’s main substitute for native hardwoods such as spotted gum, jarrah and blackbutt, making Jakarta’s certification architecture a direct input into Australian decking and flooring supply.
Not everyone is convinced the scheme protects what remains, with Forest Watch Indonesia warning that multi-business permits still lack the social and ecological safeguards needed to hold the integrity of remaining natural forests. Civil society groups argue diversified permits could open protected and production forests to new commercial pressure.
The push comes after WWF Indonesia warned that destructive financing into the country’s forest and land sectors outpaces conservation funding by more than 13 to 1, leaving Jakarta $5 billion short of its national forest targets. Wijayanti sees the answer in new income, from carbon trading now being introduced for forest managers to biodiversity credit instruments emerging in environmental finance.
Whether tenfold value can move from briefing slide to balance sheet is the test the EU Deforestation Regulation will now put to the scheme, with Indonesia held at standard risk and facing physical verification of 3 per cent of its products entering the EU from 30 December. Forest managers who can stack timber, carbon and certified non-timber income by then will face that scrutiny with a business case Jakarta believes is finally worth more than the palms next door.
