The Indonesian Timber Legality Assurance System (SVLK)

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This case was submitted as part of the Call for Innovations, an annual partnership initiative between OPSI and the UAE Mohammed Bin Rashid Center for Government Innovation (MBRCGI)

Two decades ago, 80% of Indonesia’s timber exports consisted of illegally-sourced wood. In order to combat this problem and to promote more sustainable forest management, the Government of Indonesia developed an innovative multi-stakeholder approach to ensure that wood products and raw materials would only be obtained or come from sources whose origins and management were legal and sustainable. Thus, the Timber Legality Assurance System (Sistem Verifikasi Legalitas Kayu – SVLK) was born.

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According to media reports, Indonesia supplied 219 million cubic meters of unreported or illegally-sourced timber between 1991 and 2014. This had a devastating effect both environmentally and economically. Not only did it result in the loss of 2.3 million hectares of forest, the country also lost up to USD 9 billion in uncollected non-tax revenue between 2003 and 2014. Against this backdrop, the SVLK initiative was introduced to combat illegal logging and the trade in illegal timber, while at the same time improving governance and the management of Indonesia’s forests – both those under state and private ownership.

In addition to combating illegal logging and the illegal timber trade at home, Indonesia’s SVLK was also established to meet growing demands from international markets (particularly the European Union, Australia, and the United States) for guarantees of timber legality through the certification of sustainable, legally-sourced timber exports.

The innovative SVLK scheme contains a tracking system that aims to ensure that all entities in the timber supply chain obtain their wood and timber products from sustainably-managed forests and conduct their trading operations in accordance with prevailing laws and regulations. Developed with the active participation of a range of different stakeholders, from both government and civil society and public and private sectors, the SVLK system works to:

(1) assess and, where satisfied, verify relevant parties (including concession holders, timber businesses and traders) dealing in the production, processing, transportation, distribution, transfer and domestic trade of timber and wood products;

(2) trace the origin of all timber and wood products, and

(3) issue documentation and/or licenses that certify the legality of timber and wood exports.

The SVLK assurance scheme is a mandatory system that requires all timber from state-owned and private forests to obtain verification of legality – as a guarantee that the timber originates from legal, sustainably-managed sources. It took around 10 years of development before reaching the point in 2013 when the scheme was ready to be implemented.

During the development phase, the government engaged with all stakeholders to determine the definition, criteria, indicators and verification tools on timber legality and forest sustainability; the institutional framework, mechanisms and procedures surrounding SVLK certification, and the requirements for SVLK entities including certification bodies, auditors and independent monitors. The results of these multi-stakeholder gatherings formed the basis for the development of legislation via a series of focus discussions and public consultations at both regional and national levels, as well as implementation pilots, all of which fed into a final, formal process by the Ministry of Environment and Forestry.

Transparency is one of the SVLK’s key principles; therefore, independent third-party certification bodies, which are accredited by the National Accreditation Committee, award legality-assurance certificates to domestic timber and wood products and Verification Legal (V-Legal) documentation to SVLK-certified exporters, while the system’s implementation is monitored by civil society organisations concerned with forestry issues.

Since implementation began, the SVLK system has benefited both people and planet. By promoting better forest management, the SVLK scheme is playing a leading role in environmental protection and is helping to safeguard Indonesia’s forest areas for the wellbeing not only of current inhabitants but also for the next generation. In terms of the international timber trade, the scheme benefits purchasers of Indonesian timber by providing legal assurances that any timber and wood products they import meet internationally-recognised standards with regards to legality and sustainability.

In this way, the SVLK system has also brought great benefits to Indonesia by helping to restore the country’s reputation as a responsible and trusted trader and exporter of timber and wood products. Within the past four years, for example, the SVLK has gained widespread recognition and acceptance from major international markets including the EU and Australia. The SVLK system also benefits other countries (including China, Ghana, Malaysia and Vietnam) that are considering implementing similar timber-verification schemes by providing a reference and lessons learned on how to develop and implement a robust and credible timber assurance system.

In addition to becoming a benchmark for foreign replication, the SVLK system is already providing a framework for similar schemes that aim to trace and verify the source of other commodities in Indonesia. As an initial step towards domestic replication, the SVLK certification mechanism is being applied to palm oil, but there may well be scope for more widespread replication across different sectors in Indonesia.

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