Indonesia moves to win EU confidence

As the first FLEGT-licensed timber products arrive in the European Union from Indonesia, three well-known Indonesian suppliers and three of their EU buyers tell Mike Jeffree how significant this is, and what the market impacts could be.

Falcata trees harvested by PT Kutai.

 

Mr.Robbert Dekker

(CEO, Dekker Hout, The Netherlands)

 

We have a long heritage of doing things right. That includes providing assured legality – our customers shouldn’t expect anything less. So today we’re applying most of our environmental energies to achieving 100% sustainable sourcing, with the FSC being our preferred certification scheme.

We see Indonesia’s implementation of its EU FLEGT voluntary partnership agreement (VPA) as a major advance, with benefits for its environmental credentials, the battle against illegal logging and EU companies’ legality assurance systems.

Indonesian timber businesses, including our suppliers Intracawood and Kayu Lapis, should be proud of reaching this point. The scale and diversity of their industry made their VPA, including obligatory multi-stakeholder engagement, a challenge.

It also represents a remarkable turnaround, given Indonesia’s previous poor governance standards. Initially we’ll continue to undertake our own checks back to concession on Indonesian imports. But as FLEGT licensing is proven, we may step back on this.

One concern is that EU trade and suppliers become disincentivised by the EUTR and FLEGT licensing to make the move to sustainable sourcing. So we believe the two should be wrapped together; with legality assurance presented as essential in itself, but also as a necessary step to certified sustainability.

Based in The Hague, Dekker Hout is a vertically integrated business, covering import, processing, manufacturing and distribution operations. It also manages FSC-certified forest in Bolivia.

 

 

Mr. Bob Wani

Marketing Manager,

Intracawood, Indonesia

 

Intracawood has focused on balancing production and commercial interests with environmental and social obligations for some time. We have been independently certified for legality since 2008 and our forest concessions are FSC-certified. 

So we viewed meeting the demands of the SVLK legality assurance system and the FLEGT VPA process as underpinning what we do already and, as a large, well-resourced business, we did not find compliance difficult.

We see such licensing as an important development. It legitimises the Indonesian timber industry as a whole, including, importantly, small to medium sized enterprises. Stakeholders, from traders to local communities, NGOs, trade bodies and EU authorities, are also invested in the initiative and expect so much from it.

Our first licensed goods were sold to our long-standing partner, Dekker Hout, which is distributing them EU-wide. They included decking, fencing and other outdoor products in Bangkirai and Kempas.

We also expect not only that EU buyers will give preference to FLEGT-licensed timber, but that licences will be accepted as evidence of legality under Australian and New Zealand market requirements and as contributory proof under US and Japanese regulations.

Intracawood produces plywood, decking and other garden products and operates its own FSC-certified forest concessions. Its leading markets are the US, EU and Japan.

(www.intracawood.co.id)

 

 

Mr. Pak BuniadiMakmur

Marketing Manager,

Kayu Lapis Indonesia (KLI)

 

We and our EU customers, including FEPCO in Belgium, are excited by the start of Indonesian FLEGT licensing. It will reduce EU importers’ compliance workload under the EU Timber Regulation and give us a market edge. As more countries complete their VPAs, it will become a trade norm.

The value of this licensing to us all also lies in the fact that it helps protect the forest and wider environment. It supports legitimate timber businesses, raises awareness of the need for legality assurance and combats and disincentivises illegal trade.

Kayu Lapis operates milling and manufacturing plants, producing plywood, flooring and garden products. It operates 5,00,000 hectares of forest concessions, with 60% FSC-certified. Over 70% of its output is exported.

 

 

Mr. Alexander de Groot

Managing Director,

FEPCO, Belgium

 

Now that FLEGT-licensed timber has arrived, the EU trade should capitalise on the opportunities it presents and go full speed ahead to increase market familiarity. Like other EU operators and importers, we see the licensing as a stage towards certified sustainability. For certain supplier countries, it is the most we can realistically expect for the moment.

Licensing also has its own value: it’s the best proof of legality we can have, with timber audited at source, enabling us quickly and conveniently to convince customers, who may have been reluctant to buy Indonesian before, that it’s a trustworthy source.

 

The legality guaranteed by licence covers environmental protection, logging rules, payment of fees, timber trade and transport regulation, and property rights, including those of forest dependent communities.

 It also ensures forest law requirements are applicable, consistent, understandable and enforceable, and reflect the VPA partner’s social, economic and environmental objectives.

FEPCO is one of the EU’s leading plywood and wood producers. It sources worldwide and main customers are importers and distributors, which it supplies via container or break-bulk. (www.fepco.be)

 

 

Mr. Chris Sutton

Managing Director,

Lathams Ltd., UK

 

Indonesia had illegality problems in the past, but we never walked away from suppliers there. Instead we backed them on achieving verifiable legality assurance. Over 20 years we’ve helped them develop and promote products and vouch for their environmental credentials. That includes Flamebreak fire door blanks, which are among our first licensed items.

Indonesia deserves congratulations. For a tropical hardwood supplier with a previously tarnished reputation, to be first on FLEGT licensing is huge. Indonesia presents a model for other countries engaged in the VPA initiative.

We envisage licensing increasing business with our Indonesian suppliers of marine and commercial plywood and decking. It’s simple: Indonesia makes great wood products and, if licensed, they’re now verified legal. Why wouldn’t discerning buyers want them?

Lathams imports timber and panel products globally and distributes it across the UK. It is both FSC and PEFC certified and its Chairman, Mr. Peter Latham, is also chair of PEFC International. (www.lathamtimber.co.uk)

 

 

Mr. T. Amano

Marketing Manager,

PT Kutai Timber, Indonesia

 

The issue of the first FLEGT licences was an important moment in Indonesia’s timber trading relationship with the EU – which accounts for 25% of PT Kutai’s exports. It also reflects Indonesia’s commitment to legal, sustainable wood products.

It should increase customer confidence in our products, boost exports and lead to improvements in Indonesian timber goods quality standards, to satisfy customers on the wider world scene.

PT Kutai was committed to supplying legal goods previously, and was implementing Indonesia’s SVLK legality assurance system since 2010. Other countries will also now follow Indonesia in completing such VPA implementation due to the importance of the EU market.

PT KTI, a joint venture between Sumitomo Forestry Co. Ltd. of Japan and PT Kaltimex Jaya, produces plywood, wood products and particleboard and exports globally. (wwwkti.co.id)

– The writer is Communication Consultant to the Global Timber Forum. He can be reached at: mjeffree1@gmail.com.

 

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