Government of Indonesia to explore ILCF Frameworks Based on TFD’s ILCF Dialogue Findings

Locally Controlled Forestry (LCF) has strong potential to contribute to poverty reduction, forest conservation, and social justice. Spanning over three years, The Forests Dialogue (TFD), with funding from the Growing Forest Partnership (GFP) initiative and Swedish International Development Cooperation Agency (SIDA), convened extensive multi-stakeholder dialogues between more than 400 representatives from governments, NGOs, local communities, indigenous groups, business, finance and industry. The findings show that enabling communities to locally manage and generate income from their forests can be a triple win situation for communities, investors and governments. Two publications came out of the global multi-stakeholder effort (TFD Review and the ILCF Investment Guide) and can provide valuable guidance for policy makers.

Consolidating the needs of all stakeholders involved may appear to be a difficult case. Rights-holders often demand local control over culturally appropriate economic, social and environmental outcomes, while investors look for viable business propositions with attractive risk-adjusted returns and adequate liquidity. At the same time, national governments often take up responsibility to ensure secure public goods and a strong viable economy. Field-site visits to nine different countries, including Sweden, where investment in Locally Controlled Forestry (ILCF) has been a successful model for almost a century, have revealed governments, investors and communities need to collaborate to remove barriers.

According to Yani Septiani from the Indonesian Ministry of Forestry and member of the Forest Governance Leaning Group (FGLG), Indonesia has already started to explore options that would incorporate the ILCF model into their legal system. Findings from a TFD Field Dialogue in Indonesia in February 2012 indicated that communities are facing difficulties in attracting investment or bank loans that would be needed to scale up their activities.

The Ministry of Forestry  is actively working with the Ministry of Finance to accelerate  investments into community forestry in Indonesia to explore potential investment funds from various sources, including national and international bodies. "One option is through 'an evolving financial scheme for forest community development' or the so-called: pinjaman dana berguliruntuk pembangunan kehutanan, for which source funding would mainly come from the national reforestation fund." Other potential sources are funds through The Government Investment Programme that was set up to finance development projects, including forestry sector projects, and funds from FIP (Forest Investment Programme).

Four types of forests are targeted: privately-owned community forests (“Hutan Rakyat”), community forests on state-owned land, (“Hutan Kemasyarakatan”), community-based plantation forests on state forest lands (“Hutan Tanaman Rakyat”), and village forests (“HutanDesa”).