Some 44 Indonesian NGOs engaged in forest governance issues have signed onto a statement released 31 March 2023, expressing their dissatisfaction with the recently adopted European Union Deforestation Regulation (EUDR). They believe the Regulation cannot prevent and reduce deforestation, greenhouse gas emissions, extinction of biodiversity, or protect smallholders, Indigenous Peoples and local communities (IPLCs), as it attempts to clean EU supply of certain deforestation-risk commodities but disregards the causes of deforestation and the failure to uphold the importance of protecting the customary land tenure rights of Indigenous Peoples and local communities.
In December 2022, the EU institutions agreed on the final text of the Regulation (FW 281), to be adopted in Spring 2023, which prohibits companies from putting products on the EU market unless they are deforestation free and legally produced. It will apply to wood, palm oil, soy, coffee, cocoa, rubber and beef as well as to most of the products derived from these commodities, such as hides and leather, chocolate, charcoal and (printed) paper.
Indonesia produces more than half the world’s palm oil. It is also the first consumer of palm oil. In 2020, over half of it was used for the Indonesian biodiesel and oleochemical industry. The EU was reckoned to be the third-largest consuming market for palm oil in 2021, with India in second place and China in fourth place. Indonesia, China and India all tend to source from supply chains with comparatively higher rates of deforestation risk. Trase estimates that these markets tend to rely on palm oil with 2.4 times the per-tonne deforestation risk of exports destined for export to the EU. In that context, Indonesian civil society believes addressing the key drivers of deforestation, such as weak governance and bad policies, and incentivising progress and achievement towards sustainable practices to keep the momentum going are crucial.
Such incentives are lacking, according to Indonesian CSOs. They say the EUDR neglects to provide incentives for smallholders who meet the deforestation free-requirements, and lacks teeth to strengthen community land rights. For instance, Papua is the new deforestation frontier in Indonesia, but is not associated with EU demand. In Papua Province, since 2000, forest estate land released for plantations in violation of customary land rights of Indigenous Peoples has totalled almost a million hectares – an area almost twice the size of the island of Bali. In March 2023, a West Papuan Indigenous leader filed a lawsuit over forestland grabbing by the Palm Oil Company PT Indo Asiana Lestari, claiming that his clan, the customary joint owners of the land, were not properly informed about the company’s planned activities.
Indonesian CSOs also say that the EUDR does not support Indonesia’s policy reforms leading towards sustainable management of forest-risk commodities production, which have not yet fully reached the deforestation-free stage.
Since 2016, Indonesia has been issuing FLEGT licences that facilitate the entry of timber and timber products to the EU market. The licences indicate that the products comply with a broad range of laws and regulations in the partner country pertaining, amongst other things, to forest management, environmental aspects, labour rights and community benefits.
Yet after the EUDR enters into force, FLEGT-licensed timber will qualify automatically as legal, but not necessarily as deforestation free. Indonesia will need to prove it is deforestation/degradation free in 2029. The lack of clarity about what will come after the end of FLEGT’s green lane for Indonesian timber is concerning for Indonesian NGOs. They would like to see some “sustaining and strengthening of the implementation of FLEGT VPA with the EU, a proven approach that has played an important role in improving governance in the timber sector in Indonesia”.
More than ever, the EU needs to intensify its diplomatic efforts and propose concrete ways forward to work closely with producer countries and local civil society. This, not only to clean up EU supply – the products of deforestation will find ample market access elsewhere, and deforestation will continue – but also to tackle the forces driving deforestation and to strengthen customary land tenure rights of Indigenous Peoples and local communities, who are clearly the best guardians of forests.