BRIK - a flawed approach

Down to Earth No 60  February 2004

Indonesia's forestry industry is becoming aware that consumers in Europe and North America want assurances that timber products are not imported at the cost of rainforest destruction. The Indonesian government is putting its faith in the Forestry Industry Revitalisation Agency (BRIK - Badan Revitalisasi Industri Kehutanan) to ensure the survival of the country's wood processing industry and to satisfy international demands for action on 'illegal logging'

Forestry minister Prakosa has promised that all Indonesian plywood from BRIK-endorsed companies comes from legally cut logs. "I will send a written statement to every buyer in England guaranteeing that the plywood is legal," he is quoted as saying. He sent a high level mission to London in February - including BRIK chair Soewarni, head of the forest production directorate Suhariyanto and representatives of six major timber and plywood companies - to try to convince UK government staff, timber importers and NGOs that the new system is effective. Timber trade federations in Europe are keen to have proof that the wood and timber products they import are from legal sources, not least because campaigning groups like Greenpeace and Rainforest Action Network have targeted timber importing companies in the UK and USA (see DTE 58 & 59).

The Indonesian government is committed to restructuring the forestry industry as one of the key steps towards reducing the country's deforestation rate - one of the highest in the world at nearly 4 million hectares per year. Forcing this industry to make serious cutbacks is proving to be a slow and painful process. Prakosa has set a limit of 5.7 million cubic metres for the timber supply from natural forests in 2004. Although industry capacity was estimated at over 100 million cu m in 1999, some companies have gone bankrupt or closed down in recent years. Companies are being told to import timber or use 'fastwood' produced from industrial timber estates. This is not realistic for Indonesia's sawn timber and plywood sectors which can only operate profitably with a steady supply of the tall, straight trees that are found primarily in the nation's rapidly disappearing mature rainforests.

Indonesia's powerful forestry industry warns that attempts to cut it down to size will damage the economy, cause massive unemployment and even accelerate 'illegal logging'. Since the 1970s, logs, sawn timber, plywood, furniture and paper pulp have been major export earners. They contributed US$6.5 billion to the country's foreign exchange revenues in 2002 (11.5% of the total). There are some signs that exports may be slowing. The Indonesian Wood Panel Association (APKINDO) reported a modest fall in exports of plywood in 2003 to 5.5 million cu m from 6.5 million cu m the previous year. Forestry-based companies have informed the Ministry of Manpower and Transmigration that they intend to lay off at least 50,000 workers in Riau and Kalimantan due to the downturn in business (JP 27/Dec/03). The forestry industry body, APHI, has claimed that the logging quota acted as a spur for illegal logging as companies find it increasingly difficult to meet their demand for raw materials. Meanwhile, the Indonesian government has promised the industry 'a soft landing'.

BRIK was set up jointly by the ministers of trade & industry and forestry in December 2002. It is described as a non-profit organisation and is run by business representatives, not government officials. Its broad brief encompasses "realising sustainable forest management, supporting forest industry revitalisation and improving the development and utilisation of technology in the forestry sector." Its principal activity to date has been to accept applications for permission to export processed timber from nearly 4,000 Indonesian timber mills. Soewarni has also called for new timber-hungry wood processing companies to be shut down to protect the industry.

Since October 2003, Indonesian timber exporters have had to apply for a new licence: the ETPIK (Eksportir Terdaftar Produk Industri Kehutanan). To receive an ETPIK certificate, a company must join BRIK. There is no membership fee; mill owners just have to supply three documents: a report containing the volume of timber consumed by that mill from January 1, 2003 until the application date (Laporan Mutasi Kayu); a copy of each transportation document that has accompanied each load of logs received (SKSHH); and the total volume of plywood, sawn timber or mouldings manufactured at the year end. All this data is entered into BRIK's computer system. BRIK can thus calculate the amount of timber each factory is consuming and compare this with its output. Furthermore, a licensed company must inform BRIK each time it wants to export wood products.

In theory, this system enables BRIK to check that no company is producing more processed timber than its legal intake of raw material allows. It can also check that the raw material received by each member factory is covered by legal timber transport documents. In addition, it can determine the total consumption of timber of all its members and compare this figure with the annual allowable harvest. Finally, BRIK can check what is actually going on at wood processing factories by making spot checks.

In this way, BRIK claims to be auditing the quantities of timber used by all Indonesian forestry companies which sell products overseas. ETPIK listing can be removed if a company does not export any timber for a year, if it fails to report any changes in access to timber sources or if it is shown to be exporting 'illegal timber'. Companies which export suspiciously large volumesof timber products or amounts in excess of production licenses could also have their operating permits withdrawn by the department of forestry.

Most of the eight large plywood mills caught red-handed with illegal timber by department of forestry investigators between late 2002 and mid-2003 were members of BRIK and export with EPTIK licenses. PT Kayu Lapis Indonesia, a plymill in Semarang, Central Java, came under suspicion of using illegal timber from West Kalimantan in late 2003. This did not preclude a representative from PT Kayu Lapis from joining the February lobby to the UK. BRIK's chair, Soewarni, said she would stop its export licences after the facts had been checked, but no reports of further action had been received when DTE went to press.

BRIK came in for strong criticism from a number of sources when it was first established. Monopoly Watch described it as "a cartel of timber producers dominated by former businessmen who belonged to the plywood industry association". National and local politicians complained that it was merely a new form of bureaucracy that only hampered exports. Customs officials reported that piles of furniture and plywood piled up at the docks in Surabaya on several occasions last year awaiting endorsement from BRIK. Others claimed BRIK only served the interests of the big timber companies while placing huge burdens on small and medium sized enterprises.

Nevertheless, the Indonesian timber industry now considers that BRIK is more than enough to satisfy international demands that exporters prove the legality of their timber products. The department of forestry is also a staunch defender of BRIK. However, international timber importers - such as the UK-based Timber Trade Federation - are far from convinced and want to set up independent checks to track timber from stump to mill to exported furniture veneers. (BRIK does not release information on the actual source of timber used, for example, in plywood although it is on the computer system.) The Indonesian government is offended that European purchasers doubt BRIK's effectiveness and is outraged that they only plan to carry out 'scoping studies' of Indonesian mills, while mills in Singapore, Malaysia and China operate with impunity using timber smuggled from Indonesia.

Flaws in the system

BRIK is undoubtedly a step towards checking and controlling the timber used by Indonesia's exporters. Its data collection and analysis is more reliable and very much faster than the department of forestry's own system - thanks to large numbers of data entry staff. But BRIK alone is not the answer to Indonesia's deforestation problems. Only 3,893 companies are licensed by BRIK (198 ply mills, 1640 saw mills and 2205 furniture producers), yet there are probably many thousands of other wood processing units in Indonesia. BRIK argues that all the major producers for export are members, but Indonesia also has a large domestic demand for timber. BRIK has enough field staff to check only a proportion of the biggest ply mills once a year. Moreover, pulp and paper factories - long suspected of being major contributors to 'illegal logging' - are not yet required to have ETPIK permits to export. Even ETPIK holders could be secretly consuming up to one third more timber than is officially reported due to the high figure for wastage which BRIK uses in its production calculations.

Corruption associated with log transport permits is another major problem. The BRIK system relies heavily on SKSHH documents as proof of the legality of timber. These are the weakest link in the chain of verification. SKSHH are the responsibility of the department of forestry, not BRIK. They are produced centrally, then issued in batches to provincial and district forestry offices. The local authorities are unable or unwilling to stamp out the thriving illegal trade in real and forged SKSHH documents. And, since the introduction of regional autonomy, forestry officials in Jakarta do not have the authority to control them. If a company with an SKSHH and sufficient quota asks BRIK to endorse a shipment for export, BRIK must grant this. It can only refer the documents to the forestry department later if these are found to be counterfeit.

'Legal timber' ?

Civil society groups point out that BRIK only deals with some of the symptoms of the crisis of Indonesia's disappearing forests instead of fundamental issues such as the relationship between timber companies and forest communities. The fundamental flaw in the work of BRIK and the log tracking studies funded by international timber importers is their acceptance of the official definition of legal timber (see box). This makes no reference to human rights and the only tenure issues referred to in the guidance notes are for the company, not forest peoples.

The wording - which has yet to be finally agreed and publicised - was the result of studies in two provinces (East Kalimantan and Riau) which fed into a national workshop as part of the UK-Indonesia Action Plan to curb illegal logging and the associate trade in timber.

Although the process was called a 'multi-stakeholder' consultation, it was tightly controlled by the forestry department. It also operated strictly within the terms of the 1999 Forestry Act which does not acknowledge indigenous rights. The indigenous peoples' alliance, AMAN, which was only invited to participate at the last moment, rejects this definition of legality and continues to demand the recognition of customary rights over forest lands - as included in the Consultative Assembly Decree, TAP MPR IX 2001.

The Indonesian environment forum, WALHI, also argues that just verifying the "legality" of timber is no guarantee of whether it was produced "sustainably" and they have repeated their call for a moratorium on all industrial-scale logging.

(Source: (Jakarta Post 7/Jan/04, 4/Sept/03, 27/Dec/03; Bisnis Indonesia 22/May/03, 25/Sep/03; Suara Pembaruan 11/Apr/03; Kompas 22/Apr/03; Media Indonesia 19/Mar/03)