1.
Herry Purnomo
Green Economy and Timber Value Chains

2.
Is it certified?
Is it legal?
Look at your table

3.
• Is the major way to define sustainable
forest management
• Leading to inclusive green economy of
timber
Forest Certification

4.
Green Economy
• Advocated after Rio+20
summit in June 2012.
• ‘The Future We Want’ (UN
2012):
• Poverty eradication
• Promoting sustainable
patterns of consumption
and production
• Protecting and managing
natural resource
development
UNEP 2011

5.
Global Value Chains
• Globalized trade make
fragmenting of
production
• Linking to global value
chains provide better
market access
• SMEs are becoming
global players
Kaplinsky and Readman (2000)

6.
Global furniture trade
 US$ 130 billion
 Indonesia’s share was about 1.5%, Malaysia 1.5%,
Thailand 1% and Vietnam 4%, and China is the biggest.

7.
Why furniture?
1. The most labor intensive industry in forestry
– millions people
2. Real business -- $ billions
3. Dominated by SMEs – strength in numbers
4. Women play key roles
5. Stocking carbon outside forest and
connected to everyone

8.
Jepara Furniture
• 10% of Indonesia’s export
- $110 million annually;
• 11,981 businesses; 0.9
million m3 wood annually
• Hit by global financial crisis
in 2008
• Facing legality certification
– EU, USA and Australia
• Women paid less than men

9.
Action research to
improve SMEs through
five scenarios:
1. Moving Up
– National and
international trade
exhibitions
2. Green Product:
SVLK/TLAS (legality
certification) and FSC
3. Small-scale producer
Association
Furniture value chain governance

10.
4. Collaborating Down
5. Furniture industry Roadmap 2014-2024: A district regulation
will be issued by Jepara Parliament in July 2014

11.
Certification
process
• SVLK became mandatory
– 21 December 2011 (Ministry of
Forestry Regulation P. 68/Menhut-
II/2011).
• Trainings and facilitation for
APKJ members
• APKJ members individually
and by group obtained SVLK
certification in June 2013.

12.
• Pengeringan kayu
– Observasi kondisi pengeringan kayu di Jepara
saat ini
– Pembuatan bagan pengeringan 10 jenis kayu
– Pembangunan demplot pengeringan dalam
skala IKM di Jepara
– Pelatihan pengeringan kayu (2011, 2012, 2013)
Legality is a part of improving SMEs for capturing
greater value added

13.
Understanding cost and benefit for certified
forest products
• Cost for producers
– TFT (+6%), FSC (30%), LEI (+10%), SVLK (1-3%)
• Willingness to pay more from consumers
– Forest products: +10-25% (Aguilar dan Vlosky, 2007)
– IKEA product (+16% in England), (+7.5% in
Norway) (Veisten, 2007)

14.
Buyer Perspective for certified furniture
Urban buyers (Wulandari et al.
2011)
Conventi
onal
41%
Green
23%
Greener
20%
Greenest
16%
0
5
10
15
20
25
30
35
40
1 5 10 15 20 25
Willingness to pay more (% )
Consumers (%)
Putro, 2010

15.
Role of women

16.
Potential impacts of actions in each
scenario on women’s roles
Scenario Potential impact
Very
low
Low Medium Strong Very
strong
Score
Mode
Moving up 0 0 2 6 2 Strong
SME
association
0 0 3 7 0 Strong
Collaborating
down
1 0 1 8 0 Strong
Green product 1 0 3 4 1 Strong
HOW TO: Actions need to be designed specifically for women

17.
MAIN IMPACTS
 Improved incomes
(statistically significant)
 They produced certified
furniture
 Issuance of District Law
(PERDA)
 Example of small-teak
plantation

18.
Legality

19.
District Law

20.
Securing raw material Small-scale teak

21.
Market penetration

22.
Stocking carbon
outside forest

23.
Indonesia is leading in legality verification
in ASEAN
• 5 million ha forests under SVLK  FLEGT
License
– It can be affected by BREXIT
• 5 million ha forests are certified by
– FSC (Forest Stewardship Council) – 2 million ha
– PEFC (Program for Endorsement Forest
Certification) – 1 million ha
– LEI (Indonesian Eco-labelling Institute) – 2 million
ha

24.
5 million ha certified after 20 years is not good
enough, how to move forward?

25.
Brexit impacts on timber
trade in Asia Pacific
• Economy
– Declining economy of UK and
EU (2-3%)
– EU  China  Asia Pacific
• Politics
– Less support from UK in EU-
FLEGT license negotiation
• Rattles EU-Asia Pacific
timber trade

26.
Green Economy and Timber Value Chains
1. Globalized trade and international processes -
SDGs
2. Buyer driven
3. Legality and certification
4. Inclusion of SMEs
5. Multi-stakeholder processes – bottom up,
government support and women participation

27.
Thank You