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Enabling sustainable projects in the
Forestry Sector
2014
2
AFD Strategy and Objectives in Indonesia
 Reconciling economic development and the preservation
of public goods (biodiversity and carbon) through
Sustainable Forest Management
 Support National policies (RAN-GRK and Forest
Management Units - KPH) by facilitating investments in
the forestry sector.
2
1
3
The time of plantations on forest lands
Main Findings :
 Hope of profitability of natural forest timber companies through sustainable practices
is getting lower in most areas in Indonesia (current practices are not sustainable,
the most accessible natural forest areas have already been felled ; higher logistical
costs)
 Natural Forest Companies would operate at a loss without diversification strategies;
investing in selected plantations is the only option
1. teak (high value wood with strong demand)
2. rubber (access to international market)
3. fast growing species (jabon, acacia, ..) planted in areas next to main transport
infrastructures and trading routes to keep operating costs low
 Plantation development is necessary to back industries with enough supply within the
framework of new National policies of RAN-GRK and REDD+
2
The time of plantations on forest lands
Necessary Means :
 Plantations require secured lands (30 millions ha on “permanent forest” without
tree cover).
 Plantation development requires capital and professionalism,
3
Enabling Sustainable Forestry Projects
I / By choosing to support Sustainable Project Investment Models
 Key Project Characteristics
1. Environmentally sustainable : serving Forest Conservation , Forest
Rehabilitation and Degraded Land Rehabilitation objectives with quantifiable
carbon saving targets
2. Socially responsible: it is a matter of sustainability and of risks mitigation as
AFD aims at promoting a new way to do business in the Indonesian forestry
sector
3. Economically viable :
 to answer private investors’ ouput and profitability criteria
 to reach bankability status
 and be lasting « going concerns » over a long period
4. Showing controllable risks : reliable risk mapping & adequate risk mitigation
solutions
4
6
Enabling Sustainable Forestry Projects
II / By creating a favourable Business Environment
Supporting the KPH (FMU) policy development in Indonesia as the main
set of measures to implement National policy (RAN-GRK and REDD+)
 Systemic, scalable with a potential impact on 110 millions ha with 600
KPH by end 2019
 Addresses core issues of long term forest management and
investment:
1. long term land planning
2. land tenure security
3. local communities inclusiveness
4. law enforcement & governance
5. professional forest management
 Creates a favourable business environment, able to attract private
companies that AFD can contribute to finance : the Wilaya Tertentu
concept as a PPP approach
5
Enabling Sustainable Forestry Projects
 KPH as services Provider to the Private partner :
1. Land encroachment and illegal logging prevention thanks to
preliminary land planning
2. Facilitation of cooperation & potential partnership with local
communities having land rights officially acknowledged
3. Managing HCV areas protection and conservation in and round the
contracted plantation area
 AFD support to KPH policy through financial tools
1. Estimating impacts on local communities
2. Bringing Technical assistance to “smallholders”
3. Analyzing and measuring the technical and economic risks of
projects
4. Bringing risk mitigation measures through technical assistance to
ease investments and financing decisions
5. Supporting Institutional reform and providing capacity building
(support to Forest Management Plan for KPH or concessions,
monitoring and law enforcement and dialogue on policies)
6
8
The KPH Gularaya : 110 000 ha of forest
landscape.
 Objectives
 The KPH Gularaya context is conducive to
attract plantation investors
 Plantation investments can be an “economic
engine” contributing to the financial autonomy of
the KPH for landscape management, to bring
technical assistance and enhance community
livelihood.
 KPH Gularaya in Southeast Sulawesi
Province: a diversified landscape natural
forest on dry land and mangroves,
commmunity plantations, degraded lands
 A balanced mix-production of commodities
(teak, bamboo) and public goods (carbon
and biodiversity)
 Investments in 20,000 ha of teak + 10,000
ha of bamboo + mix community plantations
on 4,800 ha of HTR & 5,000 ha on WT.
 Community and private investments.
7
9
What AFD is doing in Gularaya ?
 AFD works in partnership with SEKNAS
(coordination), GIZ (in charged of BLUD
process) and soon with WB (policy)
 AFD helps local community manage 4,800 ha
HTR (cooperative governance, plots allocation
to farmers, collective demonstration plots).
 AFD helps the preparation of the KPH
management and business plans.
 … and involvement of cooperative & NGOs in
KPH forest management plan design
 AFD is working on the detailed management
plans for teak and bamboo (mapping, land
condition analysis…).
 Institutional framework achieved by second
quarter 2014 (KPH established, “wilaya
tertentu” defined, management plan accepted,
BLUD Status obtained… ).
 AFD will help KPH attract the best investors
(prospectus, transparent call of interest)
8
Up: Head of KPH and NGO Jauh working on
forest management plan - 8 march 2014,
down, SEKNAS and NGOs
10
Results in Gularaya
 Communities (KHJL/JAUH)
 Governance of cooperative enhanced
 Professional GIS and foresters recruited
 Allocation of 241 plots (278 ha) on forest lands
to individual cooperative members
 723 ha under management including protected
and conservation areas by community.
 Plantations started on HTR
 Demonstration plot of 20 ha done
 KPH Gularaya
 Infrastructure done, staff recruited
 Mapping done
 Long-term management plan done
 Business plan in process (May 2014)
 Detailed mapping of future plantation area in
process (May 2014)
 Status BLUD (July 2014?)
 Conditions for investment (September 2014?)
9
Terima Kasih!
For more information: afdjakarta@afd.fr

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Enabling sustainable projects in the Forestry Sector

  • 1. Enabling sustainable projects in the Forestry Sector 2014
  • 2. 2 AFD Strategy and Objectives in Indonesia  Reconciling economic development and the preservation of public goods (biodiversity and carbon) through Sustainable Forest Management  Support National policies (RAN-GRK and Forest Management Units - KPH) by facilitating investments in the forestry sector. 2 1
  • 3. 3 The time of plantations on forest lands Main Findings :  Hope of profitability of natural forest timber companies through sustainable practices is getting lower in most areas in Indonesia (current practices are not sustainable, the most accessible natural forest areas have already been felled ; higher logistical costs)  Natural Forest Companies would operate at a loss without diversification strategies; investing in selected plantations is the only option 1. teak (high value wood with strong demand) 2. rubber (access to international market) 3. fast growing species (jabon, acacia, ..) planted in areas next to main transport infrastructures and trading routes to keep operating costs low  Plantation development is necessary to back industries with enough supply within the framework of new National policies of RAN-GRK and REDD+ 2
  • 4. The time of plantations on forest lands Necessary Means :  Plantations require secured lands (30 millions ha on “permanent forest” without tree cover).  Plantation development requires capital and professionalism, 3
  • 5. Enabling Sustainable Forestry Projects I / By choosing to support Sustainable Project Investment Models  Key Project Characteristics 1. Environmentally sustainable : serving Forest Conservation , Forest Rehabilitation and Degraded Land Rehabilitation objectives with quantifiable carbon saving targets 2. Socially responsible: it is a matter of sustainability and of risks mitigation as AFD aims at promoting a new way to do business in the Indonesian forestry sector 3. Economically viable :  to answer private investors’ ouput and profitability criteria  to reach bankability status  and be lasting « going concerns » over a long period 4. Showing controllable risks : reliable risk mapping & adequate risk mitigation solutions 4
  • 6. 6 Enabling Sustainable Forestry Projects II / By creating a favourable Business Environment Supporting the KPH (FMU) policy development in Indonesia as the main set of measures to implement National policy (RAN-GRK and REDD+)  Systemic, scalable with a potential impact on 110 millions ha with 600 KPH by end 2019  Addresses core issues of long term forest management and investment: 1. long term land planning 2. land tenure security 3. local communities inclusiveness 4. law enforcement & governance 5. professional forest management  Creates a favourable business environment, able to attract private companies that AFD can contribute to finance : the Wilaya Tertentu concept as a PPP approach 5
  • 7. Enabling Sustainable Forestry Projects  KPH as services Provider to the Private partner : 1. Land encroachment and illegal logging prevention thanks to preliminary land planning 2. Facilitation of cooperation & potential partnership with local communities having land rights officially acknowledged 3. Managing HCV areas protection and conservation in and round the contracted plantation area  AFD support to KPH policy through financial tools 1. Estimating impacts on local communities 2. Bringing Technical assistance to “smallholders” 3. Analyzing and measuring the technical and economic risks of projects 4. Bringing risk mitigation measures through technical assistance to ease investments and financing decisions 5. Supporting Institutional reform and providing capacity building (support to Forest Management Plan for KPH or concessions, monitoring and law enforcement and dialogue on policies) 6
  • 8. 8 The KPH Gularaya : 110 000 ha of forest landscape.  Objectives  The KPH Gularaya context is conducive to attract plantation investors  Plantation investments can be an “economic engine” contributing to the financial autonomy of the KPH for landscape management, to bring technical assistance and enhance community livelihood.  KPH Gularaya in Southeast Sulawesi Province: a diversified landscape natural forest on dry land and mangroves, commmunity plantations, degraded lands  A balanced mix-production of commodities (teak, bamboo) and public goods (carbon and biodiversity)  Investments in 20,000 ha of teak + 10,000 ha of bamboo + mix community plantations on 4,800 ha of HTR & 5,000 ha on WT.  Community and private investments. 7
  • 9. 9 What AFD is doing in Gularaya ?  AFD works in partnership with SEKNAS (coordination), GIZ (in charged of BLUD process) and soon with WB (policy)  AFD helps local community manage 4,800 ha HTR (cooperative governance, plots allocation to farmers, collective demonstration plots).  AFD helps the preparation of the KPH management and business plans.  … and involvement of cooperative & NGOs in KPH forest management plan design  AFD is working on the detailed management plans for teak and bamboo (mapping, land condition analysis…).  Institutional framework achieved by second quarter 2014 (KPH established, “wilaya tertentu” defined, management plan accepted, BLUD Status obtained… ).  AFD will help KPH attract the best investors (prospectus, transparent call of interest) 8 Up: Head of KPH and NGO Jauh working on forest management plan - 8 march 2014, down, SEKNAS and NGOs
  • 10. 10 Results in Gularaya  Communities (KHJL/JAUH)  Governance of cooperative enhanced  Professional GIS and foresters recruited  Allocation of 241 plots (278 ha) on forest lands to individual cooperative members  723 ha under management including protected and conservation areas by community.  Plantations started on HTR  Demonstration plot of 20 ha done  KPH Gularaya  Infrastructure done, staff recruited  Mapping done  Long-term management plan done  Business plan in process (May 2014)  Detailed mapping of future plantation area in process (May 2014)  Status BLUD (July 2014?)  Conditions for investment (September 2014?) 9
  • 11. Terima Kasih! For more information: afdjakarta@afd.fr