Indonesia pushes multi-enterprise forestry to boost economic value

Jakarta (ANTARA) - The Forestry Ministry is promoting the transformation of forest area utilization through a multi-enterprise forestry scheme to increase the economic value of forests.

This value increase is estimated to be up to 10 times greater than conventional timber-reliant business models.

The Director General of Sustainable Forest Management at the ministry, Laksmi Wijayanti, stated in a media briefing in Jakarta on Thursday that the low economic value of forests remains one of the main challenges in sustainable forest management.

This condition often makes forest areas less competitive than other land uses that are considered more economically profitable.

"If we continue with our current business model, the value per hectare of forest is low. If we look at the contents of the forest, it is clearly underpriced. It is understandable that people consider it better to replace it with something else," she said.

Several studies indicate that the direct economic value of forests remains relatively low. A study by the Faculty of Forestry and Environment at IPB University estimated the value at around Rp4 million per hectare per year, far below the annual value of oil palm plantations, which reaches around Rp40 million per hectare.

To that end, Wijayanti stated that the government is striving to improve this situation by developing multi-enterprise forestry schemes that allow for the simultaneous utilization of various forest resources, including timber and non-timber forest products, agroforestry, environmental services, eco-tourism, and carbon trading.

She stated that this scheme can significantly increase the economic value of forest areas while maintaining their ecological functions.

"We hope that with multi-enterprise schemes, that value will increase tenfold. We are still using agroforestry schemes for food reserves. That will automatically increase tenfold," she added.

Wijayanti stated that this transformation is also necessary because the forestry business model, which has historically relied on timber, faces competitive challenges.

According to her, several wood-based forestry products, particularly those from natural forests, have experienced stagnant growth, depressing business profitability and investment in long-term forest management.

Currently, forestry concession areas cover approximately 29 million hectares, while the government is also implementing a 12 million-hectare social forestry program to expand community access to forest management.

Through the multi-enterprise forestry scheme, concession holders are encouraged to form partnerships with local communities to develop agroforestry and other strategic commodities.

Wijayanti stated that some concessions that have implemented multi-enterprise forestry have allocated around 100,000 hectares for community partnerships, including through agroforestry development.

"We want forest utilization to be equitable. It should not be concentrated in the hands of just a few parties. Communities must also be encouraged to participate," she said.

Besides agroforestry, Wijayanti believes the economic value of forests can be increased through the development of environmental services, including carbon trading, which the government is currently introducing as a new source of income for forest managers.

She said opportunities for increasing economic value could also come from the development of biodiversity credit instruments and various environment-based financing schemes that are emerging globally.

"We believe it could actually be hundreds or even thousands of times greater than the current value," she said.

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Translator: Arie Novarina

Editor: Azis Kurmala

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