By Sonya Dyah Kusumadewi, BMRC Indonesia National Consultant and Krisdianto Sugiyanto, BMRC Co-Chair and Ministry of Forestry of the Republic of Indonesia
Current Policy Development to Support the Shifting Paradigm Towards Sustainable Forestry Business in Indonesia
To advance sustainable forest utilisation and promote inclusive economic development in Indonesia, the Government of Indonesia is now revising Ministerial Regulation No. 8/2021 (P.8/2021) on Forest Governance, Forest Management Plans, and Forest Utilisation in Protection and Production Forests. The revision process involves participatory multi-stakeholder processes and expert consultations, including a series of webinars organised by the Ministry of Forestry, in collaboration with the Multistakeholder Forestry Programme Phase 5 (MFP5).
The final consultation session was held on September 2, 2026, through an interactive webinar entitled “Transforming the Sustainable Forestry Business Ecosystem to Drive Investment, Enhance PBPH (Forest Utilisation Business License) Performance, and Optimise PNPB (Non-Tax State Revenue) from Forest Utilisation“.
Dr. Krisdianto Sugiyanto, Co-Chair of the BMRC and Director of Forest Revenue and Forest Products Administration at the Ministry of Forestry, served as a panellist in the webinar (Figure 1), along with other speakers from various units within the Directorate General of Sustainable Forest Management: Dr. Drajad Kurniadi S.Hut, M.Si. (Deputy Director of Protected and Production Forest Area Zoning, Directorate of Forest Utilisation Planning), and Dr. Risno Murti Candra, S.Hut, M.Sc. (Deputy Director of Business Performance Evaluation, Directorate of Forest Utilisation Business Control). This webinar discussed how the revised regulation can support a better forestry business ecosystem in Indonesia, especially in implementing sustainable multi-forestry businesses and leveraging the local and national economy.
The webinar was opened with remarks from Ir. Erwan Sudaryanto, M.M, the Secretary of the Directorate General of Sustainable Forest Management. He emphasised that the revision of P.8/2021 aims to facilitate a shift towards a new paradigm of sustainable forestry business that will prioritise forest ecosystem sustainability while optimising benefits for local communities contributing to greater national economic development. Historically, the lure of higher profits in non-forestry sectors has driven forest conversion. Thus, this transformation focuses on encouraging sustainable utilisation and value-added activities for forest products and ecosystem services so that forest businesses can be more profitable. Ir. Sudaryanto also emphasised that a profitable, large-scale business with a Forest Concessionaires (PBPH) can contribute to local and national economic improvement.
The speakers, including Dr. Krisdianto, explained how the transformation towards a sustainable forestry business will be supported through the revised regulation. This will be achieved primarily through facilitating better procedures for the implementation of multi-forestry businesses, encouraging forestry investors to diversify their products beyond timber, create more productive and profitable businesses, and build partnerships with local communities to deliver greater economic impacts.
As Dr. Krisdianto conveyed during the session:
“For sustainable forest management to be truly effective, it must rest on three non-negotiable pillars: it must be ecologically sustainable, socially accepted, and economically viable.”
Driving Transparent Processes and Procedures for Forestry Businesses while Creating Business Certainty
The updated regulation will address several key challenges faced by the forestry business sector on the ground in implementing the three sustainability pillars mentioned above. These challenges include overlapping rights and tenurial conflicts, complex procedures for harvesting retribution and taxes, and limited incentives for complying with mandatory standards.
To avoid overlapping rights and tenurial conflicts that may disrupt business implementation and increase underlying costs for investors — as well as prevent violations of local community and customary rights — the Ministry of Forestry is now preparing the Forest Utilisation Guidance Map (Peta Arahan Pemanfaatan Hutan – PAPH). This map has recently launched and will provide clear spatial guidance for the licensing process for both business entities and authorities. This map will provide direction on indicative areas available for new investment and has been aligned with several baseline maps within the forestry sector, such as the national forest cover map, forestry planning maps, existing licensed areas, customary forest rights, and allocated social forestry and agrarian reform maps.
The PAPH will cover indicative unmanaged areas in protected and production forests in Indonesia that are appropriate for timber and ecosystem service businesses, in accordance with applied laws and regulations. Currently, around 5.6 million hectares of forest area in Indonesia have been identified for further investment in timber and ecosystem service businesses. This PAPH is expected to support business certainty from the beginning of the licensing process and attract sustainable investment. It also contributes to supporting transparent processes and procedures for licensing, and further monitoring and evaluation (M&E) of the business and sustainability performance of license holders. The PAPH will also be interlinked with the newly launched Decision Support System (DSS), Jaga Rimba, which provides broader support for the alignment of all business processes within the Ministry of Forestry.
As M&E is one of the key activities to ensure the implementation of good governance and practices, effective enforcement for forestry business license holders will be facilitated through a multi-layered approach. Under Indonesian regulations, clear responsibilities and prohibitions guide both business operations and macro-level government oversight. The government will improve its active evaluation of license owners — providing guidance to improve practices and applying administrative sanctions if performance does not improve — while independent assessments are required to rigorously verify sustainability performance. This robust enforcement is expected to create a strong incentive for investors by establishing a clear business ecosystem that encourages compliance.
Furthermore, because current M&E indicators integrate the three pillars of sustainability (ecology, social, and economy) alongside required production progress, this can hopefully help to build long-term ventures. This comprehensive oversight aims also to increase transparency, transforming strict compliance into a competitive advantage that attracts responsible green investment.
A successful multi-forestry business through sustainable utilisation can become a pathway for leveraging the local and national economy. While collaboration with local communities and small-scale businesses are facilitated through initiatives such as social forestry, which deliver direct local economic benefits, the improvement of retribution and tax collection from forest utilisation activities can further contribute to supporting national development. Moreover, a significant portion of the collected funds will be reallocated to local governments to support green development in the region. To facilitate effective processes, an end-to-end digital transformation will seamlessly integrate taxation with broader forest production systems, licensing processes, and harvesting permits.
Reflections from the Current Practices
Besides the speakers, three discussants were also invited representing research institutions (Dr. Raden Deden Djenudin, S.Si, M.Si – Scientist from the National Research and Innovation Agency (BRIN)), practitioners (Ir. Kurnia, IPU – Head of the Independent Assessment and Verification Body Forum (LPVI Forum)), and business associations (Ir. Purwadi Soeprihantono – Secretary General of the Indonesian Forest Concession Holders Association – APHI).
The discussants highlighted that although ecological feasibility is important, investor motivation is driven primarily by economic benefits. Positive feedback was shared regarding the planned procedure improvements through the revision of the regulation with the hope that certainty in business and M&E procedures will strengthen economic incentives for investors to engage in sustainable forest management. On the other hand, several discussants raised concerns based on their experiences with current practices.
Concerns were raised relating to the PAPH, which will be operationalised as a reference map, specifically regarding how the system can accommodate changes over time. There was a suggestion that the system development and methodology for establishment should include real-time updates to prevent the recurrence of overlapping rights and tenurial conflicts caused by outdated information. Another key suggestion focused on how the map could support decision-making for investors by providing information regarding land suitability and appropriate commodities, including timber species and ecosystem services, according to law/regulation.
To support adaptive management, it was also suggested that recommendations for practice improvements resulting from the independent audit and surveillance process of the mandatory national forest and forest product certification (The Indonesian Timber Legality and Sustainability System – SVLK) need to be actively linked to, endorsed, and enforced by the government’s official monitoring and evaluation processes to connect on-the-ground practice compliance with legal obligations.
Harnessing Sustainable Forestry Business for Economic Development
By revising regulations to better reflect on-the-ground realities and restructuring administrative processes for licensing, monitoring and evaluation, and tax and retribution obligations, the government aims to optimise the entire forestry business ecosystem. This is expected to improve the accuracy and credibility of production reporting, enhance public transparency, build market confidence, and trigger green investment, boosting the local and national economy.
After accommodating feedback and input from a series of consultation processes over the past six months, the regulation process has reached its final stages, with a target for it to be signed and issued by the Minister as soon as possible. This process in Indonesia demonstrates how national forestry system implementation can be iterative to support adaptive actions towards good governance, and can hopefully act as a lesson-learned for BMRC countries and beyond.