Current Policy Development to Support the Shifting Paradigm Towards Sustainable Forestry Business in Indonesia
By Sonya Dyah Kusumadewi, BMRC Indonesia National Consultant and Krisdianto Sugiyanto, BMRC Co-Chair and Ministry of Forestry of the Republic of Indonesia
To support sustainable forest management and inclusive economic growth, the Government of Indonesia is 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 has involved broad stakeholder 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 webinar, held on 2 September 2026, focused on transforming Indonesia’s sustainable forestry business ecosystem to attract investment, improve PBPH (Forest Concessionaires) performance, and optimise non-tax state revenue from forest utilisation. The session featured Dr. Krisdianto Sugiyanto, Co-Chair of the BMRC and Director of Forest Revenue and Forest Products Administration, alongside other officials from the Directorate General of Sustainable Forest Management (Figure 1). Discussions explored how the revised regulation can strengthen sustainable forestry businesses while contributing to local and national economic development.
Opening the webinar, Ir. Erwan Sudaryanto, MM., Secretary of the Directorate General of Sustainable Forest Management, explained that the revision aims to shift Indonesia towards a new forestry business model that balances environmental sustainability with stronger economic returns. By encouraging value-added forest products and ecosystem services, the government hopes to make sustainable forest businesses more attractive and profitable while delivering benefits to local communities.
Speakers highlighted that the revised regulation will support this transition by simplifying the implementation of multi-forestry businesses. This will enable investors to diversify beyond timber, improve profitability, and build stronger partnerships with local communities, generating wider economic benefits.
As Dr. Krisdianto noted:
“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.”
Creating Business Certainty Through Better Governance
A central focus of the revised regulation is improving transparency, reducing administrative complexity, and creating greater certainty for investors. To address overlapping land rights and tenure conflicts, the Ministry of Forestry has launched the Forest Utilisation Guidance Map (PAPH), which will provide clear spatial guidance for licensing and investment decisions.
The PAPH identifies approximately 5.6 million hectares of forest land suitable for sustainable timber and ecosystem services businesses. By integrating key forestry datasets, including forest cover, existing licences, customary forests, and social forestry areas, the map is expected to improve planning, reduce investment risks, and support transparent licensing and monitoring processes.
The revised regulation will also strengthen monitoring and evaluation systems through clearer performance requirements, government oversight, and independent sustainability assessments. By integrating environmental, social, and economic indicators into evaluation processes, the government aims to improve accountability while creating incentives for responsible investment.
In addition, digital transformation will streamline the integration of licensing, production reporting, harvesting permits, and taxation systems. Improved collection of forestry revenues will contribute to national development, while a significant share of these funds will support green development initiatives at the local level.
Stakeholder Reflections
Representatives from research institutions, certification bodies, and industry associations welcomed efforts to improve regulatory certainty and simplify procedures. They noted that stronger business certainty and more effective monitoring systems could enhance investor confidence in sustainable forest management.
At the same time, stakeholders highlighted the importance of keeping the PAPH updated in real time to prevent future tenure conflicts and ensure the guidance remains relevant. Suggestions were also made to strengthen links between independent sustainability audits under Indonesia’s Timber Legality and Sustainability Assurance System (SVLK) and government monitoring processes to support continuous improvement in forest management practices.
Supporting Sustainable Growth
By modernising licensing, monitoring, evaluation, and revenue collection systems, the revised regulation seeks to build a more efficient, transparent, and investment-friendly forestry sector. The reforms are expected to attract green investment, strengthen public trust, improve sustainability performance, and generate greater economic benefits for communities and the nation.
Following six months of consultations and stakeholder engagement, the regulation is now nearing completion and is expected to be issued by the Minister in the near future. The process demonstrates Indonesia’s commitment to adaptive governance and offers valuable lessons for other countries seeking to balance sustainable forest management with economic development.
