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mall businesses may miss out on the opportunity to export timber to European Union countries as they lack proper business documents and financial assistance.

According to Agus P. Djailani, a small and medium enterprises (SME) technical assistant for the Multi Stakehoder Forestry Programme (MSFP), a majority of small businesses continue to experience fundamental problems that prevent them from passing an audit to obtain the government'€™s Timber Legality Verification System (SVLK) certification.

The certification verifies that timber is legally sourced and environmentally friendly.

Beginning in 2014, certified firms can export forestry products to Europe under the Voluntary Partnership Agreement on Forest Law Enforcement Governance and Trade (FLEGT-VPA), signed by the Indonesian government and the EU in September.

'€œHowever, they must posses various legal business permits, which are often very costly and complicated, to qualify for an SVLK audit,'€ Agus said after speaking in a discussion held by the International Centre for Trade and Sustainable Development (ICTSD) and the Center for International Forestry Research (CIFOR), on Thursday.

At the same time, not having the permits has prevented small entrepreneurs from accessing financing to fund the whole process, he added.

Indonesian Ombudsman data shows that for instance, each SME may require more than Rp 17 million (US$1,420) to acquire the necessary environment-related business documents.

In addition, the SVLK audit process costs between Rp 24 million and Rp 30 million per enterprise and is valid for three to six years, depending on the size of the company.

According to CIFOR, there are 4,000 registered timber exporters as of now. However, there are still tens of thousands of unregistered small timber businesses.

CIFOR forest governance scientist Krystof Obidzinski said it would take more time, money and capacity building to assist small businesses in preparing themselves to undergo the SVLK audit.

Forestry Ministry director of forestry development Agus Sarsito said that inter-ministry coordination '€” between the Forestry, Trade and the Cooperatives and Small and Medium Enterprises ministries '€” was important for solving the problem. Trade Ministry trade defense director Oke Nurwan argued that the main problem lied in the lack of awareness of export trends and SVLK among small entrepreneurs.

'€œThey see the SVLK audit as an obstacle, though such certification is getting more and more necessary in the global market,'€ Oke said. As an upshot, he added, the certification would enable their legal products to fetch a higher price.

The EU is currently one of Indonesia'€™s main export destinations for timber products. The Trade Ministry estimates that the FLEGT-VPA may boost timber exports by between $1.8 billion and $2 billion in 2014. In 2012, Indonesia'€™s total timber exports reached $10 billion.

Meanwhile, Colin Crooks, the deputy head of the EU delegation to Indonesia, Brunei Darussalam and ASEAN, proposed that a guarantee from a village head might be used as a way to help determine the status of small businesses.

Separately, Centre for Strategic and International Studies (CSIS) economist Titik Anas urged more involvement from the Cooperatives and Small and Medium Enterprises Ministry to help small businesses acquire the proper permits.