Despite some small progress in timber certification, there has been no benefit due to postponement of the voluntary partnership agreement (VPA) with the European Union.

The timber industry remains effectively locked out of the European market.

Forestry Ministry secretary general Hadi Daryanto acknowledged the failure to have all timber certified under the system by March, the initial deadline, but claimed progress had been made, with over 660 companies having secured the timber legality verification certificate, known locally by the acronym SVLK .

Expensive certification fees and a lack of assessors to evaluate the legality of timber are the reason behind the sluggish certification procedure.

Despite the glacial pace of the transition, Hadi claims the country is halfway to having its major companies certified and said he was pushing '€œthousands of furniture craftsmen to form groups to bear the certification expense together and access international markets.'€

Forestry business players have often complained about the expense of documentation, a rigmarole that requires them to pay from Rp 60 million (US$6,120) to Rp 100 million for a certificate.

Hadi insists that the government has improved certification by authorizing more assessors. There are now 11 authorized assessing companies'€”compared to four in 2010 when verification became mandatory'€”with three others awaiting approval.

'€œWe are committed to fighting illegal logging and log trading, but we are disappointed with the European Union. The EU has time and time again postponed the VPA, while our timber industry has spent substantial sums on certification in the reasonable expectation of enjoying the benefits of the agreement,'€ Hadi said.

The SVLK was introduced in 2003 to fight illegal logging which was running virtually unchecked nationwide.

Illegal logging has destroyed more than 1 million hectares of forests annually for the past few years, according to official statistics.

The SVLK has been mandatory for industrial forest concessions, production forest concessions, community plantation forests and timber-related industries since 2010 and was expected to smooth the way into the European market. The EU timber regulation, which came into effect in March, requires importers and sellers of timber and wood products to keep records of the sources of their supplies.

To comply with the regulation, due diligence must be conducted to ensure the timber is legal.

These regulations apply to a wide range of timber products, with exceptions for products with a Forestry Law Enforcement, Governance and Trade VPA license or Convention on International Trade in Endangered Species license. Timber with these licenses is considered by the EU to have been legally harvested.

Indonesia negotiated the VPA with the EU in 2007 and was the first country to conclude the negotiation with the signing of a memorandum of understanding in 2011, but the signing of the VPA itself was delayed twice last year and has been deferred several times this year. The necessity for translation into 21 EU languages is said to be behind the postponement.

The exclusion of Sabah and Sarawak on Borneo from the VPA with the EU agitated the Indonesian government. The two states are widely regarded as laundering spots for illegal Indonesia wood, Hadi said.

'€œWe will keep working to accelerate the certification and the VPA to show how committed Indonesia is to curbing illegal logging. Without the VPA we will just have to bear losses in the European market,'€ Hadi said.

Business players share Hadi'€™s view. Despite uncertainty around the VPA and the costly SVLK procedure, the certification has to go ahead to advance forest-related industries.

'€œThis repeated postponement is very uncomfortable. We think the EU might be afraid that our timber will dominate their market and influence the price now that Indonesia is the only VPA-negotiating country with a complete certification system. Timber products from Indonesia should be able to directly enter their market once VPA is signed,'€ Association of Indonesian Forest Concessionaires (APHI) chairman Purwadi Suprihanto said.

Purwadi believes the certification is a chance for the upstream sector to rehabilitate a reputation that has so often been blamed for illegal activity and deforestation.

Log exports have been prohibited since 2001 to contain deforestation.

Although the association will not directly benefit from certification, the APHI wants to have half of its member certified by the end of the year and all of its members by the end of 2014. Today, of 425 members only 126 have secured the certificate.

The Indonesian Furniture Entrepreneurs Association (Asmindo), on the other hand, has only had 30 of its 400 major companies certified. Five groups of 10 to 15 small companies each have been certified, out of a total 2,000 small Asmindo members that need the certificate.

Asmindo chair Ambar Tjahjono said that his association wanted half of its major members certified by August and had cooperated with the Indonesia World Wildlife Fund to train and fund over 30 furniture SMEs in 12 cities on a two-year funding program.

Despite the delay, Ambar hopes that things will go according to plan and that the government would keep the SVLK on track.

Ambar said it was important that producers got greater access to the global market. The only way to achieve this is by guaranteeing buyers that the wood and wood-based products originate from legal practices and were sourced in an environmentally friendly manner.

EU countries import $1.2 billion timber and paper from Indonesia annually, which is equal to 15 percent of total wood-based exports.

Timber exports in 2012 hit 2.62 million cubic meters with a total value of $1.52 billion. Although the revenue of $1.2 billion was greater than the year before, the volume was lower than 2011 at 4.11 million cubic meters.

Furniture exports in 2012 reached $1.8 billion, down from the previous year'€™s $2.18 billion.

This year, the business community has expectations furniture exports of $2 billion, even lower than 2010 when the amount stood at $2.7 billion.

Exports in January surpassed last year'€™s number by 4 percent, totaling $164 million.

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