Reports

Planting Trees, Growing Businesses:
The Role of micro, small and medium sized enterprises in the revitalization of the forestry sector in Indonesia.
by Dominic Elson
Published by IFC (World Bank) and DKN (Dewan Kehutanan Nasional / National Forestry Forum), July 2007.
PDF format, 1.6mb

Download DKN_MSME_report_June07.pdf

Keywords: Indonesia, forest, tenure, SME, agroforestry, poverty, Kyoto, carbon

Abstract
The purpose of this policy brief is to review the impending regulations pertaining to community forestry that follow on from the forestry law PP06/2007 and consider how it may help or hinder the micro, small and medium sized enterprises (MSME) that operate in the forestry sector, throughout the value chain from forest to furniture. A consideration is made of the importance of the MSME sector in Indonesia, particularly its apparent role in alleviating poverty. By analyzing the current approach to ‘people’s plantations’ (HTR) and ‘community forests’ (HKm), recommendations are made for adjustments to the proposed regulations to improve the likelihood that community-based forest enterprises will thrive in the new paradigm of tenure reform. These aspects are considered in the light of certain external factors that may influence the forest reform process, in particular how the political economy of climate change and the post-Kyoto negotiations may place more emphasis on growing trees rather than fostering livelihoods. Furthermore, the role of private sector financial institutions, community-company partnerships and equity investors are reviewed to establish the most effective method of linking finance and expertise to forest communities. A number of specific recommendations are made to close the gap between the good intentions of the reform process and the difficulties in implementing it in a manner that empowers communities to set up and enjoy the benefits from sustainable forest enterprises.