Ahead of implementation of the Forest Law Enforcement, Governance and Trade (FLEGT) action plan in the European Union (EU) on 1 April 2016, EU members request that all wood and timber products exported from Indonesia into the EU have the Timber Legality Verification System (in Indonesian: Sistem Verifikasi Legalitas Kayu, or, SVLK) certificate. The SVLK is an Indonesian system designed to verify the legality of its timber products. Meanwhile, the EU's FLEGT plan is designed to combat illegal logging and enhance forest management across the globe.
The mandatory SVLK certificate has raised Indonesia's competitiveness in international timber trade as it shows the country's commitment to monitor legality in the wood industry. However, in October 2015 the Indonesian government issued Trade Minister Regulation No.89/M-DAG/PER/10/2015. Through this new regulation it exempts 15 product groups (HS Codes) from the SVLK verification system (a deregulation measure), hence undermining targets of the SVLK as it opens room for illegal wood coming into the supply chain (it is known that illegal timber circulates rampantly through the country), hence making the EU question to what extent Indonesia is committed to ensure timber legality as well as sustainable forest management in Southeast Asia's largest economy and one of the world's key commodity producers.
This exemption in fact jeopardizes implementation of the FLEGT action plan in the EU per April 2016 and therefore stakeholders hope that the EU and Indonesia can harmonize their policies soon. Currently, approximately 40 percent of wood products in the EU originate from Indonesia. Wood exports from Indonesia into the EU experienced remarkable growth after the Southeast Asian nation enforced the SVLK system in 2009.
The positive impact of the SVLK certificate on the country's wood trade is also evident as ASEAN member countries Vietnam, Myanmar and Malaysia, which do not have a SVLK system, are reportedly planning to send representatives to Indonesia for the purpose of studying the SVLK system in a bid to make their wood products more competitive on the international market.