VZCZCXRO4099
RR RUEHCHI RUEHDT RUEHHM
DE RUEHJA #2140/01 2200026
ZNR UUUUU ZZH
R 080026Z AUG 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 5689
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHKO/AMEMBASSY TOKYO 0638
RUEHBJ/AMEMBASSY BEIJING 4185
RUEHBY/AMEMBASSY CANBERRA 0974
RUEHUL/AMEMBASSY SEOUL 4118
RUEAIIA/CIA WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 04 JAKARTA 002140 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/MTS AND EB/IFD/ODF 
TREASURY FOR TFCA - BERG 
DEPARTMENT FOR OES/IET and OES/ETC 
NSC FOR CEQ CONNAUGHTON, VAN DYKE 
 
E.O. 12598: N/A 
TAGS: SENV EAID ECON TBIO ENRG ID
SUBJECT: FORESTRY ISSUES DOMINATE VISIT OF OES A/S MCMURRAY TO 
INDONESIA 
 
 
¶1. (U) Summary.  In a visit to Indonesia July 26-29, OES A/S 
McMurray discussed deforestation and climate change with senior 
Government of Indonesia (GOI) officials from the Ministries of 
Forestry and Environment, non-governmental organizations, and a 
policy advisor to President Yudhoyono.  The GOI welcomed engagement 
from the USG on illegal logging, and thanked us for our assistance 
in training enforcement officials.  Lack of enforcement for proper 
land use policies is permitting encroachment on high-value 
conservation forest by logging companies and palm oil plantations. 
End Summary. 
 
Forestry and Environment Ministry Meeting 
----------------------------------------- 
 
¶2. (U) On July 26, A/S McMurray noted to senior officials from the 
Ministry of Forestry (MOF) and Ministry of Environment (MOE) that 
the Climate Change and Forestry Conference in Sydney included 
discussion on the links between climate change and deforestation. 
All agreed that biofuel development as well as biodiversity 
conservation had to factor into that discussion.  GOI officials 
stated that decentralization had in general encouraged local 
governments to be more responsible in forest management, but 
acknowledged that in some cases confusion over jurisdictional issues 
and a lack of capacity at the local level has hurt conservation. 
They emphasized the importance of engaging China on the illegal 
timber trade. 
 
MOF Forestry Policy Priorities 
------------------------------- 
 
¶3. (U) Dr. Yetty Rusli, Head of the Forestry Planning Agency 
highlighted Indonesia's five forest policy priorities: 
-- combating illegal logging and trade; 
-- revitalizing the forest industry sector; 
-- conservation and rehabilitation of forests; 
-- stabilizing forest areas through sustainable forest management; 
and 
-- empowering communities in forest areas. 
 
Dr. Rusli added that these priorities are consistent with efforts to 
tackle climate change, and that the role of Indonesia's forests 
should be given due importance leading up to the COP-13 conference. 
 
 
Illegal Logging and Wildlife Conservation 
----------------------------------------- 
 
¶4. (U) The MOF explained that they have made progress on combating 
illegal logging, citing MOUs with the U.S., U.K., Japan, and China. 
MOF officials admitted that there has been little progress in 
implementing the Indonesia-China MOU; the GOI expects talks to 
resume soon.  MOF and MOE officials emphasized the importance of 
stricter standards and laws in intermediary and consumer countries 
for tackling trade in illegal timber.  They welcomed any U.S. 
engagement with China in this context, as well as with Malaysia. 
Discussion is underway on legislation that would ban the import of 
illegal timber into the E.U., and work is continuing on a legality 
standard that can be included in bilateral or multilateral 
agreements on illegal logging. 
 
¶5. (U) MOF officials explained it issued Government Regulation No. 6 
this year (forest land use and forest management planning) to 
clarify misunderstandings among Indonesia's 450 districts about 
logging within forest concession areas.  The regulation increased 
penalties for over-cutting and illegal logging within concession 
areas.  Under the regulation, MOF established community forest 
plantations encompassing 5.4 million hectares and 360,000 households 
to provide alternatives to illegal logging.  Dr. Hadi Daryanto, 
Secretary to the Director General of Forest Production Development, 
 
SIPDIS 
said that MOF is also developing an online system for timber 
tracking and administration.  Japan is providing some assistance in 
this effort. 
 
¶6. (U) A/S McMurray appreciated the various activities of the 
Association of Southeast Asian Nations Wildlife Enforcement Network 
(ASEAN-WEN), emphasizing continued U.S. commitment to wildlife 
conservation efforts.  Dr. Tonny Soehartono, MOF Director of 
Biodiversity Conservation, thanked the US for its assistance in 
 
JAKARTA 00002140  002 OF 004 
 
 
training and capacity building for Indonesian police, customs 
officials, judges, and forest rangers.  Asked whether Indonesia 
would be interested in developing a regional mechanism similar to 
ASEAN-WEN for timber, Dr. Soehartono responded that the GOI would 
like to optimize existing cooperative arrangements such as Forest 
Law Enforcement and Governance (FLEG) and the International Tropical 
Timber Organization (ITTO). 
 
Legality Standards and International Cooperation 
--------------------------------------------- --- 
 
¶7. (U) MOF officials explained that one of their key efforts is the 
development of a domestic timber legality standard.  The MOF has 
cooperated with the Indonesian Ecolabeling Institution (LEI) to 
coordinate and organize a multi-stakeholder consultation on this new 
standard.  USAID and the UK's Department for International 
Development supported this consultation process which also provided 
a set of guiding principles that determine legality.  The MOF and 
its working group are examining the resulting draft internally and 
expect a decision before year's end.  Implementation of the legality 
standard will require GOI capacity-building, especially for auditing 
institutions.  The US Forest Service (USFS) will assist Indonesia in 
the legality standard implementation under the US-Indonesia Illegal 
Logging MOU. 
 
¶8. (U) The EU and Indonesia held the second Forest, Law Enforcement, 
Governance and Trade (FLEGT) Voluntary Partnership Agreement (VPA) 
on illegal logging and associated trade negotiation meeting in 
Brussels on July 11-13, 2007.  The MOF reported that the issues 
discussed included assurances that VPA legality standards would be 
in line with prevailing Indonesia laws and that the Timber Legality 
Assurance System (TLAS) will be managed by an Indonesian Legality 
Entity using criteria of verification and monitoring agreed by both 
parties, as well as possible legislation to prohibit the import of 
illegal timber into the E.U.. (Note: The MOF wants one standard that 
would be accepted by importing countries, which currently use 
different standards.  The U.K. has the strictest standard; the U.S. 
has no real equivalent in place but is developing legislation that 
would require identifying the country of origin of forest products; 
and Japan is seeking a better verification system for the existing 
paperwork. The U.S. Forest Service plans to meet with the U.K.'s 
Department for International Development this fall to discuss closer 
collaboration.) 
 
Haze Management 
--------------- 
 
¶9. (U) A/S McMurray raised the importance of addressing peat and 
forest fires for reducing emissions.  The MOF responded that it will 
rent helicopters and deploy fire brigades in affected provinces, 
particularly in West and Central Kalimantan and Riau in Sumatra 
(fire incidents have been decreasing in East Kalimantan).  The MOF 
and local governments conduct fire monitoring in peat areas in West 
Kalimantan, while MOF has also developed a communications system 
between provincial centers and the MOF that allows for rapid 
response to reports of forest hotspots.  At the national level, the 
MOF has the lead on an action plan for fire prevention for 35 key 
districts.  The MOE is helping communities implement "zero-burning" 
land clearing practices through training on composting and the 
production of wood briquettes.  MOE official Antung Ardiansyah added 
that Indonesia is active on the issue in the ASEAN disaster 
mitigation committee. 
 
Biofuel Development 
------------------- 
 
¶10. (U) The MOF acknowledged that oil palm expansion has raised 
environmental and social problems in some areas, but claimed that 
there is sufficient land currently designated as bare, degraded or 
non-productive that can be exploited for oil palm development 
without shrinking forest cover.  The MOF has designated areas for 
plantation development, and claims that only 200,000 out of 5 
million hectares designated in 2001 as production land in East 
Kalimantan has been developed so far.  To minimize natural resources 
degradation, the MOF will, together with Ministry of Agriculture, 
conduct a case study and environmental impact analysis (EIA) before 
additional plantation development for biofuel takes place. (Note: 
This does not resolve the problem that many local officials are 
 
JAKARTA 00002140  003 OF 004 
 
 
ignoring the central government's policy and sanctioning the 
clearing of high-value conservation forest for palm oil 
plantations.) 
 
Due to previously scheduled travel, neither the Environment nor 
Forest Ministers were in the country during A/S McMurray's visit. 
The ministers organized a group of their senior officials to meet 
with her, including: 
 
-- Dr. Achmad F. Mas'ud, Head of Center for Forest Information, 
MOF. 
-- Dr. Tonny Soehartono, Director of Biodiversity Conservation, 
MOF. 
-- Dr. Harry Santoso, Director of Center for Plantation Forest 
Research and Development, MOF. 
-- Dr. Hadi Daryanto, Secretary to Director General of Forest 
Production Development, MOF. 
-- Pratikna, Deputy Director for Investment Promotion and 
International Trade Cooperation, MOF. 
-- Mr. Agus Purnomo, Special Assistant to the Minister for 
International Environmental Issues and Partnership, MOE. 
-- Mr. Antung Ardiansyah, Assistant Deputy for River and Lake 
Degradation Control, MOE. 
-- Dr. Yetty Rusli, Head of Forestry Planning Agency, MOF. 
 
NGO Roundtable 
-------------- 
 
¶11. (U) A/S McMurray participated in a roundtable discussion with 
environmental NGO leaders.  McMurray noted that as the COP-13 
conference in December draws closer, the U.S. will be looking more 
at what developed countries can do to conserve forests and avoid 
deforestation. McMurray added that the 2002 "State of the Forest" 
for Indonesia is discouraging in that little seems to have improved 
in the past five years.  The Nature Conservancy (TNC) representative 
concurred that there had been little overall improvement in the 
forestry sector, adding that logging and plantation companies are 
encroaching on national parks. 
 
Wood Labeling and Certification 
------------------------------- 
 
¶12. (U) The Kehati (Biodiversity Foundation) representative said 
there are opportunities for dialogue with importing consumer 
countries in Europe and North America.  Companies and countries 
importing wood for furniture, hardwood floors, and similar products 
should be informed about the need for certified wood from 
sustainable areas.  This could help preserve high-value conservation 
forests.  Some retailers are already active, with Home Depot and 
Armstrong cited as examples by the NGOs. The participants noted 
however that wholesalers are less keen to participate in any 
certification scheme.  Other NGO representatives pointed out that 
consumer countries in Asia and the Middle East often do not care how 
suppliers source wood.  The Ecolabeling Institute representative 
noted that after a 3-4 year process, there is now a legality 
standard in place for timber imports to the E.U.  He hopes that 
China, the U.S., and other timber importing countries adopt this 
standard, as it would be arduous to negotiate separate trade 
standards for each importer. 
 
Enforcement Issues 
------------------ 
 
¶13. (U) Several NGO participants noted that enforcement was 
difficult due to corruption, too few enforcers, and the tendency for 
smugglers to easily find alternative shipping routes.  Police do not 
really know the difference between legally and illegally logged 
wood.  Forestry regulations have a lot of loopholes.  Enforcement 
officials tend to go after the easier targets, the small players 
rather than the big ones.  Some illegal logging crackdowns have led 
to unemployment in sawmills and furniture companies, creating a 
backlash.  One NGO noted that a potential solution is to create 
areas for sustainable community logging.  This helps increase the 
price of wood to sustain livelihoods, while avoiding large, 
industrial-scale clear cutting operations.  A representative from 
Conservation International suggested that joint international 
patrols and regional customs cooperation could help enforcement 
efforts. 
 
JAKARTA 00002140  004 OF 004 
 
 
 
The Biofuels Problem 
-------------------- 
 
¶14. (U) The roundtable participants stressed that the development of 
oil palm plantations for vegetable oil and biofuel is a huge threat 
to forests.  Kalimantan and Sumatra are already heavily deforested. 
Papua has the most pristine remaining rainforest, but even there, 
plantation companies want to convert 100 million hectares for oil 
palm.  While the central government's stated policy only allows oil 
palm plantations on degraded land, the participants all agreed that 
this was not the practice.  Many local officials simply ignore the 
central government's policy.  The biofuels drive and global demand 
for palm oil (used in over 1000 consumer products) will cause 
continued conversion of forests to plantations.  Indonesia's 
biofuels policy is badly coordinated between local officials and 
four national ministries: agriculture, forestry, trade and energy. 
 
 
NGO Roundtable Participants: 
 
-- The Nature Conservancy 
-- Conservation International 
-- Kehati (Biodiversity Foundation) 
-- Wildlife Conservation Society 
-- Orangutan Foundation International 
-- World Wildlife Fund 
-- Tropical Forest Foundation 
-- Ecolabeling Institute 
-- Telapak 
-- Forest Watch Indonesia 
 
Wehea Site Visit 
----------------- 
 
¶15. On July 27-29, A/S McMurray visited Wehea, a 38,000 hectare 
former logging site in Kotai Timur district, East Kalimantan, that 
is now a protected forest and key orangutan habitat.  Wehea is one 
of the USAID Orangutan Conservation Services Program (OCSP) sites 
and home to approximately 700 orangutans.  OCSP team members 
explained that the key to protecting any species, including the 
orangutan, is to protect their habitat.  They emphasized that loss 
of forest habitat through unsustainable and illegal logging and 
forest conversion represents the main threat to wild orangutan 
populations and the largest source of carbon emissions in Indonesia. 
They recommended that the international community offer economic 
incentives such as carbon funds as alternatives to investments such 
as oil palm plantations, which contribute to deforestation.  In a 
meeting with the Wehea Management Council, local leaders also 
emphasized that protecting forest areas not only helps the 
environment and wildlife, it preserves the cultures of the 
communities that live in those forests.  The Dayak indigenous tribal 
residents of Wehea welcomed McMurray's visit and gave her the Dayak 
name "Heling Lejie", or "a hopeful beginning". 
 
HUME