Enabling sustainable projects in the Forestry Sector

Enabling sustainable projects in the Forestry Sector

2014

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AFD Strategy and Objectives in Indonesia

Reconciling economic development and the preservation of public goods (biodiversity and carbon) through Sustainable Forest Management

Support National policies (RAN-GRK and Forest Management Units - KPH) by facilitating investments in the forestry sector.

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The time of plantations on forest lands

Main Findings :

Hope of profitability of natural forest timber companies through sustainable practices is getting lower in most areas in Indonesia (current practices are not sustainable, the most accessible natural forest areas have already been felled ; higher logistical costs)

Natural Forest Companies would operate at a loss without diversification strategies; investing in selected plantations is the only option

1. teak (high value wood with strong demand) 2. rubber (access to international market) 3. fast growing species (jabon, acacia, ..) planted in areas next to main transport

infrastructures and trading routes to keep operating costs low

Plantation development is necessary to back industries with enough supply within the framework of new National policies of RAN-GRK and REDD+

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The time of plantations on forest lands

Necessary Means :

Plantations require secured lands (30 millions ha on “permanent forest” without tree cover).

Plantation development requires capital and professionalism,

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Enabling Sustainable Forestry Projects

I / By choosing to support Sustainable Project Investment Models

Key Project Characteristics

1. Environmentally sustainable : serving Forest Conservation , Forest Rehabilitation and Degraded Land Rehabilitation objectives with quantifiable carbon saving targets

2. Socially responsible: it is a matter of sustainability and of risks mitigation as AFD aims at promoting a new way to do business in the Indonesian forestry sector

3. Economically viable : to answer private investors’ ouput and profitability criteria to reach bankability status and be lasting « going concerns » over a long period

4. Showing controllable risks : reliable risk mapping & adequate risk mitigation solutions

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Enabling Sustainable Forestry Projects

II / By creating a favourable Business Environment

Supporting the KPH (FMU) policy development in Indonesia as the main set of measures to implement National policy (RAN-GRK and REDD+) Systemic, scalable with a potential impact on 110 millions ha with 600

KPH by end 2019 Addresses core issues of long term forest management and

investment:1. long term land planning2. land tenure security 3. local communities inclusiveness4. law enforcement & governance5. professional forest management Creates a favourable business environment, able to attract private

companies that AFD can contribute to finance : the Wilaya Tertentu concept as a PPP approach

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Enabling Sustainable Forestry Projects

KPH as services Provider to the Private partner : 1. Land encroachment and illegal logging prevention thanks to

preliminary land planning 2. Facilitation of cooperation & potential partnership with local

communities having land rights officially acknowledged 3. Managing HCV areas protection and conservation in and round the

contracted plantation area

AFD support to KPH policy through financial tools

1. Estimating impacts on local communities2. Bringing Technical assistance to “smallholders”3. Analyzing and measuring the technical and economic risks of

projects4. Bringing risk mitigation measures through technical assistance to

ease investments and financing decisions5. Supporting Institutional reform and providing capacity building

(support to Forest Management Plan for KPH or concessions, monitoring and law enforcement and dialogue on policies)

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The KPH Gularaya : 110 000 ha of forest landscape.

Objectives The KPH Gularaya context is conducive to

attract plantation investors Plantation investments can be an “economic

engine” contributing to the financial autonomy of the KPH for landscape management, to bring technical assistance and enhance community livelihood.

KPH Gularaya in Southeast Sulawesi Province: a diversified landscape natural forest on dry land and mangroves, commmunity plantations, degraded lands

A balanced mix-production of commodities (teak, bamboo) and public goods (carbon and biodiversity)

Investments in 20,000 ha of teak + 10,000 ha of bamboo + mix community plantations on 4,800 ha of HTR & 5,000 ha on WT.

Community and private investments.

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What AFD is doing in Gularaya ?

AFD works in partnership with SEKNAS (coordination), GIZ (in charged of BLUD process) and soon with WB (policy)

AFD helps local community manage 4,800 ha HTR (cooperative governance, plots allocation to farmers, collective demonstration plots).

AFD helps the preparation of the KPH management and business plans.

… and involvement of cooperative & NGOs in KPH forest management plan design

AFD is working on the detailed management plans for teak and bamboo (mapping, land condition analysis…).

Institutional framework achieved by second quarter 2014 (KPH established, “wilaya tertentu” defined, management plan accepted, BLUD Status obtained… ).

AFD will help KPH attract the best investors (prospectus, transparent call of interest)

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Up: Head of KPH and NGO Jauh working on forest management plan - 8 march 2014,

down, SEKNAS and NGOs

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Results in Gularaya

Communities (KHJL/JAUH) Governance of cooperative enhanced Professional GIS and foresters recruited Allocation of 241 plots (278 ha) on forest lands

to individual cooperative members 723 ha under management including protected

and conservation areas by community. Plantations started on HTR Demonstration plot of 20 ha done

KPH Gularaya Infrastructure done, staff recruited Mapping done Long-term management plan done Business plan in process (May 2014) Detailed mapping of future plantation area in

process (May 2014) Status BLUD (July 2014?) Conditions for investment (September 2014?)

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Terima Kasih!

For more information: [email protected]