Policy Brief: Encouraging Transparency of Forestry State Revenue

This Policy Brief highlights the massive revenue losses within Indonesia’s forestry sector caused by illegal logging and substantial leakages from legal timber operations. The brief reveals that illegal logging inflicts state losses of up to IDR 30.3 trillion annually (with an estimated 70–80% of roundwood production originating from illegal sources), while the forestry sector’s formal contribution to national GDP remains disproportionately low at under 1%. Furthermore, research by Article 33 Indonesia indicates that actual Non-Tax State Revenue (PNBP) collections, specifically the Forest Resource Rent Provision (PSDH) from legal timber reach only about 30% of their full potential, meaning the state forfeits roughly 70% of potential revenues from legal timber supply chains.

To curb these financial leakages, the policy brief advocates for a multi-stakeholder transparency framework through the synergized implementation of the Extractive Industries Transparency Initiative (EITI) and the Timber Legality Verification System (SVLK). While SVLK enforces sustainable forest management and ensures companies comply with state levy payments (PSDH and Reforestation Funds), expanding EITI to the forestry sector would independently reconcile corporate payment data against actual government receipts. This publication is an essential reference for policymakers, researchers, transparency advocates, and civil society organizations dedicated to reforming extractive industry governance in Indonesia.

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