Working Paper: Understanding Aspects of Economic Rent of Forest Resources Extraction in Indonesia

This Working Paper provides a comprehensive analysis of the governance and dynamics of economic rent in timber forest resource extraction across Indonesia. The document highlights fundamental discrepancies among academics, the public, the government, and concession holders (HPH/IUPHHK) regarding the adequacy, transparency, and calculation of state levies, such as the Forest Utilization Business Permit Fee (IIUPH), Forest Resource Rent Provision (PSDH), and Reforestation Funds (DR). By examining the entire extraction chain from licensing and Non-Tax State Revenue (PNBP) collection to timber supply distribution and Revenue Sharing Fund (DBH) mechanisms the paper pinpoints critical structural issues, including uncalculated socio-ecological costs, high informal transaction fees, and their cascading impacts on deforestation rates and forestry’s contribution to national GDP.

This paper is an essential read for policymakers, researchers, forestry practitioners, and advocates of environmental economics and public policy. Beyond identifying systemic flaws in rate determination and regional fund allocations, the author presents actionable solutions: re-evaluating the log export ban policy, adjusting standard timber valuation formulas, and optimizing non-timber forest products alongside Industrial Timber Plantations (HTI) to achieve a sustainable balance between economic growth and ecological integrity.

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