Indonesia pledges investment towards regenerative forest

Indonesian Chamber of Commerce and Industry (KADIN Indonesia) and host of B20, together with Packard Foundation, during the Tri Hita Karana (THK) Forum on November 13, highlighted the many investment opportunities in the regenerative forestry business.

Since the Law No. 11/2020 on Omnibus Law and the Government Regulation No.23/2021 on Multiuse Forestry Business (Multi Usaha Kehutanan) were launched, Indonesia’s forestry businesses have the opportunities to diversify their business and move away from timber-based business. 

This law also marks a transformation in the forestry sector in Indonesia where businesses can contribute further to social, economic, and environmental goals of the country, including Indonesia’s FOLU Net Sink Target in 2030.

In response to the policy and in contribution the FOLU Net Sink target, KADIN Indonesia has launched an initiative called Regenerative Forest Business Hub (RFBSH) in April 2022. Together with Asosiasi Pengusaha Hutan Indonesia (APHI) and Indonesia’s Ministry of Environment and Forestry, the Hub aims to facilitate companies to implement diversified, multi-purpose, and regenerative forestry businesses. 

It is expected that this program enables the capacity building of companies to become ready and take immediate action in implementing the multiple forestry businesses. 

Soewarso, deputy general chairperson for sustainable plantation forest production, APHI, said: “Regenerative Forest Business Hub is the business sector’s response to the government’s policy direction on Multiuse Forestry Business and FOLU Net sink 2030. 

“We believe Regenerative Forest Business is a new investible sector in forest economies: it goes beyond sustainability and actively renews landscapes. Regenerative business is the future, where the forest entrepreneurs will see in regenerative businesses – not just for profit, but also for social and environmental goals.”

Since the launch of the Regenerative Forest Business Hub, various studies have been undertaken to study the business opportunities in regenerative forestry as well as financial analysis and models to cover the costs. The insights from the studies were shared in this event. 

Syaiful Bachri, business specialist, Lembaga Ekolabel Indonesia, lead study of the business opportunities, said: “Indonesia has a potential 20 million hectares of land for regenerative forest business. 

“The potential contribution from regenerative forestry sector is huge coming from commodities such as coffee agroforestry, cocoa agroforestry, vanilla, palm sugar, and essential oil. Exposure to market opportunities of regenerative forestry best practices could motivate stakeholders to implement, invest and support this initiative.” 

Herianto Pribadi, senior advisor, Bicka Consulting, lead for financial analysis, said: “Some financial institutions have expressed interest to support regenerative forestry business. However, they need certainty on market risks, reliable supply chain, proven featured commodities, credible and cooperative business actors, and support from regulators.”

The studies and KADIN Indonesia’s initiative were welcomed by various stakeholders. 

Budi Martokoesoemo, professional consultant, BPDLH, said: “We see this initiative as very much aligned with Indonesian Environment Fund (IEF). Regenerative forest business could inform the next plan for the Fund, showing real first step commitment from the private sector to contribute to climate actions, but more will be needed to assure success of 2030. 

“IEF look forward to see real and tangible support from the private sector. IEF as a public agency (BLU) will always endeavor to support and assist such a positive commitment.”  

Nienke Stam, global sustainable finance landscape director, IDH, said: “A regenerative approach to managing a production forest holds strong promise for sustainable development, carbon and nature. Pioneering work now needs to be done to develop business and investment models that cater to multi-crop production systems.” 

Gita Syahrani, head of secretariat, LTKL, said: “What needs to be done is clear, implementing this multi-use business concept requires stronger investment for local micro processing facilities, incubators, innovation centers and marketing centers for sustainable products at district and sub-district level. This type of ecosystem building will allow real multi-stakeholders collective action for sustainable land-use to happen.” 

KADIN Indonesi is inviting more pioneer companies to involve and implement regenerative business. Starting in 2023, KADIN Indonesia hopes the implementation from pioneer companies could take place. 

Implementing regenerative business and multi forestry enterprises is an adaptive strategy to the current dynamics in bio-geophysical, social and environment.  Moreover, it is a form of active participation of the forestry business community in supporting the achievement of Indonesia’s targets, including NDC target in 2030 and the country’s GDP. 

Photo credit: Lee Kok Leong. Luhut B. Pandjaitan, coordinating minister of maritime and investment affairs, gives keynote speech at THK Forum.

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