The Forestry Ministry announced the policy pivot during an online panel on Thursday, citing stagnant economic returns from a sector historically dependent on raw wood production.
Timber production has become increasingly challenging from a commercial standpoint because operational production costs frequently exceed current market prices, according to the ministry’s Director of Forest Utilization Business Development Ilham.
“We need to find optimization options for transformation beyond timber, for example, utilizing silvopasture for food, energy for biomass and biofuel, and water utilization,” Ilham noted.
The ministry’s newly designed MUK framework is specifically designed to reinforce the three pillars of Indonesia’s national security agenda: food, energy, and water.
Beyond tangible commodities, the government is looking at environmental services—specifically carbon sequestration and trading—as the next major macroeconomic driver.
Ilham revealed that the government’s target of restoring 12 million hectares of land has the potential to store up to 13.4 billion tons of carbon reserves.
“Multiplied by US$10 (per ton), that is US$130 billion. This is quite extraordinary. So Indonesia must be able to transform, not just rely on wood,” he remarked.
To prevent overlapping claims and guarantee absolute legal certainty for green investors, the government has finalized a highly structured, cross-ministerial zoning framework for carbon management.
Under the regulations, business actors are required to secure proper business permits and spatial legalization from respective ministries depending on the zone of operation.
For areas located within state forest zones, permits must be obtained from the Forestry Ministry.
For inland Other Use Areas (APL), permits are issued by the Ministry of Agrarian Affairs and Spatial Planning/National Land Agency (ATR/BPN), while projects in coastal zones fall under the jurisdiction of the Ministry of Maritime Affairs and Fisheries (KKP).
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Translator: Sean Filo Muhamad, Yashinta Difa
Editor: Azis Kurmala
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