EU-Indonesia Timber Legality Assurance System Improves Sales
In November 2017 Indonesia and the EU launched their Forest Law Enforcement, Governance and Trade (FLEGT) licensing scheme. The scheme, which is the first of its kind in the world, aims at increasing trade in legal, licensed timber while closing the EU market to unlicensed products. Since the introduction of FLEGT, all timber products that are listed in the voluntary partnership agreement between the EU and Indonesia and are directly exported to the EU must be accompanied by a FLEGT license certified under Indonesia’s timber legality assurance system (SVLK). Authorities in EU Member States will deny entry to any products exported from Indonesia to the EU without a valid FLEGT license.
The implementation of the scheme has been accompanied by claims of business lobby groups that the SVLK hampers competitiveness in the furniture industry. However, now, half a year after its implementation, some furniture producers say the system has improved their sales significantly.
Amongst them is the small furniture producer UD Romansa Jati. During IFEX 2017, the firm’s operational manager said that the company can now export directly to the European Union without using a second party after it obtained SVLK certification. As a result, the company’s profit margin increased from 10 to 40 percent. “With the SVLK, buyers from the EU have more confidence in us and we can sell directly to them without using trading companies, and so we enjoy a higher profit margin. Moreover, we can sell products under our own brand and excel faster”, Wibi explained.
Big exporters like PT Farindojaya Persada have also benefited from having SVLK certification, saying buyers in the EU always ask about certification and so without it, the firm could not send samples, let alone export. “I think it’s important for us to ensure buyers that they’re buying products from a wholly legal chain: from upstream to downstream,” said the firm's director, Robin Lai.