Assessing Indonesia’s legal and policy framework on forest conversion and restoration

  • Year


  • Location


  • Partners

    Sebijak Institute, Faculty of Forestry, Universitas Gadjah Mada

  • Budget

    EUR 50 000

  • Funded by

    EU REDD Facility


Indonesia’s carbon-rich forests contain some of the world’s most diverse ecosystems and provide livelihoods for a third of its population. Since the Reformation era in the late 1990s, Indonesia’s forest governance has focused on preventing and slowing deforestation, restoring degraded forests and broadening the engagement of communities in forest management.

The EU REDD Facility and Sebijak Institute collaborated to evaluate the Indonesian legal and policy framework on forest governance with a focus on forest conversion and restoration. Their analysis aims to strengthen the understanding of policymakers and relevant stakeholders, from Indonesia and abroad, of policies and regulations, including their recent changes. It also assessed the implications of this framework and its implementation on efforts to reduce deforestation, accelerate restoration, and empower indigenous peoples and local communities. They also formulate policy recommendations based on the identified challenges.

The objective

The analyses by the EU REDD Facility and Sebijak aim to provide stakeholders with:

  • An assessment of the impact of the Job Creation Law and its implementing regulations on forest and land-use governance
  • An assessment of the existing legal framework on forest restoration and rehabilitation and its implementation

Smallholders who are granted permits to utilise a village forest in Riau Province plant coconut palm. The degradation of mangrove and sea level rise put the sustainability of the smallholders’ business at risk.

The challenge

Despite significant progress in forest governance in Indonesia over the past two decades, some areas require strengthening. This includes the need to improve the legal framework’s clarity and law enforcement as prerequisites for good forest governance to help achieve the Sustainable Development Goals (SDGs) and the targets contained in Indonesia’s Nationally Determined Contribution (NDC) under the Paris Agreement on climate change.

In 2020, the Indonesian House of Representatives passed the Omnibus/Job Creation Law (Law 11/2020). It simplifies over 70 laws and regulations to stimulate domestic and foreign investment by removing bureaucratic inefficiencies and excessive licensing requirements, including in the forestry and land-use sectors. It seeks to eliminate long-standing legal issues, such as opaque, overlapping and contradictory regulations that have hindered competitiveness. In 2021, after receiving judicial review petitions from civil society groups who argued that the omnibus method used in developing the law was unconstitutional, the Constitutional Court ruled that the Law is “conditionally unconstitutional”. In response, at the end of 2022, the Government passed the Regulation in Lieu of Law (Perppu) 2/2022 on Job Creation, citing potential economic recession as a justification. The Perppu’s content is largely similar to that of the Job Creation Law.

The reactions to the enactment of the Law/Perppu and its implementing regulations were mixed. While it was praised as a breakthrough regulation for doing business in Indonesia, some raised concerns about potential negative labour and environmental impacts, including on forests and forest-dependent communities. The legal changes and potential impacts brought about by the Job Creation Law and implementing regulations need to be analysed to inform relevant stakeholders on the existing legal frameworks related to deforestation. This will support their efforts to improve Indonesia’s forest governance.

Good forest governance also includes commitment to reverse deforestation. In recent years, the Indonesian Government and relevant stakeholders have started to focus on forest and landscape restoration to complement efforts to halt and slow deforestation. In 2016, the Government established the Peatland Restoration Agency to coordinate efforts to restore degraded peatlands. In 2020, its mandate was extended to cover degraded mangrove, and it is now called the Peatland and Mangrove Restoration Agency. Further, also in 2020, as part of a restructuring within the Ministry of Environment and Forestry, the Directorate General of Watershed Management and Forest Rehabilitation was created, marking the prominence of restoration in the Ministry’s agenda in the years to come. Overall, restoring deforested and degraded areas to regain ecological functions and improve the livelihoods of local people is now seen as a cornerstone to efforts towards the SDGs and Indonesia’s NDC targets.

However, governance challenges, such as unclear legal frameworks and policy measures and weak law enforcement, hinder successful forest and landscape restoration at scale. For example, the definitions of the terms ‘rehabilitation’, ‘restoration’ and ‘reclamation’ are not consistent and harmonised across the different legal instruments and mandates. This hinders efficiency and coordination among stakeholders with responsibilities in forest and landscape restoration. An analysis of legal and policy frameworks for forest and landscape restoration in Indonesia is needed to identify challenges in ensuring the long-term sustainability of restoration efforts, in the context of the implementation of Indonesia’s NDC targets.

An oil palm agroforestry site in East Kotawaringin District, Central Kalimantan Province. The switch from oil palm monoculture to agroforestry represents an effort to restore the ecological function of the landscape.

An oil palm agroforestry site in East Kotawaringin District, Central Kalimantan Province. The switch from oil palm monoculture to agroforestry represents an effort to restore the ecological function of the landscape.

The approach

The EU REDD Facility and Sebijak carried out two legal studies, one on the Job Creation Law and one on the framework for forest restoration. They took stock of relevant laws and regulations, as well as other relevant documents. This desk-based assessment was complemented by a series of semi-structured interviews with key policy and implementing agencies and civil society organisations.

The Job Creation Law study uses normative legal research methodology, which aims to clarify, analyse, interpret, systematise and criticise laws and regulations of interest. For the forest restoration study, the evaluation of existing legal and policy frameworks is complemented by an overview of the evolution of formal forest restoration and rehabilitation initiatives in Indonesia over the past decades and their policy implications. The study’s framework draws from emerging international approaches around Forest and Landscape Restoration, distinguishing between best practices and the existing enabling environment.

Smallholder farmers from a village forest in Riau harvest and process the leaves of nipa palm or mangrove palm to turn them into handicrafts.

Results and impact

The study on the impacts of the Job Creation Law found that the Law and its implementing regulations amended many provisions related to the forest and land-use sector. These changes cover:

  • minimum threshold of forest areas
  • forest area gazettement
  • role of forest management units
  • forestry sector licences
  • forest areas with specific purposes
  • utilisation of forest areas for non-forest sector development
  • environmental protection
  • protection of indigenous/local community rights
  • tenurial conflict resolution

The report and the accompanying policy brief identify and discuss such changes, and analyse their potential impacts. Some changes appear to strengthen efforts to reduce deforestation. However, others are likely not to yield significant impacts or could result in a decrease of forest cover area and an increase in tenurial conflicts, if mitigation measures or safeguards are not put in place. An additional analysis using three study cases from different parts of Indonesia also reveals how the Law and its implementing regulations may affect the utilisation of forest resources by local and indigenous communities.

The legal and policy review of forest restoration and rehabilitation in Indonesia shows that Indonesia has made significant strides in prioritising and scaling up restoration in recent years. The legal terminology around forest restoration in Indonesia, which can be broadly categorised into three approaches (rehabilitation, restoration and reclamation), has also been evolving in the current policy landscape, particularly in the context of the passing of the Job Creation Law and the adoption by Indonesia of a plan for the forest and land-use sector to become a net carbon sink by 2030.

The report and the policy brief identified five policy barriers and institutional challenges to forest restoration in Indonesia. They formulate a set of recommendations to overcoming them. The challenges and policy barriers are:

  • difficulties in ensuring programme quality across large forest rehabilitation and restoration area targets
  • regulatory complexity and uncertainty
  • siloed processes and weak coordination
  • long-standing dilemmas around unequal terms of access to land and natural resources for local communities
  • data management and monitoring systems and applications

The results of both studies fill knowledge gaps in this fast-evolving arena. They include strategic recommendations to address identified issues, and are disseminated to policymakers and relevant stakeholders.