Indonesia - Promoting Sustainable Production Forest Management to Secure Globally Important Biodiversity Project

Page 1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No. AB5250 Project Name Project Name: Promoting Sustainable Production Forest Management to Secure Globally Important Biodiversity Region East Asia and Pacific Sector Forestry (100%) Project ID P112419 Borrower(s) Republic of Indonesia Implementing Agency Burung Indonesia & MoFor Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared November 1, 2009 Estimated Date of Appraisal Authorization 06/25/2010 Estimated Date of Board Approval November 15, 2010 I. Key development issues and rationale for Bank involvement The Ministry of Forestry (MoFor) has launched new policy frameworks to allow (a) companies to develop non-timber and environmental service-based businesses within forest concessions, and (b) licenses for ecological restoration to be granted for logged-over concessions. The restoration policy allows, for the first time, the possibility of full integration of biodiversity conservation objectives into the management of a production forest in Indonesia. The new legislation (Ministerial Decree No.159/2004 and subsequent implementing regulations) is innovative because it emphasizes conservation objectives over production ones by requiring that logging stops and that management prioritizes rehabilitation of the natural ecosystem structure and functions previously existing in the site. Approximately 20 million hectare of logged-over production forest areas are currently not covered by concession licenses making them prone to illegal logging and illegal conversion, and so bringing these areas under formal management is a priority. The opportunity presented by these new policies needs to be realized. MoFor and Burung Indonesia have identified the need for (a) development of trials and models which will demonstrate the economic, social and ecological case for applying these policies in support of sustainable forest management, (b) a program of dissemination, training and support to enable existing and potential participants in the production forest sector to adopt more sustainable management models, and (c) a program of partnerships with existing and new industry actors to catalyze the creation of