Indonesia Trust Fund to Tackle Rampant Deforestation

Jakarta Globe, Fidelis E Satriastanti, March 23, 2010

A man walking across a destroyed forest in Pelalawan, Riau. (Antara Photo)

Indonesia is set to establish a new trust fund to reduce the rapid rate of deforestation in the country.

The National Forest Trust Fund will collect money from donor countries, especially developed ones, to finance conservation projects and promote sustainable forest management.

Indonesia has one of the highest rates of deforestation in the world, losing almost two million hectares of forest every year.

Hadi Daryanto, director general of forest production at the Ministry of Forestry, said on Tuesday that the details of the fund were still being worked out between the government and potential donors.

He said officials were still considering whether to set up an endowment, where the money would be invested and the earnings spent, to spend the money directly or to establish a revolving fund.

The money, he added, would be managed by an independent organization, with the members of the board of trustees coming from local governments, academics, civil society and businesspeople.

Hadi said the government had already set up a trust fund in 2009 as a part of a debt-swap program with the US government under the Tropical Forest Conservation Act to save Sumatran forests.

“It’s basically a debt-swap program and only for Sumatra, but it’s going very well and has managed to collect around $3 million so far,” he said. “Now we want to establish one for all forest areas based on that experience.”

He said the move was also triggered by donors’ lack of faith in the climate change trust fund established by the National Development Planning Board (Bappenas).

On Sept. 14, 2009, the Indonesian Climate Change Trust Fund was launched to attract donor support for efforts to tackle climate change issues.

Basah Hernowo, the director of forestry and water resources conservation at Bappenas, said the ICCTF had a forest component so the two funds could possibly be merged.

“Basically, the forestry sector is much more ready [than other sectors], but it could confuse donors if there are too many trust funds,” Basah said.

In response to the reported lack of faith in the ICCTF, he said: “We only deal with the programs. The money will be managed by an independent organization and audited internationally, so don’t worry, we’re not taking the money for ourselves.”

Basah said the British government had committed 10 million pounds ($15 million) to the ICCTF and some of the money had already been allocated for climate change projects, which he predicted could get under way sometime in April.