Understanding Stakeholders’ Perspectives on the Indonesia–EU FLEGT-VPA Scheme Implementation

Abstract

Illegal logging comprises illegal activities that impact the economy, environment, and social aspects. This situation is addressed by the Forest, Law Enforcement, Governance, and Trade Voluntary Partnership Agreement (FLEGT-VPA) scheme. In 2014, Indonesia and the European Union ratified the FLEGT-VPA and then started the FLEGT Licensing in 2016. This study intended to discover stakeholder satisfaction from the perspectives of the government institutions, civil society organizations, and the private sector on the Indonesia–EU FLEGT-VPA scheme, and it was accomplished by performing a mixed-method sequential explanatory research design. First, the quantitative data, collected through a web-based questionnaire (n = 103), resulted in the stakeholders’ satisfaction (dependent variable), in connection with all of the independent variables, showed that all three stakeholders were satisfied with sustainable forest management, new market opportunities, timber legality, and law enforcement. In contrast, they were slightly satisfied with the social safeguards. From the measurement of the multiple regression model, the results showed that each independent variable has a positive and significant effect on stakeholder satisfaction. We discovered that timber legality performed the highest significance to stakeholders’ satisfaction. Second, qualitative data were collected to briefly explain the preceding quantitative findings through web-based in-depth and focus group interviews (n = 20). All three stakeholders seemed to agree to the scheme implementation that supported the application of sustainable forest management principles, improved the legality and traceability, promoted good governance, and strengthened the social safeguards, while it improved the new market opportunities to a lesser degree. Finally, all three stakeholders explained that there are still main challenges to be solved in improving the scheme implementation such as (1) administrative problems mainly experienced by small and medium enterprises; (2) uncompetitive FLEGT license products that are not well known to buyers; and (3) the absence of incentives given by both parties (Indonesia and the EU) to the FLEGT-licensed product exporters.

1. Introduction

To combat the illegal logging problem globally, all nations have to cooperate in terms of bilateral and/or multilateral cooperation between the timber-producing countries, with the timber-purchasing countries including timber harvesting, transporting, processing, and trading activities. These challenges were addressed very well by the establishment of the European Union Action Plan concerning Forest Law Enforcement, Governance, and Trade, hereinafter abbreviated as FLEGT, which aimed to ensure sustainable practices related to the timber legality from producing countries. The European Union FLEGT Action Plan, which was established in 2003 and aimed to reduce illegal logging by strengthening sustainable and legal forest management, improving governance, and promoting trade in legally produced timber, furtherly described seven actions in seven areas, as follows: (1) support timber-producing countries, (2) promote trade in legal timber, (3) promote environmentally and socially beneficial public procurement policies, (4) support private-sector initiatives, (5) establish financing and investment safeguards, (6) use existing or new legislation, and (7) address the problem of conflict timber [1]. The European Union FLEGT Action Plan could be categorized as an effective instrument for the EU to control public authorities and centralize its issue, instrumentation, and execution [2], and it is furtherly divided into two instruments: Voluntary Partnership Agreements (VPA) and European Union Timber Regulation (EUTR), each instrument reinforcing the other [3]. These statements were supported by [4], who confirmed that the voluntary schemes can produce a basis and criteria that can be adjusted to local circumstances through national stakeholder processes, which also further offer specialized strategies and lessons learned from implementation that are of esteem to regulatory approaches. The Voluntary Partnership Agreement, defined by [5], is aimed to ensure that wood traded from a timber-producing country to the EU comes from legitimate sources, and is additionally implied to bolster the partner country in progressing forest governance and regulations. Hence, before performing the FLEGT License, the VPA countries should carry out several phases, starting from the information phase, to the pre-negotiation phase, then the negotiation phase, and lastly the implementation phase [6].

As the first country who started the FLEGT License, Indonesia has a pivotal role in better forest law enforcement, governance, and trade, including better environment and forest management from the upstream to the downstream. In timber-producing countries, the [7] described all stakeholders as government institutions, private sectors, civil society, indigenous people, and forest-dependent communities. In connection with these stakeholders, the measurement of the Indonesia–EU FLEGT-VPA scheme implementation performance is necessary by measuring its stakeholders’ satisfaction. The data obtained from stakeholder analysis might serve various objectives [8], such as: (1) to serve input for other examinations; (2) to advise further development and support the policy reform; and (3) to direct the stakeholder participatory. The importance of the stakeholders-related study was also explained by [9], who described the stakeholders would continuously be included within the program because they have interests in and impacts on the decision-making process, and also further influence the success of the program.

From this point, this study aimed to discover the answer to the question, “How satisfied are different stakeholders on the Indonesia–EU FLEGT-VPA scheme implementation?”, and to provide policy recommendations for the Indonesian Ministry of Environment and Forestry to become an important player in improving the Indonesia–EU FLEGT-VPA scheme implementation while helping all related stakeholders to enhance their performance in the following years ahead. This study is also expected to provide meaningful information to be used in the periodic review and evaluation of the Indonesia–EU FLEGT-VPA conducted by the Joint Implementation Committee (JIC).

2. Materials and Methods

Three distinguishing characteristics of survey research is well explained in [10]. First, survey research is used to describe specific aspects of a given population quantitatively. Second, the data required for survey research are collected from people and are, therefore, subjective. Finally, survey research uses a selected portion of the population from which the findings can later be generalized back to the people. This statement is in line with the opinion that comes from [11], which explains the method for gathering information from (a sample) entities could be obtained by conducting quantitative descriptors as well as targeting the key informants from a population.

This study performed a mixed-method sequential explanatory research design to obtain more comprehensive results from the stakeholders of the Indonesia–EU FLEGT-VPA. Morse, J. M. (1991), in [12], defined that Explanatory Design is used when a researcher needs qualitative data to expand on or explain initial quantitative findings. The explanatory design, the qualitative data collection, emerges from and is linked to the quantitative results. Studies using the explanatory design occur in two sequential phases, with the quantitative data collection and analysis occurring first and usually providing the overall emphasis of the study. Therefore, the mixed-method sequential explanatory research design was adapted from [12], which were defined as follows: First, a web-based questionnaire was used to understand the stakeholders’ perspectives on the performance of the Indonesia–EU FLEGT-VPA scheme; Second, in-depth and focus group interviews were conducted to understand the reasons for satisfaction or dissatisfaction associated with the scheme implementation. To measure the degrees of their satisfaction, we applied a straightforward scoring technique, assigning values from 1 to 5 [13]. The technique aims to collect data and information that could represent the eagerness of the targeted respondents that furtherly classified into the Indonesia–EU FLEGT-VPA Stakeholders to specify their satisfaction with the scheme implementation. By using the mixed-method sequential explanatory research design, the survey and interviews are intended to collect data and information from important stakeholders about their perspectives on the Indonesia–EU FLEGT-VPA scheme (Figure 1).

The quantitative data acquired from the website-based questionnaire were analyzed to serve statistical data results by applying the hypothesis testing which includes the One-Sample Kolmogorov–Smirnov Test, Multicollinearity Test, Heteroskedasticity Test, Multiple Regression Test, including R Square Test, F Test, and T-Test. The qualitative data gained from the website-based in-depth and focus group interviews were arranged to provide transcripts and codes, and furtherly provide the mind-map as the key findings.

3. Results

3.1. Stakeholders Classification and Categorization

The stakeholders of the Indonesia–EU FLEGT-VPA scheme were firstly classified by their power and interest. By adopting [14], this study classified its related stakeholders into (1) High Power–High Interest, which includes central government institutions, the Embassy of the Republic of Indonesia, and the International Development Cooperation Agency; (2) High Power–Less Interest, which includes provincial government institution; (3) Less Power–High Interest, which includes university and research institutions, non-governmental organization, and the Independent Assessment and Verification Agency; and (4) Less Power–Less Interest, which includes forest company, timber products industry, and forest and timber products entrepreneurs (Figure 2).

Following the previous classification, the stakeholders were categorized into three entities: government institutions, civil society organizations, and private sectors, based on its classification. For government institutions, we selected stakeholders from central and provincial governments, national universities, and the Embassy of the Republic of Indonesia. Civil society organizations are represented by non-governmental organizations, international development cooperation agencies, and independent assessment and verification agencies. Private sectors include forest companies, timber product industries, and forest and timber products entrepreneurs (Table 1).

The survey was designed based on six categories: sustainable forest management, new market opportunities, timber legality, law enforcement and governance, social safeguards, and stakeholders’ satisfaction. Sustainable forest management is the highest priority set by the FLEGT-VPA. New market opportunities are an important issue since the timber industry expects the FLEGT-VPA to provide potential opportunities for the timber export business [11]. Timber legality is also a critical issue in FLEGT-VPA, which provides principles to facilitate legal harvesting and proper payment of timber loyalties and products. Law enforcement and governance are one of the highest priorities for the timber industry under the FLEGT-VPA scheme, and the questions are focused on the stakeholders’ perspectives on legal responsibility and burden. The social safeguards category is considered in FLEGT-VPA as an important goal to be achieved in timber-producing countries, and the survey focused on the issues of equity and community rights.

3.2. Quantitative Results

The survey results represent the stakeholders’ perspectives on 34 elements in 6 categories (Table 2). In the category of sustainable forest management, the stakeholders, in general, believe FLEGT-VPA has a positive impact by placing a high priority on producing timber products, while private sectors are less satisfied with socio-economic condition improvement. In terms of new market opportunities, the stakeholders agree that FLEGT-VPA could be a good example of market expansion for other countries. The stakeholders also think the scheme implementation facilitates legal timber and timber product trade by applying timber tracking systems. In the category of law enforcement and governance, the stakeholders perceive FLEGT-VPA as an effective instrument for reporting violations and is helpful for collaborative forest management. In terms of social safeguards, the stakeholders believe the scheme elevates corporates’ social responsibilities. Regarding satisfaction, the stakeholders confirmed that the FLEGT-VPA precisely and less fulfilled their satisfaction.

In performing the hypothesis testing, several statistical tests that were used are listed as follows: (1) One-Sample Kolmogorov–Smirnov Test to spot the Normality Distribution of the data; (2) Multicollinearity Test to observe a strong correlation or relationship between two or more independent variables; (3) Heteroskedasticity Test to portray the case where the variance of errors of the model is not the same for all observations; and (4) Multiple Regression Test, including R Square Test (Table 3), F Test (Table 4), and T-Test (Table 5), to use the independent variables whose values are known to portend the value of the single dependent value. The results of the statistical test concerning test number 1 to 3 mentioned previously, are well presented in Appendix A (Table A1, Table A2, and Table A3), while the Multiple Regression Test is provided as follows:

In connection to all the independent variables (sustainable forest management, new market opportunities, timber legality, law enforcement, and social safeguards), and their relationships to the dependent variable (stakeholders’ satisfaction), we found that timber legality has the highest significance to the stakeholders’ satisfaction, followed by sustainable forest management, law enforcement, new market opportunities, and social safeguards.

3.3. Qualitative Results

The key findings resulting from the interviews are shown in the mind map in the Figure 3. Each variable (from the sustainable forest management principle, new market opportunities, timber legality and traceability, good governance, social safeguards, and further main challenges to be solved) delivered different key findings that deeply explained the performance of the Indonesia–EU FLEGT-VPA, which was explained by all three stakeholder categories.

3.3.1. Sustainable Forest Management

From the focus group interviews, we found the stakeholders support the Indonesia–EU FLEGT-VPA scheme in that it promotes sustainable forest management by reducing the rate of illegal logging and deforestation. It was declared by the international development cooperation agency that the scheme has directly affected illegal logging because of the Timber Legality Assurance System (TLAS) that verifies the legality of wood products. In this respect, the forest and timber products entrepreneurs also supported the previous statement:

“The image of Indonesian products has begun to be improved in the eyes of foreign consumers. So, one of the goals of FLEGT-VPA is starting to be achieved. Timber thieves are still considered to exist in Indonesia, although the number has decreased considerably. With the implementation of this scheme, the illegal timber market will be withering, and if any, it will be easier to detect and prosecute. It is also helpful for establishing an early detection system to prevent illegal timber circulation in Indonesia.”

3.3.2. New Market Opportunities

We also found the stakeholders believe that the scheme implementation has enhanced the new market opportunities by improving the image and trust of the products. However, they do not think the new market opportunities have been linked to improving the export of timber and timber products. The stakeholders asserted that the scheme has been process-oriented rather than result-oriented. In this regard, the responsible person from the embassy of the Republic of Indonesia stated as follows:

“The FLEGT-VPA is not very practical and result-oriented. It has two objectives, namely (1) to ensure sustainability and (2) to ensure traceability. Traceability has been achieved through the license that we always carry during the wood export process. However, in terms of the export of wood products itself, I do not think it has shown significant results. Thus, to prove that Indonesia has implemented the sustainability principle, the EU needs to recognize the reality and work together to fix the problems.”

The academics also pointed out the problem of the scheme in opening up new market opportunities. They asserted that the scheme, as legally binding, should deeply consider the mutual benefits for both parties, especially regarding the advantages delivered for the FLEGT license holder. The Independent Assessment and Verification Agency claimed that the implementation of the FLEGT-VPA scheme in the European market has no significant effect on exports of timber and wood products from producers. In fact, Indonesia as one of the timber-producing countries has started FLEGT Licensing.

3.3.3. Timber Legality

We also found that the scheme implementation had directly improved the legality and traceability of timber and timber products in Indonesia. The representative of the provincial government explained that the legality is focused not only on the timber and timber products but also on the administrative aspects such as the management unit. To support the previous statement, the forest and timber products entrepreneurs stated that all the raw materials produced by the forest companies have been tagged with a unique barcode to improve the traceability of the downstream and upstream markets.

3.3.4. Law Enforcement and Governance

The FLEGT-VPA scheme has also promoted good governance and transparency, facilitating participation and communication among the stakeholders. All three stakeholders (government institutions, civil society organizations, and private sectors) agreed that the scheme improved the law enforcement application on the ground and strengthened the policy adjustment between European Union Timber Regulation (EUTR) and the Indonesian TLAS or in Indonesian terms stated as “Sistem Verifikasi Legalitas Kayu/SVLK”. However, the scheme is not very supportive of small- and medium-scale timber product exporters in the implementation processes. In terms of transparency, the scheme promoted openness and candor in the implementation processes. The person in charge of the central government institution stated as follows:

“We can see this principle of transparency from the involvement of external parties, the government and business sectors, and the supervisory network. We have a network of independent supervisors that oversees the process of granting this certification. So, I can say that it is pretty transparent, and the government, in this case, is also trying to make it possible for these small industries to be involved in the FLEGT-VPA scheme, one of which is certification assistance in the form of groups.”

The international development cooperation agency also asserted that the transparency is reinforced by the multi-stakeholder participation in monitoring the scheme implementation progress through Joint Expert Meeting (JEM) and Joint Implementation Committee (JIC) between Indonesia and the EU.

3.3.5. Social Safeguards

In terms of social safeguards, all the stakeholders stated that while the FLEGT-VPA scheme has helped increase the social welfare of the local communities, it was not successful in improving that of forest-dependent communities (people who live inside and/or surrounding the forest areas). The stakeholders also claimed that the scheme was not effective in reducing social conflicts that occur mainly inside the forest areas. According to the person in charge of the central government institution, social safeguards had not been addressed well in consideration of the people living inside and near the forest areas.

3.3.6. Stakeholders’ Satisfaction

Important challenges in implementing the FLEGT-VPA scheme are also raised by the stakeholders. From the government institutions’ point of view, the primary challenge of the scheme implementation is commerciality: uncompetitive, burdensome cost, and other requirements from consumers. A participant from the forest industry sector illustrated as follows:

“The rise of the certification, especially the V-LEGAL (V-LEGAL is the abbreviation of Verified Legality that belongs to the documents required to export the timber and timber products from Indonesia. The V-LEGAL documents is furtherly transformed into the FLEGT License to support the Indonesia–EU FLEGT-VPA scheme implementation activities when the timber and timber products has been exported to Europe ) logo, needs to be improved because the market is still dependent on a more commercial certification logo. The V-LEGAL logo helps ensure sustainability and traceability, but it is not understood well by consumers in Europe. The cost of obtaining the FLEGT license is too expensive and the final sales prices are relatively high and uncompetitive compared to the products from other countries. FLEGT certification, but for paper products, is required in addition to FSC (Forest Stewardship Council), PEFC (Programme for the Endorsement of Forest Certification), and other certifications by the demand from the export destination countries. This is the most considerable concern for timber companies. Different certification requirements by export destination countries in Europe need to be organized under an umbrella scheme.”

4. Discussion

The FLEGT-VPA is aimed at achieving sustainable practices in timber harvesting and the production of timber products to improve the forest standing stocks and the socio-economic condition. Forming a voluntary partnership agreement that performed a multi-stakeholder process had been well contributed to democratization and progressed acknowledgment of stakeholders’ rights in forest governance [15]. The preceding statement is also supported by [16], who described that the VPAs are tailor-made agreements arranged by distinctive partners in each country and adjusted to the national stage, which also consider the needs and priorities of the locals.

According to [17], the rate of illegal logging has been diminished eminently globally through sustainable forest management practices such as FLEGT-VPA. This was further supported by [18], who reported that the FLEGT-VPA provided both direct and indirect contributions to sustainable forest management practices, especially concerning forest governance refinement, transparency enhancement, sustainable timber harvesting practice improvement, and timber legality assurance system.

From the questionnaire analysis and focus group interviews, we found that the FLEGT-VPA scheme implementation is supporting sustainable forest management practices, especially in reducing the illegal logging rates. There has been an eminent diminishment in the rates of illegal logging in generation forests commanded to have an administration arrangement, where those are presently far better executed than in the past. In this respect, the FLEGT-VPA has contributed emphatically towards such an advancement [17]. The advancement of sustainable forest management practices is also supported by [18], who stated that the FLEGT-VPA provided both direct and indirect contributions to the sustainable forest management practices, especially in regard to the forest governance refinement, transparency enhancement, sustainable timber harvesting practices improvement, and timber legality assurance system.

According to the stakeholders, the FLEGT-VPA scheme considers the legal status of the area, improves the system and procedure of tree harvesting, enhances the environmental and industrial law compliance and legal timber products trade, applies the timber tracking system (chain of custody), and ensures the timber products ownership transformation. The stakeholders agreed that the scheme implementation has improved the legality of timber products, especially the traceability aspect, by providing a barcode for all timber materials (logs) and by improving business permit legality.

We also found the stakeholders agree that the FLEGT-VPA scheme is aimed at opening up new market opportunities to the EU member states, especially for the timber and timber products exporters, delivering export easiness for market expansion. However, the stakeholders believe the scheme is unpractical and results-oriented because it does not have a direct impact on the EU market and hardly increases the export of timber products. The previously mentioned problems haveraised a need for attentionto increase the value of FLEGT-licensed products in the EU markets [19]. Former studies asserted that the Indonesia–EU FLEGT-VPA could deliver the increase in timber and timber products export in the short-term with the long-term impacts influenced both directly and indirectlyby the opening of timber and timber products trade opportunities for labor (youth, crippled, and gender) due to expanded market access and premium prices for all items of small- and medium-sized enterprises having a timber legality certification [20].

All three stakeholders (government institutions, civil society organizations, and private sectors) claimed that the Indonesia–EU FLEGT-VPA scheme implementation is considering the legal status of the area, improving the system and procedure of tree harvesting, enhancing the compliance of the environmental and social aspects, including the labor laws and regulation, enhancing the legal timber and timber products trade, applying the timber tracking system (chain of custody), ensuring the timber and timber products ownership transformation, and also enhancing the industrial labor law compliance. In general, the interviewees explained that the scheme is highly related to the improvement of timber and timber products legality, especially the traceability aspect, by providing a barcode for all timber raw materials (logs) and improving business permit legality (administration factor). These conditions were conformable by [21], who defined that the FLEGT-VPA implementation gave most consideration to the identification of both technical and social standards for the timber industry and implies greater enhancement of their performance and less focus on the title of criteria for recognizing forest-dependent people.

The Indonesia–EU FLEGT-VPA is also translated as a policy adjustment between the European Union Timber Regulation (EUTR) and the Indonesian Timber Legality Assurance System/TLAS, or Sistem Verifikasi Legalitas Kayu/SVLK, which was mutually beneficial for both parties, with Indonesia as the timber producer, and the European Union as the timber consumer. In Indonesia, the FLEGT-VPA implementations were preeminently considered as including an advanced adjustment of the prior recognized professional guidelines of the Indonesian timber legality assurance system [21]. It was inserted in an existing governance arrangement for the forest and law enforcement, drawn closer through a process of fine-tuning the national guidelines to international requests.

In terms of law enforcement and governance, the stakeholders conceded that the FLEGT-VPA scheme implementation is improving the law authorization reinforcement: it escalates the principle of candor, provides an easy instrument for reporting violations, promotes better collaborative management, improves the judiciary capacity, develops the involvement of the armed forces, and provides training for private sectors and community-based workshop. The stakeholders are supportive of the scheme’s implementation because it promotes openness and transparency through multi-stakeholder involvement. The concept of multi-stakeholder involvement is crucial to have all vital partners at the table at the time of establishing the framework’s plan; as such, this will improve the sense of ownership to the scheme [22]. It is furtherly explained by [23] that the compelling administration aspects play a significant role in implementing good governance, especially with regard to the forest sector. The advancement of governance and law enforcement diminishes the chance of clashes among partners, reduces the level of exertion required to move to sustainability certification, and diminishes the obtained advantage of non-certified producers over certified producers [4].

All-important partner must be involved in establishing the goals and preparing the scheme through education, and the assessment of implementation should be conducted through collaboration with a mutual consensus on measurement methods [24]. The FLEGT-VPA process has significantly contributed to a more coherent legitimate system, with sanctions being more valid in the present than before the scheme’s implementation [17]. However, according to the stakeholders, the FLEGT-VPA scheme implementation is assessed primarily on the side of timber-producing countries, and thus, the consumer side should also be assessed for the reciprocally successful implementation of the scheme. This situation was ascertained by [22], who declared that within the FLEGT implementation, numerous partners are included, but as it is, partners in timber-producing countries are likely to be assessed.

Regarding the armed forces’ involvement, all the stakeholders pointed out that the scheme had not yet been sufficiently effective in involving the armed forces, because the illegal loggers and illegal loggings still exist, even though the rate is gradually decreasing. According to [23], compelling administration measures can play a significant role in achieving better governance of forestry. The advancement of governance and law enforcement reduces the chance of clashes among partners and the advantage of non-certified producers over certified producers [4].

Concerning social safeguards, the stakeholders asserted that the scheme has not been very effective in supporting vulnerable groups, especially the forest-dependent people living inside or surrounding the forest areas. FLEGT-VPA aims to achieve equitable sharing of forest benefits, promote local community rights, and support corporate’s social responsibility. Civil society could benefit from the FLEGT-VPA implementation by increasing the chance of securing livelihood resources and rights, mainly related to timber harvesting [25]. However, according to [20], marginal and vulnerable groups such as artisans, the disabled, forest farmers, small log yard registers, and small-scale companies are most likely to be affected negatively by the scheme implementation in the supply chain of the timber product industry. Thus, social aspects of the FLEGT-VPA scheme must be considered to support the livelihood of the forest-dependent people living inside or surrounding the forest areas.

We observed that the stakeholders are satisfied with the Indonesia–EU FLEGT-VPA scheme implementation, especially for sustainable forest management, new market opportunities, and timber legality factors. However, regarding the law enforcement and social safeguards factors, all three stakeholders addressed several concerns as follows. First, since small and medium enterprises (SMEs) are required to meet the main legal requirements such as tax identity number, location permit, environmental permit, environmental impact assessment, building permit, and business permit, FLEGT-VPA becomes another big challenge. According to [26], timber-producing countries with FLEGT licenses ought to have an adequate capacity to ensure that the licensing authorities have a reasonable budget, adequate human resources, and optimized instruments, including a license database. In Indonesia, numerous SMEs are still in need of such capacity, particularly to comply with the legal requirements and to meet the prerequisites of the European timber markets [17]. However, this situation has been exacerbated by the higher cost of obtaining legal certificates, V-LEGAL, and FLEGT licenses. The high cost of SVLK, the Indonesian timber legality assurance system for small and medium enterprises, and the high cost of SVLK certification for small- and medium-sized enterprises, combined with their restricted authoritative capacities, would strongly prohibit them from timber and timber products exports [27]. There is also the problem of high certification cost, stated by [28], who explained the main challenges confronting the small-scale forestry sector and artisanal operations, especially regarding the additional costs and endeavors included in legality verification and obligatory permitting. Second, the FLEGT license is uncompetitive and is not well known to buyers in Europe, even though the EU and Indonesia declared in 2018 that public communication is crucial to accomplish the objectives of the FLEGT-VPA. The two-way communications between timber-producing countries and the EU member states are critical to improving the understanding from both sides (the exporters and the markets) [26]. Indonesia as a timber-producing country and the EU as a timber market, have to support each other to comprehend the real problems after the scheme has started and collaborate on resolutions [24]. Moreover, the several certificate requirements by the EU countries also undermine the capability of exporters with FLEGT licenses to compete in the EU markets. Third, there are no incentives for the FLEGT license holders who followed all the policies and regulations regarding timber legality, and the situation is exacerbated by no premium prices for timber and timber products exported to the EU. Without a doubt, costs would be influenced, both locally and globally, as a result not only of the timber and timber products legality permit, but also of the other showcase drivers empowering the evacuation of illegally produced timber and timber products from the market [29]. The application of premium prices for timber products with a FLEGT license has been discussed by [30], based on the trade survey organized by the Independent Market Monitoring (IMM). However, despite its influence on the easiness of timber products from Indonesia to Europe, the critical issues from the side of exporters including price, quality, and the time for conveying have not been considered well.

5. Conclusions

The study results showed that timber legality is considered to have the highest significance in the stakeholders’ satisfaction, followed by sustainable forest management, law enforcement, new market opportunities, and social safeguards. Various findings were also obtained from the in-depth and focus group interviews with the stakeholders. First of all, the scheme implementation has facilitated sustainable forest management, reducing the rates of illegal logging and deforestation. Despite new market opportunities to some extent, the scheme implementation is results-oriented and less practical for the exporters. The FLEGT-VPA scheme has also improved the legality and traceability of timber and timber products, and it has facilitated good governance by reinforcing transparency and upholding the principle of openness through participation and communication among the stakeholders. However, social safeguards have been promoted unevenly: the employment and social welfare of the local communities living near the companies or industries are well improved, while those of the forest-dependent communities living inside the forest areas are not. The main challenges defined by the stakeholders are associated with administration aspects: high certification cost and no incentives, especially for small- and medium-sized enterprises; schemes which are uncompetitive and not well known to the buyers; additional burden for exporters along with other certification requirements.

As a way to solve the problems identified above, we propose the following recommendations. First, certification synchronization could be considered as a way to improve the status of the FLEGT license timber and timber products, by supporting the exporters to comply with other credentials required from the EU market. Thus, further coordination between SVLK/TLAS, issued by the Independent Assessment and Verification Agencies, with other commercial forest certifications, issued by international agencies, should be organized by the Indonesian government. Second, ministerial regulations need to be reorganized to facilitate understanding of FLEGT-VPA and the license, and the creation of a joint decree between the Indonesian Ministry of Environment and Forestry and other related ministries will help foster the successful implementation of the policies. Third, to help small- and medium-sized enterprises engaged in the FLEGT-VPA scheme implementation, financial aid and incentives need to be provided. Since the enterprises in Indonesia exporting timber and timber products to EU member states do not receive any financial incentives with the FLEGT license, both the Indonesian government and EU have to collaborate for more profound communications to address this problem and to create market incentives for all FLEGT-licensed products. Based on the rigorous review and assessment of the scheme implementation, proper measures should be prepared to fix any negative effects on the timber industries in Indonesia as the first country granted the license. Finally, the creation of a logo symbolizing the legality, traceability, and sustainability of timber products would enhance the credibility of the license and help more and more enterprises participate in the scheme implementation.

Author Contributions

Conceptualization, Y.H. and J.-O.K.; methodology, Y.H. and J.-O.K.; software, Y.H.; validation, Y.H.; formal analysis, Y.H.; investigation, Y.H.; resources, Y.H.; data curation, Y.H.; writing—original draft preparation, Y.H. and J.-O.K.; writing—review and editing, Y.H. and J.-O.K.; visualization, Y.H.; supervision, Y.H. and J.-O.K. All authors have read and agreed to the published version of the manuscript.

Data Availability Statement

Not applicable.

Conflicts of Interest

The authors declare no conflict of interest.

Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Figures and Tables

Figure 1. Mixed-method sequential explanatory research design. (adapted from [12]).

Figure 2. Matrix of the stakeholders’ classification. (adapted from [14]).

Figure 3. Key findings of the in-depth and focus group interviews results.

Table 1

Categorization of stakeholders for survey and interviews.

No	Stakeholders Categorization	Stakeholders	Number of Respondents
			Survey	Interviews
1	Government Institutions	Central Government Institution	22	2
		Provincial Government Institution	5	1
		University and Research Institution	12	6
		Embassy of the Republic of Indonesia	4	1
2	Civil Society Organizations	Non-Governmental Organization	3	-
		International Development Cooperation Agency	2	1
		Independent Assessment and Verification Agency	10	3
3	Private Sectors	Forest Company	22	2
		Timber Products Industry	15	3
		Forest and Timber Products Entrepreneurs related Association	8	1
Total			103	20

Table 2

Stakeholders’ satisfaction (n = 103) on the Indonesia–EU FLEGT-VPA scheme implementation.

	Mean			Std. Deviation (Total)	Std. Error (Total)
	Government Institutions(n = 43)	Civil Society Organizations (n = 15)	Private Sectors(n = 45)
Sustainable forest management
Illegal logging rates reduction	3.28	3.07	3.18	0.797	0.078
Priority basis in timber harvesting activities	3.33	3.13	3.16	0.713	0.070
Priority basis in producing the timber products	3.35	3.13	3.16	0.675	0.066
Forest standing stocks improvement	3.19	2.73	2.96	0.816	0.080
Socio-economic condition improvement	3.16	3.00	2.91	0.822	0.081
New market opportunities
Timber and timber products export improvement	3.35	3.20	3.11	0.896	0.088
FLEGT License products export easiness	3.09	2.93	3.11	0.788	0.078
A good example for other countries’ market expansion	3.72	3.53	3.31	0.895	0.088
Timber legality
Legal status of the area	3.00	2.93	3.02	0.990	0.098
Tree harvesting system and procedure compliance	3.19	3.20	3.18	0.653	0.064
Environmental and social aspects compliance	3.16	3.20	3.00	0.721	0.071
Forest company labor laws and regulation compliance	3.00	3.00	2.71	0.893	0.088
Legal timber and timber products trade realization	3.49	3.53	3.38	0.825	0.081
Timber tracking system application	3.49	3.33	3.44	0.871	0.086
Timber and timber products ownership transformation	3.33	3.40	3.18	0.703	0.069
Timber products industry labor regulation compliance	3.05	2.87	2.62	0.898	0.088
Law enforcement and governance
Law authorization reinforcement	3.07	2.67	3.00	0.779	0.077
Principle of candor escalation	3.19	2.73	3.11	0.864	0.085
Easy instrument for reporting violations	3.00	3.13	2.78	0.860	0.085
Better collaborative management	3.16	3.20	3.07	0.788	0.078
Judiciary capacity improvement	2.84	2.80	2.78	0.950	0.094
Armed forces involvement	1.70	1.47	1.47	1.499	0.148
Community-based workshop provision	2.88	2.67	2.64	1.100	0.108
Private sectors training plan development	2.98	2.93	2.78	0.911	0.090
Social safeguards
Impartial sharing	2.53	2.27	2.58	1.037	0.102
Local community rights	3.00	2.60	2.69	0.780	0.077
Local community timber advertisement	2.95	2.53	2.84	0.926	0.091
Corporate social responsibility improvement	3.02	2.53	2.91	0.834	0.082
Forest-dependent people policy enhancement	2.91	2.67	2.76	0.940	0.093
Stakeholders’ Satisfaction
Sustainable forest management	3.09	3.00	3.18	0.855	0.084
New market opportunities	3.33	3.07	3.09	0.968	0.095
Timber legality	3.19	3.27	3.20	0.901	0.089
Law enforcement and governance	2.84	3.00	2.58	0.967	0.095
Social safeguards	2.81	2.60	2.56	0.994	0.098

Table 3

R Square Test results.

Model Summary b
Model	R	R Square	Adjusted R Square	Std. Error of the Estimate
1	0.893 a	0.797	0.787	1.812

^a. Predictors: (Constant), Social Safeguards, New Market Opportunities, Timber Legality, Sustainable Forest Management, Law Enforcement; ^b. Dependent Variable: Stakeholders’ Satisfaction.

Table 4

F Test results.

ANOVA a
Model		Sum of Squares	df	Mean Square	F	Sig.
1	Regression	1252.775	5	250.555	76.282	0.000 b
	Residual	318.604	97	3.285
	Total	1571.379	102

^a. Dependent Variable: Stakeholders’ Satisfaction; ^b. Predictors: (Constant), Social Safeguards, New Market Opportunities, Timber Legality, Sustainable Forest Management, Law Enforcement.

Table 5

T-Test results.

Coefficients a
Model		Unstandardized Coefficients		Standardized Coefficients	t	Sig.
		B	Std. Error	Beta
1	(Constant)	−3.740	1.016		−3.680	0.000
	Sustainable Forest Management	0.276	0.085	0.233	3.261	0.002
	New Market Opportunities	0.305	0.109	0.175	2.790	0.006
	Timber Legality	0.218	0.061	0.286	3.551	0.001
	Law Enforcement	0.160	0.055	0.237	2.883	0.005
	Social Safeguards	0.167	0.066	0.161	2.520	0.013

^a. Dependent Variable: Stakeholders’ Satisfaction.

Appendix A

Table A1

One-Sample Kolmogorov–Smirnov Test results.

One-Sample Kolmogorov–Smirnov Test
		Unstandardized Residual
N		103
Normal Parameters a,b	Mean	0.0000000
	Std. Deviation	1.76736207
Most Extreme Differences	Absolute	0.080
	Positive	0.080
	Negative	−0.048
Test Statistic		0.080
Asymp. Sig. (2-tailed)		0.107 c

^a. Test distribution is normal; ^b. Calculated from data; ^c. Lilliefors Significance Correction.

Table A2

Multicollinearity Test results.

Coefficients a
Model		Unstandardized Coefficients		Standardized Coefficients	t	Sig.	Collinearity Statistics
		B	Std. Error	Beta			Tolerance	VIF
1	(Constant)	−3.740	1.016		−3.680	0.000
	Sustainable Forest Management	0.276	0.085	0.233	3.261	0.002	0.411	2.435
	New Market Opportunities	0.305	0.109	0.175	2.790	0.006	0.531	1.884
	Timber Legality	0.218	0.061	0.286	3.551	0.001	0.322	3.101
	Law Enforcement	0.160	0.055	0.237	2.883	0.005	0.309	3.236
	Social Safeguards	0.167	0.066	0.161	2.520	0.013	0.510	1.961

^a. Dependent Variable: Stakeholders’ Satisfaction.

Table A3

Heteroskedasticity Test results.

Coefficients a
Model		Unstandardized Coefficients		Standardized Coefficients	t	Sig.
		B	Std. Error	Beta
1	(Constant)	−0.047	0.631		−0.074	0.941
	Sustainable Forest Management	−0.005	0.053	−0.015	−0.099	0.921
	New Market Opportunities	−0.038	0.068	−0.074	−0.556	0.579
	Timber Legality	0.047	0.038	0.209	1.224	0.224
	Law Enforcement	0.006	0.034	0.029	0.168	0.867
	Social Safeguards	0.038	0.041	0.127	0.932	0.354

^a. Dependent Variable: Abs_Res.

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