About half of Indonesia’s land area is covered by forests, with over 90 million hectares of forests. The annual rate of deforestation for the period 2010-15 was 0.7% (FAO, 2015).

Indonesia is one of the world's largest exporters of tropical timber, exporting a wide variety of products, including plywood, furniture, pulp and paper. Its main export markets are China, the EU, Japan and Korea (EFI).

In September 2013, Indonesia became the first country in Asia to sign a voluntary partnership agreement (VPA) with the EU – a bilateral trade agreement that aims to improve forest governance and ensure all timber and timber products exported from Indonesia to the EU are legally sourced.

Since 15 November 2016 Indonesia has been able to issue FLEGT licenses to verified legal timber products it exports to the EU, becoming the first country in the world to produce FLEGT licensed timber. Licenses are issued under the country’s timber legality assurance system, the SVLK, which covers all commercial timber and timber products produced, processed and purchased in the country. FLEGT licensed timber automatically meets EU Timber Regulations and so is not subject to due diligence checks. The SVLK also applies to timber-based exports to other countries, which are accompanied by V-Legal Documents.

To build on the important steps the country has taken in establishing a national legality assurance system, implementation and enforcement of the law needs to continue to be strengthened. The EU-Indonesia Joint Implementation Committee oversees the continual improvement of SVLK as well as progress with the other commitments set out in the VPA.

Further progress is also needed to tackle corruption and to reform the country’s decentralized governance system. Research carried out by Chatham House found that levels of illegal logging have fallen markedly since 2000 and that forest governance has also improved over this period. However, illegal logging continues to pose a serious threat to the country’s forests, as well as the illegal clearance of forests for other land-uses. (Chatham House, 2014).