BRIK Endorsement System:Securing Timber from Legal Sources

International Seminar in Tokyo for Tackling Illegal Logging, 2007
Tokyo, 26-27 February 2007
Presented by Jimmy Purwonegoro
Vice Chair of BRIK

1

OVERVIEW• THE ESTABLISHMENT OF BRIK BOARD OF DIRECTORS LEGAL ASPECTS ACTION PROGRAM• INDONESIA’S ROLE
 PROCEDURE & REQUIREMENTS OF ETPIK EXPORT PROCEDURE
 MANDATE OF ENDORSEMENT BRIK CIRCULAR LETTER NO.713/BRIK/XII/2006
 BRIK VERIFICATION AND ENDORSEMENT METHOD
 SAMPLE OF BRIK ENDORSEMENT FORM

2THE ESTABLISHMENT OF BRIK
Established on 13 December 2002

Based on Joint Decree The Minister of Industry & Tradeand The Minister of Forestry
803/MPP/Kep/12/2002

495.1/MPP/Kep/9/2004————————————————

junction —————————————————

10267/Kpts-II/2002

SK 355.1/Menhut-I/2004

The Organization consist of
1. Board of Trustees:
6 persons
2. Board of Directors:
19 persons(The Boards come from Associations Backgroundsand Professionals)

3

BOARD OF DIRECTORS
Contact Persons:•••••••Chairperson
Vice Chair
Secretary General
Production Division, Head
Marketing Division, Head
Regulation & Organization Div. Head
Foreign Affairs & Ext. Relation Div. Head

: Soewarni: Jimmy Purwonegoro: Soegeng Soekarto: Soebardjo: Jimmy Chandra: Indradi Kusuma: Dani Pitoyo••

Executive Director
Administration Staffs: Zulfikar Adil
: 22 persons

4

LEGAL ASPECTS
1. Establishment deed by Minister of Industry & Trade andMinister of Forestry on 13 December 2002.
2. Action Program approved by Minister of Industry & Trade andMinister of Forestry on 13 December 2002.
3. Minister Decree of Industry & Trade No. 32/MPP/Kep/1/2003
in conjunction with No. 647/MPP/Kep/10/2003 on theProcedure for Registered Forest Industry Products
Exporters (ETPIK).
4. Minister Decree of Trade No. 02/M-Dag/Per/2/2006 on theProcedure for Export of Forest Industry Products.

5

ACTION PROGRAM

1. Ensuring timber supply from legal sources
2. Establishment of timber industries database
3. Providing inputs to the government
4. Implementation of ETPIK (Registered Forest Industry Products
Exporters) to all forestry industries
5. Establishment of serving mechanism, monitoring, andevaluation of ETPIK
6. Others:● Efficiency and product diversification● Evaluation of regulation that burden competitiveness
6ILLUSTRATION REGISTRATION & ENDORSEMENT
13/12/2002

16/01/2003

22/01/2003

05/02/2003

27/02/2003

SKB 2 MENTERI
pembentukan BRIKPengesahan
AD/ART & Program AKSIBRIKSK Memperindag No. 32/
2003
tentang ETPIKSK Dirjen DAGLU No. 4/
2003
tentang Tata Laksana
ETPIKSurat Memperindag
Tentang PengunduranETPIK s/d 15/03/2003

01/03/2003

Mulai berlakunya ETPIK

11/03/2003

13/03/2003

15/03/2003

2006

Surat Dirjen BPK tentang
persyaratan Endorsement

Surat Dirjen DAGLU keDirjen BEA CUKAI tentang
EndorsementMulai
Endorsement

Regulation of Minister of Trade No.
02/M-Dag/Per/2/2006 on theRequirements for Forestry Industrial
Products Export.

REGISTRATIONENDORSEMENT

BRIK
Request for
Member of BRIK

BRIK
Industry & Trade Department
LMKAccount Officer

Account Officer
Report

SKSKB
FA-KB
FA-KO
SKAU
SAL

ETPIK Licence

Operator

Operator

Letter of
BRIK Membership

Endorsement
Request

WOOD INDUSTRYWOOD INDUSTRY

Endorsement

Verificator

Forestry Department
Verificator
ReportExport Document
PEB, BoL, InvoicePrinting

Printing

Export7PROCEDURE & REQUIREMENTS OF ETPIK
1. Forest Industries are companies having legal permits based onIndonesian law and regulation
2. To get Registered Forest Industry Products Exporter (ETPIK) license,
the company has to submit a request to the Director General ofForeign Trade, the Ministry of Trade. accompanied with:• Field inspection to industry and a recommendation letter made by
local government office which is responsible for industry
development;• Copied Industry License / Industry Registration (IUI/TDI)• Copied Company Registration (TDP)• Copied Tax Payer Registration Number (NPWP)• Copied Authentic Deed/Notarized Deed.
3. ETPIK LICENCE is issued by the Director General of Foreign Trade,the Ministry of Trade
4. Export of forest industry products within HS: 4407, 4408, 4409, 4410,4411, 4412, 4413, 4415, 4418, 4421.90.50.00, 9406.00.92.00 must be
endorsed by BRIK

5. …

8

PROCEDURE & REQUIREMENTS OF ETPIK
5. Endorsement document is attached to Commodity Export Declaration(PEB).
6. Industry verification by a government team:

Directorate General of Foreign Trade, Ministry of Trade;
Directorate General of Agro and Chemical Industry, Ministry of Industry;
Directorate General of Forest Production Development, Ministry of Forestry or
by independent surveyor assigned by the Minister of Trade

7. Export of certain wood products within Ex. HS. 4407 (S4S, end jointed),
HS. 4409, Ex. HS. 4415 (pallet), Ex. HS. 4418 (door and window frame),and HS. 9406 are verified by independent surveyor assigned by theMinister of Trade.

9MANDATE OF ENDORSEMENTBRIK Endorsement System based on mandatory process stipulated in Indonesian rules
and regulations such as the following regulations:• MoF: 126/Kpts-II/2003 renewed by P.55/Menhut-II/2006 regarding the Administration of theForestry Products from the State Forests in conjunction with Number P.63/Menhut-II/2006
regarding the Amendment of the Regulation of the Minister of Forestry Number P.55/MenhutII/2006;• MoF: P.51/Menhut-II/2006 regarding the Use of the Certificate of Origins (SKAU) forTransporting Timber Forestry Products from Community Forests in conjunction withNumber P.62/Menhut-II/2006 regarding the Amendment of the Regulation of the Minister ofForestry Number P.51/Menhut-II/2006;• MoIT: : 32/MPP/Kep/1/2003 in conjunction with Number 647/MPP/Kep/10/2003 on theRequirements for Exports of Forest Industry Products;• MoT: 02/M-Dag/Per/2/2006 on the Requirements for Export of Forest Industry Products.
• Regulation of the Director General of Foreign Trade Number 01/Daglu/Per/3/2006 regarding theProcedures for the Endorsement from the Forestry Industry Revitalization Body (BRIK);• Letter Number 452/VI-Edar/2003, Number 948/VI-BPPHH/2004, and Number S.675/VIBPPHH/2006 from the Director General of Forest Production Development concerning
Recovery Factors of Wood Products.

Endorsement system are electronically processed and free of charge.
10

BRIK CIRCULAR LETTER NO.713/BRIK/XII/2006
This Circular Letter has adopted the latest government decrees and regulations, startingfrom 1 January 2007.
• ETPIK submits Timber Mutation Report (LMK) December 2006 ending-balance carried over as
beginning stock of the current year (2007). The LMK must be legalized or registered by theLocal Authorized Forestry officer;• The legality document for the transportation of forestry products consist of: Validity Certificate
for Logs (SKSKB), Logs Transportation Invoice (FA-KB), Processed Timber
Transportation Invoice (FA-KO), Tender Transportation Certificate (SAL), and Certificateof Origins (SKAU);• Copied SKSKB and SAL are legalized by the Local Authorized Forestry officer.
• Copied FA-KB, FA-KO, and SKAU are legalized by the authorized agency/officer issuingthose documents.
• In some cases, BRIK will verify to the local forestry office or the institution (s) issued those
Forest Products Legality document.
• Export realization report in the forms of copied commodity export declaration (PEB), invoice,packing lists, bill of lading must be submitted to BRIK at the latest 14 days from therealization of export.

11

BRIK VERIFICATION AND ENDORSEMENT METHOD
Concession
HolderForest productslegality documents

Production Forest

SAL

SKSKB
Conversion Forest
Plantation Forest

Forest Industry(Primary + Secondary)- ETPIK Panel Industry
Saw Mill / Wood Working
Furniture / Handicraft
Pulp and Paper

FAKB
Crop Estate

LMKB
LMKO
FAKO

SKSKB
FAKB
FAKO
SKAU
SAL

ExportEndorsement
RequestSKAUCommunity Forest

BRIK

Initial Balance

Ministries
andAgencies

CustomIndependent
Surveyor
PEB

Reports

ExportEndorsement

Add
Subtract
Stock Balance

RecordBRIK Verification and Endorsement System
P.51
P.55

SK 355.1/Menhut-1/2004
495.1/MPP/Kep/9/2004

Based on Government Mandatory
12Export Info.
Resource Info.
ETPIK Info.
Check Endorse
Internet

SAMPLE OF BRIK ENDORSEMENT FORM

13REGISTERED ETPIKNo.

Industry GroupTotal

1. Wood Panel156

2. Woodworking

1.968

3. Furniture

2.587

4. Pulp & Paper

111

5. Handicraft

703

Total

4.486

Source: BRIK

Notes:• Integrated industry is calculated 1 ETPIK.
• BRIK endorses export of wood panel and woodworking.
• Up To December 31th, 2006
14

ETPIK CONDITION IN 2005 & 2006

ActiveIndustry Group

Total ETPIK2005

Panel156

102(65%)89(57%)

Woodworking

1978861
(44%)

790
(40%)

Source: BRIK

152006

REALIZATION OF EXPORT TO JAPAN2004
Harmony
System2005

VolumeValue

M3

US$ (x1000)

Volume2006 *Value

M3

US$ (x1000)

--

4407

12,822

6,888,375

4408

45

19,648

1,268

4409

104,783

59,894,424

4410

144

4411

VolumeValue

M3

US$ (x1000)

28,433

13,396,898

690,491

1,249

1,140,078

87,813

66,606,733

53,392

42,165,400

51,590221

101,904230

129,372

3,329

797,797

3,304

942,444

3,330

1,009,039

4412

2,159,558

859,042,139

1,725,783

678,314,635

1,528,892

787,907,496

4413

198,393

99,658,400

183,588

90,051,958

175,51289,817,128

4415

37,58815,274,155

28,003

12,243,477

27,046

10,515,991

4418

115,779

90,620,908

108,326

87,423,985

43,70842,212,924

4421.90.50.00

3,805

3,788,974

2,931

3,516,583

264

297,628

9406.00.92.00

19

8,270

53

39,06518

10,831

Source: BRIK

Note:
Consumed of Plantation Resource about 37%
16* TentativeBRIK ENDORSEMENT <> GREEN PROCUREMENT POLICY17•

BRIK Endorsement is based on Indonesian forest laws, andother regulations in industry and trade sector. This is in linewith the legality definition of Green Procurement Policy (GreenKonyuho, recommendation 1, 2 and 3).

•BRIK verifies copied documents (LMK, SKSKB, FA-KB, FA-KO,SAL, SKAU) which have been registered or legalized byforestry office for LMK, SKSKB, SAL and competent officers for
FA-KB, FA-KO, SKAU.

•Method of Verification Æ Verification under the authorization ofgovernment

Tropical Forests with FSC Certification (Position 5 October 2006)

Natural Forest(Million Ha)

FSC Certification(Ha)%1. Brazil

561.1

1,249,822

0.22

2. Zaire

113.200

3. Indonesia

109.5739,216

0.67

4. Peru

67.9

48,0320.07

5. Colombia

54.0006. India

51.700

7. Bolivia

49.3

1,986,517

4.03

8. Venezuela

45.6009. Malaysia

32.8

55,083

0.16

Country

Source: World Bank
18THANK YOU
FOR YOUR ATTENTION

19CHART OF LEGAL DOCUMENTS FORLOGSFOREST
CONCESSIONHOLDER= ROUND LOGSLEGALITY DOCUMENTorLOGS

ROUND LOGSINVOICELOGS

ROUND LOGSINVOICELAND
CLEARINGLOGSROUND LOGSLEGALITY DOCUMENTCOMMUNITY
FORESTSLOGSLOGSORIGINALGROWTH CERTIFICATE

IPK( CONVERTION
FORESTS)HTI
INDUSTRIAL
PLANTATIONROUND LOGSINVOICE

WOOD
INDUSTRYMILL
FACTORY

ROUND LOGSINVOICE

BackFAKO & DKO

Back

SKAU

Back

SAL

Back

FAKB

Back

SKSKBBackReference No. 1

Forest Holder
Etc.

Verification Method by Forest Certification System and Chain of
Custody System (Image Drawing)

TimberMarketAcquisition ofForest
certification

Verification on
Acquisition ofForest certification

Verification on legality
And sustainability(both in Japan andOverseas)

Processing
Factory

SecondaryProcessing
Industry

Distributor(WholesaleDealer)

Deliverycompany

Ministries andAgencies, etc

Acquisition of CoC certification independently

Verification
On
Acquisition of
CoC
Certification
By eachTimber market

Separative
CustodyManagement ofVerified wood
And not

Verification
OnAcquisition of
CoC
Certification
By eachProcessing
factory

Verification
On
Acquisition of
CoC
Certification
By eachSecondaryProcessing
Industry

Verification
On
Acquisition of
CoC
Certification
By eachdistributor

Separative
CustodyManagement ofVerified wood
And not

Separative
CustodyManagement ofVerified wood
Products and not

Separative
CustodyManagement ofVerified wood
Products and not

Delivery withVerification
That supplies
are verified( Main certification system in each place of production )Indication such
As labelingAccording toThe standards
Of eachCertificationsystem•European wood (FSC, PEFC)•American wood (FSC, US:SFI, Canada:SFI, CSA, South America:FSC)•South seas wood (FSC, Malaysia:MTCC, Indonesia:LEI)•Pacific ocean wood (Australia:FSC, PEFC, Newzealand:FSC)•African wood (FSC)•Japan wood (Japan:SGEC, FSC)

Official in
ChargeMakes
Contract
WithCondition
That wood
And wood
Products
VerifiedWith
LegalityAnd
Sustainability
Should beused

Verification Method by Company under the Authorization ofAssociation (Image Drawing)

Reference No. 2
Forest Holder
Etc.

TimberMarket

Processing
Factory

SecondaryProcessing
Industry

Distributor(WholesaleDealer)

Deliverycompany

Ministries andAgencies, etc

Preparingverification

Preparingverification

Preparingverification

Preparingverification

Preparingverification

Preparingverification

Verification

Submission
I Legality
The timber to be procured should beHarvested in legal manner consistent with
Procedures in the forest laws of timber
Producing countries and areas
II Sustainability
The timber to be procured should beHarvested from the forest under sustainable
management

Submission

Dealing under
Separative
CustodyManagement ofTimber verified
With legality
Andsustainability

SubmissionProcessing
Under separative
CustodyManagement ofTimber verified
With legality andsustainability

Guarantee On
Measures
For
Separative
Custody
management
Association

Making Voluntary
Code of conduct

In case imported wood, exporters
Stand in image drawing above

Submission

Processing
Under separative
CustodyManagement ofWood products
Verified withlegality andsustainability

Guarantee On
Measures
For
Separative
Custody
management

Submission

Dealing Under
separative
CustodyManagement ofWood products
Verified withlegality andsustainability

Guarantee On
Measures
For
Separative
Custody
management

Delivery with
Indication that
Supplies are theProducts verified
With legality andsustainability

Guarantee OnMeasures
For
Separative
Custody
management

AssociationAssociationAssociationAssociation

MakingVoluntary
Code ofconduct

MakingVoluntary
Code ofconduct

MakingVoluntary
Code ofconduct

MakingVoluntary
Code ofconduct

Submission

Official inCharge
Makes
Contract
WithCondition
That wood
And wood
Products
VerifiedWith
LegalityAnd
Sustainability
Should beusedReference No. 3

Forest Holder Etc.

I Legality
The timber to be procured should be
Harvested in legal manner consistent with
Procedures in the forest laws of timber
Producing countries and areas
II Sustainability
The timber to be procured should beHarvested from the forest under sustainable
management

comprehension

Verification Method by Original Measure of Each Company(Image Drawing)(Many kinds of original method of each company are estimated and this image drawing is example.)

Processing
Factory

Processing Under
separative
CustodyManagement ofTimber verified
With legality andsustainability

comprehension

SecondaryProcessing
Industry

Processing Under
separative
CustodyManagement ofproducts Verified
With legality andsustainability

Deliverycompany

Ministries andAgencies, etc

Delivery withIndication thatSupplies are theProducts verified
With legality andsustainability

Preparingverification

comprehensionVerification and announcement by the delivery company and soForth under comprehension of distribution process fromHarvesting to delivery
With making code of conduct for verifying on legality and sustainability, by arranging agreements
With company at each stage from harvesting and delivery, acknowledgement of company about code
Of conduct and pratice of separative custody management should be secured

Submission

Verification

Official inCharge
Makes
Contract
WithCondition
That wood
And wood
Products
VerifiedWith
LegalityAnd
Sustainability
Should beused

Each company shhould verify legality and sustainability and pratice measures for separative
Custody management based on code of conduct
Assessment and publication of situation about practice of original measure (assessment by the third
Party institutions are desirable for securing objectivity

In case imported wood, exporters Stand in image drawing above

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