The Government of Indonesia is rolling out an information system for licensing mining, plantations and forestry (Sistem Informasi Perizinan). The overall objective of this project was to assess the feasibility of linking information on licences to data on revenues resulting from activities under licences in the licensing system. The study developed recommendations for piloting integration of revenue data into the licensing system.

 

Extractive industries that clear forests for timber production, mining and palm oil plantations contribute significantly to the Indonesian economy but their contributions to the economy seldom translate into stable, sustainable economic growth. Illegal logging and mismanagement of forests cost the state more than USD7 billion between 2007 and 2011 – USD2 billion in 2011 alone – according to estimates by Human Rights Watch.

 

The Indonesian Government is implementing a licensing information system to make licences more transparent and to make the licensing process clear and accountable. The licensing system will integrate information on evaluation, verification, issuance of licences and monitoring with spatial data. Once the licensing system is in place, there may also be scope to integrate data on revenues from licensed activities. Matching data on revenue received to licensed activities will improve transparency in value chains for timber, mining and palm oil production. Transparency in licensing will support the national REDD+ strategy by enhancing law enforcement and reducing corruption in issuing land-use licences. Matching revenues received to licences issued, supports the FLEGT Voluntary Partnership Agreement (VPA) annex on transparency of revenues from the forestry sector. The information on licences and the revenues generated from licences will link to the information system (Sistem Informasi Legalitas Kayu) for the Indonesian timber legality verification system (Sistem Verifikasi Legalitas Kayu).