Decentralization of Forest Administration 
         in Indonesia
Since  the  collapse  of  Soeharto’s  New  Order  regime  in  May  1998,  Indonesia’s Implications for Forest Sustainability,
national, provincial, and district governments have engaged in an intense struggle Economic Development and
over how authority and the power embedded in it, should be shared. How this 
ongoing struggle over authority in the forestry sector will ultimately play out is of Community Livelihoods
considerable significance due to the important role that Indonesia’s forests play 
in  supporting  rural  livelihoods,  generating  economic  revenues,  and  providing 
environmental services. Decentralization of Forest Administration 
This book examines the process of forestry sector decentralization that has 
occurred in post-Soeharto Indonesia, and assesses the implications of more recent 
efforts  by  the  national government to recentralize administrative authority over 
forest resources. It aims to describe the dynamics of decentralization in the forestry 
sector, to document major changes that occurred as district governments assumed 
a greater role in administering forest resources, and to assess what the ongoing 
struggle among Indonesia’s national, provincial, and district governments is likely to 
mean for forest sustainability, economic development at multiple levels, and rural 
livelihoods.
Drawing from primary research conducted by numerous scientists both at CIFOR                                        157 mm witdh x 2 (+ 13mm) = 327mm  x  
and its many Indonesian and international partner institutions since 2000, this book 
sketches the sectoral context for current governmental reforms by tracing forestry                                  235 mm height
development and the changing structure of forest administration from Indonesia’s 
independence in 1945 to the fall of Soeharto’s New Order regime in 1998.  The 
authors further, examines the origins and scope of Indonesia’s decentralization laws 
in order to describe the legal-regulatory framework within which decentralization 
has been implemented both at the macro-level and specifically within the forestry 
sector.  This  book  also  analyses  the  decentralization  of  Indonesia’s  fiscal  system 
and describes the effects of the country’s new fiscal balancing arrangements on 
revenue flows from the forestry sector, and describes the dynamics of district-level in Indonesia
timber regimes following the adoption of Indonesia’s decentralization laws. Finally, 
this book also examines the real and anticipated effects of decentralization on land 
tenure and livelihood security for communities living in and around forested areas, 
and summarizes major findings and options for possible interventions to strengthen 
the forestry reform efforts currently underway in Indonesia. 
         Edited by
         Christopher Barr
         Ida Aju Pradnja Resosudarmo
         Ahmad Dermawan
         John McCarthy
         with 
         Moira Moeliono and Bambang Setiono
           Decentralization of Forest Administration 
           in Indonesia
           Implications for Forest Sustainability,
           Economic Development and
           Community Livelihoods
           Edited by
           Christopher Barr
           Ida Aju Pradnja Resosudarmo
           Ahmad Dermawan
           John McCarthy
           with 
           Moira Moeliono and Bambang Setiono
     National Library of Indonesia Cataloging-in-Publication Data
     Decentralization  of  forest  administration  in  Indonesia:  Implications  for  forest 
     sustainability, economic development and community livelihoods/ed. by Christopher 
     Barr, Ida Aju Pradnja Resosudarmo, Ahmad Dermawan, John McCarthy with Moira 
     Moeliono and Bambang Setiono. Bogor, Indonesia: Center for International Forestry 
     Research (CIFOR), 2006.
      
     178p
     ISBN 979-24-4649-4
     CABI thesaurus: 1. decentralization 2. forestry 3. administration 4. central government 
     5. local government 6. sustainability 7. economic development 8. livelihoods 9. rural 
     communities 10. Indonesia I. Barr, C. et al. (ed.) 
     @ 2006 by Center for International Forestry Research
     All rights reserved.
     Front Cover photo: Christian Cossalter
     Design & Layout by Ahmad Yusuf
     Center for International Forestry Research
     Mailling address: P.O. Box 6596 JKPWB, Jakarta 10065, Indonesia
     Office address: Jl. Cifor, Situ Gede, Sindang Barang, Bogor Barat 16680, Indonesia
     Tel.: +62 (251) 622622; Fax +62 (251) 622100
     E-mail: cifor@cgiar.org
     Web site: http://www.cifor.cgiar.org
                                                                                     Contents
                             List of Editors                                                                                                                   v
                             Preface                                                                                                                          vi
                             Acknowledgements                                                                                                               viii
                             Abbreviations                                                                                                                     x
                             Glossary                                                                                                                       xiv
                             Chapter 1
                             Forests and Decentralization in Indonesia: an Overview                                                                            1
                                1.1  Introduction                                                                                                              1
                                1.2  What is Decentralization?                                                                                                 3
                                1.3  Decentralization and Forests                                                                                              6
                                1.4  Decentralization of Forest Administration in Indonesia                                                                    9
                                1.5 Organization of the Book                                                                                                 15
                             Chapter 2
                             Forest Administration and Forestry Sector Development Prior to 1998                                                             18
                                2.1  Introduction                                                                                                            18
                                2.2  Forest Administration from Independence through 
                                      the Soekarno Era, 1945-1966                                                                                            19
                                2.3  New Order Timber Policy and the Basic Forestry Law of 1967                                                              22
                                2.4  Banjir Kap and the Timber Boom of the Late-1960s                                                                        24
                                2.5  Centralized Control and Log Exports in the 1970s                                                                        25
                                2.6  Growth of Domestic Wood Processing in the 1980s and 1990s                                                               26
                                2.7  Indonesia’s Forestry Crisis                                                                                             28
                             Chapter 3
                             Origins and Scope of Indonesia’s Decentralization Laws                                                                          31
                                3.1 Introduction                                                                                                             31
                                3.2  Momentum for Decentralization                                                                                           32
                                3.3  Designing the 1999 Regional Autonomy Laws                                                                               34
                                3.4  Law 22/1999 on Regional Governance                                                                                      37
                                3.5  Government Regulation 25/2000                                                                                           41
                                3.6  Decentralization and Recentralization in Forestry Legislation                                                           43
                                3.7  Law 41/1999 on Forestry                                                                                                 44
                                3.8  Government Regulation 34/2002                                                                                           46
                                3.9  Revision of the 1999 Regional Autonomy Law                                                                              51
                             Chapter 4
                             Fiscal Balancing and the Redistribution of Forest Revenues                                                                      58
                                4.1 Introduction                                                                                                             58
                                4.2  Regional Government Finance during the New Order Period                                                                 59
                                4.3  Distribution of Forestry Revenues before Decentralization                                                               62
                                4.4  Fiscal Balancing Under Decentralization                                                                                 64