World Bank Approves $22 Million Grant to Help Forest Communities in Indonesia

May 27, 2016

New Project Will Strengthen Forest Management and Livelihoods in 10 Areas

WASHINGTON, May 27, 2016— The World Bank’s Board of Executive Directors has approved a US$22 million grant to strengthen the management of Indonesia’s tropical forests – the third largest in the world – in order to help reduce poverty amongst forest-dependent communities and reduce environmental degradation.

Denmark’s development agency DANIDA contributed 40 million Kroner (approximately US$ 5 million) to the grant, which is financed by the global Forest Investment Program, or FIP. The grant will support the government’s Forest Management Unit initiative, known by its Indonesian acronym KPH.

Indonesia’s Ministry of Environment and Forestry manages the KPH program and has prioritized it in their medium-term development plan, due to its potential to strengthen forest management, improve use of natural resources, and help reduce poverty among the 32 million people living in and around forest lands.

Unclear and conflicting regulations, limited capacity at multiple levels, inadequate investment financing and lack of consistent information have impeded effective implementation of the KPH program.

The project aims to help operationalize the KPH program by strengthening the capacity of local governments, community groups, and license holders to manage forests, and foster partnerships among them. The project also seeks to address weakness in legislation and policies that affect the forest units.   

Communities who live near forests and rely on them for livelihoods are amongst Indonesia’s poorest. The Forest Investment Program offers an opportunity for them to improve their incomes through better management of the environment. This is evidence of our support to Indonesia in better managing its landscape,” said World Bank Country Director for Indonesia Rodrigo Chaves.    

In addition to building capacity, the project will select up to 10 KPHs to implement sustainable forest management and test sustainable investment opportunities.

The project also supports the establishment of information systems that allow stakeholders to share knowledge and learn from each other’s successes.

“Effective operationalization of the KPH program requires strong systems for sharing, among other things, information on land use and land cover, existing licenses and permits, approaches for forest governance and management. The project supports the establishment of a platform that will allow exchange of knowledge among forest units, so that they may build on existing best practices,” said Diji Chandrasekharan Behr, World Bank Senior Natural Resources Economist.

This project was developed in close coordination with the other two proposed FIP financed projects led by the International Finance Corporation and the Asian Development Bank, as well as with other donor and multilateral organizations.

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