New Revenue-sharing Scheme in the Forestry Draft Bill

The House of Representatives of the Republic of Indonesia (Dewan Perwakilan Rakyat Republik Indonesia – “DPR RI”) is set to finalize the revision of Law No. 41 of 1999 on Forestry, as amended by Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation (collectively referred to as “Law 41/1999”). A member of Commission IV of the DPR RI, Darori Wonodipuro, has proposed a revenue-sharing system for forest management between the central government and regional governments.

“Currently, protected forests and production forests are managed by the provincial government through the establishment of a Forest Management Unit (Kesatuan Pengelolaan Hutan – “KPH”), while the forests themselves are located within regencies. Therefore, there have been many proposals to develop a more efficient management system,” Darori stated.

The proposed revenue-sharing scheme allocates 50% to the central government, 20% to the provincial government, and 30% to the regency government. This measure is intended to ensure more sustainable forest management while strengthening the funding of KPH.