INTERNATIONAL TROPICAL TIMBER ORGANIZATION

ITTO

PROJECT PROPOSAL

TITLE: ENHANCING BALI WOODEN HANDICRAFT INDUSTRY BY IMPROVING THE QUALITY OF PLANTED-WOOD RAW MATERIALS AND COMPLYING TO LEGALITY STANDARD

SERIAL NUMBER: PD 709/13 Rev.2 (I)

COMMITTEE: FOREST INDUSTRY

SUBMITTED BY: GOVERNMENT OF INDONESIA

ORIGINAL LANGUAGE: ENGLISH

SUMMARY: Handcrafting is an integral part of Balinese cultural heritage, and its products are inseparable with the tourism industry in Bali. As tourism is growing so are wooden handicraft products. The strong demand for Bali indigenous tree species as raw materials is putting pressures on the remaining trees scattered around farmers’ backyards and state forest lands across the island. For sustainability of the environment as well as the industry it is important that farmers continue planting indigenous tree species. Similarly, quality of wooden handicraft products using legally sourced wood has to be improved to obtain increased added value through appropriate treatment of wood raw material. The proposed project aims to contribute to increasing social, economic and ecological benefits of handicraft industry to Balinese economy. Its specific objective is to enhance capacity in developing and sustaining a competitive handicraft industry of Bali. The expected outputs of the proposed project are: i) sufficient good quality planting materials available and participation of farmers in planting program increased; ii) wood raw materials of handicrafts adequately treated; and iii) increased capacity to comply with TLAS. The main characteristics of the project are targeting community participation through their involvement in production of planting materials, participation in training to improve skills on wood drying and preservation as well as compliance to timber legality assurance system (TLAS). IMPLEMENTING AGENCY: DIRECTORATE GENERAL OF FOREST

UTILIZATON IN COLLABORATION WITH BALI PROVINCIAL FORESTRY AGENCY

DURATION: 36 MONTHS

BUDGET AND PROPOSED SOURCES OF FINANCING:

SOURCE

CONTRIBUTION IN US$

ITTO 540,008

Govt. of Indonesia 95,270

TOTAL 635,728

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TABLE OF CONTENTS

TABLE OF CONTENTS ......................................................................................................................... i 

PROJECT BRIEF .................................................................................................................................. ii 

MAP OF PROJECT AREA ................................................................................................................... v 

PART 1.  PROJECT CONTEXT ........................................................................................................... 1 1.1  ORIGIN .................................................................................................................................................... 1 1.2  RELEVANCE ............................................................................................................................................ 2 

1.2.1  Conformity with ITTO’s objectives and priorities ............................................................................ 2 1.2.2  Relevance to the Indonesia’s policies ............................................................................................... 3 

1.3  TARGET AREA ......................................................................................................................................... 4 1.3.1  Geographic location .......................................................................................................................... 4 1.3.2  Social, cultural, economic and environmental aspects ..................................................................... 4 

1.4  EXPECTED OUTCOMES AT PROJECT COMPLETION ................................................................................... 5 

PART 2.  PROJECT RATIONALE AND OBJECTIVES........................................................................ 6 2.1  RATIONALE ............................................................................................................................................. 6 

2.1.1  Institutional set-up and organizational issues .................................................................................. 6 2.1.2  Stakeholder analysis .......................................................................................................................... 6 2.1.3  Problem analysis................................................................................................................................ 8 2.1.4  Logical framework matrix ............................................................................................................... 12 

2.2  OBJECTIVE ............................................................................................................................................ 14 2.2.1  Development objective and impact indicators ................................................................................ 14 2.2.2  Specific objective and outcome indicators ...................................................................................... 14 

PART 3.  DESCRIPTION OF PROJECT INTERVENTIONS .............................................................. 15 3.1  OUTPUTS AND ACTIVITIES .................................................................................................................... 15 

3.1.1  Outputs ............................................................................................................................................. 15 3.1.2  Activities ........................................................................................................................................... 15 

3.2  IMPLEMENTATION APPROACHES AND METHODS .................................................................................. 16 3.3  WORK PLAN .......................................................................................................................................... 18 3.4  BUDGET ................................................................................................................................................ 20 

3.4.1  Consolidated budget by component ................................................................................................ 20 3.4.2  ITTO Yearly budget ......................................................................................................................... 21 3.4.3  GoI Yearly budget ............................................................................................................................ 22 3.4.4  Master Budget .................................................................................................................................. 23 

3.5  ASSUMPTIONS, RISKS, SUSTAINABILITY ............................................................................................... 26 3.5.1  Assumptions and risks ..................................................................................................................... 26 3.5.2  Sustainability ................................................................................................................................... 26 

PART 4.  IMPLEMENTATION ARRANGEMENTS ............................................................................. 28 4.1  ORGANIZATION STRUCTURE AND STAKEHOLDER INVOLVEMENT MECHANISMS.................................. 28 

4.1.1.   Executing agency and partners ....................................................................................................... 28 4.1.2.  Project management team ............................................................................................................... 28 4.1.3.  Project steering committee .............................................................................................................. 28 4.1.4.  Stakeholder involvement mechanisms ............................................................................................. 30 

4.2  REPORTING, REVIEW, MONITORING AND EVALUATION ........................................................................ 30 4.3  DISSEMINATION AND MAINSTREAMING OF PROJECT LEARNING ........................................................... 31 

4.3.1  Dissemination of project results ...................................................................................................... 31 4.3.2  Mainstreaming project learning ...................................................................................................... 31 

ANNEX 1 . PROFILES OF THE EXECUTING AGENCY AND COLLABORATING AGENCY ........... 32 

ANNEX 2. KEY PERSONNEL TO BE PROVIDED BY EA AND CA AND SUMMARIZED CVS ........ 35 

ANNEX 3. OUTLINES OF TERMS OF REFERENCE FOR PROJECT KEY PERSONNEL, CONSULTANTS AND SUB-CONTRACTORS TO BE PAID WITH ITTO FUNDS ............ 39 

ANNEX 4. RESPONSE TO THE RECOMMENDATIONS OF ITTO EXPERT PANEL ........................ 41 

ANNEX 5: RESPONSES TO REVIEWER COMMENTS/RECOMMENDATIONS ............................... 44 

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PROJECT BRIEF Background Wood-based local handicraft industry is an integral part of the tourism industry of Bali. Export value of wooden handicraft products rose from USD 81 million in 2004 to USD 93 million in 2008 which represented 16% and 17% respectively of total export value of Bali province. Wood-based handicraft industry also takes up around 35% (48,000 m3) of wood consumption in Bali. More than 10,000 small and medium scale industries are currently operating in Bali providing direct employment for over 39,000 people. Despite the economic importance of this handicraft industry, concern is growing over the sustainability of the industry due to the diminishing supply capacity of existing forests. The deterioration of Bali indigenous natural forests especially those providing raw materials of handicraft industry could have serious implications. The proposed project complements the reforestation and plantation establishment of the Government of Indonesia. This program is expected to set example for farmers to plant trees in their lands. Legality of timber used in home-based industry such as handicraft is often overlooked for various reasons. The Government of Indonesia has issued a Ministerial Decree P.38/Menhut-II/2009 and revised to Ministerial Decree No.P. 45/Menhut-II/2012, which regulates the Timber Legality Assurance System (TLAS). Nevertheless, in a market where legality of a wood product is a prerequisite to enter the market, handicraft industry must also abide to the regulation. This regulation has to be disseminated to related handicraft industries. Development and specific objectives The development objective of the proposed project is “to contribute to increasing social, economic and ecological benefits of handicraft industry to Balinese economy”. It is envisaged that when stands of indigenous tree species are established, the environmental conditions of the surrounding villages would be improved and subsequently will bring social economic benefit to the local community. The project specific objective is to enhance capacity in developing and sustaining a competitive handicraft industry of Bali. Beneficiaries, outcomes and outputs The project will benefit directly the farmers, handicraftsman, and the community in general. Tree farmers would benefit from increasing demand of timber for handicraft thus from selling timber. Handicraftsman would benefit from being trained on improving quality of their products and eventually better price of the products.

Expected outcomes from the project would be: Plantations

The involvement of community farmers groups is central to the successful plantations of Bali indigenous species. Already there are 66 farmer groups in 6 Districts that had been trained in various aspects of plantation establishment. They would be expected to continue the planting works in their districts and some additional 15 farmers groups in 2 other Districts would also be actively participating.

Improved production skills Traditionally, the craftsmanship of Balinese wooden handicraft artist is unique and widely renown. What needs to be improved is their skills in wood processing technology to increase quality of the products. The training facility will be used to introduce them to wood processing technology, particularly wood drying and preservation to improve quality of their handicraft products. It is expected that some 400 wooden handicraft small-scale industries will be trained on processing techniques.

Verification of timber legality Timber used in handicraft products has to come from legal sources and from sustainably managed plantation. Compliance to the existing Timber Legality Assurance System (TLAS) will be improved. Stakeholders in the handicraft industry will be trained on ways to comply with the TLAS.

Expected outputs from the project would be: i) sufficient good quality planting materials available and participation of farmers in planting program increased; ii) wood raw materials of handicrafts adequately treated; and iii) increased capacity to comply with Timber Legality Assurance System (TLAS).

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Project implementation The executing agency of the project is the Directorate General of Forest Utilization; the project will be implemented in collaboration with Bali Provincial Forestry Agency and in partnership with two other forestry agencies namely Regional Tree Seed Centre (BTPH) of Bali and Nusa Tenggara to deal with the production of quality seeds and seedlings, and the Regional Centre for Monitoring and Utilization of Production Forest (BP2HP) to assist in setting up and operating training facility as well as in disseminating TLAS regulation. Project sustainability Sustainability of the project’s results will be secured since the activities are within the task and role of the Bali Provincial Forest Service. Furthermore, farmers in their own land or in community land would carry out the planting activity. Incentive for planting trees from government and strong demand for timber from handicraft industry would ensure sustainability of planting activities and maintenance of the stands. Centres for training on wood drying and preservation will be continuously used for training activities. Key assumptions and risks One of the important considerations for farmers to invest in tree planting is the financial return they can get from selling the timber. Therefore, the important assumption is that demand for wood handicraft products continue to grow and subsequent demand for timber as raw materials for handicraft products will follow the growth of the handicraft industry. Farmers might be hesitant in tree planting due to unclear financial benefit accruable to them from tree planting. Therefore farmers’ interest in tree planting has to be maintained and increased through appropriate extension program since the onset of the project. Budget The project requests to ITTO to contribute in the amount of USD 540,008; the amount will be allocated to pay for key personnel USD 130,900 (24.2%) and for capital items USD 65,100 (12.1%). The Executing Agency will contribute USD 95,270 towards implementation of the project.

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LIST OF ABBREVIATIONS AND ACRONYMS Bappeda = Provincial Agency for Development Planning Bappedalda = Provincial Agency for Environmental Impact Assessment BPFA = Bali Provincial Forestry Agency BPPHH = Forest Products Processing & Marketing BP2HP = Balai Pemantauan Pemanfaatan Hutan Produksi (Regional Centre for Monitoring and Utilization of Production Forest). BTPH = Balai Teknologi Perbenihan Hutan (Regional Tree Seed Centre) BPS = Central Bureau for Statistics DFA = District Forestry Agency DG = Directorate General Gerhan = National Movement on Forest and Land Rehabilitation GOI = Government of Indonesia HTI = Industrial Forest Plantation ITTO = International Tropical Timber Organization ITTA = International Timber Trade Agreement LEO = Local Event Organizer MOF = Ministry of Forestry NC = National Consultant NGO = Non govermental Organization OT = Office Technician PC = Project Coordinator PEA = Project Executing Agency PFA = Provincial Forestry Agency PET = Project Executing Team PS = Project Secretary REDD = Reduced Emission from Deforestation and Degradation SFM = Sustainable Forest Management SP = Specialist SVLK = Sistem Verifikasi Legalitas Kayu (TLAS) TLAS = Timber Legality Assurance System UN = University YPO = Yearly Plan of Operation

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MAP OF PROJECT AREA

Map of Indonesia

Map of Bali Province with its 9 (nine) districts. The project is located in all districts except Kodya Denpasar.

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PART 1. PROJECT CONTEXT

1.1 Origin The origin of the proposed project stemmed from two completed ITTO projects, namely PD 137/02 Rev.2 (F) “Demonstration Plantation of Zantoxylum rhetsa, Manilkara kauki, Alstonia scholaris, and Wrightia pubescens “To Promote Sustainable Bali Natural Forest”, of which the development objective was to promote plantations of indigenous trees for the establishment of sustainable plantation forests, and PD 386/05 Rev.1 (F) “Technological Development for the Production of Planting Materials to Support Sustainable Plantation of Bali Indigenous Species through Community Participation”, of which the development objective was to support the tree planting program of the Provincial Government of Bali as a way of empowering local economy and improving the environmental conditions of Bali. The first project (PD 137/02 Rev.2 (F)) had demonstrated the feasibility for the establishment of plantation of Bali indigenous species. Some 150 ha of 4 species tested had been established along with 20 ha of progeny and provenance test plots to select superior trees. Nursery facilities for production of seedlings had also been established. Vegetative propagation technique using tissue culture method had been tested and further development is still required for mass production. The sustainability of the project outcomes is achieved through the direct involvement of local farmers in the nursery and in plantation establishment. Aspects of social forestry had been examined with the view that the end products of the timber would be used primarily to support local handicraft industry. Cooperative mechanism among farmers had also been developed and adopted. The follow-up project (PD 386/05 Rev.1 (F)) was attempting to put all the technology, system and experience into practical operation to support the Bali Greening Program implemented by the Provincial Government. These had been successfully carried out in the form of producing and distributing 1.2 million seedlings of 6 indigenous species to farmer groups in 6 districts across Bali. As a result over 2500 Ha of Bali indigenous tree species had been planted by 66 farmer groups involving 5,303 individual farmers. Production of genetically improved seeds that had been initiated in the previous project had been assessed and ready for production. Nursery facility had been maintained, land use map had been updated and new agro-forestry system had been adopted. Through this project stakeholders particularly local farmers, have been given the necessary skills to have a good quality plantation through the following ways: Assessment of tree seeds, collection techniques and nursery

Knowledge and technical skills of planting techniques and maintenance of the plantations

Community networking and institutional strengthening The ultimate goal of supporting the planting of Bali indigenous tree species is to improve the economic, environment and social impact of Bali handicraft industries. Whilst the newly planted trees will not be ready for harvest until some years later, it is important that resource establishment is to be continued, infrastructure for production of high quality handicraft items is to be made available and craftsmen skills in sales and marketing is to be improved. More importantly, the investment in time, funds and expertise that have been expended in providing those skills to local farmers should be utilized for their benefit. The enthusiasm and confidence of local farmers in plantations will be important to continue the planting of Bali indigenous tree species. It is always the case that a successful planting program will be influenced by the industry that uses the timber. The same is true for the Bali indigenous species. The handicraft industry in Bali traditionally uses indigenous species wood. However, due to increasing demand and the diminishing supply of the timber the industry has no choice but to use non-indigenous timber species. The rationale of empowering the handicraft industry in Bali is based on the principle of supply and demand. When the handicraft industry is growing, as results of improved design and quality, demand for raw materials will also increase. This increasing demand will attract people to plant trees. Legality of timber used in home-based industry such as handicraft is often overlooked for various reasons. Nevertheless, in a market where legality of a wood product is a prerequisite to enter the market, handicraft

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industry must also abide to the regulation. The Government of Indonesia has issued a Ministerial Decree P.38/Menhut-II/2009 and its revised version P. 45/Menhut-II/2012, which regulates the Timber Legality Assurance System (TLAS). Producers and consumers of timber have to be aware of, and familiar and comply with the regulation. 1.2 Relevance 1.2.1 Conformity with ITTO’s objectives and priorities 1) Compliance with ITTA 2006 The proposed project complies with the ITTA Objectives laid out in Article 1 of the 2006 International Timber Trade Agreement (ITTA) and will contribute to the advancement of the Agreement of the following objectives: (c) Contributing to sustainable development and poverty alleviation. Tropical rain forests play such an

important role in the Indonesian economic development and the globally ecosystem. At the current rate of deforestation the sustainability of these resources is under serious threat. The proposed project will have significant contribution on the sustainability of tropical rain forest through enhancing the establishment of plantation of potential indigenous species, and conserving the remaining plant genetic resources and utilized these resources to develop genetic improvement program to support reforestation of degraded forest. Furthermore, the availability of timber for handicraft industry and the increased production and value of the handicraft products will eventually bring economic benefit to the rural community.

(f) Promoting and supporting research and development with a view to improving forest management and efficiency of wood utilization and the competitiveness of wood products relative to other materials, as well as increasing the capacity to conserve and enhance other forest values in timber producing tropical forests. The project will also attempt to examine the wood properties of the Bali indigenous species, so comprehensive data and information can be made available. Efficiency of wood utilization will be achieved through training in wood working techniques.

(j) Encouraging members to support and develop tropical timber reforestation, as well as rehabilitation and restoration of degraded forestland, with due regard for the interests of local communities dependent on forest resources. Plantation establishment using Bali indigenous species is one of the main features of the project. The farmer groups that were formed in the previous ITTO project will be maintained and will continue the planting program using their resources. Judging by the interest of the public towards planting the species for handicraft, we are confident that new planting will be established. The rural community will manage such plantations in sustainable manner.

(n) Strengthening the capacity of members to improve forest law enforcement and governance, and address illegal logging and related trade in tropical timber. In 2009 the Government of Indonesia has issued Ministerial Decree regulating the implementation of TLAS. Wood-based industry such as handicraft, despite being home-based should also ensure the legality of the wood and comply with the TLAS. This will eventually satisfy the export market and will further increase demand.

(r) Encouraging members to recognize the role of forest-dependent indigenous and local communities in achieving sustainable forest management and develop strategies to enhance the capacity of these communities to sustainably manage tropical timber producing forests.

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2) Compliance with ITTO Action Plan 2013-2018 The proposed project complies with strategic Priority raised in the ITTO Action Plan 2013-2018 such as: Strategic Priority 1: Promote good governance and enabling policy frameworks for strengthening SFM

and related trade and enhancing SFM financing and investment. This strategic priority will be accomplished through project activities inter alia:

strengthening forest law compliance and governance, strengthening capacity of community and other small and medium-sized enterprise, support to production and marketing of legally produced tropical timber and effective supply chain management (output 3)

Strategic Priority 4: Reduce tropical deforestation and forest degradation and enhance provision of

environmental services. The project activities to address this Strategic priority 4: increasing capacity of

community stakeholders in planting good quality materials and increase participation of farmers in planting program (output 1)

Strategic Priority 6: Build and develop human resource capacity to implement SFM and increase trade

in forest goods and services from sustainable managed forests.

This strategic will be implemented through project activities such as improving capacity of stakeholders in seedling production, planting activities, as well as in wood drying and preservationthrough trainings, for the communities’ products (output 1 and output 2)

1.2.2 Relevance to the Indonesia’s policies The government policy on forestry sector as set out in the six priorities program has been translated into a range of programs and activities. In the issue of rehabilitation and conservation of forest resources, establishment of industrial forest plantation or popularly known as “Hutan Tanaman Industri” (HTI) in degraded land, and more recently national movement on forest and land rehabilitation (Gerakan Rehabilitasi Hutan dan Lahan/Gerhan) are some of the examples of policy in action. In 2003 the Government of Indonesia has launched national movement for forest and land rehabilitation. This rehabilitation movement is plan for 5 years period. In the first year, this program was targeting to rehabilitate 300,000 ha of degraded land and forest area. Apart from its objective of rehabilitating degraded land, the program is also aimed at providing natural resource that can be utilized by local community. Wood-based local handicraft industry is an integral part of the tourism industry of Bali. Export value of wooden handicraft products rose from USD 81 million in 2004 to USD 93 million in 2008; these represented 16% and 17% respectively of total export value from Bali. Wood-based handicraft industry also takes up around 35% (48,000 m3) of wood consumption in Bali. More than 10,000 small and medium scale industries are currently operating in Bali providing direct employment for over 39,000 Balineses. Despite the economic importance of this handicraft industry, concern is growing over the sustainability of the industry due to the diminishing resources. The deterioration of Bali indigenous natural resources especially those providing raw materials of handicraft industry could have serious implications. The proposed project complements the reforestation and plantation establishment of the Government of Indonesia. This program is expected to set example for farmers to plant trees in their land. From the viewpoint of conservation of forest genetic resources, this project will also stimulate the national program to enhance capabilities for conservation and genetic improvement of indigenous species. In recent years, in close consultation with some of the major consumer countries, Government of Indonesia has introduced Ministry of Forestry Decree regarding the implementation of TLAS. Hence, the proposed activities relating to implementation of TLAS in the wood handicraft industry is very much in line with the government policy.

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1.3 Target area 1.3.1 Geographic location

The proposed project will be located in several locations in Bali. The planting activities will be carried out in various places including in the areas where planting have been done under the previous ITTO project. There are 8 administrative districts (Kabupaten) where planting will be carried out, 6 of which were involved in the previous projects, namely Kabupaten Bangli, Tabanan, Karangasem, Jembrana, Buleleng, Klungkung, Gianyar and Badung. The proposed training centre will be situated in Denpasar. For further details please consult the Map.

1.3.2 Social, cultural, economic and environmental aspects Social, cultural, and demographic aspects The size population of Bali province in 2011 was 3.4 million with almost equal proportion of females (49.82%) and males (50.18%). The annual population growth in recent years is 1.1 percent. The most densely populated district is Buleleng, occupied by 19 percent of the population. Religions of people are Hindu (83.46%), moslem (13.37%), christian and catholic (2.47%) and others (0.70%). The size of work force, persons aging 15-59 years, was 2.32 million or 68% of the population with apparent unemployment rate of 2%. Economic aspect Traditionally, Bali is an agriculture area renowned for its rice field irrigation system, locally called Subak. Balinese (latest statistic of the population of Bali is 3,572,831 (BPS Bali; 2011)), is also well adapted to planting trees and often regard a certain tree species such as banyan and pulai as sacred trees, which prevent them from doing any harm to the tree. In view of this customary value, the project would fit nicely into the tradition of planting and caring tree of the people. Bali is famous for many forms of art, including painting, sculpture, woodcarving, handcrafts, and performing arts. Smaller scale businesses are also in the trend such as textile or garment, handicrafts and souvenirs, providing Bali’s economy with more than 200,000 jobs, and exports have been increasing around 6,7% (data August 2006 – August 2007) valued at around US$ 380 million. Of the total foreign exchange earners, textiles and garments contribute about 27,4% and wood products including statues, furniture and other handicrafts 18,2%. Therefore, improving the supply of quality raw material for wooden handicraft as well as improving the quality of the products would have significant economic impact. The per capita income in 2011 was about USD 1,500. The shares of economic sectors in PDRB in 2012 were of services (21.74%), agriculture (16.84%), transportation and communication (13.76%), manufacturing (8.00%) and other sectors (39.66%). Envorinmental aspect Balinese people are culturally concerned with environment conservation. Their culture has a great respect for the values of all human beings and the nature. The living culture of Balinese includes such ideas as “Tri Hita Karana”, meaning “three causes of goodness” which emphasizes three essential harmonies: People – God, People – People, People – Nature; “Desa Kola Patra” or “place, time and situation” which underscores the idea of resilience and adaptation to change while retaining the essential values intact. Therefore, culture is one of the greatest assets for development in Bali. Such a culture will certainly support the balance between socio-economic development including promotion of bamboo industry and nature conservation. Besides having environmental impact, planting and caring of trees are also economically important for the Balinese. Timber is much needed to support the handicraft home industry. With the ever-growing demand for handicraft products, especially for the export market, demand for timber is also growing. When the tree stands are well established, the environmental impact for the community will be significant.

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1.4 Expected outcomes at project completion When the project is completed a range of expected outcomes would be accomplished. Since the origin of the project came from the two ITTO previous projects, the expected outcomes would be an accumulation of those achievements. The outcomes could be classified into the followings: Plantations

The involvement of community farmers groups is central to the successful plantations of Bali indigenous species. Already there are 66 farmer groups in 6 Districts have been trained in various aspects of plantation establishment. They would be expected to continue the planting works in their districts and some additional 15 farmers groups in 2 other Districts. By the end of the project, a total of around 81 farmer groups in 8 Districts would be involved in plantation establishment. Total plantation area to be established under the proposed project is expected to be around 2500 ha. Under the completed project, over 2500 ha of forests had been established on community lands by local communities. Indeed, expansion of quality forest plantations is among the primary aims of this proposed project.

Improved production skills Improved skills of farmers will be realized through trainings on seed collection, storage and generation, nursery establishment and operation. Traditionally, the craftsmanship of Balinese wooden handicraft artist is unique and widely renown. What needs to be improved is their skill in wood processing technology to increase the quality of the products. There are thousands small and medium scale handicraft industries currently in operation in Bali exporting to more than 60 countries around the world. The training facility will be used to introduce them to wood processing technology, especially drying and preservation to improve the quality of the handicraft products. When the project is completed in 3 years time, it is expected that some 400 wooden handicraft small-scale industries will have been trained on appropriate processing techniques especially on wood drying, preservation and handicrafting.

Compliance to TLAS Stakeholders of Bali handicraft industry should be familiar with the regulation regarding the legality of wood used in the industry. Through workshop and training, the project is expected to introduce the regulation and train wood traders and handicrafts-men how to comply with TLAS.

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PART 2. PROJECT RATIONALE AND OBJECTIVES 2.1 Rationale 2.1.1 Institutional set-up and organizational issues Following the decentralization policy, the district government has been given wider responsibility to plan and implement programs on reforestation, rehabilitations, plantation and community forest development. The Provincial Forestry Agency is responsible for the implementation, monitoring and evaluation of policies set up by the Ministry of Forestry and the Provincial Government of Bali. In addition there are other agencies involved in environment and resource management, such as Bappedalda (Provincial Agency for Environmental Impact Assessment) – responsible for coordination and implementation of environmental policy, Badan Pertanahan Nasional (Agency for Land Use Planning) – responsible for land use planning and registration and Bappeda (Provincial Agency for Development Planning) – responsible for coordination of planning and budgeting of province economic development. The capacity of individual institutions to fulfil their respective responsibilities is generally weak due primarily to the lack of resources especially financing through the central, provincial as well as local governments budget appropriation and trained manpower. The Directorate General of Forest Utilization now concerns with the legality of timber products produced both from state lands and privately owned land such communities’ land. All distributed timber/wood products should be able to be traced back its sources of origin and it should be legal. In relation to the new regulation on TLAS, DG of Forest Utilization is responsible to disseminate this information to the relevant stakeholders included the handicraftsmen in Bali. Through its regional technical office namely BP2HP (Regional Centre for Monitoring and Utilization of Production Forest), this agency will work collaboratively with the Implementing Agency; the Bali Provincial Forestry Agency in improving capacity of Bali handicraftsmen on implementing TLAS. Coordination of various agencies is crucial to the planning and implementation of forestry programs and is currently rather weak. Sectoral interest has further increase the complexity of coordination. The set of examples of successful community program on forestry hopefully would facilitate the coordination issues. 2.1.2 Stakeholder analysis From the previous ITTO Projects, stakeholders involved in the projects have benefited in different ways. Most importantly, farmers have had access to planting materials and had their lands planted with seedling provided by the Project. There was strong interest to have more idle/unproductive land planted. They were involved in the nursery, plantation and seed orchard establishment as well as maintenance of the plantations. A number of activities were organized for the community such as training, workshop, study tour and regular meetings. Such an approach has proved effective in getting the farmers support. The institutional capacity of officials from Provincial Forestry Service and the Regional Seed Centre of Bali and Nusa Tenggara has been improved by their active participation in the planning and implementation and monitoring of the project. In essence, previous projects had been able to strengthen interest of local stakeholders, local community in particular, in growing indigeneous tree spesies. This plantation of indigenous species carried out by the previous project is a pioneering work in Bali. The project has provided an avenue for scientists and forestry officials as well as local communities to learn and experience the concepts and applications of productive plantation. It has been recognized that productive plantation can only be achieved through the use of genetically improved planting materials combined with suitable silvicultural practices.The project had also stimulate farmers interest in planting indigenous species as they can foresee the benefit of having indigenous trees planted in their lands through selling of logs or processed products to the growing markets. Stakeholder analysis is summarized in Table 1. At the location of the proposed project there is no potential land conflict since activities are focused on the community-owned lands located in all districts. Like the two previous project project activities focused on privately-owned lands where there are 66 groups of farmers in six districts were involved in these activities

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Table 1. Summary of stakeholder analysis

Stakeholder Group

Characteristics Problems, needs and interests

Potentials Involvement in the Project

Primary stakeholders

Handicraftsmen Groups

Lack of capacity and resources

Vulnerable to supply of raw materials

Lack of skills in wood processing for quality products

Concern of reliable supply of raw materials at competitive price

Provide extension and training to local community

Able to convince farmers to plant trees

Participant in training and workshop

Tree farmers

Good access to land

Lack of resources

Availability of planting materials

Appropriate silviculture techniques

Incentives to planting trees

Actively planting Bali indigenous tree species with incentives

Partner in setting up plantation

Local governments

Concern over the social, economic and environmental development in their respective area

Stimulus to initiate development program

Able to sustain planting program and support for handicraft industry development

Facilitate farmers and handicraftman participation

Provincial Forest Service of Bali

Responsible to manage forest, replanting, rehabilitation and timber supply in the province

Supporting programs/activities to achieve sustainable utilization of timber in Bali

Manage forestry in Bali in sustainable way

Executing agency for the project

Regional Centre of Forest Tree Seed for Bali and Nusa Tenggara

Responsible to manage seed sources and seed management

Expert advice and technical support

Ensuring the availability and supply of good quality seeds and seedlings

Collaborating with executing agency for seed sources management

Secondary stakeholders

Regional Centre for Monitoring and Utilization of Production Forest

Technical unit of DG of Forest Production Development

Responsible in ensuring the utilization of production forest for forest industry

Supportive to the increase utilization of timber for productive enterprise

Able to facilitate handicraftman’s access to timber sources

Partner in setting and operating training facility

Association of Handicraft Maker

Use of timber from local sources

Availability of timber

Better design methods

Provide data and information

Participation in training and extension

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Stakeholder aspirations play important role in the formulation of the project. Inputs from stakeholders have been gathered through community interactions, formal request and workshops. The level of commitment of the stakeholders to the proposed project is generally strong. 2.1.3 Problem analysis The key problem to be addressed by the project is “ lack of capacity to develop and sustain a competitive handicraft industry of Bali”. The stakeholder consultative meeting organized during the project development process argued that the lack of capacity is attributable to three main causes namely: i) limited supply of quality planting materials needed for the establishment of indigenous tree species plantation, ii) inadequate treatment of wood raw materials used by the industry, and iii) lack of capacity to comply with existing timber legality assurance system (TLAS). The first main cause “limited supply of quality planting materials” was identified as the result of four sub-causes: low quality of existing seed sources, under-developed seedling production technology, limited supply of quality seedlings and lack of incentives for farmers to plant indigenous tree species. The second main cause “inadequate treatment of wood raw materials” is attributable to three sub-causes, namely: lack of information on wood properties of indigenous timber species, inadequate facilities for wood treatment especially for wood drying and preservation, and lack of training on wood drying and preservation techniques. The third main cause “lack of capacity to comply with TLAS” is due to the lack of information and understanding on TLAS, lack of incentive for farmers to comply with TLAS requirements and lack of training on skills needed for complying with timber legality requirements and procedures. The consequence, main causes and sub-causes of the key problem is summarized in the problem tree (Figure 1). A solution tree as depicted in Figure 2 has been constructed as the mirror of the problem tree which clearly shows the interventions needed for resolving the key problem. The solution tree has been used to define the project elements, i.e. the development objective, specific objective, outputs and activities. By so doing, the interventions must be the relevant and effective ones to resolve the problems at hand. To facilitate understanding on the key problem, its consequence as well as main causes and sub-causes, it is also important to comprehend the different aspects of Bali handicraft industry as outlined below:

The handicrafts industry in Bali, apart from generating economic benefits is an integral part of the

Balinese culture. Craftsmanship is culturally driven and has been recognized widely. However, due to the imbalance between supply and demand of Bali indigenous species, there is a significant risk that this industry may not be sustainable economically, socially and ecologically. Economic sustainability is threatened by the rising cost of imported wood from outside Bali, decreasing profits and eventually weakening of interest in handicraft.

Traditionally, handicraftsmen in Bali use indigenous timber species, such as bentawas (Wrightia pubescens), panggalbuaya (Xanthoxyllum rhetsa), and majegau (Dysoxylum densiflorum). However, as the supply of these timbers are diminishing, handicraftsmen have no other choice but to use timber imported from other parts of Indonesia. The underlying problems of the low capacity in production of quality handicraft products are believed to have been affected by three major factors, namely: i) limited supply of Bali indigenous timber species due slow progress of plantation; ii) lack of adequately treated wood raw materials; and iii) lack of capacity to comply with existing timber legality assurance system.

In the previous projects, the issues on plantation have been partly addressed by providing the local

farmers with skills in nursery and plantation, genetic resources for producing good quality seedlings and institutional empowering of the community. When an incentive can be created farmers will be more than willing to engage in planting Bali indigenous trees.

The traditional nature of the Bali handicraft industry is often characterised by low efficiency, low

technology in wood drying and preservation and lack of wood drying and preservation skills. These issues will be addressed by creating a handicraft training facility that will be open to handicraft artists to improve their skill. Naturally, information on wood properties of the indigenous species will be

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needed to assist the processing of the wood. The third aspect of the problem is how to improve the capacity of the industry to comply with Indonesia Timber Legality Assurance System (TLAS).

The Indonesian TLAS/Sistem Verifikasi Legalitas Kayu (SVLK) is an Indonesian scheme to

assure the international timber market of the legality of its timber products. This implementation will help Indonesia to meet growing demand for legal timber. It is also expected to enhance the competitive advantage of the country’s timber products in the wider international market and form part of its contribution to global environmental sustainability. As international market has required that wood-based products should meet legality assurance system, handicraft industry has no choice but to comply with the system if it wants to increase the market share. This issue will be addressed by disseminating information of the regulation to the handicraft stake holders and provide training on ways to comply with the system. Incentives for local communities to comply with the system need to be developed so that they can get the benefit of using legal timber.

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Figure 1. Problem Tree

The social, economic and ecological benefits from wood handicraft industry in Bali is meager and unsustainable

Good quality planting materials are in short supply to support expansion

of indigenous tree planting

Woods are not adequately treated because of lack of skills

and facilities

Lack of capacity to develop and sustain a competitive handicraft industry of Bali

Lack of capacity to comply with existing timber legality

assurance system (TLAS)

Low quality of existing seed sources

Technology for seedling production under developed

Production capacity of quality seedlings limited

Lack of information on wood properties of indigenous species

Inadequate facility for wood drying and preservation

Lack of technical training on wood drying and preservation

Lack of information on legality requirements for supply of

planted indigenous wood by community forest

Lack of incentive for local communities to comply with legality requirements

Lack of training on timber legality procedures

Lack of incentives to farmers for

tree planting of indigenous species

CAUSES

KEYPROBLEM

CONSEQUENCE

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Figure 2. Objective Tree

Increased social, economic and ecological benefits of handicraft industry to Balinese economy

Sufficient good quality planting materials available and farmers actively participate in planting

program

Wood raw materials of handicrafts adequately

treated

Increased capacity in developing and sustaining a competitive handicraft industry of Bali

Capacity to comply with existing timber legality assurance system (TLAS)

improved

Generated information on wood properties of indigenous species

Established and operated a wood drying and preservation

facility in Denpasar

Conducted training on wood drying and preservation

techniques

Information on legality requirements for supply of planted indigenous wood from community

forest available

Incentive for local communities to comply with legality requirements

available

Training on timber legality procedures conducted

Improved quality of existing seed sources

Refining/developing the production technology of

seedlings

Increased capacity to produce quality seedlings

Developed incentives for farmers to continue

planting indigenous tree species

Development Objective

Specific Objective

Outputs

Activities

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2.1.4 Logical framework matrix PROGRAM ELEMENTS INDICATORS MEANS OF VERIFICATION ASSUMPTIONS

Development Objective: To contribute to increasing social, economic and ecological benefits of handicraft industry to Balinese economy

Area of Bali indigenous species plantation will increase by 10% in 5 years after project completion

Export value of wooden handicraft made of Bali indigenous species will increase by 5% in 5 years after project completion

Use of treated wood raw materials increased by 10% in 5 years after project completion

Reports from Ministry of Industry

Provincial Statistical Data

Supportive government policy on small business enterprise development

Specific Objective: To enhance capacity in developing and sustaining a competitive handicraft industry of Bali

80 farmer groups involved in tree planting using indigenous species in 8 districts

400 wooden handicraft small-scale processors trained on wood drying and preservation techniques for 8 indigenous wood species

At least 200 concerned government officers and staffs, handicraft producers and tree farmers trained on TLAS implementation

Training Reports

Ministry of Industry Reports/Statistical data

Ministry of Forestry Reports

Support from local government and community groups

Supportive planting materials available

Machinery and equipment for the processing plant obtainable

Output 1 Sufficient good quality planting materials available and participation of farmers in planting program increased

By end of the 2nd year, most seeds requirement for planting of approximately 2500 ha of 8 indigenous tree species in 8 districts will be supplied by the established seed orchards, seed stand or seed production area

By end of the 2nd year, nursery technology for seedling production of 8 indigenous tree species refined

Consultant Reports

Project Reports

Lands for planting available

Technical skills acquired

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By end of the project, production of 1.3 million seedlings of indigenous tree species realized in satellite nurseries in 8 districts

By end of the project, total area of planting increased by app. 2500 ha and the numbers of farmers participating in planting program increased by 15 farmers groups

Output 2 Wood raw materials of handicrafts adequately treated

By end of year 1, information on wood

properties of 8 indigenous tree species documented

By end of year 2, appropriate technology for timber drying and preservation suitable for handicraft products produced and available

By end of year 2, wood treatment training facilities established and operational

By end of project, 400 handicraft producers trained on efficient wood drying and preservation techniques

Consultant Reports

Established infrastructure

Training Reports

Processing technology acquired

Output 3 Increased capacity to comply with Timber Legality Assurance System (TLAS)

By end of the project, forestry officers, handicraftmen and plantation owners from 8 Districts trained and able to implement timber legality documentation system in the handicraft industry

By end of project, TLAS fully adopted and implemented by all concerns

By end of the project, incentives scheme for farmers to comply with TLAS introduced

Consultant Reports Project Reports

Forestry Provincial Office’ reports

Government introduces incentives for farmers and handicraft industry

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2.2 Objective 2.2.1 Development objective and impact indicators Wooden handicraft plays an important role in supporting tourism industry of Bali. Traditionally, local handicraftsmen use wood from Bali indigenous tree species. Species such as bentawas, panggalbuaya, majegau are the preferred species for various types of handicraft. Unfortunately due to limited supply it has become difficult to obtain such wood, handicraftsmen turned to other species acquired from outside Bali. Indeed, a thriving wood handicraft industry would have significant social, economic and environmental benefit to Bali. However, due to the limited supply of the required wood, the industry has only limited impact on those factors. Based on that premise, the development objective of the proposed project is to contribute to increasing social, economic and ecological benefits of handicraft industry to Balinese economy . It is envisaged that when stands of indigenous tree species are planted, the environmental conditions would be improved. Social and economic benefit will also flow from the stands. The long-term impact indicators are: Area of Bali indigenous species plantation will increase by 10% in 5 years after project completion Export value of wooden handicraft made of Bali indigenous species will increase by 5% in 5 years

after project completion Use of treated wood raw materials increased by 10% in 5 years after project completion. 2.2.2 Specific objective and outcome indicators

The project specific objective is to enhance capacity in developing and sustaining a competitive handicraft industry of Bali. By the end of the project, the following indicators can be observed: 80 farmer groups involved in tree planting using indigenous species in 8 districts 400 wooden handicraft small-scale processors trained on wood drying and preservation

techniques for 8 indigenous wood species At least 200 concerned government officers and staffs, handicraft producers and tree farmers

trained on TLAS implementation.

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PART 3. DESCRIPTION OF PROJECT INTERVENTIONS 3.1 Outputs and activities 3.1.1 Outputs

Output 1: Sufficient good quality planting materials available and participation of farmers in planting program increased Indicators: By end of the second year, most seeds requirement for planting of approximately 2500 ha of 8 indigenous

tree species in 8 districts is supplied by the established seed orchard, seed stand or seed production area. These quality seed sources ensure the genetic quality of the seedlings.

By end of the second year, nursery technology for seedling production of 8 different indigenous tree species is refined.

By end of the project, production of 1.3 million seedlings of indigenous tree species is realized in satellite nurseries in 8 districts.

By end of the project, total area of planting increased by approximately 2500 ha and the numbers of farmers participating in planting program also increased by 15 farmers groups.

Output 2: Wood raw materials of handicrafts adequately treated Indicators: By end of year 1, information on wood properties of 8 indigenous tree species is produced and available. By end of year 2, appropriate technology for timber drying and preservation suitable for handicraft

products is produced and available. By end of year 2, wood treatment training facilities established and operational By end of project, 400 handicraft producers trained on efficient wood drying and preservation techniques Output 3: Increased capacity to comply with Timber Legality Assurance System (TLAS) Indicators: By end of the project, forestry officers, handicraftmen and plantation owners from 8 Districts trained and

able to implement timber legality documentation system in the handicraft industry By end of project, TLAS fully adopted and implemented by all concerns By end of the project, incentives scheme for farmers to comply with TLAS introduced. 3.1.2 Activities

Output 1: Sufficient good quality planting materials available and participation of farmers in

planting program increased Activity 1.1 Improve the quality of existing seed sources

hire national consultants to increase genetic quality of existing seed orchards Activity 1.2 Refine/develop the production technology of seedlings

- Conducting further development of seedling propagation techniques for 8 species Activity 1.3 Increase the capacity to produce quality seedlings support the establishment of 8

satellite nurseries Activity 1.4 Convince farmers to continue planting Bali indigenous tree species

- inform and educate farmers on how to produce quality seedlings through intensive dialogue.

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Output 2: Wood raw materials of handicrafts adequately treated Activity 2.1 Generate information on wood properties of 8 species Activity 2.2 Establish and operate wood drying and preservation facility in Denpasar Activity 2.3 Conduct training on wood drying and preservation techniques Output 3: Increased capacity to comply with Timber Legality Assurance System (TLAS) Activity 3.1 Conduct dialogue with government officers of districts and provincial level, handicraftsmen

and plantation owners on the importance of Timber Legality Assurance System/TLAS Activity 3.2 Organize workshop on dissemination of information on TLAS Activity 3.3 Develop and introduce incentives for farmers to adopt TLAS Activity 3.4 Conduct training on implementation of TLAS 3.2 Implementation approaches and methods Successful handicraft industry needs sustainable supply of raw materials and increasing production to meet increasing demand. Previous ITTO projects have successfully addressed the technical issues of producing good quality seedlings, establishing good plantation of Bali indigenous tree species, and empowering local community to be skilful and self motivated in planting trees. This project is focusing on improving the production side by empowering handicraftsmen to improve their production and marketing skills, whilst maintaining the capacity to produce good quality planting materials so that planting program can be sustained and expanded. The approach taken by the project to promote Bali wood handicraft industry is to help maintain the enthusiasm of farmers to plant trees in an attempt to secure the availability of resources, improving the quality of wood raw materials, and improving market access by complying to the existing Timber Legal Assurance System. The steps are summarized in the following paragraph: Tree planting activity: The approach to further promoting planting activity is to produce good quality planting materials for farmers. Seedlings will be produced by satellite nursery to be set up in several villages, from seeds collected at the seed sources established by the previous project. Planting will be self-funded and self initiated by farmers. Milestones:

Farmer participation in nursery production and plantation establishment has been demonstrated in the previous project. Given the high level of enthusiasm shown by the farmers, tree planting activity will be carried out smoothly.

Farmers groups have been identified. The issue of gender participation will be addressed in the context of Balinese cultural

practices. In accordance with the custom Balinese Culture Balinese women in general are hard workers and doing jobs usually done by men, such as working in buildings / houses, bridges, roads etc. In everyday life, women usually involved helping men/father in the garden such as planting and maintaining plants. This is shown in the foregoing projects that the 78, 69% of women involved in these activities.

Training: The setting up of handicraft training facility is an important step in empowering the handicraft industry in Bali. The facility is designed to improve the processing of wood prior from being crafted to upgrade the quality so that they will be acceptable to world market. The Regional Centre for Monitoring and Utilization of Production Forest will be responsible for the operation of the training centre in collaboration with handicraft association.

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Milestones: Support from government institution responsible to conduct the training. Expertise in wood processing is locally available, when necessary international expert has

been identified Compliance with Timber Legality Assurance System (TLAS): Compliance with TLAS is influenced by the availability of information on TLAS and incentives for complying with the regulations. Dialogue and workshop to inform stakeholders on the importance of TLAS as well as training on the implementation of the system will improve the compliance. Incentives for farmers to comply with the system have to be developed. Incentives for farmers in fulfilling TLAS requirements will be developed during the project. Type of incentives among others to link directly the farmers and the primary industries so the farmers could get better price, instead selling the timber through intermediaries/broker. In other form, the farmers who have complied with the sistem will be get prioritized to have financial credit from government bank by showing their certificate. Other kind of incentives will be explored during the project time. Milestones:

Indonesian TLAS system has been recognized by international community Infrastructures for TLAS system are in place Trading of handicrafts, both for domestic and international markets, is legal only by complying

with the TLAS requirements and procedures Implementation of TLAS by any wood product manufacturers including handicrafts producers

is mandatory Training on skills needed for implementation of TLAS is provided by MOF free of charge

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3.3 Work plan

Output/activities Responsible Year 1 Year 2 Year 3 Party Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Output 1 Sufficient good quality planting materials available and participation of farmers in planting program increased Activity 1.1: Improving the quality of

existing seed sources PC,NC,BPTH V V V

Activity 1.2: Refine/develop the production technology of seedlings

PC,SP,BPTH V V V V

Activity 1.3: Increase the capacity to produce quality seedlings

PC,NGO, BPTH

V V V

Activity 1.4: Convince farmers to continue planting Bali indigenous tree species

PC,DFA V V V V V V V V V V

Output 2 Wood raw materials of handicrafts adequately treated Activity 2.1: Generate information on

wood properties of 8 species (through laboratory examinations)

PC,UN V V V V

Activity 2.2: Establish and operate wood drying and preservation facility in Denpasar

PC,NC, BPPHH

V V V V V V V V V V

Activity 2.3: Conduct training on wood drying and preservation techniques

PC,NC, BPPHH

V V V V V V

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Output/activities Responsible Year 1 Year 2 Year 3

Party Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Output 3 Increased capacity to comply with Timber Legality Assurance System (TLAS)

Activity 3.1: Conduct dialogue with government officers of districts and provincial level, handicraftsmen and plantation owners on the importance of Timber Legality Assurance System/TLAS

PC,UN, PFA V V V V V V V V

Activity 3.2: Organize workshop on dissemination of information on TLAS

PC,LEO V V V V

Activity 3.3: Develop and introduce incentives for farmers to adopt TLAS (to elucidate on economic benefits of adopting TLAS)

PC,NC, BPPHH

V V V V V V

Activity 3.4: Conduct training on implementation of TLAS

PC,NC, BPPHH

V V V V

Notes: BPPHH = Forest Products Processing & Marketing BPTH = Regional Seed Center DFA = District Forestry Agency LEO = Local Event Organizer NC = National Consultant NGO = Non govermental Organization PC = Project Coordinator PFA = Provincial Forestry Agency SP = Specialist UN = University

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3.4 Budget 3.4.1 Consolidated budget by component

- 21 -

3.4.2 ITTO Yearly budget

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3.4.3 GoI Yearly budget

- 23 -

3.4.4 Master Budget

- 24 -

- 25 -

- 26 -

3.5 Assumptions, risks, sustainability 3.5.1 Assumptions and risks One of the important considerations for farmers to invest in tree planting is the financial return they can get from selling the timber. Therefore, the important assumption is that demand for wood handicraft products continue to grow and subsequent demand for timber as raw materials for handicraft products will follow the growth of the handicraft industry. There is a strong link between handicraft and tourism industry, and tourism is also strongly influenced by economic growth. Over many years it has been demonstrated that when the world economy is slowing down so is the tourism industry in Bali. Since changes occurring in the share market, commodity market and financial market are way beyond anyone control, there is always the risk that handicraft industry will be vulnerable to the world economy. When this happens handicraft will suffer a set back and so is tourism industry. To keep the risk to the minimum level, handicraftsmen will be given access to latest information about market condition. By doing so, they will have time to adjust to the new situation. Mitigation measures to deal with such an event are to diversify products and intensify efforts to open up the domestic markets. Experience during the last economic and financial crisis showed that domestic consumption proved to sustain the country’s economic growth albeit at much lower rate than normal, but remain positive growth. Farmers might be hesitant in tree planting due to unclear financial benefit accruable to them from tree planting. Therefore farmers’ interest in tree planting has to be maintained and developed through appropriate extension program since the onset of the project. Small-scale industry such as wood handicraft is often reluctant to comply with complicated administrative procedures because it is perceived as causing additional cost. For such an industry to comply with the regulation it is necessary to ensure the industry that there is a benefit of complying. Such benefit may be introduced as incentive for complying with TLAS. If such an incentive cannot be introduced the industry might not be interested to abide to the regulation. It is anticipated that incentive program such as free of charge technical trainings easement of export licensing and free access to market information may be introduced.

3.5.2 Sustainability

The sustainability of the project may be viewed from the perspective of environment as well as industry point of view. The approach taken to promote the planting of Bali indigenous tree species is to involve community/farmer groups. It has been demonstrated in the previous projects that farmers’ interest in tree planting has been strong. In order to maintain the momentum, it is critical that they receive continuing support and encouragement to plant trees. When the linkage between tree planting and wooden handicrafts industry is well established it is expected that this practice will be self-generated. Handicraft industry has been an integral part of tourism industry in Bali. In 2009 the Government of Indonesia through the program of Visit Indonesia Year has set a target of 6.5 million overseas visitors, with up to 25% increase in the coming years. This will no doubt affect the demand for handicraft items including wooden handicrafts. Supporting farmer groups in many villages across 8 districts of Bali has institutionalised the establishment of plantations. This will ensure the sustainability of planting activity by farmers with minimum government support. The setting up of wood drying and preservation facility is also incorporated into the existing organization set up. The organization to be involved is the Regional Centre for Monitoring and Utilization of Production Forest. This approach is taken to ensure the sustainability of the facility when the project has completed. Compliance of handicraft industry to the TLAS would be sustainable if all party concern has sufficient understanding on the importance of TLAS. Incentives for complying to the system would further ensure the compliance. Exit strategy adopted for the project when it is terminated will be to secure assurance from government agencies as well as handicrafts association to continue supporting the planting scheme, timber preservation and training facility as well as promoting the TLAS system to the handicrafts

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industry in Bali. Concerned government agencies and handicraft association will have to allocate needed funds to finance crucial activities including for continued technical trainings and assistance. It should be noted that sustainability of the project rests primarily with the beneficiaries. When farmers are able to sell timber they planted at reasonable price, it will serve as a strong incentive for tree growing. And price of timber is to a large extent dependent on price of handicraft products. To be competitive, handicraft products need to be manufactured in an efficient manner. In addition, quality and design of products have to meet market preferences. In this way, the handicraft industry will be developing towards a competitive and profitable industry and will be sustainable. Therefore, sustainability of the project, and the industry, is strongly influenced by performance of producers of handicraft products. To this end, role of the association is also critical in providing continued information on the role of efficiency of processing and product quality in determining production cost, profit and survival of handicraft industries. That is to say, that to sustain favourable impacts of the project, the primary beneficiaries, i.e. provincial and district governments, handicraft industries and their association and tree growers must each play their roles as appropriate.

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PART 4. IMPLEMENTATION ARRANGEMENTS 4.1 Organization structure and stakeholder involvement mechanisms 4.1.1. Executing agency and partners

The executing agency of the project is Directorate General of Forest Utilization, the Implementing Agency is Provincial Forest Service of Bali. The collaborating agencies are the Regional Tree Seed Centre of Bali and Nusa Tenggara to deal with the production of quality seeds and seedlings, and the Regional Centre for Monitoring and Utilization of Production Forest to assist in setting up training facility. 4.1.2. Project management team

The organization structure of the project consists of a Project Steering Committee, a Project Executing Agency, and Project Executing Team. The Project Executing Agency (PEA) will coordinate the implementation of the Project activities carried out by the Project Executing Team (PET). The PET consists of representatives of the Provincial Forest Service of Bali, Regional Tree Seed Centre of Bali and Nusa Tenggara, Regional Centre for Monitoring and Utilization of Production Forest and national experts, chaired by Project Coordinator. The Project Coordinator has the responsibility to manage and coordinate all project activities. 4.1.3. Project steering committee

The Project Steering Committee (PSC) will be formed that consist of policy makers and scientists appointed by the Minister of Forestry (MOF), the Government of Indonesia. The duties of the PSC are: a). approve program and budgets of the various sub-projects within the framework of the project as approved by ITTO; b). conduct annual reviews and evaluations of the project implementation; c). approve Progress reports before submission to ITTO and GOI. The PSC will be chaired by the Secretary General of the Ministry of Forestry, and shall comprised of representatives of Directorate General of Forest Utilization, Provincial Forest Service of Bali, Regional Tree Seed Centre of Bali and Nusa Tenggara, Regional Centre for Monitoring and Utilization of Production Forest, and ITTO.

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Organization structure of Project Management Unit is as follow:

Project Steering Committee Director General of Forest Utilization, MoF Directorate General of Watershed Management and Community

Forestry, MoF Head, Bali Provincial Forestry Agency Pusdal II, Kemenhut Community Representative Representative of Handicrafts Industry ITTO Representative

National

Consultants

Regional Centre for Monitoring and

Utilization of Production Forest

for Bali & Nusa Tenggara

Regional Tree Seed Center

For Bali & NusaTenggara

Field Coordinator

Collaborating Agency Bali Provincial Forestry Agency

Stakeholder Consultation

Forum

Sub-contactors

Executing Agency DG of Forest Utilization

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Key personnel and their responsibility

Key personnel Responsibility Target group

Project Coordinator

Managing the overall activity of the project

All stakeholders of the project

National consultant for forest genetics

Providing guidelines for genetic improvement of seed orchards, including plus tree selection and maintenance of seed production area

Regional Tree Seed Centre of Bali and Nusa Tenggara

National consultant for nursery technology

Providing technical advice andguidelines for nursery establishment, seedling production and transportation

Provincial Forest Service of Bali,Regional Tree Seed Centre of Bali and Nusa Tenggara, Farmer groups

National consultant for wood technology

Providing technical advice and guidelines for wood drying and other wood preservation methods

Regional Centre for Monitoring and Utilization of Production Forest, Handicrafts Association

National consultant for TLAS

Providing guidelines for implementation of TLAS, developing teaching materials for TLAS workshop and monitor the implementation of TLAS for privately owned plantation

Farmer groups

Sub-contractors Implementing Activities 1.2; 1.3; 2.1; 3.1 and 3.2 in accordance with agreed upon terms of reference

Forestry agencies, farmers andhandicraft industries

4.1.4. Stakeholder involvement mechanisms To ensure that the interest of the stakeholders is accommodated, a mechanism of stakeholder involvement will be established. This will be based on the regular meetings of PSC and PET. Any urgent issue that requires immediate action shall be channelled directly to the Project Coordinator. 4.2 Reporting, review, monitoring and evaluation The project will follow the monitoring and reporting system adopted by ITTO. Regular meeting such as PSC will be observed and technical meeting of PET member shall be carried out regularly on a monthly base or whenever necessary. Among the reports to be produced are:

Inception report ‐ To be submitted after the signing of agreement between ITTO, Executing Agency and GOI. ‐ Contains such matters as confirmation of the availability of office space and facilities,

opening of a separate bank account in internationally recognized bank, proposed key project personnel and any changes that might have occurred since the project formulation stage.

‐ The first year workplan and MOU between Directorate General of Forest Utilization and BPFA will be annexed to the report.

Yearly Plan of Operation (YPO)

‐ To be submitted yearly prior to commencing with operations for endorsement by PSC, as appropriate, and by ITTO.

‐ The first year YPO shall be attached to the Inception Report; the subsequent ones shall be submitted, at the latest ten weeks before the beginning of the planned year.

‐ ITTO approves the YPO upon recommendation of the PSC.

Progress report ‐ Present information on executed activities during the period covered by the report,

achieved output(s) as appropriate, and inputs applied.

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‐ The report is to be submitted bi-annually or as requested by ITTO.

Technical report ‐ Contains technical and scientific data, analysis of data and the project results ‐ A technical report may pertain to one single activity, two or more activities or one output

depending on the weighted importance of the activities; the report must present procedure and methodologies adopted, the data generated, the results achieved and the conclusions reached.

‐ The project plans to produce at least five technical reports.

Financial report ‐ Annual report is to be submitted to ITTO within three months after the end of the current

financial year. ‐ A final report is to be submitted within four months after the completion of planned

activities. ‐ The project’s financial statement will be audited by registered independent public

accountant to be appointed by the Executing Agency with the prior endorsement of ITTO.

Completion report ‐ To be submitted within three months of project completion. ‐ The report summarizes the activities, inputs and expenditures, achieved outputs and

objectives during the entire implementation phase. ‐ The report highlights the most critical differences between planned and realized project

elements using the original project document as reference, and lessons learned from implementation of the project.

4.3 Dissemination and mainstreaming of project learning 4.3.1 Dissemination of project results The Project shall disseminate project results through a range of media including workshop, seminar, journal articles, brochures and a website. The website shall contain information on the background of the project highlighting the importance of combating illegal logging and illegal trade, project objectives and outputs. Stakeholders will be able to lodge their ideas on to the website. 4.3.2 Mainstreaming project learning Right from the outset, the preceding ITTO Projects in Bali has put emphasized in empowering farmers and community to take part in improving quality of the environment, increasing their prosperity through planting Bali indigenous tree species. Evidence in the field clearly demonstrates the enthusiasm of farmers to planting indigenous trees because they can see the financial benefit. The proposed project is crucial in ensuring farmers of the benefit of planting trees, particularly in establishing the direct link between farmers as timber producer and handicraftsman as timber consumer. Such inter-dependency would ensure the sustainability of the timber resources as well as handicraft industry. This model of inter-relationship may be duplicated in other places for other commodities.

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ANNEX 1 . PROFILES OF THE EXECUTING AGENCY AND COLLABORATING AGENCY 1. The Directorate General of Forest Utilization, the Ministry of Forestry of the Republic of

Indonesia The Directorate General of Forest Utilization is responsible for forest utilization activities in Production Forest on a sustainable basis, and has functions in providing regulations, services and controls for all aspects related to forest utilization. It consists of five directorates and one secretariat of the directorate general. The Organization Structure as follows:

Directorate General of

Forest Utilization

Directorate of Natural Forest Development

(DFND)

Directorate of Forest

Plantation Development

(DFPD)

Directorate of Forest

Product Processing &

Marketing Development

Directorate of Planning

Development for Forest Utilization (DPD-FU)

Directorate of Forest

Revenues and Forest Product

Distribution

The DG main task is to provide rule and regulation, policy, planning, standard operation and technical assistance for the management and development of all type production forest. In order to ensure sustainability of the project activities, the technical Directorate of Product Processng and Marketing will always be consulted. Executing Agency for this Project is under the responsibility of Directorate Forest Product Processing and Marketing. INFRASTRUCTURE Regarding the infrastructure, The Directorate of Forest Product Processing and Marketing prepared to carry the project. The office is already connected to a 2 Mbps bandwidth of Internet connection and all staff has each personal computer. BUDGET Within the last three years, the budget of the Directorate of Forest Product Processing and Marketing is as follows:

Activities 2011(USD) 2012 (USD) 2013 (USD)

Operational and Maintenance Cost 286,619 292,425 276,222

Publication 158,388 159,589 87,687

Planning Programs 1,169,368 1,301,831 1,058,431

Training Programs 142,811 104,692 64,976

TOTAL 1,757,186 1,858,536 1,487,316

Note: USD 1 = IDR 10,500

SecretariatDirectorate General

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PERSONNEL The personnel within the Directorate of Forest Product Processing and Marketing, is described as the following:

With Postgraduate Degrees 12

With Graduate Degrees 15

Middle-level Technicians 10

Administrative Personnel 12

TOTAL PERSONNEL 49

2. Bali Provincial Forest Agency

The implementation of the proposed project will be carried out by the Bali Provincial Forestry Service. 1. The expertise of the Executing Agency

The Bali Provincial Forest Service is responsible for setting up policy, regulations, monitoring the supply and demand of timber, implementing rehabilitation program, and promoting social forestry in Bali in line with the policy, regulations and developmental programs of the Ministry of Forestry and the Provincial Government of Bali.

2. Infrastructure of the Executing Agency The Bali Provincial Forest Service has 5 Sub Divisions: Administration, Planning, Land Rehabilitation, Forest Protection and Forest Products. It also has forest district offices across Bali. To support the replanting program, with the support of ITTO, it has established a permanent nursery in western Bali (10 Ha).

3. Budget The budget of Bali Provincial Forest Service from 2011-2013 is as follows:

Year (US $) Activities 2011 2012 2013 Personnel 1,036,215 1,231,223 1,136,561 Duty travel 77,172 104,419 122,452

Capital 47,256 36,318 85,909 Consumable items 114,222 113,744 90,989 Miscellaneous 123,678 123,827 119,977

4. Personnel

Staff members of the Bali Provincial Forest Service consist of 273 personnel, with university degrees in various fields (47 persons), high school graduate (179 persons) and others (28 persons).

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Profile of the Collaborating Agencies 1. Regional Forest Tree Seed Centre of Bali and Nusa Tenggara

The expertise of the Collaborating Agency

Regional Forest Tree Seed Centre of Bali and Nusa Tenggara is the collaborating agency of this

ITTO project. The Centre has been collaborating with Bali Provincial Forest Service in the previous ITTO Projects, and has demonstrated their capacity and capability to implement project activities, particularly in the area of seeds and seedling technology. The Centre has extensive experience in seedling production, seed collection, assessment of seed production area or seed stand, seed testing etc.

Infrastructure of the Regional Forest Tree Seed Centre of Bali and Nusa Tenggara

The Centre is located in the District of Badung, some 20 km from Denpasar, the capital of Bali, supported by over 44 staff members with university degrees in various fields (18 persons), high school graduate (22 persons) and others (2 persons) including technician and field specialist, and is equipped with facilities for seed testing, seed storage and nursery.

The Budget of Regional Forest Tree Seed Centre of Bali and Nusa Tenggara from 2011-2013:

Year (US $)Activities 2011 2012 2013 Personnel 160,844 155,099 173,514 Duty travel 193,911 124,607 177,666 Capital 18,209 30,000 14,000 Consumable items 146,050 131,683 255,392 Miscellaneous 8,400 7,735 12,728

2. Regional Centre for Monitoring and Utilization of Production Forest IX Denpasar

Regional Centre for Monitoring and Utilization of Production Forest IX Denpasar is the collaborating agency of this ITTO project. The Centre implementing land rehabilitation program, monitoring the supply and demand of timber, conducting the training program to increase the skill of related human resources, and developmental programs of the Ministry of Forestry.

Infrastructure of the Regional Centre for Monitoring and Utilization of Production Forest IX

Denpasar The Centre is located in Denpasar City the capital of Bali, supported by over 23 staff members with university degrees in various fields (12 persons), high school graduate (10 persons) and others (1 person) including technician and field specialist and is equipped with facilities for wood testing.

The Budget of Regional Centre for Monitoring and Utilization of Production Forest IX Denpasar from 2011-2013

Year (US $)Activities 2011 2012 2013 Personnel 78,436 87,113 173,717 Duty travel 36,945 97,993 162,050

Capital 64,451 11,097 25,108 Consumable items 53,757 60,580 171,066 Miscellaneous 7,630 23,041 74,373

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ANNEX 2. KEY PERSONNEL TO BE PROVIDED BY EA AND CA AND SUMMARIZED CVS NO. NAME/DESIGNATION EDUCATIONAL BACKGROUND PROPOSED POSITION1. MS. MAGDALENA

HEHAKAYA MASTER DEGREE ON FORESTRY PROJECT COORDINATOR

2. LAKSMI PRATIWI GRADUATED FROM AGRONOMY SECRETARY 3. ARIF WICAKSONO

ACHMAD GRADUATED DEGREE ON COMMUNICATION

TECHNICAL ADVISOR

4. ANTO RIMBAWANTO FORESTRY RESEARCH DEVELOPMENT

TECHNICAL STAFF

5. AGUS KURNIA PLANT SILVICULTURE TECHNICAL STAFF

CV OF KEY PERSONNEL

1. PROJECT COORDINATOR PERSONAL DETAILS 1. Name : Magdalena Hehakaya 2. Place/Date of Birth : Ambon, 11 September 1962 3. Office Address : Jln. Raya Puputan Renon No. 23 Denpasar-Bali4. Office Phone : +62 361 237039 5. e-mail address ; hehakaya@hotmail.com 6. Nationality : Indonesia EDUCATION School University City Country Year of Graduation Degree Field of Study 1. Pattimura

University Ambon, Indonesia

1988 Ir. Management of Forest

2. Udayana University

Denpasar, Indonesia

2005 M.Si Dry Land of Agriculture

EMPLOYMENT No. Year Position 1. 1988-1992 Ministry of Forest Staff in East Timor 2. 1992-1996 Section Head for Guidance and Planning Program, Forestry Service in East

Timor 3. 1996-1999 Section Head for Extension, Forestry Service in East Timor 4. 1999-2001 Section Head For Extension, Regional Forestry in Bali5. 2001-2003 Counterpart Expert Strategy for Mangrove Information Service 6. 2003-2006 Counterpart Research Section for Mangrove Information Centre 7. 2006-2009 Project manager For ITTO Project PD.386 / 05 Rev.1 (F) in Bali 8. 2009-2011 Section Head for Watershed Management, in Bali Forestry Service 9. 2011-now Section Head for Forest Product Processing in Bali Forestry Service EXPERIENCES No. Year Position

1. July 202 Management Training at Japan 2. 2002-2004 Team Survey for Formulation Extension Strategy of Mangrove, JICA

Mangrove Project in Bali 3. 2004-2006 Team Survey Flora and Fauna of Mangrove. JICA Project in Bali 4. 2004-2006 Trainer: Mangrove Training Program. JICA Mangrove Project in Bali 5. 2002-2006 Trainer: Environmental Education Program. JICA Mangrove Project in Bali 6. August 2008 Comparatives Study on Propagation techniques to Queensland, Australia.

ITTO Project PD. 386/05 Rev. 1 (F) in Bali

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3. TECHNICAL ADVISOR Name : Arif Wicaksono Achmad, S.Kom, MM Date of Birth : Surabaya, 04 April 1968 Education : Graduated on Manajement of Informatika Master degree on Marketing Management Position : Head, Section on Certification of Personal Technician at Production Forest Utilization Monitoring Agency, Denpasar (from 2010 – till now) Training Experience :

1. Training on Sawntimber grading supervisor (1990) 2. Training on Log Grading Supervisor (1991) 3. Training on Sustainable Forest Management (2001) 4. Taining as Auditor Ahli (2003)

Working Experience :

1. Financial Officer on Collecting of Reforestation Fee in East Java (1987-19890 2. Supervisor for Grading of Timber Exported (1991-1992) 3. Admin Officer on Log administration (1992-1995) 4. Timber Cruising Supervisor (1993) 5. Trainer for Training on Log Grading Indonesia (1995-2000) 6. Trainer for Training on Sawntimber Grading (1995-2006) 7. Trainer for Training on Gondorukem Grading (1995-2006) 8. Trainer for Training on Teak sawntimber and round log (1995-2006) 9. Consultant on primary industries at East Java (1996-2010) 10. Tim Auditor (1997-2000) 11. Resource Person on Inhouse Training Tax and Revenue Office (2000) 12. Consultant at PT Sucofindo (2001-2003) 13. Trainer for Training on Supervising of Log and Sawntimber Technical Person (2006 up to now).

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4. TECHNICAL STAFF

PERSONAL DETAILS 1. Name : Agus Kurnia, BSc.F, SP 2. Place/Date of Birth : Garut, 11 Maret 1962 3. Sex : Male 4. Office Address

: Jl. Bypass Ngurah Rai Tuban KM 23,5 Denpasar Bali

II. EDUCATION No Academic Level Name of Institution Faculty Place 4. D III/Academy Bandung Forestry Academy - Bandung 5. S 1/ Graduated degree Universitas Sjakhyakirti Palembang Plant

silviculture Palembang

III. Trainings

No Name of Trainings

Time Place Ket

1 2 3 4 5 1. Planning Of Seed Collections August 1994 BPTH

Palembang Participant

3.

Forest Regenaration 8 Nov s/d 15 Dec 1995)

Japan Participant

4. In House Planning 27 March 1997) Palembang Participant 5. Training Course on Conservation

Forest Genetic Resources 6 June 2003) Jambi Participang

6. Seedling Technics Nov 2003) Sumedang Resource person

7. Silvicultur 13 March 2004) Sumedang Resource Person

8. Forest Tree Seed Sources Management and Development

June 2009 SoutyKorea Participant

IV. Working Experience

No Position Time

1 2 3 1. Technician on Seedling at Balai Teknologi Reboisasi Benakat

Sumatera Selatan (South Sumatra) 1992 s/d 2001

4. Data Analyst on Modelling of Forest Seedling at Jawa Madura 2001 s/d 2012 5. Head, Section of Seed sources at Balai Teknologi Perbenihan

Hutan (BPTH) at Bali & Nusa Tenggara 2012 s/d now

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5. PROJECT SECRETARY PERSONAL DETAIL

1. Name : Laksmi Pratiwi 2. Place/Date of Birth : Wonosobo , 7 April 1966 3. Contact Address : Jln. Pengubugan Gg. Kayu Cendana No 19, Badung -Bali 4. Phone : Phone +62 8123986696 5. e-mail address ; pratiwilaksmi@gmail.com 6. Sex : Female EDUCATION School/ University City Country Year of Graduation Degree Subject 6. Bogor Institute of

Agriculture,

Bogor, Indonesia

1990 Undergraduate Agronomy

INFORMAL EDUCATION : Accounting Course WORK EXPERIANCES No. Year Position 1. 2011-2013

Project of Capacity Development for Climate Change Adaptation Strategies in Indonesia as Project Officer (Collaboration between Bappenas-BMKG-KLH and JICA). The job description are as follows:

General administration Collecting and formatting secondary data collection needed by the

project Manage general correspondences with the Government of RI, Local

Government, JICA and other organizations. Make arrangement for meeting, seminar, parties and negotiations Translating documents(English-Bahasa or Bahasa-English)

2. 2006-2009

ITTO Project PD 386 / 05 Rev.1 (F) Technological developments for the production of planting materials to support sustainable plantation of Bali indigenous species through community participation as project secretary (Collaboration between Ministry of Forestry and ITTO). The job description are as follows:

General administration Arranging seminar/workshop/training/field trip Undertaking other duties assigned by project manager

3. 2003-2005 Fortress recreational Product (US company) as administration. The job description are as follows

General administration

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ANNEX 3. OUTLINES OF TERMS OF REFERENCE FOR PROJECT KEY PERSONNEL, CONSULTANTS AND SUB-CONTRACTORS TO BE PAID WITH ITTO FUNDS

Position Main tasks A. Project key personnel Project Coordinator (PC) Manage project operations on a day-to-day basis

Prepare plans of operation, monitoring and evaluation Monitor progress in implementation of activities Select professional partners for execution of activities Communicate and coordinate with the EA, ITTO,

professionals, authorities and other stakeholders involved in project implementation

Organize meetings of PSC and hold regular internal technical meetings

Project Secretary (PS) Assist PC in managing project operations Manage the project office and organize documents and files Organize meetings and travels Undertake other tasks as requested by PC

Office Technician (OT) Assist PS in office operation and organize documents and files

Assist in operating the information system Assist in project reporting and documentation

B. National Consultants and Specialist Extension/training specialist on Activity 1.4

Assist in formation of farmers group in close consultation with DFAs

Prepare material for dialogues with local communities and conduct the dialogues

Assist in dissemination of information on potential benefit of growing trees and complying with TLAS

Assist PC in monitoring of progress in implementation of particular activities

National Consultant on Activity 1.1 Identify seed sources and their supply capacity of quality seed

Apply appropriate treatment on selected seed sources for improvement of seed quantity and quality

National Consultant on Activity 2.2 Develop design of wood technology training center Supervise construction of the training center Prepare training material for wood drying and preservation Assist in developing criteria for recruitment of trainees Develop training program and implement the training

National Consultant on Activity 3.3 Identify appropriate and applicable incentives for farmers to adopt TLAS in close consultation with farmers and authorities

Prepare policy brief on incentives in close consultation with concerned authorities

Undertake process on development of policy on implementation of the incentives

C. Sub-contractors No. 1 Activity 1.2, Specialist

Develop a workplan for accomplishing the task and its associated budget in close consultation with PC

Carry out experiments on different seeding and seedling production technologies

Document and analyze data on results of the experiments Develop technical manuals for most promising technologies

No. 2 Activity 1.3, NGO

Develop a workplan for accomplishing the task and its associated budget in close consultation with PC

Identify suitable sites for nurseries in close consultation with farmers and DFAs

Develop efficient nursery design Construct the nurseries involving farmers Report on the implementation of the activity

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Position Main tasks No. 3 Activity 2.1, University

Develop a workplan for implementing the activity in close consultation with PC

Conduct studies on properties of 8 tree species covering mechanical, physical and chemical properties

Prepare a technical report on the study including recommendations for best usage of the wood species

No. 4 Activity 3.1, University

Develop a workplan for accomplishing the task and its associated budget in close consultation with PC

Identify stakeholders to be engaged in the dialogue Prepare materials for the dialogue Report results of the dialogues

No. 5 Activity 3.2, LEO

Develop a workplan for accomplishing the task and its associated budget in close consultation with PC establishing venue and date, objectives, participants, logistics and strategy for implementation

Implement the workshop Submit a technical report on the workshop

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ANNEX 4. RESPONSE TO THE RECOMMENDATIONS OF ITTO EXPERT PANEL

Assessment of the Expert Panel Response made and the locus Overall Assessment The Panel acknowledged the relevance of the proposal to Indonesia and the importance to promote the presence of ITTO in Bali Island in particular. The panel also noted that the proposal arises and builds on the results of previous successful ITTO projects, focusing on plantation establishment of indigenous tree species for small-scale wooden handicraft industry in Bali Island. However, clearer explanations of several aspects of the proposal are needed in order to effectively achieve the project’s objectives. Involvement of private sector needs to be highlighted, as well as benefits received by implementing TLAS, and environmental impacts on plantation establishment, why more plantations are needed, and to what extent the wood processing facilities will be developed. Specific Recommendations The proposal should be revised taking into account the overall assessment and the following:

1. In the Map of Project Area, specify the project’s sites;

2. In Section 1.3.2 Social, cultural, economic and

environmental aspects, expand the elaboration of these aspects, including additional information on demographics;

3. In Section 1.4 Expected outcomes at project

completion, include the time-bound elements into the overall expected outcomes;

4. In Section 2.1.1 Institutional set-up and

organizational issues, add information on capacity of each institution involved;

5. In Section 2.1.2 Stakeholder analysis, describe

how the impacts of the previous ITTO projects to the stakeholders;

The acknowledgement of the EP on the

relevance and importance of the project for Indonesia in general and Bali province in particular is appreciated by the proponents

The overall assessment is laudable and

has been taken care of when addressing the repective specific recommendations as highlighted below

Map of project area has been revised as appears on 4 page. Note that the project will be implemented in 8 out of 9 districts of Bali province; only Kodya Denpasar district is excluded which is the capital city of the province More information on social, cultural, economic and environmental aspects is provided in Section 1.3.2, page 8; additional information on demographics is also concisely presented in the same section The time bound elements of the expected outcomes at project completion has been included in Section 1.4, pages 8-9. Note that time bound elements are also specified in the Logical Framework Matrix, pages 16-17 and Section 2.2, page 18 Additional information on institutional set-up and organizational issues as well as capacity of each institution is briefly presented in Section 2.1.1, page 10 Impacts of the previous ITTO projects on the stakeholders, on farmers in particular, are elaborated on Section 2.1.2, pages 10-12

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6. In Section 2.1.3 Problem analysis, reformulate

the problem analysis to the extent that the main problem encountered will be clearly depicted. Consequently, refine the Problem Tree, Objective Tree and the Logical framework matrix.

7. In Section 2.2.1 Development objective and

impact indicators, reformulate into more concise and clearer sentence;

8. In Section 3.1.2 Activities, rephrase into more

specific/targeted activities. The current activities statements are considered too general;

9. In Section 3.2 Implementation approaches and

methods, add explanation on stakeholder participation and gender issues related to the project implementation;

10. In Section 3.2, describe the anticipated incentive

program for TLAS. 11. In Section 3.4, reduce budget allocation for

personnel and clarify the provision of land (renting or purchasing), and clarify the ‘miscellaneous’ in each output of the Master budget;

The problem analysis has been improved and key problem addressed redefined as “lack of capacity to develop and sustain a competitive handicraft industry of Bali”. This redefined key problem was thought relevant and fundamental considering its far reaching adverse implications on benefits of the handicarft industry to Balinese economy. In order to successfully build up a competitive industry, the problems relating to sustainability and sufficiency of supply of indigenous timber species (which are suitable for handicrafts and most preferred by artisans), proper treatment of wood raw material) that affects handicraft quality) and compliance with TLAS (that mandatory for trading of wood products) must be eliminated or significantly lessened. Problem analysis is represented in Section 2.1.3, pages 12-13 and summarized in the problem tree (Figure 1) The development objective and impact indicators have been redefined consistent with the redefined key problem and appear in the Logical Framework Matrix, pages 16-17 and Section 2.2.1, page 18 The activities have been stated more clearly by adding explanation on individual activities, as appropriate; see Section 3.1.1, pages 19-20 Implementation approaches and methods have been enriched by adding relevant information; see Section 3.2, pages 20-21 Incentive program for TLAS is elaborated in Section 3.2, pages 20-21 The budget has been revised in the following lines: i) Personnel budget reduced by US$ 31,800,

from US$ 162,700 to US$ 130,900; see Table 3.4.2

ii) The total contribution of ITTO has been reduced by only US$ 1,774 because in the revised budget, costs of ITTO’s monitoring has been increased by US$ 6,000 and programme support calculated at 12% instead of 8%; see Table 3.4.2

iii) GOI’s contribution is now reduced to US$ 95,270 due to the summation error and inclusion of EA’s management cost in the initial budgeting; see Table 3.4.3

iv) Lands to be used are owned by farmers as in the previous ITTO projects; legal certification of the lands is needed to insure their long-term use for tree growing and this process entails costs

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12. In Section 3.5.1 Assumptions and risks, descript

on how to monitor the risks. Discuss also on financial feasibility of the established plantation;

13. In Section 3.5.2 Sustainability, improve the

elaboration on sustainability into clearer exit strategies, particularly in regards to financial and institutional aspects;

14. In Section 4.1 Organization structure and

stakeholder involvement mechanism, add elements of key personnel, their responsibility and their relationship with target groups, and establish a consultative group among stakeholders. Add the representative of private sector in the steering committee members;

15. In Section 4.2 Reporting, review, monitoring and

evaluation, revise this section in accordance with ITTO’s SOP; and

16. Include an Annex that shows the overall

assessment and specific recommendations of the 46th Expert Panel and respective modifications in tabular form. Modifications should also be highlighted (bold and underline) in the text.

v) Miscellaneous costs refer to organization of meetings and/or contingencies, sundries which are unspecified yet, e.g. increased use of materials, unit price of inputs, etc.

vi) ITTO’s programme support cost is calculated at 12% of budget items 10-80

Information on the assumptions and risks is enriched in Section 3.5.1, page 30; financial feasibility of established plantation is briefly discussed in Section 3.5.2, page 31 Sustainability aspect is elaborated in Section 3.5.2, pages 30-31 Organization structure has been revised as shown in Section 4.1, page 33 Section 4.2 has been revised in accordance with the relevant ITTO’s SOP; see pages 34-35 Annex 4

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ANNEX 5: RESPONSES TO REVIEWER COMMENTS/RECOMMENDATIONS PD 709/13 Rev. 2 (I) Enhancing Bali Wooden Handicraft Industry by Improving the Quality of

Planted-Wood Raw Materials and Comply to Legality Standard (Indonesia)

Reviewer Comments/Recommendations Amendment(s) made Page

Overall Assessment The Panel acknowledged that proposal has been revised in accordance with recommendations provided by the 46th Expert Panel. The Panel also noted that the Annex 4 (Response to the Recommendations of ITTO Expert panel) was very well presented. However, further improvement to the proposal is necessary inorder to maximize the potential benefits of the project if implemented.

Specific Recommendations The proposal should be revised taking into account the overall assessment and the following: 1. Improve the project site map presentation.

Map of project site is not change buat have been improve, to show where location of project site that is in 8 districts throughout Bali Province.

Page v

2. In Section 2.1.2, highlight potential land-conflict among stakeholders;

At the location of the proposed project there is no potential land conflict since activities are focused on the community-owned lands located in all districts. Like the two previous project project activities focused on privately-owned lands where there are 66 groups of farmers in six districts were involved in these activities

Pages 6 and 8

3. In Section 3.1.2., Improve the descriptions of the project’s activities,, using more operative phares and removing the brackets, including their activities in the respective activities;

Descriptions of the project’s activities have been improved, using more operative phares and removing the barckets. The improvement have also been made on the workplan.

Pages 15-16

Pages 18-19

4. In Section 3.2, clarify the scope of gender participation, including insertion of gender statistics, and clarify also the incentives received by the primary stakeholder in fulfilling the TLAS requirements;

Scope of gender participation have been explained in page 16. Incentive received by the primary stakeholders in fulfilling the TLAS will be developed during the project, and type of incentives have been explain in page 17

Page 16

Page 17

5. In Section 4.1.2, add information on project

personnel, including attachment of their ‘CV’

Information on project personnel have been accomodated in page 35-38

Pages 35-38

6. Include an Annex that shows the overall assessment and specific recommendations of the Forty-seventh Expert Panel and respective modifications in tabular form. Modifications should also be highlighted (bold and underline) in the text.

This matrix will be annex 5 of the Project Document.

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