legality definition (auditor guidance)

8/8/2019 Legality Definition (Auditor Guidance)

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Principles, Criteria and Indicators of Legality for ForestryOperations and Timber Processing in Indonesia

Auditors Guidance Notes1[1]

Principle 1. Land Tenure And Use Rights ..........................................................................................1

Principle 2. Physical And Social Environmental Impact..................................................................... 4

Principle 3. Community Relations And Workers Rights..................................................................... 5

Principle 4. Timber Harvesting Laws And Regulations...................................................................... 9

Principle 5. Forest Taxes................................................................................................................... 9

Principle 6. Log Identification, Transfer And Delivery......................................................................11

Principle 7. Timber Processing And Shipping..................................................................................13

Introduction

Draft Standard

1[1] These are designed to clarify, and to be read in conjunction with, the corresponding draft of Principles, Criteria & Indicators

of Legality for Forestry Operations & Timber Processing in Indonesia

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papers/Z%20Criteria%20and%20Guidance%20notes.htm#_Toc73353720%23_Toc73353720http://www.illegal-logging.info/papers/Z%20Introduction%20and%20Principles.htmhttp://www.illegal-logging.info/papers/Z%20Full%20Standard.htmhttp://www.illegal-logging.info/papers/Z%20Criteria%20and%20Guidance%20notes.htm#_Toc73353714%23_Toc73353714http://www.illegal-logging.info/papers/Z%20Criteria%20and%20Guidance%20notes.htm#_Toc73353715%23_Toc73353715http://www.illegal-logging.info/papers/Z%20Criteria%20and%20Guidance%20notes.htm#_Toc73353717%23_Toc73353717http://www.illegal-logging.info/papers/Z%20Criteria%20and%20Guidance%20notes.htm#_Toc73353718%23_Toc73353718http://www.illegal-logging.info/papers/Z%20Criteria%20and%20Guidance%20notes.htm#_Toc73353719%23_Toc73353719http://www.illegal-logging.info/papers/Z%20Criteria%20and%20Guidance%20notes.htm#_Toc73353720%23_Toc73353720http://www.illegal-logging.info/papers/Z%20Introduction%20and%20Principles.htmhttp://www.illegal-logging.info/papers/Z%20Full%20Standard.htmhttp://www.illegal-logging.info/papers/Z%20Criteria%20and%20Guidance%20notes.htm#_Toc73353713%23_Toc73353713


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Indicator Guidance Note

PRINCIPLE 1. LAND TENURE AND USE RIGHTS

Criterion 1.1: Areas covered by HPH, IUPHHK, HPHTI or land managed by PerumPerhutani must be located in the permanent state forest zone. Land clearingassociated with non-forestry activities that are nationally approved or authorized bydistrict governments may only be located outside the permanent state forest zone.

1.1.1 If the Forest ManagementUnit is covered by a natural forestselective felling permit [HPH(IUPHHK pada HA)], an industrialtimber plantation permit [HPHTI(IUPHHK pada HT)], or is licensed tothe state-owned enterprise PerumPerhutani, it must be located within

the permanent state forest zone.

Step 1: With a view toward finding out whether thearea is in the permanent state forest zone, determinewhether or not there is a current berita acara tatabatas signed by the authorized delineationcommittee regarding land status.

Note 1: An authorized delineation committee isspecified in SK Menhut 32, 2001 regarding the forestdelineation process.

Note 2: Step 1 above should only have beenfollowed by any demarcation activities carried outafter February 2001, or by any forest gazettementwhich failed to demarcate the boundaries prior tothat date. [not clear!]

Step 2: Ensure that any community area physicallylocated within the boundaries of the HPH area, HTIor Perum Perhutani area is defined as an enclaveand excluded from any production forestry activities(Juklak and Juknis Dirjen Intag No. 724/A/VII-2,1994).

Note 1: Forest zones demarcated between 1974

and 1990 should follow the provisions of SK DirJenKehutanan 85/Kpts/DJ/1/1974.

Note 2: Forest zones demarcated between 1990and 1996 should follow the provisions of SK Menhut399, 1990 and SK Menhut 400, 1990.

Note 3: Forest zones demarcated between 1997and February, 2001 should follow the provisions ofSK Menhut 399, 1990, SK Menhut 400, 1990, SKMenhut 634, 1996 and SK Menhut 635 1996.

Note 4: Crosscheck the status of the proposedforest land in the village land book and district landbook in the district office of the Badan Pertanahan

Nasional (BPN).

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Indicator Guidance Note

1.1.2 Land clearing associatedwith nationally approved non-forestryactivities or authorized by district

governments may only be locatedoutside the permanent state forestzone. Any declassification of landfrom forest to non-forest (such asagricultural plantations) must havetaken place with the free and priorinformed consent of local and adatcommunities, and be gazetted in amanner consistent with applicableregulations.

Applicable regulations are:

SK Mentan 178/Kpts/Um/4/1975 PedomanUmum Perubahan Batas Kawasan Hutan , 23

April 1975 23 Oktober 1980

SK Mentan 764/Kpts/Um/10/1980, KetentuanPelepasan Areal Hutan untuk TujuanPerkrbunan, Peternakan, Perikanan danTanaman Pangan - 23 Oktober 1980

SK Dirjen Kehutanan 54/Kpts/DJ/I/1981, TataCara Pelepasan Areal Hutan untuk TujuanPekebunan, Peretnakan, Perikanan danTanaman Pangan 23 Maret 1981

SK Dirjen Kehutanan 53/Kpts/DJ/I/1981,Penetapan Wilayah-Wilayah Propinsi yang arealHutannya tidak dapat dilepaskan untuk tujuan

Perkebunan, Peternakan, Perikanan & TanamanPangan

SK Menhut KB.550/246/Kpts/4/1984 PengaturanPenyediaan Lahan Kawasan Hutan untukPengembangan Usaha Budi Daya Pertanian

Surat Edaran Menhutbun no-VIII/2000Penhentian/penagguhn pelepasan kawasanhutan, 22 Mei 2000

SK Menhut 70, 2001 Perubahan Status & FungsiKawasan Hutan , 21 April 2001

SK 48, 2004. Perubahan SK Menteri Kehutanan

No 70/2001,Januari 2004

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Criterion 1.2: The Company holds a license to harvest timber on the Forest ManagementUnit that has been formally approved by the appropriate government authority.

1.2.1 In the case of land in thepermanent forest zone, the Companyholds a valid HPH, HPHTI or

IUPHHK that has been approved bythe Ministry of Forestry and hasbeen issued only with the free andprior informed consent of allaffected communities.

License number, validity dates, license is signed. Free andprior informed consent means that affected communitiesmust have been given full information on all activities to be

undertaken and consequences deriving there for before theygave their consent to such activities (UU 23, 1997 onEnvironmental Management; RUU Pemanfaatan danPelestarian Sumber Daya Genetik). An affected communityis one whose land claims overlap with the forestmanagement unit and/or whose livelihood system ispositively or negatively altered by the activities of the forestmanagement unit (UU 23, 1997 and PP 27, 1999).

1.2.2 In the case of land that is notin the permanent forest zone and issubject to clearing for a non-forestuse, or land in the permanent forestzone that is subject to clearing forHTI, the Company holds a (ILS) IPKfor the area that has been approvedby national and provincial, orprovincial and district, forestryauthorities, as required by nationalforestry law, and has been issuedonly with the free and priorinformed consent of the affectedcommunities.

License number, validity dates, license 2[2] is signed by Dinasand Ministry of Forestry. Natural forest timber felled throughland clearing activities to create industrial timber oragricultural plantations must have SK HTI or SK Kebungranted by national forestry authorities prior to thedeclaration of the June, 2000 land clearing moratorium, aswell as an SK IPK granted by provincial forestry authorities.Natural forest timber felled using licenses from districtauthorities may only come from districts which have writtenpermission to issue such licenses from provincial forestryauthorities, and only in the event that such land clearingactivities take place outside the national forest estate.

2[2] IPKs not permitted by Ministry of Forestry after 2000

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1.2.3 In no cases do the gazettedboundaries of a license area conflictwith any land use classification inwhich the activities allowed underthat license are prohibited.

Map with clear boundaries, cross-checked with ProvincialLand Use Planning Office. Using as base maps the PetaPenunjukan Kawasan Hutan dan Perairan Propinsi, or if thatis not available, the most recent provincially sanctionedRTRWP, plot the RKT map (in the case of a HPH), PetaRencana Pembukaan Lahan (in the case of nationallysanctioned land clearing activities), or Peta Bagan Kerja danRencana Pembukaan Lahan or its equivalent (in the case ofprovincially sanctioned/district approved land clearingpermits). Interpret the resulting map overlay to ensure that,for HPH and industrial timber plantations, cutting blocks donot overlap with areas designated as hutan lindung orkawasan konservasi. Ensure also that nationally approvedagricultural plantations and provincially sanctioned/districtlicensed land clearing permits do not overlap with any part ofthe national forest estate. In instances where unauthorizedintrusion into prohibited forest areas is thought to haveoccurred, take GPS readings to find out whether this is thecase.

Evidence that the forest management unit has been gazetted(according to UU 24, 1992) in consultation with adat andlocal communities (for example, by participatory communitymapping) with prior informed consent verified through atranscript of a dialogue with the communities).

For HPH (IUPHHK pada HA) and HTI (IUPHHK pada HT)and Perum Perhutani areas in particular, clear boundarieshave been established between the forest management unitand the territory of local and adat communities with theconsent of all related parties (eg, relevant governmentauthorities and affected communities).

Steps for gazettal:Step 1: With a view toward finding out what are thefunctional categories (kawasan konservasi, hutan lindung,hutan produksi terbatas, hutan produksi, hutan konversi),determine whether there is a current official notification ofboundary delineation (berita acara tata batas) signed by theauthorized delineation committee (SK Menhut 57, Kpts-II1994).

Step 2: With a view toward finding out whether theboundaries of a concession have been fully established,determine whether or not there is a current berita acara tatabatas (according to the SK-HPH or its equivalent under newregulation, SK-HTI or its equivalent under new regulation)

signed by the authorized delineation committee (Dir.Jen.BPK).

Step 3: Ensure that there is no hutan adat (regulated by UU41, 1999 or PerMenBPN 5, 1999) or ijin hutankemasyarakatan (SK Menhut 31, 2001) located inside oroverlapping with the working area of the forest managementunit.

Step 4: For Perum Perhutani areas, no wood may be takenfrom land which is former ERFACHT and/or partikulir land(UU 1, 1958) and/or conservation areas (SK Menhut 251,1985).

Criterion 1.3: There are plans for the Forest Management Unit that meet all applicable

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government regulations.

1.3.1 Areas covered by HPH,HPHTI or IUPHHK have long term(20 year), medium term (5 year) andannual management plans approvedby the appropriate governmentauthority.

Approved and valid 20-year, 5-year plans (Ministry ofForestry) and annual plans (Provincial Forestry Office). AACclearly defined within a net production area. Conservationareas are delineated on maps for all management plansappropriate to scale. Social areas adequately identifiedincluding any agricultural areas or culturally sensitive areas(see 1.1.3)

1.3.2 (ILS) IPK licensed areashave approved work plans (BaganKerja) to harvest trees fromConversion Forest for non-forestrypurposes, or from Production Forestfor industrial tree plantations.

(ILS) IPK License, validity dates, license and work plan isapproved by the government authority: provincial or districtas outlined in Criterion 1.2).

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PRINCIPLE 2. PHYSICAL AND SOCIAL ENVIRONMENTAL IMPACT

Criterion 2.1: The Company has conducted a physical, social and environmental assessment of the forestoperations and/or processing facility using the AMDAL Process as specified by Governmental RegulationNo.27 of 1999.

2.1.1 The Company has a currentgovernment-approved AMDAL thatwas prepared in accordance withapplicable regulations and covers theentire area of the licensed operationsand includes an Impact Identificationand Evaluation Report (ANDAL), anEnvironmental ManagementPlanning Report (RKL) and anEnvironmental Monitoring Plan(RPL).

AMDAL is signed and valid, key components of AMDAL to address socialand physical environmental impacts, including; impact on customary landclaims, protected areas have been prepared and correspond with the site

2.1.2 The Company has preparedall required Monitoring Reportsbased on the RPL of the AMDAL thatdemonstrate actions it is taking tomitigate environmental impacts andto provide social benefits.

RPL has clear plan to mitigate environmental impacts and provide socialbenefits. Review Reports on the monitoring of the impacts according to theRPL and review reports and field visit to review procedures in place asrecommended in the RKL to mitigate environmental impacts

Criterion 2.2: The Company provides for protection of endangered species as listed in IndonesianGovernment Regulation 7 and 8 /19993[3] whose range or habitat forms part of the Forest Management Unit

2.2.1 The Company implementsprocedures to identify endangeredspecies whose range or habitat occur

in the Forest Management Unit andto protect those species and theirhabitats.

List of endangered species within the AMDAL. Correct application ofAMDAL procedures to develop the list of endangered species. Cross-checking with other information about endangered species independent of

AMDAL especially the official Ministry of Forestry list of endangeredspecies. Procedures for identification and protection of endangeredspecies. Evidence of actions take to prevent illegal hunting or trapping bylocal communities, workers /contractors. Procedures to control access tothe forest and provide for security. Evidence to demonstrate implementationof procedures: patrols, guard posts, logbooks, and reports.

2.2.2 The Company implementsprocedures that demonstrate itscompliance with GovernmentRegulations 7 and 8 /1999.

Evidence of trading of CITES-listed species by local communities or workers/ contractors. Evidence of captured animals (RTE) in villages. Recognitionof indigenous legal systems and encouragement of continued customaryuse consistent with the Convention on Biological Diversity (see 1.2.2).4[4]

PRINCIPLE 3. COMMUNITY RELATIONS AND WORKERS RIGHTS

Criterion 3.1: The Company has identified all communities affected by its activities in theForest Management Unit and has obtained their free and prior informed consent to carry outthose activities5[5].

3.1.1 The Company has identified Documents demonstrating this.

3[3] Regulation to implement the requirements of CITES and the Convention on Biological Diversity4[4] Convention on Biological Diversity Article 10(c) obliges States, as far as possible and as appropriate to protect and

encourage customary use of biological resources in accordance with traditional cultural practices that are compatible with

conservation or sustainable use requirements.5[5]

The concept of free and prior informed consent is part of the Indonesian legal framework and can be found inter alia withinthe following laws: National Environmental Law, Vulnerable Families and Populations Law, UU 41, 1999, Official Indonesian

Ratification of the Convention on Biodiversity (CBD), Indonesian ratification of the International Human Rights Law.

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all communities affected by itsactivities in the Forest ManagementUnit and taken reasonable steps,including announcements in localmedia, to inform them about itsplanned activities.

3.1.2 The Company has held anddocumented the proceedings ofpublic consultations with eachcommunity affected by its plannedactivities in the Forest ManagementUnit.

3.1.3 The Company has madegood faith efforts to reach aconsensus concerningimplementation of its planned

activities in the Forest ManagementUnit with each community affected bythose activities.

Documents demonstrating this.

Criterion 3.2: The Company has identified and documented the traditional rights ofcommunities affected by its activities in the Forest Management Unit and can demonstratethat it respects those rights.

3.2.1 The Company hasdocumented the traditional rightsclaimed by each community affectedby its activities in the ForestManagement Unit.

Evidence that company has conducted a socialassessment and has compiled a list of local communitiesand their traditional rights. Documentation of extensiveconsultation with communities.

3.2.2 The Company hasdeveloped plans in association withaffected communities that describehow areas and/or resources coveredby traditional rights within the ForestManagement Unit are to bemanaged, detailing use, access andany compensation arrangements.

Management plans. Evidence that community input wasincluded in management plan. Provisions should addresscollection of non-timber forest products, co-managementand benefit sharing, if relevant (PP 34 2002 and SK 47952002). Cross-check management planning process withsample of communities.

Criterion 3.3: The Company has entered into and honors agreements with localcommunities (as distinct from affected communities) that clearly specify social benefits(such as health and community development) it will provide them.

3.3.1 The Company hasdocumented agreements with localcommunities that clearly describesocial welfare and communitydevelopment projects it willundertake for them.

Company has formal defined agreements with localcommunities regarding community development (BinaDesa regulations6[6]). Cross-check with beneficiarycommunities on implementation.

3.3.2 The Company candemonstrate that it is implementing

Company has clear list of obligations to local communities(Government Regulation No.27 of 1999 in reference to

6[6] Ministerial Decree No. 691/KPTS-II/91HPH Bina Desa Hutan (Community Development in Timber

Concessions)

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those agreements. AMDAL process). Inclusion of such obligations within theAMDAL. Cross-check with beneficiary communities.

Criterion 3.4: The Company respects its employees rights to organize and voluntarilynegotiate their employment conditions in accordance with International Labor Organization(ILO) conventions 87 and 98, enacted through law No 13/2003 on Employment.

3.4.1 The Company permits itsemployees to join recognized laborunions and can demonstrate that itdoes not discriminate against laborunion members when makingemployment decisions.

Workers are not prevented from joining unions and unionmembers are not discriminated against in employmentdecisions.

3.4.2 When requested by arecognized labor union thatrepresents its employees, theCompany willingly enters intonegotiations with that union andhonors all agreements reached as aresult of those negotiations.

Formal agreements with unions, Records of unionmeetings and management meetings.

Criterion 3.5: The Company complies with manpower regulations regarding worker safetyand health, benefits in kind, minimum salary, termination and contractors conditions, asspecified in the TPTI or TPTJ, as applicable.

3.5.1 The Company pays itsemployees salaries and providesthem with benefits in kind in amanner that meets the minimumlegal requirements as prescribed inLaw 13/2003 (commencing withArticle 88).

All salaries must be equal to or higher than the regionalminimum wage. Evidence that salaries have been paid ontime and in kind benefits actually provided.

3.5.2 The Company implementsclearly defined safety procedures asprescribed in Act 1/1970

Company has documented procedures on safety that areimplemented, including, work instructions (StandardOperating Procedures), proper use of safety equipment,and training of staff in its use. Records of accidents areevident as record that and safety performance is regularlyreviewed to identify needs for improvement.

3.5.3 The Company ensures thatall required safety equipment (APD)and emergency first aid equipment

(P3K) are available and readilyaccessible for use at each work sitewithin the Forest Management Unitand that they are used in anappropriate manner.

Company has safety equipment for workers that areactually used. Emergency first aid is available on site.Evidence that workers are trained in basic first aid.

3.5.4 The Company ensures thatall its employees are 15 years old orabove as prescribed in Law 13/2002,Article 68.

Company to provide complete records of all staff thatinclude employee number, registration of date of birth byidentity card or birth certificate.

3.5.5. The Company does notrequire any of its employees to work

more than 40 hours plus 14 hoursovertime per week, and allows each

Workers from a range of work classifications areinterviewed to ensure that no worker puts in more than 40

hours a week, plus 14 hours overtime and that eachworker is given 12 days off per year in addition to national

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employee to take 12 days off peryear in addition to statutory holidays(Law 13/2003, Articles 78 and 79).

holidays.

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PRINCIPLE 3. COMMUNITY RELATIONS AND WORKERS RIGHTS

Criterion 3.1: The Company has identified all communities affected by its activities in theForest Management Unit and has obtained their free and prior informed consent to carry outthose activities7[7].

3.1.1 The Company has identifiedall communities affected by itsactivities in the Forest ManagementUnit and taken reasonable steps,including announcements in localmedia, to inform them about its

planned activities.


3.1.2 The Company has held anddocumented the proceedings ofpublic consultations with eachcommunity affected by its plannedactivities in the Forest ManagementUnit.

3.1.3 The Company has madegood faith efforts to reach aconsensus concerningimplementation of its plannedactivities in the Forest ManagementUnit with each community affected bythose activities.


Criterion 3.2: The Company has identified and documented the traditional rights ofcommunities affected by its activities in the Forest Management Unit and can demonstrate thatit respects those rights.

3.2.1 The Company hasdocumented the traditional rightsclaimed by each community affectedby its activities in the ForestManagement Unit.

Evidence that company has conducted a social assessmentand has compiled a list of local communities and theirtraditional rights. Documentation of extensive consultation withcommunities.

3.2.2 The Company hasdeveloped plans in association withaffected communities that describehow areas and/or resources coveredby traditional rights within the ForestManagement Unit are to bemanaged, detailing use, access andany compensation arrangements.

Management plans. Evidence that community input wasincluded in management plan. Provisions should addresscollection of non-timber forest products, co-management andbenefit sharing, if relevant (PP 34 2002 and SK 4795 2002).Cross-check management planning process with sample ofcommunities.

7[7]

The concept of free and prior informed consent is part of the Indonesian legal framework and can be found inter alia withinthe following laws: National Environmental Law, Vulnerable Families and Populations Law, UU 41, 1999, Official Indonesian

Ratification of the Convention on Biodiversity (CBD), Indonesian ratification of the International Human Rights Law.

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Criterion 3.3: The Company has entered into and honors agreements with local communities(as distinct from affected communities) that clearly specify social benefits (such as health andcommunity development) it will provide them.

3.3.1 The Company hasdocumented agreements with local

communities that clearly describesocial welfare and communitydevelopment projects it willundertake for them.

Company has formal defined agreements with localcommunities regarding community development (Bina Desa

regulations8[8]). Cross-check with beneficiary communities onimplementation.

3.3.2 The Company candemonstrate that it is implementingthose agreements.

Company has clear list of obligations to local communities(Government Regulation No.27 of 1999 in reference to AMDALprocess). Inclusion of such obligations within the AMDAL.Cross-check with beneficiary communities.

Criterion 3.4: The Company respects its employees rights to organize and voluntarilynegotiate their employment conditions in accordance with International Labor Organization(ILO) conventions 87 and 98, enacted through law No 13/2003 on Employment.

3.4.1 The Company permits itsemployees to join recognized laborunions and can demonstrate that itdoes not discriminate against laborunion members when makingemployment decisions.

Workers are not prevented from joining unions and unionmembers are not discriminated against in employmentdecisions.

3.4.2 When requested by arecognized labor union thatrepresents its employees, theCompany willingly enters intonegotiations with that union andhonors all agreements reached as aresult of those negotiations.

Formal agreements with unions, Records of union meetingsand management meetings.

Criterion 3.5: The Company complies with manpower regulations regarding worker safety andhealth, benefits in kind, minimum salary, termination and contractors conditions, as specifiedin the TPTI or TPTJ, as applicable.

3.5.1 The Company pays itsemployees salaries and providesthem with benefits in kind in amanner that meets the minimumlegal requirements as prescribed inLaw 13/2003 (commencing withArticle 88).

All salaries must be equal to or higher than the regionalminimum wage. Evidence that salaries have been paid on timeand in kind benefits actually provided.

3.5.2 The Company implementsclearly defined safety procedures asprescribed in Act 1/1970

Company has documented procedures on safety that areimplemented, including, work instructions (Standard OperatingProcedures), proper use of safety equipment, and training ofstaff in its use. Records of accidents are evident as record thatand safety performance is regularly reviewed to identify needsfor improvement.

3.5.3 The Company ensures that Company has safety equipment for workers that are actually

8[8] Ministerial Decree No. 691/KPTS-II/91HPH Bina Desa Hutan (Community Development in Timber

Concessions)

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all required safety equipment (APD)and emergency first aid equipment(P3K) are available and readilyaccessible for use at each work sitewithin the Forest Management Unitand that they are used in anappropriate manner.

used. Emergency first aid is available on site. Evidence thatworkers are trained in basic first aid.

3.5.4 The Company ensures thatall its employees are 15 years old orabove as prescribed in Law 13/2002,Article 68.

Company to provide complete records of all staff that includeemployee number, registration of date of birth by identity cardor birth certificate.

3.5.5. The Company does notrequire any of its employees to workmore than 40 hours plus 14 hoursovertime per week, and allows eachemployee to take 12 days off per

year in addition to statutory holidays(Law 13/2003, Articles 78 and 79).

Workers from a range of work classifications are interviewed toensure that no worker puts in more than 40 hours a week, plus14 hours overtime and that each worker is given 12 days offper year in addition to national holidays.

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PRINCIPLE 4. TIMBER HARVESTING LAWS AND REGULATIONS

Criterion 4.1: Harvest plans for the Forest Management Unit have been approved by theappropriate government authority and have clearly defined boundaries that show areaswhere harvesting is allowed and areas that must be protected.

4.1.1 Harvest plans (RKT and IPK Bagan Kerja) have been formallyapproved by the appropriategovernment authority.

Company has geo-corrected maps of the annual workingarea that clearly show the boundary at an appropriatescale (1:10,000). The appropriate authorities are theDinas Kehutanan Province for RKT; the Bupati, withtechnical approval from Dinas Kehutanan Kabupaten, forIPK.

4.1.2 Harvest plans have clearlydelineated boundaries that showareas excluded from harvesting suchas buffer zones, steep slopes, criticalhabitats and areas of culturalsignificance such as adatareas andreligious areas, or those of culturalsignificance identified in the planningphase.

Harvest plan (RKT (ILS) IPK) has clearly delineated areasset aside for protection with GPS coordinates whereapplicable for ease of identification in the field. Check tosee if TPTI has a formal list of area classifications requiredto be mapped.

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Criterion 4.2: The Company implements harvest operations in accordance with the legallyprescribed silvicultural system or the conditions for harvesting for land clearing asapplicable.

4.2.1 Harvesting operationscomply with the requirements listed

in TPTI, TPTJ, PUHH (2003)documents for RKT licensed areas,or the applicable land clearingregulations for (ILS) IPK licensedareas.

TPTI harvesting system requires (use the Reduced ImpactLogging Guidelines for Indonesia for guidance purposes):

Tree identification and tagging with tree numbers of allharvested trees with tags, species, petak number, DBHand estimated bole length. Potential Crop Trees(PCTs) above 20 cm are also identified with tags andmapped.

Protected trees are marked with yellow tags.

Permanent sample plots (PUP) established

Buffer zones for roads and watercourses

No slopes over 40% to be harvested

No logging in Protected Areas, buffer zones, steepareas above 40%, or cultural sites

ILS areas also require boundary to be demarcated

along with any Protection/Conservation Areas. (SKMenhut 162, 2003).

4.2.2 All boundaries of licensedharvesting areas are clearlydemarcated on maps of anappropriate scale and on the ground.

Boundary is cleared with 1-meter brush cutting and treesare clearly painted along the boundary. Markings on theground coincide with those on approved plans

4.2.3 All equipment used inforestry operations complies withBPK requirements as specified in

Ministry of Forestry Decree No.428/KPTS-II/2003.

All equipment to be registered with the BPK.

4.2.4 Data for all trees harvestedas listed in the cruising report (LHC)are recorded in the Daily LogMeasurement Report (BU) as perPUHH (2003) requirements.

All trees harvested (as listed in the LHC) are identified withtags that contain the tree number, log letter, petak no.,diameter, length and species and registered in a BU.

4.2.5 No harvesting operationshave been carried out in anyExclusion Areas as shown in theapproved Harvest Plan.

Check areas on harvesting plan with actual field situation.

PRINCIPLE 5. FOREST TAXES

Criterion 5.1: The Company demonstrates that it has paid all applicable concession feesand taxes for its license covering the Forest Management Unit and the timber extracted fromit.

5.1.1 The Company demonstratesthat payments for concession fees(HPH, HTI, IUPHHK), reforestationfees (DR), and resource taxes

Receipts of payments for fees and timber extracted arecurrent for the year. Cross-check with a sample ofharvesting records.

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(PSDH) are current.

5.1.2 The Company demonstratesthat payments for community taxesbased on extracted volume of timberharvested and annual building tax(PBB) and other legal charges arecurrent.

Receipts of payments for fees are current for the year.Cross-check with a sample of harvesting records.

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PRINCIPLE 6. LOG IDENTIFICATION, TRANSFER AND DELIVERY

Criterion 6.1: The Company ensures that all logs transported from the Forest ManagementUnit have the required physical identification.

6.1.1 All logs transported fromHPH, IPK (ILS), IUPHHK areas are

marked using the prescribed tagsand paint and chisel marks thatcontain sufficient information to traceeach log back to the compartment(petak) and to the RKT harvest tree.

All logs have tags and paint/chisel markings that arelegible.

6.1.2 All logs transported fromHPH areas have a valid ForestryDepartment hammer mark to verifygovernment clearance at the logpond.

All logs at log pond have a legible hammer mark.

Criterion 6.2: The Company ensures that all logs transported from the Forest ManagementUnit are properly documented.

6.2.1 The Company records thetransport of logs from log landings(TPn) to the primary log pond (TPk)using document DP.

Check sample of logs against documentation. Thiscriterion only applies if the TPk is located within theboundaries of the forest management unit. If not, go toCriterion 6.1.2.

6.2.2 The Company records thetransport of logs through all furtherlog ponds en route to the processingfacility using SKSHH with attachedlog list (DHH) that is issued beforethose logs leave the ForestManagement Unit.

Check SKSHH has been issued inside the boundary of theFMU. Check sample of logs in each transport node againstdocumentation, according to technical guidelines outlinedin separate standardized audit procedures.

6.2.3 All exemptions from use ofdocuments listed in 6.1.1 and 6.1.2must be documented with a validgovernment approval form.

Formal letter from the provincial government exemptingthe company from using authorized forms. Internaldelivery note (Faktur) during the interim should be cited.

6.2.4 Where the Company is a(ILS) IPK license holder it records thetransport of logs from the ForestManagement Unit to the processingfacility using the Faktur, or SKSHH

with attached log list (DHH) asappropriate.

Check sample of logs against documentation.

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Criterion 6.3: All organizations transporting timber products have valid licenses.

6.3.1 Organizations operatingvessels or trucks for transportingforest products outside the ForestManagement Unit have licenses

issued by Ministry of Transportationfor the Company and for each vesselor truck it operates.

Valid (year and vehicle type, load capacity) registrationLicense, and documentation stating it is a company owned/contractor vessel or truck to be inspected.

6.3.2 Organizations operatingtrucks and loaders within the ForestManagement Unit have licensesissued by Ministry of Forestry for thatequipment.

Valid License (year and vehicle type, load capacity), anddocumentation stating it is a company owned /contractorvessel or truck available at office and inspected.

6.3.3 Organizations transportingwood products out of a province havea PKAPT (Registered Inter-islandWood Trader Registration Number)issued by the Ministry of Industry andTrade.

Valid (year and quantity) license with registration numberand details of transportation protocols to be inspected.

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PRINCIPLE 7. TIMBER PROCESSING AND SHIPPING

Criterion 7.1: Timber processing facilities, and organizations engaged in trading or exportof forest products comply with all legal requirements for their activities.

7.1.1 The timber processing facility

has a legal license to operate basedon its current capacity and legalBKPM that approves the investment.

Current operating license available on site for inspection.

7.1.2 The timber processing facilityhas an approved Industrial RawMaterial Requirement Plan (RPBBI).

Current plan available on site for inspection and should bereviewed to ensure legal sources of wood are identified.Installed capacity and annual output of the processingfacility shall not exceed more than 30% of the licensedcapacity for any category of processed timber.

7.1.3 All organizations engaged intrading of forest products areregistered with the Ministry ofIndustry and Trade and, if exportingprocessed wood products, have aregistration number issued by theMinistry confirming its status as aRegistered Exporter for ForestProducts (ETPIK).

Current ETPIK with current registration number to beinspected.

7.1.4 All raw material received bythe wood processing facility mustoriginate from one of the followingsources: natural forest selectivefelling permit [HPH (IUPHHK pada

HA)]; industrial timber plantation [HTI(IUPHHK pada HT)]; PerumPerhutani liscenced area; land

Check SKSHH documentation, to verify that log came fromone of these sources.

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clearing associated with nationallyapproved non-forestry activities orauthorized by district governmentslocated outside the permanent stateforest zone (kawasan).

7.1.5 All logs in the log yard or logpond are accompanied by valid logtransportation documents, and theinformation within these documentscorresponds to the physicalcharacteristics of each log.

Audited logs must match their description in the DHHattachment to the SKSHH on file in the log pond or logyard. In particular, alphanumeric codes of each samplelog must match exactly the code found in the DHH. If thelog originates from a HPH, it must also match the way it isdescribed in the DHH in terms of species, diameter (within5 cm of error), and length (within 10 cm of error).

Criterion 7.2: Organizations engaged in shipping of forest products for export candemonstrate their compliance with government regulations.

7.2.1 Each shipping company andits vessels are registered with theMinistry of Transportation (MoT)

Registration documents to be inspected for validity (signedby MoT and current) plus that they relate to the actual

company and vessel.

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