Forests Sourcebook - HCV Resource Network

commitment, an enabling environment has several
dimensions, both national and international. Some of the
factors may be outside the forest sector’s control, yet they
need to be addressed to promote investment in SFM. Key
enabling actions include the following:
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Reducing domestic policy and institutional problems
that restrain or discourage private sector engagement in
SFM—for example, avoiding excessive and inappropriate
regulations and bureaucracy that contribute to unduly
high costs of registering companies and undertaking
management.
Seeking ministerial commitment for legislative and other
policy reforms that will help to contain illegal logging
and create a level playing field for responsible companies
that are willing to invest in SFM (see chapter 5, Improving
Forest Governance, and associated notes). The willingness
of high-level political leaders and more responsible
companies to engage in supporting such initiatives as
the European Union– and World Bank-supported Forest
Law Enforcement and Governance Program has been
encouraging.
Facilitating political stability necessary to assure investors.
Assisting governments to engage private sector companies
and local communities in dialogue regarding
reforming timber allocation processes, achieving equitable
revenue sharing, taxation and revenue collection
systems, encouraging value added processing, and ensuring
a secure supply of raw material.
Assisting governments to develop transparent timber
allocation procedures and concession policies that will
help to ensure a secure supply of raw material for potential
client companies, thus reducing the perception of
risk for investors. Lack of security threatens the continuity
of manufacturing operations.
Ensuring stable and clear policies, institutions, and operating
environments, including those related to tenure
and concessions.
Developing instruments or drawing upon existing
instruments to hedge against excessive market fluctuations
and seek mechanisms for better prices in international
markets, and seeking ways to deter major markets
from buying low-priced supplies from unsustainable
sources that unfairly undermine responsible suppliers
seeking to achieve SFM (see note 3.2, Forest Certification
Systems).
Ensuring relevant training and skills development and
research for the forestry sector.
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Helping to expand the profit base of SFM investments
through environmental services (see note 2.3, Small and
Medium Enterprises).
Potential for relationships between companies and
communities in the forest sector. With time and effort,
some of the existing relationships between companies and
communities could mature from superficial deals into real
partnerships (Mayers and Vermeulen 2002; Howard et al. 2005;
Nawir and Santoso 2005; Vermeulen and Walubengo 2006).
These cover the full range of forest goods and services and a
wide variety of partnership models, including the following:
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In outgrower schemes and sales or purchase contracts,
small-scale farmers grow trees or NTFPs on their own
plots with support from the company (such as technical
advice, seed stock, fertilizers, pesticides, tools, harvesting)
and with guaranteed purchase, sometimes at guaranteed
prices.
In joint ventures, companies and communities make
capital coinvestments in goods or service projects, possibly
sharing management. Often the community’s capital
investment is land or labor. In simpler lease models, the
company pays a fee for use rights on community land
over a fixed period and the community plays no part in
management.
In multiple land-use arrangements on land under company
freehold or leasehold, communities are granted
access rights and management rights to noncore goods
and services, typically NTFPs in forest areas managed
primarily for timber production.
In social responsibility contracts, the forestry company
negotiates a social license to operate within environmental
and cultural limits set by the community; in return,
the company receives the benefit of local investments,
usually infrastructural. Globally, SMEs represent one of
the faster growing industrial sectors in the world. Forestbased
SMEs (SMFEs) account for 80–90 percent of all the
forest enterprises in many countries (box 2.2). For many
countries, more than 50 percent of total forest-related
employment is in SMFEs, with approximately 20 million
people employed worldwide. SMFEs generate a gross
value added of about US$130 billion per year (Macqueen
and others 2006). Greater awareness of the potential of
SMFEs to contribute to essential subsistence needs and to
poverty alleviation and economic growth is needed (see
note 2.2, Small and Medium Enterprises). Such awareness
should inform both forest policies and policies regarding
market access, credit, and other relevant macro policies.
66 CHAPTER 2: ENGAGING THE PRIVATE SECTOR IN FOREST SECTOR DEVELOPMENT