Thumbnail Image

Promoting legality within the private forest sector: obstacles and incentives to formalization

Year of publication 2021

Place of publication Rome, Italy ;

Pages 15 p.

Author FAO and EFI

Publisher FAO ;

Product type Policy brief

Edition 1

Synopsis (short abstract) Informal forest sector micro, small and medium-sized enterprises (MSMEs) are often equated with being “illegal” when their mode of production, source of raw materials, or even their legal existence does not conform with their country’s regulatory requirements. This characterization fails to recognize the complex circumstances many MSMEs faces, especially in countries where the requirements for legality compliance and achieving formal status are not clear. This situation raises a question frequently faced by practitioners who work with forest sector MSMEs – should MSMEs be encouraged to formalize to avoid being labeled as ‘illegal’? Acknowledging that MSMEs have valid reasons to either pursue or avoid formalization, this brief does not judge this question but instead argues that it is more important to ensure that MSMEs receive concrete benefits when deciding to become formalized. It is the task of practitioners, governments, and stakeholders to contribute towards the creation of an enabling environment that rewards MSMEs for formalizing. By doing that, practitioners enable MSMEs to reap the expected benefits of formal status, such as securing livelihoods and opportunities for economic growth and decent employment.

Cite this content as:

FAO and EFI. 2021. Promoting legality within the private forest sector: obstacles and incentives to formalization. Rome.

Language English

Also available in:
No results found.

Related items

Showing items related by metadata.

  • Thumbnail Image
    Article
    Increasing legality compliance amongst forest sector MSMEs: creating an enabling environment for responsible forest product trade and socio-economic recovery
    XV World Forestry Congress, 2-6 May 2022
    2022
    Also available in:
    No results found.
    Micro, small and medium-sized enterprises (MSMEs) play a critical role in meeting the growing demand for forest products worldwide, with potential to contribute to responsible supply chains that combat illegal logging while promoting economic growth. However, MSMEs have been challenged by the emergence of regulated markets requiring verified legal timber, which involve more stringent regulatory compliance and additional up-front costs. Recognizing the need to ensure MSMEs can benefit from – and are not penalized by – the responsible forest trade, the FAO-EU FLEGT Programme supported 100+ projects in 20 countries between 2016 and 2021 that sought to improve MSME capacity to supply legal timber. These projects employed several strategies: • Increasing MSME legal compliance through capacity building, mentoring and technical assistance; • Formalizing MSMEs to achieve legal status and access to benefits such as credit, training programs, and labour protections. • Strengthening associations that represent MSMEs and provide technical and financial assistance; • Reducing the regulatory burden through the simplification of existing legal frameworks; and • Integrating MSMEs into responsible value chains by linking with buyers or manufacturers. The Programme analyzed the impacts of these projects to determine best practices for supporting MSMEs atscale. It was found that the formation of associations was the most impactful intervention for helping MSMEs to formalize and produce legal timber. Capacity-building efforts also must integrate business skill development with training on legality compliance. The paper discusses options for further deployment of these strategies at scale, emphasizing the importance of building an “ecosystem of support” by forming a variety of mutually supporting partnerships. This will be central to assisting MSMEs negatively impacted by COVID-19 imposed lockdowns and economic slowdown. Keywords: Illegal logging, timber trade, small and medium-sized enterprises, forest governance, responsible markets ID:3486686
  • Thumbnail Image
    Book (series)
    Enabling micro, small and medium-sized enterprises to participate in legal timber production and trade
    Transformational changes generated by the FAO-EU FLEGT Programme
    2022
    Also available in:
    No results found.
    Micro, small and medium-sized enterprises (MSMEs) play a critical role in meeting the growing demand for forest products worldwide, with potential to contribute to responsible supply chains that combat illegal logging while promoting economic growth. However, a growing number of countries are adopting demand-side control measures that require proof of legality of forest products. Forest sector MSMEs will require significant support – and changes to the types of support they receive – to fulfil and even take advantage of these new and emerging market requirements and related opportunities. This paper draws from 110 initiatives in 20 countries supported by the FAO-EU Forest Law Enforcement, Governance and Trade (FLEGT) Programme between 2016 and 2022 and seeks to provide examples of how to support forest sector MSMEs cost-effectively and at scale to integrate them into domestic and international legal timber value chains. The initiatives discussed in this paper offer a wealth of experience and knowledge, which can be capitalized upon to boost forest-dependent livelihoods and promote both social equity and sustainability within timber supply chains. Implementing a portfolio of these strategies in a comprehensive support package generate “transformational changes” that help realize the potential of MSMEs to move past traditional business-as-usual modes of operation towards sustainable growth and more inclusive, resilient economies.
  • Thumbnail Image
    Document
    Supporting sustainability and growth in the Mekong Region’s micro, small and medium timber processing enterprises 2022
    Also available in:
    No results found.
    The European Forest Institute (EFI), with funding from the Swedish International Development Cooperation Agency (Sida), has been testing approaches to enable wood-based micro, small and medium enterprises (MSMEs) in the Mekong region to operate legally and sustainably since 2015. These MSMEs play a key role in local economies and generate significant livelihood and employment opportunities in formal and informal sectors. MSMEs can also be part of the solution to reducing deforestation and forest degradation. This can be achieved if they are encouraged to adopt legal and sustainable sourcing and processing practices through specialised trainings, and if regulatory frameworks are paying special attention to MSMEs. To this end, EFI tested solutions to challenges MSMEs are facing in six pilot interventions in Laos, Myanmar, Thailand and Vietnam. Through the pilots, EFI worked closely with more than 100 MSMEs in the 4 Mekong countries. The poster introduces and shares lessons learnt from the pilots. Keywords: Economic Development, Gender, Value chain, Decent employment, Illegal trade ID: 3488081
Show more

Users also downloaded

Showing related downloaded files

No results found.