The Sustainable District Forum (LTKL) Ecosystem Creates a Blueprint for Sustainable Jurisdictional Transformation to Achieve Sustainable Economic Targets

Jakarta, November 23, 2023 – The Sustainable District Forum (Lingkar Temu Kabupaten Lestari, or LTKL) underscored the importance of collective action among stakeholders in realizing sustainable development focused on environmental protection and enhancing community well- being. To accomplish this, nine member districts of LTKL, spanning six provinces, position themselves as a transitional bridge for sustainable development through nature-based innovations for strategic commodities. This model involves a shift from monoculture plantations like palm oil to various nature-based commodities such as coffee, cocoa, coconut, bamboo, and agroforestry byproducts. These initiatives have a positive impact on the preservation of forests and peatlands, such as patchouli, vanilla, Borneo tallow nut, pepper, snakehead fish albumin, and gambier, as well as indigenous Indonesian forest commodities.

LTKL is a district government association that brings together stakeholders in achieving sustainable development, comprising nine districts: Aceh Tamiang, Siak, Kapuas Hulu, Musi Banyuasin, Sanggau, Sintang, Gorontalo, Sigi, and Bone Bolango. These nine districts work closely with over 70 national and local networks in a spirit of mutual participation or gotong royong to sustainably oversee their jurisdictions through collective actions involving various partners.

In the journey toward 2030, LTKL is committed to fostering a balance between conventional economic models rooted in monoculture plantations and a new nature-based economic model, including bioeconomy and restorative economy. This shift places emphasis on downstreaming value-added products derived from nature and biodiversity, managed collectively by local communities, including the youth. Hence, the development of a green portfolio and engagement with the private sector, including impact and climate investment and financing entities, as well as stakeholders in commodity supply chains, play a pivotal role in catalyzing progress in the journey towards sustainable jurisdictional transformation.

“The entire ecosystem within LTKL has created a blueprint for sustainable jurisdictional transformation to prepare for entering the global market. This reflects the joint commitment of the nine districts to protect at least 50% of our forests, peatlands, and vital ecosystems while improving the well-being of one million small farmers and local communities in our region. The blueprint comprises five essential pillars: planning, policies and regulations, multi-stakeholder governance, innovation and investment, and progress measurement, reporting, and communication to gain more support,” said H. Husni Merza, BBA, MM, Siak Deputy Regent, who is also LTKL Deputy Chairman.

He went on to say that since 2018, the verification of the “recipe” [formula], particularly concerning the preparedness of districts to face the global market, has been steadily on the rise.

From the perspective of partnership innovation, LTKL districts have successfully connected with various local, national, and global partners to assist in preparing districts to reduce deforestation rates, enhance supply chain transformation, traceability, and prepare a portfolio for nature-based downstream industrial investments. As of 2023, there are 168 multi-stakeholder partners, including the private sector, collaborating to drive the readiness of LTKL districts toward sustainable transformation. In terms of readiness measurement and monitoring, LTKL has developed and implemented a readiness monitoring system through the Regional Competitiveness Framework (Kerangka Daya Saing Daerah or KDSD), which aggregates various national and global frameworks. This framework maps a series of policies, indicators, and tools for evaluating and enhancing the competitiveness of districts within a region.

On the issue of the readiness of districts to face the global market, Ristika Putri Istanti, the Head of the LTKL Secretariat, said that given the various standards and reporting frameworks such as Landscape, SourceUp, and RSPO P&C, which encompass data related to sustainable supply chain transformation, LTKL ensures that the districts are ready to meet any standards provided with the modality of the 5-pillar “recipe” and monitoring of collective action in LTKL districts, supported by the Regional Competitiveness Framework (KDSD) and the Gotong Royong (mutual help) Roadmap.

“Together with its partners, LTKL has identified the potential and readiness of sustainable districts to meet the demands of the global market. Currently, several LTKL districts are actively preparing their investment portfolios and developing downstream industries beyond the large-scale plantation commodity model. LTKL districts are aware of significant economic opportunities through diversifying business models and increasing the share of green investments in the districts. This ensures the realization of high-quality economic growth with environmental resilience, food security, and disaster resilience, without overlooking cultural heritage,” said Ristika during a discussion held by LTKL on the sidelines of the RSPO Roundtable Conference 2023 in Jakarta on Tuesday (21/11).

She added that there is a new perspective of transformation, where, in addition to ensuring the supply for global company markets, districts have started to build value-added products, both semi- finished for industrial needs and consumer products. This is indicated by 21 sustainable investment portfolios in LTKL districts and 36 local district business entities that are transitioning to sustainable businesses, featuring 40 top products. They have secured investment commitments and funding totaling up to USD 22.7 million for various downstream ventures based on natural commodities in LTKL districts.

Nature-based Innovation

Today, the palm oil industry still plays a vital role in Indonesia’s economy and employs millions of workers. On the other hand, the economic potential of nature-based solutions such as the bio- economy and bioprospection is enormous and relevant to Indonesia’s biodiversity.

According to the United Nations Environment Programme (UNEP), by 2022, public funding sources account for 83% of the estimated USD 154 billion annual investment in nature-based solutions. According to Global Sustainable Fund Flows (Morningstar, 2022), global sustainable fund assets totaled USD 2.74 Trillion in December 2021 compared to the previous year, a 53 percent increase. These global sustainable funds include open-ended and exchange-traded funds with sustainable investment objectives and use ESG criteria in their investment decisions.

Meanwhile, based on a research report from the CSIS Center for Strategic and International Studies in 2022 on Green Economy in Indonesia’s Vision 2045, it is projected that the GDP opportunity from the green economy, including through green investment, could reach 20 percent of the state budget or 612 trillion rupiah. Therefore, if Indonesia fails to take advantage of this economic opportunity, it has the potential to lose trillions of rupiah worth of growth and prosperity.

Therefore, there is a need to bridge the gap between implementing sustainable palm oil production and the gradual shift towards nature-based innovations—all within a collaborative framework to reduce deforestation.

According to Rizal Algamar, Tropical Forest Alliance Director for Southeast Asia, “Funding for nature-based innovation is one of the critical elements to ease the transition of commodity- producing regions towards sustainable development. Companies and investors see potential synergies between sustainable palm oil and nature-based innovation to drive prosperous jurisdictions with healthy nature.”

Algamar continued that cooperation between policymakers, companies, investors, smallholders/independent farmers, and civil society is critical to achieving equitable and inclusive sustainable palm oil. The joint efforts of these parties are essential to addressing the climate crisis and reversing the trend of biodiversity decline.

Current Developments

In advancing regency readiness, members participate in a regency mentoring program following the blueprint for sustainable jurisdiction transformation. This mentoring program includes a systematic process to enable farmers to manage land sustainably through collective actions with appropriate partners.

One ongoing mentoring program ensures the certification and connectivity of independent farmers with traceability mechanisms for various commodities. On the other hand, the Indonesian Government is taking various measures to control the rate of deforestation due to land conversion. One such measure is the issuance of the National Action Plan for Sustainable Palm Oil Plantations (RAN KSB), followed by the implementation of sustainable palm oil regulations at the regency level, such as in Sintang and Aceh Tamiang. This plan includes several key components, namely strengthening oil palm plantation data, enhancing farmer capacity, promoting sustainable environmental management, resolving land conflicts, expediting the Indonesian Sustainable Palm Oil (ISPO) certification process, and improving market access.

Beyond the palm oil commodity, the readiness of natural commodity value chains is also being prepared, ensuring that the portfolio aligns with national policy directions and planning.

“In terms of national planning and policy, the RPJPN 2024-2045 policy direction has been formulated, namely the development of innovation and research-based industries, especially to promote the blue economy, bioeconomy, and bioprospection. The government has now detailed plans to use this approach, including developing new innovation-based economic sectors and developing high value-added green industries such as food biochemistry, herbs, and nutrition. This is mentioned in the RPJPN 2025 – 2045 development document as one of the new economic transformation strategies, for which we need to make momentum together so that Indonesia’s 20- year plan can be realized through a sustainable economy,” said Dr. Ir. Musdhalifah Machmud, M.T., from the Coordinating Ministry for Economic Affairs of Indonesia.

“The government supports all efforts to achieve a sustainable economy, among others, through promoting sustainable practices in the plantation industry on a multicommodity basis, both palm oil, cocoa, coffee, and rubber, for a balance of social, economic and environmental interests that simultaneously need to innovate economic models outside of plantation commodities that can support forest conservation and are locally based,” she added.

To support the sustainable practices initiated by the Government, LTKL employs a multi- stakeholder governance strategy at the regency level. This collaboration strategy among stakeholders is implemented to accelerate the achievement of regional development targets in line with sustainable policies and planning. Involving collective actions between local governments, companies, NGOs, academics, farmer groups, researchers, donors, and philanthropists will be continuously rolled out.

Several member regencies have established multi-stakeholder platforms serving as partnership centers, data and information centers, as well as investment centers for sustainable development, including sustainable agriculture. Collaboration across the five pillars of this “recipe” is not limited to the nine regency members of LTKL alone. By 2026, it is targeted that the sustainable jurisdiction blueprint can be replicated in another 100 regencies in Indonesia, aiming to become a model for regency economic management across the entire country by 2030.

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About LTKL

Founded in 2017, the Sustainable District Forum (Lingkar Temu Kabupaten Lestari, or LTKL), a district government association, was formed and overseen by various regency administrations as part of the Regency Administrations Association (APKASI) caucus. Its objective is to realize a sustainable economic vision that upholds environmental preservation and enhances community well-being in the spirit of mutual participation, or gotong royong, involving multiple stakeholders. LTKL is committed to supporting the implementation of sustainable development at the district

level, contributing to national priorities by protecting environmental functions, and improving the welfare of communities within the administrative areas of its member districts following national targets.

Attachment and Reference:

Kesiapan Kabupaten dalam Menyambut Pasar Global (District Preparedness for Global Market Engagement
Global Market District Readiness
Resep Ekonomi Lestari (Guide to Sustainable Economic Development)

Media Contact

Zulyani Evi | Communication Coordinator Sekretariat LTKL
+62 812-2608-1282
zulyani.evi@kabupatenlestari.org

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