As the morning sun pierces through the dense foliage, the rustle of Kalimantan’s forest breaks the silence. The chirping of birds and the whispering breeze create a harmony of nature—a sound that’s becoming increasingly rare amidst the march of development invading our forests.
As one of the world’s largest mega-biodiversity countries, Indonesia is home to thousands of plant and animal species. But like a double-edged sword, this rich biodiversity is under serious threat from excessive human exploitation.
“Indonesia is a paradise of biodiversity,” said Rheza Maulana, a conservationist from NatGeo Indonesia. He delivered this statement at the Bumi Forum, hosted by the KEHATI Foundation and National Geographic Indonesia on December 5. “But this paradise is now under siege from deforestation, climate change, and poaching. As a result, the risk of population decline and extinction in the wild is growing,” he added.
According to a report by MADANI Berkelanjutan, between July and August 2024 alone, 200,000 hectares of Indonesia’s forests burned. Meanwhile, the Central Statistics Agency (BPS) recorded deforestation of 7.7 million hectares over the past decade. What was once a vast green fortress has now turned into barren land, palm plantations, or mining sites.
Professor Satyawan Pudyatmoko from the Ministry of Environment and Forestry emphasized during the forum, “The loss of biodiversity poses a real threat to human health and the ecosystem services we depend on. Today, about 1 million species of plants and animals are at risk of extinction.” One such example is the orangutan—an iconic symbol of tropical ecosystems—now rapidly losing its habitat due to forest conversion.
But the threat doesn’t just come from environmental degradation. Many policies unintentionally create perverse incentives—policy-driven motivations that ironically accelerate environmental destruction.
Jeffrey A. McNeely, a veteran conservationist with over 30 years of experience, highlighted in his book Economics and Biological Diversity (1988) the importance of designing economic incentive policies. The core purpose of such incentives is to steer both communities and governments toward protecting biodiversity.
The Role of Fiscal Policy
To safeguard biodiversity, governments can provide economic incentives in both direct and indirect forms. Direct incentives refer to tangible support such as cash or goods aimed at specific goals—like improving the management of protected areas.
On the other hand, indirect incentives don’t involve direct financial transfers. Instead, they may come in the form of fiscal, social, or resource-based policy support aimed at encouraging conservation efforts.
Fiscal policy, in particular, plays a crucial role in this endeavor. As McNeely (1988) argued, economic tools like tax incentives can help root conservation efforts into mainstream development.
For example, the government can offer tax exemptions to companies that engage in reforestation near protected areas. Similarly, indigenous communities that sustainably manage forests could be granted special incentives.
Currently, Indonesia has introduced several fiscal policies that support conservation—especially through income tax (PPh), value-added tax (VAT), and import duties.
Through Government Regulation No. 78/2019, the government offers tax allowances for investments in the forestry sector. These include a 30% net income reduction based on investment value, accelerated depreciation and amortization, and extended loss carry-forward periods.
Next, Minister of Finance Regulation No. 198/PMK.010/2019 grants import duty exemptions for goods used in nature conservation. It also exempts VAT and luxury goods tax (PPnBM) on such imports. In addition, PMK No. 219/PMK.011/2012 allows companies to deduct reforestation reserves from their taxable income.
Most recently, Government Regulation No. 49/2022 exempts VAT on the import of seeds and/or seedlings for agriculture, plantations, forestry, livestock, or fisheries—relieving business costs and providing strong incentives for land productivity.
However, these fiscal measures still require better oversight and effective implementation. To truly empower local communities in conservation efforts, indirect fiscal incentives could be a key bridge between economic interests and environmental protection.
Realising a Biodiversity-Based Economy
In the Indonesian context, a biodiversity-based economy can be advanced through several innovative approaches:
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Developing Ecotourism
Villages near conservation areas can be transformed into ecotourism destinations that showcase local biodiversity. This creates opportunities for locals to work as tour guides, homestay managers, or producers of eco-friendly products.
Fiscal incentives could include income tax reductions for revenue earned through ecotourism, discounted regional taxes such as hotel or restaurant taxes for ecotourism entrepreneurs, or subsidies for eco-friendly infrastructure like homestays built from local, sustainable materials.
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Community-Led Reforestation Programs
Collective reforestation initiatives can be incentivized by offering direct benefits from non-timber forest products. To ensure the success of these efforts, training on sustainable reforestation techniques is vital.
Fiscal incentives could include VAT and import duty exemptions on seeds, equipment, and technology used in reforestation, and long-term tax deductions for income generated from reforested areas.
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Supporting Conservation-Oriented Enterprises
The government can back micro, small, and medium enterprises (MSMEs) that focus on eco-friendly products, such as sustainable crafts or organic goods. These MSMEs could be granted tax exemptions as recognition for contributing to environmental preservation.
While promising, the biggest challenge lies in ensuring these incentives reach the right beneficiaries. As McNeely (1988, p. 71) noted, “Tax incentives are seldom very useful for small farmers who operate largely outside of the tax system.” This calls for more inclusive and data-driven policies that identify and support key groups.
Better coordination is needed across ministries—particularly Finance, Agriculture, and Environment—to align data on small farmers, landowners, and communities involved in conservation, ensuring they benefit from the envisioned circular economy.
Furthermore, robust monitoring and evaluation systems must be in place to prevent misuse and ensure that incentives adapt to the people’s needs. This includes collaborating with independent bodies, academics, and local communities that understand on-the-ground realities. Periodic evaluations are also essential to assess how much these incentives are actually contributing to biodiversity conservation and community welfare.
A Shared Responsibility
Indonesia’s forests are an irreplaceable legacy that must be protected. With forest cover shrinking from 193 million hectares in 1950 to just 94.1 million hectares in 2019, the alarm has long been ringing. The time to act is now.
This responsibility isn’t just about government or fiscal policy—it’s about all of us. Every individual and every community must be involved in protecting our forests.
There’s no denying that fiscal policies—tax incentives, subsidies, and financial support—are powerful tools. But without collective participation, they will fall short. Awareness of the importance of forest conservation must be instilled across society—from public officials and civil servants to business players and families.
We also face the massive consequences of our own actions—namely, climate change. Indonesia’s tropical forests, among the largest carbon sinks on Earth, are losing their function due to unregulated land conversion. If we don’t act swiftly, the damage will be irreversible.
The destruction of habitats is only the beginning. Human lives will be affected too. Natural disasters, land degradation, and water scarcity are already manifesting in many parts of the world due to our poor environmental stewardship.
What we need now is collective action—real action driven by a shared sense of ownership and responsibility to protect the planet. From reforestation efforts to supporting conservation-based tourism, even something as simple as putting trash in its place can make a difference.
So let’s look to the future with a commitment to keep our forests alive—the birds singing, the trees standing tall, and the wild flora and fauna witnessing our journey toward sustainability.
Because in the end, protecting the forest is not just about nature. It’s about us.
