Geographic Indications for Javanese Teak: A constitutional change

The central issue addressed in this paper is whether geographic indication (GI) can be applied as a tool to encourage some furniture industries and teak producers to take collective action to improve teak product quality and increase global market competitiveness. This paper explores the possibility of implementing GI on teak as a means to improve local community rights to manage teak resources, Perum Perhutani revenues and the perception of teak wood products on national and international markets, as well as employment in the furniture industry. The paper also discusses the institutional arrangement necessary to enable GI implementation on teak. After the 1998 financial crisis, Javanese furniture industries experienced a boom, but illegal logging in state forests surged as well. Unfortunately this development was disconnected from forest resources capacities. Stakeholders made a living from bad practices and misuse of forest resources. Furniture was rejected because of its bad quality, and wood was wasted. Instead of producing high-quality teak products, Java turned to mass production of cheap furniture for national and international markets. As a result wood supply was shrinking, putting many furniture enterprises and their hundreds of thousands of employees in jeopardy. Indonesian furniture is getting a bad reputation on the international market. Indonesians by culture have the perception that teak wood is something special, and on the world market teak is the best-known tropical species. In other good news, local community enthusiasm for planting teak is growing. Building on this we expect that GI to help maintain a common interest among stakeholders. GI designation is a sign that goods have a specific geographic origin and possess qualities or have a reputation because of that place of origin and the knowledge of local communities. Most commonly, a GI consists of the name of the place of origin of the goods. Agricultural products typically have qualities that derive from their place of production and are influenced by specific local factors, such as climate and soil.