Indonesia has one of the world’s largest areas of remaining forest but also one of the world’s highest deforestation rates. Reported exports from its lucrative timber sector were worth $US6.6 billion in 2007, second only to Brazil and worth some $2 billion more than all African and Central American nations combined. But in recent years almost half of all Indonesian timber has been logged illegally at a staggering cost to the Indonesian economy and public welfare.

In this report Human Rights Watch details these costs and their human rights impacts. Using industry-standard methodology, we estimate that the Indonesian government lost an average of nearly $2 billion annually between 2003 and 2006 due to illegal logging, corruption, and mismanagement. The total includes: forest taxes and royalties never collected on illegally harvested timber; shortfalls due to massive unacknowledged subsidies to the forestry industry (including basing taxes on artificially low market price and exchange rates); and losses from tax evasion by exporters practicing a scam known as “transfer pricing.”

This report, released by Reporters Without Borders/Reporters Sans Frontiers (RSF) warns about the acts of intimidation around the world towards those who report on logging and other environmental abuse: "When journalists are exposing companies and local governments that's when the trouble begins".

Many luxury brands and fashion leaders in the U.S. and Europe are unknowingly contributing to this tragic pattern of destruction. Research shows that almost 100 fashion and luxury products companies buy their custom packaging products from Pak 2000, an affiliate of Sinar Mas Group’s Asia Pulp & Paper (APP). The Sinar Mas group is perhaps Indonesia’s biggest forest destroyer, with APP alone responsible for clearing more natural forest in Sumatra than any other company. Aggressive logging practices and continued conversion of standing forests to plantations is devastating local communities and threatening elephant, tiger, and orangutan populations.