Circular Letter of the Minister of Forestry Number SE.1/MENHUT/SETJEN/KUM.04/2/2026 Clarifying Subsistence Limits and Providing for Criminal Sanctions for Unauthorized Commercial Forest Utilization

Introduction

On February 5, 2026, the Minister of Forestry issued the Circular Letter of the Minister of Forestry Number SE.1/MENHUT/SETJEN/KUM.04/2/2026 on the Implementation of the Constitutional Court Decision in Case Number 181/PUU-XXII/2024 dated October 16, 2025 ("Circular Letter 1/2026"). Circular Letter 1/2026 governs the application of sanction exemptions for communities residing within forest areas by distinguishing between subsistence activities and commercial activities.

The Minister of Forestry issued Circular Letter 1/2026 following the Constitutional Court’s decision declaring that the sanction provisions in Article 17 paragraph (2) letter b and Article 110B paragraph (1) of the Annex to Law Number 6 of 2023 on Job Creation lack binding legal force insofar as they are not interpreted to exempt communities that have lived for generations within forest areas and do not engage in commercial activities. Through Circular Letter 1/2026, the Minister of Forestry delineates the boundary between subsistence and commercial activities to ensure alignment with the Constitutional Court’s ruling while safeguarding the functions of forest areas.

Key Provisions

Criteria for Exemption from Business Licensing and Supply Chain Restrictions

Circular Letter 1/2026 limits the categories of parties eligible for exemption from the obligation to hold a business license. Under Letter D number 3 letter b, communities utilizing forest areas for plantation activities without a license from the central government may only do so to meet daily living needs (subsistence) and not for commercial purposes. Furthermore, Letter D number 3 letter f stipulates that activities are categorized as subsistence utilization (and therefore exempt from licensing) if they:

1. are conducted solely to meet the living needs of the individual and/or family;

2. are on a small activity scale;

3. use simple tools;

4. do not involve a distribution chain or other parties as buyers, collectors, or financiers;

5. are not conducted repetitively and professionally; and

6. the yields are consumed directly by the individuals conducting the activity.

Land Tenure Limitations and Administrative Recording Requirements

Circular Letter 1/2026 sets forth the requirements for communities eligible for sanction exemptions, namely that they have resided for at least 3 (three) consecutive generations and/or at least 20 (twenty) consecutive years within a forest area and manage a maximum land area of 5 (five) hectares to prevent overexploitation. In addition, Letter D number 3 letter d requires such communities to be recorded with the central and/or regional government through submission by the community to the Governor and/or Regent/Mayor or through inventory and verification conducted by the relevant authorities in accordance with statutory provisions.

Sanctions for Unauthorized Commercial Utilization

Circular Letter 1/2026 stipulates that any party conducting plantation activities within a forest area for commercial purposes must hold an approval and/or license from the central government. Under Letter D number 3 letter g, parties conducting commercial activities without such approval or license are subject to criminal and administrative sanctions pursuant to applicable statutory provisions.

Transitional Provisions

Circular Letter 1/2026 regulates the settlement of plantation activities for commercial interests previously conducted by the community. Under Letter D number 3 letter c, communities may be exempted from criminal and administrative sanctions if the activities have been carried out since prior to November 2, 2020, land tenure has been proven for at least 5 (five) consecutive years, and the land area does not exceed 5 (five) hectares. If all such requirements are met, the settlement shall be carried out through the forest area settlement mechanism in accordance with applicable provisions.

Closing

Circular Letter 1/2026 implements the Constitutional Court Decision by stipulating that exemptions from business licensing obligations and legal sanctions apply only to communities that have resided for at least 3 (three) consecutive generations and/or 20 (twenty) consecutive years within forest areas, manage a maximum land area of 5 (five) hectares, and conduct activities solely for subsistence purposes. Activities are not included in the subsistence category if they involve buyers, collectors, or financiers, are conducted repetitively and professionally, or are operated on a scale exceeding simple needs. Any plantation activity for commercial purposes within a forest area must hold an approval and/or license from the central government, and violations of such obligation are subject to criminal and administrative sanctions pursuant to applicable statutory provisions. For commercial activities that have been ongoing since before November 2, 2020, sanction exemptions only apply if land tenure is proven for at least 5 (five) consecutive years and the area does not exceed 5 (five) hectares, with settlement conducted through the forest area settlement mechanism.