Terms of Reference: Consultant for a Rattan Business Feasibility Assessment in Hutan Harapan
Hutan Harapan is an ecosystem restoration concession (ERC) covering 98,000 hectares of formerly commercially logged lowland tropical forest in central-south Sumatra, Indonesia. Hutan Harapan is rich in biodiversity and an important habitat for 26 endangered and critically endangered species. Hutan Harapan is also important for 228 Batin Sembilan families who live in and depend on the forest for small scale swidden agriculture, gathering non-timber forest products (NTFPs), rubber tapping and hunting. In addition, approximately 14,158 people live in six villages that are located within 10 km of the concession boundary. They interact with the forest through gathering NTFPs or are dependent on it for its ecosystem services.
The forest restoration license issued by the Indonesian government allows the concession holder, a company called PT. REKI, which was formed by a consortium of three NGOs, (Burung Indonesia, Birdlife International and the Royal Society for the Protection of Birds (RSPB), to manage and earn revenue from the Hutan Harapan through the sustainable harvesting of NTFPs, ecosystem services, eco-tourism and other non-exploitative resources. The concession holder has a responsibility to support the livelihoods of the indigenous people (Batin Sembilan) living in the concession area. Nevertheless, the options for a substantial return on investment, through direct market mechanisms and within realistic time scales are relatively few and require significant levels of innovation and entrepreneurship.
A potential commodity to be developed in HH is rattan. Rattan is used to make goods such as furniture for national and international markets. Rattans are generally lightweight, durable and to a certain extent, flexible. Because of its flexibility and its long stems of great strength, rattan is a primary binding material. In its unsplit form, it is used to provide structural support in furniture and construction. Once split, rattan has a great variety of uses, including weaving into mats and baskets of all sizes and shapes and to make furniture.
Rattan grows in many parts of Hutan Harapan, often deep in the forest and therefore it not easily located. It is however still collected by the indigenous Batin Sembilan forest people who then sell it to middlemen. In 2015, Hutan Harapan piloted a rattan processing project during which rattan was bought from the Batin Sembilan, processed and shipped to Cirebon in central Java. Cirebon is the centre for rattan processing in Indonesia. Although the Batin Sembilan received a higher price for their rattan, HH operated at a loss because the market price for rattan was so low. The pilot only lasted 6 months when seed funding came to an end. Although not financially viable at that time due to low volumes and low prices, this experience allowed HH to develop its processing and marketing skills while building trust with the Batin Sembilan.
Given the limited information and analysis of the market potential of rattan in HH, PT REKI would like to conduct an assessment to gain a more comprehensive and in-depth understanding. The assessment will be used to guide its decisions on whether rattan is a viable commodity to be developed in the current market context.
2. Objectives of the assignment
To determine if rattan is a good business opportunity for PT REKI.
3. Scope of the assignment
a. Conduct a financial and risk analysis on the business opportunity. This includes determining capital expenditure requirements, creating financial projections based on different scenarios, and a SWOT analysis.
b. Conduct a technical feasibility assessment. This includes determining the potential volume of supply that could be obtained from the concession, assessing management capacity and other implementation requirements.
c. Conduct a market analysis to determine potential buyers and partners, and the appropriate business model for PT REKI.
d. Provide recommendations to PT REKI for the next steps.
4. Output and Deliverables:
The consultant is expected to deliver the following
a. A report and a presentation on the rattan business opportunity assessment. This should include, but is not limited to, information on capital expenditure requirements, financial projections based on different scenarios, SWOT analysis, and potential supply volume from the concession, implementation requirements, and a market analysis.
b. Recommendations to PT REKI on whether the rattan opportunity is viable, and if yes, provide an outline of the possible business model.
- Master’s degree in the relevant field of expertise (Forestry Management, Business ) with 10years of relevant experience
- Indonesian National with good knowledge of and the market potential for rattan in Indonesia.
- Ability to prepare clear and concise reports and to analyses and interpret source information and data.
- Track record in providing high quality consultancy services or forest based business advice is an advantage.
6. Duration and phasing
The final report is expected to be submitted by 15 October 2017. The table below shows the main deliverables and respective deadlines:
Technical and financial proposals
submitted by consultants describing their understanding of the assignment, their capacity
to conduct the study, proposed
methodology, work plan and budget
August 10 2017
A contract signed between PT REKI and the
August 20 2017
An inception report submitted by the
consultants and approved by PT REKI that
specify study questions, methodology, tools,
work plan with task assignment and
timelines, and report outlines
August 28 2017
Conduct interviews, field visit (5 days in field, 2 days travel)
2nd wk Sept 2017
Draft report and presentation
A draft report is submitted to PT REKI (in English)
30 Sept 2017
Finalization of the
A final report is submitted in English addressing all research questions as indicated in the TORs and approved inception report
15 Oct 2017