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Indonesia has instituted both the internationally recognized Forest Stewardship Council (FSC) certification and a national certification scheme known as Lembaga Ekolabel Indonesia (LEI, Indonesian Ecolabelling Institute). LEI was developed by strong government initiatives that included relevant parties. This article explores the social and economic impact of a national certification scheme in select villages, and it analyzes the programs' potential for further development. Field observations, interviews and secondary data collection were conducted in December 2005, October 2006 and March 2010. A key finding of this research is that a sustainable approach to forest certification and the management of certified community forests can only be achieved through community participation. In particular, sustainability is best achieved by involving local NGOs that can, in turn, support existing farmers' groups that work on forest certification and management. The certification model used in the villages had shortcomings: for example, there was an imbalance between the supply of certified wood and companies' demand, a lack of public awareness regarding the value of certification and undeveloped market mechanisms to sell certified wood. However, the forest certification model could be seen as an innovative approach with great potential to benefit local communities and to ensure sustainable forest management.