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Small-scale timber plantations have increasingly become an important source of wood supply in Indonesia. One important government-driven community tree-growing strategy inside state forests was initiated under the Community Forestry Scheme (CFS). The paper explores the feasibility of this strategy as the basis for developing commercially competitive management. The primary challenge to feasibility had been the high dependency of local communities on land inside state forest for cultivating food and cash crops. Feasibility was also determined by low current standing stocks of planted timber, as a result of illegal logging and forest encroachment under open access conditions due to the delay in involving communities. Ways forward include easing the bureaucratic procedures to hand over exclusive rights in state forest management to local communities. In order to maintain long-term community commitments to the tree-growing programme, it is important to have secured timber benefits, improving community business skills, as well as ensuring cost-effective government investment.