A research intended to analyze effectiveness of partnership between wood-processing industry and communities for supporting sustainable development of forest plantations management (Kibarhut) in Java Island. The research was conducted in 3 locations (Sukaraja, Bawang, and Krucil) on April-October 2008. Up to 2008, 3 industries (INPAK) had been planted 14,537.12 ha of Kibarhut in 4 provinces of Java Island. Partnership of Kibarhut was carried out with land owners (Type 1 and 2) and the proprietors of state property (Type 3), using non-formal (Type 1) and formal contracts (Type 2 and 3). Partnership, as a form of agency relationships, were formally enforced based upon written clausuls on contracts of Kibarhut, as well as involvement of informal institutions (elite figures of the village). The study resulted that Kibarhut had financial feasibility for all actors involved, and competitive and comparative advantages. However, the nonformal contract had very high opportunistic behavior and moral hazard risks therefore had possibility to disturb its continuation. The study concluded that the formal contracts (Type 2 dan 3) did not only generate positive incentives for the actors but also had enforceable contract based upon their initial commitment, therefore the formal contracts had possibility to support sustainable development of Kibarhut in Java Island.