The “Village Forest” is a right given to a village government to manage certain areas of forest around the village. This study discusses the difference between forest utilization license and forest management rights according to Indonesia’s statutory laws and goes on to examine their workings and implication for “Village forest” management. The study includes a content analysis of the 28 forest resources-related statutory laws; household surveys of de jure property right in three villages; spatial analysis of changing land cover between 2000 and 2015 using satellite images and official data. This study finds some contradictions in framing forest definitions; ambiguity in the delineation of forest area; under-regulation of substantial allocations of forests to private companies; and under-utilized potential for recognizing community-based agroforests. We trace the problems of “Village Forest” management in three villages in Berau, East Kalimantan where there are varying gaps between de jure provisions and de facto rights in managing forests. In these villages, community perceptions of customary entitlements interact with their understandings and experiences of the official classifications in a context where the state has granted substantial concessions to private companies for logging and has at times recognized a “Village Forest”. This study concludes that promoting a local rule in favor of communities would increase the consistency between de jure and de facto bundles of rights and has the potential to contribute to sustainable forest management, particularly “Village Forests”.