Ecosystem Restoration Concession (ERC) is an innovative solution for managing natural forests in Indonesia that integrates forest utilization, environmental services, biodiversity protection and improving the livelihoods of local people. The main aim of ERC is to restore the degraded forest to reach an ecosystem equilibirum. Harapan Rainforest is the first ecosystem restoration concession in Indonesia and it is a site rich with biodiversity. The field implementation process for ERC, however, faces many challenges, and one of the biggest is encroachment. Based on an analysis of a landsat satellite image 7 ETM and Envisat.asat images, from 2005-2012 the total area cleared due to encroachment was ±18,362 ha with an average cleared area as large as 2,623 ha/year. If encroachment continues to occur and cannot be reduced or stopped completely, an area totaling 98,555 ha is predicted to be lost within the next 10 years. This study describes what the roots of the conflicts are, the modus operandi, the connection between encroachers and supporters, and an appropriate resolution strategy. The encroachment problems are complex and involve the local elites, migrants and speculators. The encroachers are now getting stronger and acquiring legitimacy by gaining support from various mass organizations and government programmes. The decision to implement an encroachment strategy can not be undertaken in a universally agreedupon or repressive way. The encroachment conflict resolution strategies should use a collaborative management approach and mechanisms which are accepted by relevant parties, resolve the problems permanently, avoid human rights violations, apply international standards and create harmonious relationships. Collaborative Conflict Management is participatory and long process that should implement all steps to create new social contract on natural resources and needs patience and a legitimate process.