This research focuses on the impact of property rights' insecurity that drives tenure insecurity as well deforestation and forest degradation in the limited production forest (hutan produksi terbatas/HPT) in Tanjung Jabung Barat district, Jambi Province, Indonesia. Deforestation is considered as a risk management strategy; tenure insecurity reduces the present value of forest and fosters forest conversion into agricultural lands-in this case convertion into oil palm and rubber monoculture and rubber agroforest plantation. Moreover, deforestation is the consequence of strategic interactions between the local community (which has a claim over land and forest) with the migrant community (which is hungry for land to gain capital increment). This strategic interaction has driven the formulation of an informal land market institution and effected the local tenure arrangement that has significantly contributed to deforestation over the study site area. The current situation of forest land encroachment is the result of the lack of forest governance at the site level in which the state forest zone is considered more as an open access area or no-man's land. The research tried to get a better understanding on how the informal land market institution had been formulated at the study site area