The two-year moratorium, announced last May by Indonesian President Susilo Bambang Yudhoyono, was part of an agreement with Norway.
Under that agreement, Norway had committed up to $1 billion in assistance funds in 2014 if Indonesia is successful in reducing levels of deforestation and greenhouse gas emissions under REDD+, an internationally agreed mechanism for compensating countries that reduce emissions from deforestation and forest degradation.
Indonesia has the world's third-largest area of tropical forest after Brazil and the Democratic Republic of Congo. Deforestation is mostly attributed to logging for the conversion of forests to plantations for palm oil and to supply the pulp and paper industry.
While globally deforestation accounts for up to 20 percent of greenhouse gas emissions, in Indonesia that figure is up to 85 percent, making it one of the highest emitters in the world.
"The existing moratorium only suspends the issue of new forest use permits, it did not order a review of existing permits," Yuyun Indradi, forests policy adviser for Greenpeace Southeast Asia, told reporters this week, as Indonesia marks the first year of the moratorium.
Greenpeace says the ban is being undermined because the legislation and enforcement of it is weak.
"There are other glaring loopholes in the moratorium which need to be addressed if Indonesia is to honor its international commitments," said Indradi.
A Greenpeace report estimated that since the moratorium has been in place, Indonesia has lost nearly 5 million hectares of forest and peatlands out of a total 71.01 million hectares covered by the moratorium.
If Indonesia's deforestation were to continue averaging more than a million hectares annually, Greenpeace says, all of the country's forests will have been destroyed within the next 50 years.
But Agus Purnomo, a presidential special aide on climate change, told Antara news agency the Greenpeace report was misleading and the Forestry Ministry's records indicate the deforestation rate over the past few years "has drastically decreased to around 500,000 hectares annually."
In September, Yudhoyono said he would dedicate the final three years of his presidency to protect his country's rainforest.
In a related development, World Wildlife Fund and Indonesian non-governmental organization coalition Eyes on the Forest announced a Google Mapping Tool on Wednesday that shows the impact of deforestation on Indonesia's Sumatra Island.
"Our conviction is that if we empower people with the information, the forests of Sumatra cannot only be saved, but we can restore them," said Carter Roberts, WWF president and chief executive officer.