Down to Earth No. 42, August 1999

Dayaks charged in oil palm dispute

A long-running land dispute between oil palm plantation company PT London Sumatra and indigenous Dayak landowners has resulted in large-scale military and police repression in East Kalimantan.

On May 7th mobile brigade riot police moved in to put an end to a protest by Benuaq Dayaks in Jempang sub-district, Kutai, East Kalimantan. The Benuaq villagers had staged a six-month occupation of a base-camp at Muara Nayan owned by the plantation company PT London Sumatra (Lonsum) in protest against the violation of their land rights. The protestors had shut down operations at the camp, seized heavy machinery and set fire to part of the camp, destroying two office buildings, a fertiliser store and some workers' accommodation. The police action took place at 6 am while the villagers were holding a traditional ceremony: sacred artefacts were scattered and the villagers terrorised. Many fled into the forest. Twelve people were arrested and charged, mainly with damaging company property. Staff from non-governmental organisations (NGOs) who supported the villagers were forced to leave the area at gunpoint. The security forces raided the nearby village of Perigiq, shots were fired and villagers fled into the forest to avoid the shooting. Two people from this village had earlier been abducted by eight men in civilian clothes and taken to Tenggarong police station, where they were roughly treated and threatened, then interrogated and charged. They were not allowed any legal representation.

Since May's police raid on the base camp there has been little information on the plight of the Benuaq villagers: NGOs based in the provincial capital Samarinda were forbidden to enter Jempang sub-district and villagers were reported to be too frightened to leave their homes. Some people remained in hiding in the forest. Both the villagers and NGOs staff in Samarinda have been subjected to intimidation and threats by the security forces. There have been rumours of more police raids and the head of East Kalimantan's police issued a 'shoot on sight' order if there were any further demonstrations.

PT Lonsum's foreign connections

London Sumatra was founded 90 years ago as a British company then became a subsidiary of British palm oil traders Harrison and Crossfield. They sold out in the mid-1990s and the PT Lonsum is now an Indonesian company, listed on the Jakarta stock exchange. Foreign investors include the Netherlands-based international bank, Rabobank, and Lazard Asia Investment, a Hong Kong-based investment bank, which bought a 50% stake in the company in June this year. Lazard has been brought in to restructure and manage the company's substantial debts.

The company has 54,477 hectares of plantations, half of which are oil palm, in North Sumatra, Java and Sulawesi as well as Kalimantan. It also owns rubber, tea and cacao plantations as well as fifteen processing factories. It exports 60% of its products: foreign customers include Singapore Tong Teik Pte Ltd , Anglia Oils Ltd and Lewis &Peat (August 1998).

(Dow Jones Newswire 29/6/99, DTE email appeal 7/6/99)

PT Lonsum entered the area in 1996 to develop 16,500 hectares of oil palm plantations. The Benuaq's land rights were ignored, their productive agro-forests cleared and burial sites destroyed. Representations to the company and government officials got nowhere, even when it was discovered that the company had not yet acquired the legally required permit to start its activities.

Two days after the occupation was ended, PT Lonsum resumed operations. East Kalimantan governor H Suwarna said that he would bring the two sides to the negotiation table and at the end of May a meeting was arranged between the East Kalimantan Indigenous Dayaks Association (PDKT), the local police chief, PT Lonsum representatives and district government staff. The meeting agreed that PDKT should conduct a field investigation into the dispute as soon as possible. Four of the arrested villagers were to be released, although the other eight would remain in custody.

PT Lonsum has a bad name in East Kalimantan for other reasons too: it was one of the companies accused of large scale burning and contributing to the forests fire disaster of 1997/8. Police since dropped charges against the company due to 'lack of evidence'. Lonsum has also faced action by local communities at other sites in South Sumatra and at Deli Serdang, North Sumatra.

[Sources: Statement by the Independent Union of Plantation Workers (Perbuni), April/99; Support locals against oil palm company and oppression by the authorities, Down to Earth, 7/6/99. For more information on this appeal, circulated by email in response to a request by Indonesian NGOs, contact:]

South Kalimantan Dayaks win lawsuit

Elsewhere, some progress is being made against oil companies who burn forests to clear land. In the neighbouring province of South Kalimantan, the Samihim Dayak community has won a lawsuit against seven subsidiaries of one of Indonesia's biggest conglomerates, the Salim Group. In May, the companies, all developing oil palm plantations, were found guilty of burning farming areas owned by local people during the forest fires of 1997. The Kota Baru district court ordered the seven firms to pay Rp 150 million (US $22,000) in compensation. Environmental group WALHI, who assisted the 106 Dayak plaintiffs, has won two other lawsuits against companies who burn forests. It said the seven Salim companies were only a few of the 176 firms accused by the Ministry of Forestry of involvement in the forest fires in 1997 (see DTE 35, Supplement for full list). WALHI urged the government to investigate the other companies. (Jakarta Post 1/6/99)

More oil palm more disputes

The violent approach that the authorities used to deal with the PT Lonsum dispute in East Kalimantan may be linked to the fact that the province is a target area for large-scale oil palm development. In other areas under intensive oil palm development, such as West Kalimantan, Sulawesi and parts of Sumatra, many other conflicts over land and forest destruction have been documented. Some disputes, in areas where plantations are established and palm oil processing plants have been built, concern the pollution of local water resources.

Oil palm is one of the export commodities which is being promoted by the government as an source of foreign exchange. And Indonesia's economic 'recovery programme', led by the International Monetary Fund, is encouraging the expansion of oil palm in the effort to generate enough income to service the country's colossal debts. Investment is being encouraged by a staged reduction of export taxes on palm oil in line with IMF requirements, from 60% in January this year down to a targeted 10% by the end of the year.

These policies mean vast swathes of the nation's forests being converted to oil palm. The present area of 3.2 million hectares is expected to increase at a rate of 330,000 hectares per year. The sector will be dominated by foreign players: seventy five per cent of the 650 investors applying for permits to convert forests into oil palm plantations are foreign companies. In East Kalimantan alone, the area planned for oil development is 3.5 million hectares, or around one sixth of East Kalimantan's total land area. The province is already under pressure from numerous coal mining projects including Kaltim Prima, Indonesia's biggest as well as the Kelian gold mine (both mines are operated by the UK-Australian multinational, Rio Tinto). Logging, and fires have ravaged much of the remaining forests. Respiratory diseases from smoke from the fires, drought and food shortages have hit the population hard in the past two years.

The massive expansion of oil palm plantations and the continuation of police intervention on the side of big business will only add to the suffering of the region's indigenous population and do nothing to change the perception that central government in Jakarta exists to serve the interests of companies rather than protect the rights of its citizens.

New research published by Adelaide University implies that the new laws on regional autonomy could well make things worse. "Much of the stimulus for oil palm production comes from regional governments interested in promoting local economic development and building their tax base." Local governments permitted to keep more of the revenues from local resources will be keen to develop oil palm in their areas if land remains cheap and opposition can be kept under control. What is required to balance theses business interests is strong local democracy that protects the rights of local communities a requirement that, unfortunately, has not been written in to the new laws.

(Sources: Jakarta Post 5/6/99, 24/5/99; World Rainforest Movement Bulletin 20, February 1999; Tree Planting in Indonesia: Trends, Impact and Directions, by L. Potter and J. Lee is available on the CIFOR website:

CDC: British public funding for oil palm

The CDC (formerly the Commonwealth Development Corporation), a British government-owned body which invests in private projects in developing countries, is continuing to invest in oil palm plantations in Indonesia.

The corporation has part-financed an oil palm project, Manis Mata, in West Kalimantan. The province, which has seen two outbreaks of appalling ethnic violence in the past three years, hosts many transmigration sites. It is just one part of Indonesia where indigenous peoples organisations have rejected oil palm and other monoculture plantations because they violate traditional land rights, destroy forests and reduce biodiversity.

In the past CDC has also funded a cacao plantation combined with transmigration at Ransiki in West Papua. Other projects have included a cement factory, rubber, coconut, tea and textiles as well as oil palm plantations and processing factories.

CDC recently announced a US$14.4 million investment in PT Agro Indomas, which is developing a 10,000 hectare plantation in neighbouring Central Kalimantan. The other principal investor is the Netherlands-based Rabobank also involved in PT London Sumatra. The funds will go towards completing planting and building a CPO processing plant and port facilities on the banks of the Sampit River to allow coastal tankers to ship out the product. The project was started three years ago by a Sri Lankan company, Carson Cumberhatch whose subsidiary, Agro Hope, also operates plantations in Malaysia. CDC says the plantation is situated on 'derelict grassland which had previously been cleared by the logging industry.' The corporation is currently in the process of being privatised and is hoping to attract ethical investment. Choosing to invest in oil palm projects in areas like Kalimantan, where such projects are renowned for displacing indigenous people and destroying forests, may well make this option difficult.

(Source:; DTE 41; 32 & 33; Suara Pembaruan 21/8/98)

IFC project in West Kalimantan

In 1996 another publicly funded body, the International Finance Corporation (IFC) the private lending arm of the World Bank - agreed to invest US$41 million in PT Kalimantan Sanggar Pusaka, developers of palm oil estates and processing plants in West Kalimantan. (Jakarta Post 22/11/96)

More oil palm for West Papua

Indigenous lands in West Papua have also been targeted by Jakarta for further oil palm development as part of the plan to focus new projects in "underdeveloped" eastern regions. The largest development to be announced in recent months is a vast 102,000 hectares in the Arso transmigration area near the border with Papua New Guinea. The developers, state-owned PT Perkebunan Nusantara II, will also build a crude palm oil (CPO) processing factory with a production capacity initially of 30 tons per hour, rising to 60 tons. The plant will be built on transmigration site Arso VII.

In Northern West Papua a one million hectare plot has been set aside for rice, sago and oil palm in the Biak Integrated Economic Development Zone (KAPET). Chief executive of the Zone's management board, Frans de Wanna, announced in April that PT Dato, a consortium of Malaysian and German companies would start developing the project in Nabire district after the June elections. Large scale oil palm plantations are being developed by private company PT Varita Majutama in Babo sub-district, in the mangrove-fringed Bintuni Bay area. Around 6,000 hectares of a planned 100,000 ha area have already been planted, with a further 4,000 planned this year. The development uses transmigrant labour under the PIR (nucleus estate/smallholder) system. The company recently announced plans to build a processing factory at Babo to begin operations in 2002 and said it would also build a port to ship the palm oil to Indonesian and overseas markets.

PT Varita Majutama is a subsidiary of the Jayanti Group, one of Indonesia's top three timber companies with holdings covering 2.7 million hectares. The Group already has logging concessions in West Papua which supply its large plywood mill in Maluku, as well as a sago plantation project using transmigrant labour in Bintuni Bay (See DTE 29/30: pages 10 and 20; and DTE 40:11). It also owns a fish canning plant on Biak island.

One of Indonesia's biggest oil palm and pulp developers, PT Sinar Mas, announced in April that it too would build a 60 tons-per-day CPO plant along with port facilities in Jayapura district. The company is developing 22,157 hectares of oil palm in Jayapura, of which around 13,000 hectares have been planted.

The same month, two more plantation firms announced plans to develop oil palm projects: PT Tujuh Wali-Wali is awaiting approval for a 30,000 hectare project in Lereh sub-district, near Jayapura and PT Prabu Alaska has applied for 6,000 hectares in Buruway sub-district, Fakfak.

According to the head of the provincial Forestry and Plantations office, the new projects will make West Papua the largest palm oil producer in the country.

These companies, some of which are well-known violators of community land rights in Indonesia, are even less likely to respect indigenous interests in West Papua, where the remote locations and the protection of the military work in their favour. The new investments indicate that these companies are confident about the political future of West Papua as part of Indonesia, at least as far into the future as the needs of oil palm production require. In the meantime they can profit from timber cleared for plantation development. However, unless their treatment of local communities changes, the invasion of oil palm is likely to further fuel independence aspirations of the West Papuans whose lands and livelihoods are destroyed.

(Sources: Antara 20/5/99; Jakarta Post 10/6/99, 10/4/90 & 24/2/99, 28/4/99)

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