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Indonesia
Down to Earth No. 45, May 2000

Communities confront loggers

Indigenous communities whose forests have been plundered by logging companies are demanding compensation for the damage. Deprived of the protection they enjoyed under former President Suharto, the companies are having to take them seriously.

Communities in Kalimantan, Sulawesi, Sumatra, Maluku and West Papua are asserting their rights over their traditionally-owned natural resources and are demanding recompense for the massive destruction of the forests at the hands of logging companies.

The Association of Indonesian Forest Concessionaires (APHI) reported in March that at least 50 companies with concessions totalling around ten million hectares of forests in West Papua, Kalimantan and Sulawesi, had stopped logging because of conflicts with local communities. Villagers were claiming ownership of the concessions and threatening company workers, complained APHI chairman Adiwarsita Adinegoro. In East Kalimantan 77 logging companies have threatened to shut down if the authorities fail to solve disputes in Kutai and Bulungan districts, where local people have seized some of the heavy equipment and demanded compensation amounting to billions of rupiah.

On January 3, the heads of 12 Dayak communities from Sungai Atan in Kutai district, East Kalimantan agreed to impose sanctions on nine named logging concessionaires according to customary law. One of the companies is state-owned PT Inhutani I. The Dayak leaders say the companies have sidelined indigenous people in the area and denied them access to their traditional resources, while destroying more and more of the forest each year. They are demanding compensation of US$ 2 per cubic metre of timber logged since the first year of production, fines of $5 /m, plus facilities for local villages. The move is supported by the overall head of the Sungai Atan Dayaks and the Dayak Kenyah head, Laden Mering, who is a member of the People's Consultative Assembly (MPR) in Jakarta.

The upsurge in demands for compensation stems partly from the changing political climate in Indonesia. During the three decades of Suharto's rule, the forests were ruthlessly and systematically exploited for their timber. Adat (customary) rights were swept aside as business empires controlled by the ruling elite rushed to rake in profits as quickly as possible. As Suharto and his family profited more than most from this frenzied destruction it was always a vain hope for forest communities that anything would improve while he remained president.

Now the more open, democratically elected government of Abdurrahman Wahid has given indigenous peoples more hope of redressing the injustices of the past. They have also gained strength from new alliances between different communities - such as AMAN, the Alliance of Indigenous Peoples of the Archipelago, founded March 1999 - and with NGOs and other peoples' organisations like farmers unions. Although the current law on forests enacted by the previous government in 1999 still refuses to acknowledge adat rights over forests, the demand for this to change is gaining momentum.


Logging West Papua

As forests in Sumatra, Kalimantan and Sulawesi have been so heavily logged, timber companies are turning to West Papua. 57 timber companies are logging a massive 11 million hectare area in West Papua, according to recent information provided by the government's environment protection agency, Bapedal, in Jayapura. The total area designated for logging is ten million hectares, meaning that areas of protected forest have been included in concessions. Bapedal has named sixteen companies with concessions over 200,000 hectares who control a total of 6,812,770 between them.

Chairman of the Indonesian Logger's Association Harbiansyah Hanafiah says that most logging companies which have halted work due to conflicts with communities are in West Papua, where investment in the logging business amounts to US $72 million. (Jakarta Post 4/Mar/00; Astaga.com 22/Mar/00)

These conflicts are the inevitable result of the abusive practices of the past three decades when timber, mining and oil and gas companies were given a free hand to operate in resource-rich areas. They ignored the rights of indigenous Papuan peoples and enlisted the help of the Indonesian security forces when local people resisted.


Logging companies are having to face up to the fact that they cannot continue fobbing off local people and public opinion with promises of handouts and community development, while continuing to tear down their forests. They can no longer rely on the security forces to evict local people, termed "squatters" by the industry, as local administrators are no longer always willing or able to enforce the law in this way.

Instead they face the prospect of abandoning operations or negotiating directly with local people - and this is already starting to happen in East Kalimantan. In February, 14 co-operatives and 4 indigenous councils were handed a 20% share in the profits or funds worth Rp 100 to Rp 200 million (US $13-26,000) each. This was in accordance with new forestry regulations introduced last year and was the first time concessionaires had been obliged to make such a substantial contribution. However, the danger here for indigenous peoples is that they are bought off by logging companies either by one-off payments or share allocations, which leaves them with very little once the forests have been destroyed and the company moves on.
(Kompas 18/Feb/00, Jakarta Post 18/Mar/00; Suara Pembaruan 1/Feb/00)

Bob Hasan arrested, tycoons under investigation

Indonesian environmental NGO WALHI says that around 80% of forest concessions held by the country's biggest timber tycoons were obtained through corruption. The tycoons are Bob Hasan, Prayogo Pangestu, Burhan Uray, Eka Tjipta Wijaya, Gunawan Sutanto, Windya Rahman, Anthony Salim and Budiono Widjaya. WALHI wants the government to take action against all of these men, since they are responsible for destroying about 52 million hectares of forests in Indonesia - an area over twice the size of Britain.

In March Bob Hasan's steeply declining fortunes spiralled further downward when he was locked up in a detention cell at the Attorney General's office in Jakarta. The initial 20-day detention period was later extended. The timber tycoon, once known as Indonesia's 'real' forestry minister because of the power he wielded over forests and forest peoples, had been questioned about a US $87 million corruption scandal concerning an over-priced forest mapping project carried out by one of the companies he controls, PT Mapindo. He was detained so that he would not try to escape justice or destroy evidence.

Hasan, who controls the Kalimanis groups of forestry industry companies, the Nusamba Group (see Freeport article) as well as numerous other business ventures, has also been questioned over his suspected misuse of the Reforestation Fund. The Fund, collected from logging companies is supposed to be used for reforestation (tree plantations) but has been diverted for such non-forestry uses as aircraft development and a pulp mill owned by Hasan. Companies owned by other tycoons such as Pangestu Prayogo have been accused of making fraudulent claims on the fund by supplying false data on the amount of land they were planning to replant.

The fund diversions now under investigation were personally approved by Suharto. The former president has so far evaded questioning about this: his lawyers claim he is medically unfit, although this is disputed by the Attorney General's office. In April he was placed under "city arrest" and forbidden to leave Jakarta.

Timber companies are also accused of failing to pay their reforestation fees and other taxes. An estimated Rp15 trillion (US $2 billion) is owed to the government by several companies who failed to pay over a five year period.


Bank forestry projects critique

A meeting to evaluate the World Bank's forestry strategy in Southeast Asia since 1991 was taking place in Singapore as we went to press. A report on Indonesia - one of six case studies prepared for the meeting by the Bank's Operations Evaluation Department (OED) - is highly critical of the outcomes of the strategy in Indonesia. However, it still fails to address the underlying causes of the Bank's failure to protect forests or to alleviate poverty.

To see DTE's critique of this report click here


The erosion of the logging industry's supremacy is starting to elicit the same warnings about damage to the foreign investor confidence that have been repeated ad infinitum by the mining industry. The Indonesian Forestry Society (MPI) - another of the big timber industry associations - reported in March that ten foreign investors and buyers of plywood from Kalimantan had threatened to pull out of their contracts due to concern over escalating conflicts with local communities. MPI chairman Soedradjat Djaja warned that the investors, who are mostly from South Korea, had "begun to lose confidence in the country" and were "worried about the security and legal uncertainty of conducting business here."

The Jakarta government appears to be less sympathetic towards the timber industry than the foreign-dominated mining industry. This is probably due to the fact that most of Indonesia's forest industries are controlled by national conglomerates, closely connected with the Suharto regime, and are therefore a less problematic target for a government focussing on foreign investment. Attacking well-known Suharto cronies like Bob Hasan, Prayogo Pangestu and members of the Suharto family scores popularity points with a reform-hungry public. It also conforms nicely with the IMF's loan requirements that Indonesia root out corruption and nepotism in the sector.

Foreign investors have stayed away from Indonesia's forestry sector, despite encouragement from the government. A presidential tour of European and Asian countries to drum up business from foreign investors has not yet resulted in any new forestry sector projects.
(Jakarta Post 18, 29/Mar/00; Kompas 22/Feb/00; 31/Mar/00)

Regional autonomy

Whether investors' reluctance will be overcome once decentralisation measures take effect remains to be seen. Until regulations supporting the 1999 Acts on Regional Autonomy and Fiscal Balance are published (scheduled for May) the confusion over decision-making on forests will probably not be cleared up. According to the laws, key natural resources are to remain in the hands of central government, but statements by government officials since then have contradicted this. Already some regional governments are demanding a greater share of timber profits. Members of the People's Consultative Assembly (MPR) and national parliament (DPR) from East Kalimantan are pressing the government to return all the reforestation funds levied on logging companies to the province. MPR member H Harbiansyah Hanafiah has expressed dissatisfaction with the current fund share-out of 60% to central government and only 40% to the regions. He calculates that the province could bring in around Rp 700 billion in reforestation funds per year - enough to improve 75% of villages classified as "backward". Here the thinking appears to be that if more revenues from logging are returned to the local economy, people will be better off. But it ignores the fact that logging, as currently practised by timber concessionaires, is unsustainable and that, if World Bank predictions are right, Kalimantan's commercial forests will be logged out by 2010. And who will ensure that these funds are really used to benefit communities?

The main deterrent to local authorities supporting more commercial logging will be their new status as democratically elected bodies. If local democracy works, they will be answerable to local people and will be obliged to accommodate their rights to the forests and demands to stop further damage. The fear is that local democracy will not be strong enough, at least in the first years of regional autonomy, to overcome the entrenched capacity for corruption and self-enrichment that has persisted among government officials and their friends in the military until now.
(Source: Suratkabar 13/Feb/00)

CGI demands action

The February meeting of Indonesia's main credit grouping, the Consultative Group on Indonesia (CGI) demanded that the Indonesian government show commitment to policy reform and take effective action against illegal logging. This appears to have been taken seriously by the government which has now formed an interdepartmental committee, including members from the forestry and environment departments along with the military, to monitor progress on the CGI's recommendations. Prior to the meeting, Indonesian NGOs called on the CGI to stop providing new loans and and give grants instead - see DTE 44 (box 3).

Positive signs...

While rampant illegal logging and burning continue in forest areas and international pressure to do something about it is stepped up, at government level at least, some positive signs are emerging. Overall the government does appear to be taking the forestry crisis more seriously than its predecessors. It also accepts the role of the timber industry in creating the crisis. President Wahid has made clear that his sympathies do not lie with the concessionaires: "Concessions were leased to a small group. We let them cut as much forest as they liked. Then the forest people got the blame.." Also, within the department of forestry and plantations, there have been new efforts to root out collusion between forestry officials and timber companies. The new Director General, Soeripto, whose responsibility it is to clean up the department, has himself been the target of a hefty bribe from an unnamed entrepreneur.

It is unlikely that Gus Dur's statements are motivated by a genuine concern for forest peoples. They are more likely to be the result of pressure from the international creditors like the IMF and the World Bank, the need to break with the corrupt ways of the past and the urgency of preventing fires in order to encourage tourism. Nevertheless, the heightened sense of urgency is to be welcomed. As is the greater transparency at the forestry department which is providing more information on the state of the forests and those responsible for its destruction.


Minister calls for reforestation aid

Forestry minister Mahmudi has appealed to the US and Japan to donate US $2.5 billion to fund the reforesting of 2.6 million hectares of forests degraded by logging companies. The minister has stressed the need for grant aid, not loans, in order not to increase the huge debt burden. However, the form of the reforestation, and who will undertake it, has not yet been made clear. Previous attempts have focussed on establishing large tree plantations for the pulp and wood industries. The so-called HTI schemes were carried out by timber companies with negligible success. In theory they were to be developed in degraded areas, but instead many have cleared natural forests, so have been responsible for yet more deforestation.

(Kompas 16/Feb/00; Surabaya Pos 21/2/00; Jakarta Post 22/Feb/00 )


What still needs to be changed is the government's view of Indonesia's forests first and foremost as a timber crop, which can be harvested to generate state income. Forests' functions as providers of food, housing and other daily needs for millions of forest-dwellers need to be given full recognition, along with their water catchment protection, climate regulation and protection for wildlife.

Also still lacking is government recognition that secure tenure is crucial to the survival of the forests. Forestry department officials are blaming the current conflicts between loggers and communities on "mistakes" over land claims and "social jealousy" aroused by timber companies. They suggest these problems can be addressed by involving logging firms in local development schemes. But NGOs and indigenous peoples point out that it is the whole concession system that violates adat rights, not just mistakes in administering it. Forests need to to be taken out of the hands of the timber tycoons, out of central government control and handed back to local communities. What must be a priority for the Indonesian government now is to sit down with all those involved and draw up a new way of managing the country's forests that reflects the needs of local communities and future generations.

(Source: Suara Pembaruan 21/Mar/00; Jakarta Post 25/Mar/00)


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