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Down to Earth No. 56, February 2003

Stop logging now!

As Indonesia's forest crisis deepens, the environmental campaigning organisation, WALHI, has made a strong appeal to international donors to support a moratorium on industrial logging across Indonesia.

WALHI launched an attack on corrupt politicians and their cronies responsible for the worsening deforestation in Indonesia. The felling has caused widespread ecological devastation and human suffering, including deaths from floods, landslides and fires.

WALHI puts deforestation at 2.5 million hectares per year, and estimates that within a few years all lowland rainforests in Indonesia will be destroyed unless radical changes are introduced. The wood is consumed by Indonesia's voracious forestry industries - sawmills, ply and pulp mills and wood product manufacturing. WALHI says that in 2002, the demand for timber from the country's wood-processing industries was an estimated 63 million cubic metres, but the allowable cut set by the government was only 12 million m3 - a supply gap that has been widening year on year as the forests are progressively destroyed. This means that the 51 million m3 shortfall in 2002 had to come from other sources - most of which were illegal. The forestry ministry predicts that this year the gap will be even bigger, with the official cut at 6.8 million m3 and national demand reaching as high as 71.6 million m3. This overcapacity is a key factor driving rampant illegal logging in Indonesia.

WALHI wants the CGI - Indonesia's creditor group chaired by the World Bank - to provide grants to assist Indonesia to reduce overcapacity as a matter of urgency It says the CGI should direct strictly monitored funds toward the laying off and retraining of forest industry workers who will lose their jobs. It is calling for a nationwide moratorium on industrial logging, followed by implementation of the eight reforms agreed at the CGI's 9th annual meeting in Jakarta 2000. These include a crack-down on illegal logging, a moratorium on converting forests to non-forest uses and the down-sizing of wood-based industries (see DTE Special Report, Forests, People and Rights for details of these).

WALHI also wants the CGI to request Indonesia to stop all industrial logging and forest conversion on indigenous lands without the owners' free and informed consent. The CGI met in Bali in January 2003 to approve over 2 billion dollars of new loans aimed at propping up Indonesia's debt-ridden economy. Since 1999, when the CGI first started discussing forest reforms, Indonesia has been under pressure to reduce capacity in the wood industries, but with little effect. Increasingly, the CGI's main emphasis has been tackling the problem of illegal logging, partly as this area of reform is considered the most practicable.

WALHI argues that all industrial logging - not just some - must be halted if the nation's last remaining forested areas are to be saved.

"The blatant criminal activities in the forestry sector, whether categorized as 'legal' or 'illegal' at the Ministry of Forestry, violate Indonesians' social and cultural rights throughout the country, and compromises our future", writes WALHI's director Longgena Ginting. (Jakarta Post 17/Jan/03)

WALHI's moratorium call, first issued in January 2000, is aimed at creating a space for reforms to be implemented, including legal recognition of indigenous forest-dwellers' rights.

Logging moratoria have now been agreed to by the governors of Aceh and West Java and, recently, two Indonesian ministers called for a logging moratorium throughout Java. Environment minister Nabiel Makarim again called for a logging ban in Java and Bali in late January. (Jakarta Post 31/Jan/03)

Last May, President Megawati signalled interest in a national moratorium, but no concrete action followed. According to WALHI, "strong forces" in the forestry ministry are resisting change and have attempted to stop the implementation of logging moratoria at the provincial and local levels.

Illegal Exports

Making matters worse are the shiploads of logs that are smuggled out of the country for sale in Malaysia, China, Japan and other countries, despite a national log export ban imposed in 2001. The logs are used to feed wood processing industries in other countries. According to forestry minister Prakosa, over 10 million cubic metres of timber was smuggled abroad in 2001. China's demand for wood is at least 40 million cubic metres per year, most of which is expected to come from Indonesia, according to a top Indonesian forestry official. China is particularly known to import large quantities of merbau (Intsia bijuga) logs from West Papua (see DTE 55).

Illegally exported Indonesian timber is now so cheap in China (whose own forests are protected by a logging moratorium) that, ironically, Indonesian wood-processing companies are finding it cheaper to re-import than to buy legally felled logs in Indonesia. Four or five Indonesian timber tycoons are suspected by the forestry ministry of being behind the trade with China, including an unnamed famous tycoon. NGOs suspect that an MoU signed by China and Indonesia in December 2002 to curb illegal log exports will not affect these activities. A similar agreement signed with Malaysia earlier in the year is not believed to have made much impact on the illegal trade. (Jakarta Post 24/Dec/02)


It is widely known that government officials and the security forces are involved in the web of corruption that sustains the illegal logging and export trade. In January, military involvement in illegal logging was openly acknowledged by the armed forces commander Endriartono Sutarto, who threatened dire consequences for members of the armed forces (TNI) caught in the act. "If there are TNI members protecting log smugglers, I will not hesitate to shoot them", he declared, issuing the same warning for "businessmen who get TNI members involved in smuggling". He also instructed the navy to sink any vessels carrying smuggled logs after the logs had been confiscated. (Jakarta Post 16&24/Jan/03)

Companies controlled by military-owned foundations have timber licences along both the Kalimantan and Papuan borders and ex-military personnel housed there are said to be heavily involved in illegal logging operations. (SawitWatch pers com.)

In January, a forestry department official predicted that illegal logging would intensify during 2003 as political parties raise funds to finance the 2004 election campaign. I Made Subadia, Director General of Forest Protection and Nature Conservation, told Indonesian parliamentarians that illegal logging usually increased dramatically before elections, as politicians pressed illegal loggers to provide more kickbacks. The claim was reported to have infuriated the parliamentarians. (Jakarta Post 30/Jan/03)

Links between illegal logging and Indonesia's top politicians have been exposed before - notably by the environmental NGOs EIA and Telapak Indonesia in their work on the role of Abdul Rasyid's Tanjung Lingga Group and illegal logging in Central Kalimantan's Tanjung Puting National Park. Abdul Rasyid is a member of Indonesia's highest legislative body, the Peoples' Consultative Assembly (MPR). A new EIA/Telapak report documents the corruption which prevents implementation of the log export ban and allows Abdul Rasyid to escape prosecution. The report calls on President Megawati to give full support to the forestry minister to tackle illegal logging and remove Rasyid's parliamentary immunity. It also calls on the Indonesian government to investigate cases of police and navy collusion in illegal logging and make the activities of the military transparent and accountable. (See EIA/Telapak, Above the Law, January 2003

New decrees

New measures announced by the government around the time of the Bali CGI meeting include:

  • an agreement signed by forestry minister Prakosa and the military commander Endriartono Sutarto, to co-operate in cracking down on illegal logging. A joint forestry ministry, army and navy operation will raid all sawmills suspected of processing illegal logs, targeting border areas in Kalimantan and Papua which are notorious for illegal activity;

  • a government decree (to be issued soon) to boost coordination among government agencies dealing with illegal logging, and containing a long-term plan to prevent illegal logging (Jakarta Post 28/Jan/03);

  • a joint decree by the forestry minister, transportation minister and industry and trade minister issued January 2003 on the supervision of wood transport at seaports;

  • a decree by the industry and trade minister on the export of forest products (Jakarta Post 27/Jan/03).

NGOs remain sceptical about the new measures, saying they will be meaningless unless the timber industry is restructured.

Timber tycoons to buy back indebted companies

Timber bosses whose companies suffered financial collapse during the late 1990s will be free to continue their forest-destroying activities if a plan to write off millions of dollars worth of debt continues. IBRA, the Indonesian Bank Restructuring Agency which was set up after the 1997 financial collapse and which took control of heavily indebted companies, has made negligible progress in recovering money owed by forestry companies. According to David Kaimowitz of the Center for International Forestry Research and Mubariq Ahmad of WWF Indonesia, IBRA now wants to cut the government's losses and recover as little as 15% - 20% of the debts, by selling them to commercial banks. The banks have a strong incentive to buy the debts because they are counting on indebted entrepreneurs being willing to repay the reduced debt and regain control of their companies. They could then go out and borrow yet more funds - a scenario that would increase overcapacity and exacerbate the forest crisis.

IBRA data shows that 111 forest-related companies still owe Rp 3 trillion (US$3.8 billion) to the agency. In 2000, companies belonging to just four of the top forestry tycoons totalled $1.224 billion (see Forests, People and Rights, for more on debt and the forestry industry).

Indonesian NGOs Forest Watch Indonesia, the Indonesian Working Group on Forest Finance, WALHI and INFID have jointly called on the government to close down inefficient forestry companies under IBRA control. In a related move, civil society organisations including INFID, Indonesia Corruption Watch and Transparency International Indonesia have called on the government to cancel a planned decree which would release and discharge private debtors who broke banking laws and whose debts were taken over by IBRA. (Joint statement 30/Dec/02 circulated by INFID; Jakarta Post 27/Jan/03)


IBRA's plans may also counteract forestry ministry attempts to close down unsustainable logging operations which fail audits. Twelve auditors were hired last year to assess whether 412 logging concessionaires had met the environmental requirements of their contracts. How successful this exercise will prove remains doubtful - last November, the forestry ministry set up a supervisory body to oversee the performance of the auditors following reports that at least three of the auditing companies have business links to timber concessionaires, including the disgraced tycoon, Bob Hasan. Hasan is now serving a six-year jail term for corruption. None of the auditors has yet been fired. (Deutsche Presse-Agentur 18/Nov/02)

In December, forestry minister Prakosa announced preliminary results of audits carried out by the Independent Verification Institute (LPI) which showed that more than half the 27 companies audited so far, failed to meet requirements for sustainable operations.

The audits started in October last year. A further 52 are due to be audited between December 31, 2002 and March 15 2003. The end of year target is 296 concessionaires. (Jakarta Post 16/Dec/02)

A number of companies whose forest concessions have already expired, have been asked to halt operations until the forestry department can audit these.

Regional autonomy blamed

While some action is underway against this 'old guard' timber fraternity, out in the forests, locally issued timber permits remain out of Jakarta's control. Here, district heads (Bupati) continue to issue timber-felling permits to local entrepreneurs, despite a ban by central government. Forestry ministry data shows that about 300 concessions covering over 2 million ha have been issued over the past two years, but the real tally is likely to be much higher. Responding to criticism from the CGI, Forestry Minister Prakosa said he would tour 'defiant' districts in Kalimantan, Sumatra and Papua to persuade them to stop issuing logging licences.

Administrators of each of these districts have issued, on average, 150 licences per year, each covering up to 100,000 ha. They are also setting their own targets for timber outputs in order to maximise local revenues. For example, Sanggau's target of 400,000 m3 of timber per year for one district in West Kalimantan must been seen in the context of a national target of only 6.8 million m3 for this year. Furthermore, the government has just announced plans to create around a dozen new districts (Kabupaten).

Special autonomy regulations in West Papua allow communities to apply to the provincial government for logging permits of up to 10,000 ha on their customary lands. There are reports that entrepreneurs are encouraging indigenous leaders to apply for these licences, which they then take over. (Jakarta Post 27&31/Jan/03).

HTI clamp-down

Fifteen forestry companies who were given a total of 989,079 hectares of concessions to develop timber estates (HTI) - mostly for pulpwood to supply their own pulp plants - have had their licences withdrawn by the forestry department*. The forestry minister revoked their licences in November 2002 because they had failed to develop plantations in the areas allocated to them (only 188,950 ha of plantations had been planted) and they were not financially sound enough to continue their projects. Director General for Supervision of Forestry Production, Suharyanto, said that the companies should repay Reforestation Fund loans within 30 days, or the government would take legal action against them. The companies include PT Menara Hutan Buana, owned by former President Suharto's stepbrother, Probosutedjo, whose Central Kalimantan project is linked to a proposed new pulp mill in the province - see article on South Kalimantan pulp plant p.3 - and PT Kiani Hutani Lestari, owned by jailed timber baron, Bob Hasan.

Thirteen of the companies are reported to have filed lawsuits with the Jakarta Administrative Court, in an attempt to get the decision reversed. A further thirteen companies, whose concessions cover another 900,000 ha, are expected to have their HTI licences revoked in the near future. (Jakarta Post 12/Nov/02; 16&17/Dec/02)

* A separate report refers to fourteen companies who owe around US$76 million in reforestation funds to the government. (Jakarta Post 20/Dec/02)

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