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Down to Earth No. 66, August 2005

Oil palm expansion will bring more conflicts

Indonesia has announced plans for the world's biggest oil palm plantation, as part of its bid to become the No.1 global producer of palm oil by the end of the decade. Indonesian civil society organisations are warning that the massive expansion of this internationally traded commodity will impoverish more local communities and destroy yet more forests.

The stage is set for an intensification of conflicts over land and resources in Indonesia as President Susilo Bambang Yudhoyono's government pushes ahead with oil palm expansion. One focus of attention is the border between Kalimantan and Malaysia, where the world's largest integrated plantation and processing facilities are planned. According to agriculture minister, Anton Apriyantono, quoted in the Jakarta Post in July, more than 500,000 workers will be employed under the project, which will cost around Rp5.5 trillion (US$567million) over the next five years and is projected to start producing palm oil after 2010*.

It may be no coincidence that 2010 is the year that Indonesia plans to overtake Malaysia, which accounts for around half of global palm oil production. Indonesia's current expansion plans range between 6 and 20 million ha across the archipelago, depending on sources. The total existing planted area in 2004 was 5.3 million ha, according to government figures. Indonesian NGO Sawit Watch is calling for more efficiency from existing plantations rather than further expansion (see also separate item).

Both central and local governments are looking to oil palm as a major foreign exchange earner. Yudhoyono's government is continuing with his predecessor's policy to encourage foreign investment in internationally marketable goods in order to service the country's huge foreign debt. The policy prioritises the interests of big business - foreign and Indonesian - over community-based development, and ignores government legislation aimed at protecting natural resources. A new regulation on compulsory land purchase may well be used to hasten the expansion of oil palm (see land article).

Security and illegal logging

The government links oil palm development in the border region to border security, poverty reduction, regional development and the campaign to stop illegal logging and timber smuggling. However, there is concern that more large-scale plantation development will bring more of the same problems brought by existing schemes. These include conflicts over land - sometimes involving violence against people opposing land acquisition; resource poverty, denial of rights and livelihood destruction for indigenous communities; deforestation and forest fires; pollution; indebtedness and poor conditions for plantation labourers.

Visiting West Kalimantan in June, President Yudhoyono said plantations would be developed along with roads with security and check-points to prevent theft, illegal border crossers and insecurity. He said "..tens or even hundreds of thousands of people could be employed in the border areas".

Environmentalists have exposed massive-scale smuggling of logs across the Kalimantan-Malaysia border as well as from West Papua, which flouts a government export ban, drives destructive logging and destroys local indigenous communities' livelihoods (see DTE 65 for more on the Papua case).

Rather than curb deforestation, opening plantations is likely to mean more forest cleared, providing more timber for the illegal cross-border trade. More roads would enable further logging in non-plantation areas, while more security-checks along the roads could simply increase the opportunities for security personnel to levy unofficial taxes.

The idea that the plantations will promote national security seem especially ironic, given that, according to Sawit Watch, Malaysian companies and investors already have a stake in over half of all Indonesia's oil palm estates and are likely to be the main investors in the expansion.

The announcement that hundreds of thousands of people will get work on the plantations is also worrying - reminiscent of the pronouncements of the Suharto-era transmigration schemes that uprooted families from Java, Bali and Madura to work for exploitative companies on the 'outer islands'. (Source: JP 23/Jun/05,17/Jul/05; DTE 63)

This edition of DTE focuses on oil palm plantations from the perspective of local communities, the environment, and the attempt to identify "best practice" in the industry. DTE hopes that this publication will inform discussions at the meeting of the Roundtable on Sustainable Palm Oil in November (see also below) as well as wider debates on land and development.

*Tempo Interaktif (28/6) says 107,000 jobs and puts the plantation area at 241,000 ha oil palm and rubber.

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