"The planting of oil palm represents a positive land use in an area which had previously been degraded following exploitation of its forest resources. The estate is to be operated to international standards and will provide a benchmark for other oil palm development in the area." CDC Report and Accounts 1996, p21




The context: oil palm in West Kalimantan

Box: Problems for local communities

The companies: PT HSL and CDC

The location

Traditional land use

The impacts of development

The KKPA plantation co-operative system

Concerns raised by the indigenous community

The conflict between the company and the community


The community’s main demands



A   Summary of the WALHI Kalbar Team’s findings
B   Some Interviews With Members Of Local Communities
C   Local Government Investigation Into The Dispute
D   Evidence Of Plantation Company Burning To Clear Land
E   Letters To The Indonesian President From Local Communities
F   The Co-operative Plantation Scheme (KKPA)
G   Attempts By The Local Community To Claim Their Rights
H   CDC’s Involvement With Oil Palm In West Kalimantan
I   Palm Oil in Indonesia

1   CDC's investments in oil palm in Kalimantan
2   West Kalimantan & Manis Mata district
3   Sketch map of HSL/CDC location
4   Sketch map of Bagan Kusik's customary lands




This report is intended to shed some light on the dispute between the oil palm plantation company PT Harapan Sawit Lestari (PT HSL) and the local community in the Manis Mata area of West Kalimantan. It has been produced in response to conflicting information about the impacts of an oil palm plantation development received by Indonesian and international NGOs from two main sources: the indigenous people and CDC plc, PT HSL’s major investor. It was prepared jointly by WALHI Kalbar (the West Kalimantan group of the national environmental NGO network, WALHI) and Down to Earth: the International Campaign for Ecological Justice in Indonesia.

The HSL group has plantation concessions covering around 25,000 hectares in the south-east corner of the province of West Kalimantan. The concession affects the customary lands of 15 indigenous communities which all fall under the administration of Manis Mata sub-district. The indigenous people are Dayak Jelai and Melayu who made a reasonable living following a largely traditional way of life which depended on their agro-forestry system. This involved the rotational use of forests to set up rubber and fruit plantations and the cultivation of rice and vegetables. The area became the target of large scale logging operations in the 1980s and large-scale oil palm plantations during the 1990s. PT HSL started operations in 1993.

The main concerns relate to land rights violations and the destruction of the indigenous community’s sustainable livelihoods by this oil palm development. There is evidence of burning and bulldozing to clear land; desecration of graves; various underhand and corrupt practices to acquire land; and unfair compensation payments. There are signs of a serious debt problem in the making. There are also concerns over air and water pollution from the company’s palm fruit processing factory which started operations in 1998.

The dispute is complex and tied up with the interactions between the local government and the company. The company made full use of the close relationship between the village administration and the local police and military during the Suharto era to force the indigenous community to hand over their private and communally held fields, agro-forestry gardens and forest lands. The result for many local people has been years of resentment about their mistreatment plus increased hardship as they can no longer produce their own food. The advent of a new pro-reform government in Jakarta has brought no change to Manis Mata. PT HSL continues to refuse to recognise the local community’s land rights.

The community is divided: some now support the company; others are opposed to it. Much of the opposition is currently focused on the so-called partnership between the company and community whereby part of the oil palm plantation is run by a local co-operative. The KKPA scheme established by PT HSL and village officials in Manis Mata is fraught with problems: unfair land allocation; corruption; a lack of transparency over how it operates. Many locals who support the company have benefited directly or indirectly from the plantation either through employment or by gaining land through the co-operative scheme. The way the scheme has been imposed on the community and inequities in its implementation are increasing social tensions, especially between different ethnic groups.

The community’s grievances have not been properly addressed. There have been several ‘investigations’ by various teams of officials with recommendations for action, but these have not been implemented by the local administration or the company. Most of these centre around expanding the KKPA plantation co-operative system and using the courts to determine a fair level of compensation. These measures do not address the indigenous peoples’ demands for recognition of their land rights and sustainable livelihoods. Local people are becoming more and more frustrated. As their pleas to government officials at district, provincial and national levels have been ignored, some community groups are taking action into their own hands.

This report is only a preliminary study. It does, however, reveal injustices suffered by the indigenous community and the very real danger of open conflict in Manis Mata. These issues have been ducked by local government and the senior management of PT HSL; CDC plc who recently became the majority shareholders and managers of the plantation and oil palm processing operation; and the Department for International Development of the British government which still holds all CDC’s shares. It must be stressed that local people do not want CDC/HSL to pull out. Their former way of life is now impossible since their land is covered with oil palm plantation. They want proper compensation for their losses and some guarantee of a sustainable livelihood for their families and future generations. WALHI Kalbar and Down to Earth urge CDC, as the major shareholder in PT HSL and now the operator of this oil palm plantation, to address the community’s demands quickly and fairly.

The findings in this report pose questions about whether CDC should have gone ahead with a second major tranche of investment in this company last year – despite the unresolved problems with the local community. The report also raises the broader issue as to whether CDC should be investing at all in Indonesia’s palm oil sector, in view of its statutory obligation to pay attention to environmental and social factors and the conflict with DFID’s new Country Strategy Policy.

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This report was prepared in response to claims by indigenous people of Manis Mata that their rights had been violated by PT Harapan Sawit Lestari’s oil palm plantation development on the borders of West and Central Kalimantan.

The first reports of the local community’s problems were received by non-governmental organisations in Pontianak, the provincial capital of West Kalimantan, in late 1997. Around the same time, Down to Earth found out that the UK-based development finance institution, CDC, was investing in this oil palm development. DtE raised concerns with CDC’s London office in early 1998 and with the Department for International Development in 1999. Further information from the field was clearly needed. However, the Manis Mata area is a long way from the provincial capital and it is difficult for local community groups and NGOs to exchange information. The original plan, to visit the location to interview local people and meet company representatives that year, was delayed for several reasons, the most important of which were Indonesia’s economic and political crises. These changed the whole context of civil society activities, development planning and foreign investment in Indonesia.

This report draws heavily on a two-week field investigation carried out by a WALHI team in May 2000. This team included a researcher, a journalist and a representative of a legal rights organisation who also collected video and photographic evidence. All members of the team were experienced in land rights, agricultural and indigenous peoples issues in West Kalimantan. One came from the Ketapang district, in which the HSL/CDC plantation is located, and understood the local Dayak language. The team visited the five settlements within the PT HSL concession area where communities claim their rights have been violated. During the investigation, the team stayed in the villages and travelled by local transport. They then met with an official from the district agriculture office in Ketapang who headed the government team charged with settling the dispute between PT HSL and the community in Manis Mata.

The main objective was to find out whether it was indeed the case that a substantial number of the indigenous people felt they had been unfairly treated by the plantation company. If so, to identify these people; to examine the grounds for their grievances; to look for evidence to support their claims; and to record their statements. It was considered important to focus on this sub-group since their voices are not heard through other channels, such as the company or local officials. This was done by interviewing people and, where possible, checking the information they provided in the field or with other local residents. The main focus was on the loss of land and sustainable livelihoods suffered by members of the indigenous community. Other issues associated with the oil palm plantation, including the social and cultural impacts of an introduced labour force (mainly transmigrants); the ecological and cultural impacts of the reduction in biodiversity and pollution caused by the processing plant are only mentioned incidentally.

The field investigation was only a preliminary study. Most of the findings are qualitative rather than quantitative. These are summarised in English in Appendix A. As this was not a government-approved study, the team did not have access to official sources of information. To date, local NGOs and community representatives have not been able to obtain a concession map or any information from the company. Nor were they able to access data on the area of each settlement and numbers of inhabitants, since these figures are held by local government employees who side with the plantation company in its dispute with the local community. WALHI Kalbar and Down to Earth have not approached PT Harapan Sawit Lestari or the local CDC management directly. A follow-up visit to Manis Mata planned for July 2000 was cancelled due to police measures following direct action by the local community.

This work has been supplemented with interviews with representatives from the local community, information from non-governmental organisations in Pontianak and Jakarta and from researchers in the Netherlands, Australia and the UK, plus statements by CDC in its Annual Reports, communications with CDC’s London office by phone and letter and CDC’s web site. Translations of some of the villagers’ statements and correspondence between government officials, PT HSL’s management and local community representatives – plus some explanatory notes - can be found in Appendices B-G. CDC’s policy statements are presented in Appendix H.

See the Chronology for significant events in the HSL/CDC plantation development.

This report does not purport to be comprehensive. It does, however, identify grievances and probable injustices which should be addressed and rectified by the senior management of PT HSL, CDC plc - who recently became the majority shareholders and managers of the plantation and oil palm processing operation - and by DFID, the department of the British government which still holds all CDC’s shares.

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West Kalimantan is one of Indonesia’s largest provinces covering 14,753,000 hectares. The population is estimated at around 4 million. Approximately 40% are ethnic Dayak, 40% Malay, 11% Chinese and 9% Javanese/Madurese, although proportions vary significantly in different localities[1].

Suharto’s regime intended that Indonesia should overtake Malaysia as the world’s top palm oil producer by 2000. The oil palm sector became an important source of foreign exchange during the 1990s. Increasing domestic demand also fuelled the oil palm boom. More recently, politicians have looked to plantations to help the country’s economic recovery. Recent regional autonomy legislation has generated further interest in the regions in oil palm expansion as more taxes and other revenues generated from plantations will, in future, accrue directly to local authorities instead of to central government. Kalimantan is second only to Sumatra as a target area for oil palm development. Further information about the Indonesian palm oil sector is presented in Appendix I.

West Kalimantan’s official development priority is agriculture, specifically large-scale plantations. Plantation targets are 3-5 million hectares. By 1997, nucleus estate & smallholder plantation schemes covered 233,233 ha. The provincial governor, Aspar Aswin, has instructed 165 companies to establish plantations on 2,369,788ha. The Ketapang district - which includes CDC/HSL’s Manis Mata plantation - is an important oil palm area[2]. The local agricultural department has granted developers land use rights for 89,760ha of oil palm plantations. To date, 31 companies have yet to start operations, 6 have withdrawn and 7 have established plantations covering 28,456ha[3].

This development paradigm has generated many problems, not least a conflict of interests between companies and with indigenous communities. In West Kalimantan, the Dayak and Melayu people rely heavily on access to natural resources, while the plantation companies want to realise their investment by clearing those resources and replacing them with oil palm. Companies are encouraged by the government to meet targets for plantations and, particularly during the Suharto era, used violence, intimidation and corrupt practices to take land from local communities.

Although government officials and plantation companies promote oil palm schemes as a vehicle for local development, they stand to benefit far more than indigenous communities. Local and central government benefit from taxes and export revenues from palm oil. Companies gain financially by obtaining land at artificially low prices, from the sale of any commercially valuable timber on that land and from subsidised credit. On the other hand, oil palm plantations deprive indigenous peoples, like the Dayaks of West Kalimantan, of their traditional, sustainable livelihoods and accelerate cultural erosion due to the loss of access to their land and forest resources. These people have little choice but to become plantation workers and/or oil palm growers through smallholder or co-operative schemes attached to the plantation company. The 2 hectares of land allocated to them is much less than their original holdings and must be used to grow oil palm.

The lack of alternative sources of income brings increased poverty. Research carried out by LBBT in the Landak and Sangggau districts of W. Kalimantan showed that farmers’ monthly incomes from nucleus estate & smallholder (NES) oil palm schemes were not sufficient to support their needs[4]. Average smallholder incomes were only Rp148,500 per month in 1998[5]. Newer plantations, such as CDC/HSL’s Manis Mata development, are required to set up KKPA co-operative schemes (Koperasi Kredit Primer Anggota = Primary Co-operative Credit for Members, see p8). These are proving to be just as problematic as the NES system; there is no evidence that they have brought greater financial security or other benefits for local people. Only three companies in the Ketapang district have set up KKPA plantation co-operative schemes; two of these belong to the Harapan Sawit Lestari group[6].

The whole process of converting communities from diverse, self-supporting lifestyles to total dependence on the cultivation of an introduced mono-culture and employment by a company is fraught with difficulty. Many of the problems underpinning the disputes in the CDC/HSL Manis Mata case are common to large-scale oil palm plantations elsewhere in Kalimantan and in other parts of Indonesia. Some of these are summarised in the box. Specific issues relating the CDC/HSL development are covered elsewhere.


Government officials regard local farming systems as primitive and environmentally destructive and plantation schemes as advanced and modern. Indigenous people have been branded as 'anti-development' for refusing to give up their land - a charge tantamount to subversion during the Suharto decades. The Ministry for Trade and Investment (via the Department for Co-operatives and Small-scale Enterprises) promotes co-operatives as synonymous with the national interest, making it hard for local farmers to refuse to participate.

It is almost impossible for indigenous communities to make an informed decision about whether to give up their land to oil palm developers or to continue their traditional practices. Most have no experience of oil palm cultivation or access to independent sources of information. They are unused to calculating their monthly incomes from forest farming in cash terms and so cannot compare these with the promises from co-operative schemes. Company officials are seen as educated, so locals are reluctant to contest their arguments.

Farmers cannot know in advance if an oil palm co-operative scheme will be profitable. All input costs and the purchase price of palm fruits are determined by the palm oil company. Prices paid by palm oil processing factories are subject to local, national and global price fluctuations. Furthermore, estimates of productivity and incomes are often based on figures from Sumatra which are generally higher than for Kalimantan.

Where companies and government officials do convey information about palm plantations and co-operative schemes to villagers, this is usually done verbally. There is no written information which people can study or ask for outside advice on. In any case, many older people and those living in areas far from the major population centres are functionally illiterate. Deliberately or unintentionally, this creates misunderstandings.

Local community leaders (customary and religious) are often co-opted by companies and local authorities to promote oil palm schemes. Like other villagers, they rarely have experience of oil palm cultivation or access to independent sources of information and therefore promote an uncritical view. Some receive payment or other benefits (e.g. plots or shares in the co-operative scheme) for persuading people to relinquish their land.

Oil palm farmers' incomes are highly dependent on the efficiency of local transport, which is often controlled by palm oil factories. Palm fruits must be processed within 24 hours of harvesting. Factories may refuse to pay for older fruit or pay lower prices. Hence farmers are penalised for factors outside their control, such as the poor condition of access roads or company vehicles which cause delays in collections. It is common practice for company trucks to collect fruits from the main estate first, leaving the 'plasma' area until last.

Communities become more economically and ecologically vulnerable. One crop (palm oil) replaces the multiple products from forest farming: vegetables, corn, rice, fruits, firewood, bushmeat and medicines.

Communities need a higher cash income. Materials which people used collect free are unavailable once their forests have gone. These must then be purchased from markets, shops or pharmacists.

Government officials claim that oil palm plantation schemes increase local employment. However, indigenous people who make a living from forest farming are considered 'unemployed', even though their income may be five times that of plantation workers. 'Employment' means working as a teacher, local governmental official or company employees. So prevalent is this perspective that even the local farmers will describe themselves as 'unemployed'.

The majority of plantation workers are not local people. The introduction of oil palm plantation is usually coupled with transmigration schemes. Companies consider the indigenous communities are poorly educated, unskilled and 'difficult'. Where local people are employed, it is usually as the lowest grade workers on a daily basis. In some areas, transmigrants now outnumber indigenous communities. With the advent of local democracy in Indonesia, this has important political implications.

Plantation companies usually promise to provide amenities such as dirt roads, places of worship, schools, basic clinics and playing fields which will benefit the local community. However, large-scale plantations also brings social costs in terms of the cultural erosion, consumerism, prostitution, gambling and abuse of alcohol associated with the sudden influx of substantial numbers of outsiders.

Plantation co-operative schemes involve credit from banks. The financial crash and Indonesia's political problems have left the banking system fragile and unstable. It is likely that the true extent of corruption in the banking sector has yet to be revealed. Co-operatives and small-scale enterprises are caught in a spiral of debt as banks go bankrupt and are taken over by other banks with increased charges.

In addition to the social and economic impacts on indigenous communities, the expansion of oil palm plantations in Indonesia has taken place at the expense of its natural forests. In general, plantations are established in forested areas rather than on coarse grassland or other degraded habitats. This is largely because companies are more interested in plantation concessions as a means of acquiring the rights to any commercially valuable timber on that land and access to cheap credit rather than palm oil production.

In West Kalimantan, the dominant natural vegetation is tropical rainforest but, as elsewhere in Indonesia, deforestation rates are high. By 1990, less than 60% of the province (i.e. under 9 million ha) was covered with forest, nearly 20% was scrub and 16% used for 'shifting cultivation'[7]. Official figures from 1997 classified only 7 million ha as forest, before the 1997 fires and recent burst in illegal logging took their toll[8]. Virtually all lowland tropical rainforest in Sumatra and Kalimantan has been logged over at least once. In theory, only selective logging is allowed but, in practice, the absence of effective controls has allowed commercial loggers to take as much as they want. Even heavily logged or sparse secondary forest will recover given sufficient time. It also still has significant social, economic and environmental value to the surrounding community and is important for wildlife. These functions are lost with the conversion of forest ecosystems to plantations. Furthermore, large-scale monocultures of introduced species decrease biodiversity and affect the hydrology of the area. However, by converting forest to plantations, companies get a return on their investment in 5-10 years instead of waiting 25-50 years for natural forest cover to recover.

The environmental impacts of widespread oil palm cultivation are already being felt. The hydrology of the Marau and Manis Mata areas of Ketapang district (West Kalimantan) has been affected. In the dry season, streams and small rivers dry up while there is flooding in the wet season. Wild animals which provided an important source of protein for the local diet have disappeared with the forest. Similarly natural checks on pest populations have broken down. Plagues of rats affect local rice crops up to 2km from plantations. Locusts wiped out all local crops in four sub-districts of Ketapang in 1999[9].

Forest fires are another major problems associated with large-scale oil palm plantations. At the height of the devastating 1997 fires, the forestry minister named 176 oil palm plantations, industrial timber estates and transmigration sites implicated in deliberate burning to clear land. Commonly oil palm developers belong to the same group of companies as loggers. Once forest concession has been over-logged, the degraded forest can be re-designated for plantations. The whole area is clear-felled and any commercially valuable timber extracted before burning is used as the quickest and cheapest form of land clearance. Fires have been a regular annual occurrence in Kalimantan since the early 1980s. Large-scale burning has produced persistent smoke pollution every dry season, causing respiratory problems and the closure of domestic airports as well as the destruction of natural forests and traditional plantations. By mid-July, smoke levels in Pontianak, provincial capital of West Kalimantan, were again above 500 on the pollution index - a level seriously dangerous to human health[10].

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The HSL Group is an Indonesian private company. It has two palm oil companies with concessions in West Kalimantan: PT Harapan Sawit Lestari (HSL) and PT Ayu Sawit Lestari (ASL). The plantations are located in the south-east part of the province, in the Ketapang district, close to the Central Kalimantan border. The River Jelai flows north-south through the location. The group also owns two plantations in the same area which originally intended for hybrid coconuts (through PT Harapan Hibrida Kalbar Barat and PT Harapan Hibrida Kalbar Timur) which are now also planted with oil palm.

The Commonwealth Development Corporation (CDC) was a British government body which provided long-term cheap financing to the private sector in developing countries. It became a private company in December 1999, but the British government (via the Department for International Development – DFID) still holds all its shares. CDC Groups plc will probably be floated on the stock market within the next two years. DFID is not in control of CDC’s operations or decision-making , but CDC has a statutory obligation to operate within the business principles agreed with DFID which contain clear ethical, environmental, health & safety and social policies.

There is conflicting information about the area of the Manis Mata plantations. Originally, PT HSL was given a concession of 8,000 ha (6,000ha for the main estate and 2,000ha for a shareholder scheme) and PT ASL 8,000 ha (5,000ha main estate; 3,000 ha shareholder), but Forestry Department figures state that PT HSL was allowed to clear 11,353ha of forest land[11]. CDC described its initial (1996) investment in PT HSL as involving a 6,000 hectare plantation[12] but, by mid-1999 this had become “a total plantation of 25,400ha, including 4,000ha under a smallholders scheme”[13]. According to the local agriculture department, PT HSL had ‘used’ 3,693 ha and PT ASL 4,818 ha of their respective concession areas by early 2000.

The plantation concession affects the lands of 15 indigenous communities: Air Durian, Gajah, Belian Sunsang, Bagan Kusik, Labuk, Hampul, Kaluih, Jangkit-Jangkit, Keladi, Kuala Asam, Asam Besar, Beriam, Tarahan, Seguling, and Manis Mata . PT HSL and PT ASL implement a plantation co-operative scheme (known in Indonesian as a KKPA) through the Beringin Jaya Village Co-operative, based in the village of Manis Mata.

The HSL group began to establish plantations in the Manis Mata area in 1993. CDC became involved a few years later with US$3.3 million equity and a US$13.5 million loan for the plantation plus mill and associated bulking station. It had also helped the company “to prepare the feasibility study and assess the requirements” for this development[14]. By 1997, the HSL group - in common with many other Indonesian companies - was in financial difficulties. In mid-1999 CDC announced a new US$32 million investment agreement at a ceremony in Jakarta. This meant CDC owned 65% of the business. It also became the entity’s new manager[15]. PT HSL, PT ASL and CDC share offices inside the concession area, not far from Manis Mata village. These are locally called FAD. The local community was not informed about the change in ownership and control of HSL or CDC’s new responsibilities.

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Manis Mata is a huge sub-district - as big as some districts in other parts of Indonesia. This hilly upland is not easily assessable from major population centres. The main village, also called Manis Mata, is about 360km from the provincial capital Pontianak. It takes a day to get from Manis Mata to Ketapang (the main town on the coast) by minibus or motorbike and another day to get to Pontianak (around the coast by boat or by express bus and ferry). The trip can take much longer in the wet season, due to bad roads. The return journey costs in the order of Rp350,000 – a substantial amount given that plantation wages for local labourers are about Rp10,000 per day[16]. Smaller towns to the north can be reached by motorbike or motorboat. Local people tend to go by river to Sukamara in Central Kalimantan to sell rubber, timber and non-timber forest products.

It is necessary to understand something of power relations in the local community to appreciate the basis of many of the indigenous people’s grievances against the PT HSL/CDC oil palm development. As in other parts of Indonesia, the traditional concept of a village is different from the official village system imposed by central government in 1979. The official ‘village’ (desa) of Manis Mata comprises 6 official hamlets (dusun) or 19 traditional villages (kampung). Fifteen of these kampung are affected by HSL oil palm plantations. Under the government system, administrative control for the HSL concession area lies in the hands of the village head (kepala desa), based at Manis Mata. Hamlets, neighbourhoods (RW) and smaller groups of houses (RT) also have official representatives. The system is strictly hierarchical: all these government staff answer to the sub-district head (camat), also based in Manis Mata, who is responsible to the district administrator (bupati) in Ketapang. The authority of the village administration is reinforced through the muspika: a body formed jointly from village officials, the local police and local military. The current village head of Manis Mata (Djainullah A.H.)is not a local; he comes from Central Kalimantan. This system should change once local autonomy regulations are fully implemented in 2001 and local representatives are elected by the community rather than selected by provincial officials.

Although most Dayaks are either Protestant or Catholic, traditional beliefs are still very important - particularly for the older generation. The customary guardian or traditional leader (temenggung) plays a central role in everyday life in Dayak communities, including keeping alive traditional land use practices and land ownership systems. There is no such equivalent in Melayu communities. It is a cause of some tension that the government village head (who was always Melayu until late 1997) used to select the traditional leaders of Dayak settlements. Furthermore, during the Suharto era, the local government established ‘officially approved’ traditional councils at provincial, district and sub-district levels. These Majelis Adat and Dewan Adat are not genuinely representative customary institutions but were, and still are, used by the government and companies to validate their development plans for the area.

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The population density of Manis Mata is still low, although it has been substantially increased by transmigration over the past decade. The indigenous people (Dayak Jelai and Melayu) live in villages along the rivers. They have customary rights over the whole area, which was bequeathed to them by their ancestors. Originally this land was covered with lowland tropical rainforest, managed traditionally for agro-forestry and agriculture on a rotational basis. Local people made a reasonable living, growing rice, tubers and vegetables for their own use, catching fish in the rivers and streams and hunting pigs, deer and other wild animals. (Guns only replaced spears and blowpipes within the last 30 years.) A range of non-timber forest products were sold or traded including tree resins, honey, fruits, rattan and native rubber. The valuable fragrant gaharu resin was scarce by the 1980s due to over exploitation.

The Melayu people tend to have smaller landholdings than the Dayak Jelai and depend less on forest farming for their livelihoods. Many make a living from fishing, woodworking, boat building, trading and timber operations. This may be a historical relic from the sultanate period when the Melayu were a privileged class and the Dayaks their serfs. It may also explain why the Melayu are far more ready to accept oil palm co-operative schemes than the Dayaks. Unusually for inland parts of West Kalimantan, official village heads in Manis Mata are always Melayu. Most Melayu are Muslims, so Melayu communities are characterised by a greater number of mosques or prayer houses rather than churches or chapels. Of all the many settlements, it was these predominantly Muslim settlements which the government selected as key ‘villages’ in its administrative system. The way that the plantation development has exploited differences between the Melayu and Dayak Jelai communities to achieve its own goals has also generated the potential for horizontal conflict. This is of particular concern given the recent history of ethnic conflict in West Kalimantan.

The Dayak Jelai have several different categories of traditional land use. Some secondary forest is regularly cleared for cultivation while other forested areas are managed in agro-forestry systems or left intact for future generations. Traditional rubber plantations are an important part of the local economy. These use native varieties (karet alam) rather than hybrid rubber (karet unggal). Trees can be tapped after 6 or 7 years and are productive for some 40 years. The rubber is dried and stored for up to a year to take advantage of market prices. Rubber trees are usually planted around cultivated land and ‘reserve’ forest to designate a forest farmer’s holding. Rubber plantations are not pure stands: dozens of other species grow there. Villagers also plant fruit gardens and rattan. In between houses, coconuts, betel nut, fruits and other useful trees are planted, so that areas of mature forest which were once occupied by settlements even several generations ago are recognisable from the species composition. This is called mamak in the local language (or tembawang in other parts of West Kalimantan).

Each traditional village (kampung) has its own customary lands, some of which are held individually and some collectively. There are no written records or maps. Boundaries are marked by natural features such as distinctive trees, hills or streams (see Map 3)[17]. Everyone knows the extent of the village, collectively held customary land or their family’s land because children learn the markers by accompanying their parents to the forest/fields. People find it hard to estimate the area of their property in hectares, preferring to use the term ‘bidang’ (a very approximate unit of around 2 ha). Typically, in the area affected by PT HSL, each family has 5-10 bidang and will clear two of these every year in rotation. So a village of 50 families will actively cultivate some 200ha each year. Some of these fields and mixed plantations are a long way from the main settlement, so forest farmers set up a few simple houses there while they tend their crops. Sometimes babies are born or people die and are buried at these outposts. In time, some of these may develop into permanent settlements; others are abandoned.

Fields are used to grow rice and vegetables for a few seasons then left fallow for 3-7 years. During this time the land (known as ‘bawas’) is covered by scrub or secondary forest and is used for hunting. According to the indigenous community, their use of fire for land clearing is not destructive or dangerous. The area of land cleared is strictly limited to the amount needed to support a family. Burning is carefully controlled by clearing a wide path around an area (which is limited to the amount needed to support the family), taking the direction and strength of the wind into account and only burning at certain times of day. Astronomical calendars are consulted to determine the most propitious time for each part of the cultivation cycle and every stage is accompanied by ceremonies which are an integral part of the Dayak culture and belief system.

Opposition to the HSL/CDC plantation is greatest in five villages where communal customary land (tanah adat) was taken by the palm oil development in addition to individually held land (tanah milik perorangan). There are Keladi, Beriam, Asam Besar, Asam Kuala and Bagan Kusik.

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The Suharto government did not recognise the indigenous population’s rights to this forest. It was designated as ‘state land‘ and made a logging concession. By the late 1980s, timber companies had stripped out all the large, commercially viable trees, apart from those species such as ulin, nyatoh and duren which are protected for local use. This severely reduced the amount of forest available to the local community and affected the ecological and economic viability of their traditional lifestyle. For example, when trees which housed wild bees nests were felled, not only did honey become scarce but there were fewer pollinators for fruit trees and other crops. Nevertheless, the traditional agro-forestry system was still highly productive as is reflected in the compensation demands which involve tens of thousands of trees for each small settlement (see Appendix A).

The impact of oil palm plantations has been even more damaging to traditional communities and their environment. In the wake of the loggers, much of the Manis Mata area was targeted for plantation development. PT HSL is only one of a number of large-scale oil palm operations in the area. Companies started to move in during the early 1990s, with contractors clear-felling remaining trees and burning and bulldozing fallow land before replanting with oil palms. They divide their concessions into blocks and work progressively through these over several years. The area was badly hit by forest fires in 1994 and 1997. Companies used the fire damage as a reason to clear land and set up plantations.

Today little forest is left. Indigenous communities have been marginalised. At best, they cling onto what remains of their rubber plantations and fruit gardens at the peripheries of the oil palm estates. Any land they still have is largely unproductive due to locust infestations which have plagued the area for several years in succession. This problem was unknown before extensive monocultures replaced forest cover. The authorities have done nothing to eradicate the pests or to compensate local people for their crop losses, although 5 sub-districts in Ketapang are badly affected. Villagers suspect this is because the government wants to force the indigenous population to give up their land and traditional practices and become plantation workers. There are few other possibilities for employment. Unlike many other oil palm plantations, the CDC/HSL project does not depend on transmigrant labour.

Educational provision in the area is poor. There are only about 15 primary schools in the whole of this sub-district and there is only one state lower secondary school in Manis Mata to serve a population of over 15,000, roughly half of which is under 15 years old[18]. Local researchers estimate that only around half the adult population can read.

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(Koperasi Kredit Primer Anggota; Primary Co-operative Credit for Members)

The HSL oil palm plantations are partly run directly by the HSL group companies and partly indirectly through a KKPA scheme. This co-operative share system was introduced nationally by the Indonesian government to replace the much-criticised nucleus estate & smallholder plantation system (NES; PIR in Indonesian). From 1995 to 1998, companies no longer had to set up their own smallholder schemes in addition to their main estates, but were required to establish a ‘partnership’ with local people within the concession area. This was done through co-operative schemes run by officially approved Village Co-operatives (KUD). In practice the ‘partnership’ system operates in much the same way as the nucleus estate & smallholder system it replaced, with many of the same problems.

Technically, a KKPA co-operative is set up by local people for local people. In practice, these are usually established by local government authorities in conjunction with the company. Basically, KKPA provide access to cheap credit and land for the companies[19]. Prior to the Asian economic crash, it cost the equivalent of US$80 million to establish a 10,000ha oil palm plantation in Indonesia. On average companies borrowed over three-quarters of these total costs[20]. The government encouraged banks to promote its Village Co-operative schemes (KUD) by providing cheap credit. So companies were also keen to participate. This is particularly the case since 1998, when Indonesian interest rates rose sharply and bank loans have been hard to come by.

The HSL scheme operates through the Beringin Jaya Lestari Village Co-operative (KUD). Credit was originally obtained from Danamon Bank, but has now been taken over by Bukopin, a state-owned entity created after bank restructuring following Indonesia’s financial crisis. According to local people, the co-operative must have at least 750 members with a total area of 1,500ha of land. Farmers who want to take part in the KKPA scheme must have a letter of support from the village head and hand over a minimum of 2ha of their land. This land is measured by the local Land Agency (BPN). The stakeholder then receives a certificate for the 2ha which will be used for oil palms. The certificate is usually held by the bank as a guarantee against the loans needed to support the farmers while the oil palms mature. There is a very close relationship between HSL and the KUD. The company and local government select one local civil servant as the co-operative manager. Each co-operative member has to pay Rp5,000/month to cover the administrative costs of the scheme[21].

Details of KKPA schemes and the ‘partnership’ between companies and communities vary from area to area and company to company. According to Plantation Use Permit Regulation 107/Kpts-II/1999 plantation concessionaires can choose between five partnership schemes[22]. According to local farmers, HSL now uses the ‘Build, Operate and Transfer’ model. The plantation company manages the whole plantation area (using mainly transmigrant labour) from land preparation to tree planting until the oil palms start producing. For eleven years from the first crop, 30% of each farmer’s monthly income from oil palm production is deducted to cover the costs of purchasing seedlings, fertilisers, pesticides and other plantation running costs. After 11 years, the plantation is handed over to the co-operative members. Farmers sell their oil palm fruits to the KUD which sells them to the company[23]. It is possible that some of local people’s confusion about the relationship between the company and the co-operative stems from changes in government policy and hence changes in the scheme over the past six years.

The following point must also be taken into consideration in the context of HSL/CDC’s operations. In West Kalimantan (unlike Sumatra), oil palms are commercially productive for a maximum of 15 years. Oil palms are not productive until 6 years after planting. They are most productive from 8-13 years after planting and commercially unproductive after 22 years. This means that a farmer may only have 4 years of maximum productivity left after the 11 year debt repayment period. Local forest farmers do not realise that the production period is limited and that some of their land will be unproductive for up to ten years while the oil palms are replaced. Old oil palms must be felled, then cleared using heavy machinery. The compacted land must then be turned over, fertilised and left fallow for a couple of years before replanting[24].

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A more detailed summary of the NGO investigation team’s findings is presented in Appendix A. Supplementary evidence from longer interviews and translations of correspondence between government officials, PT HSL’s management and local community representatives – plus some explanatory notes can be found in Appendices B to I.

Lack of consultation, consent or information

  1. The company started operations without any prior consultation with or permission from the local community. Only government officials and administrators such as the village and hamlet heads (kades; kadus) were informed or asked for consent. The forest farmers whose land was taken for the development were never consulted (see Appendix B). At best, people got some compensation and a 2ha plot in the co-operative scheme.

  2. Ordinary members of community have not been involved in any of the meetings with the company or with the KKPA plantation co-operative scheme, neither have they been allowed to see the minutes, so they do not know exactly what has been given away or promised on their behalf or by whom.

  3. People were forced to hand over their land by the authorities who worked in close association with the plantation company (see communities’ letter to the President, Appendix E; Mr A’s statement, Appendix B). Village officials work - officially or unofficially - as the company’s ‘community relations’ staff. It is widely believed that they receive payment (in cash or goods) for these services.

  4. If persuasion by the village head was insufficient to make people hand over their land to PT HSL, the local police and/or military were called in. Villagers who refused to give up their land were accused of belonging to the banned communist party or being anti-government. Educated outsiders, such as teachers or local officials, have been threatened with sacking for supporting community opposition or informing villagers of their rights.

  5. Most important decisions are taken by local government officials in the district capital, Ketapang, who - until recently - rarely made the day’s journey to Manis Mata. Members of the local community (other than the official village head) do not have access to these decision-makers, unlike the company representatives (see Appendix C).

  6. People were given misleading information by company and local government staff about the profitability of oil palm compared with native rubber and about the advantages of the KKPA co-operative scheme. None of the potential drawbacks of oil palm plantations or the KKPA scheme were mentioned, let alone discussed.

  7. Representatives of the indigenous communities who are demanding their rights and local NGOs do not know whether an Environmental Impact Assessment was ever carried out, as now required under Indonesian law for all new, large-scale developments. It is therefore not known what potential impacts of its plantation or the processing plant the company is aware of or what measures it has promised to take to reduce negative social and environmental impacts.
Loss of land, livelihoods and natural resources
  1. Local communities have been deprived of their land which had, for generations, provided them with a reasonable living through a mixture of mixed farming and agro-forestry. Large areas of mature forest and the indigenous community’s fruit and rubber plantations (mamak) have been destroyed. Although some people have gained employment on the plantation, most face increased poverty and/or indebtedness.

  2. Local people’s rubber plantations were destroyed in fires set by HSL (or its contractors) to clear land for its oil palm plantation. From 1993 to 1996, ‘waste wood’ from land clearance was routinely dumped on people’s plantations then burnt. Also, the company did not take precautions to stop their fires from spreading (see statement, Appendix B). Once local people’s crops and plantations had been destroyed or damaged by fire, the company and local officials used this as a reason to force farmers to give up their land (see statement, Appendix D).

  3. Local people’s crops were destroyed by the company or its contractor when clearing land for plantations. People were not given chance to harvest these first. In 1993, rice fields in Beriam and Asam Besar were burned. In 1997, Keladi farmer’s yam crop was bulldozed, causing a loss of 4 tonnes of food. (This had been planted as a substitute crop for rice due to the locust outbreak).

  4. Participatory community mapping is not an option to help the indigenous people secure their land rights since the whole area has been planted with oil palms and most traditional signs of land ownership wiped out.

  5. The company is still burning to clear land. This was forbidden by regulations issued by the Department of Forestry in 1994. The most recent recorded incidence was at Bagan Kusik in May 2000 (see letter about legal representation, Appendix D).

  6. Oil palms are being planted right up to people’s houses. Local people believe that regulations protect the land immediately surrounding settlements. The inhabitants of Keladi are being moved out to make way for oil palm. Only around 500sq m of their 800ha remains unplanted and that is to go soon. The people have been asked to move to a swampy area which frequently floods (see Mr C & D, Appendix B and Photos ).

  7. The company is reported to clear forest right up to the water along the smaller tributaries (but not the main river where the land is too swampy). This contravenes Department of Forestry regulations for plantations. It also removes remnants of forest important for local needs and increases the risk of flooding when the rains are heavy. Local rivers, formerly clear and full of fish, are now murky and useless for fishing.

Destruction of graves

    Local peoples graves’ have been destroyed during land clearance. Compensation of Rp300,000 was paid for eight graves belonging to the Beriam community, but no compensation has ever been paid for others bulldozed at Beriam, Keladi and Asam Besar.
Pollution and health
  1. Members of the local community are aware of the potential dangers to their health of the fertilisers and pesticides routinely used on the oi1 palm plantation. They have not made an issue of this with the company or the local authorities because they consider it is pointless so to do. Also, they are more concerned about recognition of their land rights.

  2. Poor waste management at the processing factory is causing water pollution. Waste which should be dumped in a pit is apparently left to rot when the pits are full. Although all waste water should pass into a waste bond, local people say that some is discharged straight into the R. Keladi. The smell of the processing factory is noticeable several kilometres away.
Inadequate and unfair compensation and irregularities in payments
  1. People who gave up their individual or family land to the company/KKPA scheme were entitled to compensation. Compensation was paid at a very low rate - as little as Rp2/sq m. (During that period the Rupiah exchange rate was fairly stable at Rp2,500 = US$1.) There was no fixed rate for compensation. The amounts received varied from Rp30,000 - Rp60,000/ha; people who were more assertive got more.

  2. The compensation issue partly linked to the issue of calculating stakeholdings in the co-operative. This is a source of grievance in the community, since the village head promised that each family member would receive a share irrespective of age. So if a family handed over 20ha and there were 4 people in the family, they expected to get an 8ha stakeholding (4x2ha) plus compensation for 12ha. In fact, they were only given a 2ha stakeholding in the plantation co-operative.

  3. Some people claimed and received compensation for land which was not theirs. Compensation was not always paid directly by the company to the landholders. A few people who were more assertive and/or had some education did receive direct payments. The majority received theirs through an intermediary. This meant that not all claimants received all (or in some cases any) of the money due to them.

  4. There was manipulation of some of the receipts for land handed over. People were asked to sign blank receipts for their land. Later, when the forms were handed back, the receipts had been completed with the owner’s name, the amount of land and the compensation received. However, the amounts of land and compensation paid were not always right. Some people who only intended to give up part of their land found that, according to the receipt, they had handed over all their land.

  5. Some people who gave up their land were not accepted in the KKPA plantation co-operative scheme and did not receive compensation, so have lost everything.

  6. PT HSL has refused to pay any compensation for communally held customary lands. The company was eventually instructed to pay the Bagan Kusik community for their land by a government team (TP3DII) in May 1999 (see Appendix C). It is not clear whether all these payments have been made.

  7. Compensation is also payable for crops damaged or destroyed when the plantation was established. In many cases people have been unable to provide proof of the amount of field or tree crops destroyed as they had no prior notice of land clearance. In some cases, bulldozing was done at night, before villagers had chance to count their trees or measure their fields. Often, the land clearance was so complete that all signs of crops or boundary markers were destroyed.

  8. The company promised compensation for property damaged by fires, but only has paid out for field crops. Forest farmers have not received compensation for rubber and fruit trees burnt, despite the importance of these crops in the local economy.
The workings of the plantation co-operative scheme (KKPA)
  1. The company gave assurances to the community after their land had been taken over by the plantation that they would get it back through the co-operative (KKPA) scheme. However, not all forest farmers were accepted as KKPA members; each family was only allocated 2 ha; and they were not always given plots on their own land (see Appendix C).

  2. Many more people are applying for land through the KKPA scheme than the co-operative is providing land to. For example, around 120 families from Keladi have given up land. Only 51 families received stakeholdings in Phase I of the KKPA. Although another 34 families will receive stakeholdings in Phase II (see Appendix F), 35 other families were not accepted for this round of plantation plot allocations. Yet more families are waiting for a Phase III, for which no dates have been set. In Bagan Kusik, it is said that fewer than 10 of the 99 families have been accepted into the Phase I KKPA scheme.

  3. The stakeholdings which people are allocated are not necessarily on their own land. For example, people from Beriam may be given KKPA plots in Manis Mata (see also the example in Appendix C). This gives rise to several problems. Firstly, according to the Dayak Jelai land tenure system, they are then violating their neighbours’ land rights. Secondly, the plots are further away and less inconvenient for them to tend. Thirdly, the land which people hand over to the KKPA is often not empty: it may well have mature fruit or rubber trees on it. The landholder’s intention (but not necessarily that of the KKPA or the company)is to retain at least some of these to create a mixed planting with oil palm. So they are resentful when not only their land, but their tree crops are allocated to someone else who then gets additional benefits for no extra cost. Corruption may be involved here as it is alleged that certain people always get the ‘best’ land (usually those who hold prestigious positions or are pro-company).

  4. Some land handed over to the KKPA has been allocated to people who are not part of the scheme. There are specific cases where local officials in the district capital, Ketapang, and relatives of the village head and the local police chief in Manis Mata acquired land intended for the KKPA. This appears to be a form of pay off or corruption, as all these people are Melayu and held no land in the area.

  5. Members of the co-operative are not usually shown KKPA balance sheets or bank papers. They therefore have no idea of the size of their debt or interest rates. Some people do not even realise that they are incurring debts. One local man reported that he was given Rp14,720,000 credit for the 54 months that the oil palms on his plot would take to start producing. This must be repaid within 20 years. He is given Rp83,000 per month (approx US$10 at June 2000 exchange rates) as ‘wages’. It is not made clear that this is part of his debt and he does not know what his total debt is at present.

  6. Representatives of Bupindo and Bank Indonesia met village officials in Manis Mata in May 1999. The possibility was discussed of land certificates being forfeited to the bank if stakeholders do not ‘look after their stakeholdings properly’ once the oil palms are producing. It was not made clear how this would be assessed.

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The pattern of community opposition to the PT HSL development is complex. It has changed spatially and over time, especially during the establishment phase of the plantation as the operations advanced - block by block - and one village/landholder after another was affected. The changes in the Manis Mata community’s economic and ecological environment as forest, forest gardens and fields were replaced by plantations must also be considered against the background of political and economic events in Indonesia, primarily during the past three years.

Typically, local communities were indifferent to the company and its activities until their own land was directly threatened. There was then an intensive phase of opposition, largely quashed under the prevailing authoritarian regime. The impacts of losing their forest land - the main source of their livelihood – were not always immediately obvious to outside observers. The effects really hit people once any compensation payments and savings were used up. In many cases this coincided with Indonesia’s economic crisis which began in late 1997. There were sharp increases in the costs of food and basic commodities which people could no longer produce themselves from their local environment. Once the political regime changed, many villagers dared to express their resentment at their treatment by the company and local authorities during the Suharto years and began openly to demand a better deal from the company.

The community in the HSL concession area is now divided in its position towards the company/CDC. In each settlement there are supporters and opponents of the oil palm development. On the whole, supporters are those individuals in influential positions who have benefited financially from the company, land deals or the co-operative scheme. Many of these have been actively co-opted by the company to promote its goals. As all the settlements in the PT HSL concession area are administratively grouped as the ‘village’ of Manis Mata, the official village head of Manis Mata wields considerable power. This was especially so during the Suharto era. The village head is also part of the muspika - a tripartite sub-district body composed of civil, military and police personnel. PT HSL managed to procure private and community land by getting the support of these people. They then used their official positions to instruct the hamlet heads to do what the company wanted. Community leaders of settlements lower in the administrative hierarchy were therefore powerless against the authorities.

The majority of the community did not initially want the development. They wanted to continue their traditional land use systems as best they could once the logging companies had stopped operations in the area. They were reluctant to hand over their land, but eventually did so due to persuasion and/or intimidation by the company and local authorities. Most are now actively pressing for the KKPA co-operative scheme established by HSL and village officials. It cannot be emphasised too strongly that they are doing this not because they are enthusiastic about the scheme, but because it seems to be their as the only means of obtaining any land. Without land or a share in the plantation scheme, local people face destitution.

The KKPA scheme is a source of much uncertainty, misunderstanding and resentment. PT HSL and the Beringin Jaya co-operative share much of the responsibility for the confusion due to their lack of openness in explaining clearly to the whole community how the scheme works, the criteria for participation, the ‘credit’ system and the timetable for plot allocation. The government investigation team recognised that corrupt practices been involved in apportioning plantation plots (see Appendix C). The local government shares responsibility for this situation as the local agriculture departments at district and provincial levels have never provided NGOs with information about how KKPA schemes operate, despite repeated requests over many years.

A few people refused to give up their land and have been actively opposed to the company and the plantation from the start, especially after seeing the impacts on their neighbours. They are still holding out for recognition of their land rights and fair compensation. Their numbers have been increased by others who felt they had been cheated by company and/or local government officials or misled by their promises. There are also increasing concerns about air and water pollution in the vicinity of the processing mill since it started operations in 1998. Opposition towards PT HSL is strongest in the five settlements in the Manis Mata sub-district where people lost their communal customary land/forest: Keladi, Beriam, Asam Besar, Asam Kuala and Bagan Kusik in addition to individually held land which the company took over.

From the start, PT HSL has worked closely with the local authorities (as outlined above) in order to procure the land for its plantation. Where compensation payments were made for privately owned land and crops damaged, the level was determined by the local authorities. Even though this was well below prevailing market rates, these low prices were obviously to the company’s immediate advantage and so it is not surprising that PT HSL did not offer any more than the local legal minimum. Actual payments were made by local officials on behalf of the company in the presence of the local police and military. When complaints arose about the lack of compensation, the level compensation rates or irregularities in compensation payment, PT HSL appears to have hidden behind the skirts of local officials and left it to them to deal with.

Members of the community began to stand up for their rights after the downfall of Suharto. They asked to meet the company and the local government. For many months there was no response. Finally, in May 1999, PT HSL formally asked the Ketapang district administration to settle the problems they were having with the local people. Whether this was due to local pressure or a measure of rising political tension throughout Indonesia in the run up to Indonesia’s first democratic elections in four decades is not known.

The local administration set up a team under the acronym of TP3DII which apparently stands for “The Local Government Team to Promote Awareness of Regulations” (Tim Pelaksana Penyuluhan Peraturan Daerah II). If this is indeed the correct title of this team, it speaks volumes about official attitudes towards the Manis Mata dispute. It implies that the problems was not that local peoples representations for fair compensation had been ignored for many months, but that villagers were breaking regulations by protesting. It is noteworthy that local officials established this team within days of receiving PT HSL’s report, whereas it had never taken any action in response to complaints from the community.

This local government investigation was neither thorough nor balanced. The Team’s brief was only to investigate the problems which HSL had reported. These related specifically to the KKPA co-operative scheme and did not include any of the community’s other grievances over land seizures, destruction of property and compensation. Some villagers had been waiting as long as five years for compensation. The team did go to the field, but only went to one village (Bagan Kusik) and only spent two days there. Meetings were held with the village administration, the local security forces and the company. Villagers were allowed to attend one meeting, but the muspika (military and police) were present throughout the team’s visit. The TP3DII team reported that there were some grounds for the villagers’ complaints. Very few people had been allocated stakeholdings in the plantation co-operative scheme and compensation was owed to some villagers. Translations of the Team’s report and PT HSL’s response are provided in Appendix C.

Not surprisingly, many local people remained disappointed by the TP3DII’s findings and recommendations. For a start, the Team did not question that receipts given to individuals accurately represented the payments made to them, whereas several villagers allege malpractice and manipulation. The presence of receipts cannot be used as legitimate proof of payments. Furthermore, the team recommended where villagers were dissatisfied with compensation levels, they should pursue their cases through the courts. This is not feasible for ordinary people on low incomes who live far from any major towns and who are, in many cases, illiterate. Moreover, PT HSL responded only with promises that local people would be included in the problematic KKPA scheme at some indeterminate time and stalled further on payment for fire-damaged crops by claiming more field evidence was required.

As their own attempts to get the local administration or PT HSL to listen to them seemed to have failed, certain people asked M. Saleh SH to represent them legally and to press their demands. Mr. Saleh is a lawyer who comes from Manis Mata, but now practises in East Java. His personal interests in this case are not clear, but the local authorities have actively been trying to discredit him and keep him out of any negotiations (see press clipping, Appendix G). There is some evidence that Mr Saleh has adopted a forthright approach, for example writing to HSL/CDC accusing the village head of Manis Mata (Djainullah) and the head of Asam Besar (Khimsa) of corruption (letter dated 22/8/99).

By late 1999, Indonesia’s first democratic government was in place in Jakarta and at local (district level). Even in the backwaters of West Kalimantan, ordinary peoples’ expectations of their elected representatives were raised. A group of local people from Manis Mata sub-district made the long journey to the local assembly in Ketapang (DPRD II) in late December 1999 to ask for a hearing. The group which called itself called itself ‘The Team of 13’ comprised twelve people from Bagan Kusik, Beriam, Asam Besar, Keladi, Seguling and Tarahan village, plus M. Saleh. The meeting soon turned into a confrontation. Assembly members kept criticising M. Saleh and questioning why he was involved. M. Saleh replied that he was not there for any personal interest, just to present the community’s problems with PT HSL. When the moderator said M. Saleh’s assistant had to leave (on the grounds ‘that he had not been invited’), tempers flared up. The moderator ordered the whole community team to leave. After questions from local journalists, three community representatives were eventually allowed to tell their story to the assembly. They also pointed out local officials who were present as people who had tricked them into handing over their land. As a result, the local assembly set up another investigation into the dispute between the company and the community.

The Local Assembly Team (Tim 8) came to the HSL location in mid-January 2000 and visited eight villages (kampong) where people had complaints against the company or the KKPA scheme. Each village community selected its own spokesperson to explain the community’s demands. Once again, local people’s expectations were high since their representatives had actually come to listen to them and their visit came so soon after the confrontation in Ketapang. Once again they were disappointed: the local people have heard nothing since. When one community representative asked a member of the local assembly why there had been no official report or action , he was told “The DPRD is not a decision-making body. It is only a channel for listening to the community’s expectations.”

Local people do not yet realise the change in the relationship between PT HSL and CDC whereby CDC is now a major investor and responsible for the plantation management. Even if they did, they are unlikely to take their grievances straight to CDC’s representatives at the projects field office: firstly, because the villagers are afraid they will not be able to communicate with any foreign (i.e. English-speaking) staff; secondly because CDC shares offices with PT HSL and there is bad feeling on both sides between some villagers and certain HSL staff.

CDC appears to have done nothing towards recognising the conflicts between the community and its Indonesian partner or investigating the underlying causes. It was only once CDC realised that NGOs were not going to let this issue lie and after it had made its second substantial financial commitment to the company that, in mid-2000, it commissioned a ‘social and environmental audit’. The brief of this investigation was more limited than the term ‘audit’ suggests. The environmental team, from the Scotland-based consultancy LTS, was charged with establishing baseline data against which CDC/LTS will be able to measure future environmental performance and identifying areas for rehabilitation to ‘natural’ vegetation. This raises the question of why such a study was considered necessary at this stage, when CDC apparently invested in PT HSL on the basis of an earlier EIA commissioned by the company several years before. The first EIA has not been made available to local NGOs or environmental groups.

As yet, none of the parties involved in the Manis Mata project has taken a rigorous look at the social issues involved with the plantation. The terms of reference for the ‘CDC audit’ with respect to social issues were so weak that at least one consultant refused to take part in the team. The social report was eventually undertaken by the Jakarta-based consultancy BIDARA. Local people report that they were not consulted by this team, but that it did hold discussions with some official village representatives. It is therefore quite possible that this social survey glossed over areas of actual and potential conflict.

The potential for open conflict between the company and local communities, and within local communities, is very real. Some members of the local community are so frustrated that they no longer want to take up their grievances with HSL/CDC or the local government. They say they have tried this and it has got them nowhere. They are now taking to direct action. In mid-1999 villagers apparently reoccupied 2,000ha of HSL/CDC’s plantation, marking their former property with boards bearing their names. In early July 2000, 50-60 people from three villages cut down 400 oil palms in the concession area in broad daylight as a token protest. All plantation operations were stopped for several days and local security forces were reinforced by additional police from Ketapang. Two communities have recently written to the Indonesian President saying that PT SHL has violated their land rights and demanding that their customary rights are recognised (see translation Appendix E).

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Feb 1993 PT Harapan Sawit Lestari established
Late 1993 Land procurement and land clearance began
Early 1994 KKPA co-operative scheme introduced
mid-1994 Long dry season. Serious forest fires in Kalimantan.
1994 –1997 Land clearance continued
1996 CDC's first investment in PT HSL reported (US$3.3m equity US$13.5m loans)
June 1997 Asian financial crash started
mid-late 1997 Long dry season. Serious forest fires in West & Central Kalimantan
May 1998 Suharto stepped down as President. Replaced by his Vice president, Habibie
April 1999 New Local Autonomy Acts passed increased political and financial power to the regions
10th May 99 PT HSL sent report to the District administration, Ketapang re Manis Mata problems
12th May 99 TP3DII Team set up, headed by the Bupati, to investigate the HSL problem
19th May 99 Meeting between the TP3DII Team and Manis Mata Muspika
20th May 99 Meeting between the Team and Bagan Kusik people
26th May 99 TP3DII recommended PT HSL pays compensation and all indigenous community join KKPA
May 1999 Bank Bukopin and Bank Indonesia had meeting in Manis Mata with KKPA
June 1999 General Elections. Megawati's Democratic Party of Struggle won a majority.
23rd Aug 99 CDC signed new US$32m investment agreement with PT HSL
Oct 1999 Abdurrahmad Wahid became President of Indonesia with Megawati as Vice President
Nov 1999 Local people presented their demands to PT HSL and the government via M. Saleh SH
Late 1999 Indigenous communities started to reclaim their land, staking it out and erecting signs
30th Dec 99 'Team of 13' - locals plus M. Saleh - tried to present their demands to local assembly in Ketapang
15th Jan 00 Local Assembly Team (Tim 8) went to HSL location and visited all villages, but no action
May 2000 WALHI W. Kalimantan team went to HSL location and carried out a 10-day investigation
May 2000 CDC consultants went to HSL location to do an 'environmental and social audit'
6th July 00 Villagers cut down 400 oil palms in KKPA scheme as protest about lack of response to demands.
Local police sent from Ketapang to quell dispute.
7th July 00 PT HSL's legal advisors publicly question M.Saleh's right to represent the local community.

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  1. Compensation for all the land, traditional rubber plantations, fruit gardens and other agro-forestry systems damaged and/or taken by the plantation. This should be based on the long-term value of these agro-forestry systems to individual families and the community; in other words, the opportunity costs which local people have suffered by losing these forest resources. It must not be a simple calculation of the value of the timber or one year’s production. (In Bahasa Indonesia they are demanding ganti untung -opportunity costs - rather than ganti rugi – compensation).

  2. Recognition of indigenous land rights. This means that the practice of taking local people’s land without their direct consent must stop. HSL/CDC must not use the local authorities to procure land (at least until democracy at village and district levels is fully implemented under recent local autonomy legislation).

  3. A new agreement must be signed with local communities for the use of their customary (adat) lands over the 25 year period which the plantation permit covers.

  4. Payment of fines determined by customary law for the desecration of graves.

  5. A stop to burning by the company in and around its concession, whether this is to clear land for plantation, to control weeds or to prevent encroachment.

  6. Full transparency about the way the plantation co-operative scheme operates, including its advantages and disadvantages and the financial and other responsibilities of participation. This is essential for local people to be able to make an informed decision about whether to take part.

  7. All people who have given up land and who decide, after being properly informed, that they want to participate in the KKPA scheme must be allocated plots. As far as possible, these should be plots on their own land; agreements must be negotiated where this is not so.

  8. Members of the KKPA scheme must not be burdened with debt. The ‘credit’ system must be abolished.

  9. Even though they realise that there is no chance of going back to their old way of life since their land has been planted with oil palm, some villagers are now demanding their land back. Certain individuals have said that they want a share in the company’s profits proportionate to the land which was taken from them.

  10. Most local people want some kind of guarantee for their future from the company. They want an alternative means of making a living now their forest, agro-forestry gardens and fields have gone.

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CDC has been less than transparent to the UK government, the general public and NGOs in Britain and Indonesia about the Manis Mata project, with respect to the original nature of the land use, how it was being developed for plantations and the conflicts between the community and its Indonesian partner. In its 1996 Report and Accounts, CDC described the Manis Mata project in the following misleading terms: “The planting of oil palm represents a positive land use in an area which had previously been degraded following exploitation of its forest resources. The estate is to be operated to international standards and will provide a benchmark for other oil palm development in the area[25].” At the time CDC published this statement, its Indonesian partner was working with a corrupt, authoritarian regime to force the indigenous community to hand over privately owned and customary forested lands for little or no compensation and deliberately (and illegally) using fire to clear this for its plantation.

Of even greater concern is the fact that, in August 1999, CDC went ahead with a further US$ 32 million investment in PT HSL’s Manis Mata development. It did this even though local people had been complaining to the company and the local authorities since mid-1998, shortly after the downfall of Suharto. By mid-1999, there had been letters of complaint, visits to officials, deputations to the local assembly and demonstrations on the community’s part, and a flurry of official correspondence plus a government team set up to investigate this case. It is scarcely conceivable that CDC had no knowledge of this growing conflict. Furthermore, it had not commissioned any independent evidence on the environmental and social implications of this development. Concerns about the destruction of local people’s agro-forestry systems, problems over compensation and land rights violations had been raised by Down to earth and DFID in 1998 and 1999. Nevertheless, during this period, CDC reassured DFID that that there were no problems with its investments in Kalimantan.

As a recently privatised company, CDC’s sole shareholder is the UK government, in the form of DFID – the Department for International Development. DFID has very clear policy guidelines. All overseas development should be directed towards poverty reduction and the protection or creation of sustainable livelihoods. The preliminary findings contained in this report are that CDC’s investment in the HSL oil palm plantation at Manis Mata has so far failed badly on both counts.

The establishment of this plantation generated a number of serious problems within the local community relating to land rights, the destruction of people’s livelihoods, the payment of compensation and desecration of graves. These have already led to confrontation between local people, the company and the local authorities. Feelings are running very high, as certain groups in the community have been treated very unfairly. On the other hand, other elements in the community – including local officials - have benefited from the presence of the oil palm plantation. These divisions within the community further heighten local tensions.

Now that the plantation is maturing and palm oil production has begun, other important questions are arising. These are long-term issues about local people’s sources of income, their food security and general welfare in the future. There are grave concerns as to whether the Beringin Jaya’s plantation co-operative scheme can support all the people whose lands have been taken for the oil palm plantation and pollution of land and rivers resulting from the CDC/HSL’s operations. Other studies show that farmers in West Kalimantan tend to abandon the monoculture of oil palm in their ‘plasma’ plots and integrate oil palm within their agro-forestry systems. This helps to increase their food security but decreases plantation productivity[26].

To some extent, the conflict between the company and the community is the result of past government policy and practice, whereby officials in Jakarta granted plantation concessions without any consultation with local communities, and local officials implemented these decisions through corruption and oppression. However, this does not absolve PT HSL or CDC from responsibility.

One of the major factors contributing to the community’s frustration has been poor communications. For many years PT HSL has dealt with the local community at a distance, using local government officials as intermediaries. As the local government has its own agenda for promoting oil palm plantations this has further complicated the situation. Local people have been at best kept in the dark about developments and at worst misled. When villagers have tried to bring their concerns to the attention of the company, PT HSL’s management have referred matters back to the local authorities to deal with.

It was possible, while the repressive Suharto regime was in power, for plantation companies like PT HSL to rely on the civil and military authorities to keep the lid on the any ‘local difficulties’. Now that Indonesia is entering an era of democracy and local autonomy, this is no longer the case. Ordinary Indonesians’ resentment of past oppression and their aspirations for retribution are rising to the surface. This is illustrated by the way that, for the first time, members of the Manis Mata community have recently taken direct action, felling a number of oil palms as a token protest.

CDC only bought into the PT HSL development after the establishment phase had finished. It is not clear how open PT HSL’s management were about its conflict with the Manis Mata community when CDC first considered investing in the company. It is even feasible that the upper echelons of the company did not realise the extent of the negative impacts it had brought to at least some sections of the community and the strength of local feeling about this and therefore could not inform CDC properly.

Nevertheless, this does not absolve CDC from responsibility. Until December 1999, CDC was a public body which was directly answerable to the UK government via DFID. Its mandate was not only to invest in enterprises which were commercially viable, but to meet international, social and environmental standards. It was therefore CDC’s job to ensure that it was fully informed about the social and environmental impacts of the PT HSL plantation before it made its initial loans. As far as we can tell, CDC limited its investigations to a number of meetings with the company and visits around the plantation site itself. CDC, its consultants or advisors should have recognised that the Environmental Impact Assessment was completely inadequate as the basis for any investment decision since it was commissioned by the company and such documents are produced with no input from the community. CDC should have instigated a full, independent investigation prior to any further financial commitment.

Whether or not CDC realised the extent and gravity of the problems between the PT HSL and the Manis Mata community, by increasing its equity in the company and taking over management of the plantation it is now in a position where it must take action. CDC has a statutory obligation to abide by the business principles which have been agreed in consultation with DFID (see Appendix H). These include social and environmental policies intended to meet the highest levels of business integrity and ethical practice.

There are compelling reasons why CDC should do its utmost to settle conflicts between HSL and the indigenous community, quite apart from any moral or ethical arguments about the hardship which this plantation has brought to many local people. Firstly, the continuation or acceleration of disputes with the local community will have a negative impact on the plantation’s profitability and therefore affects its ability to repay its loans. Secondly, this kind of conflict also generates negative publicity for the company and its financial backers and could affect the prospects for investments in other parts of Indonesia or sectors of the economy in the future.

It would therefore be to CDC’s benefit to change its whole approach to the Manis Mata development, by adopting a more pro-active, participatory approach to management issues concerning the community. By being more transparent and open about the current and potential impacts of the plantation on the community and its environment, CDC/HSL would dispel the misunderstandings, misinformation and distrust which have surrounded this development so far. More than anything, it is local people’s uncertainties about their own future and the fate of their children and grandchildren which fuels their demands.

If CDC takes prompt, appropriate action, it is not too late to resolve the current dispute with the people of Manis Mata. Despite their understandable anger and frustration, local people are not yet demanding that CDC withdraws its investment or that the government withdraws PT HSL’s operating permits. They are, for the most part, being realistic. They realise that they cannot return to their former way of life since their forests and fields have now become oil palm plantation. Rightly or wrongly, they are they are looking to CDC/HSL to provide them with the security which they need.

The CDC/HSL development in Manis Mata is far from being one of the largest commercial oil palm operations in Indonesia or one of the worst in terms of its management practices. Nevertheless, it falls a long way short of the commitment to best practice made in CDC’s 1996 annual report. CDC now has the chance to set itself up as a beacon of excellence in this sector against which other developments should be measured. To do this, CDC/HSL will have to face up to – fairly and squarely – past malpractice and set up mechanisms whereby the company and community can genuinely work together to ensure that the plantation’s commercial success is not at the expense of the local community and the environment.

Taking a broader view, CDC’s investment in oil palm plantations in Indonesia conflicts with DFID’s Indonesia-UK forestry programme, which is investing in a range of initiatives intended to promote the sustainable management of forests and to protect the livelihoods of forest peoples. The conversion of logged over natural forest to oil palm plantations brings faster financial returns on investment than allowing forest regeneration, particularly as the latter involves protecting forests against illegal logging and fires. The long-term social and ecological costs of this investment strategy are largely borne by local communities – not the plantation companies and their financial backers. Financial institutions which assist Indonesian company groups to diversify their business into plantation development are therefore contributing to the destruction of natural rainforests. Since - as is the case with PT HSL - large-scale plantation schemes have a negative effect on the incomes and food security of the indigenous community, such investments are also increasing poverty and destroying sustainable livelihoods. This directly contravenes DFID’s stated policy for overseas development as outlined in the government’s 1997 White Paper.

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A   Specific to the HSL/Manis Mata development

  1. Greater transparency about past injustices and a genuine commitment to tackle these. As the major shareholder and manager of the plantation CDC must take responsibility for this and play a leading role. It cannot write past grievances off as history or leave their resolution to its local partner and/or local authorities.

  2. Take a more pro-active role to improving community relations in the future. Setting up new mechanisms for genuine consultation with the local community and conflict resolution should be central to this.

  3. CDC/HSL should commission an independent audit to investigate fully the social, economic and environmental impacts of the plantation. This must be a top-quality investigation – not something done on the cheap to assuage critics – using participatory methods. The terms of reference should be agreed with the indigenous community.

  4. The recommendations of the audit must be discussed openly with the whole community and implemented on a schedule to be agreed with the community.

  5. Set up an appeals procedure to deal with further disputes or disagreements over the settlement of present grievances. The whole community should be made aware of how this operates.

  6. Review the Beringin Jaya KKPA scheme and improve it, drawing on examples of good practice for other KKPA schemes in West/Central Kalimantan.

  7. Accept into the plantation co-operative all people who have given up their land and want to take part. Stakeholdings granted gratuitously to people because of their official positions in the community must be fairly reallocated.

  8. Abolish co-operative stakeholders’ debts through the KKPA. Villagers’ land and labour must be counted as their share in the plantation company.

  9. Set up community development schemes – after full consultation and preparation – to ensure that the whole local community has a means of making a living which is economically, socially, culturally and environmentally sustainable in order to replace the livelihoods which they have lost since the advent of the oil palm plantation.

  10. Respect the land rights of the local community. People who do not want to give up their land or to join the KKPA scheme must not be forced or coerced by any means into this.

  11. Hold full and open discussions about what form the recognition of indigenous land rights should take, in the community’s eyes – whether this means land certification, formal acknowledgement of customary (adat) property law or some other form.
In all these actions, CDC should seek advice from and the active participation of the local community, plus civil society groups which have good grassroots contacts and broad practical experience of the issues important to indigenous communities.

B   General points about investment in plantations in Indonesia

  1. CDC should not engage in or give any financial support to any developments in Indonesia which involve – directly or indirectly – the conversion of forest into large-scale plantations (i.e. over 100ha).

  2. CDC’s stated policy of “never financing developments that are based on the clearing of virgin forest” is meaningless and must be changed. All forest – whether ‘virgin’ or not – on which local communities depend for their livelihoods and which provides natural habitats for wildlife is valuable. The overriding principle must be that local communities’ rights over their forests must be respected.

  3. In all its activities, CDC must recognise the local community's rights and also protect natural resources. The whole community must be fully consulted and genuinely involved in any development from the initial (pre-planning) stages. Democracy in Indonesia is not yet at a stage where any investor or company should rely on negotiations with local or central government alone as representing the indigenous communities’ wishes.

  4. New forms of ‘partnership’ with local communities must be explored, apart from government-style co-operatives. These could include shareholdings in companies, equivalent to the land and natural resources which local communities are investing in their developments.

  5. The cost of fair compensation for any past injustices and/or rehabilitation due to previous mismanagement must be properly assessed and provided for as an integral part of the costs of any development. If these costs are too high to make the investment financially viable, the investment should not go ahead.

  6. CDC must commission full, independent investigations into the impacts of any development in which it considering investing before deciding whether to go ahead. This should involve cover the impacts on the local community’s rights as well as their local economy, social structure, culture and environment. It must not rely on local partners or government as sole sources of information. Procedures must be established to make the results available to the community and civil society groups while protecting commercial interests.

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Property taken Operations Dates Notes
Bagan Kusik Land with rubber plantations owned by 99 households (area not stated)

150 ha customary lands

Fruit gardens

Forest was deliberately burned, by the company.

Company representatives then asked the owners to give up their land in return for compensation.

Land was taken without consent.

Land was cleared at night if owners guarded it by day. Land was cleared the night before the burned rubber trees were due to be counted.


(private land and customary land)

The company only gave the village a generator and satellite dish in return for their customary lands.

Compensation for crops of Rp50,000/ ha was given to 40 families who had handed over their rubber plantations.

Only 7 of the 36 families who gave up their land got oil palm plantation plots in the KKPA scheme.

The majority of the indigenous community has not been paid compensation.

Divisions IV, V & VI of PT HSL's oil palm plantation are on Bagan Kusik's customary lands.

People were evicted from their land before they could count their rubber and fruit trees. The company only agreed to a count after strong protests from the community.

Some people are trying to reclaim their land.

No measurement/inventory has been made of the land given up by the indigenous community. People who gave up their land complain they were not allocated KKPA plots on their own land. The best plots were given to others who had not handed over any land.

Asam Besar 700ha customary land

One area which had just been prepared for rice planting.

Rubber plantations and fruit gardens

Two graves in Betipau

Forest was deliberately burned, by the company.

Company representatives then asked the owners to give up their land in return for compensation.

Land was taken without consent.

Land was cleared at night if owners guarded it by day. Land was cleared the night before the burned rubber trees were due to be counted.

1993-1994 The community's customary land was sold by its official representative (kepala dusun).

Most of the people who were forced to give up their land and crops have not received compensation yet.

Problem of desecrated graves still unresolved.

Some people are trying to reclaim their land.

No measurement/inventory has been made of the land given up by the indigenous community.

Some people were not been allocated KKPA plots where they wanted.
Some people are still demanding compensation.

Beriam Dozens of hectares of customary land were taken by company for its seedling area.

Land, fruit gardens and rubber plantations owned by 45 households.

Burial ground at Jelamuk with 8 graves desecrated.

Two graves at Petuipau desecrated: Maisil & Mahudi (now Division IV in PT HSL's plantation.)

Forest was deliberately burned, by the company.

Company representatives then asked the owners to give up their land in return for compensation.

Land was taken without consent.

Land was cleared at night if owners guarded it by day.

Land cleared the night before burned rubber trees were due to be counted.

Local military (Daramil Manis Mata) supervised the seizure of one man's rubber plantation and its destruction.

The local military prevented people from putting out fires which burned their rubber plantations. Local civil and military officials summoned 4 people who tried to stop the company taking their land, but they refused to attend.

1993-1996 The village official paid compensation of Rp300, 000 for the 8 graves, but the fine due under customary law has not been paid.

Only 16 of the 64households forced to give up their land have been accepted into the KKPA scheme.

Some people want to reclaim land which the company took.

Some people have not been allocated KKPA plots where they wanted.

Graves in Division V of the plantation are being cleared.

Customary land in Blocks I – N ( 1 block = 30 ha) is being cleared. Some people still demanding compensation.

Keladi 180ha customary land.

Field with crop of about 4 tonnes of yams.

Rubber plantations owned by 120 households.

2 graves desecrated (Goris at Sungai Jambu & Sitih at Sungai Kinjil)

Several agro-forestry areas locally known as tembawang: Sungai Ketanggang, Sungai Kinjil, Batubatu, Mamak, Keladi Beguruh, Paya' Manggis, Air Putih and Air Laut.

Forest was deliberately burned, by the company.

Company representatives then asked the owners to give up their land in return for compensation.

Land was taken without consent.

Land was cleared at night if owners guarded it by day. Land cleared the night before burned rubber trees were due to be counted

1993-1994 No compensation has been paid for the desecrated graves.

Some land owners only got compensation amounting to Rp20,000 per ha.

Only 51 of the 120 households have been allocated plots in the KKPA scheme.

Some people want to reclaim the land taken by the company.

People have not been allocated plantation plots in appropriate areas.

Manis Mata Privately owned land and rubber plantations. Some people were only paid compensation of Rp 50,000 - Rp75,000 per ha for their land.

Land and rubber plantations were taken without consultation and consent.

1993-1994 Some people are aware of the disadvantages of the KKPA scheme because their certificated land became a loan guarantee for bank credit amounting to Rp14,720,000. This loan has to be repaid within 20 years.

KKPA members do not know how much profit the company will take from their palm oil production.

Summary of the WALHI Kalbar Investigation Team, May 2000, original in Bahasa Indonesia

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Mr A (Beriam)

Mid-1993. The first the local community knew that their land was destined to become an oil palm plantation was when they encountered contractors with chainsaws who were felling their fruit and rubber trees. The villagers were furious, but there was nothing they could do as the contractors (said to be from a Sambas construction company) said they had the right to clear the land. The company had not consulted the community, let alone sought their consent.

Within a few weeks, at least five people who protested about the contractors’ activities were summoned to the local government office in Manis Mata where the administrator (Amir Hasibuan, the camat), military (Daramil) and police told them they had no rights because they had no land certificates. Even though some of their trees had been cleared, a number of people continued to insist that their customary rights to their remaining land were respected.

About three months later (around December 1993), the local authorities forced remaining objectors from Beriam village to accept that their land was being taken over. The village head and heads of the local military and police came from Manis Mata to ‘explain’ the situation to the locals (penyuluhan).

In 1993 there was nearly open conflict when the customary leader of Keladi community refused to hand over his 30ha rubber plantation for the oil palm development. He was eventually forced to give up his land for which he was only given Rp20,000/ha in compensation (less than US$10 at exchange rates then).

The village head acts as the public relations arm of HSL and procures land for the company. Even if a member of the community does not want to hand over his family’s land, the village head will sign the consent form. In some cases he has signed the official forms relinquishing land before even going to see the land owner.

The authorities announced in early 1994 that a KKPA scheme was being set up. Local people were told that this oil palm venture would be much more profitable than their rubber. Sunardi Basno, then district head came from Ketapang to address a public meeting held at the plantation nursery and brought the official letter about the KKPA with him. The bupati was much respected by the local people and so they believed what they were told.

After any large trees remaining from the logging operations had been felled, the land was cleared using bulldozers. Most of the land clearance took place between 1994 and 1996. Much of the clearance was apparently done at night, to avoid confrontation with the local community.

In 1996, a graveyard was destroyed when contractors took advantage of a local ceremony to clear land at Titik Jelamuk, a distant part of Beriam village’s field system (Km5 Divisi V in PT HSL’s plantation). This was fertile land where crops like rice, sugar and bananas had been grown for generations. During the growing season, local landowners would live in this settlement so they could tend their crops but returned to the main village when necessary. On this occasion, everyone had gathered at Beriam for a 3-day traditional festival held when a particular type of rice was ripening (membaham). While they were away, the bulldozers moved in. The community did not know that their land was to be taken and had not given consent. The families returned two days later to find their land, including their huts, agro-forest (mamak) and rice crop, had been completely razed. The graves of eight people were also destroyed (five named adults - Kisir, Maisil, Bilang, Situngkil, Siayat - and 3 unnamed children). After the people complained vigorously to the company, the village headman (who was probably acting on orders) called the family and gave them Rp 300,000. They accepted this as a ‘sympathy payment’ as the payment was on his own initiative and the customary leader had not been involved. According to Dayak law, a fine is payable for the desecration of graves but no such consultation has ever taken place so the matter is unresolved.

The company promised the land at Titik Jelamuq to Pak Lengit as private land within the KKPA plantation scheme as it was his land. However, it has become part of the main estate and the owner has received no compensation.

It was common practice between 1993 and 1996 for HSL (or its contractors) to bulldoze smaller trees, bushes, rattans, undergrowth and crops into heaps and then burn the lot. Typically, cleared vegetation was piled up in community’s plantations at the periphery of the area to be planted with oil palms, thus causing extensive fire damage to local people’s property when the ‘waste wood’ was burnt. It is said that contractors also used fire to clear land without bulldozing.

Suyiatno (daramil) stopped members of the local community from putting out fires started by the company that were engulfing their rubber trees near Beriam. These trees were 8 years old and very productive. Then company staff came and told people to hand over their land because ‘it is no use now’.

1994 was a very dry year and forest fires were widespread. Villagers of Beriam suffered extensive losses to their traditional plantations in September 1994 when the wind carried fires apparently set by PT HSL (or its contractors) to clear land around the neighbouring village of Manis Mata. The following tree crops were burnt: 25,000 native rubber trees; 15,000 cempedak (tree similar to jackfruit); 20,000 durian trees; 573 petei (an acacia-like tree bearing beans); 17,000 rattan palms. The company then bulldozed the land. This data was given to the police in 1994, but no action was taken against the company. The community is demanding compensation for these trees plus a substantial number which were not affected by the fires.

In 1997 there was another prolonged dry season and serious forest fires in West Kalimantan. More of the community’s fields and traditional plantations were destroyed. The community wanted to demand compensation from the company, because they blame the company’s practice of using fire to clear grass and undergrowth between rows of oil palms. However, the village official for Beriam refused to support their claim saying that this was "a national disaster" not the company’s fault.

As the bulldozers advanced on their land, the local community became increasingly angry. They eventually discovered that it was Beriam’s village head who had handed over the people’s land, although he personally did not have any land there. He promised that every member of every family whose land had been taken would get a stake in the KKPA scheme. He told people to provide copies of their identity cards and marriage certificates plus photos which were apparently needed by the local land registration agency (BPN). They had to pay for this to be done or they would not be eligible for the co-operative.

There has been large-scale destruction of the forests and fruit and rubber plantations (mamak) on which the community has always depended for its livelihood. This includes agro-forestry lands at Sei Tetanggang, Sei Kinjil, Batu-Batu, Keladi Baguruh, Air Putih and Batu Laut (all parts of Keladi); Menggelugup, Bekarangan, Ranggam Hilir, Ranggam Hulu, Mangguk and Berupis (all part of Bagan Kusik - see Map 4); Titik Jelamuk, Tarahan Putih and Titik Kebumbuyak (all part of Beriam).

“Before the company came, the R. Beriam was crystal clear. However, since then the water is cloudy and the river readily floods when it rains as there aren’t any big trees left to soak up the rainwater.”

“The water in the R. Keladi where the palm fruit processing factory discharges its waste is black and smells putrid. Don’t even think about drinking water downstream. You can smell the stench from the factory in Keladi village several kilometres away. Day or night the smell is always there.”

Ms B (Beriam)

Ms B had private land in Keladi sub-district about 30 ha which was taken without consent or compensation. The company also took over some of her land in Beriam in the night. The company offered compensation of Rp 7/ sq m to give up the rest. She will not accept this as she considers it is too low, but others have as they wanted the money – however little it was. The company would not increase its offer and said this is the standard amount which it pays for compensation. Ms B had refused to hand over her grandfather’s land without fair compensation. She describes him as mentally confused and physically very frail. She was demanding Rp2,000/sq m but the company refused to consider this.

24/11/99 Late the previous night, Ms B and two other people erected a fence around her family's land, which included a plantation access road. This blocked all plantation traffic. Company staff came to see her at 5.30am to ask her to lift the blockade, which she did. They told her that they would convey her compensation demand to the company and bring her a reply in a week.
1/12/99 Ms B blocked the road again (on her own) since no-one had responded to her demands. This time, HSL's Assistant Manager, the village head and various local sympathisers came to persuade her to lift the blockade. When she refused, the village head dragged her old grandfather out to speak to her. She then unblocked the road at 11am, by which time plantation lorries were backed up in both directions for some distance.
3/12/99 Ms B was summoned to the house owned by one of the company's staff to meet the sub-district head (camat). She was unwilling because the company man had threatened her with imprisonment if she blocked the road again. However, she did go. The camat listened to her demands and tried to persuade her to drop the price. He then said they would "have to ask the boss".
13/12/99 Ms B had still received no reply, so she went to see the village head at Manis Mata. He offered to help.
14/12/99 Ms B was told to go to see HSL's manager, Sumadi. She went to his home with someone from her family as a witness. Sumadi told them that her grandfather had received compensation in the form of a KKPA stakeholding and cash. It seems that, in her absence, company staff had been to her house and got her grandfather to put his thumbprint on a document releasing all their land. Ms B refuses to accept this document.

Mr C (Keladi)

In 1994, Goris’s grave was destroyed by the company (the operator’s name was Pak Karo Karo). This was done without the family’s knowledge or permission. It was actually his grandfather’s grave and his land. The only sign is now the stump of a durian tree surrounded by oil palm plantation. No compensation was ever paid.

Mr C was forced to hand over 7 bidang (approx 14ha) of his family’s land, but only got a 2ha stakeholding in the co-operative. So, in effect, the KKPA (or HSL) received 12ha of land free. This was apparently reallocated to other people. Only this 2ha stakeholding was measured by the local land agency (Badan Pertanahan) and so the certificate Mr C received was only for this land.

The company promised that his family would be given plots in the co-operative plantation (KKPA) in the same area in return for giving up their land. Mr C has been given a KKPA plot, but not on his own land. His land, and the rubber trees on it, has been allocated to Manis Mata people, even though they had no right to it. He is very disappointed.

The company paid compensation for some of his land, but only at Rp20,000 per ha for his land; in other words Rp 600,000 for 30 ha.

Mr D (Keladi)

This man’s land included rubber and fruit gardens (rambutan, durian, cempedak) plus the grave of a respected female ancestor (Sicikak). He does not know when the company came in and took his land; it may have been in the night or during the day. His trees were cut down even though he had marked it out his property with bamboo stakes. All he has left is a little of his fruit garden. He never agreed to give up his land. He is determined to protect what is left, including some cempedak trees (a kind of jackfruit). He keeps a close watch on his remaining property as he fears the company will come in and clear it while he is not there.

Mr E (Bagan Kusik)

This man became the customary leader for the Manis Mata area in 1980. The sub-district officer (camat) selected him at a meeting in Manis Mata village to which 97 members of the indigenous community were invited. Later the sub-district officer came to his village and stayed there. He asked Mr E for the names of all the people he represented, then went away. He has never heard from him since, except that the official sent him some second-hand clothes (government staff uniform). During the past 6 years, no-one from the sub-district office has wanted to see him (because his community has been demanding compensation and recognition of land rights since the company took their land).

Mr F (Bagan Kusik)

Mr F had land and a total of 5,000 rubber trees (8 ha was taken over by company and 20 ha burned; the remaining area is 16 ha). His father had land and 5,000 rubber trees as well, but all of this area was burned by the company. The fire happened in 1994. It affected Manis Mata, Beriam, Asam Besar, Bagan Kusik and Belian Sunsang, because the company did not control it.

The company is still clearing land for the plantation.

The company offered to buy the land at Rp 60,000/ha. Some members of the community felt this represented a substantial loss and decided to hold onto their land. They have marked it out “as enclaves of customary land”. No agreement has yet been reached with the company on this.

Some people who have given up their land have been given plots in the KKPA scheme, some have not, but no-one has received any proof of ownership yet. The company promised that people in the KKPA scheme would be given Rp 75,000/month for the 42 month period that before the oil palms were productive (in 2000), then the land would be handed over to them in the New Year.

This has not happened, so they have given M. Saleh the legal right to take up their case. He has tried at sub-district level, with no success yet, but says he will take their case to district and central government levels if necessary.

Three divisions of the plantation covering 3,000ha now occupy indigenous people’s land. People from Bagan Kusik and Asam Besar had staked out around 400ha and were refusing to give it up. He personally had given up 6ha and did not know what would happen to the rest of it. M.Saleh has demanded that they are all allocated land (in the KKPA scheme), but has not received any response. The Local Assembly team has investigated their case twice, but the problems are still unsolved.

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(original in BI)

From: the Head of the Local Plantations Dept/ Acting Team Leader
To: the District Administrator, Ketapang/Head of the TP3DII Team

A:   Basis for Action

  1. The District Administrator’s letter as Team Leader (No. 094/1162/Ekon 12th May 1999)
  2. Report from PT Harapan Sawit Lestari (No. 61/HSL-V/1999 10th May 1999) about problems to do with its plantation in Manis Mata sub district.
B:   Main Tasks
  1. To make an inventory of and investigate the problems reported by PT Harapan Sawit Lestari.
  2. To report on these findings to the district administrator (bupati) in Ketapang.
  3. To weigh up the issues and make recommendations on how to settle them, based on research in the field, to the district administrator.
C:   Implementation

The TP3DII team held the following meetings to make an inventory of and investigate the problems:

  1. Meeting with Manis Mata civil and military authorities (muspika) (19th May 1999 15.30).
  2. Meeting with the muspika, village head, head of the Beringin Jaya Village Co-operative and PT Harapan Sawit Lestari representatives at HSL’s FAD plantation office (19th May 1999 20.00-23.00)
  3. Meeting with the muspika, village head, Village Co-operative and members of Bagan Kusik community (20th May 1999).

D:   Findings

  1. Local people had handed over their land in return for compensation, the amount of which had been agreed by the community, village head, hamlet head and company. The evidence for this is the receipts for compensation paid out to each villager who had handed over land. The district administration has not been involved in these land transfers to date.
  2. Only 7 of the villagers who had given up their land have definitely been allocated stakeholdings in the KKPA co-operative scheme (as replacements for PT HSL staff who had withdrawn). No decision has been taken by the company or the Beringin Jaya Village Co-operative with respect to the other 33 families.
  3. There is a difference of opinion between the villagers and the company over approximately 150ha of customary land which the hamlet head handed over to the company.
    1. The company provided a diesel generator (village electricity) and a satellite dish at the request of the Bagan Kusik community. The company therefore only accepts into the co-operative scheme those villagers who gave up their own private land (40 families);
    2. The villagers consider that all families in Bagan Kusik are entitled to have stakeholdings in the plantation co-operative scheme because they handed over their customary land without compensation.
  4. When the company cleared the land, some villagers’ plantations were unintentionally displaced (sic). The company has still not paid out compensation for this.
  5. The company has not involved the district administration as the local authority in selecting candidates for Phase I of the plantation co-operative scheme.
E:   Conclusions

The following conclusions have been drawn from the Team’s meeting with Bagan Kusik villagers about their demands:

  1. There should be a review of the compensation agreed between the villagers and the company for payments made between 1993 and 1996 at rates of between Rp75,000 and Rp100,000 per hectare (approx US$30-50 at exchange rates then);
  2. All Bagan Kusik villagers, without exception, must be given stakeholdings in the plantation co-operative scheme because they have given up their customary land. They must be told which plots they have been allocated.
  3. The company should settle compensation claims for villagers’ land which was unintentionally cleared by the company.
F:   Recommendations
  1. As the company has made compensation payments directly to villagers who gave up their land, as agreed between the company, village administration and community, the legal basis for a review of compensation rates is very weak. However, if the villagers continue to press their case, they could pursue this through the courts in line with the current spirit of reform (sic);
  2. All Bagan Kusik villagers (to be listed by the district authorities) can be accepted as participants in the plantation co-operative scheme run by Beringin Jaya Village Co-operative, as demanded by the community. However, the location of their stakeholdings needs to be agreed since the villagers want their plots to be on their own customary or private land. The district authorities and the company should approach each family about this, because the most important thing is that the local people get plantation stakeholdings.
  3. The district authorities should take on the job of going back and collecting data again on land taken by the company and settle the issue of compensation for land/crops according the district administrator’s official policy on this (SK Bupati).
  4. To avoid local people being easily influenced by other parties speaking on their behalf, the company should make an agreement with the community and the TP3DII that everyone will be definitely receive stakeholdings in Phase II of the Beringin Jaya Village Co-operative plantation scheme. This should include agreements on the farmers’ data, the necessary paperwork and the names of candidate accepted and should involve the district authorities.
Hopefully the above report will prove useful in settling these issues.

Dated 26th May 1999, Ketapang

Yonathan P. Peno, head of the local Plantation Dept/Acting TP3DII team leader
Provincial Plantations Dept in Pontianak
Managing Director of PT Harapan Sawit Lestari
PT HSL representatives/management
TP3DII secretariat


2:   LETTER No. 102/HSL-VII/99 From HSL to the local government team
(original in BI)

Re: Response to the TP3DII Team Report
19th July 1999, Pontianak
To: The Administrative Head, Ketapang/Head of the TP3DII Team

With respect to the proposals made by the Head of the local Agricultural Dept/Acting TP3DII Team Leader in his report and accompanying letter dated 26th May, the board of PT Harapan Sawit Lestari would like you to know that the following decisions were taken at a meeting on 16th June 1999:

  1. The Directors of Harapan Sawit Lestari accept and agree to the Team’s recommendation that the people of Bagan Kusik who have given up their land/customary lands should be accepted as participants in Phase II of the Beringin Jaya KKPA co-operative scheme. Our field data shows there are a total of 78 families, including those in Bagan Kusik, Belian Sunsang, Asam Besar, Beriam and Manis Mata. They are now undergoing selection by the local authorities and the company.
  2. The co-operative plantation will be extended to include approximately 200 more families to satisfy the demand from other Manis Mata people who wanted to take part in Phase II. This should prevent any social problems arising in future.
  3. It is hoped that these measures will mean that all the Manis Mata people have been accommodated in the Beringin Jaya KKPA co-operative scheme and that there will be no further demands from local people about not receiving compensation or places in the plantation scheme.
  4. The listing of potential participants in the co-operative scheme (the 78 families plus the other 200) and their requirements - such as the location of the stakeholdings - will be carried out by the local authorities, the Village Co-operative and the Village Head, as suggested.
  5. As for the compensation for people whose land was taken unintentionally, staff from the local (district) government office are in the process of collecting data.
Thank you for your consideration.

Supardal Danuatmodjo, Director PT Harapan Sawit Lestari
Head of the local Agricultural Dept, West Kalimantan
Head of the local Agricultural Dept, Ketapang/Acting TP3DII Team Leader


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(original in BI/local dialect)

Tuesday, 12th August 1997 3.30pm

This is about my family’s plantations which were burnt in a fire set to clear grass from Division IV by Mr Amin’s staff. The fire has destroyed our rubber and fruit trees, cane sugar, yams and other crops. As Dayaks (the indigenous people) we use our fields to grow rice and whatever other foods and other useful things we can: rubber, various kinds of jackfruit, durian, betel nut, candlenut, a type of lychee, tamarind, mango, bananas, sugar, yams, chillies, lemongrass, gingers, pineapples and other fruits, vegetables and spices. All this just went up in smoke in the fire. My parents and I have lost 23,000 rubber and fruit trees, quite apart from what our friends have lost. My name is Gunsul and my father is Suli.

But Pak Amin’s assistant says that we have been paid compensation for all our crops. He told my father that we’d been paid for the yams on Friday 22/8/97. He was only given Rp20,000. But so far we have not been paid for all the other crops/trees. On the contrary, they now want me to sell my land and the fruit/rubber plantations which were burnt. The Village Head has offered Rp5,500,000 (approx US$500 at exchange rates then). They’ve even measured up my land and it’s 15.3 hectares.

However, all I want is compensation for the trees which were burnt in the fire. I want to replant my fruit & rubber plantations again because I’ve got no other land to leave to my children and grandchildren. All my father and I have ever done all our lives is to tap rubber, grow rice, rubber, fruit trees and so on. This is what we are asking for - from our Adat Council and the Local Assembly – as members of the community of Asam Besar.

Gunsul bin Suli, Asam Besar


(Original in BI)

I, the undersigned as the first party:   Kinyup of Asam Besar,
hereby grant the right to legally represent me to the second party:   Anang Dari of Asam Besar
to settle (the issue of) my plantation which was burnt by the company on 21st March 2000 at 2pm.
There were 3,000 rubber trees on my land.
I therefore demand that the company pays me compensation for my property which was burnt.
I make this letter of legal representation to be used as appropriate.

Dated 23/3/00, Asam Besar
Anang Dari

There are 2 copies of this letter identical in content and with identical signatures, but in different handwriting. This suggests that one or both of the signatories may have got someone else to write the letter, because they could not read/write. (Neither copy is witnessed or stamped).

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To the President and Vice President in Jakarta

Dear Sir
We would ask you to give instruction to all the relevant parties involved with Indigenous Land Rights issues. As an indigenous community, we have reclaimed our land which was forcibly taken from us by PT Harapan Sawit Lestari. They have operated in our area since 1994, using the authority of the local government. However, we did not want to hand over our land unconditionally, particularly if customary land belonging to individuals then becomes the private property of others. We are completely opposed to all such transactions.

Our conditions are that:

  1. PT Harapan Sawit Lestari (HSL) can operate a concession if it has gained consent from the indigenous community, including customary leaders (kepala adat).
  2. This land remains customary land for future generations as in the past, because it has been handed down from our ancestors as our property according to traditional law. We do not want this land to be considered as state property. This land is still our customary land.
We hope that this letter will receive your consideration and apologise for anything that may displease you. We thank you in advance for your help and your advice.

Yours truly,
The indigenous people of Beriam

Dated 27th May 2000

40 signatures/marks

Similar letters were sent to the Indonesian President and Vice President by 75 people from Bagan Kusik, witnessed by the community head, on July 6th 2000 and another 71 people from Asam Besar, witnessed by the traditional leader on July 7th 2000.

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(Translated from BI)

We, the undersigned:

  1. Stanislaus, B. BA: Senior Manager FAD Manis Mata, acting on behalf of PT HSL Chairman, Manis Mata plantation, henceforth known as the FIRST PARTY.
  2. Unca: Head of neighbourhood RT VII, in the hamlet of Keladi, acting on behalf of the Keladi community, henceforth known as the SECOND PARTY.
Hereby enter into the following agreement:
  1. The Keladi community agrees to the location of co-operative plantation owned by other Manis Mata residents on land close to the village which was formerly Keladi customary land (Blocks Q36-39; R36-39).
  2. The 34 Keladi people who are going to participate in Phase II of PT Harapan Sawit Lestari’s co-operative scheme (KKPA) are willing to be given (34) plots on land other than their customary land. The location will depend on land the company has available.
  3. As these 34 KKPA plots will be on land other than their customary land, these individuals will be given compensation amounting to Rp300,000 each (approx US$40 at prevailing exchange rates); totalling Rp10,200,000.
  4. The company and the people of Keladi agree to build a church together at Keladi.
  5. The First Party will improve community facilities by:
    - providing a 5kVA electricity generator
    - making a communal well from drinking water
    - improving the road between Manis Mata and Keladi
  6. Implementation by the First Party will depend on the company’s position and the situation in the field.
  7. On signing this agreement, the people of Keladi will not make any more problems over the use of their customary land by other Manis Mata inhabitants for the plantation co-operative scheme (KKPA).
This agreement is not only signed by the two parties above, but also by the Head of the Local Authority Team and witnesses deemed to represent the community which took part in the consultation.

Dated 2/10/99, Manis Mata

Stanislaus (HLS)
Unca (Keladi)

Witnessed by
Tamani, S. Sos (District Team Head, Ketapang)
Djainullah (Manis Mata Village Head)
Uti Jusni
Anang Masher


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(Original in BI)

Local people who feel they have been cheated by PT Harapan Sawit Lestari in Manis Mata sub-district have reclaimed around 2,000ha of oil palm plantation by marking it out and putting up signs bearing their names. This land has been controlled by PT HSL since 1995. “The people have taken this action against the plantation because the company violated their customary rights”, said M. Saleh, who has been chosen legally to represent their case by 300 of the protesting locals (Equator 14/7/99). Mr Saleh said that customary rights were protected under clause 5 of the Basic Agrarian Law No.5/1960.

The local people marked out and reoccupied the oil palm plantation because they felt their rights had been violated. The company changed the status of the land from customary land by claiming land use rights (HGU), then getting it certificated as private land. The locals had sought to settle the dispute peaceably, but the company had not responded to this. As described in KR No.34 June 1999, PT HSL took over the Dayak Jelai and Melayu’s land in Manis Mata through a co-operative scheme (KKPA). This was put in place because the community did not want to give up their land. So the community lent their land and a local co-operative was set up.

This is the first part of an article by Edi Petebang which appeared in the local magazine, Kalimantan Review, in late 1999. It quotes a local newspaper piece. Contrary to the title, it does not explain exactly how the land was sold or to whom. It also states that the company moved in in 1995, whereas other sources say 1993.

(original in BI)

PT HSL’s legal advisers from the legal practice of M Akil Mochtar plan to write to the East Java judiciary and East Javan legal organisations questioning whether Muhammad Saleh can legitimately represent a community in Manis Mata.

“We are questioning the legitimacy of Muhammad Saleh who has been given the right to legal represent some Manis Mata people in their case against PT HSL’s oil palm plantation. The reason is that he seems to make all sorts of excuses not to meet us, but he is sending off letters to various parties, including the company, about settling compensation for land. Indeed, his letters discredit PT HSL by accusing the company of violating local people’s land rights,” stated Hanafi KS firmly.

Hanafi said that recent events had opened up the possibility that they would press for legal action against Saleh for misrepresenting and slandering the local people. It appears that, when local people were questioned directly, their accounts differed from what Saleh had said in his letter. Some people had even withdrawn their letter granting Saleh the right to represent them. He said it was completely untrue that PT HSL has violated people’s land rights. “In its management of the oil palm plantation, PT HSL has fulfilled everything the government has asked of the company. If they happen to find any problems in the field, they have always tried to settle these in accordance with the law i.e. jointly through discussions between the company, local community and the government. They always do this and all parties agree with this way of doing things. Unfortunately, Saleh never attends these discussions. He only sends off letters to all and sundry”, said Hanafi in a disappointed tone.

The reason why PT HSL’s lawyers are writing to East Java is that Saleh’s last letter came from a practice in Malang and they want to know if he is registered there because the local judiciary say he is not registered to practise in West Kalimantan……

Summary of local newspaper article, Akcaya 7th July 2000

(Original in BI)

Indigenous people have run out of patience in Bagan Kusik, Asam Besar and Beriam (Manis Mata sub-district, Ketapang, West Kalimantan). They decided they had to take direct action. On July 6th, from 10am to 3pm, 65 people used 2 chainsaws to cut down around 400 oil palms belonging to PT Harapan Sawit Lestari (PT HSL). These oil palms had been planted on plots allocated to local people who were members of Beringin Jaya plantation co-operative scheme (KKPA). The protestors said all the co-operative stakeholders whose oil palms were felled were company supporters and traitors. Now the company has stopped making the monthly support payments of Rp83,000 to these stakeholders.

A security guard tried in vain to stop the protestors, but ran away after he was threatened with a chainsaw. Police who has been called in from Manis Mata rescued him.

It is well known that PT HSL has been involved in corrupt practices with local officials. The collusion was revealed by investigations carried out by the district authorities and members of the Ketapang Local Assembly. They discovered that local officials had held over a dozen land ownership certificates which rightfully belonged to members of the community. The local people are demanding that immediate action is taken against the company for collusion and land seizures.

The Local Assembly has recommended that all local people who had not been allocated plots should be included in the next phase of the plantation’s co-operative scheme. The indigenous community must be given priority and the company must pay compensation for the land it had taken.

The local agriculture department supported the Assembly’s recommendations and urged the company to review compensation rates through the courts. An official said that people who had given up their land should be accepted into the Beringin Jaya co-operative scheme and be allocated plots on their own land. The department had also asked the district authorities to do new inventory of the land which local people had lost to the company and settle the issues of compensation for land and crops. However, these are just his recommendations. So far, not one of them has been implemented.

This case of oil palm felling should be taken into consideration by the Commonwealt Development Company (sic), a British government investor which is interested in shares in PT HSL.


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(taken from CDC’s website


CDC Injects Another Us$32m Into The Indonesian Oil Palm Industry
Monday, August 23, 1999

On the 19th August CDC signed a US$32 million investment agreement with PT Harapan Sawit Lestari at a ceremony in Jakarta. PT Harapan Sawit Lestari is an oil palm plantation and processing company operating in the Ketapang Regency, West Kalimantan. Its total plantation area is 25,400 hectares - 4000 of which are under a smallholders scheme. CDC will manage the new entity and will own 65% of the business.

Commenting on the investment, Justin Braithwaite, Managing Director CDC Industries, said: "This investment is important to CDC Industries, our managed business division, as it builds on our US$160m portfolio of investments in the oil palm sector in South East Asia and the Pacific Islands. "Our strategy is to build world class businesses within certain specialist industries and oil palm is one of them. Indonesia has a comparative advantage in the oil palm industry and we are currently examining other investment opportunities within the same sector."

Sugito Darmawan, President Commissioner of PT Harapan Sawit Lestari, welcomed the additional investment by CDC, which will enable the current expansion to be completed: "We have worked closely with CDC since 1996 to develop the business. They provide us with valuable technical support and assistance and the additional investment will enable us to complete our expansion."

At the signing ceremony CDC was represented, among others, by Justin Braithwaite, Managing Director CDC Industries and Mark Edwards, Country Manager, CDC Indonesia. Mr Sugito Darmawan was accompanied by Mr. H I Julius, President Director of PT Harapan Sawit Lestari. Mark Edwards pointed out that CDC Indonesia currently manages a US$200 million portfolio of investments in agribusiness, transport and financial services and is actively pursuing a number of other potential deals.

CDC Industries manages 30 businesses in developing countries. At the end of 1998 these companies employed over 40,000 people in 15 countries, and CDC's investment in these companies totalled approximately US$350 million.



At CDC Capital Partners how we do business is extremely important to us. So much so that we have developed a set of five guiding principles:

  1. To be open and honest in all our dealings, while respecting commercial and personal confidentiality
  2. To be objective, consistent and fair with all our stakeholders
  3. To be a good corporate citizen, demonstrating integrity in each business and community in which we operate
  4. To respect the dignity and well-being of all our people and those with whom we are involved
  5. To operate professionally in a performance orientated culture and be committed to continuous improvement
We seek to apply these throughout our business and the businesses in which we invest via a number of distinct policies, relating to:

Our objectives here are:

Download a pdf of CDC's 'How we do business' Brochure*


To recognise that economic development results in environmental change. Sustainable development seeks to maximise the potential of environmental resources, to mitigate any adverse impacts, and where possible, to increase the supply of environmental assets.

As part of our developmental objective we therefore:

Download a pdf of CDC's 'How we do business' brochure*


To recognise that economic development results in social change and that, to be successful, development needs to be sustainable.

As part of our developmental objective we therefore:

Download a pdf of CDC's 'How we do business' brochure*

*Download not possible: technical fault reported

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(All figures from World Bank OED, April 2000, unless otherwise stated.)
Total area of palm oil plantation 3 million ha**
Area allocated to palm oil 8.7 million ha, BKMP 1997**
Applications for oil palm plantations (district level 1999) 32 million ha**
Productivity (1997) 3.37 tonnes CPO/ha
Pending applications from plantation companies around 4.5 million ha
Area of forest converted annually for palm oil (1999) 330,000 ha
Area of oil palm plantation planted in 1997 266,565 ha*
Growth rate of oil palm plantation are per year (1967-97) 12%*
Employment in oil palm industry (1998) Over 2 million people*
8 conglomerates control 2.1 million ha
Malaysian investments in oil palm 1.3 million ha
Oil palm companies implicated in 1997/8 forest fires 133 of 176 total
CPO production 1997 5.4 million tonnes*
CPO production 1998 5 million tonnes*
Estimated CPO production 1999 5.6 million tonnes*
Indonesian contribution to global palm oil supply 30% (second after Malaysia)*
Palm oil exports (1997) 2.9 million tonnes* worth US $1.4 bn
+ or - 49% of production **

* Casson A, 2000, The Hesitant Boom, CIFOR
** Wakker E, 2000, Funding Forest Destruction, Aid Environment

Destinations of Indonesian CPO exports (1997)*
Netherlands 44%
Spain 5%
Germany 12%
Greece 2%
Kenya 3%
Italy 9%
USA 2%
UK 1%

* Casson A, 2000, The Hesitant Boom, CIFOR

Area and CPO production by category, 1997
Province Area (ha) Production (tonnes)
Smallholders 813,175 1,292,829
Government Estate 448,735 1,800,252
Private Estate 1,254,169 2,287,366
Total 2,516,079 5,380,447

Land holdings owned by some Indonesian oil palm conglomerates, 1997
Holding Company Group Total land bank area (ha) Total area planted (ha)
PT PP London Sumatra Indonesia Tbk Napan Group 245,629 78,944
PT Bakria Sumatra Plantations Bakria and Brothers 376,041 34,392
PT Golden Agri Resources Sinar Mas Group 582,208 211,713
PT Astra Agro Lestari Tbk Astra International 280,000 177,976
PT Asian Agri Raja Garuda Mas 200,000 110,000
PT Salim Plantations Salim Group 275,000 125,000
PT Socfindo Socfin Group 47,777 37,180
PT Tolan Tiga SIPEF Group 52,869 36,312
Total   2,059,524 811,517


  1. Pardjoko S, Governor West Kalimantan, 1992, cited by LBBT
  2. Hutan: Darah dan Jiwa Dayak, M. Pilin, SHK-Kalbar, Oct 1999
  3. Information from Walhi Kalbar, June 2000
  4. Lembaga Bela Banua Talino, a Potianak-based non-government organisation. Cited in Panen Bencana Kelapa Sawit, P. Florus & E. Petebang, Institut Dayakologi, Dec 1999, p12
  5. At that time exchange rate varied from US$1 = Rp7,000-Rp12,000 (Indonesian rupiah)
  6. Information from WALHI Kalbar, June 2000
  7. Revised TGHK data, The Land Resources of Indonesia, RePPProT, 1990, p105
  8. Potter & Lee, 1998, Tree Planting in Indonesia, CIFOR Occasional Paper No 18
  9. Florus & Petebang, 1999, op cit, p16
  10. Detik - July 13, 2000
  11. Department of Forestry and Plantations, April 1999
  12. CDC Report and Accounts 1996, p21
  13. CDC website, Press Release 23/8/99
  14. CDC 1996 Report, op cit
  15. CDC website, Press Release 23/8/99
  16. Exchange rates in late June-early July were around US$1 = Rp 8,000
  17. This map is a copy in English of a sketch map drawn by representatives of Bagan Kusik’s indigenous community specially for the NGO investigating team.
  18. Biro Pusat Statistik, Ketapang, 1993
  19. Tree Planting in Indonesia: Trends, Impacts and Directions, L. Potter & J. Lee, Univ. of Adelaide, Feb 1998, p5
  20. The Hesitant Boom: Indonesia’s Oil Palm Sub-Sector in an Era of Economic Crisis and Political Change, A. Casson, CIFOR paper No.29, June 2000, p14
  21. Florus & Petebang,1999, p38
  22. Casson, 2000 op cit p46
  23. Florus & Petebang, 1999 op cit, p37
  24. Florus & Petebang, 1999 op cit p13
  25. CDC Report and Accounts 1996, p21
  26. Potter & Lee, op cit


Wahana Lingkungan Hidup Indonesia Kalimantan Tengah
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Palangkaraya 783112
Central Kalimantan

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