Forests, People and Rights, Down to Earth Special Report: June 2002

Part I: Forests, People and Rights


Forest figures
Indonesia's disappearing forests
Indonesia's forest wealth
Adat and Indonesian forest law
The Ammatoa of South Sulawesi
Forest classifications
Forestry in the Suharto era
Bob Hasan: downfall of the timber king
The cost to forest peoples
The Reforestation Fund
Plantations in the Suharto period
Pulp and paper
Oil palm
Forest fires
The first signs of reform
A legacy of conflict
Footnotes to Part I


Indonesia's forests are in crisis - a crisis largely overshadowed by the country's recent economic and political upheavals. Forest degradation and conversion have accelerated to some 2 million ha per year. Central and local governments continue to see natural resources - particularly forests - as a means of generating much-needed revenues and bestowing political patronage. A prominent Indonesian forest campaigner has called this approach 'national suicide'[1]

The challenge for Indonesia is to put new policies in place before conflicts over resources escalate further and the remaining forest is destroyed. There is an urgent need for a fundamental reform of Indonesia's laws on land and natural resources, including the recognition of indigenous communities' customary rights. At the very least, there must be a new paradigm of forest management with an integrated approach which takes into account the socio-cultural importance of forests as well as their macro-economic and conservation aspects.

The 'forests for people' theme is hardly new. It was the slogan of the World Congress on Forestry held in Jakarta in 1978. But little was done to translate the slogan into action. Since then, some 40 million hectares of Indonesia's forests have been destroyed: less than 100 million ha remains[2].

An estimated 100 million of Indonesia's 216 million people depend directly on forests and the products and services they provide[3]. These forest peoples are claiming the rights denied to them throughout three decades of Suharto's 'New Order' government and the centuries of colonialism which preceded it. They are demanding the end of a forest concession system which benefits the state and private sector at the expense of sustainable livelihoods.

In Indonesia, the state has control over all forests. Under the 1945 Constitution, it alone determines what forests can be used for and by whom. A handful of heads of giant conglomerates, military officials and other business associates of ex-president Suharto and his family have swallowed the lion's share of Indonesia's forest wealth. The rights over vast tracts of forest lands have been granted to logging, plantation and mining companies which have ruthlessly exploited these areas for short-term gain. Millions of hectares have been zoned for clearance and conversion to agriculture and settlements, including transmigration sites[4]. Very little of this land was 'empty'. On the contrary, most of it was - and still is - subject to traditional law or adat.

Holistic forest management practices, which may point the way to new models of community-based forest use, can still be found throughout Indonesia. These traditional systems, enshrined in customary law, include the repong damar of the Krui Peminggir in Lampung; the tombak of the Batak in North Sumatra; the mamar of Nusa Tenggara Timur; the lembo of East Kalimantan Dayaks and the tembawakng of West Kalimantan Dayaks. Most are sophisticated, dynamic multi-use systems which depend on managing a balance between natural forests, agroforestry and agricultural plots. Developed by indigenous communities over many generations, they are an integral part of their lives. These systems are under threat from policies and practices which ignore forest peoples' rights.

The sustainable, equitable use of natural resources in Indonesia depends on political reform. Indonesia is now a fledgling democracy. In July 2001, Megawati Sukarnoputri became its third new president in three years. Nevertheless, many elements of the Suharto regime remain unchanged. The military is still a key player at all levels - from the balance of power in Jakarta to everyday village life in the regions. The judiciary is weak and controlled by business and political interests. The current government is more concerned with maintaining national unity and fending off the worst of the prolonged economic crisis than it is in promoting human rights and democracy. Corruption is rife - not least in the forestry sector. However, recent regional autonomy legislation has introduced new opportunities, threats and uncertainties.

Indonesia's creditors - the World Bank, International Monetary Fund (IMF), foreign governments and private financial institutions - provided financial support for projects and policies which destroyed forests during the Suharto years. Since the 1997 economic collapse they have played a direct role in decision-making affecting forests and forest peoples, as they press Indonesia to keep up with debt repayments. These institutions must accept joint responsibility for the forest destruction and marginalisation of communities this has caused and start prioritising the needs of the poor over the interests of international finance.

This special DTE report looks at the context of current issues in forest policy in Indonesia (Part I), describes recent policy changes (Part II) and explores alternatives for sustainable futures for forest peoples (Part III). The report makes the case for fundamental reform which puts community decision-making and recognition of adat rights at the heart of forest management in Indonesia.

Forest Figures

Total land area of Indonesia 189 million ha
'Forest lands' (official - 1998) 147 million hai (78% total land)
Area administered as forest lands 112 million ha
Total forest cover 93 million haii
Forest as proportion of total land area 48%
Annual deforestation rate over 2 million haiii
Protection Forest (1997) 35 million ha
Conservation Forest (1997) 19 million ha
Production Forest (1997) 59 million ha
   [Permanent production 34 million ha]
   [Limited production 25 million ha]
Conversion Forest (1997) 8 million ha
Area allocated to logging - HPH (1998) 69.4 million ha
Established timber plantations - HTI (1997) 2.4 million ha
Area allocated to timber plantations (1998) 4.7 million haiv
Area allocated to other plantations (1998) 3.8 million hav
Forest degradation due to logging operations (1998) 16.57 million havi
Total area affected by 1997/1998 forest fires possibly 10 million ha
   - of which forests at least 5 million ha
Land affected by forest fires - Kalimantan 5 million ha
Contribution of 1997/8 fires to global CO2 Up to 30%vii
Estimated sustainable timber supply from forests 20 million cubic m/yearviii
Total industry capacity to process timber 117 million cubic m/yearix
Deficit between recorded supply and estimated use 41 million cubic metresx
Number of people employed by Dept of Forestry 47,993xi
Number of people employed by state forestry companies Perhutani 23,000; Inhutani I-V 6,000xii
Population of Indonesia 216 million
People directly dependent on forests 30 millionxiii ; 100 millionxiv
Number of indigenous people in Indonesia 50-70 millionxv
   - indigenous people dependent on adat forests 30-50 million xvi

* All figures (unless otherwise indicated) from Gautam M et al, January 2000, The Challenges of World Bank Involvement in Forests, OED Report World Bank.
i. All official figures vary considerably depending on the source.
ii. FWI/GFW (draft), 2002, p.10. This includes degraded and fragmented forest.
iii. D. Holmes in his Deforestation in Indonesia report to the World Bank (2000) gave a deforestation rate of at least 1.7 million ha/year for the decade to 1997. According to Forest Watch Indonesia, the rate may now be as high as 3.6 million ha/year: New Scientist 2/Mar/02.
iv. 7.8 million ha had been allocated to HTI concessions by 2000, but only 23.5% of this had been planted FWI/GFW, 2002.
v. Indonesian forestry academic Hariadi Kartodihardjo estimated that nearly 7 million ha of forest had approval in principle for conversion - mainly to oil palm. Cited in FWI/GFW, 2002.
vi. Critical land in forest areas covers 35.9 million ha according to Kartodihardjo, Tempo 5/Mar/01.
vii. World Bank, 1999, cited in Trial by Fire, 2000, Barber CV & Schweithelm J, WRI p17.
viii, ix, x. Scotland, N, Fraser A and Jewel N, 1999, Roundwood Supply and Demand in the Forest Sector in Indonesia, DFID/Indonesia-UK Tropical Forest Management Programme, Report No. PFM/EC/99/08.
xi, xii. Renstra, 2000
xiii. Ministry of Forestry, 2000, cited in WRI/FWI (draft) p3. Also World Bank OED, 2000.
xiv. European Commission Forest Liaison Bureau, 2000, cited in Mainhardt, 2001.
xv, xvi. Nababan A, 2002, Revitalisasi Hutan Adat untuk Menghentikan Penebangan Hutan 'Illegal' di Indonesia, paper for AMAN

Note: estimates of 'sustainable' yield ignore the impact of extraction on local peoples' livelihoods.

Indonesian Forestry Ministers

Year Forestry Minister President
1983 - 1988 Soedjarwo Suharto
1988 - 1993 Hasjrul Harahap Suharto
Mar 93 - Mar 98 Djamaluddin Suryohadikusumo Suharto
Mar 98 - May 98 Sumahadi Suharto
May 98 - Oct 99 Muslimin Nasution B.J. Habibie
Oct 99 - Mar 01 Nur Mahmudi Ismail Abdurrahman Wahid
Mar 01 - Jul 01 Marzuki Usman Abdurrahman Wahid
Aug 01 - present Mohammad Prakosa Megawati Sukarnoputri

Indonesia's disappearing forests

"State Ministry of Environment statistics show a forest destruction rate of between 2 million and 2.4 million hectares a year. The rate was highest during the last two years. The environmental NGO WALHI says the deforestation rate is 3 million ha/yr; that only 40 million ha remain and that Kalimantan - which has the fastest rate of logging - could be logged out in 5 years."
(Jakarta Post, 10/Dec/01)

The state of Indonesia's forests is far more serious than the government was prepared to admit during the Suharto era. For years, the government used an official figure of 143 million ha of forest lands as if this remained pristine forest, while dismissing as alarmist warnings by Indonesian non-governmental groups of deforestation rates as high as 1 million ha per year. In fact, a report drafted for the FAO and Indonesian government admitted a deforestation rate of over 1.2 million ha/annum in 1991[5].

Nevertheless, many people inside and outside government circles were shocked at the extent of deforestation revealed in 1999 by a mapping study commissioned by the World Bank[6]. In an unprecedented step, the evidence was presented on the Department of Forestry & Plantation's web site shortly before international donors met in Jakarta in January 2000 to discuss action on Indonesia's disappearing forests. Based on satellite imagery dating from 1994-1997, it showed a deforestation rate of at least 1.7 million ha/year: more than twice the Bank's earlier estimates[7]. Over 20 million ha of forest had been lost in the 12 year period since the previous reliable study. And the destruction goes on. Since 1997 deforestation has accelerated due to widespread forest fires and extensive legal and illegal logging. Over 70% of all timber in Indonesia comes from undocumented sources[8].

Forest loss is greater in some types of forest and geographical areas than in others. The more accessible and commercially valuable lowland forests have been targeted for most logging. The Bank report predicted that the lowland forests of Sumatra and Kalimantan (outside swampy areas) had, at most, five to ten years of commercial timber production left. Most of Sulawesi's lowland forest is already logged out. The extinction of swamp forests was expected to follow about five years later. Over 1 million ha of swamp forest was clear felled in Central Kalimantan during the late 1990s. Mangrove forests throughout Indonesia were also identified as under serious pressure. A forestry minister has since publicly stated that some 6.9 million ha of a total 8.6 million ha of remaining mangrove forest has suffered serious damage[9]. The gloomy conclusion was that, unless the government enacts new forest policies, the only forest remaining in Sumatra, Kalimantan and Sulawesi by 2010 would be high montane forest.

Other sources are even more pessimistic. In 1999 WWF estimated the rate of forest clearing at 2.4 million ha annually, up from 900,000ha in the late 1980s[10], while respected Indonesian forestry professor Hasanu Simon has said forest loss may be 2.5 million ha/year[11]. Indonesia lost 17% of its forests between 1985 and 1997[12]. Only around 17 million ha of 'commercially viable' forest was thought to remain by 1996 and 5 million ha (30%) of that had been earmarked for conversion[13]. Moreover, large tracts of the remaining forests are in West Papua, where access is very difficult and there are strong demands for independence.

Degraded land

What has happened to the land which used to be tropical rainforest? Some has been converted to agriculture - by small farmers or, more commonly, large-scale commercial ventures. Some has been replanted as timber estates or other tree crop plantations, although the extent falls far short of government targets. The expansion of oil palm plantations brought a significant increase in forest clearance in the 1990s but, as the World Bank report made clear, "of the 17 million ha of forest loss in Sumatra, Kalimantan and Sulawesi, only some 4.3 million ha have been actually replaced by other tree crops (mainly timber and oil palm plantations)"[14]. The data is scant, but it seems that substantial areas of forest are now degraded land, abandoned by commercial developers and land speculators after over-logging, forest fires and occupation by land-hungry peasants.

Forestry Minister Nur Mahmudi Ismail said early last year that 21.5 million ha of forest needed to be 'rehabilitated': 15.2 million ha within the supposedly permanent forest estate and 6.3 million ha in areas set aside for watershed protection and nature conservation. He estimated that it would cost over Rp200 trillion (US$20 billion) to restore this extent of forest[15].

One reason for the uncertainty over the extent of remaining forest and deforestation rates stems from a more fundamental question: exactly what is considered forest in Indonesia? To answer this requires some understanding of the legal basis for Indonesian forest policy. This is particularly important for forest peoples since the way the Suharto regime defined the forest estate has denied their rights to own, manage and access natural resources.

Forest maps online:

The Indonesian Forestry Department /World Bank maps of forest cover are at:

Indonesia's forest wealth

Indonesia is one of the biologically richest countries. Although it only occupies 1.3% of the world's land area, some 17% of species on earth are found there. Its forests contain 11% of the world's plant species, 12% of mammal species, 15% of reptiles and amphibians and 17% of birds[16]. Borneo alone has at least 3,000 species of trees; over 2,000 species of orchids and 1,000 species of ferns: over a third of these plants are unique to the island[17]. Over 1,400 species of bird have been recorded in Indonesia; 420 species are endemic. One reason for this high biodiversity is that Indonesia lies on the Wallace line at the junction of two major biogeographical zones. To the west of Bali, including the island of Borneo, species are similar to those occurring in mainland Asia; to the east of Bali, flora and fauna typical of Australia are found such as eucalyptus trees and marsupials.

Many different types of forest occur in Indonesia, depending on the soils, climate and altitude. About half the forest in the 'outer islands' is lowland rainforest, which is most heavily exploited. The highest proportion of commercially valuable species is found in the western archipelago, where lowland forests are dominated by the Dipterocarp family[18]. Half of the known species of commercially important dipterocarp trees are found in Indonesia, with 155 species in Kalimantan alone[19]. Peat swamp forests cover large areas of Sumatra and Kalimantan. They are also under pressure from commercial logging, fires and agricultural development schemes. Montane forest, found above 2,000m, is less species rich and more stunted but is important for watershed protection. Savannah forest and dry deciduous forests are typical of the drier eastern islands. These forests are very vulnerable to fire and over-exploitation: sandalwood is now almost extinct in Indonesia. Heath forest occurs on poor, sandy soils. Sago palm stands provide the staple food of many indigenous forest people, particularly in parts of West Papua, Sulawesi and the Mentawai islands.

Large tracts of mangrove forests are found along the coasts and rivers of Sumatra, Kalimantan and West Papua as well as fringing the smaller islands of the Moluccas and parts of Sulawesi. Despite their importance for protection against coastal erosion and as the breeding ground on which local fisheries depend, extensive areas have been cleared for fish/shrimp ponds and for timber.

Indonesia's forests are a centre of genetic diversity for many important food and economic crops including tropical fruits, bamboo, rattan, orchids and timber. They also provide a wide range of commercially valuable products such as timber, fruits, vegetables, nuts, spices, medicines, perfumes, seed oils, fodder, fibres, dyes, preservatives and pesticides. Over 6,000 plant and animal species are used by Indonesian communities in their everyday lives[20].

The threat to biodiversity

Many Indonesian species of animals and plants are now threatened with extinction due to deforestation and forest degradation. Scientists predict that the orang-utan (Pongo pygmaeus) faces extinction in the wild within the next one or two decades, unless species conservation can be effectively enforced[21]. Fewer than 25,000 orang-utans are thought to survive in the wild: an estimated 15,000 on Borneo and only between 5,000 and 8,000 on Sumatra. Numbers have fallen by half in the last decade[22]. There are only 50 to 60 Javan rhinoceros (Rhinoceros sondaicus) left in Indonesia and these survive only in Ujung Kulon National Park in West Java.

Asian elephants in Sumatra face extinction if the mixture of grassland and forest which is their preferred habitat continues to be destroyed. The remaining population is estimated at between 2,500 and 4,000. Conflicts between human and elephant populations are most marked in Riau and Lampung where habitats are rapidly being converted to farmland, rice paddies, and oil palm and sugar plantations to earn export income[23]. The Sumatran tiger (Panthera tigris sumatrae) may soon follow the Javan and Balinese tiger into extinction: there are only around 500 left. Poaching and destruction of the tiger's forest habitat are the main reasons for its decline.

The island of Sulawesi - a biological transitional zone between Asia and Australasia - has one of the highest levels of species endemism in the world. Sulawesi masked owls, hornbills, parrots, the babirusa 'pig-deer', dwarf buffalo called anoa, macaque monkeys, cuscus (species of marsupial) and the maleo bird are among those facing possible extinction.

The disputed territory of West Papua is home to at least 27 species of birds of paradise, many of which are threatened[24]. Local people say corrupt military officers are involved in smuggling out the birds. They are often used as bribes to secure jobs or promotions and are also given as souvenirs to Indonesian government officials and military officers. The birds are also threatened by logging, mining, road construction and land settlement.

National Parks are important strongholds for endangered species. Yet even there, forest fires and illegal logging are diminishing the forest cover and eroding the biodiversity of these and other protected areas. A number of national parks, such as Tanjung Puting in Central Kalimantan[25], Gunung Leuser in the north of Sumatra, Kutai in East Kalimantan and Kerinci-Seblat in South and West Sumatra have suffered severe degradation[26].

Adat and Indonesian forest law

Forest is "a unit of ecosystem in the form of land comprising biological resources, dominated by trees in their natural forms and environment, which cannot be separated from each other". It is an area "….which is designated by the government to be retained as permanent forest…….on lands where there are no ownership rights."

(Indonesian Forestry Law 41/1999)

"The Basic Agrarian, Forestry and Mining Laws make it easy for business to take our land and exploit the natural wealth which belongs to us"

(Indigenous peoples' position statement, KMAN, March 1999)

Indonesian law governing land and natural resources is complex and contradictory[27]. Customary (adat) law existed long before the modern Indonesian state and the Dutch and Japanese colonial periods. Each of the multitude of ethnic groups of the archipelago has its own history and developed its own spiritual beliefs, cultural norms, decision-making structures and regulations - known collectively as adat. Adat is not static and unchanging. Most of this knowledge has evolved through generations and has been sustained through practice and orally; little exists as written documents.

During the 19th century, the Dutch superimposed a western concept of 'the state' and state control of land on the territory they colonised. Through Dutch forestry and agrarian laws, the state claimed the right to control forest land. These laws were applied mainly in Java and those parts of the 'outer islands' (e.g. Lampung and North Sumatra) where the colonial administration was well established. Elsewhere, adat law and land tenure systems prevailed. The Dutch gave limited recognition to communities' land rights through the Domain Statement (Domein Verklaring).

After independence, this pluralist legal system was replaced by a centralist one whereby all rights are controlled by the state. The 1945 Indonesian Constitution, drawn up by the founding fathers of the new Republic, Sukarno and Hatta, strongly reflects their idealism, socialist leanings and anti-colonial sentiments. When they wrote that the state has the right "to manage all resources above, below and on the ground for the well-being of all its people" (Clause 33, sub-clause 3), they could not foresee that the state would become an agent of repression and exploitation - as happened after Suharto seized power in a military coup in 1965. The interpretation of that specific clause by Suharto's 'New Order' regime underpins all land and natural resources conflicts in Indonesia to this day.

After taking power, the Suharto regime quickly produced a stream of new laws and supporting regulations which gave it far greater control over natural resources. The Basic Forestry Law (5/1967) was a key part of this endeavour. This, like Dutch colonial forestry law, put all forests under state control. The forestry authorities (then part of the Department of Agriculture) issued logging permits to 350 private companies. The Basic Mining Law (11/1967) paved the way for the government to grant hundreds of mineral exploration and exploitation concessions, often overlapping with forestry and plantation concessions. This process also ignored the fact that most of this land was - and still is - already claimed under adat law.

Any Indonesian law is qualified by all-important 'operating regulations' (known as PP in Indonesian). Other policy instruments include presidential and ministerial decrees and parliamentary decisions. In the mid-1970s, the government issued a regulation on Forest Planning (PP33/1974) which allowed the Directorate of Forestry to define the extent of 'forest land'. This resulted in a Forestry Department empire covering 143 million ha - roughly three-quarters of Indonesia, including 88% of the land of the 'outer islands'.

State control of forests

The government made a clear distinction between 'land' and 'forest' - the two entities were controlled by different ministries and different laws. This division persists in official thinking today and lies at the heart of many conflicts with forest communities. Land defined as 'forest land' was to be controlled by the Forestry Department and the Basic Forestry Law, whether or not it was covered with trees. All other areas came under the administration of the Minister for Agrarian Affairs (and the National Land Agency when it was set up in 1988) and were subject to the 1960 Basic Agrarian Law[28].

Indigenous peoples, on the other hand, have their own understandings of the relationships between 'land' and 'forest'. Some do not distinguish between 'land' and 'forest' as one area could be managed both for agriculture and as a secondary forest within a rotational cycle. Others have a classification system far more complex than the government's simple distinction. The tenure and rights to use this forest/land may be held by individuals, families, clans, the whole community or a mosaic of some or all of these depending on the adat. The limits of each piece of land/forest are marked by natural markers such as streams, rocks, paths, hills or long-lived, characteristic trees. Commonly, but not always, the family which clears a patch of forest for the first stage of rotational use can claim that as its own. There is rarely any written proof of ownership; tenure records are part of the community's oral history.

By contrast, the government only recognises official proof of tenure in the form of land ownership certificates issued by the National Land Agency (BPN). Certification is a costly, time consuming process which is extremely difficult for forest people with limited access to urban-based lawyers or the cash to pay for their services. It is not even possible for many. Certificates can only be issued for individually held, private land - so communally held land is not eligible. Forest peoples cannot gain title to their land through the Land Agency if it has been designated 'forest land' as this is not subject to agrarian law. Another obstacle to legal tenure is the requirement that farmed land must be under permanent cultivation before it can be certified. This automatically excludes the rotational cultivation systems practised by many indigenous peoples which involve long fallow periods and excludes some agroforestry systems where crops are planted within forests.

Yet another source of confusion over the extent of state control over forests in Indonesia stems from fact that, by early 1999, only 68% of land claimed by the Forestry Department had been formally delineated and gazetted as required by law[29]. In other words, nearly one third of 'state forest' lands are not definitively under the legal jurisdiction of the Forestry Department. Once forest has been delineated, forestry officials have the legal duty to inform the local communities affected, but this rarely takes place.

Customary forest and indigenous rights

In short, indigenous peoples were dispossessed and disempowered throughout the Suharto years. Adat forests were claimed as state lands; adat land and resource tenure were not recognised; adat systems of forest management were disregarded. Parts of the 1945 Constitution (e.g. Clause 18 and the Explanatory Notes) and the 1960 Agrarian Act which recognise some indigenous peoples and their land rights were ignored by the government for the next three decades. Where the government did acknowledge the existence of customary adat laws, state law was (and still is) considered superior. This results in a fundamental difference in perspective between the state and indigenous peoples.

Indigenous communities continue to believe that their adat land belongs to them and that the state has no authority over it. Many claims originate from before the Dutch colonial period and, in some cases, this can be proven. These communities therefore maintain that the government cannot grant rights to these lands in the name of the Indonesian Republic to others for mining, forestry or plantations. It can only grant land use rights for areas not belonging to them. The onus, they say, should be on the government to show that this is not adat land before granting any concessions.

After Suharto was forced to resign in 1998, the interim government was pressurised into addressing the need to reform forestry and land law. The Minister of Agrarian Affairs attended the first Congress of Indigenous Communities where he was lambasted by angry representatives of communities locked in land disputes with private and state-owned companies. He subsequently took the first step towards the formal recognition of adat land ownership.

Ministerial decree 5/1999 allows the registration of adat lands - including communal lands. It also enables adat communities to lease their lands to the government or the private sector. Hopes raised by this initiative were soon dashed by the new Forestry Act (41/1999) which reasserted the principle of state control. This law recognises the category 'adat forest', but only as a class of state forests. Moreover, since the introduction of regional autonomy legislation, responsibility for the registration procedure has moved from Jakarta to local authorities and even the status of ministerial decrees is now open to challenge. Whether or not provincial or district level officials act on Ministerial Decree 5/1999 will depend largely on the lobbying power of adat communities and their supporters in the regions.

National Parks and adat rights

As is the case with almost all forested areas of Indonesia, Indonesia's National Parks are usually the customary lands of indigenous peoples. Most of these areas have been established as parks without any consultation with indigenous communities. Too often, the local people only know that the land which they believe is their ancestral birthright has become a park when park authorities - with or without government staff and the security forces - try to evict them. Indonesian law forbids any settlement or human activity within the core zone of a National Park. Communities may be allowed to live in enclaves, frequently in the buffer zone, but even so, they are not allowed to practise their traditional rotational land use systems. The irony is that the high biodiversity which attracts conservationists often owes is existence to the customary practices and cultural taboos of adat communities. Far from being pristine environments, many of Indonesia's National Parks are the product of generations of traditional natural resource management systems.

The eviction of the Moronene people in Southeast Sulawesi is one example of the conflict between parks and rights (see DTE 41:6). An example of a more positive approach in Lore Lindu National Park, Central Sulawesi is given in Part III (see The Behoa People of Central Sulawesi).

The Ammatoa of South Sulawesi
An example of traditional forest management

Most of the lowland rainforest of South Sulawesi was logged many years ago to make way for extensive plantations, agricultural land and other 'development'. Remaining forest areas are under serious pressure due to population growth. Yet only 250 km east of the provincial capital of Makassar (Ujung Pandang), in the eastern part of Bulukumba district known as Kajang, there is mature rainforest, rich in wildlife. This is the customary land of the Ammatoa who still live by a system of strict rules governing their social behaviour and their relationship with their forest environmenti.

The Ammatoa (sometimes called the Kajang) share some similarities with the Baduy of West Java. An inner community, which observes the strictest form of their belief system - the Pasang ri Kajang, is surrounded by a more extensive area governed by customary law. The inner community was allowed to continue the traditional way of life when the Suharto regime introduced legislation standardising the village governance system throughout Indonesia in the 1970s. Traditional leaders in the wider community were supplanted by government appointed officials but, to some extent, they have managed to hold onto their customary power and practices. Members of the inner community, centred on the village of Tana Toa, wear characteristic black clothing and do not use any modern goods such as motor vehicles or plastics.

The Ammatoa's forest lands now cover 317.4 ha and are bounded by four rivers. These forests are rich in plant and animal life: rattan and many commercially valuable tree species are still found there. The conservation of this forest stems directly from the Kajang beliefs which stress the social values of working together, helping others and co-operation. The Ammatoa believe that Turie' A'ra'na created the world and all living things as one complete system, analogous to the human body with its different organs. Hence all parts must be cared for and preserved to maintain the integrity of the whole. The forests are believed to bring the rains, maintain water sources and keep the balance between wet and dry seasons.

The forests are divided into three zones: the 'forbidden zone' where no-one is allowed to enter or to disturb the forest; the 'inner zone' where people can only collect forest products at particular times, determined by customary law; and the 'community zone' which everyone can use. All forest is sacred to the Ammatoa and it is forbidden to fell trees, hunt or collect forest products unless permitted by customary law. The forest is also the place where many of the ceremonies which are an integral part of community life must be held: ceremonies to appoint traditional leaders; to curse or ask forgiveness for people who have broken adat law; to give thanks or ask for protection; and to make peace with their Creator.

According to the Kajang belief system, people should only take sufficient to meet their basic needs in order to maintain a balance with the rest of the environment. Hence the Ammatoa have a subsistence lifestyle and are largely self-sufficient. They depend on cultivating traditional varieties of rice and vegetables and fishing. Deer, monkeys, cuscus and birds are hunted for food. Local timber is used for housing and furniture and some is sold to boat-builders in fishing communities on the coast.

Ammatoa society is governed by a council made up of traditional leaders (Galla) and their representative - an 'executive' or Karaeng Tallu. The customary guardians (Sanro), responsible for holding ceremonies and healing practices, are also important in everyday life. Apart from ceremonies, these community leaders meet regularly to take decisions. Some Galla were appointed as official village heads during the 1970s and this has undoubtedly helped to protect their pre-Islamic culture and their environment. Equally important in this respect has been this indigenous people's fearsome reputation for magic. One Ammatoa spokesman explained that he would use his power to command swarms of wild bees if their lands were threatened by outsiders: "Developers and security forces can defend themselves against knives and other weapons, but they cannot fight against bees".

i.  Interview with Ammatoa representative, AMAN Congress March 1999; WALHI SulSel pers com

Forest classifications

All 'state forest' in Indonesia is officially classified into three functional categories: Protection Forest (for watershed protection and prevention of soil erosion); Conservation Areas (including National Parks and Nature Reserves) and Production Forest - sub-divided into 'Permanent Forest' (for sustained logging) and 'Conversion Forest' - areas to be clear-felled for agriculture, settlements and other non-forestry uses. Some land with tree cover is excluded: perennial tree crops including rubber, coconut, oil palm and various fruits and nuts are classified as plantations and count as 'estate crops' or agriculture. Paradoxically, industrial timber estates (HTI) of fast-growing tree species to supply the pulp industry are included in the forest inventory.

This classification, carried out during the 1980s, was called the Consensus on Forest Land Use (TGHK). The classification was based on biophysical criteria (primarily soil type, slope and climate) with no consideration of social or economic aspects. Also, the 'consensus' was only between provincial government agencies. There was no consultation with local communities, let alone consent. Throughout Indonesia, communities whose land had been declared Protection Forest were targeted for resettlement as 'local transmigrants'. Many other forest peoples were also forced out of areas allocated to logging companies under the Department of Social Affairs' programmes to settle 'shifting cultivators' and to relocate 'isolated and backward tribes'.

Forest categories - Suharto era

The 143 million ha of 'forest lands' were divided as follows:

Protection Forest 30 million ha 21%
Nature Reserves/National Parks 19 million ha 13%
Limited Production 31 million ha 22%
Regular Production 33 million ha 23%
Conversion Forest 30 million ha 21%

Conversion Forest figures were lower later (see table, above) as conversion proceeded.
Source: Jakarta Post 8/Mar/96

A major obstacle to Indonesian forest policy has been the lack of accurate maps of the forest estate and land with forest cover or reliable data on deforestation and replanting (until the World Bank/MoF maps were published – see Forest Figures box, above). Large areas of 'state forest' in Indonesia are not forested and, in some cases, have not been for several decades. The original designation was made by forest officials' lines on maps in Jakarta, rather than accurate field data. 'State forest' lands largely followed the areas designated as forest during the colonial period, even though significant amounts had already been turned into agricultural land or settlements by indigenous and migrant populations. Villages, farmed land and coarse grasslands plus millions of hectares of traditionally managed forest systems became part of Indonesia's forest estate. For example, in South Sumatra, official forest maps in 1984 showed there was three times more forest than during the Dutch colonial era, mainly because these included smallholders' rubber and fruit plantations[30].

Poor mapping caused serious errors. Some 'permanent forest' turned out to be grassland; logging concessions were granted on steep slopes; and transmigration sites located in swamp forest. The worst of the technical shortcomings were rectified through a comprehensive land use survey carried out to identify appropriate transmigration locations during the late 1980s. The RePPProT study, funded by British government grants, recommended revisions in the Forestry Department's figures, but did not address the way that the forestry and transmigration authorities had annexed indigenous peoples' lands[31]. Also, by categorising land as 'forest', 'extensively used land' and 'intensively used land', the study perpetuated the myth that the forests are not used by forest-dwelling peoples.

"Collusive agreements between officials of the Forestry Department and concessionaires, inadequate mapping, tardy gazetting of nature reserves, and poor co-ordination among authorities controlling each use category resulted in the transfer of 4.55 million hectares of protection and conservation forests to HPHs by 1990."   

(WALHI, YLBHI, 1992)

Until the 1992 Spatial Management Act, Indonesia had no integrated land-use planning. While the forestry authorities in Jakarta were awarding logging concessions (HPH) to private companies, other ministries were also handing out rights to forest peoples' lands, for example, as mining concessions or transmigration sites. Poor co-ordination between central authorities and inaccurate maps produced overlapping concessions. Not uncommonly indigenous communities found both a logging and a mining company claiming their land. Meanwhile, during the 1980s, local authorities had been drawing up regional development plans (RTRWP) independently of the Forestry Department. The result was two separate and often contradictory land-use zoning schemes. From 1992, the two sets of plans had to be consolidated.

The resulting 'padu serasi' negotiations between local government and forestry officials were long and difficult, not least because the process involved two powerful government bodies in Jakarta: the National Planning Board (BAPPENAS) - under the Ministry of Home Affairs - and the Forestry Department. Most, but not all, provinces had agreed integrated land use plans with the central authorities by the late 1990s. Then everything changed again with the introduction of regional autonomy in January 2001. This completely altered the relationship between central and local governments and transferred zoning responsibilities to local authorities.

The Forestry Department

During the Suharto period, the Forestry Department became one of the largest ministries in terms of staff, budget and political influence. Together with its regional and provincial offices, this ministry employed up to 30-40,000 peoplei. It shares an office complex in Jakarta with the State Forestry Companies Inhutani I-V; Perhutani (now privatised) and several private timber companies; the plywood trade association, APKINDO; and the Association of Indonesian Forest Industries (APHI).

Responsibility for forest protection and nature conservation (including National Parks) also comes under the Forestry Department - where business priorities have meant that conservation interests are secondary. The Environment Ministry - which is most critical of negative impacts of government policy - is a separate, much smaller entity with little political power.

At various times, forestry has been under the control of the Minister for Agriculture and/or combined with the plantations sector. For simplicity's sake we refer to the Forestry Department throughout.

i.  Barber et al, 1994

Forestry in the Suharto era

"From nearly nothing in 1966, the timber and forest products industry has with the state's active support grown into a highly concentrated, wealthy and well-connected political and economic actor dependent on cheap raw materials, used to high levels of profit and accustomed to passing on the environmental costs of unsustainable logging practices to local communities, the state and society at large. The industry is now a significant factor in forest policy-making and thus lessens the autonomy of the state to move in directions that might be more sustainable but would hurt the industry" .

(C.V. Barber, 1997)

During the thirty three years of Suharto's rule, Indonesia changed from a predominantly rural economy to become one of Southeast Asia's 'tigers'. Suharto's uniform, unsustainable vision of development depended on the exploitation of the country's rich natural resources to foster urbanisation and industrialisation. Oil and gas, minerals and forestry were, and still are, seen as important sectors of the economy because they generate state revenues, foreign exchange and employment. At the forestry industry's peak, in the early 1990s, forest products contributed 6-7% of GDP and 20% (US$8.5bn) of Indonesia's foreign exchange earnings - second only to oil[32].

The forestry sector was also a valuable political tool. Forest concessions were granted to the military and to business colleagues of the Suharto family. Under this patronage, timber companies grew into conglomerates which diversified into many other areas of the economy including real estate and banking. The rise and fall of Mohammad 'Bob' Hasan - widely known as Indonesia's de facto forestry minister for years - epitomises the crony capitalism which characterised the New Order regime (see box).

The recent history of forestry in Indonesia can be summed up as three phases:

1970s:   the development of large-scale commercial logging
1980s:   the growth of the timber processing industry
1990s:   the plantation boom (pulp and oil palm).

The 'outer islands' have largely been logged by private companies whose primary interest was money not forests. The state-owned forestry companies (Inhutani I-V) which operated there were little better (see box). Forestry became just another economic sector where entrepreneurs could get a quick return on investments. This was asset stripping in the form of forest destruction. Macro-economics and politics rather than expert forestry advice ruled forest management. The rights and interests of forest-dwelling communities counted for nothing in the rush to extract quick profits.

The HPH concession system was hugely damaging: it destroyed forests through over-logging; increased the likelihood of forest fires; violated indigenous rights; deprives forest peoples of their livelihoods and institutionalised corruption. Logging trails opened up forest to exploitation by outsiders, including local townspeople, migrants and transmigrants placed on failing sites. Logging camps employing non-local labour brought disruption to forest-dwellers and social conflict.

In theory, commercial loggers were required to practise selective logging and, later, to replant logged areas under Indonesia's TPTI[33] system. In reality, timber companies had a free rein due to minimal supervision of logging concessions and rampant corruption. Illegal practices, such as exceeding the annual allowable cut and felling outside concession limits, were commonplace and companies did all they could to avoid paying forestry taxes and levies.

A Reforestation Fund set up in 1980 for replanting logged areas (see box) was pilfered by companies, ministers and the president and his family for their own purposes.

Annual forest fires were a symptom of the growing crisis in Indonesian forestry. The system had built-in incentives to over-log a concession and fines or sanctions were rare.

Indonesian companies were not alone in benefiting from the Suharto system. International timber companies moved in during the logging boom of the 1970s in order to export logs, including US-based Weyerhauser and Georgia Pacific and Japan's Sumitomo and Mitsubishi. Most pulled out towards the end of the decade but some South Korean and Japanese companies maintained an active interest.

The state-owned companies: Perhutani and the Inhutanis

Indonesia's state-owned forestry companies were established in the 1970s. Perum Perhutani managed 2.5 million ha of forests and plantations in Java and East and West Nusa tenggara. Most of this was teak and pine plantations on Javai.

Meanwhile, the PT Inhutani group controlled far larger amounts of forest on the 'outer islands': PT Inhutani I in East Kalimantan, South Sulawesi and Maluku; PT Inhutani II in South and East Kalimantan; PT Inhutani III in West and Central Kalimantan; PT Inhutani IV in Aceh, North and West Sumatra and Riau; PT Inhutani V in Jambi, South Sumatra, Bengkulu and Lampung.

As logging companies' permits expired or were withdrawn due to malpractice, more and more forest land outside Java came under Inhutani's control. Inhutani I-V were also allowed to form joint ventures with private logging and plantation companies. In this way, Inhutani expanded into the oil palm sector. By mid-1998, 14 million ha were being managed by the Inhutani group, with 8 million ha as state-private joint ventures. (WRI/FWI 2002 (draft) p26)

While the Inhutanis operated like profit-oriented private companies, Perhutani also had a social mission. Apart from rehabilitating forests under its control, Perhutani set up some 'social forestry' schemes for people living in and around the areas it controlled on Java. Nevertheless, the social and environmental track records of Inhutani companies and Perhutani were no better than private companies. Tensions were high between Perhutani and villagers on Java who claimed rights to forest landii. From 1998 onwards, this erupted into open conflict and large-scale timber raids on plantations.

Perhutani was privatised in March 2001. Since the economic collapse in 1997, all Inhutanis have been in severe financial difficultiesiii.

ii.   FWI/GFW, 2002 (draft) p26
ii.   See Peluso N., 1990, in Poffenberger, 1990, for a good account
iii.   Kompas 4/Apr/01


Foreign companies continued to promote and benefit from forest destruction in other ways. International miners were invited to exploit the mineral wealth underlying the forests, through foreign direct investment and mining legislation passed in 1967.

Mining in Indonesia has been a significant cause of forest destruction, with concessions covering over 36 million ha - a fifth of the country's total land area. Much of this is forested land.

The damage is done not only at the mine itself, where the forests are torn up in order to excavate the ores, but also by the building of roads, towns and ports, by the pollutants carried in water courses and by the increased competition for land and resources caused by the influx of outsiders[34].

In 1967, PT Freeport Indonesia - now operator of one of the largest gold and copper mines in the world - was the first to take advantage of mining opportunities under Suharto's New Order regime. with Canadian nickel miner INCO, coming in the following year with a concession covering 6.6 million ha in a forested region of Southeast Sulawesi. While Freeport's mine itself was not in a forested area, around 13,000ha of forests of lowland forest downstream have been destroyed or damaged by tailings, depriving local peoples of their livelihoods. Freeport is owned by US-based Freeport-McMoRan Copper & Gold Inc, in which Britain's Rio Tinto has a 14.6% share.

Rio Tinto acquired 90% of the Kelian gold mine, which started production in 1992, and half of PT Kaltim Prima Coal - Indonesia's biggest coal producer - together with BP[35]. Both these mines are located in forest areas of East Kalimantan claimed by indigenous peoples. The Kelian mine, like Freeport, and the Australian-owned Indo Muro Kencana gold mine in neighbouring Central Kalimantan, have been linked with serious human rights violations[36].

The military and timber

Since 1967, timber concessions have been distributed to reward loyal generals and appease potential dissidents in the military. Timber is a well-established means of supplementing the inadequate military budget, particularly at regional command level. The Department of Defence's business group PT Tri Usaha Bakti (TRUBA)controlled at least 14 timber companies by 1978i. Companies controlled by military foundations were given lucrative concessions in border zones and occupied territories. The military ran sandalwood logging operations in East Timor and were heavily involved in the trade of the fragrant gaharu resin in West Papua. Until the 1999 elections, the majority of cabinet ministers and governors had military backgrounds.

The International Timber Corporation of Indonesia (ITCI) controls one of the largest logging concessions in East Kalimantan, adjoining Kutai National Park. The company, originally a joint venture between TRUBA and US company Weyerhauser, obtained a 601,000ha concession in 1971. Weyerhauser pulled out of Indonesia in 1983ii. Until the downfall of Suharto, TRUBA owned 51% of ITCI with the remainder split between holdings controlled by Suharto's son, Bambang Trihatmodjo, and business tycoon Bob Hasaniii. There are unconfirmed reports that the military are continuing to log the area heavily. ITCI also has a large timber plantation in the same area (PT Hutani Manunggal) which was included in the list of companies accused of causing the 1997 forest fires by burning to clear land. Local groups also reported serious forest fires in ITCI's concession in early 1998: 20,000ha were reported to have gone up in smokeiv. ITCI was not prosecuted. The company unsuccessfully applied for certification under the Indonesian Ecolabelling Standards system in 1998v.

Another military-owned logging company, PT Yamaker, which had a concession along the Indonesia - Malaysia border in West Kalimantan extracted far more timber than was permitted under selective logging rules. Large tracts of Dayak customary lands now need reforesting. Local communities who have been left destitute are taking court action to press for Rp10 bn (US$1million) compensationvi.

Military involvement in logging in South Aceh is included in J. McCarthy's CIFOR Occasional Paper 31, Oct 2000: Wild logging.

i. Dauvergne P, 1997, Shadows in the Forest, p71
ii. Gallon Environmental Newsletter 8/Jan/01 quoting Barr 98
iii. Indonesian Business Data Center, 1994, p.166
iv. pers com - email from Samarinda 15/Apr/98
v. pers com LEI
vi. Kompas 9/May/01

Forest consultants

International companies gained lucrative forestry consultancies during this period. Foremost amongst these was the Finnish company, Jaakko Pöyry, brought in during the 1980s to advise the Indonesian government on a master plan for a large-scale plantation programme linked to developing a pulp and paper industry[37]. Jaakko Pöyry went on to be consultants on specific projects, including PT Inti Indorayon Utama (now known as PT Toba Pulp Lestari) - notorious for conflicts with local communities displaced by feeder plantations and for the paper/rayon pulp plant's appalling pollution record[38]. (See box, pulp section, Part II for new pulp development.)

From logs to plywood

Throughout the 1960s and '70s Indonesia experienced a logging boom, based on the export of raw logs. By 1979, Indonesia was the world's largest producer of tropical timber. Some 580 logging concessions had been issued by the late 1980s, covering over 60 million ha. Although these concessions averaged about 100,000ha each, some timber tycoons controlled millions of hectares of forest through groups of logging companies (see box, below). The exploitation rights lasted 20 years, but could be extended to 35 years, by which time often little or no commercially valuable timber remained[39].

In 1985, the government imposed a log export ban, ostensibly to promote forest conservation, but actually to stimulate the growth of an Indonesian wood processing industry[40]. All logging companies had to set up factories producing sawn timber, plywood, chipboard or other wood products.

These measures drove out most international logging companies and stimulated the vertical integration of the industry. Eventually a few giant Indonesian conglomerates controlled the whole industry from logging through to the export of wood products like plywood mouldings and quality paper. Marketing cartels chaired by Bob Hasan (see box, below) dominated timber production and wood product exports. Indonesia became the world's biggest plywood exporter. At its peak (in 1992) the annual output of plywood was nearly 11 million m3, 80% of which was for export[41]. Most of these companies were completely Indonesian owned, although a few Japanese and Korean investors like Marubeni and Kodeco formed joint ventures with Indonesian companies.

The value of the forestry industry in the late 1990s

Volume of wood exports (1998) 49 million m3
Gross value of wood exports (1997) US$6 billion*
Contribution of wood to domestic economy (1997) US$8 billion
Contribution of wood to total GDP (1990s) 6%
Estimated value of 'non-market' forest products US$3 billion#
Value of forests' watershed & soil conservation functions US$22 billion

All figures from OED Report World Bank January 2000, unless otherwise indicated.
*   Mainly as plywood, pulp and paper; pre-1998 tariffs on log exports were so high that there was no legal export of raw timber.
#   FWI/GFW, (draft), 2002

Vast overcapacity

The fact that forest destruction means a finite and diminishing supply of wood available to industry didn't concern the timber tycoons or government. The Investment and Co-ordinating Board (BKPM) issued licences for wood processing industries without reference to the log supply calculated by the Forestry Department. The result was that by 1998 the capacity of sawmills, plywood, paper pulp and other wood-product factories (117 million m3) was roughly six times estimates of sustainable yields (under 20 million m3 per year). Large-scale industrial timber plantations, intended to supply the raw material for the fibreboard, pulp and paper and construction industries failed to materialise at anything like the rate required to make up for forest depletion, despite funding from the Reforestation Fund (see box below).

The wood processing industries became increasingly dependent on timber supplied by the clear felling of Conversion Forest and illegal logging. In 1997 the official timber supply was 29 million m3, yet the actual quantity consumed was 86.5 million m3. This left a shortfall of 41 million m3, after imports and recycling had been accounted for. In 1994/5 official figures showed a drop in timber production yet an increase in production from saw mills, plymills and paper and pulp factories[42]. Worse was to come in the unsettled post-Suharto period.

Bob Hasan: the downfall of the 'King of the Forest'

Mohammad 'Bob' Hasan is still the best known figure in Indonesia's forestry industry. Other timber tycoons owned more logging and plywood companies or controlled more logging concessions and plantations (see box, below), but no other individual has exerted such power over the whole forestry sector. Hasan's dominant influence on forestry policy and practice derived from two sources: his long-standing close friendship and business associations with former president, Suharto; and his role as head of the forestry industry associations. He headed the powerful Indonesian Forestry Community (MPI): an umbrella organisation which includes the Association of Indonesian Wood Panel Producers (APKINDO), the Association of Indonesian Concessionaires (APHI) and the Indonesian Saw Millers Association (ISA).

Hasan's association with the ex-President dates back to the 1950s when Suharto was supplementing his earnings as a military officer in Central Java through business deals with ethnic Chinese entrepreneurs. Hasan soon changed his name from The Kian Seng and became a Muslim in a vain attempt to shake off anti-Chinese prejudice. One of his first ventures was running PT ICTI which was worth US$500,000 when he took control in 1969 and US$100 million by 1993i .

Bob Hasan's close ties with Suharto enabled him to become one of Indonesia's richest and most powerful business tycoons. Hasan was a major player in six business groups by the late 1990s: in addition to his forestry empire under the Kalimanis Group, he controlled the Pasopati Group with its 120 satellite companies and the Hasfarm Group (agriculture) and had interests in the Nusamba group (10% Hasan; 10% Suharto's son Sigit and 80% Suharto-controlled foundations); the Tugu Group (a partnership between the Nusamba Foundation; the state oil company Pertamina and Pertamina's pension fund) and the Bank Umum Nasional Group (40% Hasan; 60% Kaharuddin Ongko)ii. He successfully bid to build a new coal-fired coal station in West Java. He got US$109 million from the Reforestation Fund to set up a new pulp mill in East Kalimantaniii. He became chairman of the car manufacturer and petrochemicals conglomerate PT Astra in 1997. He was close to being one of the 10 richest men in the world with assets of US$3,000 millioniv. But even Hasan made mistakes: through Nusamba, Hasan gained control of 30% of the Busang gold mine in East Kalimantan, which was later revealed to be spectacular fraud.

Hasan became even more influential once Suharto's wife, Tien, died in April 1996. In addition to being the president's golfing partner and business confident, he took on the role of settling the business rivalries among the president's six children. In the final months of the Suharto regime, Bob Hasan's powerful role behind the scenes was officially recognised when the president appointed his loyal friend Minister of Trade and Industry - the first ethnic Chinese to have a Cabinet position.

As head of the Indonesian Forestry Community (Masyarakat Perkayuan Indonesia, MPI) and the Indonesian Plywood Association (APKINDO), Hasan operated a personal monopoly over half the world's tropical plywood exportsv. He turned APKINDO into a powerful plywood marketing cartel, using it to determine the price of Indonesia wood products overseas and the export quotas, allocations and prices which plywood producers would receive. This increased financial returns for the member companies, but only as long as they supported Hasan's rule. Companies which complained about the monopolies and rake-offs were punished by exclusion from the most lucrative export allocations.

APKINDO also became part of Hasan's money-making machine as he used it to set up a his own plywood marketing companies in major importing countries. These included Nippindo in Japan; Indo Kor Panels Ltd. in Hong Kong which handled sales to South Korea; Celandine Co. Ltd. (Hong Kong) to co-ordinate panel shipments to China and Taiwan; PT Fendi Indah in Jakarta to manage exports to the Middle East; and Fendi Wood in Singapore to oversee sales to Singapore and Europevi. All Indonesian plywood exporters had to use Hasan's shipping company Kencana Freight Lines and his insurance company PT Tugu Pratama. In this way the whole trade from plantation to consumer markets flowed though his companies.

Hasan became an easy target for reformists once Suharto had been removed from power. His sprawling business empire hit serious problems after the financial crisis and his banks collapsed. The Indonesian Bank Restructuring Agency became one of Hasan's major creditorsvii (see Part II). The MPI has accused its former chairman of siphoning off hundreds of millions of dollars into his own businesses and banks and Hasan's involvement in the misuse of funds in five charitable foundations the ex-president controlled is under investigation. He is now in prison serving a 6 year sentence for corruption in a fraudulent aerial mapping project by his company PT Mapindo Parama and of misappropriation of reforestation fundsviii. He was ordered to pay US$243 million for losses to the state and his appeal was turned down.

Hasan became a scapegoat for much of what was wrong with forestry in Indonesia for the past three decades. Former forestry ministers, senior forestry staff and heads of forestry companies and conglomerates who are not ethnic Chinese have entirely escaped public scrutiny.

However, Hasan has never been made to answer for the crimes committed against the many communities living in and around forests whose livelihoods were destroyed by his many logging companies.

i.  Forum 8/Sep/98
ii.  DTE 33:10
iii. DTE 38
iv.  Forbes, July 1997
v.  Asian Timber, Sept 96 p44-7
vi.  Barr C, 1998, Summary of MA thesis via EDF 21/Apr/98
vii.  Dow Jones Newswires, 7/Dec/99
viii.  Jakarta Post, 15/Mar/2001

Who owned the forests ?
Major forest conglomerates in the Suharto period

Group Owner Concession holdings
Kayu Lapis Indonesia Hunawan Susanto 3.5 million ha (17 companies)
Djajanti Burhan Uray 2.9 million ha (17 companies)
Barito Pacific Pangestu Prayogo 2.7 million ha (27 companies)
Kalimanis Mohammad 'Bob' Hasan 1.6 million ha
Korindo Johanes Empel 1.3 million ha

(Source: Jakarta Post 28/Sept/98; PasaR 22/Sept/98)

The cost to forest peoples

"Indigenous peoples' understanding and control over our own natural wealth have been destroyed by policies which enforce social and cultural uniformity".
(KMAN position statement March 1999)

The foundation stones of Suharto's New Order regime were political control and economic development. Through adherence to a national ideology of 'Pancasila development' and economic growth, Indonesia would become a strong, unified country and its people would become prosperous. Suharto assumed the paternalistic title of 'Father of Development' (Bapak Pembangunan). Yet the hidden cost of Indonesia's 'development' has been borne largely by the forest peoples and the poor of the 'outer islands'. Their land and resources have been appropriated - often using violence - to satisfy the needs of a corrupt elite, the central government and the demands of the increasingly modernised, urbanised population on Java. This process was supported politically and financially by international lending agencies and creditor governments, while the timber traders profited directly from the wholesale destruction in the forests.

This was the attitude of the Indonesian government in 1990:

"The logging industry is a champion of sorts. It opens up inaccessible areas to development; it employs people; it evolves (sic) whole communities; it supports related industries; it performs public and community services. It creates the necessary conditions for social and economic development. Without the forest concessions, most of the Outer Islands today would still be underdeveloped."

(National Forestry Action Plan GoI/FAO)

To the decision-makers in Jakarta, indigenous peoples were irrelevant to a modern Indonesian state. The very existence of indigenous forest peoples was denied in the common official statement that "all Indonesians are indigenous". On the other hand, in official documents, indigenous people were referred in negative terms as 'backward', 'primitive', 'alienated' or 'isolated'. As adat peoples were not recognised, so their traditional forest-use practices were not recognised as legitimate management systems. They were labelled 'forest squatters' and 'agents of forest destruction' and their land management system (under the heading of 'shifting cultivation') rather than a rapacious forestry industry, was blamed as the major cause of deforestation[43]. Local governance acts (5/1979 and 5/1974) dismantled traditional power structures in indigenous communities and replaced them with a standardised system. Every village in Indonesia became part of a huge bureaucracy in which all decision-making was determined from Jakarta.

Attempts by local communities to stop or limit the violation of their rights and the destruction of their forests were largely ineffective[44], with some notable exceptions. Within Indonesia, the tools of political oppression - censorship, military terror, imprisonment - were used to crush opposition. Land reform was off the political agenda; the 1960 Agrarian Law was seen as the product of Sukarno's socialist allies. Even organisations or individuals who talked about land rights or fair compensation for people displaced by 'development projects' ran the risk of being branded as communists: a charge tantamount to subversion in a country where the leader gained power in an anti-Communist coup. International concern was met with polite or insistent indifference. No figures are available and few studies have been done on the numbers of people living in and around forests displaced or impoverished by large-scale logging operations and plantations[45].


Indonesia's transmigration programme - partly funded by the World Bank - moved 8 million people to the nation's forested islands between 1969 and 1994[46] and forced the relocation of indigenous peoples. Not only were their forests taken over by government schemes to provide new settlements and agricultural land for landless poor from Java, Bali and Madura but, if these schemes failed, the settlers often moved on to occupy other adat land. In a bitter irony, dispossessed indigenous people were also settled on these sites, so that the newcomers could teach them to grow arable crops. 'Spontaneous migrants' (encouraged by government propaganda) followed in the wake of official settlers, again clearing more adat forest, particularly once the transmigration programme was coupled to credit-based plantation estates (HTI-Trans and PIR-Trans.)

Ten years after it began supporting the programme, the World Bank concluded that transmigration had been a major cause of deforestation and had had major negative and probably irreversible effects on some indigenous groups[47]. Transmigration was directly responsible for the clearance of about 2 million ha of forests between the 1960s and 1999[48]. But the knock-on impacts including spontaneous migration, transmigrants moving off unsuitable sites into new areas and the programme's association with plantation schemes, have resulted in far greater forest loss - possibly five times as great as the area originally planned[49]. It is widely believed that, until the programme was drastically reduced following the 1997 economic crash, the transmigration programme, and its knock-on effects was the single most important cause of forest loss.

For a fuller discussion on transmigration see DTE's report Indonesia's Transmigration Programme: an Update, July 2001.

Forest communities development programmes

Successive government development plans (Repelita) included, as objectives for forestry development, increasing the prosperity of local communities and environmental protection. The 6th Five Year Plan (1993-8) gave poverty eradication highest priority. By the early 1990s, a number of community development programmes had been set up such as the Forest Community Development Programme (Pembinaan Masyarakat Desa Hutan - PMDH - commonly called the Bina Desa programme), implemented by logging companies under the Forestry Department; initiatives funded under the Presidential Decree on Under-Developed Villages (IDT) and the Integrated Area Supervision scheme (PKT) carried out by the local government. The projects included the provision of basic schools, health centres and washing facilities; agricultural extension work; dirt roads; sports facilities and places of worship. The overt intention was to reproduce a 'modern', standardised Indonesian lifestyle based on the Javanese model which included replacing traditional land use patterns with settled farming.

All these village development programmes shared similar goals of poverty reduction, but they were - for the most part - poorly planned and implemented. More often than not, they did not address the real needs of communities or deal with all villages within their domain. All were top-down schemes which treated communities as objects of social development rather than active participants. Local people were expected to be the grateful recipients of any temporary support, not agents involved in the design, planning and management of any scheme. A social forestry programme on Java designed to overcome many of the above shortcomings had only limited success (see box below).

Companies, forestry officials and local government staff had very limited knowledge about the local communities - their priorities, needs, culture, customary laws - and there was no co-ordination between activities carried out in the same area by different agencies. There was little monitoring or evaluation and, when the budgets had been spent and the programme providers moved on, there was little to show - except, perhaps, for a few richer local officials[50].

The Reforestation Fund

The Reforestation Fund is sad misnomer. Throughout the Suharto years, this fund was used to promote forest destruction, notably through providing finance for the creation of industrial timber estates, the drainage of over 1 million ha of swamp forest for the Central Kalimantan 'mega-rice' project and 'Bob' Hasan's Kiani Kertas pulp and paper mill in East Kalimantan. As an 'extra-budgetary' fund, only the Forestry Minister and the president were responsible for its use.

Current investigations may only be revealing the tip of the iceberg about how much of this money has been squandered, embezzled or mismanaged. Some of Indonesia's massive foreign debt would not have been created if the Reforestation Fund had not been handled so inefficiently and corruptly. This means that, once again, ordinary Indonesians lose out twice over as they will ultimately bear the cost of debt repayments to international lenders.

Reforestation payments were said to amount to Rp7 trillion (approx US$700 million) before interest in mid-2000i. The Reforestation Fund would be richer if logging companies had been forced to pay their contributions during the Suharto years and if the fund had not been used for non-forestry purposes. The financing of the Forestry Department office complex in Jakarta is under investigation. It may well have been built with Reforestation Funds through Yayasan Sarana Wana Jaya, a foundation owned by former Forestry Minister Soedjarwoii. A joint investigation by a team of forestry and finance officials revealed that unpaid logging fees and Reforestation Fund contributions amounted to Rp15 trillion (approx US$1.5 billion). An additional Rp1.6 trillion (US$160 million) of the Reforestation Fund had gone on former president's pet projects (including Rp80 billion for his grandson's company PT Ario Seto and Rp400 billion to Habibie's national jet programmeiii. It is believed that some of the Reforestation Fund disappeared in propping up the fragile national currency during the first impact of the Asian financial crash.

The Department of Forestry asked Attorney General Marzuki Darusman in early 2000 to take action against five business tycoons suspected of defrauding the Reforestation Fund to the tune of Rp784 billion (approx US$80 million). The suspects were 'Bob' Hasan, Barito Pacific boss Prayogo Pangestu, Suharto's daughter Siti Hardiyanti 'Tutut' Rukmana, Probosutedjo - another Suharto relative and business man Ibrahim Risjadiv. Of these only Hasan has been convicted.

i.   Bisnis Indonesia 27/Jun/00
ii.   Kompas 7/Jun/00
iii.   Kompas 22/Feb/00
iv.  Bisnis Indonesia 8/Feb/00

Plantations in the Suharto period

"In a 'worst case scenario' in which plantations replace most natural forest outside protected areas, the distinction between forestry on Java and the outer islands will diminish."

Indonesia's ambitious plantations programme, started during the Suharto period, directly contributed to the destruction of the rainforests, sparked social conflict and the violation of indigenous peoples' rights. Natural forests have been consistently undervalued through Indonesian forestry policies which make it more profitable (in the short term) to clear the land for plantations.

The expansion of two major plantation types - industrial timber (HTI) and oil palm - is intimately linked to logging. The Suharto government encouraged the conversion of natural forest to plantations through a policy decision which allowed companies to clear fell 'unproductive' Production Forest and use 60% of the land for HTI and 40% for oil palm[51]. It was in the interests of conglomerates to ensure that their subsidiaries over-logged timber concessions to reduce yields to below the critical 20m3/ha and then apply for 'forest conversion' permits.

Industrial timber and oil palm plantations present similar social and environmental threats to forests and forest peoples. Selective logging leaves some areas of rainforest relatively intact and even heavily logged areas can eventually regenerate. Plantations - including oil palm - mean wide-spread, permanent forest destruction. Both types of plantations are typically established on forest land rather than degraded grasslands or scrub. Both are predominantly monocultures of exotic species (i.e. not native to Indonesia). Both are large-scale and deprive large numbers of forest peoples of access to land and resources to support their families. Both have been linked to the Indonesian government's transmigration programme through HTI-Trans or PIR-Trans schemes (see box). These led to conflicts between indigenous peoples and settlers over land rights, cultural differences and access to schools, clinics and other facilities.

PIR schemes

PIR (Nucleus-Estate / Smallholder) schemes have been used to provide cheap labour for oil palm and other plantations and intensive aquaculture projects across Indonesia. Oil palm schemes funded by the ADB and World Bank, linked to the transmigration programme (PIR-Trans) contributed to deforestation and caused pollution as well as the displacement of indigenous peoples. Smallholders, obliged to sell their crops to the operating company, often found they were worse off than before they joined the schemes due to fluctuating commodity prices, problems with land entitlement, corruption and malpractice and difficulties in repaying loans. HTI-Trans schemes supplied cheap transmigrant labour for timber plantations. The programme was scrapped in 2000, one of the official reasons being that wages were too low for transmigrants to sustain an appropriate living. (See DTE Special Report on Transmigration, July 2001)

Oil palm and pulpwood plantations are also a major cause of forest fires, although this was not officially acknowledged by the forestry minister until the 1997/8 fires disaster. Although illegal in Indonesia since 1994, burning is still common practice as the easiest and cheapest method of preparing land for plantations (see fires, below).

There are also strong similarities between the economic forces which have driven HTI and oil palm plantation expansion. Both pulpwood and palm oil are cash crops which generate products for export and increase foreign exchange revenues. Both industries are attractive to foreign investors because of the steadily increasing global demand for paper and paper products and for the many products manufactured from palm oil, including margarine, soap, makeup, detergents, chocolate-substitute and cooking oil. Both exemplify how foreign companies have sought to profit from Indonesia's forestry regulations and lax environmental controls through schemes which would not be allowed in their own countries where environmental legislation and democratic controls are stronger.

HTI - Trees for industry or money-making scam?

Estate crops are not new to Indonesia: the Dutch East India Company and Dutch colonial administration established extensive plantations of tree crops like rubber and teak, mainly on Java and Sumatra. Since independence, plantations have also been promoted through 're-greening' and watershed protection programmes intended to replant some of the millions of hectares of degraded land described by officials as 'critical', 'barren' or 'unused'. However, the focus of concern of environmental, social and indigenous organisations is the HTI system, which promotes the clearance of natural forests and their replacement by large-scale commercial plantations.

Tropical countries have a natural commercial advantage when it comes to plantations. Fast-growing species such as Acacia mangium, Gmelina arborea and Paraserianthes falcataria are typically ready to harvest seven years after planting in Indonesia. The tree growing cycle in temperate countries is normally 30 to 45 years.

The HTI programme was introduced in 1990 as part of government efforts to boost the non-oil and gas sectors of the Indonesian economy. In theory, areas of degraded land would be prioritised for replanting with fast-growing trees to feed Indonesia's burgeoning paper pulp industry. The Reforestation Fund would provide private companies with cheap financing for pulpwood investments. In practice, the whole system was a scam. Logging and plantation companies worked hand in glove as they were generally subsidiaries of the same conglomerates. The Indonesian government gave companies concessions covering tens of millions of hectares and allowed them to operate virtually unsupervised.

Developers preferred to clear logged-over forests for their plantations, rather than attempting to reforest tree-less areas. This also allowed them to extract and sell remaining timber, primarily to the pulp industry. There were no effective penalties against a company which flaunted selective logging regulations. The minister may cancel its logging licence, but by that time the damage had been done and the profits were in the bank. The parent group could then set up a plantation company which was eligible for cheap loans from the Reforestation Fund to finance planting. But planting did not always take place and, where it did, poor management of the new plantation meant that the trees did not always survive.

The plantation scheme got off to a slow start and never achieved the promised results. Under 1 million ha of timber estates were created in the first two years, well below the target of 1.5 million ha for that period[52]. By 1994, 38 companies had been allocated 3,841,777 ha for industrial tree plantations. By 1998, 161 companies had applied to set up timber estates covering nearly 8 million ha and 98 of these had been given permits for 4,620,738ha - mostly in Sumatra and Kalimantan[53]. While ever larger amounts of land were allocated to HTI, less than a quarter of it was successfully established as timber plantations. This meant that the forestry industries - largely plywood and the growing pulp and paper industry were still relying on natural forests to provide raw materials and would continue to do so in future.

The government attempted to conceal the failure of the HTI programme by using figures which included areas reforested by Perhutani and Inhutani. These (then) state forestry enterprises became responsible for reforestation after years of private logging companies' 'cut and run' practices. Government figures of 6.1 million ha of forest lands reforested were rightly regarded with suspicion[54] since some of the same areas had been replanted several times, only to be cleared by timber raiders or forest fires.

Even if the target had been achieved, the replanted area still would have been negligible when compared with the vast tracts of forest damaged or totally destroyed within logging concessions and the third of Indonesia's forests zoned for clearance for commercial agriculture. Moreover, like commercial plantations, reforested areas are mainly planted with a limited number of fast-growing introduced species. In no way do these plantations fulfil the social and ecological functions of the natural forests they replace.

Pulp and paper

"The growth of the pulp and paper sector in Indonesia since the late '80s has been based on the clear felling of vast area of forest -- estimated at at least 800,000 hectares a year -- the spread of tree monocultures, the violation of indigenous peoples' land rights, and the granting of official subsidies to companies, which often hide corrupt practices."
(WRM Bulletin, 41, December 2000)

Until 1987, Indonesia was a net importer of paper and pulp. Paper was an expensive luxury for the majority of the population. Natural forests were hardly used for pulp. Indonesia's pulp manufacturing originally depended on agricultural waste, largely from sugar plantations, plus pine plantations[55]. The domestic paper industry was protected by tariffs. A number of paper mills using imported pulp had been built, as pulp could be imported free of duty, but there were no integrated pulp and paper mills. Nevertheless, the government and the forestry industry had ambitions to become the world's leading pulp and paper producer by 2005[56]. According to head of the Raja Garuda Mas Group, Sukanto Tanoto, Indonesia's pulp production capacity would exceed 11 million tonnes by 2010[57]. Much of the initial investment was in Sumatra, including PT Kertas Kraft (Aceh, 1989); PT Inti Indorayon Utama (N. Sumatra 1989); PT Indah Kiat (Riau, 1984) and PT Riau Andalan Pulp and Paper (Riau, 1995). Indah Kiat's Perawang plant was the first to use pulp to produce paper. In 1993 Indorayon started commercial production of viscose pulp. Other large pulp plants were set up in West Java and East Kalimantan[58]. By 1996 there were 65 pulp and paper mills in production with plans for a further sixteen[59]. The main Indonesian companies in the pulp industry were already big players in other aspects of the forestry business, namely Sinar Mas, Barito Pacific and Raja Garuda Mas/APRIL.

Bankrolled by overseas finance, Indonesia's industry became one of the world's leading producers, with pulp capacity expanding almost seven-fold between 1988 and 1999, from 606,000 tonnes per annum to 4.9 million tonnes. Paper processing capacity rose from 1.2 million to 8.3 million tonnes for the same period[60]. It was also one of the lowest cost producers due to cheap loans, low wages, lax environmental controls and large-scale legal and illegal logging of natural forests.

Most of Indonesia's pulp and paper production was for export. Indonesia was well-placed, with Japan a major paper importer and demand for paper in Southeast Asia growing fast - until the economic crisis hit in 1997. Also, the potential domestic market was huge, with Indonesia's 200 million plus population and an economic growth rate of 8%. Each Indonesian consumed on average only 19.4kg of paper a year, compared with an annual per capita consumption of 106kg in Malaysia, 200kg in Singapore and 330kg in USA[61].

Overcapacity in pulp plants

The environmental and social costs of Indonesia's burgeoning pulp and paper industry have been high. Indonesian and international NGOs had warned that the dramatic expansion of Indonesia's pulp and paper sector was based on 'mining the forests'[62]. For sustainable production, the capacity of a pulp mill should not exceed the volume of pulpwood that can be legally obtained from a company's own concessions and neighbouring farmers. It soon became obvious that the capacity of the pulp and paper industry far outstripped sustainable timber supplies. Pulp plants were already experiencing shortages of raw materials by the mid-1990s, even before many of the planned mills had been built[63]. And, as plantations had not been established, companies were meeting their demands from illegal supplies. For example, in 1993, a parliamentary commission accused Indah Kiat of buying timber illegally cleared from 70,000ha[64].

The Suharto government encouraged overcapacity, firstly by insisting that logging concessionaires develop downstream industries and secondly by allowing companies to defer tax payments in years when plant capacity was being expanded. Companies claimed that high capacities would reduce unit costs and make their product more competitive in international pulp and paper markets.

Oil palm

"Oil palm plantations are not a panacea, but a disaster for Indonesia and Indonesia's forests"
(Telapak/EIA, 2000)

The 1990s were a boom period for the Indonesian oil palm industry. This 'development' promised land, employment opportunities and greater prosperity - for small-scale farmers and for the Indonesian economy. Indonesian environmentalists now see the expansion of large-scale oil palm plantations as the third massive blunder in Indonesian forestry policy, following hard on the heels of the logging concession system and the establishment of industrial tree plantations to feed the pulp and wood industries[65]. The rapid spread of oil palm plantations became a major direct cause of deforestation and social conflict in Indonesia[66]. Companies took adat land without consultation or adequate compensation; local people whose livelihoods once depended on the forests were tied into sharecropping schemes (PIR) which led to indebtedness, loss of independence and poverty.

Concerns about the social and environmental impacts of this sector have been heightened since the 1997/8 forest fires and the economic crisis. Of the 176 companies accused of burning to clear land, 133 were oil palm plantation companies (43 of which were Malaysian)[67].

Companies which financed plantations through loans depend on high global prices to repay bank loans. The palm oil market, like most export crop markets, is subject to boom and bust cycles. Since so many oil palm plantations in Indonesia operate through credit schemes, fluctuations in prices hit indebted farmers very hard[68]. These concerns were swept aside by the Suharto regime whose main interest was the foreign exchange revenues the plantations could bring into the country. More recently, pressure to service the mounting debts has taken priority over social concerns.

"Fifty indigenous peoples' leaders who attended a workshop on oil palm plantations, in March 1999, stated that they and their peoples had taken on high interest private debts for the first time in their lives by joining Nucleus-Estate Shareholder schemes on oil palm plantations. Their involvement was forced and in many cases involved military intimidation. Many of the leaders had been arrested and jailed when they opposed the programme."

(M. Siscawati, March 1999)

The expansion of oil palm

Oil palm was introduced to Indonesia from West Africa in the nineteenth century. There was some development of oil palm plantations by the Dutch colonial government, but the sector stagnated during the early years of independence.

The revival of the Indonesian oil palm industry stems from several initiatives in the 1980s. The World Bank funded several Nucleus Estate/Smallholders (PIR) projects beginning in 1980. This was coupled with Bank support for the Indonesian government's transmigration programme. The Asian Development Bank also helped fund five PIR plantations between 1981 and 1995[69]. In 1984 the Ministry of Agriculture issued a regulation to promote the oil palm sector through the PIR approach. This was followed by a Presidential Decree (1/1986) which integrated the transmigration programme with the PIR scheme. In this way, government-sponsored migrant farmers were used to open up forest areas and as a cheap source of labour for industrial plantation companies[70]. At the same time, access to credit at preferential rates for estate development and processing facilities stimulated the development of large-scale private oil palm plantations[71] By the end of the Suharto period in 1998, the total estimated area planted with oil palm plantations had reached 2.5 million ha[72]. Annual production of crude palm oil (CPO) had reached almost 5.4 million tonnes (1997) and export earnings stood at US$1.4 billion from 2.9 million tonnes (1997)[73].

One of the key factors facilitating the continued conversion of tropical rainforest to oil palm plantations was a controversial regulation passed in the last weeks of the Suharto government (SK376/1998). This set down the criteria for suitable land - criteria so broad that they cover the majority of lowland rainforest in western Indonesia. The (then) state-owned forestry companies, Inhutani I-V, were also allowed to expand into the oil palm sector by forming joint ventures with plantation companies.

Attractive investment

Key factors which made Indonesian oil palm plantations an attractive prospect for domestic and foreign investors were:

  • the high temperature and rainfall ensured high growth rates;
  • large tracts of land had suitable soils;
  • Indonesian laws and regulations relating to land and forests could be easily
  • manipulated, so land was cheap;
  • Indonesian labour was cheap, particularly where plantations were coupled with transmigration schemes;
  • companies could benefit from selling timber from any remaining forest, before clearing the land for planting;
  • there was relatively little room for further expansion of oil palm in peninsular Malaysia;
  • the Indonesian government was keen to promote exports, particularly outside the oil & gas sector.
Almost all of these factors still apply today - see Part II for recent developments.

Conglomerate control

The palm oil industry was, until the economic crisis, increasingly dominated by giant conglomerates which controlled an integrated process from plantation to palm oil processing and the manufacture of cooking oils. Most oil palm plantations in Indonesia (48% of the total area) were owned by private companies; smallholders only controlled 33% and state-owned plantations 19%[74]. Four Indonesian groups - Astra, Salim, Sinar Mas and Raja Garuda Mas - controlled two-thirds of private estates by 1997. Private companies also had access to a large share of the smallholder palm oil output from so-called plasma/tree-crop transmigration programmes. Palm oil refinery capacity in Indonesia was concentrated in the hands of five corporate groups: Sinar Mas, Salim, Hasil Karsa, Musim Mas and Bukit Kapur, who jointly controlled 61.3% of total annual refining capacity[75]. With the exception of the last three, all these conglomerates had been heavily involved in the forestry and plantation industry for many years.

Forest fires

The catastrophic forest fires of 1997/8 were the first to hit international headlines and TV screens, but they were not the first or the last time Indonesia's forests have gone up in smoke. The 1982-3 'Great Fire of Borneo' destroyed 3.6 million ha of forest in East Kalimantan. The financial value of timber lost was estimated at over US$5 billion, quite apart from the damage to people's health and livelihoods as far away as Singapore[76].

This was described as the "greatest natural catastrophe in historical times"[77] but - as in subsequent years - these fires were man-made. Mature, intact tropical rainforest has little undergrowth and is too wet to burn easily, even in very dry 'El Niño' years like 1982/3, 1987 and 1997/8. Where logging companies had created vast tracts of degraded forest, dry underbrush and discarded timber became tinder. The fires were particularly hard to extinguish where coal and peat deposits under the forest floor burned for months.

Little was learned from this disaster. Year after year, government ministers and local officials continued to scapegoat 'shifting cultivators', ignoring the destructive practices of large, politically well-connected logging companies which continued to over-log their concessions with impunity.

The oil palm sector boom in the 1990s made the situation worse. Burning was seen as the cheapest option to clear forested land to establish large scale plantations. The smoke, carried by prevailing westerly winds to mainland Southeast Asia, prompted annual formal protests from Indonesia's ASEAN neighbours and calls for Jakarta to take action on what they euphemistically called 'the haze'.

The 1997-1998 fires

The difference with the 1997/8 fires was the political and economic context in Indonesia as well as the scale of the disaster. While the fires raged and a huge pall of smog choked Southeast Asia, the Jakarta government was caught up in political and economic turmoil. Apart from the forestry and environment ministers, Indonesia's leaders paid no serious attention to the disaster. Almost 4 million ha of agricultural land, over 3 million ha of lowland forest and 1.5 million hectares of peat and swamp forest were burnt in 1997/98[78].

The extensive fires ravaged large areas of Indonesia, especially on the islands of Kalimantan and Sumatra. These forest and land fires and the accompanying smoke, caused serious damage to the forest areas, air pollution, damage to public health, loss of life, destruction of property and livelihood options, and other substantial economic losses in much of southern Southeast Asia. Estimates put the area of Indonesia burned at 9.7 million ha (forest and non-forest land), with some 75 million people affected by smoke, haze, and the fires themselves. The economic costs were estimated to be between US$4.5 billion and US$10 billion[79].

For full list of companies accused of starting fires and more details on the 1997 fires see DTE 35 supplement of the fires.

See Part II for fires, post-Suharto, recent initiatives and fires monitoring websites.

The first signs of reform

Preventing forest destruction was practically impossible under President Suharto, because it directly benefited his family and cronies. Most ministers in key positions controlling natural resources - forestry, mining, transmigration & resettlement, home affairs (which included agrarian affairs and the powerful National Planning Board) and trade & industry, promoted the authoritarian, exploitative policies in which ordinary Indonesians were no more than the objects of top-down development initiatives. Yet three forestry and environment ministers showed some change in attitudes towards local communities and indigenous resource management and sowed the seeds for future reforms.

Forestry Minister Djamaluddin Suryohadikusumo (1993-1998) made some attempt to include forest peoples in forest policy. He wanted to develop a new model for forestry in Indonesia geared towards increasing revenue from the forestry sector while promoting sustainable forestry. Djamaluddin managed to get a limited amount of new legislation in place on community-based forest management before Indonesia's 1998 elections, when he lost his post - probably due to the enemies he made in the forestry industry. He tried to take action to curb the worst excesses of the forestry industry, cancelling or refusing to renew around one fifth of the 584 logging concessions which had been issued at the time and at least drawing public attention to a disaster in the making due to overcapacity in the wood processing industry[80]. Most conspicuously, he publicly blamed forestry companies, rather than forest communities or the El Niño climatic phenomenon, for the disastrous 1997 forest fires. Djamaluddin went on to become an influential advisor to the two most important international policy and research institutions in Indonesia: the Centre for International Forestry Research (CIFOR) and the International Centre for Research on Agroforestry (ICRAF).

Emil Salim was also confronted with the problems of taking action against the business elite during his 12 years as environment minister (1981-1993)[81]. He had a high profile - often making pronouncements on the need for pollution control and sustainable development - but little power. To compensate for this, Salim developed close associations with the burgeoning environmental movement and gave support to non-governmental organisations. These groups and the new generation of civil society groups they have nurtured proved to be vital elements in the drive for political change, human rights and forest policy reform. He went on to set up the ecolabelling working group and to chair the GEF-funded NGO, Kehati.

When Sarwono Kusumaatmadja, a career bureaucrat in the government party GOLKAR, took over from Salim as Environment Minister in 1993 many NGOs had low expectations. In the event, Sarwono continued to push for reform and spoke out on the need to control the activities of logging and plantation companies during the 1997/8 forest fires. He was an outspoken government critic in the dying days of the Suharto regime and, briefly, became minister for a newly created marine department in the Wahid government.

The Social Forestry Programme

Perum Perhutani, the state-owned forestry company, controlled all forests in Java outside conservation areas until 2000. It became interested in social forestry in the 1980s in an attempt to reduce conflict with local communitiesi.

The forests managed for timber production on Java are mainly teak plantations (and, to a lesser extent, pine) which date back to the colonial period. The conflicts arose because local communities saw these semi-natural forests as their land and claimed the right to fell timber for their needs and to grow their own crops thereii. In contrast, Perhutani's official remit was to maximise income from timber production. So forest guards evicted forest farmers and villagers caught with logs were charged with theft.

The Social Forestry Programme, largely funded by the Ford Foundation, sought to bridge the gap between forest farmers and Perhutani officials. Its main aim was to give local communities greater access to forest land so that they had some means of supporting their families. Land-poor villagers had to form 'forest farmer' groups in order to get plots. They could then plant agricultural crops between rows of plantation trees in return for planting, weeding and generally caring for the main tree crop. They were also allowed to collect waste timber for firewood. Perhutani changed its planting and cropping regimes to allow farmers a longer period to grow their crops. NGOs provided liaison between Perhutani and forest farmer groups and the monitoring and evaluation from the field trials fed back to a joint steering committee of decision-makers within the Forestry Department. Research by Indonesian and foreign universities into improving the yields and values of forest farmers' crops provided further input.

The Social Forestry Programme was influential in that it did reduce conflict between Perhutani and villagers in the areas where it operated. At least some forestry officials learned to see NGOs and even forest farmers groups as partners rather than opponents. Villagers gained legal access to the forests and could cultivate more land, thus increasing their incomes and food security. The programme pioneered written agreements between forest farmers and the state-owned forestry company on the rights and responsibilities of both parties. Another innovation was the framework which enabled dialogue or consultation between the government, a forestry company and local communities.

Overall, this ten-year initiative only had limited success, largely because Perhutani is a massive autocratic, bureaucratic organisation with an inbuilt resistance to change. The few enlightened individuals within it could not transform entrenched attitudes and the number of pilot projects never reached the critical mass needed for the new practices to spread further. Decision-making was almost exclusively top-down. The programme encountered social and technical problems. It tended to benefit better-off farmers rather than the landless, poorest members of the community who were the primary target.

Farmers could not grow crops for more than three years in teak plantations due to heavy shade. The programme did not challenge the status quo in that it only addressed issues of forest access and management rather than ownership rights. Once donor funding was phased out in the mid-1990s, the government would not provide the necessary financial support to continue and expand the work.

i. A more detailed analysis of the Social Forestry Programme is presented in Chidley L & Potter D, 1997, NGOs and Environmental Policy in Indonesia, GECOU Working Paper 8, The Open University, UK
ii. The reasons behind these land claims are complex. Levels of rural poverty in Java; the scarcity of agricultural land; the relationship between communities and Dutch plantation managers; and the vestiges of pre-colonial adat law and beliefs are all relevant factors. See Peluso N, 1992, Rich Forests, Poor People.

Special Purpose Lands (Kawasan dengan Tujuan Istimewa - KdTI)

Ministerial Decree 49/1998 was one of the few signs of a more progressive approach towards forest management by local people during the Suharto era. It was the direct result of intensive lobbying by one group of traditional agroforestry farmers - the Krui of Lampung - and their supporters (see Part III). In some ways, they were pushing at an open door. Forestry Minister, Djamaluddin, was keen to reduce conflict over forest resources by recognising sustainable community-based natural resource management systems that lay within 'state forest' lands. He was also prepared to work with NGOs supporting the local community to reach a compromise.

The Special Purpose decree did not change the status of the forest - it was still 'state land' - but it allowed the indigenous community to continue to collect forest resources, including timber, for an indefinite period. This was the first time that the government had recognised the value of and safeguarded a traditional forest management system. In the short period before the Suharto government fell and new forestry legislation was enacted, several other communities applied for Special Purpose status (later called Kawasan untuk Tujuan Khusus, KuTK), but the supporting regulations were never enacted. Instead, subsequent forestry ministers have promised a broader policy instrument on adat forest under the 1999 Forestry Act.

Certification starts

The certification of timber and forest products is intended to improve forest management through consumer pressure. The best known scheme was set up by the Forest Stewardship Council (FSC) in 1993. Timber operations are inspected by FSC accredited teams which evaluate them according to a series of Principles and Criteria. These cover environmental and social issues, including the legal recognition of indigenous peoples' customary rights. If a logging concession measures up to these standards, the timber and any products made from it can carry the FSC logo. Consumers are prepared to pay higher prices for wood products which come from sustainable, equitable sources. FSC-certified forestry operations are located in more than 30 countries.

Indonesia started its own ecolabelling initiative independently in 1993. A working group of forest NGOs, including LATIN and WALHI, academics and industry representatives developed a scheme under the chairmanship of former Environment Minister Emil Salim. This was agreed by the forestry industry and the government in 1998 and was recognised by the Indonesian National Standards Board in 1999. Companies which fulfil the criteria and indicators are awarded ecolabel certificate SNI 5000.

The working group became an independent organisation, Lembaga Ekolabel Indonesia (LEI), which trained assessors, advised companies about the certification process and upheld the standard of certifications. Concerns that the LEI standard might be lax compared with internationally recognised schemes have gradually diminished. Only one concession - managed by PT Diamond Raya Timber in Riau - had gained a LEI certificate by mid-2000 and then only at the lowest (bronze) level, although this decision itself has proved highly controversial.

Indonesian companies were very slow to accept certification, even though Indonesia signed up to the International Timber Trade Organisation's pledge that, by 2000, all tropical wood traded should come from sustainably managed forests. For more background see DTE/Rainforest Foundation Briefing on Certification, June 2001 at (See also box, Part II for more recent FSC certification in Indonesia.)

Civil society struggles

The term 'civil society organisations' (CSOs) in Indonesia encompasses a wide range of very different groups, including mass organisations, trades unions, community groups and non-governmental organisations (NGOs). The NGO community alone comprises tens of thousands of organisations, ranging from large well-established or well-funded foundations to small groups operating on a shoe-string; from national networks to village co-operatives. Some are independent, radical campaigning groups; others are linked to political or religious parties; yet others are thinly disguised commercial ventures or may have been created purely to access government or donor funding.

Indonesia's NGO movement only began to grow with the national economic development of the late 1970s and 1980s. The anti-communist purges which accompanied the early days of Suharto's dictatorship wiped out or drove underground any independent organisations. Gradually, a new generation of well-educated, middle class individuals set up organisations to address the worst excesses of the New Order. Some (including later leaders of WALHI and SKEPHI) had cut their campaigning teeth in a short-lived wave of student activism in the mid-1970s. Others belonged to 'nature lover' or independent study groups. Typically, each NGO dealt with specific issues - labour conditions, social problems, the urban poor, the environment - and advocacy was limited to public education and application of state laws. The Suharto regime stamped down brutally on any groups and individuals deemed to threaten its authority. To band together, to tackle broader agendas of rights or state violence, or to protest openly was to risk imprisonment.

Nevertheless, some communities did stand up for their rights, particularly by the early 1990s. Once the majority of their customary land had been taken by logging companies, mines or transmigration sites, forest peoples like the Bentian Dayaks of East Kalimantan and the Yamdena islanders of the Southeast Moluccas realised that the alternative to protest was the destruction of their societies and cultures as well as their livelihoods[82]. Villagers in Java who lost their land to industrial or commercial developments faced destitution. The thousands of peasants in Central Java who refused to move off their land for the Kedung Ombo dam became a national cause celebre[83].

Throughout the Suharto years, environmental activism was tolerated to a greater extent than other forms of political action. The international environmental movement had been boosted by the first UN 'Habitat' conference in Stockholm in 1972. Indonesia soon established an environment ministry. The minister, Emil Salim, had good intentions but a small budget and no field staff, so a symbiotic relationship developed between him and environmental groups in Indonesia. The NGOs could raise issues in public (as long as they were not too aggressive) and, in return, would receive tacit protection from government crackdowns. Their position was further strengthened by the 1982 Environment Act, which recognised civil society's role in protecting the environment.

Some organisations were founded as networks in order to resist government repression. The forest campaigning NGO, SKEPHI, founded in 1982, was initially a very radical network with a high public profile. Members from up to a dozen organisations openly criticised government policy and spread information on forest issues internationally then dispersed until the uproar died down. On the other hand, in its early days, organisations belonging to WALHI (Indonesia's Friends of the Earth) took a less confrontational approach, focusing on increasing environmental awareness amongst journalists, student groups and communities. Later, these NGOs evolved in very different directions. The Legal Aid Foundation, YLBHI, adopted a more overtly political stance and pursued workers' rights and land rights cases through the courts. WALHI and YLBHI established the legal precedent for NGOs to take court action against the government with the landmark case against the Indorayon pulp mill in 1989[84]. A consortium of environmental NGOs, including WALHI, later tried twice to sue President Suharto for the appropriation of reforestation funds for the national aircraft project of his Minister of Technology (Habibie) and for 'Bob' Hasan's Kiani Kertas pulp mill[85].

Successes were rare. Forestry baron 'Bob' Hasan publicly accused Indonesian forestry NGOs of promoting the interests of international competitors[86]. The International NGO Forum on Indonesia (INGI), lobbied the World Bank and IMF to adopt policies and projects which were less socially and environmentally damaging in Indonesia. It disbanded and re-emerged as INFID following the government ban on Dutch aid. This was decided after the Netherlands development minister, Jan Pronk, led international protests over a massacre in East Timor. Suharto's vice president Try Sutrisno, called Indonesian human rights activists "the new traitors"[87].

As the 1980s gave way to the 1990s, more changes occurred. Indonesia hosted a UN-sponsored workshop on human rights where environment, development and women's groups participated. The National Commission on Human Rights (Komnas HAM), set up in 1993, provided another vehicle for communities to express their protests and demands for justice. Connections between different kinds of organisation began to flourish - for example members of SKEPHI, student activists and women's groups joined forces in a temporary alliance as the human rights coalition INFIGHT[88]. Organisations like WALHI and YLBHI started openly to advocate challenging state control and building mass support for democracy.

A legacy of conflict

During the Suharto years it was extremely difficult for ordinary Indonesians to express their opposition. The civil administration was paralleled by a military command structure which permeated every aspect of village life. There was no democracy: the party political structure was tightly controlled by the president so that the government party always won elections. Local assemblies (DPRD) existed to rubber stamp decisions made in Jakarta. People who tried to stand up for their rights were accused by the military, police or civil authorities of belonging to the banned communist party or intimidated in other ways. Violence was used routinely to crush resistance to logging, plantations, mines and other 'development' schemes.

Where the government or private companies did decide to use something other than the security forces option to address social conflicts, that route was negotiations about compensation. This short-term fix did nothing to address the basic grievances and often merely prolonged the disputes. Legal action was not an option, since the judiciary was (and remains) notoriously corrupt. Companies and individuals with links to the ruling elite were above the law.

Against these odds, many communities did stand up for their rights. They include:

Three features are prominent in the majority of these cases:

Conflicts over forests have risen sharply since the change in government in May 1998. The legacy of the Suharto regime's drive for 'development' is over 20,000 disputes involving forests, plantations, protected areas and agricultural land[89] (see table below). The underlying reasons behind these disputes have not been addressed in the post-Suharto era and many of these conflicts remain unresolved. As Part II explains in further detail, recent governments have at last started to recognise the problem. However, so far they have failed so far to take effective action to protect the interests of millions of Indonesians whose lives depend on the forests.

Conflicts and natural resources 1990-1996

Source Number of cases Type of conflict Parties involved
HPH 8,741 Burning; overlapping permits; social conflict Companies; local communities; local/central government
HTI 5,757 Change of land use status; corruption of Reforestation Funding; social conflict Companies; local communities; local/central government
Perhutani 3,097 Illegal logging; timber raids; reclaiming land; attacks on forest rangers Perhutani, local communities; logging 'mafias'
Land 1,492 Land disputes; misuse of land use permits National Land Agency, local communities; local government; private companies
National Park 1,492 Illegal logging; overlapping permits; agricultural encroachment; timber raids Local communities; National Park and Nature Conservation authorities
Plantation 405 Raids on plantation crops; seizure of local peoples' land Private and state companies; local communities
Ethnic 331 Conflict between different ethnic communities; social conflict between indigenous communities and settlers Various ethnic groups, companies and the government

(Source: LATIN (1999) Reprinted in Ketika Rakyat Mengelola Hutan, KpSHK, 2000, p2)

Footnotes to Part I

  1. Ginting/WALHI 2001
  2. calculated from RePPProT 1990/Holmes 2000
  3. Ginting 2000. Other sources are more conservative Lynch &Talbott 1995 cited in Aliadi 1999:40-65 million people live in and around forests. See also Poffenberger, 1990, p101: by the late 1980s, an estimated 30 to 40 million people lived on or near 'state forest land'.
  4. NRI, 1998 p.19 quotes National Inventory figures for 1996 of 22.7 million ha of 'convertible forest'.
  5. Dick 1991
  6. Eventually published as Holmes, 2000
  7. Sunderlin & Resosudarmo 1999
  8. Scotland et al, 1999
  9. Nur Machmudi Ismail in IO, 15/Mar/01
  10. Jakarta Post 30/Nov/99
  11. Suara Pembaruan 27/Aug/00
  12. FWI/GFW, 2002 (draft), p.5
  13. Scotland & Jewell,1999
  14. Holmes, 2000
  15. Media Indonesia 20/Mar/01
  16. Ministry of Environment & Konphalindo, 1994
  17. MacKinnon et al, 1996, p.35
  18. RePPProT, 1990, p.155
  19. GTZ, 1995, Planning Workshop ZOPP 4
  20. Ministry of Environment & Konphalindo, 1994
  21. IUCN/SSC 2001
  22. New Scientist, 3/Mar/2001
  23. IPS 14/Feb/2001
  24. IPS 2/Mar/2001
  25. See for example EIA/Telapak, 1999
  26. See DTE 45:11on Kutai and DTE 52:13 on Leuser.
  27. This section draws on Fay, Sirait & Kusworo, 2000; Sirait, Fay & Kusworo, 2001; and Fauzi, 1999.
  28. The Department of Land Affairs became an agency controlled by the Ministry of Home Affairs in 2000.
  29. Fay and Sirait, 1999
  30. Gautam et al, 2000
  31. RePPProT, 1990, p.167
  32. Kartodihardjo, 1999, cited in World Bank, 200
  33. Tebang Pilih Tanam Indonesia (TPTI) means the Indonesian Selective Logging and Replanting system. Forest activists joked that the acronym really stood for Tebang pasti Tanam inshallah (logging is definite, but replanting depends on Allah's will.) Trees are felled on a 35-year cycle. Only trees with a diameter of over 50cm can be harvested in normal Production Forest and over 60cm in Limited Production Forest.
  34. Marr, 2000
  35. DTE, Nov 2000, Newsletter No 47, p6, 7, 11
  36. (see recent DTE newsletters for reports on these and JATAM website: for more details).
  37. Carrere & Lohmann, 1996
  38. See for example DTE 41:1 for more.
  39. Barber et al, 1994
  40. The log ban was replaced in 1992 with prohibitively high export taxes. These were reduced following 1997 by IMF demand, but a temporary export moratorium was imposed again in 2001.
  41. Asian Timber, Sept 1996 p44-7
  42. Scotland et al, 1999
  43. See for example Indonesia's National Forestry Action Plan, 1990, GoI/FAO, p22
  44. SKEPHI & Kiddell-Monroe, 1993, in Colchester & Lohman, The Struggle for Land and the Fate of the Forests, WRM/ZED
  45. A notable exception was studies done as part of the Sustainable Forest Management Programme (SFMP), a large, long-term Indonesian-German forestry project in East Kalimantan. The first phase involved detailed field studies in three concession areas (Inhutani I, PT Sumalindo Lestari Jaya and PT Limbang Ganca) and examined relationships between these companies and the local populations. A number of reports were published, for example: Main Results SFMP Document No.2, 1995. More limited social studies were carried out by the UK-funded ODA Forestry programme in the early 1990s in Central Kalimantan, Riau and Jambi.
  46. GoI National Development Planning Agency 6th 5 Year Plan 94/5-8/9 cited in WRI, 1997 p30.
  47. DTE Special report on Transmigration, 2001, p2
  48. FWI/GFW, (draft), 2002
  49. MacKinnon, 1996, p390
  50. Diah Rahardjo, 1996, pers com
  51. KepMen 614/Kpts-II/1999, see Casson, 2000
  52. Jakarta Post 27/Feb/93
  53. WALHI, pers com 9/Nov/98
  54. Agenda 21 p25; RePPProT, 1990, p165
  55. RePPProT, 1990, p185
  56. Jakarta Post 8/Sept/93
  57. Gallon Environmental Letter Vol 5, No. 2, 2001
  58. Indonesian Business Data Center, 1994
  59. DTE 29/30:11
  60. Barr 2000
  61. Kompas 11/Aug/01, 2000 figures.
  62. See for example DTE's Pulping the Rainforest, 1991 and WALHI's Mistaking Plantations, 1992
  63. SKEPHI European support office 27/Oct/96
  64. Jakarta Post 22/Sept/93
  65. See for example, WALHI's end of year statement 1998
  66. Siscawati, 1999
  67. See DTE 35 (supplement), and 36
  68. Potter and Lee, 1998
  69. DTE, 2001, Special report on Transmigraton
  70. Siscawati, 1999
  71. Casson, 2000
  72. Inside Indonesia Apr-June 1999
  73. Casson,2000; Wakker, 2000
  74. paper presented at KMAN, 1999
  75. Wakker, 2000.
  76. Meijaard & Dennis, R (1997)
  77. Johnson,1984.
  78. Barber & Schweltheim, 2000
  79. ibid
  80. DTE 29/30:6
  81. In 1978 the government set up the Ministry for Development Supervision & Environment, later transformed into the Ministry for Population & the Environment which is now the Ministry for the Environment.
  82. See for example DTE 22:5,11 and 19:1
  83. See for example, DTE 26:1
  84. DTE 1-4
  85. DTE 24:9 and 34:3
  86. DTE 23:6
  87. Schwartz,1999, p254
  88. DTE 8:12
  89. Muhammad et al in LATIN, 2000

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