Bank report on chaos at Kalimantan Project

Down to Earth No. 39, November 1998

A World Bank report on the government's project to convert a million hectares of peat swamp forests into rice-lands reveals how appalling the situation on the ground is.

What comes out of the report is the project's total lack of planning and failure to anticipate the economic, social and environmental costs. The main activities so far – logging and burning to clear the land and digging drainage canals – are turning the project into a disaster area. Unless the government takes heed of the warnings and halts the project immediately the disaster will grow much, much worse.

The report, written by a senior water resources engineer at the Bank, Theodore Herman, was the result of a two-day field visit to the project area in May at the request of the Public Works Minister, Rachmadi. The findings, sent to the Minister include several important recommendations which, if followed, would mean vastly reducing the scope of the project, stopping further expansion and starting again from scratch with planning, impact assessment and project costing.

The Central Kalimantan mega-project was launched by President Suharto in 1995 as a means of securing Indonesia's self-sufficiency in rice. The project aimed to settle as many as 316,000 transmigrant families to cultivate the rice and other crops. From the outset, critics warned that the project was impossible from an ecological point of view as peatlands are unsuitable for growing rice. At the same time the traditional, successful livelihoods of indigenous Dayak villagers were being bulldozed out of existence. But Suharto had decreed that his pet project would succeed and so nobody was allowed to contradict him. (For further background see DTEs 29/30, 31, 35, 36 and 37).



A major point of concern in Herman's report is the fact that almost all the primary canals are aligned over deep peat conservation areas and/or medium peat soils. He warns that subsidence of the deep peat will occur rapidly near the canals, compromising their drainage functions, while becoming increasingly prone to fire. He advises:

..the whole water supply system needs to be redesigned and made compatible with soil and topographic constraints. It is not unlikely that - to reverse the damage done - the major canals will have to be filled in...

Among the environmental impacts, the report identifies the need to quantify the effect on rivers and estuaries of large quantities of acidic water, agrochemicals and nutrients draining from the project area in the dry season when the dilution effect of river flows is reduced. Herman notes that "contrary to recommendation, there are reports that Gramoxone (paraquat) has been distributed to farmers on a trial basis."* Also, an insecticide, banned for use on rice has been made available to farmers.

The report warns of the impact of logging and the soil erosion it causes on the functioning of the canals and flood control systems. It states that no information was available about the damage to wildlife habitat caused by the project and recommends that this should be assessed so that endangered species can be relocated to other areas. Likewise, there was no information on the impact on indigenous people. The report states:

It is not clear whether the 1-3 km Greenbelt river corridor of the project plan is adequate to accommodate their customary (adat) land use rights for rattan gardening and the like. This should be ascertained and appropriate and equitable provisions made to forestall future friction.

The argument that may persuade the government to call a halt to the project more than any other is the economic one. Here the report is forthright:

At least Rp 1.5 trillion has been spent on the project to date…Redesign of the project …means an even greater expenditure than ever foreseen. At the same time the agricultural area will be reduced to below 500,000 ha while rice yields and agricultural economics are uncertain. No benefit-cost engineering-economic and sensitivity analysis has been undertaken to date, especially one that includes settlement and environmental mitigation costs as well as other irreversible losses. GOI [Government of Indonesia] owes itself such an analysis in order to determine the desirability of further major expenditure on this project.

The report makes four main recommendations: cease further expansion and re-evaluate the project; improve public relations and communication; conduct revised environmental assessment; and intensify research and recruit international technical expertise. (Source: Million Hectare Swampland Project Field Visit Observations and Recommendations, Theodore Herman, World Bank 31/5/98)

While some of these recommendations are more useful than others, the main point is that the government should be persuaded to stop further destruction in Central Kalimantan and concentrate on repairing the damage caused so far. There is much repair work to be done: apart from environmental rehabilitation, the needs of the 13,500 transmigrants already placed on the project must be addressed and the lands and livelihoods of indigenous villagers restored to them.

* This pesticide is produced by Zeneca, the UK-based agro-chemicals and pharmaceuticals multinational. Down to Earth has written to Zeneca to enquire about its involvement in the mega-project. The company replied that it has no direct involvement in the project, but confirmed that it owns 95% of Zeneca Indonesia (which very definitely is involved in the project).


Villagers stage protest in Palangkaraya

Communities whose lives have been wrecked by the mega-project staged an occupation of local government offices in the provincial capital Palangkaraya in August. Over a hundred and twenty people from 12 villages arrived on August 26th to present five demands to the government. The government has made little response to the demands and states that the central government, not the local authority is responsible for the mega-project.

Supported by students and NGOs, the villagers refused to leave the offices for over a week. Their demands are: the project must be stopped; the land must be returned to its rightful owners in the community; all damage caused by the project must be repaired; due compensation must be paid to the local community; individuals who have demanded illegal payments from prospective local settlers must be investigated.

The students, NGOs and community organisations have formed a Solidarity Alliance for the Victims of the Swamp Forest Rice Mega-Project and have set up a community post to distribute aid to the protesters. The Alliance has appealed for contributions to fund their work to support the mega-project victims. Further details from


The government's solution: oil palm

While ministers ponder how best to extricate the government from the mega-mess in Kalimantan at the minimum cost to balance sheet and dignity, one solution that has been put forward is oil palm. Speaking in September, transmigration minister Hendropriyono said the project would no longer be directed at food production, but at oil palm plantations. He hoped that foreign investors would be attracted so that foreign exchange would be brought into the country fast, but said only one investor – from Japan – had shown interest so far. (Suara Pembaruan 17/9/98)

Oil palm, which fetches high prices on international markets at the moment is being promoted as a relatively fast means of earning dollars and so rescuing Indonesia's economy. Unlike other crops, it does also grow in some areas of peat. It is already being developed over large areas in other parts of Kalimantan as well as other islands.


Stop press…damage limitation?

As we went to press, reports from Indonesian NGO sources suggested that the project is indeed to be drastically reduced in scale. Around 50,000 hectares of land already cleared plus the transmigration areas are still to be "developed". Further opening of the project area is to be stopped, although it is not yet clear what will happen to the drainage canals already dug across the peat.