Forestry Act fiercely opposed

Down to Earth No. 42, August 1999

A new Forestry Act was before the Indonesian Parliament as DTE went to press. Despite promises of reform, the proposed law is based on top-down control and commercial exploitation. Indonesian NGOs, forestry academics and the indigenous people's alliance, AMAN, have demanded that the bill is withdrawn because it ignores customary (adat) rights and was drafted without proper consultation. Furthermore, parliament has no legitimacy until new MPs take their places following the final election results.

Indonesia's 1967 Basic Forestry Law, on which all other forestry legislation and regulations depend, is long overdue for reform. But in Indonesia, as in other countries, forestry is not just a technical or economic matter; it is a highly political issue. A new law has been more than a decade in the making as successive ministers strove to balance the powerful vested interests of the Suharto family, the military and timber tycoons with international commitments to forest conservation. Conflict between forest communities, logging companies and local authorities continued as the logging and timber estate system rode roughshod over traditional land rights.

The Habibie government tried, unsuccessfully, to rush the new Forestry Act through parliament before the elections. The driving force has been pressure from the IMF and World Bank, rather than demands from civil society. Forestry sector reforms were among the conditions for the US$43 billion 'economic rescue' package announced in November 1997. The IMF's concerns were almost exclusively geared to improving the forestry sector's contribution to the economy through such measures as removal of timber trade monopolies; transfer of control of the Reforestation Fund and state-owned forestry companies to the Ministry of Finance; auctions of logging concessions; the introduction of performance bonds; and raised fees and taxes on timber companies (see DTE 40).

Meanwhile, World Bank pressed hard for forest management policy reform through a Policy Reform Support Loan (PRSL-1). This included rescinding the obligation for concessionaires to own timber processing plants; making concession permits tradable by sale and lengthening the period of concession. The Bank withheld disbursement of a US$400 million tranche of funding in late 1998 due to the 'glacial pace' of forestry reform, but denied in correspondence with Down to Earth that it wanted the new Forestry Act to be passed quickly.

'Invite, Inform, Ignore'

One of the World Bank's loan conditions was that there must be effective formal consultation with all stakeholders on forest policy reforms. The Indonesian government did indeed hold a series of consultations with NGOs, academics and foreign donors on forestry issues in late 1998, but this was just window dressing. Two drafting committees were working on the new Forestry Act - both sanctioned by Indonesian Minister for Forestry and Plantations, Muslimin Nasution: the Department of Forestry's internal committee and the Forestry and Plantations Reform Committee (KRPKP), comprising academics and a few NGOs as well as representatives of the government and forestry industry. Neither committee included representatives of indigenous peoples groups. When the final draft of the legislation to go before parliament was made public in March, it bore little resemblance to the versions hammered out in the consultations or to the Minister's promises of 'forests for people'. Forestry Department officials had ensured that the status quo prevailed. The Bank turned a blind eye and went ahead with plans for a second forestry policy reform loan (PSRL-II) and Sectoral Adjustment Loan (ForSAL).

Indonesian forestry academics and campaigners and international researchers were outraged that the whole consultation on forest reform had proved to be a farce. Groups as varied as the Alliance of Indigenous Peoples of the Archipelago (AMAN), the Agrarian Reform NGO KPA, a consortium of 14 NGOs in East Kalimantan and 28 community leaders from South Kalimantan issued public statements calling for the proposed law to be withdrawn. Even the much respected former Environment Minister Emil Salim and ex-Forestry Minister Djamaluddin announced openly that the proposed law was 'rubbish' and did nothing to address the real issues facing Indonesia's forests, such as over-exploitation and illegal logging.

Although parliament did not sit for several weeks either side of the June elections, there was furious lobbying of the various factions to stop the bill progressing. The Community-based Forest Management Communication Forum (FKKM) - a 'think tank', based in Yogyakarta, comprising leading forestry academics, NGOs, government officials and commercial foresters - put forward an alternative draft forestry law which received support from some MPs. The major environmental NGO WALHI proposed that, instead of separate Forestry, Mining and Planning legislation, a Natural Resources Act should be introduced. Lobbyists also asked the head of the State Secretariat, Muladi, to withdraw the bill until the newly elected MPs had taken their seats. The Forestry Department has been lobbying too. Meetings have been held at the Department to discuss the FKKM's version of the proposed law and Forestry Minister Muslimin was the main speaker at a big public debate between department officials, the 'reform' committee, FKKM and NGOs held in a Jakarta hotel. Unless civil society groups and donors can stop the process, the new Forestry Act is likely to be passed in August.

National Forestry Programme planning

Despite opposition to the proposed Forestry Law and no date for the presidential elections, the Department of Forestry announced the start of the next 5-year cycle of forestry in July. As the Indonesian government has to been seen to be more democratic and transparent in order to satisfy the conditionalities of international donors, the first stage is to set up two consultative working groups which will report by October. The first is a "Scenario group" of experts which will present data on the state on Indonesia's forests and options for future action. The second is a "Process group" of representatives of interested parties to devise an acceptable consultative mechanism. Meanwhile, behind the scenes, major bilateral donors including the EU, UK and Germany are sorting out their own priorities for funding forestry programmes in the future.

This forestry policy review is taking place against a pitiful lack of information on the impacts of the economic and political crisis on forests and forest peoples. One of the first is a study of the effects of the economic crisis on farmers' livelihoods and forest use by the international forestry research institution, CIFOR. Preliminary results from fieldwork in Riau, West and East Kalimantan and Central Sulawesi show that the situation is highly variable both geographically and with time. Researchers Angelsen and Resosudarmo conclude that the crisis has had a larger negative impact on farmers than originally expected. Unsurprisingly, poor farmers are hardest hit but the short term impact on forests may be less than some feared. The main threat to the forests comes from better-off farmers, immigrants and urban entrepreneurs who are more likely to convert forests to grow the most profitable cash crops. They also point out that observers may be underestimating the impacts of the political vacuum on forests since the lack of law enforcement has made illegal logging and encroachment of protected areas more likely.

There have been alarming reports about encroachment on forests in 'Protected Areas' throughout Indonesian over the past few months. Timber raids on plantations and logging concessions increased sharply following the fall of Suharto (see DTE 39). Recent Indonesian press articles report the destruction of forests on Mount Salak and Meru Betiri National Park in Java; Tanjung Puting National Park in Central Kalimantan; Bukit Tiga Puluh in Jambi and Gunung Leuser in North Sumatra. Many of the reports come from visitors and researchers, mainly concerned with the protection of endangered species such as orang utans, rhinos and birdlife. For example, at the Suaq Belimbing centre in the Leuser Ecosystem area, international and Indonesian scientists see years of their research disappearing to the chainsaws of illegal loggers. Where large-scale illegal logging has been sanctioned by local officials and the military for years, there is a very real danger of a 'free for all' approach prevailing in which everyone - including local communities - now grabs what timber they can.

Accelerating deforestation

Indonesian official figures seriously underestimate the extent of illegal logging. World Bank unofficial estimates are that annual forest losses averaged 1.5 million ha over the last twelve years. Privately, experts talk in terms of Sumatra being commercially logged out within a decade. A recent study by the Indonesia-UK Tropical Forests Management Programme (ITFMP) shows a 32.6 million m3 gap between legal log production totals and demand from the wood processing industry (see table below). This shortfall can only be met by illegal logging. This is equivalent to clear felling 640,000 hectares of natural forest each year (taking an average volume of standing timber of 50m3 per hectare). This report is the most outspoken document to come from the British aid-funded programme to date, stating that "…there is a grave risk that the forests will largely disappear in the near future unless urgent action is taken now". It blames this situation on Indonesian government forestry policy which allowed the processing industry to exceed the sustainable capacity of the forest to supply it. Furthermore, export-led strategies have been pursued at the expense of meeting domestic demand. In particular, the report points the finger at Indonesia's paper pulp exports as the spur for the massive illegal harvest. Given the IMF's emphasis on exports, this situation is unlikely to improve.


Supply/demand Amount (million m3) 1997/8
Legal log production in Indonesia
Other sources
Total supply
Domestic demand
Log equivalent of exports
Total demand
Net wood balance -32.6


Sources of Indonesian logs (estimates) Amount (million m3) 1997/8
Selective logging of natural forest 16 (20%)
Clear felling for plantations/agriculture 10 (13%)
Plantations 2 (3%)
Private/community forests 1 (1%)
Illegal logging of natural forest 32 (63%)
Total (excluding imports) 61

Too little, too late

Muslimin, who is likely to be replaced in cabinet reshuffles once the new government is announced, is making a last stand against corruption in the forestry industry. In July, he revoked eight forest concessions totalling 1.17 million hectares on the grounds that they were granted through corruption, nepotism and collusion. The concessions in the provinces of West, East and Central Kalimantan and Jambi belonged to business groups jointly owned by Suharto's daughters Siti "Tutut" Hardijanti Rukmana and Siti Hutami Adiningsih and a number of their associates, including Muhammad "Bob" Hasan and Prajogo Pangestu. Thirteen other forest concessions covering 1.36 million hectares will not be renewed when they expire next March, but will be put under the management of local universities, co-operatives and Islamic boarding schools.

Four of the timber estates, PT Fendi Hutani Lestari and PT Tusam Hutani Lestari, controlled by Hasan, PT Adindo Hutani Lestari, owned by Suharto's daughter Siti Hediyanti Prabowo, and PT ITCI Hutani Manunggal, jointly owned by Hasan and Suharto's son Bambang Trihatmodjo, were found to have made false claims from the Reforestation Fund and would be required to repay Rp 50.71 billion (US $7.5 million) to the government. Muslimin said his office was also reviewing three forest land exchange deals between the government and companies owned by the Salim Group: PT Pertiwi Lestari, PT Kapuk Naga Indah and PT Mandara Permai in Angke Kapuk, West Java, due to suspicions of corruption.

WALHI and the Indonesian forest campaigning NGO SKEPHI were unimpressed by the government's action against these companies and called for the cancellation of all concessions. They point out that the revoked concessions are only a small fraction of the vast areas controlled by timber barons, many of whom have been completely ignored in the called for an industry 'clean-up'. They also state that the whole system of allocation of logging and plantation concessions is riddled with corruption and that the Forestry Department itself has colluded with forestry companies in illegal practices for years.

(Sources: AMAN statement 25/5/99; WALHI press releases 2/6/99, 14/7/99; SKEPHI press release 13/7/99; JKPP 3/6/99; Jakarta Post 16/6/99, 19/6/99, 9/7/99; 20/7/99; CGIF 13/7/99; "Krismon, farmers and forests", Angelsen & Resodarsomo, May 1999, CIFOR; "Threats to Sustainable Forest Management in Indonesia", ITFMP, March 1999 Report number PFM/EC/99; and other sources)

First forests ecolabelled

The first 'Certificate of Well-Managed Forest' issued under Indonesia's ecolabelling scheme was awarded to a 90,957 ha PT Diamond Raya Timber concession in the Bengkalis district of Riau in February. The Indonesian Ecolabelling Group (Lembaga Ekolabel Indonesia, LEI) was established in 1994 in response to an International Tropical Timber Organisation (ITTO) agreement that by the year 2000 all tropical timber exports should come from 'sustainably managed forests'. The Working Group, chaired by ex-Environment Minister Emil Salim and staffed by forestry graduates and NGO members, drew up criteria and indicators for the timber industry. By 1998, a Certification System for Sustainable Forest Management (Sistem Sertifikasi Pengelolaan Hutan Produksi Lestari, PHPL) had been agreed with the government and industry. Companies which meet the criteria are awarded certificate SNI 5000 through the Indonesian National Standards Board.

LEI, now reconstituted as the Indonesian Ecolabelling Institute, carries out the assessments. So far, it has assessed 15 logging concessionaires, but only PT Diamond Raya Timber's Riau operation has passed. The Indonesian ecolabelling system is a voluntary scheme. Applicants must submit full documentation for inspection, including annual work plans and reports, prior to a field inspection. The concessionaire is allowed to choose which body carries out the field study, but all field assessors must have appropriate qualifications and training. The inspection criteria include social and environmental indicators as well as production factors, administration and financial management. Local communities can also contribute to the assessment process. The evidence is considered by an assessment panel which passes its recommendation to the certification panel. There are five standards - gold, silver, bronze, copper and zinc - but only the first three are considered a pass. Certificates are valid for five years and can be withdrawn before expiry if there is evidence that conditions have been broken.

LEI is now trying to increase the international acceptability of the Indonesian ecolabelling scheme by working with the Forest Stewardship Council (FSC) and the Dutch Foundation Kerhout towards 'Mutual Recognition' status. However, many Indonesian NGOs and forestry companies are still deeply suspicious of the whole process. (Sources: Jakarta Post 16/3/1999; LEI pers com)