Government, business and communities

Down to Earth No. 74, August 2007

DTE interviewed Dr Afrizal, a sociology lecturer at Andalas University, Padang, West Sumatra. His thesis, entitled 'The Nagari Community, Business and the State', is a detailed examination of the relationship between these three elements through the example of oil palm plantations. He has become the spokesperson for the smallholders' organisation, SPKS, in working groups of the sustainable palm oil initiative, Roundtable on Sustainable Palm Oil (RSPO).

What first got you interested in the issue of oil palm plantations?

To be honest, I am not. My interest is in the connections between three actors - the state, companies and communities - and the consequences arising from different modes of relationships between them. I decided to focus on land issues, and oil palm plantations were one example of these interactions, but I have also looked at rubber plantations and mining.

What did you find?

Communities are in a much weaker position than the state and business who owe their strength to collaboration with each other because they share certain interests. Government officials need income, both for state institutions and personal reasons. Businessmen need the state to secure the means to develop their enterprises.

Indonesian civil society is weak in two respects. Firstly, communities do not have the power to resist the interests of business and the government: they are easily persuaded when their leaders are won over and if promised a few million rupiah. Secondly, communities are unable to fight hard for their rights and their own interests against government and business. Their organisations are weak or, in some cases, non-existent; their level of education is low; local people who do have education lack the capacity to organise people to stand up for themselves.

This is not to say that communities do not fight for their rights, but that it is usually easy to break down their resistance by controlling their leaders. In the end, they give up their land to companies because they are forced to or because the majority do not understand what is going on.

Would you say that the government isn't fulfilling its role to protect the public?

Yes, I would. Rather it is fulfilling another role - that of finding sufficient funds to keep itself going; to pay for its offices, employees and activities.

So what should the function of the state be?

The overall function of the state is to ensure the well being of its people. And to do this the government needs to clean up its act. In the current situation in Indonesia, the government tends to prioritise its own development and, where this conflicts with its other duties to protect the public, it will ignore these and put its own interests first.

This can be seen by the pride that the district administrator (bupati) and/or governor take in generating large local revenues (PAD). Obviously the government needs money to serve the public but it is often difficult to raise revenues through taxation. It therefore chooses the easier route of 'rent seeking' - issuing permits in return for money. Although local authorities find various lucrative ways of issuing permits for companies to operate in their area, they do not care about the impacts on communities. So, this is an example of the way that the government supports business.

Does the same analysis apply to other agrarian contexts in Indonesia, such as mining, pulpwood and other plantations?

Yes, the details are different in each case, but the pattern is the same.

What can communities do in this situation?

We must strengthen civil society as well as work through international initiatives like the Round Table on Sustainable Palm Oil (RSPO). It is vital that the principles, criteria and indicators of any certification scheme take into account the communities around the plantations as a requirement of that certification.

Can certification address the political and legal problems that exist in Indonesia?

It is certainly debatable whether this approach can be effective or not. Will the auditors be genuinely independent of the company or will the two parties reach an 'informal understanding'? Can the RSPO be independent when it depends for its survival on its membership which consists largely of companies and it has a vested interest in issuing them with certificate?

This venture is not a guaranteed success. It needs civil society organisations like WALHI, Sawit Watch and WWF to keep the pressure up. They must report any violations of the principles and criteria because to keep quiet would increase the opportunities for collusion between the auditors, companies and RSPO.

The RSPO is the most recent certification scheme and has learned from the weaknesses of other systems. The issue now is how we monitor its implementation. If this is done properly, it could bring about improvements such as companies taking more care of the environment and local communities rights because they are audited according to agreed indicators.

How would the companies benefit?

Companies are concerned with markets. There is a growing market which is concerned about a clean environment and local communities' rights. These consumers do not choose a product simply for its quality, but according to whether or not its production caused environmental damage or is unethical because the rights of women or children were violated. It will increasingly be in the interests of companies to pay attention to such issues if they want to expand their businesses and secure their markets.

Will this affect the relationship between companies and the government?

Of course it will. Like it or not, it will make the government's job easier. The government is always afraid that investors will not engage or that they'll pull out. Investors worry that they will have to spend large sums of money on issues which are not directly related to production, such as the environment or indigenous people's rights. So if companies address these matters, uncertainties are reduced for both sides and the government has less to bother about.

Isn't there a risk that government revenues will be reduced?

No, because companies will want to invest even though they will have to comply with conditions such as proper waste treatment facilities to meet local people's needs and this does not come cheap. But if they know these conditions beforehand, they will accept them.

Doesn't this mean that the companies and government will have to change their old ways of working, where they identified development areas on paper without even knowing who was living there? And won't less land be available to companies as certain areas must be excluded to comply with the criteria - such as conflict locations? That's right and I suspect that there will be many violations of the rules in order to get access to larger land areas. That is why we need organisations such as Forest Peoples Programme and Sawit Watch to put pressure on the government and business community.

Will the government listen to civil society organisations?

There are many more opportunities now compared with during the Suharto years. The government is well aware that it must involve civil society organisations in policy making and things are moving in the right direction, even though vested interests mean that we are not completely there yet.

Issues such as human rights violations, lack of workers rights and environmental damage do not only occur in Indonesia. The capitalist economy is at the root of many disasters: people must produce to make a profit and these activities conflict with the interests of the masses. Hence conflicts arise depending on the strengths and weaknesses of civil society and the degree of concern shown by the state.

The same problems confront the USA and Europe but at lower levels of intensity than in Indonesia because their decision-making involves long public consultation processes. In Indonesia, public consultation is meaningless because stakeholders are invited to listen to decisions that have already been taken.

Why did you choose oil palm plantations for your case study? Is it because these are so many of these plantations in West Sumatra?

Oil palm plantations interested me because of the high number of conflicts associated with them in this province. Also, there is more rapid expansion of oil palm compared with other types of plantations. Indeed, many rubber plantations are being replaced by oil palm. So I focused on oil palm because the areas covered by coffee, sugar and rubber are so much smaller.

Oil palm plantations have become a key issue in Indonesia in general. If you want to explore agrarian issues, you have to focus on mining or oil palm. Sugar cane is only really an issue on Java and even then the area is small compared with oil palm. Moreover, there has been a long history of individual land ownership in Java which has wiped out customary law.

Are agrarian conflicts in West Sumatra over communal land?

Definitely! Here the majority of land is communal, except for settlements and urban areas. So if we are talking about land availability, forests are all held communally.

Is the customary concept of a village (Nagari) still in use?

The Nagari is the smallest administrative unit in West Sumatra. Customary lands are classified as housing, paddy fields, rain-fed fields and forests. The forest is all customary land held communally, except for any given to the government.

In the government's view, forests are state land

Yes, there is a difference of views.The indigenous community consider that they are the rightful owners of the forest under customary law, but the government says this is state land under the laws which it has passed. The concept of legal pluralism is important in this context: the two legal systems are in collision, but customary law existed long before state law.

The 1960 Agrarian Law recognises customary law. What does this mean in practice?

That law only grants limited recognition as it contains the problematic phrase "as long as (the customary rights) still exist". There is also the agrarian minister's decision (No5/1999) that customary rights only apply to land which the government has not granted formal rights over. If the government granted land use rights to a company (HGU, HGB) then, in the government's opinion, that area is no longer acknowledged as customary land. However, indigenous communities believe that the status of their land is not the government's business - so it's a complicated situation.

The battle in West Sumatra and other places now is to challenge certain clauses in that ministerial decision. The West Sumatra Legal Aid Bureau (LBH Sumbar) and customary leaders want to amend the clauses which say that on expiry of land rights granted by the state the land automatically reverts to state control. They want such land to return to customary control.

There is public support for a new local regulation on customary land in West Sumatra, but this has not come about yet because the local government wants to implement the Agrarian Law. There is a problematic legal issue of governance here because tenure is not covered under local autonomy legislation. So we cannot pass local regulations that conflict with the national agrarian law. Also, it is pointless to hope for an amendment to the agrarian minister's decision unless the basic legislation is revised. That is why we need to support groups who are pushing for agrarian law reform.

So your answer to all these issues is that communities must be empowered?

Yes. It's the only way. That does not mean that I do not want to increase the capacity of the government sector but, even if government officials know about people's rights, it is by no means certain that these will be implemented if communities remain so weak.


Dr Afrizal's book, The Nagari Community, Business and the State, published in 2007 by Forest Peoples Programme, is available from or from FPP - see or contact Tel: +44 (0)1608 652893 Fax: +44 (0)1608 652878