New plantation law - more land conflicts predicted

Down to Earth No 62  August 2004

Indonesia's new plantation law, aimed at providing legal certainty for investors, will do nothing to address conflicts between local communities and companies. It could well make things worse.

The Plantations Bill was endorsed by Indonesia's national parliament on 12th July, two years after it was tabled. The bill purports to set out the rules for developing plantations professionally, and sustainably, based on the principle - enshrined in Indonesia's 1945 Constitution - that natural resources should be managed optimally for the welfare of the people. It describes the functions of plantations as: increasing income, human and community development, unifying the nation, regional development and preserving natural resources and the environment. The bill covers planning; control over land; business, management and marketing; research and development; human resources; finance and supervision.

In Indonesia, 'plantations' mean oil palm, rubber, coconut,cashews, tea, coffee, cacao and other commercial crops, but not timber plantations (HTI). The aims of stimulating investment in the plantation sector are difficult to square with sustainability and environmental protection.

Under the bill, plantation companies receive 35-year concessions, which can be renewed for a further 25 years with the minister's approval. The regional administrations provide licences for companies to operate and concessions are issued by the National Land Agency (BPN). The minister of agriculture has the power to determine the maximum and minimum area to be used for plantations, based on type of commodity, availability of land and population density.


As a editorial in the influential Jakarta Post put it: "Judging by its primary objectives of bringing about fairness to farmers/smallholders, enhancing sustainable plantation-management practices and building up an internationally competitive plantation industry, the plantation bill by no means a good law." (15/Jul/04)

Different sections of civil society have attacked the bill for its failure to protect the interests of small-scale farmers and indigenous communities and for giving big business too much power. Clauses in the draft law limiting land holdings to 20,000 hectares in a single province and 100,000 ha in total have been omitted in the final version.

Some NGOs consider that the 35-year extendable concession period is tantamount to giving companies ownership of public land - a situation that is bound to lead to more land conflicts with local communities whose own rights to the land are not given sufficient legal recognition.

On the crucial question of customary rights (hak ulayat), the bill says:

"when giving rights over land for plantation development, attention should be paid to the ulayat rights of customary law communities, as long as these still exist in reality and do not conflict with the national interest." (Article 9(3))*

Since there are no clear procedures for recognising hak ulayat or 'the national interest', this kind of language offers almost no protection for indigenous communities**. Like so many other pieces of legislation, the bill fails to address the fundamental problems with land tenure in Indonesia.

The bill sets down a maximum prison term of 10 years and up to Rp 10 billion in fines as sanctions aimed at stopping plantation companies using fire to clear land. However, there is concern that this could be used against indigenous communities using controlled burning techniques as part of their traditional farming systems (see also forest fires article, above). Other crimes include the illegal occupation of land - which could be used to target peasant farmers and indigenous communities whose rights over lands are not adequately recognised. One member of parliament, Sayuti Rahawarin from the Daulatul Ummah Party (PDU) raised the key issue for indigenous peoples: "We have numerous reports of big plantations taking over tribal land. The bill should stipulate that such companies should have their concessions revoked," he argued.

Ivan Valentina Ageung of the RACA Institute said that the government should have reviewed all existing legislation relating to agrarian and natural resource management. "Traditional land owners need recognition from the government to protect their land from big plantation companies", he said.

NGOs have criticised the fact that the key Agrarian Reform and Natural Resources Management decree (No IX, 2001) has not been used as the basis of the plantations law. The decree, which was passed by the MPR, Indonesia's highest legislative body, paved the way for reform of all sectoral laws affecting land and natural resources, and afforded some protection for the rights of 'peoples following customary law' (see DTE 52).


In June, thousands of farmers from Central Java, West Java and Banten provinces joined students and workers grouped under the Agrarian Reform Movement Alliance (AGRA) in a demonstration against the plantations bill, Alliance leader Erpan Faryadi said his organisation was demanding land reform under the 1960 agrarian law. The protestors also called for a stop to violence against peasants, and demanded the release of peasant and indigenous leaders who had been jailed for defending people's interests to land and natural resources.

Dita Indahsari, chair of the labour organisation FNPBI, said the bill would create tension between small farmers and large companies - a scenario which has brought military and police intervention. She said the protesters therefore rejected militarism and opposed presidential candidates with a military background.


The new law states that local communities should be involved in security at the plantation to create a sense of ownership and responsibility towards the operation.

Until now, many companies, including plantation developers, have chosen (or been obliged to) pay for military or police security guards. This has led to a climate of intimidation and fear around projects where community-owned resources have been appropriated by the company without consent. As is the case with mining companies, plantation companies have benefited from this system, whilst denying responsibility for human rights abuses committed by the guards in their employ. It remains to be seen whether the new arrangement will encourage better practice, but concerns have already been raised that involving local people could create divisions and 'horizontal conflict' between surrounding communities. The wording on this in the draft plantations law (article 20(1) and explanatory notes) may have been inspired by the problematic 'community-based' security approach being attempted by British oil multinational BP at the Tangguh gas project in West Papua - see DTE 60 for more details and concerns raised over this approach.

(Source: RUU Perkebunan/Draft Plantations Law [no date] Jakarta Post 10/Jun/04, 7,12&13/Jul/04; press release, Kesatuan Aksi untuk Hak-hak Petani (KUHAP): TOLAK Rancangan Undang-undang Perkebunan, 31/Jan/03; Tempointeraktif 9/Jul/04)

* Paragraph 3 was omitted from the final version of the law. However in the general notes, the point is made that "The issuing of rights over land for plantation businesses must still pay attention to the ulayat rights of customary law communities, as long as they still exist and do not conflict with higher laws or the national interest."

** A 2002 study on legal tenures in Indonesia also notes that hak ulayat cannot be recognised on lands overlapping concessions; that recognition of the right is subject to regulations that do not exist and that no compensation is payable when the land is expropriated in the national interest. See Colchester, Sirait and Wijardjo, Obstacles and Possibilities, the Application of FSC Principles 2 & 3 in Indonesia p.124.


Calls for Agrarian conflict resolution Commission

Indonesia's National Commission for Human Rights (Komnas HAM) and NGOs have called for a national commission to resolve agrarian conflicts. Komnas HAM admits that it is not able to deal with land disputes across the country due to lack of expertise, staff and powers.

The NGOs - WALHI, KPA, HuMA and Bina Desa - and Komnas HAM have drafted a 15-article presidential decree to establish the commission, which provides for the resolution of land disputes dating back to 1967. This is the date when the most cases of land disputes arose, according to Rikardo Simarmata of HuMA. In that year Suharto, who had seized power two years before, enacted laws on forestry, mining, and foreign investment which allowed the political and military elite, plus foreign investors to take control of the country's rich natural resources.

The draft decree would also provide for the establishment of an agrarian court to resolve land disputes fairly within one year of receiving a submission.

(Source: Jakarta Post 24/Jun/04)

[This article was updated June 14, 2007]