Oil palm plantations? Carbon credits? Papua's forests targeted

Down to Earth No.75, November 2007

Large areas of Papua's rich and diverse forests are being targeted by Indonesian and overseas investors for conversion into oil palm plantations. At the same time, discussions are in progress to reserve large areas of Papua's forest to generate carbon credits for trade on international markets. Decisions about these developments will very probably be made over the heads of the people who will be most directly affected by them: the indigenous Papuan communities whose livelihoods largely depend on the resources in their forests.

Indigenous Papuans have borne the negative impacts of top-down development for decades - from Indonesia's disastrous transmigration scheme, in which indigenous forest land was taken for agricultural schemes involving imported Javanese labour1, to the giant Freeport/Rio Tinto gold and copper mine. Since the 1970s the Freeport mine has carved up Papua's mountains to get at the valuable minerals, and has dumped billions of tonnes of mining waste downstream. 'Development' has also meant dividing up Papua's indigenous-owned forests for logging and for oil and gas exploration. Though it attempts to present a community-friendly face, the BP-operated Tangguh gas project in Bintuni Bay shares with all these projects the fact that it is large-scale, decided and directed by non-Papuans and is largely aimed at benefiting outsiders2. Underlying all of these imposed projects, is the stark fact that Papua's political status is an imposition in itself, as Papua's 1969's 'Act of Free Choice' - on whether or not to be part of Indonesia - has been shown to be a total sham. This means that any opposition to such schemes from local people is open to interpretation by Jakarta as security problem to be countered with military force.

Given this historical mix of imposition, export-orientated resource exploitation and military enforcement, it is not surprising that poverty levels among the indigenous population remain high - despite the fact that Papua's income has risen steeply after the introduction of regional autonomy revenue-sharing rules. Since 'special autonomy' for Papua was Indonesia's means of undermining calls for independence, the fact that poverty levels remain so high is troubling the Jakarta government. Earlier this year, president SBY issued a decree aimed at speeding up development in Papua. But, as yet another top-down initiative, this is unlikely to bring positive results while more fundamental problems are left untouched3.

The latest schemes being talked about for Papua are a major expansion in oil palm plantations and setting aside forests for international carbon markets. The first of these appears to be very much in the mould of previous schemes (top-down, export-orientated, involves overseas companies, takes over indigenous-owned lands and is being promoted by Jakarta). The second is different in two main ways: it aims to create income by protecting a resource, rather than directly exploiting (and exhausting) it, and it is being promoted not by Jakarta, but by Papua's governor, Barnabas Suebu. From a purely environmental perspective, the idea of protecting forests for carbon credits may be attractive, but there are serious questions over how effectively such schemes will protect the forests at all, and what implications they will have for local forest-dependent communities whose forests are targeted (see also DTE 74).


Oil Palm Plantations

Exactly how much Papuan land is being set aside for oil palm plantations is not clear, but recent announcements range from one million hectares to be developed very soon, to four or even five million hectares in the next ten years4. According to Indonesia's Investment Coordinating Board (BKPM) there are over two million hectares of land in Papua available for oil palm development. Most of this (1.935 million ha) is spread through nine districts in Papua province, with the remaining 150,000 ha in the recently renamed 'West Papua' province5. BKPM classifies this land as 'state and customary/collective land' (Tanah Negara & Ulayat)6.

The BKPM data states that land already taken for oil palm schemes covers around 90,000 hectares in Papua, and around 30,000 in West Papua. According to Department of Agriculture data, Papua has three oil palm production units with a processing capacity of 120 tonnes of fresh palm oil fruits per hour7.

Sawit Watch, the Indonesian NGO network working on oil palm issues, puts oil palm expansion plans for Papua at the higher figure of 3 million hectares, but has lower estimates for existing plantation cover at 40,889 hectares. According to these figures, Papua's expansion plans are second only to West Kalimantan (5 million hectares) and are the same as those of Riau province in Sumatra8.

A much higher figure for land available for biofuel development (oil palm, plus other biofuel crops) is given by Indonesia's National Team on Biofuel Development, which puts land available in Papua at a staggering 9,262,130 hectares, at least three times higher than in any other province9.

The Jakarta government says that biofuel development will only go ahead on non-productive forest land, but in Papua, as elsewhere, it is clear that timber-rich forests are being set aside for such schemes.

Using just the lower estimates for land targeted for oil palm, this means that between one fifth and one third of Papua's 9.3 million hectares of 'conversion' forests are likely to be targeted for oil palm under government plans. Papua is estimated to have around 17.9 million hectares of intact forests of a total official forest zone of 39.7 million ha10, but these are diminishing fast as destructive logging by legal and illegal operations takes its toll11.

Some of the plans for Papua are well-advanced. In April, governor Suebu said that he had agreed to release a million hectares of indigenous land for oil palm investment, at the request of three investors alone. Two of these are Indonesian (Sinar Mas Group, Medco Group) and the other is Malaysian (Felda). The focus would be biodiesel markets, he said, and would make Papua a source of energy for countries starting to run short of fossil fuels. "Now is the era of green energy, no longer fossil energy", he said12.

Sinar Mas, the huge pulp and paper conglomerate whose interests include south-east Asia's biggest paper pulp plant, has plans for oil palm mostly in the southern part of Papua, in the districts of Mappi, Boven Digul and Merauke. This company, which is in a joint venture with China's CNOOC (China National Offshore Oil Corporation), has signed memorandums of understanding for 200,000 hectares in each district13. (CNOOC is also a shareholder in the BP-operated Tangguh gas project in Bintuni Bay, West Papua.)

But, according to a document seen by the Straits Times, Sinar Mas' 'wish-list' plans are much more ambitious, covering a massive 2.8 million hectares: 603,000 ha in Merauke, 637,000 ha in Mappi and 914,000 ha in Boven Digul plus large areas in three other districts north of the central highlands: Sarmi (313,000ha), Keerom (186,000ha) and Jayapura (163,000ha)14. In all cases, except Mappi district, these figures exceed the official figure for land available for oil palm development as set out by Indonesia's Investment Coordinating Board (BKPM)15.

Other investors interested in buying into Papua's oil palm for biofuel rush are reported to include:

  • Malaysia's Genting Bhd, through its Singapore-based company, Genting Biofuels Asia Pte Ltd: US$3 billion for a 400,000 ha palm oil plantation for biofuels;
  • Indonesia's Muting Mekar Hijau: 540,000 hectares of palm oil and sugar;
  • Indonesia's Rajawali Corp (Keerom district);
  • Indomal: 300,000 ha of oil palm in Merauke and Sula (North Maluku) districts.

A company called Trans Pacific, a joint venture between Indonesian, Singaporean and Chinese investors, is also reported to be interested in developing biofuel from sago16.

For Indonesia as a whole, according to Business Watch Indonesia, by early 2007 as many as sixty agreements on biofuel development projects, including 14 foreign investors, had been signed17.


Oil palm's murky record

Based on past experience, such large-scale projects bring potential for conflict, human rights abuses and marginalisation of people at the local level.

A report by ICG, published in July this year, reveals chronic problems with existing plantations developed by Korean investor Korindo in Boven Digul district, in the southern part of Papua. These problems relate to land rights, access to resources and the influx of non-Papuan workers. ICG estimates that if Sinar Mas goes ahead with its projects in southern Papua (200,000 hectares in three districts), each project would require 60,000 workers, meaning in Boven Digul's case, "an influx of 42,000 non-Papuans - a number larger than the entire district's current population."18

Recent reports from the Institute for Papuan Advocacy and Human Rights indicate how such explosive situations can turn violent. In July the group reported that a West Papuan man was dying in hospital after being tortured by members of the military at a military base at Asiki, near the Korindo concession. The following month, the group reported the death of a non-Papuan Korindo employee in a clash between company workers and indigenous Muyu. Local people had previously reported the death of at least one Papuan killed by the military. "The recent violence ...appears to be as a result of longstanding dispute[s] over land rights between Korindo and local indigenous traditional landowners," said Matthew Jamieson of IPAHR. "Ultimately the conflict over the expansion of oil palms is driven by international demand for bio-fuel. This will involve the destruction of millions of hectares of rainforest and with it the indigenous populations who have lived in and managed these forests for thousands of years", said Jamieson19.



The fact that the military and police are at hand to protect the company's interests is in itself a reminder of Papua's long record of human rights atrocities committed by the armed forces, and the history of impunity. The military presence is also more entrenched. With the creation of more districts in Papua, more district military and police command posts have been established, ensuring a tighter military mesh. This puts further pressure on local natural resources, since a large part of the military budget is made up from external businesses. Personnel often turn to resource-based projects to generate income - either legally or illegally - but both in ways that push aside the interests of local people.

Papuans have little recourse to the law due to the continuing low status of indigenous rights under Indonesian law. This means indigenous groups have almost no effective protection from competing land use rights awarded by district, provincial or central authorities. Despite a general provision for respecting customary rights under Papua's Special Autonomy law, their legal status has still not been clarified. A required special regional regulation (Perdasus) on land rights and forestry which was drafted in 2006 (see DTE 69) has not yet been debated by the provincial parliament20.

Elsewhere in Indonesia, palm oil plantations are associated with pollution problems and pesticide use, which have a disproportionate impact on women's health (see DTE 66). It is reasonable to expect that these problems will also exist in current and future plantations in Papua.

One fundamental problem, long associated with oil palm schemes throughout Indonesia is the use of oil palm projects as a front for gaining access to valuable timber. Regional governments have often complained about the 'cut and run' tactics of companies who commit to providing jobs and creating income for the local economy by developing large-scale plantations (not just oil palm, but pulpwood and other cash crops), but which are only really interested in selling off the hardwood from the natural forests in their concessions. Now that oil palm prices have skyrocketed, with the new demand for biofuels, there is more of an incentive for companies to actually develop the plantations after logging the timber. However, with a company like Sinar Mas, which owns pulp mills whose capacity for processing timber far outstrips the legal supply, accessing Papua's forests is likely to still be a major motivation for investment (for more background on Sinar Mas-APP's pulp project see DTE 52DTE 56 and DTE 61).



Governor Bas Suebu has portrayed himself as an enthusiastic supporter of oil palm expansion in Papua. A Bisnis Indonesia report in April this year quoted the governor's calculations that 2 million hectares of plantations developed over the next 10-15 years, would provide work and prosperity for some 250,000 families21. He is also quoted by ICG as describing the oil palm development programme as "waking the sleeping giant" of Papua's economic potential22. However, he has also warned potential investors that they must be committed to the developments, and not just take the timber and disappear.

The ICG report also notes a cautious approach towards Sinar Mas investments in the three southern Papuan districts: "Although district governments have signed memorandums of understanding with a dozen prospective plantation investors, no formal permission has yet been granted. The provincial government is in the process of developing strategies to minimise social disruption before opening up more land, including a stipulation that indigenous Papuans must be given priority for labour and work contracts." The group notes that Sinar Mas itself may be judged incapable of managing 600,000 ha because it has planted only 12,000 ha of 40,000 ha of land it was granted as long ago as 199223.

Indonesian MPs have also raised suspicions about the motive of large companies making biofuel investments in Papua. Ishartanto, for example, member of a national parliamentary commission on forests and plantations, said the programme was over-ambitious. Providing enough seedlings for just one million hectares would be problematic, let alone finding enough workers and managers. He estimated that developing 300,000 hectares alone could take 12 years - and that would be in an area with good infrastructure, unlike Papua. He said such investors were interested in the timber, using land to raise capital and, while incapable of developing the land themselves, wanted to prevent access by others24.


Forest protection for carbon credits

It is interesting that the Bisnis Indonesia report in which Suebu promotes the benefits of oil palm development came out just one day before a very different message was put out and widely reported by the international press. This was his joint statement with fellow governors of West Papua and Aceh pledging to "implement environmentally friendly policies, sustainable development and the reduction of greenhouse gas emissions"25. The international message on forest protection was later firmed up by Suebu, when he claimed in an interview with the Wall Street Journal to be resisting pressure from Jakarta to develop oil palm plantations26. The article says that Suebu wants to protect more than half of the land targeted for development. The protected forest would then be used to earn carbon credits. Forest protection, or 'avoided deforestation' - is expected to be accepted as an official means of generating carbon credits at December's Bali climate change summit, DTE 74 has more background on this issue). This stance appears to have assisted the governor's nomination for an environmental award from Time Magazine, in October 2007. The governor told Time, "Pressure on our forests is coming from the forestry department because they are still operating with an old mindset…They need to realize that there is a new paradigm now and we are not going to repeat the mistakes of the past"27. It is quite possible, of course, that Suebu believes that it is possible both to develop oil palm plantations as well as forest protection for carbon credits as ways of earning income for Papua.

But even the supposedly 'green' approach of avoided deforestation does not bear too close an examination. According to the Wall Street Journal, a 30-year-old Australian millionaire, Dorjee Sun, has been instrumental in persuading Barnabas Suebu to take up avoided deforestation so enthusiastically.

After the governors' joint statement on forest protection in April, Mr Sun bought a controlling stake in the Carbon Pool Pty. Ltd., a small Australian company. In 2006, this company bought farmers' rights to over 12,000 hectares in Queensland and sold the resulting carbon credits to Anglo-Australian mining multinational, Rio Tinto in one of the world's first avoided-deforestation trades. According to WSJ, Sun wants to interest Rio Tinto in carbon schemes in Papua and Aceh and the company itself is "keen to look at other opportunities".

It really would be some dreadful irony if Rio Tinto - a major investor in the highly destructive Freeport mine in Papua, set about offsetting its carbon emissions (or continuing to pollute) by buying credits generated by Papua's forests.

Since the Freeport mining operations have destroyed large areas of forest, some might say that this would be paying something back to Papua and Papuans, but at what price? If Papua's forests are to be traded for carbon credits - who will decide which forests should be set aside? Who will benefit? How much will go to Jakarta? How much will go to Papua? And how much, if anything, will go to indigenous Papuans whose forests are to remain protected?

According to Papuan commentator Neles Tebay: "If the government is really committed to accelerating development in Papua, then President Yudhoyono should pursue a more dialogical method based on three fundamental principles: peace, democracy and dignity, as proposed by the president himself in December 2005."28

This should apply to governor Barnabas Suebu as well as the Indonesian president, when planning large-scale oil palm developments and setting aside forests for carbon trading. If the principles of human rights and free, prior and informed consent continue to be ignored, these schemes will more than likely fail to improve the lives of Papuans. Instead, there is a risk that they will sustain the current cycle of conflict over resources, military aggression and human rights abuses suffered by Papuans for so long. 


Palm oil in Papua

District Used for oil palm (ha) Available for oil palm (ha) Status of land
Boven Digul - 300,000 State and community
Jayapura 51,589 90,000 State and community
Keerom 6,000 100,000 State and community
Mappi - 800,000 State and community
Merauke 500 400,000 State and community
Nabire - 35,000 State and community
Paniai - 60,000 State and community
Puncakjaya - 100,000 State and community
Sarmi 31,738 - State and community
Waropen - 50,000 State and community
TOTAL 89,827 1,935,000  
(Source: BKPM website accessed 27/Oct/2007; data updated Jan 2007; regionalinvestment.com/sipid/id/commodityarea.php?ic=2&ia=91)

Note: some of these figures may conflict with other sources: eg in the ICG report which states that in Boven Digul district, Korindo has cleared around 4,000 ha of a 7,000 ha oil palm block in the southern part of the district. SeeIndonesian Papua: A Local Perspective on the Conflict, Crisis Group Aisa Briefing No 66, July 2007, p.7)

1 See DTE's report on transmigration 
2 For more on Tangguh see DTE 73 
3 For details and opinion on the decree, see Jakarta Post 30/Aug/07 
4 The higher figure comes from Governor Barnabas Suebu, as quoted in Bisnis Indonesia 25/Apr/07. 
5 Papua's split into two provinces was imposed by Jakarta against local opposition. The new 'Irian Jaya Barat' province was renamed 'Papua Barat' (West Papua - the name commonly used by supporters of self-determination or independence). It means that Papua's provinces are now 'West Papua' and 'Papua'. 
6 See regionalinvestment.com/sipid/id/commodityarea.php?ia=91&ic=2 for a breakdown of land already used and available for oil palm in ten of Papua's districts (accessed 23/Oct/07). For the whole of Indonesia land available for oil palm amounts to: 2,967,194 ha, while land already developed is: 3,955,070 ha. See: regionalinvestment.com/sipid/id/commodity.php?ic=2 (Accessed 30/Oct/07). These figures conflict with information from the Department of Agriculture that Indonesia has 6 million hectares of oil palm plantation and plans at provincial level that may add up to as much as another 20 million ha. 
7 Quoted in Bisnis Indonesia 25/Apr/07 
8 See Promised Land: Palm Oil and Land Acquisition in Indonesia - Implications for Local Communities and Indigenous Peoples by Marcus Colchester, Norman Jiwan, Andiko, Martua Sirait, Asep Yunan Firdaus, A. Surambo and Herbert Pane (2006) Forest Peoples Programme, Sawit Watch, HuMA and ICRAF, Bogor (also available in Bahasa Indonesia). Can be downloaded from www.sawitwatch.or.id or www.forestpeoples.org 
9 Figures quoted in Business Watch Indonesia, Biofuel Industry in Indonesia: some critical issues
10 See DTE 69 for more Papuan forest figures from various sources, including Forests Watch Indonesia. 
11 See DTE 69 and Greenpeace SEAsia press release 21/Aug/07. 
12 Bisnis Indonesia 25/Apr/07 
13 Indonesian Papua: A Local Perspective on the Conflict, Crisis Group Asia Briefing No.66, 19/Jul/07 
14Straits Times 23/Aug/07 
15 According to head of Papua's chamber of commerce and industry, John M Kabey, speaking in April 2007, Sinar Mas will open plantations in five districts - Boven Digul, Mappi, Merauke, Sarmi and Jayapura, covering a total 1 million hectares and costing between Rp21.6 and 24.6 trillion. This, he said, would produce more than130,000 barrels of biofuel per day. The target was for the five districts to become fuel self-sufficient by the sixth year of investment, and ready to export biofuel in the seventh year (Investor Daily 24/Apr/07 via Watch! Indonesia) 
16 http://www.papua.go.id/berita_det.php/en/1241, accessed 22/Oct/07; additional sources: Minister of Energy and Mineral Resources, Indonesia's Experience on Biofuels Development, Power point presentation to International Biofuel Conference 5/Jul/07, ec.europa.eu/external_relations/energy/biofuels/sessions/s1_02_yusgiantoro.pdf accessed 27 Oct 2007 
17 Figures quoted in Business Watch Indonesia, Biofuel Industry in Indonesia: some critical issues
18 Crisis Group Asia Briefing No.66, p5. 
19 Media Release, IAPHR 24/Aug/07 
20 Crisis Group Asia Briefing No.66, p5. 
21 Bisnis Indonesia 25/Apr.07 
22 Crisis Group Asia Briefing No.66, p5. 
23 Crisis Group Asia Briefing No.66, p5. 
24 Investor Daily 24/Apr/07; Kompas Cybermedia 20/Apr/07, 'Papua akan buka lahan sawit tiga juta hektar',
25 Reuters 26/Apr/07
26 Wall Street Journal 10/Aug/07
27 Time Magazine 29/Oct/07
28 Pastor Neles Tebay writing in Jakarta Post 30/Aug/07

Thanks to Watch Indonesia! for contributions to this article