Bill Guerin – International aid donors led by the World Bank may, just may, put more pressure on Indonesia to reform its forestry policy. Management of Indonesia's remaining forests is among the topics on the agenda of the 12th meeting of the 30-member Consultative Group on Indonesia (CGI) in Bali this week.
Most donor countries, though themselves large-scale importers of timber products, have consistently slammed Indonesia's environmental stance on sustainable resources.
Although the Indonesian archipelago comprises little over 1 percent of the Earth's land surface, it holds a disproportionately high share of its biodiversity, is host to a wealth of natural riches and contains 11 percent of the world's plant species, 10 percent of its mammal species, and 16 percent of its bird species.
Indonesia also has the world's second-largest reserves of natural forest. These are among the most diverse and biologically rich in the world. They are Asia's largest and the world's third-largest contiguous areas of remaining tropical forests.
Industry experts say these forests have been exploited with little regard for their sustainability as a valuable resource. Corruption in the bureaucracy, military and police have fueled a frenzy of illegal logging, so much so that 5,000 hectares of forest is destroyed every day.
This rampant pillaging of the nation's natural resources is characterized by exploitation for political ends and personal gain and the unprecedented annual loss of nearly 2 million hectares of forest every year, double the rate of the 1980s, spawned by the political and economic instability of the past five years.
With other economic needs taking priority, illegal logging has reached unprecedented levels in post-Suharto Indonesia, and up to 56.6 million cubic meters of logs are felled without permits each year. Rampant corruption in the local and national bureaucracy, weak or non-existent monitoring, and the support of the military have combined to ensure the perpetuation of a top-down laissez-faire approach.
The loss of forest also destroys wildlife habitat. Time is running out for many of Sumatra's remaining natural forests and national parks, which provide a haven for a host of critically endangered species. Thousands of species of mammal, including the Sumatran tiger, Sumatran elephant, Sumatran rhinoceros, orangutan and clouded leopard and sun bear live in the same Sumatran natural habitat.
Pressure on aid donors to look at the deforestation issue in economic terms increased when the Center for International Forestry Research (CIFOR), funded by more than 50 international donors, including the World Bank, called for the government to halt the sale of US$2 billion worth of loans owed by Indonesian pulp and paper firms and plywood factories.
Huge conglomerates such as Bob "Mr Jungle" Hasan's Kalimanis Group and Burhan Uray's Djajanti Group owe almost half of this. Though Hasan, a Suharto crony, is still in jail over forestry-related crimes that caused $75.5 million in state losses, his Kalimanis, with timber holdings spanning nearly 20,000 square kilometers in Kalimantan, has been slammed as "one of the most voracious, barbaric conglomerates in the world".
CIFOR wants to see many of these companies pushed into bankruptcy, in order to reduce the demands on forestry resources. This is by no means a new initiative, though similar pressure in 2001 from the CGI saw little action by Jakarta.
The environmentalists, local and foreign, want Jakarta to commit to a national plan, which would reclaim the vast tracts of land that currently lie idle and properly conserve the primary forest that remains. Government policy, on the other hand, has been to convert forests into palm-oil or rubber plantations, which, of course, further drives deforestation.
Nearly 9 million hectares of land, much of it natural forest and allocated for industrial timber plantations, has been cleared in the past five years, but only 2 million hectares has been replanted. Some 7 million hectares of forest has been approved for planting palm or rubber trees but forestry sources say only 4 million hectares has been planted.
The frenzy of logging that has gripped Indonesia over the past three decades has been ratcheted up by regional autonomy. The shifting of authority from Jakarta to the provinces and thence down to local districts has resulted in even more exploitation of forest resources as the easy path to riches and short-term revenue.
The illegal logs come mainly from Aceh, North Sumatra, Riau, Jambi, West Kalimantan, Central Kalimantan, East Kalimantan, Central Sulawesi and Papua.
Autonomy gave district heads (bupatis) the right to issue small forest exploitation permits (IPPK). Hundreds of logging permits have been issued in forest-rich areas such as East Kalimantan, ostensibly to local community initiatives, which are usually controlled by firms backed by powerful business interests.
Bupatis are limited to issuing permits of up to 50,000 hectares, and governors up to 100,000 hectares. Governors are responsible for any concessions that cover one or more districts and the central government retains control over concessions that overlap more than one province. Some local authorities now often question the status of ministerial decrees.
The heady expansion of the plywood, pulp and paper industries over the past two decades means that demand for wood fiber now exceeds legal supply by some 40 million cubic meters a year, with illegally cut wood accounting for as much as 65 percent of the supply in 2000.
Forestry experts calculate that the widespread illegal logging costs the country an estimated annual loss of Rp30.42 trillion ($3.42 billion) and say 50.7 million cubic meters of timber a year is sold illegally.
Some estimates put the revenue from timber exports at a healthy $10 billion per year but many of the major industry players are among Indonesia's biggest debtors, who owe big bucks to the Indonesian Bank Restructuring Agency (IBRA).
Both the World Bank and the International Monetary Fund (IMF) are said to be ready to support a halt in IBRA's sale of loans and assets belonging to these debtors in advance of a total restructuring of the sector and a review of license holders authorized to fell logs.
According to Ministry of Trade and Industry data on wood-based industries in Indonesia, the needs of the pulp and paper industry together with the plywood and furniture sector's raw material needs amount to some 63 million cubic meters of wood per year. On the other hand, the Forestry Ministry says only 12 million cubic meters were legally felled in 2002. The shortfall confirms estimates that up to 80 percent of timber felled in Indonesia is illegal. This costs the state an estimated $5 billion a year and some $609 million annually in environmental destruction throughout the country.
The wild card is the Indonesian military. The Indonesian Forum for the Environment (WALHI) says most illegal timber is first shipped to Singapore or Malaysia, and then to its final markets in Japan, Taiwan and South Korea. Most shipments carry documentation that, with the connivance of the police, customs and navy, is accepted to be legal.
TNI (Indonesian armed forces) chief General Endriartono Sutarto acknowledged last week that military personnel were behind many illegal logging operations in the country and promised to crack down on them. Sutarto promised a new cooperation between the military and the Forestry Ministry and local administrations to arrest those involved in the illegal logging.
"They must be severely punished. Their illicit activities have not only inflicted financial losses on the state, but they are also destroying the sustainability of out forests," he told a news conference after meeting with Forestry Minister Muhammad Prakosa.
Though this willingness by TNI to be seen to cooperate in combating illegal logging was lauded as a milestone, it fell short of an admission that the military as an institution was partly to blame for protecting those involved in illegal logging.
The donors in Bali would have noted the general's candid and timely public words, but a few days earlier a report from the Environmental Investigation Agency, a non-profit group based in London and Washington and funded by Indonesia's major donors, blew the whistle.
The EIA report, "Above the Law: Corruption, Collusion, Nepotism and the Fate of Indonesia's Forests", said that the military, through its private businesses, has logged illegally and operated sawmills to cover the daily needs of troops. EIA wants donors to consider linking future financial aid to proof that Jakarta is cracking down on illegal logging and they condemn the police and the courts for failing to prosecute illegal loggers, even when other agencies, including the Ministry of Forestry and navy, intervened.
Indonesian legislator and timber baron Abdul Rasyid was cited as the main player in the rape of Kalimantan's forests. Kalimantan province, the Indonesian part of the island of Borneo, has been hit worst by the illegal logging. Rasyid's company, Tanjung Lingga, has consistently looted timber from Kalimantan's Tanjung Puting National Park, says the report, prepared with the help of local activists, adding that Rasyid and those who work for him have used violence and intimidation, attacked researchers and tried to kill an Indonesian reporter.
The issue of illegal logging and the trade in illegal timber commands center-stage attention worldwide. Much of the spleen has been vented on Indonesia as one of the world's leading timber-producing (and -destroying) nations, though Malaysia's demand for cheap raw materials has helped drive this destruction.
Malaysia has a lot to answer for. It is the biggest exporter of tropical timber in the world and also a major exporter of wood furniture. In 2000 the value of Malaysia's exports of tropical logs, sawn, ply and veneer was in excess of $2.4 billion, and wood-furniture exports were valued above $1 billion.
Malaysia's own log production has reduced dramatically in recent years, to about 22 million cubic meters, but, like Indonesia, installed capacity of the country's wood-processing industry outstrips production and is estimated to need more than 40 million cubic meters a year.
Illegally logged timber from Indonesia makes up the shortfall and highlights the role of Malaysia in undermining international efforts to control the problem. An estimated 3 million cubic meters of illegally felled Indonesian timber enters Malaysia every year – a trade worth more than half a billion dollars.
In 2000 environmental organizations from the Asia-Pacific region met in Kuala Lumpur, at a convention known as Ring of Fire, and announced publicly that the most exploited region was the Malaysian state of Sarawak. Malaysia did not attend.
A year later, in September 2001, Southeast Asian countries together with Japan, China, the United Kingdom, the United States and the European Union met in Bali for a ministerial-level forest law-enforcement conference. They all signed up to the Bali Declaration, a far-reaching agreement to work together to tackle the problem within the region. Again, Malaysia was notable by its absence. Jakarta is expected to get some $3.2 billion in fresh loans from the CGI to promote equitable growth, investment and poverty reduction. There is unlikely to be much reduction in poverty for local community's affected by the continued deforestation.
Sustainable development is little more than a textbook theory. The government has long deprived local communities' participation in the management of the surrounding forests that succor and sustain the livelihoods of millions of forest-dwelling or forest-dependent Indonesians.
Everything, as so often in Indonesia, revolves around money, not principles or ethics. Far from benefiting the rural poor, forest management has been subverted to serve the interests of the ruling elite. Logging concessions are dished out to powerful players, who can pay the most. Even today only 10 companies control 45 percent of the total logging concessions in the country.
President Megawati Sukarnoputri, addressing an International Tropical Timber Organization (ITTO) meeting in Bali last year, called for a logging moratorium in order to stop forest destruction and loss, citing the need to let the forests "breathe". As always, the good lady can be relied on for looking at issues in the simplest of dimensions.
The problem, however, is immense and can only be properly tackled by a complete overhaul of forest management in Indonesia boosted by international pressure and sanctions on buyers and traders.
Last June Prakosa kicked off the government's slow-moving attempts to redress the balance. A permanent ban was imposed on log exports and wood chips. The forestry minister also plans big cuts in the permitted annual quota for timber felling, to move more in line with sustainable levels and match the capacity of the sawmills closer to the volumes of timber cut down legally.
Searching and unannounced audits of some of the largest wood-processing mills are also in the cards and the government will allow logging companies to produce only 6.8 million cubic meters this year, down about 50 percent from 12 million to 15 million cubic meters last year.
Internationally, the UK was first to stop the rot through a ground-breaking agreement with Jakarta to work to stop illegal logging and the trade in stolen timber, amid pressure for all timber sold on the European mainland to be clearly marked as having come from sustainable forests. Greenpeace has also put pressure on Western wholesalers and retailers to prove that timber they sell is legal.
A concerted, donor-led campaign to instigate and enforce bans on shipments of illegally cut timber and accept responsibility, with Jakarta, for the management of Indonesia's forests, would have much more impact than the annual soapbox speeches.
China and Japan have the biggest appetite for Indonesian wood, and unlike major Western timber importers, so far, at least, have had no qualms about the environmental and conservancy issues posed.
After all, as Environment Minister Nabiel Makari points out, illegal logging only succeeds because of those who want to keep on buying its products. Just as in the international drug trade, he says.