There are worrying signs that Indonesia's timber barons are trying to accelerate their destruction of Indonesia's last remaining forests.
In a series of underhanded campaigns, the tycoons are posing as conservationists in order to increase their profits and productivity.
In the latest example of this brazen guile, the Indonesian Forestry Society (Masyarakat Perhutanan Indonesia – MPI) announced Thursday it will provide 100 billion rupiah ($11.25 million) to help the government curb timber smuggling and protect the environment. Good news? No! It's a ruse. It's an effort to increase destruction of the environment.
Beware of the MPI, which was led from 1991-98 by one of the greatest rapists of Indonesia's forests, ex-president Suharto's former golfing buddy and trade minister, Mohamad "Bob" Hasan, who is now supposedly serving a six-year jail sentence for fraud and misuse of reforestation funds. But more on Bob later.
The MPI says it will only give the 100 billion rupiah to the government if plywood exports reach 6 million cubic meters and the global price of plywood averages $400 a cubic meter.
Why have these strings been attached? The MPI is upset that the government plans to license logging companies to cut down "only" 6.7 million cubic meters of wood next year.
Therefore the MPI is urging the government to allow logging firms to cut down a minimum of 12 million cubic meters of timber in 2003.
In return for that, the notoriously corrupt government will receive the 100 billion rupiah – supposedly for combating timber smuggling. Yeah, right. Even if the government ever does go after the kingpins, the corrupt timber barons should have no problem paying off crooked courts to ensure they avoid punishment.
Experts reckon about 80% of all logging in Indonesia is illegal and say the problem will take years to overcome, by which time there won't be much left of the forests.
The World Bank is no longer involved in forestry projects in Indonesia because the military, police and local governments have extensive financial interests in them. Foreign aid groups also complain that funds for forestry conservation projects are liable to be misused by officials who inflate prices.
MPI chairman Sudradjat Djaja insists his organization is interested in conservation – which is absolute nonsense, given that he's demanding the government double the amount of logging concession areas.
What's more worrying is that he said the MPI intends to raise its 100 billion rupiah payment to the government by asking that timber firms set aside $2 from the export of every single cubic meter of plywood.
Sound familiar? It should. This is harking back to what happened when Bob Hasan was the self-styled King of the Jungles and controlled the timber industry.
It worked like this: the timber products sector was organized into various industry organizations and marketing boards. Market access and exports were tightly controlled by the boards, which also allocated market share. These industry associations made policy decisions that were almost always approved by the relevant subservient government ministries. Membership in the organizations was compulsory and all members had to pay annual fees to finance the "expenses" and "promotion costs" of the marketing boards. And at the top of all of these associations was Bob Hasan.
The main organization in Hasan's forestry fiefdom was the Indonesian Plywood Association (Apkindo), which flooded overseas markets with quality plywood sold far below world market prices. With Apkindo's control over export licenses, plywood companies had to follow the cartel's orders or face serious consequences. Little wonder that by the early 1990s, Apkindo had captured about 75% of the world trade in tropical plywood.
Critics say that Hasan collected a tidy $2.04 billion from commissions, promotion funds, and trading monopolies on plywood products, as well as an estimated $8 billion from saw milling, timber products, pulp and paper products, as well as monopolies on insurance and aerial mapping.
Under pressure from the International Monetary Fund at the height of the regional economic crisis of 1997-98, the Indonesian government in February 1998 revoked Apkindo's monopoly.
But Apkindo and its affiliates merely took a step back and are now doing their best to regain total dominance of the plywood trade. And they are doing this by claiming they want to protect the nation's forests.
Apkindo chairman Martias on June 10, 2002, announced that a special organization, to be called the Production Control Body (BPP), would soon start operating to monitor plywood production, exports and prices – all for the sake of protecting the environment and increasing profits.
Likewise, MPI chairman Sudradjat Djaja said that illegal logging must be halted – for the sake of pushing plywood prices up from the current $280 a cubic meter to $400 a cubic meter. What he means is that timber barons want to reassert their stranglehold on the industry. And presumably these tycoons won't care whether their timber comes from legitimate concession areas or elsewhere.
A study by the Center for International Forestry Research (CIFOR) reveals that in the mid-1990s less than 50% of the timber sourced by 33 large-scale timber companies came from their official concession areas. The rest of it sure didn't drop out of the sky.
But without a trace of irony, Djaja said wood smuggling activities in the forests must be dealt with seriously.
Djaja is no fan of the Forestry Ministry, which he feels is hindering the growth of the timber sector because it dares to impose limits on the amount of logging. In May 2002 he accused Forestry Minister Mohammad Prakosa of gradually "killing" the national timber industry.
The timber tycoons have found an ally in the form of Trade and Industry Minister Rini Suwandi, who on August 19, 2002, gave her official backing to the creation of a "new agency to help resolve the various problems facing the country's ailing forestry-based industry".
State news agency Antara quoted Suwandi as saying one of the agency's main jobs would be to help curb illegal logging. This pap was dutifully reprinted in the widely read The Jakarta Post daily.
What the media has not reported (until this report) is the revealing minutes of the meeting held by the Trade and Industry Meeting on August 19. The minutes state that the proposed agency will have three goals.
First, the agency will function to increase forestry product exports. As for the second and third goals, they're just a deceptive veneer, claiming that the agency will support the creation of local jobs and protect the environment. The agency's main function will be to increase logging.
The minutes also state that the agency will be financed through the obtainment of a "security fee" imposed on timber companies – ostensibly for the purpose of fighting illegal logging.
Furthermore, the minutes say the agency will be chaired by two executives from the Forestry Ministry and Trade and Industry Ministry, while membership of the board will be open only to executives of Apkindo and related logging organizations.
What's this all about Minister Rini Suwandi? You're creating an agency that you claim will protect the environment, but representatives of genuine conservation groups and other non-government organizations will not be allowed to join? Why not just come clean and admit that you're helping out Bob Hasan and his cronies? Never forget that Suwandi is a long-time friend of Hasan. So much so, that when he was running automotive giant Astra, he hired her in 1998 to be the company's chief executive.
Anyone who thinks that Hasan is out of the timber business has sawdust in their head.
Detailed studies by CIFOR consultant David Brown, who also advises the Forestry Ministry, reveal that 18 of 35 offshore companies controlled by Hasan export plywood to the US, the UK, Japan, South Korea and elsewhere in Asia.
With the Trade and Industry Ministry now backing increased exports of timber products and "fee payments" from industry players, Hasan and his cronies will no doubt grow wealthier, while Indonesia's forests will suffer further.