forests,people and rights - down to earth indonesia · the ammatoa of south sulawesi forest...

Forests, People and

Rights

A Down to Earth special report June 2002

Forest farmers in Paser, East Kalimantan, Photo: DTE

Part IForests, people and rightsForest figuresIndonesia’s disappearing forestsIndonesia’s forest wealthAdat and Indonesian forest lawThe Ammatoa of South SulawesiForest classificationsForestry in the Suharto eraBob Hasan: downfall of the timber kingThe Reforestation FundThe cost to forest peoplesPlantations in the Suharto periodPulp and paperOil palmForest firesThe first signs of reformA legacy of conflict

Part IIForest reforms, post-SuhartoThe political and economic contextThe increased role of the IFIsReforms in the Habibie periodThe 1999 Forestry LawThe CGI focus on forestsReforms during the Wahid periodRegional autonomy and forestsDebt and the forestry industryReforms under MegawatiContinued pressure: plywood, pulp Illegal loggingOil palmForest firesFundamental reforms still needed

Part IIICommunity forest management:the way forward What is community forest management?Pressure for reform & the GoI responseThe HKM programmeThe Peoples’ Forest ProgrammesPBHM in Kuningan, West JavaThe community forestry movementAMAN, FKKMKpSHKSouth Sumatra SolidarityCBFM in Wonosobo, Central JavaAgroforestry in Krui, SumatraThe Behoa people of Central SulawesiRevitalising customary laws: BentekLogging to save the forests: PejangkiForests and communities, W. KalimantanChallenges to community managementRecommendationsReferences

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Note on terminology

In this report, we use the terms ‘forestpeoples’, ‘forest-dwellers’ or ‘forestcommunities’ to denote peoples living inand around forests - including indigenousand non-indigenous peoples. The term 'indigenous’ is used to describegroups who self-identify as indigenouspeoples or masyarakat adat.

Contents

DTE: 59 Athenlay Rd, London SE15 3EN, England, email: [email protected] tel/fax: +44 207732 7984 website:www.gn.apc.org/dte

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With sincere thanks to: R. Agus Bakrie,M. Amin, Devi Anggrain, A. Baso, Buyung,Abdul Situmorang Wahib, Chip Barber, ChrisBarr, Bestari Raden, Anne Casson, EvaCastaner, Stefanus Djuweng, Linda Ekstrom,Chip Fay, Cholis Yung, P. FlorusHasjrul Junaid, Irfan, Kim Loraas, A. Mecer,Serge Marti, Mardi Minangsari, AbdonNababan, H. Nazarius, Tri Nugroho, HarryOktavian, Mateus Pilin, Putrawadi, DiahRaharjo,Rama Astraatmaja, HubertusSamangun, Mina S. Serta, Max Simpoha,Martua Sirait, Rukka Sombolinggi, Suwito,Paulus Unjung, A. Valentinus, Eric Wakker,Joko Waluyo, Tony Whitten, Taufik Widjaya.

Also, many thanks to LonggenaGinting, Adriana Sri Adhiati, MarcusColchester, Sandra Moniaga, CarmelBudiarjdo for their valuable editorial insights.

Written by Liz Chidley,edited by Carolyn Marr

and produced with the support ofthe Forest Peoples Programmeand the Rainforest Foundation.

Forest Peoples Programme:1c Fosseway Centre, Stratford Road,Moreton-in-Marsh, GL56 9NQ, UK.www.forestpeoples.org

Rainforest FoundationCity Cloisters, 196 Old Street, LondonECIV 9FR, England. www.rinforestfoundationuk.org

1

DOWN TO EARTH Forests, People and Rights Part I, June 2002

Indonesia's forests are in crisis - a crisislargely overshadowed by the country'srecent economic and political upheavals.Forest degradation and conversion haveaccelerated to some 2 million ha per year.Central and local governments continue tosee natural resources - particularly forests- as a means of generating much-neededrevenues and bestowing politicalpatronage. A prominent Indonesian forestcampaigner has called this approach'national suicide' 1.

The challenge for Indonesia is toput new policies in place before conflictsover resources escalate further and theremaining forest is destroyed.There is anurgent need for a fundamental reform ofIndonesia's laws on land and naturalresources, including the recognition ofindigenous communities' customary rights.At the very least, there must be a newparadigm of forest management with anintegrated approach which takes intoaccount the socio-cultural importance offorests as well as their macro-economicand conservation aspects.

The 'forests for people' theme ishardly new. It was the slogan of the WorldCongress on Forestry held in Jakarta in1978. But little was done to translate theslogan into action. Since then, some 40million hectares of Indonesia's forests havebeen destroyed: less than 100 million haremains2.

An estimated 100 million ofIndonesia's 210 million people dependdirectly on forests and the products andservices they provide3. These forestpeoples are claiming the rights denied tothem throughout three decades ofSuharto's 'New Order' government andthe centuries of colonialism whichpreceded it.They are demanding the end ofa forest concession system which benefitsthe state and private sector at the expenseof sustainable livelihoods.

In Indonesia, the state has controlover all forests. Under the 1945Constitution, it alone determines whatforests can be used for and by whom. Ahandful of heads of giant conglomerates,military officials and other businessassociates of ex-president Suharto and hisfamily have swallowed the lion's share ofIndonesia's forest wealth. The rights overvast tracts of forest lands have beengranted to logging, plantation and miningcompanies which have ruthlessly exploitedthese areas for short-term gain. Millions ofhectares have been zoned for clearance

and conversion to agriculture andsettlements, including transmigration sites4.Very little of this land was 'empty'. On thecontrary, most of it was - and still is -subject to traditional law or adat.

Holistic forest managementpractices, which may point the way to newmodels of community-based forest use, canstill be found throughout Indonesia. Thesetraditional systems, enshrined in customarylaw, include the repong damar of the KruiPeminggir in Lampung; the tombak of theBatak in North Sumatra; the mamar ofNusa Tenggara Timur; the lembo of EastKalimantan Dayaks and the tembawakng ofWest Kalimantan Dayaks. Most aresophisticated, dynamic multi-use systemswhich depend on managing a balancebetween natural forests, agroforestry andagricultural plots. Developed by indigenouscommunities over many generations, theyare an integral part of their lives. Thesesystems are under threat from policies and

practices which ignore forest peoples’rights.

The sustainable, equitable use ofnatural resources in Indonesia depends onpolitical reform. Indonesia is now a fledglingdemocracy. In July 2001, MegawatiSoekarnoputri became its third newpresident in three years. Nevertheless,many elements of the Suharto regimeremain unchanged.The military is still a keyplayer at all levels - from the balance ofpower in Jakarta to everyday village life inthe regions. The judiciary is weak andcontrolled by business and politicalinterests.The current government is moreconcerned with maintaining national unityand fending off the worst of the prolongedeconomic crisis than it is in promotinghuman rights and democracy. Corruption isrife - not least in the forestry sector.However, recent regional autonomylegislation has introduced newopportunities, threats and uncertainties.

Indonesia’s creditors - the WorldBank, International Monetary Fund (IMF),foreign governments and private financialinstitutions - provided financial support forprojects and policies which destroyedforests during the Suharto years. Since the1997 economic collapse they have played adirect role in decision-making affectingforests and forest peoples, as they pressIndonesia to keep up with debtrepayments.These institutions must acceptjoint responsibility for the forestdestruction and marginalisation ofcommunities this has caused and startprioritising the needs of the poor over theinterests of international finance.

This special DTE report looks at thecontext of current issues in forest policy inIndonesia (Part I), describes recent policychanges (Part II) and explores alternativesfor sustainable futures for forest peoples(Part III). The report makes the case forfundamental reform which puts communitydecision-making and recognition of adatrights at the heart of forest management inIndonesia.

Part I: Forests, people and rights

1.Ginting/WALHI 20012.calculated from RePPProT 1990/Holmes 20003.Ginting 2000. Other sources are more

conservative Lynch & Talbott 1995 cited in Aliadi1999: 40-65 million people live in and aroundforests. See also Poffenberger, 1990, p101: by thelate 1980s, an estimated 30 to 40 million peoplelived on or near 'state forest land'.

4. NRI, 1998 p.19 quotes National Inventoryfigures for 1996 of 22.7 million ha of ‘convertibleforest’.

Dayak basket-weaving, E. Kalimantan DTE


Total land area of Indonesia 189 million ha'Forest lands' (official - 1998) 147 million hai (78% total land) Area administered as forest lands 112 million ha Total forest cover 93 million haii

Forest as proportion of total land area 48% Annual deforestation rate over 2 million haiii

Protection Forest (1997) 35 million ha Conservation Forest (1997) 19 million ha Production Forest (1997) 59 million ha

[Permanent production 34 million ha][Limited production 25 million ha]

Conversion Forest (1997) 8million ha Area allocated to logging - HPH (1998) 69.4 million ha Established timber plantations - HTI (1997) 2.4 million haArea allocated to timber plantations (1998) 4.7 million haiv

Area allocated to other plantations (1998) 3.8 million hav

Forest degradation due to logging operations (1998) 16.57 million havi

Total area affected by 1997/1998 forest fires possibly 10 million ha - of which forests at least 5 million haLand affected by forest fires - Kalimantan 5 million haContribution of 1997/8 fires to global CO2 Up to 30%vii

Estimated sustainable timber supply from forests 20 million cubic metres/yearviii

Total industry capacity to process timber 117 million cubic metres/yearix

Deficit between recorded supply and estimated use 41 million cubic metresx

Number of people employed by Dept of Forestry 47,993xi

Number of people employed by state forestry companies Perhutani 23,000; Inhutani I-V 6,000xii

Population of Indonesia 210 millionPeople directly dependent on forests 30 millionxiii; 100 millionxiv

Number of indigenous people in Indonesia 50-70 millionxv

- indigenous people dependent on adat forests 30-50 millionxvi

*All figures (unless otherwise indicated) from Gautam M et al, January 2000, The Challenges of World Bank Involvement in Forests, OED Report World Bank. i. All official figures vary considerably depending on the source.ii. FWI/GFW (draft), 2002, p.10. This includes degraded and fragmented forest.iii. D. Holmes in his Deforestation in Indonesia report to the World Bank (2000) gave a deforestation rate of at least 1.7 million ha/year for the decade to 1997.

According to Forest Watch Indonesia, the rate may now be as high as 3.6 million ha/year: New Scientist 2/Mar/02.iv. 7.8 million ha had been allocated to HTI concessions by 2000, but only 23.5% of this had been planted FWI/GFW, 2002.v. Indonesian forestry academic Hariadi Kartodihardjo estimated that nearly 7 million ha of forest had approval in principle for conversion - mainly to oil palm.

Cited in FWI/GFW, 2002.vi. Critical land in forest areas covers 35.9 million ha according to Kartodihardjo, Tempo 5/Mar/01.vii. World Bank, 1999, cited in Trial by Fire, 2000, Barber CV & Schweithelm J, WRI p17.viii. ix, x, Scotland, N, Fraser A and Jewel N, 1999, Roundwood Supply and Demand in the Forest Sector in Indonesia, DFID/Indonesia-UK Tropical Forest

Management Programme, Report No. PFM/EC/99/08.xi, xii. Renstra, 2000.xiii. Ministry of Forestry, 2000, cited in WRI/FWI (draft) p3. Also World Bank OED, 2000.xiv. European Commission Forest Liaison Bureau, 2000, cited in Mainhardt, 2001.xv, xvi. Nababan A, 2002, Revitalisasi Hutan Adat untuk Menghentikan Penebangan Hutan ‘Illegal’ di Indonesia, paper for AMAN

Note: estimates of 'sustainable' yield ignore the impact of extraction on local peoples' livelihoods.

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Indonesian Forestry Ministers

Year Forestry Minister President

1983-1988 Soedjarwo Suharto1988-1993 Hasjrul Harahap SuhartoMar 93- Mar 98 Djamaluddin Suryohadikusumo SuhartoMar 98 - May 98 Sumahadi SuhartoMay 98 - Oct 99 Muslimin Nasution B.J. HabibieOct 99 - Mar 01 Nur Mahmudi Ismail Abdurrahman WahidMar 01 - Jul 01 Marzuki Usman Abdurrahman WahidAug 01- present Mohammad Prakosa Megawati Sukarnoputri

Forest figures*

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“State Ministry of Environment statistics show aforest destruction rate of between 2 million and2.4 million hectares a year. The rate was highestduring the last two years. The environmental NGOWALHI says the deforestation rate is 3 millionha/yr; that only 40 million ha remain and thatKalimantan - which has the fastest rate of logging- could be logged out in 5 years.”

(Jakarta Post, 10/Dec/01)

The state of Indonesia's forests is far moreserious than the government was prepared toadmit during the Suharto era. For years, thegovernment used an official figure of 143million ha of forest lands as if this remainedpristine forest, while dismissing as alarmistwarnings by Indonesian non-governmentalgroups of deforestation rates as high as 1million ha per year. In fact, a report draftedfor the FAO and Indonesian governmentadmitted a deforestation rate of over 1.2million ha/annum in 19915.

Nevertheless, many people insideand outside government circles were shockedat the extent of deforestation revealed in1999 by a mapping study commissioned bythe World Bank6. In an unprecedented step,the evidence was presented on theDepartment of Forestry & Plantation's website shortly before international donors metin Jakarta in January 2000 to discuss action onIndonesia's disappearing forests. Based onsatellite imagery dating from 1994-1997, itshowed a deforestation rate of at least 1.7million ha/year: more than twice the Bank'searlier estimates7. Over 20 million ha offorest had been lost in the 12 year periodsince the previous reliable study. And thedestruction goes on. Since 1997 deforestationhas accelerated due to widespread forestfires and extensive legal and illegal logging.Over 70% of all timber in Indonesia comesfrom undocumented sources8.

Forest loss is greater in some typesof forest and geographical areas than inothers. The more accessible and commerciallyvaluable lowland forests have been targetedfor most logging. The Bank report predictedthat the lowland forests of Sumatra andKalimantan (outside swampy areas) had, atmost, five to ten years of commercial timberproduction left. Most of Sulawesi's lowlandforest is already logged out. The extinction ofswamp forests was expected to follow aboutfive years later. Over 1 million ha of swampforest was clear felled in Central Kalimantanduring the late 1990s. Mangrove foreststhroughout Indonesia were also identified asunder serious pressure. A forestry ministerhas since publicly stated that some 6.9 millionha of a total 8.6 million ha of remainingmangrove forest has suffered seriousdamage9. The gloomy conclusion was that,

unless the government enacts new forestpolicies, the only forest remaining in Sumatra,Kalimantan and Sulawesi by 2010 would behigh montane forest.

Other sources are even morepessimistic. In 1999 WWF estimated the rateof forest clearing at 2.4 million ha annually, upfrom 900,000ha in the late 1980s10, whilerespected Indonesian forestry professorHasanu Simon has said forest loss may be 2.5million ha/year11. Indonesia lost 17% of itsforests between 1985 and 199712. Onlyaround 17 million ha of 'commercially viable'

forest was thought to remain by 1996 and 5million ha (30%) of that had been earmarkedfor conversion13. Moreover, large tracts of theremaining forests are in West Papua, whereaccess is very difficult and there are strongdemands for independence.

Degraded landWhat has happened to the land which usedto be tropical rainforest? Some has beenconverted to agriculture - by small farmersor, more commonly, large-scale commercialventures. Some has been replanted as timberestates or other tree crop plantations,although the extent falls far short ofgovernment targets. The expansion of oilpalm plantations brought a significant increasein forest clearance in the 1990s but, as theWorld Bank report made clear, “of the 17million ha of forest loss in Sumatra,

Kalimantan and Sulawesi, only some 4.3million ha have been actually replaced byother tree crops (mainly timber and oil palmplantations)”14. The data is scant, but it seemsthat substantial areas of forest are nowdegraded land, abandoned by commercialdevelopers and land speculators after over-logging, forest fires and occupation by land-hungry peasants.

Forestry Minister Nur MahmudiIsmail said early last year that 21.5 million haof forest needed to be 'rehabilitated': 15.2million ha within the supposedly permanentforest estate and 6.3 million ha in areas setaside for watershed protection and natureconservation. He estimated that it would costover Rp200 trillion (US$20 billion) to restorethis extent of forest15.

One reason for the uncertainty

over the extent of remaining forest anddeforestation rates stems from a morefundamental question: exactly what isconsidered forest in Indonesia? To answer thisrequires some understanding of the legalbasis for Indonesian forest policy. This isparticularly important for forest peoplessince the way the Suharto regime defined theforest estate has denied their rights to own,manage and access natural resources.

Forest maps online:The Indonesian Forestry Department /WorldBank maps of forest cover are at:http://mofrinet.cbn.net.id/e_informasi/e_nfi/GIS/vegetasi.htm

Indonesia’s disappearing forests

5. Dick 19916. Eventually published as Holmes, 20007. Sunderlin & Resosudarmo 19998. Scotland et al, 19999. Nur Machmudi Ismail in IO, 15/Mar/0110. Jakarta Post 30/Nov/9911. Suara Pembaruan 27/Aug/0012. FWI/GFW, 2002 (draft), p.513. Scotland & Jewell,199914. Holmes, 200015. Media Indonesia 20/Mar/01

Forest destruction in Musi Hutan Persada concession, 1999 WALHI Sumsel

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Indonesia is one of the biologically richestcountries. Although it only occupies 1.3% ofthe world's land area, some 17% of species onearth are found there. Its forests contain 11%of the world's plant species, 12% of mammalspecies, 15% of reptiles and amphibians and17% of birds16. Borneo alone has at least3,000 species of trees; over 2,000 species oforchids and 1,000 species of ferns: over a thirdof these plants are unique to the island17.Over 1,400 species of bird have beenrecorded in Indonesia; 420 species areendemic. One reason for this high biodiversityis that Indonesia lies on the Wallace line at thejunction of two major biogeographical zones.To the west of Bali, including the island ofBorneo, species are similar to those occurringin mainland Asia; to the east of Bali, flora andfauna typical of Australia are found such aseucalyptus trees and marsupials.

Many different types of forest occurin Indonesia, depending on the soils, climateand altitude. About half the forest in the ‘outerislands’ is lowland rainforest, which is mostheavily exploited. The highest proportion ofcommercially valuable species is found in thewestern archipelago, where lowland forestsare dominated by the Dipterocarp family18.Half of the known species of commerciallyimportant dipterocarp trees are found inIndonesia, with 155 species in Kalimantanalone19. Peat swamp forests cover large areasof Sumatra and Kalimantan. They are alsounder pressure from commercial logging, firesand agricultural development schemes.Montane forest, found above 2,000m, is lessspecies rich and more stunted but isimportant for watershed protection. Savannahforest and dry deciduous forests are typical ofthe drier eastern islands. These forests arevery vulnerable to fire and over-exploitation:sandalwood is now almost extinct inIndonesia. Heath forest occurs on poor, sandysoils. Sago palm stands provide the staple foodof many indigenous forest people, particularlyin parts of West Papua, Sulawesi and theMentawai islands.

Large tracts of mangrove forests arefound along the coasts and rivers of Sumatra,Kalimantan and West Papua as well as fringingthe smaller islands of the Moluccas and partsof Sulawesi. Despite their importance forprotection against coastal erosion and as thebreeding ground on which local fisheriesdepend, extensive areas have been cleared forfish/shrimp ponds and for timber.

Indonesia's forests are a centre ofgenetic diversity for many important food andeconomic crops including tropical fruits,bamboo, rattan, orchids and timber. They alsoprovide a wide range of commercially valuableproducts such as timber, fruits, vegetables,nuts, spices, medicines, perfumes, seed oils,

fodder, fibres, dyes, preservatives andpesticides. Over 6,000 plant and animalspecies are used by Indonesian communitiesin their everyday lives20.

The threat tobiodiversityMany Indonesian species of animals and plantsare now threatened with extinction due todeforestation and forest degradation.Scientists predict that the orang-utan (Pongopygmaeus) faces extinction in the wild withinthe next one or two decades, unless speciesconservation can be effectively enforced21.Fewer than 25,000 orang-utans are thought tosurvive in the wild: an estimated 15,000 onBorneo and only between 5,000 and 8,000 onSumatra. Numbers have fallen by half in thelast decade22. There are only 50 to 60 Javanrhinoceros (Rhinoceros sondaicus) left inIndonesia and these survive only in UjungKulon National Park in West Java.

Asian elephants in Sumatra faceextinction if the mixture of grassland andforest which is their preferred habitatcontinues to be destroyed. The remainingpopulation is estimated at between 2,500 and4,000. Conflicts between human and elephant

populations are most marked in Riau andLampung where habitats are rapidly beingconverted to farmland, rice paddies, and oilpalm and sugar plantations to earn exportincome23. The Sumatran tiger (Panthera tigrissumatrae) may soon follow the Javan andBalinese tiger into extinction: there are onlyaround 500 left. Poaching and destruction ofthe tiger's forest habitat are the main reasonsfor its decline.

The island of Sulawesi - a biologicaltransitional zone between Asia and Australasia

- has one of the highest levels of speciesendemism in the world. Sulawesi masked owls,hornbills, parrots, the babirusa ‘pig-deer’, dwarfbuffalo called anoa, macaque monkeys, cuscus(species of marsupial) and the maleo bird areamong those facing possible extinction.

The disputed territory of WestPapua is home to at least 27 species of birdsof paradise, many of which are threatened24.Local people say corrupt military officers areinvolved in smuggling out the birds. They areoften used as bribes to secure jobs orpromotions and are also given as souvenirs toIndonesian government officials and militaryofficers. The birds are also threatened bylogging, mining, road construction and landsettlement.

National Parks are importantstrongholds for endangered species. Yet eventhere, forest fires and illegal logging arediminishing the forest cover and eroding thebiodiversity of these and other protectedareas. A number of national parks, such asTanjung Puting in Central Kalimantan25,Gunung Leuser in the north of Sumatra, Kutaiin East Kalimantan and Kerinci-Seblat in Southand West Sumatra have suffered severedegradation26.

16. Ministry of Environment & Konphalindo, 199417. MacKinnon et al, 1996, p.3518. RePPProT, 1990, p.15519. GTZ, 1995, Planning Workshop ZOPP 420. Ministry of Environment & Konphalindo, 1994 21. IUCN/SSC 200122. New Scientist, 3/Mar/200123. IPS 14/Feb/200124. IPS 2/Mar/200125. See for example EIA/Telapak, 199926. See DTE 45:11on Kutai and DTE 52:13 on

Leuser.

Indonesia’s forest wealth

Forest home, East Kalimantan DTE

Forest is "a unit of ecosystem in the form of landcomprising biological resources, dominated bytrees in their natural forms and environment,which cannot be separated from each other". It isan area "….which is designated by thegovernment to be retained as permanentforest…….on lands where there are noownership rights."

(Indonesian Forestry Law 41/1999)

"The Basic Agrarian, Forestry and Mining Lawsmake it easy for business to take our land andexploit the natural wealth which belongs to us"

(Indigenous peoples' position statement,KMAN, March 1999)

Indonesian law governing land and naturalresources is complex and contradictory27.Customary (adat) law existed long before themodern Indonesian state and the Dutch andJapanese colonial periods. Each of themultitude of ethnic groups of the archipelagohas its own history and developed its ownspiritual beliefs, cultural norms, decision-making structures and regulations - knowncollectively as adat. Adat is not static andunchanging. Most of this knowledge hasevolved through generations and has beensustained through practice and orally; littleexists as written documents.

During the 19th century, the Dutchsuperimposed a western concept of 'thestate' and state control of land on theterritory they colonised. Through Dutchforestry and agrarian laws, the state claimedthe right to control forest land. These lawswere applied mainly in Java and those parts ofthe ‘outer islands’ (e.g. Lampung and NorthSumatra) where the colonial administrationwas well established. Elsewhere, adat law andland tenure systems prevailed. The Dutch gavelimited recognition to communities' landrights through the Domain Statement(Domein Verklaring).

After independence, this pluralistlegal system was replaced by a centralist onewhereby all rights are controlled by the state.The 1945 Indonesian Constitution, drawn upby the founding fathers of the new Republic,Sukarno and Hatta, strongly reflects theiridealism, socialist leanings and anti-colonialsentiments. When they wrote that the statehas the right “to manage all resources above,below and on the ground for the well-beingof all its people” (Clause 33, sub-clause 3),they could not foresee that the state wouldbecome an agent of repression andexploitation - as happened after Suhartoseized power in a military coup in 1965. Theinterpretation of that specific clause bySuharto’s 'New Order' regime underpins allland and natural resources conflicts inIndonesia to this day.

After taking power, the Suhartoregime quickly produced a stream of newlaws and supporting regulations which gave itfar greater control over natural resources.The Basic Forestry Law (5/1967) was a keypart of this endeavour. This, like Dutchcolonial forestry law, put all forests understate control. The forestry authorities (thenpart of the Department of Agriculture) issuedlogging permits to 350 private companies. TheBasic Mining Law (11/1967) paved the way forthe government to grant hundreds of mineralexploration and exploitation concessions,often overlapping with forestry and plantationconcessions. This process also ignored thefact that most of this land was - and still is -already claimed under adat law.

Any Indonesian law is qualified byall-important 'operating regulations' (knownas PP in Indonesian). Other policyinstruments include presidential andministerial decrees and parliamentarydecisions. In the mid-1970s, the governmentissued a regulation on Forest Planning(PP33/1974) which allowed the Directorate ofForestry to define the extent of 'forest land'.This resulted in a Forestry Departmentempire covering 143 million ha - roughlythree-quarters of Indonesia, including 88% ofthe land of the ‘outer islands’.

State control of forestsThe government made a clear distinctionbetween 'land' and 'forest' - the two entitieswere controlled by different ministries anddifferent laws. This division persists in officialthinking today and lies at the heart of manyconflicts with forest communities. Landdefined as 'forest land' was to be controlledby the Forestry Department and the BasicForestry Law, whether or not it was coveredwith trees. All other areas came under theadministration of the Minister for AgrarianAffairs (and the National Land Agency when itwas set up in 1988) and were subject to the1960 Basic Agrarian Law28.

Indigenous peoples, on the otherhand, have their own understandings of therelationships between 'land' and 'forest'.Some do not distinguish between 'land' and'forest' as one area could be managed bothfor agriculture and as a secondary forestwithin a rotational cycle. Others have aclassification system far more complex thanthe government's simple distinction. Thetenure and rights to use this forest/land maybe held by individuals, families, clans, thewhole community or a mosaic of some or allof these depending on the adat. The limits ofeach piece of land/forest are marked bynatural markers such as streams, rocks, paths,hills or long-lived, characteristic trees.Commonly, but not always, the family whichclears a patch of forest for the first stage of

rotational use can claim that as its own. Thereis rarely any written proof of ownership;tenure records are part of the community'soral history.

By contrast, the government onlyrecognises official proof of tenure in the formof land ownership certificates issued by theNational Land Agency (BPN). Certification is acostly, time consuming process which isextremely difficult for forest people withlimited access to urban-based lawyers or thecash to pay for their services. It is not evenpossible for many. Certificates can only beissued for individually held, private land - socommunally held land is not eligible. Forestpeoples cannot gain title to their land throughthe Land Agency if it has been designated'forest land' as this is not subject to agrarianlaw. Another obstacle to legal tenure is therequirement that farmed land must be underpermanent cultivation before it can becertified. This automatically excludes therotational cultivation systems practised bymany indigenous peoples which involve longfallow periods and excludes someagroforestry systems where crops areplanted within forests.

Yet another source of confusionover the extent of state control over forestsin Indonesia stems from fact that, by early1999, only 68% of land claimed by theForestry Department had been formallydelineated and gazetted as required by law29.In other words, nearly one third of 'stateforest' lands are not definitively under thelegal jurisdiction of the Forestry Department.Once forest has been delineated, forestryofficials have the legal duty to inform the localcommunities affected, but this rarely takesplace.

Customary forest andindigenous rightsIn short, indigenous peoples weredispossessed and disempowered throughoutthe Suharto years (see also p. 11). Adat forestswere claimed as state lands; adat land andresource tenure were not recognised; adatsystems of forest management weredisregarded. Parts of the 1945 Constitution(e.g. Clause 18 and the Explanatory Notes)and the 1960 Agrarian Act which recognisesome indigenous peoples and their land rightswere ignored by the government for the nextthree decades. Where the government didacknowledge the existence of customary adatlaws, state law was (and still is) considered

27. This section draws on Fay, Sirait & Kusworo,2000; Sirait, Fay & Kusworo, 2001; and Fauzi,1999.

28. The Department of Land Affairs became anagency controlled by the Ministry of HomeAffairs in 2000.

29. Fay and Sirait, 1999

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Adat and Indonesian forest law

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superior. This results in a fundamentaldifference in perspective between the stateand indigenous peoples.

Indigenous communities continueto believe that their adat land belongs tothem and that the state has no authority overit. Many claims originate from before theDutch colonial period and, in some cases, thiscan be proven. These communities thereforemaintain that the government cannot grantrights to these lands in the name of theIndonesian Republic to others for mining,forestry or plantations. It can only grant landuse rights for areas not belonging to them.The onus, they say, should be on thegovernment to show that this is not adat landbefore granting any concessions.

After Suharto was forced to resignin 1998, the interim government waspressurised into addressing the need toreform forestry and land law. The Minister ofAgrarian Affairs attended the first Congressof Indigenous Communities (see p.43) wherehe was lambasted by angry representatives ofcommunities locked in land disputes withprivate and state-owned companies. Hesubsequently took the first step towards the

formal recognition of adat land ownership. Ministerial decree 5/1999 allows

the registration of adat lands - includingcommunal lands. It also enables adatcommunities to lease their lands to thegovernment or the private sector. Hopesraised by this initiative were soon dashed bythe new Forestry Act (41/1999) whichreasserted the principle of state control. Thislaw recognises the category ‘adat forest’, butonly as a class of state forests. Moreover, sincethe introduction of regional autonomylegislation, responsibility for the registrationprocedure has moved from Jakarta to localauthorities and even the status of ministerialdecrees is now open to challenge. Whetheror not provincial or district level officials acton Ministerial Decree 5/1999 will dependlargely on the lobbying power of adatcommunities and their supporters in theregions.

National Parks and adat rightsAs is the case with almost all forested areasof Indonesia, Indonesia’s National Parks areusually the customary lands of indigenouspeoples. Most of these areas have been

established as parks without any consultationwith indigenous communities. Too often, thelocal people only know that the land whichthey believe is their ancestral birthright hasbecome a park when park authorities - withor without government staff and the securityforces - try to evict them. Indonesian lawforbids any settlement or human activitywithin the core zone of a National Park.Communities may be allowed to live inenclaves, frequently in the buffer zone, buteven so, they are not allowed to practise theirtraditional rotational land use systems. Theirony is that the high biodiversity whichattracts conservationists often owes isexistence to the customary practices andcultural taboos of adat communities. Far frombeing pristine environments, many ofIndonesia's National Parks are the product ofgenerations of traditional natural resourcemanagement systems.

The eviction of the Moronenepeople in Southeast Sulawesi is one exampleof the conflict between parks and rights (seeDTE 41:6). An example of a more positiveapproach in Lore Lindu National Park,Central Sulawesi is on p.53.

Most of the lowland rainforest of SouthSulawesi was logged many years ago to makeway for extensive plantations, agriculturalland and other 'development'. Remainingforest areas are under serious pressure dueto population growth. Yet only 250 km east ofthe provincial capital of Makassar (UjungPandang), in the eastern part of Bulukumbadistrict known as Kajang, there is maturerainforest, rich in wildlife. This is thecustomary land of the Ammatoa who still liveby a system of strict rules governing theirsocial behaviour and their relationship withtheir forest environmenti.

The Ammatoa (sometimes calledthe Kajang) share some similarities with theBaduy of West Java. An inner community,which observes the strictest form of theirbelief system - the Pasang ri Kajang, issurrounded by a more extensive areagoverned by customary law. The innercommunity was allowed to continue thetraditional way of life when the Suhartoregime introduced legislation standardisingthe village governance system throughoutIndonesia in the 1970s. Traditional leaders inthe wider community were supplanted bygovernment appointed officials but, to someextent, they have managed to hold onto theircustomary power and practices. Members ofthe inner community, centred on the villageof Tana Toa, wear characteristic black clothingand do not use any modern goods such asmotor vehicles or plastics.

The Ammatoa's forest lands now

cover 317.4ha and are bounded by fourrivers. These forests are rich in plant andanimal life: rattan and many commerciallyvaluable tree species are still found there. Theconservation of this forest stems directlyfrom the Kajang beliefs which stress thesocial values of working together, helpingothers and co-operation. The Ammatoabelieve that Turie' A'ra'na created the worldand all living things as one complete system,analogous to the human body with itsdifferent organs. Hence all parts must becared for and preserved to maintain theintegrity of the whole. The forests arebelieved to bring the rains, maintain watersources and keep the balance between wetand dry seasons.

The forests are divided into threezones: the 'forbidden zone' where no-one isallowed to enter or to disturb the forest; the'inner zone' where people can only collectforest products at particular times,determined by customary law; and the'community zone' which everyone can use. Allforest is sacred to the Ammatoa and it isforbidden to fell trees, hunt or collect forestproducts unless permitted by customary law.The forest is also the place where many ofthe ceremonies which are an integral part ofcommunity life must be held: ceremonies toappoint traditional leaders; to curse or askforgiveness for people who have broken adatlaw; to give thanks or ask for protection; andto make peace with their Creator.

According to the Kajang belief

system, people should only take sufficient tomeet their basic needs in order to maintain abalance with the rest of the environment.Hence the Ammatoa have a subsistencelifestyle and are largely self-sufficient. Theydepend on cultivating traditional varieties ofrice and vegetables and fishing. Deer,monkeys, cuscus and birds are hunted forfood. Local timber is used for housing andfurniture and some is sold to boat-builders infishing communities on the coast.

Ammatoa society is governed by acouncil made up of traditional leaders (Galla)and their representative - an 'executive' orKaraeng Tallu. The customary guardians(Sanro), responsible for holding ceremoniesand healing practices, are also important ineveryday life. Apart from ceremonies, thesecommunity leaders meet regularly to takedecisions. Some Galla were appointed asofficial village heads during the 1970s and thishas undoubtedly helped to protect their pre-Islamic culture and their environment. Equallyimportant in this respect has been thisindigenous people's fearsome reputation formagic. One Ammatoa spokesman explainedthat he would use his power to commandswarms of wild bees if their lands werethreatened by outsiders: "Developers andsecurity forces can defend themselves againstknives and other weapons, but they cannotfight against bees".

i. Interview with Ammatoa representative, AMANCongress March 1999; WALHI SulSel pers com

The Ammatoa of South SulawesiAn example of traditional forest management

7


All 'state forest' in Indonesia is officiallyclassified into three functional categories:Protection Forest (for watershed protectionand prevention of soil erosion); ConservationAreas (including National Parks and NatureReserves) and Production Forest - sub-divided into 'Permanent Forest' (for sustainedlogging) and 'Conversion Forest' - areas to beclear-felled for agriculture, settlements andother non-forestry uses. Some land with treecover is excluded: perennial tree cropsincluding rubber, coconut, oil palm and variousfruits and nuts are classified as plantations and

count as 'estate crops' or agriculture.Paradoxically, industrial timber estates (HTI) offast-growing tree species to supply the pulpindustry are included in the forest inventory.

This classification, carried outduring the 1980s, was called the Consensuson Forest Land Use (TGHK). The classificationwas based on biophysical criteria (primarilysoil type, slope and climate) with noconsideration of social or economic aspects.Also, the ‘consensus’ was only betweenprovincial government agencies. There was noconsultation with local communities, let aloneconsent. Throughout Indonesia, communitieswhose land had been declared ProtectionForest were targeted for resettlement as'local transmigrants'. Many other forestpeoples were also forced out of areasallocated to logging companies under the

Department of Social Affairs' programmes tosettle 'shifting cultivators' and to relocate'isolated and backward tribes'.

A major obstacle to Indonesianforest policy has been the lack of accuratemaps of the forest estate and land with forestcover or reliable data on deforestation andreplanting (until the World Bank/MoF mapswere published - see box, p.3). Large areas of'state forest' in Indonesia are not forestedand, in some cases, have not been for severaldecades. The original designation was made byforest officials' lines on maps in Jakarta, rather

than accurate field data. ‘State forest' landslargely followed the areas designated as forestduring the colonial period, even thoughsignificant amounts had already been turnedinto agricultural land or settlements byindigenous and migrant populations. Villages,farmed land and coarse grasslands plusmillions of hectares of traditionally managedforest systems became part of Indonesia'sforest estate. For example, in South Sumatra,official forest maps in 1984 showed there wasthree times more forest than during theDutch colonial era, mainly because theseincluded smallholders' rubber and fruitplantations30.

Poor mapping caused seriouserrors. Some 'permanent forest' turned out tobe grassland; logging concessions weregranted on steep slopes; and transmigration

sites located in swamp forest. The worst ofthe technical shortcomings were rectifiedthrough a comprehensive land use surveycarried out to identify appropriatetransmigration locations during the late1980s. The RePPProT study, funded by Britishgovernment grants, recommended revisions inthe Forestry Department's figures, but did notaddress the way that the forestry andtransmigration authorities had annexedindigenous peoples' lands31. Also, bycategorising land as ‘forest’, ‘extensively usedland’ and ‘intensively used land’, the studyperpetuated the myth that the forests are notused by forest-dwelling peoples.

"Collusive agreements between officials of theForestry Department and concessionaires,inadequate mapping, tardy gazetting of naturereserves, and poor co-ordination amongauthorities controlling each use category resultedin the transfer of 4.55 million hectares ofprotection and conservation forests to HPHs by1990." [WALHI, YBLHI, 1992]

Until the 1992 Spatial Management Act,Indonesia had no integrated land-use planning.While the forestry authorities in Jakarta wereawarding logging concessions (HPH) to privatecompanies, other ministries were also handingout rights to forest peoples' lands, forexample, as mining concessions ortransmigration sites. Poor co-ordinationbetween central authorities and inaccuratemaps produced overlapping concessions. Notuncommonly indigenous communities foundboth a logging and a mining company claimingtheir land. Meanwhile, during the 1980s, localauthorities had been drawing up regionaldevelopment plans (RTRWP) independently ofthe Forestry Department. The result was twoseparate and often contradictory land-usezoning schemes. From 1992, the two sets ofplans had to be consolidated.

The resulting 'padu serasi'negotiations between local government andforestry officials were long and difficult, notleast because the process involved twopowerful government bodies in Jakarta: theNational Planning Board (BAPPENAS) - underthe Ministry of Home Affairs - and theForestry Department. Most, but not all,provinces had agreed integrated land useplans with the central authorities by the late1990s. Then everything changed again with theintroduction of regional autonomy in January2001. This completely altered the relationshipbetween central and local governments andtransferred zoning responsibilities to localauthorities.

30. Gautam et al, 200031. RePPProT, 1990, p.167

Forest classifications

Forest categories - Suharto era

The 143 million ha of ‘forest lands’ were divided as follows:

Protection Forest 30 million ha 21%Nature Reserves/National Parks 19 million ha 13%Limited Production 31 million ha 22%Regular Production 33 million ha 23%Conversion Forest 30 million ha 21%

Conversion Forest figures were lower later (see table, p. 4) as conversion proceeded.

Source: Jakarta Post 8/Mar/96

During the Suharto period, the ForestryDepartment became one of the largestministries in terms of staff, budget andpolitical influence. Together with its regionaland provincial offices, this ministry employedup to 30-40,000 peoplei. It shares an officecomplex in Jakarta with the State ForestryCompanies Inhutani I-V; Perhutani (nowprivatised) and several private timbercompanies; the plywood trade association,APKINDO; and the Association of IndonesianForest Industries (APHI).

Responsibility for forestprotection and nature conservation(including National Parks) also comes under

the Forestry Department - where businesspriorities have meant that conservationinterests are secondary. The EnvironmentMinistry - which is most critical of negativeimpacts of government policy - is a separate,much smaller entity with little politicalpower.

At various times, forestry has been under thecontrol of the Minister for Agriculture and/orcombined with the plantations sector. Forsimplicity’s sake we refer to the ForestryDepartment throughout.

i. Barber et al, 1994

The Forestry Department

"From nearly nothing in 1966, the timber andforest products industry has with the state's activesupport grown into a highly concentrated, wealthyand well-connected political and economic actordependent on cheap raw materials, used to highlevels of profit and accustomed to passing on theenvironmental costs of unsustainable loggingpractices to local communities, the state andsociety at large. The industry is now a significantfactor in forest policy-making and thus lessens theautonomy of the state to move in directions thatmight be more sustainable but would hurt theindustry" . (C.V. Barber, 1997)

During the thirty three years of Suharto'srule, Indonesia changed from a predominantlyrural economy to become one of SoutheastAsia's 'tigers'. Suharto's uniform, unsustainablevision of development depended on theexploitation of the country's rich naturalresources to foster urbanisation andindustrialisation. Oil and gas, minerals andforestry were, and still are, seen as importantsectors of the economy because theygenerate state revenues, foreign exchange andemployment. At the forestry industry’s peak, inthe early 1990s, forest products contributed6-7% of GDP and 20% (US$8.5bn) ofIndonesia's foreign exchange earnings -second only to oil32.

The forestry sector was also avaluable political tool. Forest concessionswere granted to the military and to businesscolleagues of the Suharto family. Under thispatronage, timber companies grew intoconglomerates which diversified into manyother areas of the economy including realestate and banking. The rise and fall ofMohammad 'Bob' Hasan - widely known asIndonesia's de facto forestry minister for years- epitomises the crony capitalism whichcharacterised the New Order regime (seebox).

The recent history of forestry inIndonesia can be summed up as three phases:w 1970s: the development of large-scale

commercial logging w 1980s: the growth of the timber

processing industry w 1990s: the plantation boom (pulp and oil

palm).The ‘outer islands’ have largely been

logged by private companies whose primaryinterest was money not forests. The state-

owned forestry companies (Inhutani I-V)which operated there were little better (seebox). Forestry became just another economicsector where entrepreneurs could get a quickreturn on investments. This was asset strippingin the form of forest destruction. Macro-economics and politics rather than expertforestry advice ruled forest management. Therights and interests of forest-dwellingcommunities counted for nothing in the rushto extract quick profits.

The HPH concession system washugely damaging: it destroyed forests throughover-logging; increased the likelihood of forestfires; violated indigenous rights; deprivesforest peoples of their livelihoods andinstitutionalised corruption. Logging trailsopened up forest to exploitation by outsiders,including local townspeople, migrants andtransmigrants placed on failing sites. Loggingcamps employing non-local labour broughtdisruption to forest-dwellers and socialconflict.

In theory, commercial loggers wererequired to practise selective logging and,later, to replant logged areas under Indonesia'sTPTI33 system. In reality, timber companies hada free rein due to minimal supervision oflogging concessions and rampant corruption.Illegal practices, such as exceeding the annualallowable cut and felling outside concessionlimits, were commonplace and companies didall they could to avoid paying forestry taxesand levies.

A Reforestation Fund set up in 1980

for replanting logged areas (see box p.11) waspilfered by companies, ministers and thepresident and his family for their ownpurposes.

Annual forest fires were a symptomof the growing crisis in Indonesian forestry.(see p.16). The system had built-in incentivesto over-log a concession (see p.13) and finesor sanctions were rare.

Indonesian companies were notalone in benefiting from the Suharto system.International timber companies moved induring the logging boom of the 1970s in orderto export logs, including US-basedWeyerhauser and Georgia Pacific and Japan’sSumitomo and Mitsubishi. Most pulled outtowards the end of the decade but someSouth Korean and Japanese companiesmaintained an active interest.

MiningForeign companies continued to promote andbenefit from forest destruction in other ways.International miners were invited to exploitthe mineral wealth underlying the forests,through foreign direct investment and mininglegislation passed in 1967.

Mining in Indonesia has been asignificant cause of forest destruction, withconcessions covering over 36 million ha - afifth of the country's total land area. Much ofthis is forested land (see also p.27).

The damage is done not only at themine itself, where the forests are torn up in

Indonesia's state-owned forestry companieswere established in the 1970s. PerumPerhutani managed 2.5 million ha of forestsand plantations in Java and East and WestNusa tenggara. Most of this was teak andpine plantations on JavaI.

Meanwhile, the PT Inhutani groupcontrolled far larger amounts of forest onthe 'outer islands': PT Inhutani I in EastKalimantan, South Sulawesi and Maluku; PTInhutani II in South and East Kalimantan; PTInhutani III in West and Central Kalimantan;PT Inhutani IV in Aceh, North and WestSumatra and Riau; PT Inhutani V in Jambi,South Sumatra, Bengkulu and Lampung.

As logging companies' permitsexpired or were withdrawn due tomalpractice, more and more forest landoutside Java came under Inhutani's control.Inhutani I-V were also allowed to form jointventures with private logging and plantationcompanies. In this way, Inhutani expandedinto the oil palm sector. By mid-1998, 14million ha were being managed by theInhutani group, with 8 million ha as state-

private joint ventures. (WRI/FWI 2002(draft) p26)

While the Inhutanis operated likeprofit-oriented private companies, Perhutanialso had a social mission. Apart fromrehabilitating forests under its control,Perhutani set up some 'social forestry'schemes for people living in and around theareas it controlled on Java (see also p.17).Nevertheless, the social and environmentaltrack records of Inhutani companies andPerhutani were no better than privatecompanies. Tensions were high betweenPerhutani and villagers on Java who claimedrights to forest landii. From 1998 onwards,this erupted into open conflict and large-scale timber raids on plantations.

Perhutani was privatised in March2001. Since the economic collapse in 1997, allInhutanis have been in severe financialdifficultiesiii.

ii FWI/GFW, 2002 (draft) p26ii. See Peluso N., 1990, in Poffenberger, 1990, for

a good accountiii. Kompas 4/Apr/01

The state-owned companies: Perhutani and the Inhutanis

32. Kartodihardjo, 1999, cited in World Bank, 200033. Tebang Pilih Tanam Indonesia (TPTI) means the

Indonesian Selective Logging and Replantingsystem. Forest activists joked that the acronymreally stood for Tebang pasti Tanam inshallah(logging is definite, but replanting depends onAllah's will.) Trees are felled on a 35-year cycle.Only trees with a diameter of over 50cm canbe harvested in normal Production Forest andover 60cm in Limited Production Forest.

8


Forestry during the Suharto era

The value of the forestry industry in the late 1990s

Volume of wood exports (1998) 49 million m3

Gross value of wood exports (1997) US$6 billion*Contribution of wood to domestic economy (1997) US$8 billion Contribution of wood to total GDP (1990s) 6%Estimated value of ‘non-market’ forest products US$3 billion#

Value of forests' watershed & soil conservation functions US$22 billion

All figures from OED Report World Bank January 2000, unless otherwise indicated.*Mainly as plywood, pulp and paper; pre-1998 tariffs on log exports were so high that there was nolegal export of raw timber. # FWI/GFW, (draft), 2002

9


order to excavate the ores, but also by thebuilding of roads, towns and ports, by thepollutants carried in water courses and by theincreased competition for land and resourcescaused by the influx of outsiders34.

In 1967, PT Freeport Indonesia -now operator of one of the largest gold andcopper mines in the world - was the first totake advantage of mining opportunities underSuharto’s New Order regime. with Canadiannickel miner INCO, coming in the followingyear with a concession covering 6.6 million hain a forested region of Southeast Sulawesi.While Freeport’s mine itself was not in aforested area, around 13,000ha of forests oflowland forest downstream have beendestroyed or damaged by tailings, deprivinglocal peoples of their livelihoods. Freeport isowned by US-based Freeport-McMoRanCopper & Gold Inc, in which Britain's RioTinto has a 14.6% share.

Rio Tinto acquired 90% of theKelian gold mine, which started production in1992, and half of PT Kaltim Prima Coal -Indonesia's biggest coal producer - togetherwith BP35. Both these mines are located inforest areas of East Kalimantan claimed byindigenous peoples. The Kelian mine, likeFreeport, and the Australian-owned IndoMuro Kencana gold mine in neighbouringCentral Kalimantan, have been linked withserious human rights violations36.

Forest consultantsInternational companies gained lucrativeforestry consultancies during this period.Foremost amongst these was the Finnishcompany, Jaakko Pöyry, brought in during the1980s to advise the Indonesian governmenton a master plan for a large-scale plantationprogramme linked to developing a pulp andpaper industry37. Jaakko Pöyry went on to be

consultants on specific projects, including PTInti Indorayon Utama (now known as PT TobaPulp Lestari) - notorious for conflicts withlocal communities displaced by feederplantations and for the paper/rayon pulpplant's appalling pollution record38. (See box,p.38 for new pulp development.)

From logs to plywoodThroughout the 1960s and '70s Indonesiaexperienced a logging boom, based on theexport of raw logs. By 1979, Indonesia wasthe world's largest producer of tropicaltimber. Some 580 logging concessions hadbeen issued by the late 1980s, covering over60 million ha. Although these concessionsaveraged about 100,000ha each, some timbertycoons controlled millions of hectares offorest through groups of logging companies(see box, p.10). The exploitation rights lasted20 years, but could be extended to 35 years,by which time often little or no commerciallyvaluable timber remained39.

In 1985, the government imposed alog export ban, ostensibly to promote forestconservation, but actually to stimulate thegrowth of an Indonesian wood processingindustry40. All logging companies had to setup factories producing sawn timber, plywood,

34. Marr, 200035. DTE, Nov 2000, Newsletter No 47, p6, 7, 1136. (see recent DTE newsletters for reports on

these and JATAM website: <www.jatam.org>for more details).

37. Carrere & Lohmann, 199638. See for example DTE 41:1 for more.39. Barber et al, 1994 40. The log ban was replaced in 1992 with

prohibitively high export taxes. These werereduced following 1997 by IMF demand, but atemporary export moratorium was imposedagain in 2001.

The military and timber

Since 1967, timber concessions have beendistributed to reward loyal generals andappease potential dissidents in the military.Timber is a well-established means ofsupplementing the inadequate militarybudget, particularly at regional commandlevel. The Department of Defence's businessgroup PT Tri Usaha Bakti (TRUBA)controlled at least 14 timber companies by1978i. Companies controlled by militaryfoundations were given lucrative concessionsin border zones and occupied territories. Themilitary ran sandalwood logging operations inEast Timor and were heavily involved in thetrade of the fragrant gaharu resin in WestPapua. Until the 1999 elections, the majorityof cabinet ministers and governors hadmilitary backgrounds.

The International TimberCorporation of Indonesia (ITCI) controlsone of the largest logging concessions in EastKalimantan, adjoining Kutai National Park.The company, originally a joint venturebetween TRUBA and US companyWeyerhauser, obtained a 601,000haconcession in 1971. Weyerhauser pulled outof Indonesia in 1983ii. Until the downfall ofSuharto, TRUBA owned 51% of ITCI with theremainder split between holdings controlledby Suharto's son, Bambang Trihatmodjo, andbusiness tycoon Bob Hasaniii. There areunconfirmed reports that the military arecontinuing to log the area heavily. ITCI alsohas a large timber plantation in the same area(PT Hutani Manunggal) which was included inthe list of companies accused of causing the1997 forest fires by burning to clear land.Local groups also reported serious forestfires in ITCI's concession in early 1998:20,000ha were reported to have gone up insmokeiv. ITCI was not prosecuted. Thecompany unsuccessfully applied forcertification under the IndonesianEcolabelling Standards system in 1998v.

Another military-owned loggingcompany, PT Yamaker, which had a concessionalong the Indonesia - Malaysia border in WestKalimantan extracted far more timber thanwas permitted under selective logging rules.Large tracts of Dayak customary lands nowneed reforesting. Local communities whohave been left destitute are taking courtaction to press for Rp10 bn (US$1million)compensationvi.

Military involvement in logging S.Aceh is includedin J. McCarthy’s CIFOR Occasional Paper 31, Oct2000: Wild logging

i. Dauvergne P, 1997, Shadows in the Forest, p71ii. Gallon Environmental Newsletter 8/Jan/01 quotingBarr 98iii. Indonesian Business Data Center, 1994, p.166iv. pers com - email from Samarinda 15/Apr/98v. pers com LEIvi. Kompas 9/May/01

continued on p.11

Protest by local people against INCO, May 2001 Photo: YTM

10


Mohammad 'Bob' Hasan is still the bestknown figure in Indonesia's forestry industry.Other timber tycoons owned more loggingand plywood companies or controlled morelogging concessions and plantations (see box,below), but no other individual has exertedsuch power over the whole forestry sector.Hasan's dominant influence on forestry policyand practice derived from two sources: hislong-standing close friendship and businessassociations with former president, Suharto;and his role as head of the forestry industryassociations. He headed the powerfulIndonesian Forestry Community (MPI): anumbrella organisation which includes theAssociation of Indonesian Wood PanelProducers (APKINDO), the Association ofIndonesian Concessionaires (APHI) and theIndonesian Saw Millers Association (ISA).

Hasan's association with the ex-President dates back to the 1950s whenSuharto was supplementing his earnings as amilitary officer in Central Java throughbusiness deals with ethnic Chineseentrepreneurs. Hasan soon changed his namefrom The Kian Seng and became a Muslim ina vain attempt to shake off anti-Chineseprejudice. One of his first ventures wasrunning PT ICTI (see box p.9) which wasworth US$500,000 when he took control in1969 and US$100 million by 1993i .

Bob Hasan's close ties with Suhartoenabled him to become one of Indonesia'srichest and most powerful business tycoons.Hasan was a major player in six businessgroups by the late 1990s: in addition to hisforestry empire under the Kalimanis Group,he controlled the Pasopati Group with its120 satellite companies and the HasfarmGroup (agriculture) and had interests in theNusamba group (10% Hasan; 10% Suharto'sson Sigit and 80% Suharto-controlledfoundations); the Tugu Group (a partnershipbetween the Nusamba Foundation; the stateoil company Pertamina and Pertamina'spension fund) and the Bank Umum NasionalGroup (40% Hasan; 60% KaharuddinOngko)ii. He successfully bid to build a newcoal-fired coal station in West Java. He gotUS$109 million from the Reforestation Fundto set up a new pulp mill in East Kalimantaniii.

He became chairman of the car manufacturerand petrochemicals conglomerate PT Astra in1997. He was close to being one of the 10richest men in the world with assets ofUS$3,000 millioniv. But even Hasan mademistakes: through Nusamba, Hasan gainedcontrol of 30% of the Busang gold mine inEast Kalimantan, which was later revealed tobe spectacular fraud.

Hasan became even moreinfluential once Suharto's wife, Tien, died inApril 1996. In addition to being thepresident's golfing partner and businessconfident, he took on the role of settling thebusiness rivalries among the president’s sixchildren. In the final months of the Suhartoregime, Bob Hasan's powerful role behind thescenes was officially recognised when thepresident appointed his loyal friend Ministerof Trade and Industry - the first ethnicChinese to have a Cabinet position.

As head of the Indonesian ForestryCommunity (Masyarakat Perkayuan Indonesia,MPI) and the Indonesian Plywood Association(APKINDO), Hasan operated a personalmonopoly over half the world's tropicalplywood exportsv. He turned APKINDO into apowerful plywood marketing cartel, using itto determine the price of Indonesia woodproducts overseas and the export quotas,allocations and prices which plywoodproducers would receive. This increasedfinancial returns for the member companies,but only as long as they supported Hasan'srule. Companies which complained about the

monopolies and rake-offs were punished byexclusion from the most lucrative exportallocations.

APKINDO also became part ofHasan's money-making machine as he used itto set up a his own plywood marketingcompanies in major importing countries.These included Nippindo in Japan; Indo KorPanels Ltd. in Hong Kong which handled salesto South Korea; Celandine Co. Ltd. (HongKong) to co-ordinate panel shipments toChina and Taiwan; PT Fendi Indah in Jakarta tomanage exports to the Middle East; and FendiWood in Singapore to oversee sales toSingapore and Europevi. All Indonesianplywood exporters had to use Hasan'sshipping company Kencana Freight Lines andhis insurance company PT Tugu Pratama. Inthis way the whole trade from plantation toconsumer markets flowed though hiscompanies.

Hasan became an easy target forreformists once Suharto had been removedfrom power. His sprawling business empirehit serious problems after the financial crisisand his banks collapsed. The Indonesian BankRestructuring Agency became one of Hasan'smajor creditorsvii (see p.32). The MPI hasaccused its former chairman of siphoning offhundreds of millions of dollars into his ownbusinesses and banks and Hasan'sinvolvement in the misuse of funds in fivecharitable foundations the ex-presidentcontrolled is under investigation. He is now inprison serving a 6 year sentence forcorruption in a fraudulent aerial mappingproject by his company PT Mapindo Paramaand of misappropriation of reforestationfundsviii. He was ordered to pay US$243million for losses to the state and his appealwas turned down.

Hasan became a scapegoat formuch of what was wrong with forestry inIndonesia for the past three decades. Formerforestry ministers, senior forestry staff andheads of forestry companies andconglomerates who are not ethnic Chinesehave entirely escaped public scrutiny.

However, Hasan has never beenmade to answer for the crimes committedagainst the many communities living in andaround forests whose livelihoods weredestroyed by his many logging companies.

Bob Hasan: the downfall of the 'King of the Forest'

Who owned the forests ? Major forest conglomerates in the Suharto period

Group Owner Concession holdingsKayu Lapis Indonesia Hunawan Susanto 3.5 million ha (17 companies)Djajanti Burhan Uray 2.9 million ha (17 companies)Barito Pacific Pangestu Prayogo 2.7 million ha (27 companies)Kalimanis Mohammad 'Bob' Hasan 1.6 million haKorindo Johanes Empel 1.3 million ha

(Source: Jakarta Post 28/Sept/98; PasaR 22/Sept/98)

i. Forum 8/Sep/98ii. DTE 33:10iii. DTE 38:8iv. Forbes, July 1997v. Asian Timber, Sept 96 p44-7vi. Barr C, 1998, Summary of MA thesis via EDF

21/Apr/98vii. Dow Jones Newswires, 7/Dec/99viii. Jakarta Post, 15/Mar/2001

Press notice, 1991, placed by a Hasan company

chipboard or other wood products.These measures drove out most

international logging companies andstimulated the vertical integration of theindustry. Eventually a few giant Indonesianconglomerates controlled the whole industryfrom logging through to the export of woodproducts like plywood mouldings and qualitypaper. Marketing cartels chaired by BobHasan (see box,p.10) dominated timberproduction and wood product exports.Indonesia became the world's biggestplywood exporter. At its peak (in 1992) theannual output of plywood was nearly 11million m3, 80% of which was for export41.Most of these companies were completelyIndonesian owned, although a few Japaneseand Korean investors like Marubeni andKodeco formed joint ventures withIndonesian companies.

Vast overcapacityThe fact that forest destruction means a finiteand diminishing supply of wood available toindustry didn’t concern the timber tycoonsor government. The Investment and Co-ordinating Board (BKPM) issued licences forwood processing industries withoutreference to the log supply calculated by theForestry Department. The result was that by1998 the capacity of sawmills, plywood, paperpulp and other wood-product factories (117million m3) was roughly six times estimates ofsustainable yields (under 20 million m3 peryear). Large-scale industrial timberplantations, intended to supply the rawmaterial for the fibreboard, pulp and paperand construction industries failed tomaterialise at anything like the rate requiredto make up for forest depletion, despite

funding from the Reforestation Fund (seebox).

The wood processing industriesbecame increasingly dependent on timbersupplied by the clear felling of ConversionForest and illegal logging. In 1997 the officialtimber supply was 29 million m3, yet theactual quantity consumed was 86.5 millionm3. This left a shortfall of 41 million m3, afterimports and recycling had been accountedfor. In 1994/5 official figures showed a drop intimber production yet an increase inproduction from saw mills, plymills and paperand pulp factories42. Worse was to come inthe unsettled post-Suharto period (see p37).

The cost to forestpeoples

“Indigenous peoples' understanding and controlover our own natural wealth have been destroyedby policies which enforce social and culturaluniformity”.

(KMAN position statement March 1999)

The foundation stones of Suharto's NewOrder regime were political control andeconomic development. Through adherenceto a national ideology of 'Pancasiladevelopment' and economic growth,Indonesia would become a strong, unifiedcountry and its people would become

prosperous. Suharto assumed thepaternalistic title of 'Father of Development'(Bapak Pembangunan). Yet the hidden cost ofIndonesia's 'development' has been bornelargely by the forest peoples and the poor ofthe ‘outer islands’. Their land and resourceshave been appropriated - often using violence- to satisfy the needs of a corrupt elite, thecentral government and the demands of theincreasingly modernised, urbanisedpopulation on Java. This process wassupported politically and financially byinternational lending agencies and creditorgovernments, while the timber tradersprofited directly from the wholesaledestruction in the forests.

This was the attitude of the Indonesiangovernment in 1990:

"The logging industry is a champion of sorts. Itopens up inaccessible areas to development; itemploys people; it evolves (sic) wholecommunities; it supports related industries; itperforms public and community services. Itcreates the necessary conditions for social andeconomic development. Without the forestconcessions, most of the Outer Islands todaywould still be underdeveloped."

(National Forestry Action Plan GoI/FAO)

To the decision-makers in Jakarta, indigenouspeoples were irrelevant to a modernIndonesian state. The very existence ofindigenous forest peoples was denied in thecommon official statement that “allIndonesians are indigenous”. On the otherhand, in official documents, indigenous peoplewere referred in negative terms as


11

The Reforestation Fund is sad misnomer.Throughout the Suharto years, this fund wasused to promote forest destruction, notablythrough providing finance for the creation ofindustrial timber estates (see p.14) thedrainage of over 1 million ha of swamp forestfor the Central Kalimantan ‘mega-rice’project and ‘Bob’ Hasan's Kiani Kertas pulpand paper mill in East Kalimantan. As an'extra-budgetary' fund, only the ForestryMinister and the president were responsiblefor its use.

Current investigations may only berevealing the tip of the iceberg about howmuch of this money has been squandered,embezzled or mismanaged. Some ofIndonesia’s massive foreign debt would nothave been created if the Reforestation Fundhad not been handled so inefficiently andcorruptly. This means that, once again,ordinary Indonesians lose out twice over asthey will ultimately bear the cost of debt

repayments to international lenders. Reforestation payments were said

to amount to Rp7 trillion (approx US$700million) before interest in mid-2000. TheReforestation Fund would be richer if loggingcompanies had been forced to pay theircontributions during the Suharto years and ifthe fund had not been used for non-forestrypurposes. The financing of the ForestryDepartment office complex in Jakarta isunder investigation. It may well have beenbuilt with Reforestation Funds throughYayasan Sarana Wana Jaya, a foundationowned by former Forestry MinisterSoedjarwoii. A joint investigation by a team offorestry and finance officials revealed thatunpaid logging fees and Reforestation Fundcontributions amounted to Rp15 trillion(approx US$1.5 billion). An additional Rp1.6trillion (US$160 million) of the ReforestationFund had gone on former president's petprojects (including Rp80 billion for his

grandson's company PT Ario Seto and Rp400billion to Habibie's national jet programmeiii.It is believed that some of the ReforestationFund disappeared in propping up the fragilenational currency during the first impact ofthe Asian financial crash.

The Department of Forestry askedAttorney General Marzuki Darusman in early2000 to take action against five businesstycoons suspected of defrauding theReforestation Fund to the tune of Rp784billion (approx US$80 million). The suspectswere 'Bob' Hasan, Barito Pacific boss PrayogoPangestu, Suharto's daughter Siti Hardiyanti'Tutut' Rukmana, Probosutedjo - anotherSuharto relative and business man IbrahimRisjadiv. Of these only Hasan has beenconvicted - see box, p. 8)

The Reforestation Fund

i. Bisnis Indonesia 27/Jun/00ii. Kompas 7/Jun/00iii. Kompas 22/Feb/00iv. Bisnis Indonesia 8/Feb/00

41. Asian Timber, Sept 1996 p44-742. Scotland et al, 1999

continued from p.9

12


'backward', 'primitive', 'alienated' or ‘isolated’.As adat peoples were not recognised, so theirtraditional forest-use practices were notrecognised as legitimate management systems.They were labelled 'forest squatters' and'agents of forest destruction' and their landmanagement system (under the heading of'shifting cultivation') rather than a rapaciousforestry industry, was blamed as the majorcause of deforestation43. Local governanceacts (5/1979 and 5/1974) dismantledtraditional power structures in indigenouscommunities and replaced them with astandardised system. Every village in Indonesiabecame part of a huge bureaucracy in whichall decision-making was determined fromJakarta.

Attempts by local communities tostop or limit the violation of their rights andthe destruction of their forests were largelyineffective44, with some notable exceptions(see p.19). Within Indonesia, the tools ofpolitical oppression - censorship, militaryterror, imprisonment - were used to crushopposition. Land reform was off the politicalagenda; the 1960 Agrarian Law was seen as theproduct of Sukarno's socialist allies. Evenorganisations or individuals who talked aboutland rights or fair compensation for peopledisplaced by 'development projects' ran therisk of being branded as communists: a chargetantamount to subversion in a country wherethe leader gained power in an anti-Communist coup. International concern wasmet with polite or insistent indifference. Nofigures are available and few studies have beendone on the numbers of people living in andaround forests displaced or impoverished bylarge-scale logging operations andplantations45.

TransmigrationIndonesia’s transmigration programme - partlyfunded by the World Bank - moved 8 millionpeople to the nation's forested islandsbetween 1969 and 199446 and forced therelocation of indigenous peoples. Not onlywere their forests taken over by governmentschemes to provide new settlements andagricultural land for landless poor from Java,Bali and Madura but, if these schemes failed,the settlers often moved on to occupy other

adat land. In a bitter irony, dispossessedindigenous people were also settled on thesesites, so that the newcomers could teachthem to grow arable crops. 'Spontaneousmigrants' (encouraged by governmentpropaganda) followed in the wake of officialsettlers, again clearing more adat forest,particularly once the transmigrationprogramme was coupled to credit-basedplantation estates (HTI-Trans and PIR-Trans -see also box,p.13.)

Ten years after it began supportingthe programme, the World Bank concludedthat transmigration had been a major cause ofdeforestation and had had major negative andprobably irreversible effects on someindigenous groups47. Transmigration wasdirectly responsible for the clearance of about2 million ha of forests between the 1960s and199948. But the knock-on impacts includingspontaneous migration, transmigrants movingoff unsuitable sites into new areas and theprogramme’s association with plantationschemes, have resulted in far greater forestloss - possibly five times as great as the areaoriginally planned49. It is widely believed that,until the programme was drastically reducedfollowing the 1997 economic crash, thetransmigration programme, and its knock-oneffects was the single most important causeof forest loss.

For a fuller discussion on transmigration seeDTE’s report Indonesia’s transmigrationprogramme: an update, July 2001.www.gn.apc.org/dte/ctrans.htm

Forest communitiesdevelopment programmesSuccessive government development plans(Repelita) included, as objectives for forestrydevelopment, increasing the prosperity oflocal communities and environmentalprotection. The 6th Five Year Plan (1993-8)gave poverty eradication highest priority. Bythe early 1990s, a number of communitydevelopment programmes had been set upsuch as the Forest Community DevelopmentProgramme (Pembinaan Masyarakat DesaHutan - PMDH - commonly called the BinaDesa programme), implemented by loggingcompanies under the Forestry Department;initiatives funded under the PresidentialDecree on Under-Developed Villages (IDT)and the Integrated Area Supervision scheme(PKT) carried out by the local government. Theprojects included the provision of basicschools, health centres and washing facilities;agricultural extension work; dirt roads; sportsfacilities and places of worship. The overtintention was to reproduce a 'modern',standardised Indonesian lifestyle based on theJavanese model which included replacingtraditional land use patterns with settledfarming.

All these village development

programmes shared similar goals of povertyreduction, but they were - for the most part -poorly planned and implemented. More oftenthan not, they did not address the real needsof communities or deal with all villages withintheir domain. All were top-down schemeswhich treated communities as objects ofsocial development rather than activeparticipants. Local people were expected tobe the grateful recipients of any temporarysupport, not agents involved in the design,planning and management of any scheme. Asocial forestry programme on Java designed toovercome many of the above shortcomingshad only limited success (see box p.17).

Companies, forestry officials andlocal government staff had very limitedknowledge about the local communities -their priorities, needs, culture, customary laws- and there was no co-ordination betweenactivities carried out in the same area bydifferent agencies. There was little monitoringor evaluation and, when the budgets had beenspent and the programme providers movedon, there was little to show - except, perhaps,for a few richer local officials50.

43. See for example Indonesia's National ForestryAction Plan, 1990, GoI/FAO, p22

44. SKEPHI & Kiddell-Monroe, 1993, inColchester & Lohman, The Struggle for Land andthe Fate of the Forests, WRM/ZED

45. A notable exception was studies done as partof the Sustainable Forest ManagementProgramme (SFMP), a large, long-termIndonesian-German forestry project in EastKalimantan. The first phase involved detailedfield studies in three concession areas(Inhutani I, PT Sumalindo Lestari Jaya and PTLimbang Ganca) and examined relationshipsbetween these companies and the localpopulations. A number of reports werepublished, for example: Main Results SFMPDocument No.2, 1995. More limited socialstudies were carried out by the UK-fundedODA Forestry programme in the early 1990sin Central Kalimantan, Riau and Jambi.

46. GoI National Development Planning Agency6th 5 Year Plan 94/5-8/9 cited in WRI, 1997p30.

47. DTE Special report on Transmigration, 2001,p2

48. FWI/GFW, (draft), 200249. MacKinnon, 1996, p39050. Diah Rahardjo, 1996, pers com

Logging truck, N. Sumatra DTE

13


“In a 'worst case scenario' in which plantationsreplace most natural forest outside protectedareas, the distinction between forestry on Javaand the outer islands will diminish.”

(WALHI/YLBHI 1992)

Indonesia's ambitious plantations programme,started during the Suharto period, directlycontributed to the destruction of therainforests, sparked social conflict and theviolation of indigenous peoples' rights.Natural forests have been consistentlyundervalued through Indonesian forestrypolicies which make it more profitable (in theshort term) to clear the land for plantations.

The expansion of two majorplantation types - industrial timber (HTI) andoil palm - is intimately linked to logging. TheSuharto government encouraged theconversion of natural forest to plantationsthrough a policy decision which allowedcompanies to clear fell 'unproductive'Production Forest and use 60% of the landfor HTI and 40% for oil palm51. It was in theinterests of conglomerates to ensure thattheir subsidiaries over-logged timberconcessions to reduce yields to below thecritical 20m3/ha and then apply for 'forestconversion' permits.

Industrial timber and oil palmplantations present similar social andenvironmental threats to forests and forestpeoples. Selective logging leaves some areasof rainforest relatively intact and even heavilylogged areas can eventually regenerate.Plantations - including oil palm - mean wide-

spread, permanent forest destruction. Bothtypes of plantations are typically establishedon forest land rather than degradedgrasslands or scrub. Both are predominantlymonocultures of exotic species (i.e. not nativeto Indonesia). Both are large-scale anddeprive large numbers of forest peoples ofaccess to land and resources to support theirfamilies. Both have been linked to theIndonesian government's transmigrationprogramme through HTI-Trans or PIR-Transschemes (see box). These led to conflictsbetween indigenous peoples and settlers overland rights, cultural differences and access toschools, clinics and other facilities.

Oil palm and pulpwood plantationsare also a major cause of forest fires, althoughthis was not officially acknowledged by theforestry minister until the 1997/8 firesdisaster. Although illegal in Indonesia since1994, burning is still common practice as theeasiest and cheapest method of preparingland for plantations (see fires, p.16).

There are also strong similaritiesbetween the economic forces which havedriven HTI and oil palm plantation expansion.Both pulpwood and palm oil are cash cropswhich generate products for export andincrease foreign exchange revenues. Bothindustries are attractive to foreign investorsbecause of the steadily increasing globaldemand for paper and paper products and forthe many products manufactured from palmoil, including margarine, soap, makeup,detergents, chocolate-substitute and cookingoil. Both exemplify how foreign companieshave sought to profit from Indonesia'sforestry regulations and lax environmentalcontrols through schemes which would notbe allowed in their own countries whereenvironmental legislation and democraticcontrols are stronger.

HTI - Trees forindustry or money-making scam?Estate crops are not new to Indonesia: theDutch East India Company and Dutchcolonial administration established extensiveplantations of tree crops like rubber and teak,mainly on Java and Sumatra. Sinceindependence, plantations have also beenpromoted through 're-greening' andwatershed protection programmes intendedto replant some of the millions of hectares ofdegraded land described by officials as'critical', 'barren' or 'unused'. However, thefocus of concern of environmental, social andindigenous organisations is the HTI system,which promotes the clearance of naturalforests and their replacement by large-scalecommercial plantations.

Tropical countries have a naturalcommercial advantage when it comes toplantations. Fast-growing species such asAcacia mangium, Gmelina arborea andParaserianthes falcataria are typically ready toharvest seven years after planting inIndonesia. The tree growing cycle intemperate countries is normally 30 to 45years.

The HTI programme wasintroduced in 1990 as part of governmentefforts to boost the non-oil and gas sectors ofthe Indonesian economy. In theory, areas ofdegraded land would be prioritised forreplanting with fast-growing trees to feedIndonesia's burgeoning paper pulp industry.The Reforestation Fund would provideprivate companies with cheap financing forpulpwood investments. In practice, the wholesystem was a scam. Logging and plantationcompanies worked hand in glove as they weregenerally subsidiaries of the sameconglomerates. The Indonesian governmentgave companies concessions covering tens ofmillions of hectares and allowed them tooperate virtually unsupervised.

Developers preferred to clearlogged-over forests for their plantations,rather than attempting to reforest tree-lessareas. This also allowed them to extract andsell remaining timber, primarily to the pulpindustry. There were no effective penaltiesagainst a company which flaunted selectivelogging regulations. The minister may cancelits logging licence, but by that time thedamage had been done and the profits werein the bank. The parent group could then setup a plantation company which was eligiblefor cheap loans from the Reforestation Fundto finance planting. But planting did not alwaystake place and, where it did, poormanagement of the new plantation meantthat the trees did not always survive.

The plantation scheme got off to aslow start and never achieved the promisedresults. Under 1 million ha of timber estates

PIR schemesPIR (Nucleus-Estate / Smallholder) schemeshave been used to provide cheap labour foroil palm and other plantations and intensiveaquaculture projects across Indonesia. Oilpalm schemes funded by the ADB andWorld Bank, linked to the transmigrationprogramme (PIR-Trans) contributed todeforestation and caused pollution as wellas the displacement of indigenous peoples.Smallholders, obliged to sell their crops tothe operating company, often found theywere worse off than before they joined theschemes due to fluctuating commodityprices, problems with land entitlement,corruption and malpractice and difficultiesin repaying loans.

HTI-Trans schemes supplied cheaptransmigrant labour for timber plantations.The programme was scrapped in 2000, oneof the official reasons being that wageswere too low for transmigrants to sustainan appropriate living.

(See DTE Special Report on Transmigration, July2001 www.gn.apc.org/dte/ctrans.htm)

Plantations in the Suharto period

51. KepMen 614/Kpts-II/1999, see Casson, 200052. Jakarta Post 27/Feb/9353. WALHI, pers com 9/Nov/98

Bob Hasan and entourage inspect seedlings forpulpwood plantation, 1996 Antara

14


were created in the first two years, wellbelow the target of 1.5 million ha for thatperiod52. By 1994, 38 companies had beenallocated 3,841,777ha for industrial treeplantations. By 1998, 161 companies hadapplied to set up timber estates coveringnearly 8 million ha and 98 of these had beengiven permits for 4,620,738ha - mostly inSumatra and Kalimantan53. While ever largeramounts of land were allocated to HTI, lessthan a quarter of it was successfullyestablished as timber plantations. This meantthat the forestry industries - largely plywoodand the growing pulp and paper industry (seebelow) were still relying on natural forests toprovide raw materials and would continue todo so in future.

The government attempted toconceal the failure of the HTI programme byusing figures which included areas reforestedby Perhutani and Inhutani. These (then) stateforestry enterprises became responsible forreforestation after years of private loggingcompanies' 'cut and run' practices.Government figures of 6.1 million ha of forestlands reforested were rightly regarded withsuspicion54 since some of the same areas hadbeen replanted several times, only to becleared by timber raiders or forest fires.

Even if the target had beenachieved, the replanted area still would havebeen negligible when compared with the vasttracts of forest damaged or totally destroyedwithin logging concessions and the third ofIndonesia's forests zoned for clearance forcommercial agriculture (see box, p7) forfigures). Moreover, like commercialplantations, reforested areas are mainlyplanted with a limited number of fast-growingintroduced species. In no way do theseplantations fulfil the social and ecologicalfunctions of the natural forests they replace.

Pulp and paper

“The growth of the pulp and paper sector inIndonesia since the late '80s has been based onthe clear felling of vast area of forest -- estimatedat at least 800,000 hectares a year -- the spreadof tree monocultures, the violation of indigenouspeoples' land rights, and the granting of officialsubsidies to companies, which often hide corruptpractices.”

(WRM Bulletin, 41, December 2000)

Until 1987, Indonesia was a net importer ofpaper and pulp. Paper was an expensiveluxury for the majority of the population.Natural forests were hardly used for pulp.Indonesia's pulp manufacturing originallydepended on agricultural waste, largely fromsugar plantations, plus pine plantations55. Thedomestic paper industry was protected bytariffs. A number of paper mills usingimported pulp had been built, as pulp could

be imported free of duty, but there were nointegrated pulp and paper mills.

Nevertheless, the government andthe forestry industry had ambitions tobecome the world's leading pulp and paperproducer by 200556. According to head of theRaja Garuda Mas Group, Sukanto Tanoto,Indonesia's pulp production capacity wouldexceed 11 million tonnes by 201057.

Much of the initial investment wasin Sumatra, including PT Kertas Kraft (Aceh,1989); PT Inti Indorayon Utama (N. Sumatra1989); PT Indah Kiat (Riau, 1984) and PT RiauAndalan Pulp and Paper (Riau, 1995). IndahKiat's Perawang plant was the first to use pulpto produce paper. In 1993 Indorayon startedcommercial production of viscose pulp.Other large pulp plants were set up in WestJava and East Kalimantan58. By 1996 therewere 65 pulp and paper mills in productionwith plans for a further sixteen59. The mainIndonesian companies in the pulp industrywere already big players in other aspects ofthe forestry business, namely Sinar Mas,Barito Pacific and Raja Garuda Mas/APRIL.

Bankrolled by overseas finance,Indonesia's industry became one of theworld's leading producers, with pulp capacityexpanding almost seven-fold between 1988and 1999, from 606,000 tonnes per annum to4.9 million tonnes. Paper processing capacityrose from 1.2 million to 8.3 million tonnes forthe same period60. It was also one of thelowest cost producers due to cheap loans,low wages, lax environmental controls andlarge-scale legal and illegal logging of naturalforests.

Most of Indonesia's pulp and paperproduction was for export. Indonesia waswell-placed, with Japan a major paperimporter and demand for paper in SoutheastAsia growing fast - until the economic crisishit in 1997. Also, the potential domesticmarket was huge, with Indonesia's 200 millionplus population and an economic growth rateof 8%. Each Indonesian consumed on averageonly 19.4kg of paper a year, compared with anannual per capita consumption of 106kg inMalaysia, 200kg in Singapore and 330kg inUSA61.

Overcapacity in pulp plantsThe environmental and social costs ofIndonesia's burgeoning pulp and paperindustry have been high. Indonesian andinternational NGOs had warned that thedramatic expansion of Indonesia's pulp andpaper sector was based on 'mining theforests'62. For sustainable production, thecapacity of a pulp mill should not exceed thevolume of pulpwood that can be legallyobtained from a company's own concessionsand neighbouring farmers. It soon becameobvious that the capacity of the pulp andpaper industry far outstripped sustainabletimber supplies. Pulp plants were already

experiencing shortages of raw materials bythe mid-1990s, even before many of theplanned mills had been built63. And, asplantations had not been established,companies were meeting their demands fromillegal supplies. For example, in 1993, aparliamentary commission accused Indah Kiatof buying timber illegally cleared from70,000ha64.

The Suharto governmentencouraged overcapacity, firstly by insistingthat logging concessionaires developdownstream industries and secondly byallowing companies to defer tax payments inyears when plant capacity was beingexpanded. Companies claimed that highcapacities would reduce unit costs and maketheir product more competitive ininternational pulp and paper markets.

Oil palm

"Oil palm plantations are not a panacea, but adisaster for Indonesia and Indonesia's forests"

(Telapak/EIA, 2000)

The 1990s were a boom period for theIndonesian oil palm industry. This'development' promised land, employmentopportunities and greater prosperity - forsmall-scale farmers and for the Indonesianeconomy. Indonesian environmentalists nowsee the expansion of large-scale oil palmplantations as the third massive blunder inIndonesian forestry policy, following hard onthe heels of the logging concession systemand the establishment of industrial treeplantations to feed the pulp and woodindustries65.

The rapid spread of oil palmplantations became a major direct cause of

54. Agenda 21 p25; RePPProT, 1990, p16555. RePPProT, 1990, p18556. Jakarta Post 8/Sept/9357. Gallon Environmental Letter Vol 5, No. 2, 200158. Indonesian Business Data Center, 199459. DTE 29/30:1160. Barr 200061 Kompas 11/Aug/01, 2000 figures.62. See for example DTE's Pulping the Rainforest,

1991 and WALHI's Mistaking Plantations, 199263. SKEPHI European support office 27/Oct/9664. Jakarta Post 22/Sept/9365. See for example, WALHI's end of year

statement 199866. Siscawati, 199967. See DTE 35 (supplement), and 36

15


deforestation and social conflict inIndonesia66. Companies took adat landwithout consultation or adequatecompensation; local people whose livelihoodsonce depended on the forests were tied intosharecropping schemes (PIR) which led toindebtedness, loss of independence andpoverty.

Concerns about the social andenvironmental impacts of this sector havebeen heightened since the 1997/8 forest firesand the economic crisis. Of the 176companies accused of burning to clear land,133 were oil palm plantation companies (43of which were Malaysian)67.

Companies which financedplantations through loans depend on highglobal prices to repay bank loans. The palm oilmarket, like most export crop markets, issubject to boom and bust cycles. Since somany oil palm plantations in Indonesiaoperate through credit schemes, fluctuationsin prices hit indebted farmers very hard66.

These concerns were swept asideby the Suharto regime whose main interestwas the foreign exchange revenues theplantations could bring into the country.More recently, pressure to service themounting debts has taken priority over socialconcerns.

“Fifty indigenous peoples' leaders who attended aworkshop on oil palm plantations, in March1999, stated that they and their peoples hadtaken on high interest private debts for the firsttime in their lives by joining Nucleus-EstateShareholder schemes on oil palm plantations.Their involvement was forced and in many casesinvolved military intimidation. Many of the leadershad been arrested and jailed when they opposedthe programme." (M. Siscawati, March 1999)

The expansion of oil palmOil palm was introduced to Indonesia fromWest Africa in the nineteenth century. Therewas some development of oil palmplantations by the Dutch colonialgovernment, but the sector stagnated duringthe early years of independence.

The revival of the Indonesian oilpalm industry stems from several initiatives inthe 1980s. The World Bank funded severalNucleus Estate/Smallholders (PIR) projectsbeginning in 1980. This was coupled with Banksupport for the Indonesian government'stransmigration programme. The AsianDevelopment Bank also helped fund five PIRplantations between 1981 and 199567. In 1984the Ministry of Agriculture issued a regulationto promote the oil palm sector through thePIR approach. This was followed by aPresidential Decree (1/1986) whichintegrated the transmigration programmewith the PIR scheme. In this way, government-sponsored migrant farmers were used toopen up forest areas and as a cheap source of

labour for industrial plantation companies68.At the same time, access to credit atpreferential rates for estate development andprocessing facilities stimulated thedevelopment of large-scale private oil palmplantations69

By the end of the Suharto period in1998, the total estimated area planted with oilpalm plantations had reached 2.5 million ha70.

Annual production of crude palm oil (CPO)had reached almost 5.4 million tonnes (1997)and export earnings stood at US$1.4 billionfrom 2.9 million tonnes (1997)71.

One of the key factors facilitatingthe continued conversion of tropicalrainforest to oil palm plantations was acontroversial regulation passed in the lastweeks of the Suharto government

(SK376/1998). This set down the criteria forsuitable land - criteria so broad that theycover the majority of lowland rainforest inwestern Indonesia. The (then) state-ownedforestry companies, Inhutani I-V, were alsoallowed to expand into the oil palm sector byforming joint ventures with plantationcompanies.

Conglomerate controlThe palm oil industry was, until the economiccrisis, increasingly dominated by giantconglomerates which controlled anintegrated process from plantation to palmoil processing and the manufacture of cookingoils. Most oil palm plantations in Indonesia(48% of the total area) were owned byprivate companies; smallholders onlycontrolled 33% and state-owned plantations19%72. Four Indonesian groups - Astra, Salim,Sinar Mas and Raja Garuda Mas - controlledtwo-thirds of private estates by 1997. Privatecompanies also had access to a large share ofthe smallholder palm oil output from so-called plasma/tree-crop transmigrationprogrammes.

Palm oil refinery capacity inIndonesia was concentrated in the hands offive corporate groups: Sinar Mas, Salim, HasilKarsa, Musim Mas and Bukit Kapur, whojointly controlled 61.3% of total annual

refining capacity73. With the exception of thelast three, all these conglomerates had beenheavily involved in the forestry and plantationindustry for many years.

Attractive investment

Key factors which made Indonesian oil palmplantations an attractive prospect fordomestic and foreign investors were:w the high temperature and rainfall

ensured high growth rates;w large tracts of land had suitable soils;w Indonesian laws and regulations relating

to land and forests could be easilymanipulated, so land was cheap;

w Indonesian labour was cheap, particularlywhere plantations were coupled withtransmigration schemes;

w companies could benefit from sellingtimber from any remaining forest,before clearing the land for planting;

w there was relatively little room forfurther expansion of oil palm inpeninsular Malaysia;

w the Indonesian government was keen topromote exports, particularly outsidethe oil & gas sector.

Almost all of these factors still apply today- see p. 39 for recent developments.

68. Potter and Lee, 199869. DTE, 2001, Special report on Transmigraton70. Siscawati, 199971.Casson, 200072. Inside Indonesia Apr-June 199973. Casson,2000; Wakker, 200074. paper presented at KMAN, 199975.Wakker, 2000.

Oil palm plantation, Kalimantan DTE

Preventing forest destruction was practicallyimpossible under President Suharto, becauseit directly benefited his family and cronies.Most ministers in key positions controllingnatural resources - forestry, mining,transmigration & resettlement, home affairs(which included agrarian affairs and thepowerful National Planning Board) and trade& industry, promoted the authoritarian,exploitative policies in which ordinaryIndonesians were no more than the objectsof top-down development initiatives. Yetthree forestry and environment ministersshowed some change in attitudes towardslocal communities and indigenous resourcemanagement and sowed the seeds for futurereforms.

Forestry Minister DjamaluddinSuryohadikusumo (1993-1998) made someattempt to include forest peoples in forestpolicy. He wanted to develop a new model forforestry in Indonesia geared towardsincreasing revenue from the forestry sectorwhile promoting sustainable forestry.Djamaluddin managed to get a limitedamount of new legislation in place oncommunity-based forest management beforeIndonesia's 1998 elections, when he lost hispost - probably due to the enemies he madein the forestry industry (see KdTI box p.17 &HKM p.44I). He tried to take action to curb

the worst excesses of the forestry industry,cancelling or refusing to renew around onefifth of the 584 logging concessions which hadbeen issued at the time and at least drawingpublic attention to a disaster in the makingdue to overcapacity in the wood processingindustry79. Most conspicuously, he publiclyblamed forestry companies, rather than forestcommunities or the El Niño climaticphenomenon, for the disastrous 1997 forestfires. Djamaluddin went on to become aninfluential advisor to the two most importantinternational policy and research institutionsin Indonesia: the Centre for InternationalForestry Research (CIFOR) and theInternational Centre for Research onAgroforestry (ICRAF).

Emil Salim was also confronted withthe problems of taking action against thebusiness elite during his 12 years asenvironment minister (1981-1993)80. He hada high profile - often making pronouncementson the need for pollution control andsustainable development - but little power. Tocompensate for this, Salim developed closeassociations with the burgeoningenvironmental movement and gave supportto non-governmental organisations. Thesegroups and the new generation of civil societygroups they have nurtured proved to be vitalelements in the drive for political change,

human rights and forest policy reform. Hewent on to set up the ecolabelling workinggroup (see p.18) and to chair the GEF-fundedNGO, Kehati.

When Sarwono Kusumaatmadja, acareer bureaucrat in the government partyGOLKAR, took over from Salim asEnvironment Minister in 1993 many NGOshad low expectations. In the event, Sarwonocontinued to push for reform and spoke outon the need to control the activities oflogging and plantation companies during the1997/8 forest fires. He was an outspokengovernment critic in the dying days of theSuharto regime and, briefly, became ministerfor a newly created marine department in theWahid government.

16


The first signs of reform

Forest firesThe catastrophic forest fires of 1997/8 werethe first to hit international headlines and TVscreens, but they were not the first or the lasttime Indonesia's forests have gone up insmoke. The 1982-3 'Great Fire of Borneo'destroyed 3.6 million ha of forest in EastKalimantan. The financial value of timber lostwas estimated at over US$5 billion, quiteapart from the damage to people's health andlivelihoods as far away as Singapore76.

This was described as the "greatestnatural catastrophe in historical times"77 but- as in subsequent years - these fires wereman-made. Mature, intact tropical rainforesthas little undergrowth and is too wet to burneasily, even in very dry 'El Niño' years like1982/3, 1987 and 1997/8. Where loggingcompanies had created vast tracts ofdegraded forest, dry underbrush anddiscarded timber became tinder. The fireswere particularly hard to extinguish wherecoal and peat deposits under the forest floorburned for months.

Little was learned from this disaster.Year after year, government ministers andlocal officials continued to scapegoat 'shiftingcultivators', ignoring the destructive practices

of large, politically well-connected loggingcompanies which continued to over-log theirconcessions with impunity.

The oil palm sector boom in the1990s made the situation worse. Burning wasseen as the cheapest option to clear forestedland to establish large scale plantations. Thesmoke, carried by prevailing westerly winds tomainland Southeast Asia, prompted annualformal protests from Indonesia's ASEANneighbours and calls for Jakarta to take actionon what they euphemistically called 'the haze'.

The 1997-8 firesThe difference with the 1997/8 fires was thepolitical and economic context in Indonesia aswell as the scale of the disaster. While the firesraged and a huge pall of smog chokedSoutheast Asia, the Jakarta government wascaught up in political and economic turmoil.Apart from the forestry and environmentministers, Indonesia's leaders paid no seriousattention to the disaster. Almost 4 million haof agricultural land, over 3 million ha oflowland forest and 1.5 million ha of peat andswamp forest were burnt in 1997/9878.

The extensive fires ravaged largeareas of Indonesia, especially on the islands ofKalimantan and Sumatra. These forest and landfires and the accompanying smoke, caused

serious damage to the forest areas, airpollution, damage to public health, loss of life,destruction of property and livelihoodoptions, and other substantial economiclosses in much of southern Southeast Asia.Estimates put the area of Indonesia burned at9.7 million ha (forest and non-forest land),with some 75 million people affected bysmoke, haze, and the fires themselves. Theeconomic costs were estimated to bebetween US$4.5 billion and US$10 billion79.

For full list of companies accused of starting firesand more details on the 1997 fires see DTE 35supplement of the fires.

See p.40 for fires, post-Suharto, recent initiativesand fires monitoring websites.

80. DTE 29/30:681. In 1978 the government set up the Ministry

for Development Supervision & Environment,later transformed into the Ministry forPopulation & the Environment which is nowthe Ministry for the Environment.

76. Meijaard & Dennis, R (1997) 77. Johnson,1984.78. Barber & Schweltheim, 200079. ibid

Civil society strugglesThe term ‘civil society organisations’ (CSOs)in Indonesia encompasses a wide range ofvery different groups, including massorganisations, trades unions, communitygroups and non-governmental organisations(NGOs). The NGO community alonecomprises tens of thousands of organisations,ranging from large well-established or well-funded foundations to small groups operatingon a shoe-string; from national networks tovillage co-operatives. Some are independent,radical campaigning groups; others are linkedto political or religious parties; yet others arethinly disguised commercial ventures or mayhave been created purely to accessgovernment or donor funding.

Indonesia's NGO movement onlybegan to grow with the national economicdevelopment of the late 1970s and 1980s. Theanti-communist purges which accompaniedthe early days of Suharto's dictatorship wipedout or drove underground any independentorganisations. Gradually, a new generation ofwell-educated, middle class individuals set uporganisations to address the worst excessesof the New Order. Some (including laterleaders of WALHI and SKEPHI) had cut theircampaigning teeth in a short-lived wave ofstudent activism in the mid-1970s. Othersbelonged to 'nature lover' or independentstudy groups. Typically, each NGO dealt withspecific issues - labour conditions, socialproblems, the urban poor, the environment -and advocacy was limited to public educationand application of state laws. The Suhartoregime stamped down brutally on any groupsand individuals deemed to threaten itsauthority. To band together, to tackle broaderagendas of rights or state violence, or toprotest openly was to risk imprisonment.

Nevertheless, some communitiesdid stand up for their rights, particularly by theearly 1990s. Once the majority of theircustomary land had been taken by loggingcompanies, mines or transmigration sites,forest peoples like the Bentian Dayaks of EastKalimantan and the Yamdena islanders of theSoutheast Moluccas realised that thealternative to protest was the destruction oftheir societies and cultures as well as theirlivelihoods82. Villagers in Java who lost theirland to industrial or commercialdevelopments faced destitution. Thethousands of peasants in Central Java whorefused to move off their land for the KedungOmbo dam became a national cause celebre83.

Throughout the Suharto years,environmental activism was tolerated to agreater extent than other forms of politicalaction. The international environmentalmovement had been boosted by the first UN'Habitat' conference in Stockholm in 1972.

Indonesia soon established an environmentministry. The minister, Emil Salim, had goodintentions but a small budget and no field staff,so a symbiotic relationship developedbetween him and environmental groups inIndonesia. The NGOs could raise issues inpublic (as long as they were not tooaggressive) and, in return, would receive tacitprotection from government crackdowns.Their position was further strengthened bythe 1982 Environment Act which recognisedcivil society's role in protecting theenvironment.

Some organisations were foundedas networks in order to resist governmentrepression. The forest campaigning NGO,SKEPHI, founded in 1982, was initially a veryradical network with a high public profile.Members from up to a dozen organisationsopenly criticised government policy andspread information on forest issuesinternationally then dispersed until the uproardied down. On the other hand, in its earlydays, organisations belonging to WALHI(Indonesia's Friends of the Earth) took a lessconfrontational approach, focusing on

17


Perum Perhutani, the state-owned forestrycompany, controlled all forests in Java outsideconservation areas until 2000. It becameinterested in social forestry in the 1980s inan attempt to reduce conflict with localcommunitiesi.

The forests managed for timberproduction on Java are mainly teakplantations (and, to a lesser extent, pine)which date back to the colonial period. Theconflicts arose because local communitiessaw these semi-natural forests as their landand claimed the right to fell timber for theirneeds and to grow their own crops thereii. Incontrast, Perhutani's official remit was tomaximise income from timber production.So forest guards evicted forest farmers andvillagers caught with logs were charged withtheft.

The Social Forestry Programme,largely funded by the Ford Foundation,sought to bridge the gap between forestfarmers and Perhutani officials. Its main aimwas to give local communities greater accessto forest land so that they had some meansof supporting their families. Land-poorvillagers had to form 'forest farmer' groups inorder to get plots. They could then plantagricultural crops between rows ofplantation trees in return for planting,weeding and generally caring for the maintree crop. They were also allowed to collectwaste timber for firewood. Perhutanichanged its planting and cropping regimes toallow farmers a longer period to grow theircrops. NGOs provided liaison betweenPerhutani and forest farmer groups and themonitoring and evaluation from the fieldtrials fed back to a joint steering committeeof decision-makers within the ForestryDepartment. Research by Indonesian andforeign universities into improving the yieldsand values of forest farmers' crops providedfurther input.

The Social Forestry Programmewas influential in that it did reduce conflictbetween Perhutani and villagers in the areaswhere it operated. At least some forestryofficials learned to see NGOs and even

forest farmers groups as partners ratherthan opponents. Villagers gained legal accessto the forests and could cultivate more land,thus increasing their incomes and foodsecurity. The programme pioneered writtenagreements between forest farmers and thestate-owned forestry company on the rightsand responsibilities of both parties. Anotherinnovation was the framework whichenabled dialogue or consultation betweenthe government, a forestry company andlocal communities.

Overall, this ten-year initiative onlyhad limited success, largely becausePerhutani is a massive autocratic,bureaucratic organisation with an inbuiltresistance to change. The few enlightenedindividuals within it could not transformentrenched attitudes and the number of pilotprojects never reached the critical massneeded for the new practices to spreadfurther. Decision-making was almostexclusively top-down. The programmeencountered social and technical problems. Ittended to benefit better-off farmers ratherthan the landless, poorest members of thecommunity who were the primary target.

Farmers could not grow crops formore than three years in teak plantationsdue to heavy shade. The programme did notchallenge the status quo in that it onlyaddressed issues of forest access andmanagement rather than ownership rights.Once donor funding was phased out in themid-1990s, the government would notprovide the necessary financial support tocontinue and expand the work.

i. A more detailed analysis of the Social ForestryProgramme is presented in Chidley L & PotterD, 1997, NGOs and Environmental Policy inIndonesia, GECOU Working Paper 8, The OpenUniversity, UK

ii. The reasons behind these land claims arecomplex. Levels of rural poverty in Java; thescarcity of agricultural land; the relationshipbetween communities and Dutch plantationmanagers; and the vestiges of pre-colonial adatlaw and beliefs are all relevant factors. SeePeluso N, 1992, Rich Forests, Poor People.

The Social Forestry Programme

82. See for example DTE 22:5,11 and 19:183. See for example, DTE 26:1

increasing environmental awareness amongstjournalists, student groups and communities.Later, these NGOs evolved in very differentdirections.The Legal Aid Foundation, YLBHI,adopted a more overtly political stance andpursued workers' rights and land rights casesthrough the courts. WALHI and YLBHIestablished the legal precedent for NGOs totake court action against the government withthe landmark case against the Indorayon pulpmill in 198983. A consortium of environmentalNGOs, including WALHI, later tried twice tosue President Suharto for the appropriation ofreforestation funds for the national aircraftproject of his Minister of Technology (Habibie)and for ‘Bob’ Hasan’s Kiani Kertas pulp mill84.

Successes were rare. Forestry baron'Bob' Hasan publicly accused Indonesianforestry NGOs of promoting the interests ofinternational competitors85. The InternationalNGO Forum on Indonesia (INGI), lobbied theWorld Bank and IMF to adopt policies andprojects which were less socially andenvironmentally damaging in Indonesia. Itdisbanded and re-emerged as INFID followingthe government ban on Dutch aid. This wasdecided after the Netherlands developmentminister, Jan Pronk, led international protestsover a massacre in East Timor. Suharto's vicepresident Try Sutrisno, called Indonesianhuman rights activists “the new traitors”86.

As the 1980s gave way to the 1990s,more changes occurred. Indonesia hosted aUN-sponsored workshop on human rightswhere environment, development andwomen’s groups participated. The NationalCommission on Human Rights (KomnasHAM), set up in 1993, provided anothervehicle for communities to express theirprotests and demands for justice.Connections between different kinds oforganisation began to flourish - for examplemembers of SKEPHI, student activists andwomen’s groups joined forces in a temporaryalliance as the human rights coalition

INFIGHT87. Organisations like WALHI andYLBHI started openly to advocate challengingstate control and building mass support fordemocracy.

DOWN TO EARTH Forests, People and Rights Part I, May 2002

18

Certification startsThe certification of timber and forestproducts is intended to improve forestmanagement through consumer pressure.The best known scheme was set up by theForest Stewardship Council (FSC) in 1993.Timber operations are inspected by FSCaccredited teams which evaluate themaccording to a series of Principles andCriteria. These cover environmental andsocial issues, including the legal recognitionof indigenous peoples' customary rights. If alogging concession measures up to thesestandards, the timber and any productsmade from it can carry the FSC logo.Consumers are prepared to pay higherprices for wood products which come fromsustainable, equitable sources. FSC-certifiedforestry operations are located in morethan 30 countries.

Indonesia started its ownecolabelling initiative independently in1993. A working group of forest NGOs,including LATIN and WALHI, academics andindustry representatives developed ascheme under the chairmanship of formerEnvironment Minister Emil Salim. This wasagreed by the forestry industry and thegovernment in 1998 and was recognised bythe Indonesian National Standards Board in1999. Companies which fulfil the criteriaand indicators are awarded ecolabelcertificate SNI 5000.

The working group became anindependent organisation, LembagaEkolabel Indonesia (LEI), which trainedassessors, advised companies about thecertification process and upheld thestandard of certifications. Concerns thatthe LEI standard might be lax comparedwith internationally recognised schemeshave gradually diminished. Only oneconcession - managed by PT Diamond RayaTimber in Riau - had gained a LEI certificateby mid-2000 and then only at the lowest(bronze) level, although this decision itselfhas proved highly controversial.

Indonesian companies were veryslow to accept certification, even thoughIndonesia signed up to the InternationalTimber Trade Organisation's pledge that, by2000, all tropical wood traded should comefrom sustainably managed forests.

For more background seeDTE/Rainforest Foundation Briefing onCertification, June 2001 atwww.gn.apc.org/dte/Ccert.htm. (See alsobox, p.36 for more recent FSC certificationin Indonesia.)

Ministerial Decree 49/1998 was one of thefew signs of a more progressive approachtowards forest management by local peopleduring the Suharto era. It was the directresult of intensive lobbying by one group oftraditional agroforestry farmers - the Krui ofLampung - and their supporters (see p.50).In some ways, they were pushing at an opendoor. Forestry Minister, Djamaluddin, waskeen to reduce conflict over forest resourcesby recognising sustainable community-basednatural resource management systems thatlay within 'state forest' lands. He was alsoprepared to work with NGOs supportingthe local community to reach a compromise.

The Special Purpose decree didnot change the status of the forest - it was

still 'state land' - but it allowed theindigenous community to continue to collectforest resources, including timber, for anindefinite period. This was the first time thatthe government had recognised the value ofand safeguarded a traditional forestmanagement system. In the short periodbefore the Suharto government fell and newforestry legislation was enacted, severalother communities applied for SpecialPurpose status (later called Kawasan untukTujuan Khusus, KuTK), but the supportingregulations were never enacted. Instead,subsequent forestry ministers have promiseda broader policy instrument on adat forestunder the 1999 Forestry Act.

Special Purpose Lands (Kawasan dengan Tujuan Istimewa - KdTI)

84. DTE 1-485. DTE 24:9 and 34:386. DTE 23:687. Schwartz,1999, p25488. DTE 8:12

Detail from Suharto period protest calendar

19


During the Suharto years it was extremelydifficult for ordinary Indonesians to expresstheir opposition. The civil administration wasparalleled by a military command structurewhich permeated every aspect of village life.There was no democracy: the party politicalstructure was tightly controlled by thepresident so that the government party alwayswon elections. Local assemblies (DPRD)existed to rubber stamp decisions made inJakarta. People who tried to stand up for theirrights were accused by the military, police orcivil authorities of belonging to the bannedcommunist party or intimidated in otherways. Violence was used routinely to crushresistance to logging, plantations, mines andother ‘development’ schemes.

Where the government or privatecompanies did decide to use something otherthan the security forces option to addresssocial conflicts, that route was negotiationsabout compensation. This short-term fix didnothing to address the basic grievances andoften merely prolonged the disputes. Legalaction was not an option, since the judiciarywas (and remains) notoriously corrupt.Companies and individuals with links to theruling elite were above the law.

Against these odds, manycommunities did stand up for their rights.They include:

w Bentian Dayak in East Kalimantan havestruggled to prevent their forests andagroforestry gardens being clear-felled and

converted to HTI plantations. Their leaderL.B. Dingit, was awarded the GoldmanEnvironmental Prize in 1997. (DTE 34;5)

w The community group Rimueng LamKaluet threatened to burn all HPHconcessions in South Aceh unless thelicences of timber companies involved inillegal logging were withdrawn. (DTE 40:11)

w Local people's rubber plantations andforest fields were bulldozed in SouthSumatra to make way for the PT TEL paperpulp plant and the plantations which willfeed it. (DTE 44:10)

w Indigenous people's agricultural lands,forests and graveyards have been floodedby the ADB-funded Kambaniru dam in eastSumba, Nusa Tenggara Timur province.(DTE 37:15)

w The Moronene people have been forciblyevicted from their forest lands by themilitary four times in two decades. Theirhomeland has become Rawa AopaWatumohai National Park. (DTE 41:6) The Moi in West Papua protested to thelocal government against the logging oftheir forests by PT Intimpura, a companylinked to the Indonesian military. (DTE16:3)

w Thousands of Ngaju Dayak andtransmigrant families joined forces inprotests that they had been left destitutewith no means of supporting themselvesby the Central Kalimantan swamp forestmega project. (DTE 42:8)

w Villagers of Wahai, North Seram, Maluku

set fire to a shrimp company's property.The company, part of the giant Djajantilogging group, had tricked them out oftheir land and destroyed their sago stands.(DTE 40:15)

w The Samihim Dayaks of South Kalimantansuccessfully sued seven oil palm plantationcompanies belonging to one of Indonesia'sbiggest conglomerates for burning localpeoples' lands during the 1997 forest fires.(DTE 42:12)

Three features are prominent in the majorityof these cases:w lack of control over or access to land and

natural resources;w lack of justice in the distribution and use of

land and resources;w highly centralised decision-making.

Conflicts over forests have risen sharply sincethe change in government in May 1998. Thelegacy of the Suharto regime's drive for'development' is over 20,000 disputesinvolving forests, plantations, protected areasand agricultural land89 (see table below).

The underlying reasons behindthese disputes have not been addressed in thepost-Suharto era and many of these conflictsremain unresolved. As Part II explains infurther detail, recent governments have at laststarted to recognise the problem. However, sofar they have failed so far to take effectiveaction to protect the interests of millions ofIndonesians whose lives depend on theforests.

Conflicts and natural resources 1990-1996

Source Number of cases Type of conflict Parties involvedHPH 8,741 Burning; overlapping permits; Companies; local communities; local/central government

social conflictHTI 5,757 Change of land use status; corruption Companies; local communities; local/central government

of Reforestation Fund; social conflictPerhutani 3,097 Illegal logging; timber raids; reclaiming land; Perhutani, local communities; logging 'mafias'

attacks on forest rangersLand 1,492 Land disputes; misuse of land use permits National Land Agency, local communities; local

government; private companiesNational Park 1,492 Illegal logging; overlapping permits; Local communities; National Park and Nature

agricultural encroachment; timber raids Conservation authoritiesPlantation 405 Raids on plantation crops; seizure of local Private and state companies; local communities

peoples' landEthnic 331 Conflict between different ethnic Various ethnic groups, companies and the

communities; social conflict between governmentindigenous communities and settlers

(Source: LATIN (1999) Reprinted in Ketika Rakyat Mengelola Hutan, KpSHK, 2000, p2)

A legacy of conflict

89. Muhammad et al in LATIN, 2000

20

The Asian economic collapse of 1997precipitated the political events which forcedPresident Suharto's resignation in May 1998.Since then there has been more opportunityfor the voices opposing forest destruction tospeak out and there have been morepossibilities for positive change in policies andpractice. Greater political freedoms havehelped civil society groups strengthen theirdemands, gain greater access to decision-makers in the government and raise politicallysensitive issues in the public arena.

But the economic crisis has alsocreated new imperatives which are driving yetmore forest destruction. Indonesia'screditors, led by the IMF, have set a course foreconomic recovery which requires Indonesiato sell off state assets and generate revenuesby exploiting natural resources. Althoughthese creditors were partly to blame for theeconomic crisis - by pouring investment fundsinto a corrupt and brutal regime - they areunwilling to share the costs. Instead, theburden is being transferred to ordinaryIndonesians and their already depletednatural resources.

This is one of the reasons why,despite all the talk of reform, policiespromoting relentless resource extractionhave continued until today.

The post-Suharto reform processand its impacts on the forests have beenshaped both by the economic crisis itself andthe subsequent interventions of Indonesia'screditors; by the demands of civil society andIndonesia's ambitious and chaotic process ofdecentralisation. Reforms have beenconstrained by the financial priorities of theinternational lending institutions as well as bythe interests of influential members of thepolitical and business elite, and the ever-present military. A break-down in centralisedstate authority, aided by rampant corruptionand almost non-existent law enforcement

has led to a dramatic increase in theuncontrolled exploitation of forests.

The end result in May 2002 is arenewed confrontation between vestedinterests seeking to maximise profits fromthe forests and communities seeking securelivelihoods.

Part II of Forests, People and Rights, starts bydescribing the political and economic contextfor post-Suharto reforms affecting forests andforest peoples. It then outlines some of thekey policy changes under forestry ministersMuslimin Nasution, Nur Mahmudi, MarzukiUsman and Mohammad Prakosa. The maindrivers of and constraints to the reformprocess - the IFIs, the demands of civil society,decentralisation and the vested political,business and military interests are alsodescribed. The section ends with an overviewof the continued pressure on the forests fromindustry overcapacity, illegal logging, oil palmand forest fires.

Part II: Forest reforms in the post-Suharto era

Indonesia currently faces enormouschallenges: an unprecedented economic crisis;building democratic institutions after threedecades of autocratic rule; and implementing afar-reaching decentralisation programme. Atthe same time, the over-exploitation ofIndonesia's forests threatens the livelihoods ofmillions1.

For many years Indonesia had beenwidely praised as an economic miracle and adevelopment success story. Internationalfinancial institutions, multinational companiesand foreign investors had fallen overthemselves to do business in Indonesia,

turning a blind eye to its shocking humanrights and environmental record.

World Bank reports had describedIndonesia in glowing terms as one of thefastest growing economies in the world, with"a strong emphasis on macroeconomicstability and diversification (and)…far reachingreforms in trade, investment, taxation andfinance"2. The economy grew at an averagegrowth rate of 7% per year throughout the1980s and until 1997. Official indicators of theaverage Indonesian's standard of livingimproved substantially. In 1967 Indonesian percapita income was $US50; by 1991, it was

$US610 and the number of people below theofficial poverty line fell from over 70 million toabout 27 million in the same period3. Lifeexpectancy increased from just 46 years in1970 to 63 years by 1995 and infant mortalityhad dropped from 145 to 53 per 1,000 livebirths4.

However, these figures did not tellthe whole story. The statistics compiled by theSuharto regime were self-serving and,particularly on the social front, grosslyinaccurate. The majority of Indonesians werestill very poor and deprived of rights or

The political and economic context"No country in recent history, let alone one the size of Indonesia, has ever

suffered such a dramatic reversal of fortune". (World Bank, 1998)

1. This section is drawn mainly from TAPOLBulletins August 1997 - Feb 2002

2. World Bank, 1993,p13. ibid4. World Bank, 2000, OED, p1

During a politically turbulent time whichhas seen three presidents and four forestryministers, key elements of the forest reformprocess - positive and negative - haveincluded:

w A new Forestry Law (41/1999)w A decision to draft a new National

Forest Planw Attempts to reduce the influence of

timber tycoonsw Debt-restructuring and threat of closure

for indebted logging, plywood and pulpcompanies

w Pressure to reduce overcapacity inwood-processing industries

w Direct involvement of CGI members inforestry policy decisions

w Ministerial commitment on actionagainst illegal logging

w Attempts to clamp down on corruptionw Pressure to open up forest industries to

foreign companiesw Continued expansion in the oil palm and

pulp sectorsw Decentralisation of decision-making in

forests (from 2000)w The issuing of permits for hundreds of

small logging concessionsw Mining suspended in Protection Forests

pending government decisionw Certification and subsequent suspension

of FSC certification of timber fromplantations

w The first FSC certification of timberfrom natural forests

w Ban on further conversion of naturalforests (from 2000)

w Ban on felling of ramin (2000) w Total log export ban (temporary) (2001)w An MPR decree governing laws on

natural resources and land (2001).Indigenous women at KMAN, 1999

21

DOWN TO EARTH Forests, People and Rights Part II, June 2002

security. Widespread corruption throughoutSuharto's administration had created a hiddenprivate and public debt problem,compounded by lack of financial controls.When the financial crisis struck Asia in mid-1997, Indonesia was hardest hit and - unlikeits ASEAN neighbours - has yet to recover.The poor, without land or security, havesuffered most.

Economic meltdown5

While Indonesia experienced its worst everforest fires in 1997/8 (see p.16) the financialcrisis (commonly called krismon in Indonesia)brought severe economic, social and politicalimpacts to the whole country. The Indonesianrupiah lost over half its value against the USdollar between July 1997 and February 1998.The economy contracted by 15% in 1998. Inthe same year, Indonesia's state bankssuffered massive losses of Rp200 trillion(around US$30bn), equivalent to one-fifth ofthe country's GDP. The richest Indonesianssalvaged as much as they could by sendingcapital overseas, but ordinary people losttheir life savings as banks closed and foodprices sky-rocketed. Unemployment figuresrose from 2.5 million in 1997 to 8.7 million inFebruary 19986. The crisis brought a four-foldincrease in poverty, with half the populationnow below the poverty line.

The IMF stepped in with a massivebail-out package of US$43 billion dollars inOctober 1997. Even this failed to stop the rotand a 'rescue package for the rescue' wasagreed in February 1998. Indonesia wasrequired by the IMF to adhere to a tightmonetarist policy, with high interest rates andspending controls. As conditions of the loan,the Jakarta government had to stamp outcorruption, dismantle monopolistic practices,reduce trade and investment restrictions forforeign investors and privatise statecompanies. The structural adjustmentprogramme and its conditionalities also hadimportant effects on natural resource use(see p23).

These measures suited theinterests of international capital, but made theburden for ordinary Indonesians moresevere, as fuel and food subsidies werewithdrawn and public spending on health andeducation was sacrificed to make debtrepayments. As the economic crisis deepenedand the social impacts worsened, governmentcritics began to see the IMF as part of theproblem, not the solution for economicrecovery.

Pressure for reformThe economic crisis fuelled politicalpressures mounting against the ageingdictator. The reform movement - oppositionparliamentarians, students, activists andacademics - was fast gathering momentum,demanding an end to KKN - corruption,

collusion and nepotism - and calling for‘reformasi total’ in Indonesia. As studentprotesters filled the streets of Jakarta andother cities, public outrage grew at themilitary's brutal response. Food riots andviolence, often directed at Chineseshopkeepers, became a daily occurrence incities and even small towns

The farce of the March 1998elections was the final straw. Suharto, as theonly candidate, was reinstalled for a fifthpresidential term. His cabinet was packedwith loyal supporters, including his friend andbusiness advisor, the forest tycoon ‘Bob’Hasan as Trade and Industry Minister and hiseldest daughter 'Tutut' as Social AffairsMinister. The pressure on Suharto mountedfrom within Indonesia and from abroad ascreditor nations finally lost faith. On May 21st,1998 Suharto was finally forced to resign thepresidency. He handed over to his vice-president and erstwhile protégé, B.J. Habibie.Like most members of Suharto’s last cabinet,Forestry Minister Sumahadi only held his postfor two months.

Interim rule A tidal wave of political euphoria and muchtalk of reforms followed. Habibie promiseddemocratic elections, relaxed censorship,lifted some of the restrictions on the politicalopposition and released some politicalprisoners of the Suharto regime. Once theelections were announced, new politicalparties sprang up like mushrooms after rain.

As the press become more open,revelations of human rights violations by theArmed Forces, including the kidnapping ofactivists, the shooting of student protestorsand massacres in West Papua, East Timor andAceh, greatly increased public resentment ofthe military's role in Indonesian politics.Ordinary Indonesians, whose demands forjustice had been silenced for so long, started

to voice their grievances and call theiroppressors to account. The cry went up forSuharto, his family and cronies to be put ontrial for robbing the Indonesian people. Theydemanded that the army get out of politics.NGOs started using the new politicalopenness to organise meetings, press publiclyfor reform and draw up their own agendasfor the future.

However, the transfer of powerfrom Suharto to his deputy, Habibie, marked anew phase of the power struggle rather thanits end. The Indonesian Armed Forces, one ofthe main supporters of the New Orderregime, was now on the defensive but itspowers were not significantly curbed.Although Suharto had stepped down andsome of his supporters in the governmentwere replaced, much of his regime remainedintact.

In the months following Suharto'sresignation, the reform movement lost someof its momentum and the disparate nature ofthe political opposition became apparent.Three decades of oppression had leftIndonesia ill-prepared for change. There wasno coherent opposition but an ad hoc allianceof groups of activists, students, tradesunionists, NGOs and workers which hadgradually coalesced around the banned PRDparty, Megawati's branch of the IndonesianDemocratic Party (PDI-P) and Islamicmovements. The reform movement waspredominantly an urban and middle classmovement and the agenda for reformreflected this. No attention was paid to theinterests and needs of peasant farmers andpeoples of the ‘outer islands’. Indigenousforest peoples were ignored.

Indonesia & democracy7

Indonesia's first democratic elections in 44years took place in June 1999, one year afterthe resignation of Suharto. AbdurrahmanWahid (known popularly as Gus Dur) andMegawati Sukarnoputri (daughter ofIndonesia's first president) were appointed aspresident and vice-president. Indonesia hadchanged: East Timor had voted againstintegration with Indonesia and was under UNadministration in preparation forindependence; the police force had beenseparated from the Indonesian armed forces;new regional autonomy laws had been passedby parliament (see page 30); the media werefreed from censorship; labour unions hadbeen liberalised.

However, for all Habibie's promisesof reform, there had been no radicaleconomic or political change. Revelations

5. Sunderlin, 1998, Dow Jones 6/Jul/996. TAPOL Bulletin, April 1998, No. 146 p117. This section is draws on Tapol Bulletins and

Aspinall E, in Inside Indonesia Oct-Dec 2001,pp23, ‘Mother of the Nation’

22


about the corruption which pervaded theSuharto family's US$15 billion businessempire shook investor confidence and theIndonesian economy remained in a parlousstate. New laws on the criminal code andstates of emergency restricted human rightsand democracy instead of promoting them.The World Bank-funded social safety netprogramme, intended to alleviate the worsteffects of the economic crisis on the poor,proved to be ineffective and riddled withcorruption. Demands for self-determinationin West Papua and justice in Aceh had beenignored. Moreover, the values of the powerfulJavanese elite and the business communityremained unchallenged throughout thetransitional regime and remained at the heartof the new government.

As the former leader of Indonesia'slargest Islamic group and a prominentopposition figure, Gus Dur was known for hisdeep commitment to democracy and apluralist civil society. So hopes were high thathis government would implement a genuineprogramme of reform. Instead, Wahid'spresidency brought reformasi to an end.During the Suharto and Habibie regimes, theopposition movement had an obvious enemy.Now the political map had become far morecomplex. Wahid only became president dueto a compromise between military leaders, acoalition of Islamic parties and various NewOrder figures. Megawati's PDI-P party hadwon most votes, whereas Wahid's PKB partywas one of several minority groups.Throughout his period of office, Wahid waspreoccupied by a difficult balancing act toappease the political interests of rival factions.The continuing economic problemsconcealed the developing constitutional crisis.

The initial signs were promising.Wahid appointed some prominent reformersto his cabinet and took steps to reduce thepolitical power of the military. ProminentNGO figures were invited to advise hisministers. Political exiles were allowed toreturn to Indonesia and the president gavepublic support to dialogue over demands forself-determination in Aceh and West Papua.However, Wahid's many overseas trips toimprove international relations and mobilisemore financial support for the country'sbeleaguered economy left him vulnerable. Themilitary and the old regime's Golkar partyregrouped and formed alliances with otherpolitical parties and business figures.

These forces gradually ralliedagainst Wahid, undermining reforms inparliament and Indonesia's supreme legislativeassembly, the MPR. Wahid became embroiledin two highly public corruption cases whichbecame the excuse for his opponents toinstigate impeachment proceedings againsthim. In April 2000 and then again inDecember that year, the IMF furthercontributed to his difficulties by withholding aUS$400 million tranche of its US$5 billion

loan programme on the grounds of failure toimplement economic reform. Without IMFsupport, it became impossible for Indonesiato reschedule billions of dollars of debt toforeign creditors.

Long before the end of his 21month rule, most reformists had becomedisillusioned as Wahid behaved like any otherpolitician desperate to maintain power. Hereshuffled the cabinet several times in a vainattempt to bolster his political position aswell as threatening to dissolve parliament andvilifying the press. As Wahid's influenceweakened, the military gained ground and thepresident was cornered into orderingintensified military operations in Aceh.Indonesia seemed on the brink of anarchy asWahid's supporters from his East Javahomeland threatened to invade Jakarta.Wahid was finally ousted on July 24th 2001,when a Special Session of the MPR revokedhis mandate as president, installing his deputy,Megawati as the fifth president of theRepublic of Indonesia.

Megawati’s position

"The fear is after two years of messy, oftenvolatile political transition, the pendulum hasswung back in favour of conservative forces andthat Megawati is beholden to them".

(Far Eastern Economic Review, 2/Aug/01)

The failure of Wahid to bring greaterdemocracy and reform to Indonesia is notsurprising. Many other countries whichendured long, authoritarian regimes haveundergone protracted periods of politicalinstability. In Indonesia, the situation is madeworse by the nation's grave economicproblems and a world teetering on the edgeof recession. Indonesia's total foreign debt,including the public and private sectors, isestimated at over US$140 billion - an amountcomparable with the country's annual GDP8.

The omens are that Megawati willnot be any more successful. She came topower with the backing of the military andher multi-millionaire husband's business andpolitical connections are suspect. Her recordas vice-president was unimpressive: sheremained silent on all important issues andcompletely failed to fulfil her remit to resolvethe political conflict in the Moluccas and WestPapua and the ethnic conflict in CentralKalimantan.

Megawati is determined to uphold'the unity' of Indonesia which means littlehope for independence movements in WestPapua and Aceh. She is also committed torevising the regional autonomy laws whichshe regards as handing over too much controlto local governments.

There were fears that Megawati'sclose relationship with the military wouldbring a return to authoritarian rule and theyhave been proven right in West Papua and

Aceh where there has been an escalation inmilitary violence. There have been signs ofprogress at central government level - a newdecree was passed in November 2001, whichbrings Indonesia’s agrarian and naturalresources together under one piece oflegislation for the first time - but civil societygroups are increasingly looking to the regionsas the window of opportunity for change.

In contrast, Megawati'sappointment was hailed by world leaders andthe IMF as heralding a return to stability. Her'honeymoon period' as president saw a newagreement with the IMF and a deal with theUS president for more loans and support forthe military.

The early enthusiasm was cut shortby the events of September 11th and the US-led ‘war on terrorism’ that resulted. For atime, Megawati’s presidency looked doomedas she wavered between support for theUSA’s war in Afghanistan and appeasing anti-US feeling at home. The economic downturnfollowing September 11th did not helpIndonesia’s troubles.

But Megawati did survive into 2002and her close alliance with the military hasbeen consolidated during recent months. Herfailure to respond to demands for anindependent enquiry into the assassination ofPapuan independence leader Theys Eluay, andthe creation of a new military command inAceh are evidence of this.

Megawati and the forestsMegawati made few public statements aboutforests in her first six months of office.Opening the Third National ForestryCongress in October 2001, she blamed forestdestruction on mismanagement, corruptionand the lack of proper planning. This hadresulted in the loss of state revenues and lossof livelihoods for a great number of people,she said. In December, she announced a newdirection on sustainable logging certificationfor logging companies (see also p.36). InJanuary this year the president toldenvironmentalists she was angry about forestdestruction, the lack of progress withreforestation and corruption in theReforestation Fund. It remains to be seenwhat she will do about this.

Megawati has not, however, paidspecific attention to the fate of forest peoplesor their maltreatment under governmentpolicy over the past decades. Some see signsof hope: she is believed to back her ForestryMinister, Muhammad Prakosa, in his attemptsto do something about illegal logging. But hermilitary backers may apply pressure if thisget-tough policy bites too deeply into theirfinancial interests.

8. Jakarta Post 16/Aug/01

23

“...rather than protecting the forests with whatmay seem to be conservation-enlightenedrequirements by the IMF, the overall effect of IMFintervention perpetuates conditions responsiblefor rapid deforestation.” (H. Mainhardt, 2001)

Since Indonesia's economic crisis,international financial institutions (IFIs) haveenjoyed hugely increased leverage overgovernment decision-making and have playeda fundamental role in forcing the pace anddirection of reforms affecting forests andforest peoples. Led by the InternationalMonetary Fund and the World Bank, thesecreditors are using their position to try toforce Indonesia to make economic reforms tosuit the global free-market economy, whilstensuring that debt repayments continue. Theyrefuse to admit their share of responsibilityfor Indonesia's huge debt burden, inheritedfrom the Suharto era, when a largeproportion of this was embezzled. Some 30%of World Bank loans, amounting to $30bn,were corrupted9.

At the same time, the World Bankin particular has been forced to pay attentionto the concerns of civil society groups bothinside Indonesia and abroad, who are callingfor an end to debt-dependency, greateraccountability among lenders to corruptregimes and an end to loans and loanconditions which have negative impacts onforests and communities. As a result, the loanconditions imposed on Indonesia by the IMF,World Bank and other lenders havecontained mixed messages. They call forincreased forest protection whilst at thesame time introducing measures whichencourage further destruction.

The LoI conditionsThe first major set of reforms affectingforests were contained in the IMF's October1997 and January 1998 Letters of Intent (LoI)with the Indonesian Government - thedocuments which spelled out the loanconditions Indonesia had to agree to securea $11bn loan as part of a US$43bn bail-outpackage (see box, next page for details of thisand subsequent LoIs). The contradictionswere apparent from this first of seventeenLoIs signed over the next four years.Although improvements in governance andtransparency (for example calls for reform ofconcession regulations, introduction ofperformance bonds and for the dismantling ofcartels) could clearly benefit both forests andgovernment revenues, other objectives suchas reducing export taxes on timber were justas likely to offset those gains. A requirementfor forest land conversion targets to bereduced to 'environmentally sustainablelevels' was inconsistent with the removal ofrestrictions on the export of palm oil and on

foreign investment in the sector - a movethat was likely to accelerate the rate of forestconversion to plantations.

The measures did nothing toaddress the underlying structural causes ofdeforestation and degradation. Indigenouspeoples and other forest communities wouldcontinue to be marginalised as their rights tocontrol forest lands and resources wereignored.

Ironically, while the LoIs called forgreater transparency and consultation withcivil society, the process of drafting theagreements themselves was anything buttransparent. The contents of the LoIs still arenot made available for public scrutiny beforesigning. There is no participation by thosemost affected.

Some of the contradictions in theforest conditionalities may be due to the waythe IMF called in the Bank at a very late stageto approve the initial deal. Bank forestryexperts in Washington called in Indonesiaspecialists and worked overnight to draft theconditions. There are also importantdifferences between the approaches of thetwo organisations. The IMF has no permanentoffice in Jakarta and no understanding offorestry, other than as a sector for generatingrevenues. On the other hand, the Bank hasconsiderable Indonesian experience - withtransmigration and plantations for example -for which it had been severely criticised.

World Bank loans

“The aim of the program stated in the Bank’sForestry Policy (1991) to reduce the rate ofdeforestation and meet the needs of the forestryindustry - have not been fulfilled.”

WALHI, 2000

The World Bank had tried, in 1993, to make a$120 million loan conditional on forestryreform, but this failed because it threatenedbusiness interests close to Suharto. It firstinitiated a forestry programme in 1989 (withthe FAO). A second project was designed toprovide policy advice, but this was terminatedin 199510. From then on, there was indirectinvolvement in forestry through such projectsas the controversial Land AdministrationProject (LAP) (1995 to present) - see DTESpecial Report on Transmigration, 2001. TheBank’s own review team concluded that theWorld Bank forestry policies and practiceshad been a miserable failure11.

Following the economic crash, theWorld Bank refined and included the IMF’sloan conditions in two structural adjustmentloans - PRSL I (April 1998) and PRSL II (May1999). Wider stakeholder consultation tookplace and a paper prepared for theconsultation aimed to respond to social

concerns by explicitly calling for community-based conservation and concessionmanagement. The PRSL II was accompaniedby a specification that draft forest legislationneeded to accommodate "rights andresponsibilities for adat [customary] areaswhich include forest areas" and required a"community forest participation regulation".The Bank also called for greater transparency(making new maps of forest areas publiclyavailable) and a "multi-stakeholderconsultative process" during the drafting oflegislation and regulations.

The Bank went ahead with PRSL IIdespite the lack of progress on conditions seton the first loan. It ignored warnings aboutthe Forestry Department’s lack ofcommitment to genuine consultation indrafting the new Forest Law passed in 1999(see p.27).

Moreover, the same fundamentalflaws remained at the heart of the package.Inconsistent requirements (such as thoserelating to land conversion and oil palm) werecoupled with problems of feasibility andeffectiveness (could the objectives stipulatedactually be achieved?). Above all they focusedon the conventional wisdom of the WorldBank - that of improving efficiency within theexisting forest management paradigm.

Initially the Habibie governmentcommitted itself to greater environmentaland social objectives promising to replaceexport taxes with resource royalties andstating that Bob Hasan’s plywood cartel hadbeen dismantled. It also agreed to a June 1998deadline for changing regulations on theaward of logging concessions to be followedby a sweeping reform programme forconcession management by year end,including "provisions to encourageparticipation by local communities andprotection of forest dwellers".

In some areas, reforms wereminimal - for example, just 15% of forestconcessions known to have been allocatedillegally were revoked and despite increases instumpage fees, rent capture declined becausepayment in rupiah was allowed at favourableexchange rates. The lack of progress led theWorld Bank to suspend the disbursement ofmonies in late 1998. It was clear that thereforms were fundamentally flawed with thegovernment apparently seeking to complywith the letter rather than the spirit of thereform packages sought by the IFIs.

Reform without changeAt first NGOs were keen to useopportunities for consultation opened up bythe new political climate and by theconditions on stakeholder involvement inpolicy-making required by the World Bank.But disillusionment soon set in when the

DOWN TO EARTH Forests People and Rights Part II, June 2002

The increased role of the IFIs

9. Jakarta Post 28/Dec/0110. Seymour, 2000, p.8611. Gautam et al, 2000

24


government failed to act on input fromNGOs during a series of consultations on thenew forest law.

These and other policy reformnegotiations were a very new way ofproceeding for the Forestry Department andcivil society for which both parties were illprepared. The large number and frequency ofmeetings to discuss forestry policy reformput a great strain on the finances andpersonnel of NGOs in particular. After thefailure to secure positive change through theForestry Act consultations, NGOs were

largely left out of the drafting of the NationalForestry Plan which has dragged on until now.

Since then, NGOs have becomemore skilled in making use of opportunities toengage with donors and use them as leversfor change. They have pushed for changes inforestry policy through the CGI-initiatedInter-Departmental Committee on Forests(see box on CGI p.28 ) and through big,donor-sponsored meetings such as the 2001‘FLEG’ meeting on illegal logging (see p.38).But they have also continued to pressIndonesia’s creditors and the IFIs to take

responsibility for failures. They have stagedanti-debt demonstrations against the CGI,slammed the World Bank’s record on forestryand used the media to get their messageacross.

Impacts of the economiccrisis on forest peoplesWhile there have been several studies of theimpact of the economic crisis on health,nutrition and education, very little attentionhas been paid to the effects on theenvironment and forest communities. Anyanalysis is complicated by the 'triplewhammy': the interaction between thepolitical and economic crises plus the forestfires and drought of 1997/8. The effects varywidely between different parts of the countryand different social groups. For example,people who owned their own land andproduced export crops like coffee, pepperand palm oil generally benefited at theexpense of the landless and workers onnucleus-estate schemes.

One of the first studies, on theeffects of the economic crisis on farmers'livelihoods and forest use, was by theinternational forestry research institution,CIFOR12. Preliminary results from fieldworkin Riau, West and East Kalimantan and CentralSulawesi showed that the situation was highlyvariable both geographically and with time.The report concluded that the crisis had alarger negative impact on farmers thanoriginally expected. Unsurprisingly, poorfarmers were hardest hit, but the short termimpact on forests was possibly less than somefeared. The main threat to the forests wasfrom better-off farmers, immigrants and urbanentrepreneurs who are more likely toconvert forests to grow the most profitablecash crops. The researchers also pointed outthat observers may be underestimating theimpacts of the political vacuum on forestssince the lack of law enforcement was makingillegal logging and encroachment onprotected areas more likely.

This prediction was to prove all tooaccurate as the negative impacts of regionalautonomy combined with the emergence of anew level of forest entrepreneur acting incollusion with officials in local governmentsand the security forces to speed up the ratesof destruction.

IMF Letters of Intent - conditions on forestry since 1997Altogether there have been 17 agreements contained in Letters of Intent or similarMemoranda between the IMF and the Indonesian government between October 1997 andJanuary 2002.

Date Conditions Oct 1997 Review the administration and allocation of forestry concessions, with a view

to significantly raising stumpage fees in 1998/99, and use the proceeds of theReforestation Fund solely for sustainable management of forestry resources.

Jan 1998 Lift restrictions on foreign investment in oil palm plantations (implementedearly 1998) lift export ban on oil palm products (done); reduce forestconversion targets to sustainable levels (later replaced with conversionmoratorium), implement performance bonds for forest concessions (notyet), reduce export taxes on logs and rattan to 10% by end of December2000 (was eventually implemented but the log export ban of Oct 2001 actedagainst this); introduce measures to reform the logging industry including:phase in new resource rent taxes on timber resources (done) increasestumpage fees, implement auctions for new concessions and lengthenconcession periods; allow concession transferability and de-link concessionownership from processing for new concessions. (All eventually implemented- but no auctions have taken place); eliminate APKINDO’s monopoly overplywood exports (implemented March 98) Incorporate Reforestation Fundinto national budget (implemented early 1998)

Jul 1998 Complete audit of Reforestation Fund by end December 1998. (Thedeadline was extended many times and the audit was not finally completeduntil the end of 1999.)

Mar 1999 This LoI noted that the moratorium on the award of new permits for forestland conversions was being observed “while new land allocation proceduresand conversion targets are being developed”. (In fact, the forest conversionmoratorium, on applications for permits submitted after May 2000, was notannounced until August 2000 and had many loopholes.)

Jul 1999 (Note: from here on the objectives generally become more vague.)Implement “broad-based consultation process, seeking assistance from theWorld Bank, the ADB, and other stakeholders prior to implementing majorforest policy reform”.

May 2000 Starting June 2000, publication of quarterly reports on the implementation ofcorrective actions following Reforestation Fund audit is required.

Jan 2000 Greater stakeholder consultation and participation in decisions affectingnatural resources; expand and improve environmental monitoring; movetowards price structuring of natural resources that reflects true value;special attention to forest management to ensure sustainable production ofgoods and services; review of forestry sector taxation in Jan 2000; continuemoratorium on new forest conversion licences until “transparent, rules-based procedures are developed to minimize further conversion of theremaining natural forest”; transparent criteria and budgeting procedures toupgrade Reforestation Fund to be developed in consultation with the WorldBank, to be implemented beginning April 1, 2000.

Aug 2001 BPKP (Development Finance Comptroller) audit of Reforestation Fund to becompleted by end of 2001.

All LoIs are listed on the IMF website at: www.imf.org/external/country/idn/index.htm

12. Sunderlin et al, 2000

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Muslimin Nasution(May 1998 - October 1999)

As the first forestry minister of the post-Suharto period, Muslimin made a stream ofannouncements - some contradictory - aboutforestry reform. The new minister was caughtbetween the demands of reformers, theconditionalities of international financialinstitutions and the still-powerful forestrylobby.

In 1998 Muslimin established aReform Committee which was charged withconstructing a new framework of forestmanagement; restructuring the Departmentof Forestry and Estate Crops; and drawing upa new forestry law to replace the 1967 BasicForestry Act.

Forestry reforms were verynecessary. The Indonesian forestry industryhad to be more economically efficient andmore environmentally responsible. Largecompanies which managed vast concessionareas were seen as corrupt, financiallyinefficient and responsible for bad forest

management practices. They were nowblamed as the main cause of forestdegradation, soil erosion and forest fires.

Progress was slow due partly to thefundamental difference in attitudes toforestry reforms between the internationalfinance institutions and Jakarta-basedpoliticians. In the IMF's eyes, the right toexploit natural resources should be allocatedpurely on economic grounds. In Indonesia,the allocation of forest concessions hasalways been a highly political issue (see p.8).The Habibie government was still reluctant tobreak the link between political andeconomic interests. In the 'reform era', theallocation of logging rights was to fulfil adifferent political agenda: promoting the idealof co-operatives and the business interests ofthe middle classes.

Cutting the concessionairesdown to sizeMuslimin issued new rules for loggingconcessionaires. Logging licences due toexpire in 1999/2000, he announced, would

not be renewed or extended. All new loggingconcessions must be linked with co-operatives (see box). Logging companieswould have to give 20% of their shares tolocal co-operatives; 10% to state-timbercompanies and 10% to companies owned bythe provincial administration in order to getan extension of their concession licences.13

The size of concessions would belimited to 100,000ha with a maximum total of400,000ha anywhere in Indonesia for eachconcessionaire - be it company, co-operativeor individual (Decree 6/1999). Companieswhich exceeded the concession limits wouldhave to pay a higher rate of taxes. All timberlogged would also be subject to a new socialtax to be returned to the local community14.

Some of the ‘excess’ land fromcompanies with greater concession areasthan allowed would be handed over to smallcompanies or co-operatives, higher educationinstitutions and Muslim schools to manage as‘’Land Grant Colleges’ - an initiative thatcontinued to violate adat rights15.

Many of these measures had moreto do with political expediency and populistdemands than sustainable forestry. In the'reform era' it was vital that policies wereseen as reining in the big businessconglomerates, particularly those run byethnic Chinese, and appeal to 'ordinaryIndonesians'.

The humiliation of Bob Hasan, the

Co-operativesUnder Muslimin Nasution, there was astrong push to open forest exploitation toco-operatives. All logging companies wereto give 20% of their shares to co-operatives. Every year the company mustincrease the co-operative's stake by 1%. Soif the concession lasted for 35 years, the co-operative would eventually end up with55% of the companyi.

However, co-operatives inIndonesia are not always the independententities usually understood by the term.Since Independence, co-operatives havebeen a political tool to appease nationalistand populist demands in Indonesia. Inpractice they have become an extension ofa vast, corrupt government bureaucracywhich permeates every village.

The co-operative logging schemewas in any case manipulated by commercialentrepreneurs to gain access to newunlogged areas. Among the areas to see anupsurge in logging was Siberut in theMentawai Islands, where local people wereused to front commercial operations run byoutsiders. (see DTE 44:6 for more on thiscase)i. Jakarta Post 15/7/99

Reforms in the Habibie period

KUDETA’s demands

One of the first civil society organisations to set out its ideas was the student/academic andNGO alliance, provocatively named KUDETA, (The Coalition for the Democratisation ofNatural Resources). This was their ‘manifesto’ for reform issued within a month of Suharto'sresignation:

Return natural resources to the people!The Coalition for the Democratisation of Natural Resources demands that the transitionalgovernment of Indonesia immediately carries out the following steps:w Immediately revoke the status of state forests by redefining the boundaries between state forests

and forests that have been owned and controlled by traditional and social communities;w Restructure state institutions responsible for the management of natural resources and the

environment; and w Redirect the development and utilisation of natural resources by making traditional and local

communities the main actors of natural resource management as producers of both timber andnon-timber products, to fulfil subsistence, domestic and export needs.

Furthermore KUDETA strongly urges Muslimin Nasution, Minister of Forestry and EstateCrops, to carry out the following reforms:wCease all Forest Concessions (HPH), Timber Estates (HTI), large Private Plantations and Timber Use

Permits (IPK).wCancel forest conversion for large plantations, transmigration and mining activities.w Revoke all regulations and policies regarding the exploitation and the violation of community rights

to manage natural resources.wRevoke all regulations and policies that restrict the trade of forest and plantation commodities

produced by traditional and local communities.w Recognise access and control by local communities to manage state-claimed forests.wReallocate natural and forest resources to be directly controlled and managed by local and/or

traditional communities.w Provide complete open access to information regarding the utilisation and protection of natural

resources to the general public.w Purge the Department of Forestry and Estate Crops of collusion, corruption and nepotism.w Bring to trial forest and plantation companies proven to have burned forest resources.wConduct open consultation and dialogue with different groups, especially traditional and local

communities to define the substance of and steps for total reform in natural resource management.wReject governmental forestry reform that does not have a transparent process and does not address

fundamental issues in forestry and the management of natural resources.

Jakarta, 11th June 1998 Signed by 66 Indonesian forest, environment, development and human rights NGOs.

13. Jakarta Post 18/Jul/9914. Straits Times 8/May/9915. Bisnis Indonesia 8/Apr/99 cited in BI 28/Apr/99.

See DTE 44:7 for example of LGC on Siberut).

most influential timber tycoon of the Suhartoera who had been the government’s trade andindustry minister just months before, suitedthe public mood. Hasan was expelled fromthe country’s highest legislative body, theMPR, by Habibie in June 1998. The followingmonth he was questioned for three hours bythe Attorney General over the handling ofAPKINDO funds16. This was the start of alengthy process which eventually saw himjailed for corruption in one of Indonesia’smost notorious prisons, Nusakambang.

IMF pressure: auctions andperformance bondsThe forestry minister was forced tointroduce new measures to satisfy the IMFand World Bank, including auctioning loggingconcessions; performance bonds; allowing thesale of concessions and relinquishing controlof the Reforestation Fund to the Treasury.(See also LoI box page p.24).

Many indigenous communities hadhoped that, when the 20-year timberconcessions granted in the 1970s and 80s ranout, the forests would revert to them. But thiswas not to be. As part of the IMF’s 1997economic 'rescue package', concession rightswere to be auctioned instead. Most of thelogging rights on offer were for concessionswhich had expired or had their licenseswithdrawn due to gross mismanagement.Many were owned by timber tycoons close toSuharto and his children, including PrayogoPangestu's Barito Pacific Group and BobHasan's Kalimanis Group.

The wilder dreams of someinternational conservation NGOs or foreigntimber companies that they might - for quitedifferent purposes - be able to get their handson Indonesian logging concessions weredashed in the announcement of the

conditions for the first auctions. OnlyIndonesian state-owned companies, privatecompanies with local offices and co-operatives would be allowed to take part17.

The new system was open tocorruption since parties eligible to take partin the auction would be pre-selected. The newregulations were also unclear about themethods of valuing concessions and how theyshould be managed, although ForestryDepartment officials said they would usefinancial, social and ecological criteria. Newconcession holders would be required to paya Performance Bond - refundable only if theystuck to forestry regulations18.

While this may look like a goodidea, the insistence on performance bondspresented problems. Firstly, performancebonds would require a major change inculture. Indonesian timber companies havebeen 'mining' the forests for years, with littleor no control from the Forestry Departmentover what they did on their concessions.Secondly, performance bonds would notensure that timber companies did notcontinue to over-exploit the forests.Indonesia's notoriously weak bankruptcy lawsand regulations on capital repatriation make itall too possible for companies and theirprofits to 'disappear' leaving behinddevastated tracts of forest. Thirdly,performance bonds favoured large timbercompanies rather than the co-operatives andsmall businesses which the Indonesiangovernment wanted to promote, since onlythey had the funds to guarantee the bonds.

While the IMF and World Bankwere keen to press forward with the auctionof all forest concessions, the Indonesiangovernment dragged its feet. Plans for

auctions were first announced in September1998 but, month after month, the date waspushed forward and the auctions never tookplace.

Local communitiesAlongside an attack on the timber barons,there were promises of improvements forforest-dependent communities in theimmediate post-Suharto period. These cameas a result of demands from NGOs,indigenous groups and academics as well asreform-minded officials within the ForestryDepartment. There was also pressure fromIndonesia’s creditors for consultations withstakeholders including forest peoples.

New regulations about 'communityforests' would ostensibly allow local peopleto use the forests where they live intraditional ways (SK677/1998). The catch wasthat - in practice - communities had first toform a co-operative then, with arecommendation from the local authorities,get the approval of the Minister for Forestryand Plantations. If their application wassuccessful, the co-operative would be granteda 30-year concession to manage their ownforest in accordance with a community forestmanagement plan drawn up with guidancefrom forestry staff aided by NGOs oruniversity experts. They would be responsiblefor the demarcation of the area; itsrehabilitation; its conservation; and forestrylevies19. In addition, the government hoped toestablish 'mini industrial forests' of 5-10hathrough the participation of communitiesliving near forests20.

This community forestry initiativehas been a topic of hot debate within andbetween government, academic and NGOcircles. At best, it offered some forestcommunities a legal option to use theirresources. At worst, it has become yetanother local government tool to exercisepatronage, generate revenues and achievereforestation of damaged forests on thecheap (see also p.44).


26

Concessions cutMany logging concessions which had been issued in the 1970s have expired in the last fewyears. Although some of these were renewed, many were not, and the total number wasdrastically reduced.

By mid 1998, 652i concessions had been issued covering 69.5 million ha of forests.Of these, 395 licences (35.5 million ha) had come to the end of their 20-year period.Another 32 (2.9 million ha) were due to expire that year. 293 concessions (34 million ha)were still operatingii. By mid 1999 the number had been reduced to 146iii.

i. Other sources say 580 concessions (see p. 9) - the higher figure may be cumulative.ii. WALHI 2/Nov/98 - citing Ministry of Forestry and Plantations figuresiii Jakarta Post 15/Jul/99

16. DTE 38:417. Kompas 21/May/9918. Jakarta Post 15/Sep/98; Bisnis Indonesia 16/Jan/9919. Suara Pembaruan 14/Nov/9820. Suara Pembaruan 14/Nov/98

Land reclaimingImmediately after the fall of Suharto therewas a wave of actions to reclaim land lostto ‘development projects’ by the originalowners. This has become a more coherentmovement over the past four years,throughout Indonesia. Examples of thisinclude the reclaiming of land fromPerhutani in West Java and Banten.

Many of these actions have beenco-ordinated by the peasants movement,with legal support from the legal aidfoundation, YLBHI. In many cases theseactions have still been met with violentreaction from the police,

Such reclaiming actions are apotential source of conflict betweendispossessed peasant farmers andindigenous forest peoples.

See DTE 52:2 for Banten case and DTE 48:9for Sukabumi, W. Java case.

Clearing forest in MHP concession, S. Sumatra DTE

27


The 1999 Forestry LawOnce Habibie's interim government tookover, the race was on to get new forestrylegislation in place. This was only partly tosatisfy the community groups, NGOs andacademics who had been lobbying for change;forestry policy reform was included in theconditionalities of the IMF and World Bankloans.

The opportunity presented adilemma for reformists in the government.The 1967 Basic Forestry Act had been thesource of conflict between the governmentand forest communities for over threedecades. It had been identified as one of theunderlying causes of deforestation inIndonesia at meetings of the CSD'sInternational Panel on Forestry21. Allsubsequent forestry legal instrumentsdepended on it. Fundamental change couldonly come through a new Forestry Act.

On the other hand, a new ForestryAct would be politically contentious. Therewere many different vested interests at stakeand the process of negotiation was timeconsuming. The window of opportunity forpolicy reform might be very limited and anew Forestry Act had already been severalyears in the making by the time Suhartostepped down.

The solution was to 'put the cartbefore the horse'. Instead of following theusual legal process of laying down the mainlaw first then introducing supplementarylegislation, the new government continued toreform the subsidiary legislation aroundwhich a new Forestry Act could beconstructed. This had the advantage of theappearance of reform without tackling thefundamental issue of land rights. A sense offoreboding grew amongst forest campaignersthat, for all the talk of reform, the newForestry Act would be shaped around theseconservative regulations instead of providinga framework for fundamental change. And soit transpired.

It gradually became evident that theinterim government and civil society groupshad very different views of forestmanagement. Government officials apparentlywelcomed proposals from NGOs andcommunity forestry experts, but had nointention of radically changing the frameworkof Indonesia's forestry system. Basicprinciples agreed at one meeting wouldundergo fundamental changes or disappearwhen the next policy draft prepared byForestry Department staff appeared. Reviseddrafts for the Forestry Act were producedwith such rapidity that the versionspresented to outside experts for discussionand modification had already beensuperseded by more recent ones agreedwithin the Department.

Habibie did not succeed in rushingthe new Forestry Act through parliament

before the June 1999 elections. Ironically,given the World Bank's avowed commitmentto supporting democracy and civil society, itwas the Bank's conditionalities whichindirectly forced the Act to be passed twomonths later - before the new president andhis democratically elected government werein place and in the face of fierce oppositionfrom forest reformers. The Bank had withhelddisbursement of a US$400 million tranche offunding in late 1998 and the government wasdesperate to secure new IMF loans as theeconomic crisis deepened.

Adat rights deniedThe new Forestry Act only recognises twocategories of forest tenure: state forest andprivate property. Adat forest is specificallydefined as "state forest where communitieswith customary laws are" (41/1999 Clause 1,sub-clause 6). This classification continues todeprive forest peoples of their rights andtheir livelihoods. (For more informationabout the Forestry Act see DTE 43:2-4.)

At the time of writing, many of theall-important operating regulations whichspell out how the principles of the 1999Forestry Act will be applied in practice haveyet to be finalised. These include regulationson customary forests (hutan adat). Progresshas been slow because NGO, forestryacademics and donor agencies are using thisopportunity to press for greater recognitionof indigenous rights, while the ForestryDepartment has been doing its utmost tomaintain the status quo.

Impact on miningThe 1999 Forestry Law prohibits open-pitmining in Protection Forests. This had a majorimpact on the mining industry, since manyexploration concessions handed out byJakarta prior to 1999 included this categoryof forest. The new measure put around 150mining projects covering 11.4 million ha offorest on the wrong side of the law. Eversince, mining companies and localgovernments seeking to raise income fromthe mining projects have lobbied to changethe law to enable them to operate in theforests. NGOs, led by the mining advocacynetwork, JATAM, have mounted a campaignto prevent them22.

One of the suspended projects is ajoint venture between Australia’s BHP-Billiton(75% share) and state-owned miningcompany, PT Aneka Tambang (25%) todevelop a nickel mine on Gag Island, off WestPapua. PT Gag Nikel’s contract of work wassigned with the Indonesian government inFebruary 1998. The company was forced tosuspend activities on the island when theForestry Law was passed, following anannouncement by the Forestry Departmentthat the contract area was protected.

Prior to suspending the project,

Gag Nikel had spent US$50 million onexploration activities and had found 240million tonnes of high-grade nickel and cobaltresources.

Early this year, after Canada’sFalconbridge pulled out a partnership agreedin 2000, BHP hinted it might pull out if theforest status question could not be clearedup. West Papua’s governor J. Solossa ispressing central government to allow themining to proceed and says the classificationof forest on the island as protected is amistake. He has the Mines and EnergyMinister Purnomo Yusgiantoro on his side. InMarch this year his ministry announced it hadreached agreement with the forestry ministeron changing the forest status to ProductionForest and allowing the project to goahead23. At the time of writing, there hadbeen no separate confirmation from ForestryMinister Prakosa.

Gag island (only 56 squarekilometres) is one of the hundreds of isletsof the Raja Empat archipelago off the Bird'sHead region of West Papua. The biologicaldiversity in Gag's waters is among the richestin the world. This marine environment isunder threat from plans to dump theproposed mine’s tailings in the sea24.

There has been almost no publicdiscussion about the potential negativeimpacts of the proposed mine on the island’sforests or Gag’s indigenous population.

Other mining projects affected bythe law are PT Newcrest in Halmahera,North Maluku province, and PT Citra PaluMineral in Central Sulawesi (in which RioTinto has a majority interest).

21. This later became the International Forum onForests.

22. .See DTE 52:9 and JATAM petitionwww.jatam.org.

23. Asia Pulse/Antara, 19/Mar/0224. Mineaction / Tempo Magazine / Kabar-Irian, 19-25

Mar, 2002

Indonesia’s multilateral and bilateral creditorgrouping, the Consultative Group onIndonesia (CGI), meets annually to set levelsof financial assistance. It is chaired by theWorld Bank and includes the IMF, the AsianDevelopment Bank, the EuropeanCommission and UN agencies as well asbilateral lenders like the USA, Britain andJapan.

During the Suharto era, this grouplargely ignored human rights and theenvironment in its discussions but, post-Suharto, it started to broaden its demands toinclude progress on ‘governance’ and forestmanagement. Whereas before it was seen aspolitical meddling, ‘good governance’ is nowat the top of the donor agendas. This changeof perspective has had a knock-on effect onthe forest policy debate. The emphasis on ‘lawenforcement, anti-corruption measures andstakeholder participation reflects this change.

In July 1999’s CGI meeting, forestmanagement was considered for the firsttime. It was at this meeting that the WorldBank presented its first evidence thatdeforestation rates were probably doubleprevious estimates. The following January, theCGI held its first meeting specifically onforestry issues and came up with eight actionpoints for the Indonesian government toimplement. Illegal logging has been the mainfocus of concern within the internationallending community since then. The eightpoints were:w a crack-down on illegal logging;w speeding up an assessment of forests as a

basis for a National Forest Program(NFP);

w a moratorium on all conversion of naturalforests until agreement on NFP is

reached;w down-sizing the wood-based industry to

balance timber supply and demand andincrease competitiveness;

w closure of heavily-indebted companiesunder the control of the Indonesian BankRestructuring Agency (IBRA);

w connect reforestation with existing forestindustries and those under construction;

w a recalculation of the 'real value' oftimber;

w the use of decentralisation processes as atool to enhance sustainable forestmanagement.

In October that year, the only realprogress to report was the setting up of anInter-Departmental Committee on Forests(IDCF) to implement the action points. Thisincluded key NGO members as well asministry staff and, significantly, was chaired byCo-ordinating Minister for Economic AffairsRizal Ramli. The Committee promised tocome up with an Action Plan at the Octobermeeting. This plan, made public in December2000, expanded the 8 action points to 12 andincluded points on land rights and a review ofthe HPH system. Working groups were set upto look at areas of concern including tenurefor adat communities. However, Ramli arguedthat only four commitments should beprioritised: illegal logging, forest fires,restructuring indebted wood basedindustries and forest inventory and mapping.Once again, the fundamental issue of landrights was pushed aside. IDCF member,WALHI, walked out in protest at the lack ofprogress and the dominance of the ForestryDepartment in the Committee.

When the CGI met to reviewprogress on the action points in April 2001,

the Wahid government - paralysed bypolitical wrangling in Jakarta - had justmanaged to rush through a couple ofmeasures, most notably a ban on sales of theendangered ramin wood, and a presidentialdecision instructing a clamp-down on illegallogging. CGI members said they wanted“tangible results” soon. Before the meetingForestry Minister Marzuki Usman had triedto pre-empt criticism by calling the eightaction points agreed by his predecessorunrealistic.

There was no separate meeting onforests at November 2001’s annual meetingin Jakarta, but the lack of progress inimplementing reforms was criticised.Forestry Minister Prakosa presented a draftof the National Forestry Statement - the firststep towards the long-awaited NationalForestry Programme, required as part ofWorld Bank lending conditionality, but thiswas not the result that creditors had wanted.It was agreed that the IDCF should berevitalised in a further attempt to get someaction.

NGO reactions NGOs in Indonesia and overseas have beenhighly critical of the CGI agencies for failingto take a share of the responsibility forIndonesia’s economic crisis. They haveconsistently called for debt reduction andcancellation of corrupt debt ammassedduring the Suharto era.

At the November 2001 meeting inJakarta, Indonesian NGOs in the Coalitionfor Forests and Debt called on the CGI tostop financing deforestation in Indonesia.They also raised concerns that theIndonesian government had reduced theForestry Action Plan from twelve to fivepoints, without any consultation withstakeholders. The NGOs’ demands presentedto the CGI included a call for a moratoriumon large-scale commercial logging in naturalforests, and a stop to the involvement of theIndonesian security forces in forestexploitation.

See DTE 52:11. The full NGO statements areat www.gn.apc.org/dte/CCGI4.htm.See also www.infid.be/ andwww.gn.apc.org/dre/Af19.htm for more onNGO position on the role of the CGI.

28


The CGI focus on forests

Loans, grants and ECAs

“It is clear that forest sector loans do not fulfil their aim of preventing deforestation anddegradation. On the contrary, they increase the GoI’s debt burden and increase foreign exchange byexploiting forest resources. Directly and indirectly, forest sector loans tend to accelerate forestdestruction.” (Longgena Ginting, Paper for CGI meeting, 2000)

Forests and forest peoples are affected bothby loans, grants and government exportcredit agency (ECA) funding aimed directlyat the forestry sector as well as assistancenot specifically directed at forests. The latterinclude the IMF’s bail-out loans, which comewith conditions which direct overalleconomic priorities - often with damagingconsequences for forests and communities.

Some 20 donors within the CGIare involved in financing programmes in theforestry sector. As of April 2001 thesedonors were funding around 50 projects,accounting for almost US$250 million ingrants.

Many of these same governmentsare supplying export credit funding for

private sector projects which damageforests. A December 2000 studyii by the USgroup, Environmental Defense, andIndonesia’s Bioforum, showed that ECAprojects in Indonesia’s paper and pulp sectorinclude the Indah Kiat Pulp & Paper (IKPP),Riau Andalan and Tanjung Enim Lestari (TEL)operations - all of which are associated withland-grabbing intimidation against localpeoples forest destruction or illegal logging.(Bioforum/EDF Export Credit AgencyFinance in Indonesia, Dec 2000 - see alsoDTE 49:11)

ii. Fried & Soentoro, 2000ii. European Commission, 2001

CGI meetings 1998 - 2002

July 1998 Paris $7.9 bnJan 1999 JakartaJuly 1999 Paris $4.7 bnJan 2000 JakartaFebruary 2000 JakartaOctober 2000 JakartaOctober 2000 Tokyo $4.8 bnApril 2001 JakartaNovember 2001 Jakarta $3.1 bn

29

Nur Mahmudi Ismail (October 1999 - March 2001)

Nur Mahmudi Ismail was appointed firstforestry minister in the Wahid presidency.Forest reforms continued to be driven byeconomic imperatives and the newpresident’s focus on prioritising the interestsof foreign investors over local communities’needs.

Like his predecessor, Nur Mahmudimade a string of policy decisions which leftmost observers amazed and confused. Thesewere, in part, a response to IMF LoIconditions and the eight point action planagreed with the CGI in February 2000 (seeCGI box p.28).

In August 2000, he announced thatno more logging concessions (HPHs) wouldbe issued by central government after the endof 2000 and existing HPHs would be graduallyphased out25. In May that year the ministerdeclared that all forestry operations outsideJava would be put under the control of newstate companies. These companies wouldshare profits with the provincial authorities(30%), districts (30%) and local people (10%).(How much profit there might be wasdebatable since the priority was to restoreforests for 'sustainable logging'.) Forests on the ‘outer islands’ damaged byover-logging would be restored by'enrichment' - selective replanting withcommercially valuable species. Initially, 26million ha of forest would be in the hands ofthese new companies. Restoring this areawould require Rp130 trillion (approx US$13billion), which Nur Mahmudi wanted to takefrom the Reforestation Fund. Eventually, theforests would be managed by small andmedium-sized community enterprises26.

The minister also submitted aproposal for a US$500 million loan from theMiyazawa Plan - Japan’s economic rescue planfor Asia - for the reforestation and thedevelopment of industrial timber estates on 1million ha by Inhutani I, II and III27. He hopedto raise funds for replanting forests fromtaxes from the water sector, a carbon tax,income from forest parks and debt for natureswaps28 (see box p.34).

The run-up to regionalautonomyGovernors, local governments, district heads,parliament, private sector associations, theWorld Bank and forestry academicsdenounced the plans for new state forestrycompanies as out of step with regionalautonomy legislation and inappropriate fortackling the crisis in Indonesia's forests .

These plans were eclipsed in August2000 by a new initiative: a national forestryagency (Badan Pengelola Kehutanan BPK) - astate-owned commercial enterprise tooversee the management of 'state forest'. Theconcept, which was widely regarded asnationalisation by the back door, came in formore criticism - especially from the regionswho saw it as Jakarta's means to by-pass localautonomy and maintain control over itsforest empire. Nur Mahmudi's response tothe frosty reception to his plans was to senda team to the regions to whip up support.

How the minister planned toaddress the problems of continued clearfelling of forests and forest fires while all thisreplanting went ahead was one of manyunanswered questions. The plans were alsothrown into doubt by regional autonomy

legislation, due to be implemented in January2001, and by local governments’ expectationsthat they would have much more say in forestmanagement.

In late 2000 Nur Mahmudi appalledNGOs by issuing a fresh batch of loggingconcessions to private companies, just beforethe deadline, reneging on earlier promises tophase out concessions. These included 21new HPH concessions29. This move wasdecried as being against the spirit ofdecentralisation, due to start only weekslater.


Reforms during the Wahid period

"Even 'legal logging' through forest concessionscan be considered an illegal operation becauseit contributes to the killing of our forest."

(Longgena Ginting, Jakarta Post 23/Oct/00)

In January 2000 Indonesian environmentalNGO WALHI issued a statement on the CGIforestry meeting called Indonesian Forestry:How to move forward. This not only called fora halt to conversion of natural forests, butalso for a moratorium on all logging inIndonesia under the concession system “untilthe borders of all indigenous peoples’ rightsare defined.” A moratorium on forestconversion was part of the CGI-GoI ActionPlan (see p. 28). The statement also pushedfor the acknowledgement, respect andprotection of indigenous peoples’ landsi.

Longgena Ginting, WALHI'scampaigns co-ordinator, pointed to thedanger of focussing just on ‘illegal logging’ ingovernment efforts to stop forestdestruction. A pattern of timberconsumption which is over three times theforest's productive capacity cannot continue,he said. In WALHI’s opinion, only by stoppingall logging will it be possible to hold adialogue on future forest exploitation. "Wemay have to lose a total of US$3 billionincome from legal felling, but can actually save

US$8.5 billion worth of timber that would belost through illegal logging"ii.

The following year, themoratorium call was included in therecommendations issued by the thirdIndonesian Forestry Congress. This statedthat “there should be a moratorium onlogging natural forests as part of thecommitment to the incremental reform offorestry in Indonesia”iii.

AMAN, the indigenous peoples’organisation established in 1999, insists thatthe legal rights of indigenous peoples mustbe restored and that any plans for logging,mining, plantations, fisheries andtransmigration programmes “must be basedon consultations with the indigenous peoplesto whom the land and resources belong...” iv.

WALHI’s logging moratoriumcampaign page is athttp://www.walhi.or.id/KAMPANYE/Moratorium.htm

i. WALHI position paper 26/Jan/00ii. Jakarta Post 23/Oct/00 iii. See www.gn.apc.org/dte/CFC.htm for

English translation of the statement). iv See DTE Special Issue on AMAN, Oct

99:3

WALHI calls for logging moratorium

25.Media Indonesia 18/Aug/0026. Reuters 4/ Jul/0027. Reuters 25/Apr/0028. minutes from meeting between NGOs and

Nur Mahmudi, Washington 9/Mar/0029. Reuters 21/Nov/00

Farmers in West Java reclaim their land fromPerhutani

30


Indonesia’s regional autonomy laws (22 &25/1999) were passed in May 1999 andimplemented from January 2001. They havebeen a major force for change in forestmanagement. The programme has hadseriously negative impacts and is believed tohave sped up deforestation in some areas. Ithas also had some positive effects in areaswhere strong civil society action has maderegional governments more responsive tolocal peoples’ interests.

The regional autonomy policyarose out of the perceived need, immediatelyfollowing the downfall of Suharto, to head offnational disintegration and offer resourcerich regions more control over and financialgain from their natural resources. West Papuaand Aceh, which had the strongestindependence movements, were offered‘special autonomy’ packages, passed into lawin late 2001i.

Forests, as one of Indonesia’s mostvaluable natural resources, have been theobject of an undignified power strugglebetween central and regional governments.While local governments have asserted theirnew authority with a vengeance, the centralgovernment has attempted to retain a highdegree of control.

Since Megawati replaced Wahid aspresident, the whole decentralisationprogramme has been under revision, withconservative elements - including the militaryand Megawati herself - known to be against asystem they regard as too near federalism.

There is also pressure fromIndonesia’s creditors who recognise thepolitical necessity of decentralisation, but stillregard it as a potential threat to Indonesia’sability to service its debts.

Points of contentionThe Department of Forestry and Plantationshas been extremely resistant to any erosionof its power base through regional autonomy.It was not until November 2000, just weeksbefore the deadline, that Mahmudi finallyannounced some measures which set outhow control over forests would betransferred to the regions.

The struggle for power betweencentre and regions has been focussed on thefollowing:

Logging revenues: under the 1999 law onfiscal decentralisation, revenues from forestryshould be divided 80% for the regions and15% for central government. In 2000Forestry Minister Nur Mahmudi proposed a70% - 30% split which angered the regionalheads.

Reforestation Fund revenues: centralgovernment proposals initially splitReforestation Fund revenues at 40% for theregions and 60% for central government. Thiswas later changed to 90:10 in favour of theregions (see p.35).

Decision-making over concessions: aNovember 2000 decree (SK05.1/2000)permitted local governments to issue loggingpermits (see box,p.31). The ministerattempted to reverse the decision thefollowing year, as some district heads(Bupatis) were issuing hundreds of logginglicences in their areas, but was widelyignored. In February this year the Bupatispressed Megawati to hand over full control ofthe forests.

Then, later that month the currentforestry minister, Muhammad Prakosa, movedto recentralise forest management bycancelling Mahmudi’s 2000 decree, therebybanning provincial governors and Bupatisfrom issuing any further logging licencesii.The minister argued in an April 2002interview that decentralisation would beselective and gradualiii. It is not clear what, ifany, authority the Bupatis have left to makedecisions over the forests The situation isfurther confused by the fact that theimplementing regulations for the 1999forestry law - which outlined the division ofadministrative authority - have not yet beenfinalised. It remains to be seen whether theBupatis will pay any attention to Prakosa’sban.

Hierarchy of authority: Bupatis feel theycan ignore directives from centralgovernment because there is no hierarchy ofauthority between centre, provincial anddistrict levels. They argue that localregulations (Perda) carry the same weight ascentral government decrees so they canfollow edicts which contradict those comingfrom Jakarta.

Negative impactsOne of the main drawbacks of regionalautonomy is its tendency to strengthen theposition of powerful local political andbusiness elites. Entrepreneurs, governmentofficials and members of the security forces

are colluding to extract as much profit fromthe forests as they can, in as short a time aspossible, through local timber concessionlicensing powers.

In Central Kalimantan, for example,investigations by the Indonesian NGOTelapak assisted by the UK-based EIA, havedocumented rampant illegal logging withinTanjung Puting National Park. This is knownto be controlled by Abdul Rasyid, a memberof Indonesia’s highest legislative body theMPR. His company, Tanjung Lingga has beenidentified as the transit point for all stolentimber in Central Kalimantan and mostrecently, linked to illegal exports of timber onto China (see also p.38). Although Rasyid hasbeen investigated by the Attorney General’soffice, no arrest has ever resulted. For moredetails, see EIA/Telapak reports on illegallogging in Indonesia at www.eia-international.org/. In some areas,the state forestry companies (Perhutani andInhutani) have been accused of colluding withlocal officials and timber entrepreneurs to fellillegally. Civil society groups have pressedlocal governments to take control away fromthese corruption-riddled companies.

Positive effectsThe struggles for more local democracy andfinancial control of forestry in the regions areonly just beginning. Civil societyorganisations, local officials and Jakarta'spoliticians and bureaucrats are starting towrestle with the complexities andcontradictions within the regional autonomylegislation, pronouncements from theforestry minister and between the two.

In East and West Kalimantan theNGOs and indigenous peoples organisationswere the first to use regional autonomy tolobby local governments to implement moreequitable forest managementiv.

Recent district level legislationpassed in Wonosobo, Central Java, isproviding for community management offorests formerly controlled by state companyPerhutani - (see p. 49).

Regional autonomy and forestsFor more information on regional autonomysee DTE 46 www.gn.apc.org/dte/news.htm#ra plus articles in DTE 48 and 51.

CIFOR’s studies on decentralisation and forestsare athttp://www.cifor.cgiar.org/highlights/Decentralisation.htm

i. See DTE 51ii. Bisnis Indonesia 1/Mar/02iii. DPA 9/Apr/02iv. See DTE 46, page 14-16

31


The anti-corruption driveIn the second half of Nur Mahmudi’s time asminister, the Forestry Department was moreconcerned with its internal organisation. Forfour months following a cabinet reshuffle inAugust 2000, the Department of Forestry andPlantations was amalgamated with theDepartment of Agriculture and Nur Mahmudiwas demoted to junior minister. The 'superministry' proved short lived: by November2000 the institutional arrangement had

reverted to its previous form. The reasonsprobably had more to do with PresidentWahid's need for political support from theJustice Party, formerly headed by NurMahmudi, than considerations of forests orforest peoples.

A drive to wipe out corruption haddominated the Department's agenda sinceMay 1999, but a complete turn-over of allechelons of forestry officials in Jakarta failedto eliminate the deep-rooted culture of

corruption. Suripto, (appointed December1999) the forestry minister's second-in-command, tried to tackle illegal logging andtimber smuggling but since warnings of raidswere spread in advance most of these werelittle more than publicity stunts. At the sametime, former high ranking officials, includingex-minister Harahap, were revealing theirown malpractice as they were called aswitnesses in the trial of Mohammad 'Bob'Hasan, accused of fraudulent use ofReforestation Funds through his aerialmapping company PT Mapindo (see p. 10).

In March 2001, Nur Mahmudi wassacked, officially for his “lack of clear vision”on forestry, although the minister claimed itwas because he had refused to bow topressure to sack Suripto (see also p.34).

Suripto had prepared the reportsthat put former forestry king 'Bob' Hasan injail. He then pressed for court action againstPrayogo Pangestu, forest tycoon and closebusiness associate of Suharto's daughter'Tutut', for embezzlement of around US$35million from the Reforestation Fund30. Themain case related to PT Musi Hutan Persada,the feeder plantation for the controversial PTTEL pulp plant in South Sumatra, but thereare many more31 (see also box p.11). Suriptohad also submitted documents to theAttorney General's office six months beforeon the involvement of members of theSuharto family and their charmed circle inforestry corruption cases, including HutomoMandala Putra, Bambang Trihatmodjo,Anthony Salim, Probosutedjo, Ibrahim Risjad,Sudwikatmono and HasjimDjojohadikusumo32. These accusationsimpinged on the business interests of NewOrder elements still within the governmentand Wahid himself was rumoured to be closeto Prayogo. Suripto was alleged to be plottingWahid's downfall and was 'retired' less than 2weeks after Nur Mahmudi's dismissal33. Sincethen he has sued for unfair dismissal34 andtried to clear his name.

30. Tempo 27/Mar /0131. Tempo 12/Jun/0132. Bisnis Indonesia 22/Mar/0133. Jakarta Post 28/Mar/0134. Tempo 11/May/01

A new threat to Indonesia's forests andforest communities is the so-called 'smalllogging concessions' (HPH kecil) - issued bylocal authorities. The term properly appliesto the '100ha' concessions (HPHH), createdby Ministerial Decree (KepMenHutBun310/1999) in order to reduce illegal loggingand resource conflictsi. The idea was toincrease local incomes by giving communitiesa stake in forest exploitation. Forest villagescould form a co-operative or a company andthen log in Conversion Forest areas for ayear. The district administrator, not Jakarta,grants these permits.

In some provinces hundreds ofthese small operators have been allocated'100ha' concessions and literally thousands ofapplicants are queuing up. East and WestKalimantan are the best documented cases.In Kutai Barat district, Bupati Rama Asia hadissued over 600 HPH kecil by mid 2001ii. TheBupatis of Bulongan and Kutai Tengah havealso issued hundredsiii , but East Kalimantanprovincial forestry authorities have nooverall idea of how many or where theseareiv. The West Kalimantan Forestry servicehas complained that too many '100ha'concessions have been issued in districts likeSintangv.

Evidence is mounting that theeffect of huge numbers of small-scale loggersis as damaging as the old-style large HPHs.There are no checks on exactly wherelogging is taking place so the area clearedmay 'accidentally' exceed 100ha. Moreover,these concessions are now being handed outfor some areas of Production Forest whereplenty of commercially valuable timberremains. In at least one district, contractorsfor Malaysian companies are taking overthese annual permits, moving from locationto location as they expirevi .

There are further problems. Farfrom reducing conflict, '100ha' concessionsare generating disputes within and betweenvillages and with companies. 250 cases ofconflict in 15 sub-districts of Kutai Barat havebeen attributed to disputes with companieswhere small concessions overlap withexisting HPHs; with neighbouring families orvillages over boundaries between 100haconcessions; and over who gave permissionfor the forest to be loggedvii.

Confusingly, the term HPH kecil isoften used for permits for much largerconcessions. A later ministerial decree (SK5.1/2000) allowed districts to issueconcessions up to 50,000ha and provinces upto 100,000ha to local companiesviii. Theselogging permits were originally intended forareas of Production Forest where licencesfor concessions had expired or beenwithdrawn by Jakarta. Since regionalautonomy, several local authorities haveseized the opportunity to pass regulations orissue decrees permitting them to grant theirown forest concessions. These are knownlocally by a bewildering array of acronymssuch as IPH (in Batang Hari district); IUPHHK(Kutai Barat) and IPKHPA (Merangin).

These locally issued forestconcessions share many negative features,despite their different origins and extents:w All the permits can only be allocated to

legally registered bodies: in practice, co-operatives or companies. So communitiescannot apply through adat institutions;

w The companies and co-operatives arefrequently controlled by urbanentrepreneurs, government officials andlocal assembly members rather thanforest communities;

w There is widespread corruption. Permitsare issued by Bupatis to reward theirsupporters and may be sold on to othercompanies;

w Forest planning at provincial and nationallevels is virtually impossible;

w Deforestation through illegal logging islikely to increase, due to lax controls.

Prakosa has attempted to withdraw localauthorities’ rights to issue forest concessions(see box, p.30). But regional governors andadministrators claim that, since autonomy,local decisions and regulations carry moreweight than ministerial decrees and showevery sign of continuing 'business as usual'.

i. Pontianak Pos 29/May/01ii. Kompas 26/Sept/01iii. Suara Pembaruan 2/Oct/00iv. Jawa Pos 10/Jan/01v. Pontianak Pos 29/May/01vi. GTZ staff pers com 11/Dec/01vii. SHK Kaltim letter to authorities 16/Jun/01viii. Email via FKKM 19/Nov/01

HPH Kecil - locally issued logging permits

Logs on Mahakam River, E. Kalimantan DTE

32


Since the economic collapse, Indonesia’spowerful and politically well-connectedforestry industry bosses have been fightinghard to resist reforms demanded by theinternational lending community and by civilsociety, which harm their interests.

An intimate connection haddeveloped between the timberconglomerates and the banking sector underthe Suharto regime. During the years whenthe economy was awash with oil and timberrevenues, any company with connections tothe Suharto family had no difficulty obtaininglow cost loans from Indonesian state-ownedbanks - regardless of official credit limits.These were used to raise more finance,including from overseas. When thegovernment liberalised the commercialbanking sector in the late 1980s, someforestry tycoons bought substantialshareholdings in commercial banks (seetable). Their conglomerates could thenborrow from their own banks to fund pulpand paper mills and petrochemical plants.

In short, the forestry tycoons wereheavily involved in illegal practices in financialactivities as well as in their loggingconcessions. Both aspects of malpracticewere ignored due to corruption and lack ofmonitoring. This meant that the export creditagencies, investment banks, stock exchanges,brokerage houses and pension funds whichbought into these conglomerates were (andstill are) effectively financing illegal activities.

It became apparent how rotten thesystem was when the Asian financial crisistriggered a collapse in Indonesia's bankingsector in mid-1997. Dozens of state-ownedand private banks went bankrupt and thebusiness empires set up by forestry tycoonsalso faced financial ruin. The governmentclosed down many smaller banks and tookover others, but the magnitude of theproblem was far greater than anyone hadforeseen. Indonesia's foreign and nationaldebt was eventually estimated at US$200billion.

To avoid total financial meltdown, abank restructuring agency (IBRA) was set upwith IMF and World Bank funding. IBRA isnow responsible for recovering all the loans

of closed banks, and the non-performingloans of state banks and banks taken over bythe government. It has also guaranteed somecompanies' billion dollar foreign debts toprevent the collapse of other banks -including the Indonesian central bank.

The forest-based industry -particularly the pulp and paper sector - is oneof its major debtors. The economic crisisforced wood processing companies tosharply reduce their activities due tocollapsing markets in the rest of Asia,particularly South Korea and Japan - majorimporters of Indonesian plywood and pulp.Hasan's group was identified as IBRA's third-largest debtor, after the Barito group, ownedby timber tycoon Prayogo Pangestu, and thegroup of companies owned by Suharto's sonHutomo 'Tommy' Mandala Putrai.

Hasan's group of companies owesin excess of US$500 million to IBRA. HisEast Kalimantan pulp mill, PT Kiani Kertas,owes IBRA US$370 million, the ninth largestof more than 4,000 corporate debtorsii. Themill is still allowed to operate, even though itis technically insolvent and regardless of thefact that overcapacity in the pulp and paperindustry is a major factor drivingdeforestation and illegal logging in Indonesia.

Corrupt connectionsExpectations that efforts to reform thecountry's bankrupt banking sector wouldfully expose the corruption of the Suhartofamily and their cronies have slowly faded.IBRA has found it hard to reveal therelationships between companies and thetrue extent of their debts. Indonesia'sconglomerates comprise a myriad of holdingcompanies, subsidiaries and affiliates whosestructures and finances are enmeshed incomplex ways. The conglomerates are makingthe whole investigation process as slow anddifficult as they can, in the expectation thatIBRA will eventually write off their debtsrather than force them into liquidation.

IBRA is unwilling to close downcompanies: it sees that as the government'srole. IBRA has not helped itself by keepingmost negotiations private, giving rise to

rumours that payoffs and patronage are stillrife. Legal action against certain companieshas been mysteriously delayed. It is possiblethat political support has been thedetermining factor in whether companies andindividuals are prosecuted, especially duringthe precarious later days of Wahid'spresidency.

Four examples illustrate how theforest-related conglomerates have striven tokeep their assets out of the hands ofgovernment and foreign creditors.

Prayogo Pangestu, theIndonesian business tycoon, is the majorshareholder of the controversial SouthSumatra pulp plant, PT Tanjung Enim Lestari(PT TEL). Prayogo misled the Indonesiangovernment, IBRA and international creditorsover several of his bankrupt businesses whichinclude Bank Andromeda and Indonesia'slargest petrochemical company PT ChandraAsri. In late 2000, he was ordered to handover shares in PT TEL and his loggingconglomerate PT Barito Pacific Timberas a guarantee in IBRA's US$738 millionrescue package of Chandra Asri. A deal wasnegotiated for IBRA to take a 31% stake inthe petrochemical company with theremainder split between Prayogo (49%) andJapan's Marubeni Corp (20%). Marubeni is thelargest overseas creditor of Chandra Asri andis also a major stakeholder in PT TEL.However, the Chandra Asri deal failed whenIndonesia's powerful Financial Services PolicyCommittee discovered that Prayogo hadalready surrendered PT TEL and its feedertimber company, PT Musi Hutan Persada, totwo private creditors in other bailout deals. Itwas not revealed when or to whom PT TELand PT MHP had been signed over. Suharto'sdaughter 'Tutut' (Siti Hardiyanti Rukmana),who was a close business associate ofPrayogo, was a nominal shareholder in bothcompaniesiii.

According to a joint report byresearchers from CIFOR and the IndonesianNGO, Telapak, the Indonesian government,

Debt and the forestry industry

Forestry tycoons and the financial crisis (as of 2000)

Founder Conglomerate Major Forestry Asset Bank Total IBRA Debt US$Eka Tjipta Widjaya Sinar Mas Asia Pulp & Paper Bank Internasional Indonesia 42 millionSukanto Tanoto Rajah Garuda Riau Andalan Pulp & Paper; Unibank 92 million

Mas/APRIL Toba Pulp Lestari (formerly Indorayon)

Prayogo Pangestu Barito Pacific Tanjung Enim Lestari Bank Andromeda 640 million'Bob' Hasan Kalimanis Kiani Kertas Bank Umum Nasional 450 million

(APKINDO) Bank BukopinSuraya Hutani Jaya Bank Universal

(Adapted from tables in Barr C, 2000, Profits on Paper, CIFOR/WWF - see www.cifor.cgiar.org

i. Dow Jones Newswires 7/Dec/99ii. Barr C, 2000iii. Dow Jones 9/Dec/00; 4/Jan/01; 13/Feb/01

33


under the guise of 'restructuring' the loans ofthe Chandra Asri factory, has now effectivelyforgiven all but US$100 million of the originalUS$1.1 billion that the company borrowedfrom the state banks. The government hasalso given back control of Chandra Asri tothe original owner, Prayogo Pangestu,chairman of the Barito Pacific groupiv.

The Djajanti Group has Rp 3.3trillion (US$ 330 million) outstanding loansunder IBRA and its true debts may be muchhigher. Yet, at the same time, this Indonesianconglomerate was looking at investing inforestry operations in the Russian Far East.Headed by Burhan Uray, this conglomeratecontrolled the largest area of forests inIndonesia. Starting from logging operations inKalimantan, it grew into a business empire inplywood, plantations and fisheries mainly ineastern Indonesia. Like the other timbertycoons, Burhan Uray also diversified hisbusinesses into the finance and propertysectors. However, unlike Hasan, Salim andPangestu, he did not get heavily involved inthe banking sector, did not borrow heavilyoverseas and was not as close to the Suhartofamily. Instead, Djajanti was connected with anumber of lower level military and officialsand borrowed heavily from state-ownedbanks, such as the now defunct Bank DagangNegara. In contrast to the case of 'Bob'Hasan, there is almost no recent presscoverage of Djajanti and its debt problem.

Raja Garuda Mas controlled twopulp factories, Indorayon and Riau AndalanPulp & Paper (RAPP), through its Singapore-based holding company, APRIL (Asia PacificResources International Limited). Bothcompanies were problematic: Indorayon forits dreadful pollution record; RAPP for landrights disputes and illegal logging. RGM listedAPRIL on the New York Stock Exchange in1994 to generate equity capital and facilitateloans. The group borrowed over US$2 billionin offshore financing through APRIL(compared with total assets of US$3 billion in1998). The plan was to expand RAPP's pulpproduction capacity to 2 million tonnes peryear (despite the over capacity of Indonesia'spulp industry). APRIL spun off Indorayon inorder to make itself more attractive. Theeconomic crisis struck just as some ofAPRIL's longer-term dollar loans werecoming due. Nevertheless, creditors agreedto reschedule US$ 800 million of RAPP'sdebts so the expansion could go ahead, partlyin the hope that a larger mill would help topay off the debts fasterv. Oddly, IBRA did notinsist that APRIL sell its assets in a pulp mill inChangsu, China to repay the group's debts.Instead, it allowed APRIL to delay paymentson US$1.3 billion in outstanding loans,effectively giving the group a US$165 millioncapital subsidy. At the same time, APRIL soldoff its shares in the Changsu mill and used theproceeds to pay off short-term debts toforeign creditors. In this way, as with othercompanies, APRIL's private debt has become

Indonesia's public debtvi. The most spectacular case is the

US$13 billion debt of Sinar Mas, Indonesia'sthird largest conglomerate. Sinar Mas isIndonesia's largest pulp and paper producerthrough its Singapore-based holding companyAsia Pulp and Paper. APP owns PT IndahKiat, which has mills in Riau and West Javawith a capacity of 1.7 million tonnes of pulpper year. Indah Kiat's pulp mill in Perawang,Riau is now supplied from plantations ownedby subsidiaries of the Sinar Mas group(although these timber estates were createdby clear felling rainforest). Sinar Masdiversified into oil palm as well as chemicals,real estate and financial services and ownsfactories in Indonesia, India and China. It wasalso a major shareholder in BankInternasional Indonesia (BII). APP was floatedon the New York Stock exchange in 1994 andissued 30 year bonds. The trouble came whenthe rupiah collapsed and investors lostconfidence in Indonesian companies. Thedollar loans had to be paid in rupiah, but BIIcould not cover all the debts. Foreigncreditors clamoured for their money andseveral groups took out lawsuits in the USA.There were allegations of double pledging ofassets and dubious accounting. Theconsequences to the fragile Indonesianeconomy of APP reneging on its internationaldebts were so alarming that IBRA is acting asa guarantor for BII credits to Sinar Masvii.(For further details see DTE 52:14 orwww.gn.apc.org/dte/52plp.htm)

Resistance to closureSteps to shut the timber industry down arecrucial to reduce an unsustainable level ofdemand for wood from Indonesia's depletedforests. Forestry Minister Marzuki Usmanwas known to be keen to proceed withclosure. In March 2001, the economicsminister, Rizal Ramli, announced that thegovernment had decided to shut down half ofthe total 128 forestry companies under IBRAcontrol and would use the closures to securedebt cancellation through ‘debt for nature’deals with foreign banks (see box, p.34).

But the Ministry of Industry andTrade had other views. They argued thatclosure would significantly reduce foreignexchange revenues from the forestry sector.

Needless to say, the forestryindustry was and remains strongly opposedto any moves to check its activities too. It hasnot come to terms with the need for a newparadigm of forest management in Indonesia.In August 2000, head of the timbermanufacturers' association, MPI, Sudrajatclaimed that it was unreasonable to shutdown wood processing factories “justbecause companies are inefficient and debt-ridden”. He blamed the industry's problemson an international conspiracy led by NGOsand said his industry was supportinggovernment efforts to control illegalloggingviii.

Subsidy for timber tycoonsOne way or the other, it is highly likely thatmillions of ordinary Indonesians public willbear the long-term costs of bailing out theseconglomerates - through repayment of theIMF/World Bank loans which fund IBRA andthe nationalisation of private debt. Despitethe enormous debt load they carried whenthe financial crisis struck, none of Indonesia'smajor pulp and paper producers has beenforced to halt its operations due tobankruptcy. On the contrary, internationalcreditors are keen for pulp mills to continueoperating at maximum production so thattheir investment can be paid off. Meanwhile,the companies' hidden reserves of capitalremain intact.

IBRA is likely to use public funds towrite off at least 70% of the pulp and paperindustry’s debtsix. In the long run, IBRA may -in effect - subsidise Bob Hasan, Salim andSinar Mas to the tune of US$4.4bn - $6.5bnof public funds. This provides an incentive forfurther high-risk and socially/environmentallyhazardous investments, and in doing so, laysthe foundations for future financial collapse.

Forest peoples, illegal loggingThe government’s failure to tackle theindebted forestry industries has a directimpact on the lives of forest peoples. Byallowing these companies to continue tooperate, Jakarta is sanctioning the continuedtheft of timber from adat lands. It also meansthat nothing is being done to reduceovercapacity in the processing industries -which far outstrips the sustainable supplyfrom natural forests and the very limitedamounts of wood coming from plantations.This is driving the boom in illegal woodsupplies from Protection Forests and parks.

Indonesian NGOs and theindigenous peoples organisation, AMAN, arecalling for the immediate closure of highly-indebted companies and those withshortages of raw materials. This should bedone “through strict due diligence studiesagainst ecological, social and economicstandards developed through multi-stakeholder participation.”x

iv. Brown et al, 2002 v. Jakarta Post 30/Sep/99vi. Adapted from DTE article for Inside Indonesia

Jan-Mar 2001vii. Asia Times 4/Oct/01; Barr, 2000viii. Media Indonesia 10/Aug/00ix. Barr, 2002 x. Indonesian NGO/AMAN statement on

Indonesian-UK MoU, April 2002 - seewww.gn.apc.org/dte/Cfst1.htm

34


Marzuki Usman (March - July 2001)

"The forestry department's slogan is not thatmoney is a problem, but how to make money outof problems."

Marzuki Usman, Gatra.com 3/Jul/01

Marzuki Usman was only forestry minister forthe last four months of Gus Dur's presidency.His appointment reflected Wahid'sincreasingly precarious balancing act:allocating important and lucrative posts tocompeting political factions in order tomaintain their support. Mahmudi’s dismissalwas widely believed to result from the shift ofthe Justice Party, which he used to lead, fromsupporting Wahid to calling for hisimpeachment.

Marzuki's appointment surprisedmany. His name was not on the heavily leakedlist of candidates, which included IndroCahyono, director of the formerly radicalforest NGO SKEPHI (see p.17). He had madelittle impression as an investment ministerduring Habibie's interim regime or as Ministerfor Tourism, Arts and Culture in the early daysof Wahid's government. Marzuki had nobackground in forestry, although he ownedsignificant interests in timber and oil palmplantations in his native province of Jambi. Onthe other hand, he was an economist bytraining and, as the president made clear atMarzuki's swearing in ceremony, theimportance of Indonesia's forests to thenational economy - rather than to forestcommunities - was the key issue35.

Marzuki Usman inherited all theproblems his predecessors had faced, such asforest fires, rapid deforestation rates andovercapacity in the wood processing industry.But by this stage the situation in the forestrysector was even worse than when Wahid waselected. The prolonged effects of theeconomic crisis were biting harder, increasingpressure on the government to increaserevenues from natural resources. At the same

time, the huge implications of the regionalautonomy legislation became evident as localauthorities started to flex their muscles anddefy Jakarta (see p.30). Co-ordinating Ministerfor the Economy, Rizal Ramli, as head of theInter-Departmental Committee on Forests,was under considerable pressure frominternational donors for forest policy reform

as a condition of further loans and possibledebt relief.

Log smugglingLog smuggling had become rampant since theIMF had forced the removal of tariffs on logexports. Measures to control it were nowhigh on the donors’ agenda. Illegal exports ofat least 10 million m3 of timber were costingthe country over US$360 million per year inlost taxes36. Thousands of cubic metres oftimber a day were being illegally transportedacross the Kalimantan border to Malaysia37.China had become another favoureddestination for legal and illegal timber exportssince it imposed a logging ban in 199838.Marzuki made a lightning visit to TanjungPuting National Park (C. Kalimantan),announced tougher measures to stop illegalexports and a complete ban on the rarehardwood ramin just before a crucial CGImeeting in April 2001 (see p.28), but

35. Jakarta Post 17/Mar/0136. Bisnis Indonesia 20/Mar/0137. Asia Pulse 1/Mar/01; Obidzinski, 200138. New Scientist 28/Feb/01

Given the size of Indonesia's foreign debtand the rate of forest destruction, 'debt fornature' swaps seem an obvious solution. Inthese schemes, a portion of a nation's publicdebt is bought by a third party at substantialdiscount. The debt is then cancelled. Inreturn, the country promises to protectseveral million hectares of forests.

In early 2001 (then) economicsminister, Rizal Ramli, announced that thegovernment would withdraw loggingconcessions from companies with seriousdebt problems and turn the forest intoconservation areas. In return, foreigncreditors would reduce the debt burden ofconcession holders.

Germany has been the first

creditor country to express interest - in adebt cut of DM50 million (some $22.9million) to finance suitable forestry projects.At April 2002’s Paris Club meeting ofIndonesia’s main creditors, Indonesiaproposed that debt swap schemes could beused to fund education or social projects, notjust forest projects. At the time of writingnothing had been finalised, but one ofIndonesia’s biggest creditors, Japan, was alsoreported to be interested in such schemes.

Indonesian NGOs have broadlywelcomed the idea of debt swaps.

For a discussion on the potentialdisadvantages of debt-for-nature schemessee our web-pagewww.gn.apc.org/dte/Cfdb.htm.

Debt for Nature

The separation of the military's political andsecurity roles was one of the main demandsof protestors in the last days of the Suhartoregime. Habibie's interim governmentseparated the police from the armed forces,and his successor Wahid dealt several blowsto military control in the first months of hisadministration. But the military has stronglyresisted efforts to reduce its political andcommercial interests and regrouped to helpoust Wahid in 2001. Levels of brutality inWest Papua and Aceh have been increasingsince Megawati became president (see p.22).

Part of the problem is structural:the military permeates the whole system ofgovernance in Indonesia, right down to thetripartite councils (Muspika - civil, police andmilitary authorities) which operate at villagelevel. Furthermore, Indonesia’s soldiers aremassively underpaid and so rely on outsidecommercial interests - like logging - tosupplement incomes. This has led to military-run ventures like logging companies PT ITCIand Yamaker in the past, but more recently ithas prompted military/police involvement inthe explosion of illegal logging and miningwhich is devastating the forests anddestroying sustainable livelihoods in manyregions. Given the high levels of corruptionbetween security forces, government officialsand local entrepreneurs, there appears to belittle chance of success for efforts to stopillegal logging using the police, military andnavy. The latest of these was an agreement tocontrol log smuggling, signed with the policeand the navy in December 2001i.

Although no longer under militarycontrol, the reputation of the police mobile

brigades (Brimob) has not improved. Brimobunits are routinely paid to guard timber,mining and plantation operations fromactions by local people trying to defend theirlivelihoods. This is a situation that leads tomore human rights abuse and conflict - aswas witnessed last year in the Wasior area ofWest Papua. Here, when a timber companyignored demands for justice from localpeople, five Brimob officers ended up dead. Amassive police and military response causedan estimated 10,000 villagers to flee theirhomes. Incidents of torture, killings anddisappearances have been reported byPapuan human rights group, ELS-HAM.

Another recent case in Ladongi,Southeast Sulawesi, concerned an indigenouscommunity leader who was also a peasantunion activist. He was shot by police at closerange when several hundred peoplepeacefully occupied a plantation in order toreclaim their customary land rightsii.

These kind of abuses are set tocontinue, unless the Indonesian governmentmakes a concerted effort to rein in themilitary and end the climate of impunitywhich means that it is almost impossible forforest peoples and other victims of abuse toseek justice through the courts.

For more information on militaryinvolvement in illegal logging and miningoperations see: Indonesia: Natural Resourcesand Law Enforcement, ICG December 2001www.crisisweb.org)

i. Jakarta Post 31/Dec/01ii. Yayasan Suluh, email, 17/Apr/02

The military and police post-Suharto

35


Mohammad Prakosa(August 2001 - present)

Megawati Sukarnoputri became Indonesia'sfourth president in three years in July 2001,after Wahid was forced to step down. Hernew forestry minister, Mohammad Prakosa,gained an MSc and PhD in forestry economicsin the USA. He was a junior agricultureminister early in Wahid's presidency and hadtaught at the prestigious Bogor agriculturaluniversity, although his membership of theruling PDI-P party may have been a moresignificant factor in his selection.

Prakosa's initial pronouncementsprovided some reassurance for the forestryindustry which had not been able to keeppace with the plethora of new directives andregulations announced previous forestryministers, but dashed the hopes of forestNGOs, academics and community groupsadvocating radical reform of forest policies. Inthe hand-over ceremony from MarzukiUsman, Prakosa announced that he would notintroduce new programmes but build on thefoundations laid down by his predecessors49.

Further disappointment for thecommunity forestry lobby came withMegawati's instruction for Prakosa to focuson only five forestry priorities for the next 5-7 years: illegal logging; forest fires;reforestation; decentralisation; andrestructuring the forestry industry50. At astroke, the 12 point Action Plan agreed withthe CGI had been reduced to five.Furthermore, tenure was not one of these.Donors were not impressed by Prakosa's

poor performance at the November 2001CGI meeting where he showed little sign ofhaving grasped the main issues or of having anoverall vision for the future of the forestrysector. NGOs complained that the newforestry minister was not accessible to themand feared that forestry policy would remainthe domain of a closed circle within acorrupt, bureaucratic Forestry Department.

Relations between Prakosa andcivil society groups were not improved whenmembers of the indigenous peoples' alliance,AMAN, forced him to return to the podiumand face an hour of questions and criticismfrom participants at the third IndonesianForestry Congress the previous month. Thatmeeting - which is only held every 10 yearsand has formerly been a mouthpiece forgovernment and the forestry industry - wasremarkable in several other ways. Itsrecommendations, including support for alogging moratorium and the recognition ofadat rights, showed how the wind of changehad even reached 'the establishment' of theforestry sector51.

Prakosa supporters argued that thenew forestry minister is a dark horse whoprefers to listen and learn before speakingout or acting and, more recently, signs of anew direction in forest policy have indeedbegun to emerge. His appointment of tworespected pro-reform foresters to keypositions within the department reassured

MPR decree combinesagrarian renewal & natural

resources for first timeOne positive step during 2001 was a decreepassed in November by Indonesia's highestlegislative body, MPR. This provides the legalframework for the reform of laws relatingto natural resources management. DecreeIX/MPR/2001 on Agrarian Renewal andNatural Resources Managementacknowledges the weakness of existing lawsand the resulting conflicts. It provides forthe "optimal, just, sustainable andenvironmentally friendly" management ofnatural resources. The decree’s principlesand policy directives, include theacknowledgement, respect and protectionof the rights of 'peoples followingcustomary law' and cultural diversity inagrarian/natural resources use.

The decree was welcomed bymany Indonesian NGOs involved in draftingand lobbying for it. They see the decree as astep forward - particularly because it bringsland and natural resources together underone legislative framework for the first time.At the same time, there is uncertainty overhow far the new decree will be able todismantle the existing strict divisionbetween 'land' and 'forests' - a majorobstacle to gaining legal recognition ofindigenous peoples' customary rights inforest areasi

These NGOs are now pushing thegovernment to set up an agency to ensurethat the November decree is acted upon.They also want ad hoc courts to beestablished to help settle agrarian disputes.

i See also DTE 52:3

Reforms under Megawati

49Suara Pembaruan 13/Aug/0150. Tempo 31/Aug/0151. See DTE 52:10

otherwise there was little sense ofcommitment to forestry reform.

The forest fires were a case in point.Marzuki had said stopping the fires was one ofhis first priorities39. By July, as the annualoutbreak of forest burning in Sumatra andKalimantan was causing the usual pollutionproblems for Indonesia's neighbours, theminister was forced to admit there was noplan to tackle the fires (see also p.40), blaminga lack of human resources and funds40. It wasleft to Environment Minister Sonny Keraf totake legal action against five companies forillegally burning forest the previous year41.

Reforesting damaged forests42,reduction of the size of logging concessions43,protection of National Parks44 and theclosure of 128 heavily indebted forestryrelated companies were all mentioned inministerial speeches as targets forforthcoming measures, but Marzuki did notdeliver.

The week before Wahid was forcedto resign the presidency in late July 2001, hemade a rare reference to forest policy callingon people "to have a sense of ‘forestbelonging’ in an effort to conserve them"45.Marzuki was on the brink of introducingmeasures to force logging companies to pay allReforestation Fund contributions and otherlevies three years in advance. In addition,loggers would be required to pay aperformance bond to guarantee against over-extraction of timber. The industry's body, MPI,lobbied strongly against this on the groundsthat they would bankrupt those of itsmembers who were not already bankrupt. Theforestry minister had already introducedmeasures to distribute 90% of reforestationfund payments (equivalent to over US$4million) direct to the provincial authorities torehabilitate degraded forests in their areas46.

Even more controversially, Marzukiplanned to devolve completely the authority

to issue or extend logging concession permitsto regents or district heads47 (see HPH kecilbox p.31). NGOs led by WALHI responded byreiterating their call for a total ban on alllogging in Indonesia to prevent furtherdeforestation and allow time to agree on anew paradigm of forest management (see alsobox p.29)48.

39. Jakarta Post 19/Mar/0240. Jakarta Post 11/Jul/0141. Jakarta Post 5/May/0142. Antara 12/May/01 43. Tempo 18/Apr/0144. IO 11/May/0145. Antara 16/Jul/01 46. Jakarta Post 25/May/01,Kompas 26/Jun/0147. Indonesian Observer 28/May/01, Bisnis Indonesia

26/Feb/01 48. Jakarta Post 9/Jun/01

36


some critics: Untung Iskandar (Director-General, Forest Production) and BoenMochtar Purnama (Head of ForestPlanning)52. Prakosa has surprised many by hisstrong stance against the Department ofMining and Energy over the issue of mining inProtection Forests. The mining industry haslobbied fiercely for changes in the 1999Forestry Act to allow open-pit miningconcessions within these forests (see p.27)and have the mining minister’s support53.

More commitment to action camein the form of a total ban on log exports fromOctober 200154. The moratorium, initially for6 months, flouts IMF measures intended togenerate foreign exchange through increasedexports. The move met with approval fromthe forestry industry which had complainedfor months about the shortage of rawmaterials for the domestic wood processingindustry and that log smuggling was floodinginternational markets with cheap timber55.The announcement of a crack-down on illegallogging was also welcomed by internationaldonors.

Prakosa's emphasis so far has beento create a more efficient Indonesian forestryindustry56. Department officials have made anumber of statements about the need forforest rehabilitation, acknowledging themassive scale of destruction and degradationof the forest estate over the last 3 decades57

All existing HPH permits will be reviewed andlogging operations will have to obtain agovernment-approved certificate ofsustainable forest management by 200358.Details of this scheme have not been officiallyannounced, but an 'ecolabelling' systemsimilar to that initially run by LEI is underconsideration. Prakosa considers Indonesianplywood to be a sunset industry59. He hasshifted his initial position that factories willnot be closed down60, to threatening thatwood processing industries with difficultyobtaining legal supplies would face automaticclosure61. Most surprisingly, Prakosa recentlystated that the future of Indonesian forestrymust be based on small-scale community-based operations, not large-scale commerciallogging62.

It is too early to say whetherPrakosa is moving towards genuine forestreform and whether he has the power toimplement much needed-changes. There isresistance and even outright opposition fromother sections of government, such as theDepartment of Trade & Industry, torestructuring the forestry industry; checkingillegal log trading; prosecuting timber baronsand clawing back their ill-gotten gains throughIBRA. And the judicial system is notoriouslyweak.

An agreement between theForestry Department, the Indonesian policeand the navy to control log smuggling (seebox, p.34) has, at best, been a limited

success63. Illegal log shipments continue tostream out of West Papua and Kalimantan65.The temporary log export ban is due to endsoon. In May 2002, Megawati announced thatthere would be a logging moratorium but thisturns out to be no more than proposedrestrictions on logging in the most degradedforests.

Prakosa certainly speaks a languagewhich the international donor communityunderstands and approves. But the forestryminister does not appear to understand, letalone give priority to, indigenouscommunities' demands to address tenurialissues. The crucial question is whetherPrakosa's 'more efficient' forestry industrywill also be a more just, equitable andsustainable one.

52. Forest Liaison Bureau press release 5/Jan/200253. Bisnis Indonesia 12/Mar/02; Reuters 21/Mar/02;

Suara Pembaruan 23/Mar/0254. AP 8/Oct/0155. Jakarta Post 11/Aug/01; Bisnis Indonesia

16/Aug/01, 21/Aug/01; AFP 13/Sept/0156. Surabaya Post 21/Aug/0157. Antara 1/Oct/0158. AFP 3/Dec/0159. Statement to UK NGOs on ministerial visit,

London 18/April/0260. Tempo 31/Aug/0161. Asia Times 20/Nov/0162. Statement to UK NGOs on ministerial visit,

London 18/April/0263. Reuters 28/Dec/01; JP 31/Dec/0164. Kompas 1/Nov/01; FKKM email 13/Mar/02

Certification in troubleBetween 1998 and 2000, six Perhutaniplantation units in East and Central Java hadgained FSC certification. Most of thesewere teak plantations. A 10,000 haplantation in South Sumatra (PT Xylo IndahPratama) was also FSC-certified. From1998 onwards, tensions between Perhutaniand villagers erupted into open conflict.Most of the FSC certificates for Perhutaniunits were suspended by 2001 as a resulti.

In 2001 the FSC took the highlycontroversial step of certifying timber fromthe first natural forests - PT DiamondRaya’s 91,000 ha concession in Riau. Thedecision was met with severe criticism fromIndonesian and international NGOs.Rainforest Foundation and WALHIsubsequently initiated a review of FSCcertification and adat rights in Indonesia.

Certification forcommunity operationsLarge conservation NGOs based in theNorth, like WWF, and influential donoragencies, such as the Ford Foundation arepromoting the idea of certification ofcommunity timber and non-timber forestproducts as a means of conserving forestsand promoting sustainable livelihoods. TheFSC is trying to develop mechanisms whichmake it easier for community operations togain certification. The Indonesian NGOs LEIand LATIN (through its TROPIKA initiative)are also actively working on communityforestry certification schemes.

However, certification is linked to international markets and it is far fromcertain that marketing timber and otherforest products overseas is what forestcommunities want to or are able to do.These are also questions about theeconomic sustainability of community-based certification. Costs for small-scale,remote operations are high. Pilot schemesin other countries have mainly succeededonly for as long as they have beensubsidised by support from donors.

For further information and a list ofcertification in Indonesia see DTE/Rainforest Foundation’s BriefingCertification in Indonesia, June 2001 atwww.gn.apc.org/dte/Ccert.htm

i. See DTE 51:8

37


Overcapacity in the forestry industries -especially plywood and pulp - has continuedto cause forest destruction and the furthermarginalisation of forest communities in post-Suharto Indonesia.

The plywood industryIndonesia's plywood industry has been forcedinto decline in the post-Suharto period by thecombined effects of reduced log supply, theeconomic crisis, the illegal logging boom andthe resumption of log exports. As a result,many plywood companies are in seriousfinancial difficulties and some have beenforced to close. Nevertheless the industry isstill consuming large volumes of natural foresttimber. The development of timberplantations to supply the plymills, though on

the drawing board for years, has been almostnon-existent. The basic problem ofovercapacity has yet to be addressed. Thereare still 101 plymills in operation (down from112 in 1998, just over half of them in EastKalimantan65.

The plywood tycoons, led by BobHasan, have suffered some setbacks. Theplywood cartel run by ‘Bob’ Hasan throughthe plywood producers' association,APKINDO, was dismantled by IMF demand.Debt and corruption scandals followed,though none of the top players have beenforced out of business. Only Hasan has beenprosecuted for corruption and none havebeen held to account for devastating hugeswathes of Indonesia's forests and destroyingthe livelihoods of forest-dwellers.

By the late 1990s Indonesia'splywood industry was already cuttingproduction as the log supply fromunsustainably managed natural forest

concessions began to run out. Then, from1997, the Asia-wide economic crash reduceddemand in major markets like Japan andSouth Korea as well as cutting domesticdemand. When the IMF insisted thatprohibitively high export taxes on logs werephased out starting 1998, the plywoodindustry lost out again. Millions of cubicmetres of logs from both legal and illegalsupplies flooded out of the country. A lot ofthem ended up in China, Malaysia, Singaporeand Japan, feeding a boom in the plywoodindustries of Indonesia's competitors.According to APKINDO, these competitors -especially China and Malaysia - have been ableto undercut Indonesian plywood and forcedown international prices because they usecheap logs, illegally felled and smuggled out of

Indonesia. The industry has backed calls for aclamp-down on illegal logging and supportedthe log export moratorium introduced inOctober 2001.

In figures the industry's decline isfairly steep: Indonesia's export volumes andearnings fell from 8.5 million m3 in 1997,earning US$3.4 billion, to an estimated 6.6million m3 in 2001, earning US$1.9 billion.International plywood prices have fallensharply from $400/m3 in 1997 to US$230 in200166.

At the same time, log exports haverocketed. Official figures put log exports atjust under 300,000m3 in 1999 earningUS$37.85 million then jumping to almost450,000m3 in 2000, earning $66.67 million.But the official figures do not reflect the realstory since so much of the Indonesia's logproduction is smuggled out of the country:one estimate puts the amount of woodsmuggled to Malaysia alone at 10 million m3

per year67. Last October's log exportmoratorium has yet to make its impact onthis huge illegal trade.

Pulp and paper

“Indonesia’s largest pulp producers - the SinarMas Group and the Raja Garuda Mas Group -rely heavily on unsustainable sources of fiber,much of which is obtained through the clear-cutting of natural forests.” (Chris Barr, 2002)

Despite massive debts, corrupt practices andhuge social and environmental problems theIndonesian pulp & paper industry continuesto expand (see box for example).

Pulp companies were among thoseworst hit by the economic crisis. World pulpand paper prices had slumped in 1996 andinvestors had started becoming concernedabout Indonesia's political stability during thelast years of the Suharto regime. Many ofIndonesia's plants were new and still had torepay start-up loans when the 1997 financialcrisis hit Southeast Asia68.

At first, the sharp depreciation ofthe Rupiah seemed to act in industry's favour.The major costs (wood and labour) were paidin local currency, while all income fromexport orders was in US dollars. But parentcompanies had borrowed heavily to financepulp and paper manufacture and their debtsalso increased. Pulp developments funded byhigh interest offshore loans faced massivelyincreased debt burdens (see p.32-33). Manypulp and paper mill projects approved by thegovernment were never built.

According to Ministry of Industryand Trade data, pulp and paper productioncapacity now stands at 6.28 million tonnesper year, 5.9 million tonnes of which derivesfrom the seven top pulp and papercompanies. There are 25 companies operatingpulp and paper plants with licences coveringover 5.53 million ha to develop pulpwoodplantations69. Exports of pulp and paperproducts continued to increase too, fetchingUS$3 billion in 2000 up from US$2.44bn in1999, even though companies were onlyoperating at around 50% capacity.

Short suppliesThe industry has continued to refuse toaddress the raw materials supply crisis. Aspulp processing capacity has expanded somuch faster than feeder plantations,

Continued pressure on the forests: overcapacity, illegallogging, oil palm and fires

65. Surabaya Pos 26/Apr/01, www.castleasia.com/66. Jakarta Post 19/Nov/0167. Sinar Harapan 9/Oct/0168. Financial Times 8/Dec/9769. Weekly Sawit Watch News, 13/May/02

Illegal logs from Sikakap, Mentawai Islands, at Malaysian port Pakis

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Indonesia's pulp plants face supply problemsfor many years to come. In 2000, mills run bythe country's biggest pulp and paperproducers APP and APRIL consumed 15million m3 of timber from natural forests inSumatra. These companies are now pressingthe government to allow more forest to becleared in Riau, ostensibly for outgrowerschemes where local communities arecontracted to supply timber from plantationsfor the pulp mills70.

Recent research by the NGOForest Watch Indonesia shows that pulp andpaper companies' total pulpwood capacity is25 million m3 whereas timber estates can stillonly supply 3 million m3 per year. FWI saysthat of the nearly 5 million ha allocated to HTIfor pulp, just over a million ha was planted71.

Only 10% of the estimated 120million m3 of wood estimated to have beenconsumed by the pulp industry during 1998-2000 was harvested from HTI plantations72.Indonesia’s biggest pulp conglomerates, SinarMas and Raja Garuda Mas, claim that by 2008their wood will be sourced from sustainablymanaged plantations, but the study throwsdoubt on this, predicting that by then nomore than 50% of the required wood will besupplied from plantations. Both thesecompanies are also in severe financialdifficulties (see p.32).

Illegal loggingOvercapacity has fuelled the explosion ofillegal logging in Indonesia. Weak lawenforcement and unprecedented levels ofcorruption have resulted in a ‘free-for-all’ inthe forests in which local businessmen haveteamed up with military, police andgovernment officials to exploit local labourand make a quick profit. UK-funded researchsuggest that as much as 70% of all woodproducts exported by Indonesia are

produced from illegal sources. Indonesia'sEnvironment Ministry statistics show thatthat Indonesia is losing 56 million cubicmetres of timber per year worth US$8.4billion billion due to illegal logging73.

Since 1999, alarm over theincreasing rates of forest destruction has ledIndonesia's creditors to prioritise illegallogging as the most pressing task in theforestry sector (see CGI box, p.28). The focushas prompted Indonesia to take some actionagainst illegal loggers and timber smugglers -most recently the impounding of threeChinese-owned ships. The ships, carryingtimber 31,800 m3 of logs valued at US$4.7million without papers from CentralKalimantan, were held for five monthspending prosecution in three highly publicisedcases, but were then released after a majordiplomatic row74. None of the politicallypowerful businessmen involved have beenbrought to trial.

Heightened concern from creditorcountries has also produced an internationalcommitment to tackling illegal logging -FLEG75. The conference on forest lawenforcement and governance was supportedby international donors: USAID, DFID and theWorld Bank. The September 2001 meetingresulted in a 13-point ministerial declarationsigned by leaders of East Asian nations,including Japan, China, Korea and (eventually)Malaysia. Most recently, a joint Memorandumof Understanding on illegal logging betweenthe British and Indonesian governments,signed in April 200276.

While such agreements arewelcome in that they address some of thesymptoms of the forestry crisis, they do nottackle the underlying need for total reform inforest management.

There are also problems associatedwith the term ‘illegal’. As Indonesian law nowstands, any logging by indigenous peoples canbe termed illegal, but only because thosepeoples' rights to own and manage theircustomary forests have not been legallyrecognised. Furthermore, many HPHs maytechnically be illegal since the ForestryDepartment has never gazetted all the land itclaims as ‘state forest’. More important still,sustainability is a more meaningful criterionthan legal or illegal logging.

There is concern too that anarrowly focussed campaign to tackle illegallogging will divert attention away from theneed for a total overhaul of forest policy andmanagement in Indonesia. However,Indonesian and international NGOs involved

70. Barr, 200071. FWI/GFW, (draft), 2002, p.3772. Barr, 200273. See DTE 52:10.74. Asia Times 13/Nov/01; AFP 1/May/02 75. See DTE 51:776. Jakarta Post 25/Apr/02, see

ww.gn.apc.org/dte/camp.htm#for for details.

New pulp mill for SouthKalimantan

A major new pulp plant development is togo ahead in South Kalimantan, despiteconcerns about impacts on forests. A600,000 tonne/yr pulp mill will be located inthe southeast of the province, at SakupungBalaut, near Sungai Danau in Kotabarudistrict.

A number of foreign investorsincluding the Singapore-listed constructioncompany, Poh Lian Holdings Ltd, Swedishpaper company Cellmark and Dutch-basedAkzo Nobel were reported to beinterested in investing in the new plant.China State Construction & EngineeringCorp and Singapore Power Internationalmay also be involved. PT Marga Buana BumiMulia (MBBM) and its subsidiary PT MenaraHutan Buana (MHB) were owned byProbosutedjo, step-brother of formerpresident Suharto, whose banking interestswere hard hit after the 1997 Asian financialcrash. Poh Lian bought MBBM in April 2002and set up a new company, United FiberSystems, to run the new project.

The provincial government isbacking the initiative as part of a broaderindustrial development programme in thearea. The scheme, which would cost anestimated US$1.15 billion, would include anew pulp mill and supporting infrastructuresuch as a power plant, water and effluenttreatment works and a township. A numberof Scandinavian companies will probablysupply the equipment and expert staff.Start-up is planned for 2005.

The plant will be fed from a259,000 ha concession near Batulicin inSouth Kalimantan, part of which used to beowned by MHB. Planting of Acacia mangium,pine and Paraserianthes falcataria began in1994 but only 82,000ha has been planted.According to one report, only 100,000ha ofthis concession can be planted since therest comprises villages and farmed land.

Finnish forestry consultants,Jaakko Pöyry have recently assessed the millplans and plantation for Poh Lian. As usual,the whole development is justified bypromises of jobs and prosperity - not least,taxes for the local government. A localofficial is reported to have made the absurdclaim that the plant will employ 20,000people in the construction phase and200,000 workers once operational.Indonesian and international environmentaland social NGOs have joined forces incondemning the scheme and arecampaigning for its cancellationi.

i. World Rainforest Movement newsletter No43,February 2001; Kompas 3/Jan/01;paperloop.com singapore 8/Jan/01; papercutsnewsletter 6/June/01; Antara27/May/01BanarmasinPos 2/Dec/00

Indorayon pulp mill, North Sumatra DTE

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in pushing for agreements on illegal loggingare hoping that the new MoU and anysubsequent agreements will open up thisdebate and help raise awareness of the needto address the more fundamental issues offorest peoples' land and resource rightsversus state control.

Oil palmOil palm plantation development remains amajor cause of conflict over land andresources. While adat rights continue to besidelined by politics and laws, this situationlooks set to continue.

The economic crisisIndonesia's economic crisis caused a boom inthe palm oil industry followed by a period ofstagnation. An 80% slump in the value of therupiah in late 1997 created a huge differencebetween domestic and international pricesfor crude palm oil and its refined productolein. In a move that was criticised byenvironmental NGOs, the IMF then gaveIndonesian palm oil exports another boost,insisting on the removal of "export quotasand punitive taxes" as a condition of itseconomic 'rescue package' (see LoI box,p.24). All formal and informal barriers toinvestment in palm oil plantation had to beremoved within 3 months. The Indonesiangovernment was forced to lift a temporaryban on palm oil exports designed to stabiliseprices and dollar-hungry producers exportedas much of their output as possible triggeringa domestic shortage. Raising export taxes ofcrude palm oil (CPO) from 40 to 60% didlittle to slow down exports and flew in theface of the IMF's 20% target for export taxes.

Illegal palm oil exporters alsoprofited. Hundreds of thousands of tonnes ofpalm oil are thought to have been smuggledfrom Sumatra across the Malacca Strait77.

However, conglomerates like theAstra and Salim groups lost some of theirpolitical clout after Suharto fell and weresoon struggling to pay their banking debts.Many companies were taken under thecontrol of IBRA (see p.32) and forced to selltheir assets.

Regional autonomy, introduced in2001, provided a further stimulus for oil palm

expansion with local authorities desperate toincrease their revenues from export revenuesand taxes on plantation companies.Applications for plantation permits cover ahuge area - as high as 32 million ha78. In 2001the governor of Jambi in Sumatra announcedthat one million ha would be developed in theprovince by 200579.

Investors are now lobbying hard tostreamline the system for licensingplantations - a measure which will also speedup deforestation. Under the existing system,potential investors have to get a documentfrom the Forestry Department to prove thechange of status from forest to agriculturalland use; a land use rights permit from theNational Land Agency; planning permissionfrom the local government; and investmentapproval from the Investment Co-ordinatingBoard. The whole process can take up to two

years unless 'facilitating fees' are paid to therelevant officials. The Investment Co-ordinating Board wants to set up a 'one-stepservice' to cut down the bureaucracy facedby the palm oil industry.

Production boomLow international palm oil prices and massivedebts owed by Indonesian plantationcompanies slowed the initial oil palm boom ofthe late 1990s. But development is expectedto take off again once prices pick up andinvestors overcome doubts about securityand political instability in Indonesia.Production has rocketed from 5.4 milliontonnes in 1997 to 8.3 million tonnes in200180. The target for 2002 is over 9 milliontonnes. However, as Indonesia rushes to rivalMalaysian palm oil production, there is a realrisk of overproduction and a collapse ofworld prices.

By the year 2000, oil palmplantations already covered an estimated 3million ha of land in Indonesia81. Around 60%were located in Sumatra and Kalimantan, butthe islands of Eastern Indonesia (primarilySulawesi and West Papua) were slated to bethe new growth centres targeted by thegovernment82.

Much of the land allocated tocompanies has not yet even been developed.8.7 million ha of land had been allocated foroil palm plantations by 2000, but just over athird - 3 million ha had been planted. Insome cases this has been due to the lengthybureaucratic procedure required to changethe status of the land from forest toagricultural land83. In others, companies wereunder-capitalised or hard hit by the economiccrisis. But there is little doubt that manyinvestors hold onto plantation permits purelyfor speculation or to get access to valuabletimber on forest lands.

Producers and consumersIndonesia and Malaysia now produce over80% of the world's palm oil, with Indonesia'sshare standing at 30%84. Production inIndonesia is set to double as the governmentseeks to overtake Malaysia as the topproducer and to increase much neededforeign revenues. Global consumption of palmoil increased sharply during the 1990s anddemand was expected to increase in the longterm.

Conflicts and campaignsSawit Watch is the main NGO networkworking on oil palm issues in Indonesia:[email protected]

For studies on how oil palm plantationshave affected communities see joint casesstudies on CDC's UK-funded plantationsin Kalimantanwww.gn.apc.org/dte/camp.htm#CDC. Seealso DTE 51:12; violence against villagers inSosa, Sumatra (DTE 47:14) and Telapak/PutiJaji/Madanika study Planting Disaster (2000)for case studies on the confrontationbetween Benuaq Dayaks and plantationcompany London Sumatra International inKalimantan and state plantation companyPTPN XIII in West Kalimantan.www.telapak.org.

Green and social criteriaThe forest fires of 1997/1998 triggeredinternational concern over the damagingimpacts of oil palm development. Four yearslater, some European investors haveresponded. An international campaign bythe Indonesian NGO Sawit Watch, FoENetherlands and Greenpeace NL hasresulted in four major Dutch banksrestricting investments in oil palmdevelopment against environmental andsocial criteria. (see DTE 52:12) andwww.milieudefensie.nl)

Migros, Switzerland's largestsupermarket chain, together with theWorldwide Fund For Nature (WWF) inSwitzerland, has drawn up a set of minimumenvironmental and social criteria for itspalm oil products aimed at reducing thedevastation of tropical forests. WWFSwitzerland has produced a set of reportson European Banks involvement inIndonesia's oil palm and pulp and paperprojects. Contact [email protected]

77. See Jakarta Post 6/8/98, 21/8/98; sawit-watch22/9/98; Suara Pembaruan 26/7/98, 14/8/98;SiaR 14/8/98, 19/8/98, 20/8/98; EDF letter toWorld Bank 7/8/98

78. Wakker, 200079. DTE 49:1780. Jakarta Post 11/Apr/0281. Wakker, 200082. KMAN, 199983. Jakarta Post 23/Jun/9984. Jakarta Post 27/Feb/0185. J. Hewitt, pers com

Mature oil palm DTE

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China, India and Pakistan are theworld's largest importers of palm oil.Following those countries, Netherlands,United Kingdom and Germany are Europe'smain palm oil importers. Germany is thefourth largest importer of Indonesian palm oiland the largest inside the EU85.

Indonesia is itself one of the world'slargest markets for palm oil, with use at 20%of total global consumption.

Forest fires"While neighbouring countries have beencomplaining about the choking haze caused byIndonesia's forest fires and have called onIndonesia to take action to deal with theproblem, the Ministry of Forestry said on Tuesdayit had yet to formulate a program to swiftlyremedy the situation. "So far, we don't have aclear blueprint of how to cope with the problem.We will start to prepare it," minister MarzukiUsman told reporters, following a meeting of allthe ministry's senior officials from across thecountry." (Jakarta Post 11/Jul/01)

Forest fires remain the most dramatic andvisible symptom of the crisis affectingIndonesia's forests and forest peoples. It isalso these forest communities that will bearthe long term costs of the fires, which includeloss of livelihood and health impacts. The firesare a direct effect of Indonesia's politicalecology: the allocation of logging andplantation concessions to a powerful elite;the corruption which prevents effectiveforest monitoring in the field; and, mostrecently, the power vacuum left afterSuharto's rule. The fires are also directly andindirectly influenced by international andbilateral aid and loans.

While the devastating fires of 1997-1998 fires have not yet returned to Indonesia,the annual round of burning, smoke andoccasional haze has continued. These do notgrab international headlines but theycontinue to do substantial amounts ofdamage - both in terms of forest cover aswell as costs to health and livelihoods.

Nowadays, most fires are started

for private financial gain. The figures vary, butall sources agree that big oil palm and pulptimber plantations are mostly to blame. Thecompanies and their contractors are notafraid to flout the law in the current unsettledpolitical climate. A recent World Bank studyshows that large-scale land clearingcontributes to 34% of cases of forest fires,slash-and-burn farming 25%, permanentfarming 17%, conflict between locals andconcessionaires 14% and transmigration8%86.

Other researchers estimate thatlarge-scale operations like oil palm andlogging concerns start about two-thirds ofthe fires87. A study by the EU-funded ForestFire Prevention and Control Project, based inPalembang, states that all important fires inSumatra in non-El Niño years are caused byplantations88.

The forest fires are also asymptom of social conflict in Indonesia, inparticular the conflict over land ownershipand use. Arson is a weapon used by bothsides. Plantation companies stake their claimsto indigenous communities' lands by burningit and embittered local people take theirrevenge by destroying plantations establishedwithout their consent in their ancestraldomains. It is impossible to tell howwidespread such incidents are. Some of thefires that were put out in 1997/98 wereimmediately re-lit89. The picture iscomplicated by transmigrants andopportunists from urban areas who also burnto clear land for farming or for landspeculation. Unlike indigenous forestcommunities, these people are not governedby traditional practices which limit burning tospecific areas and conditions. They are alsoinexperienced and so fires easily get out ofcontrol in dry, windy conditions.

Since the 1997/8 fires little inpractice has changed. Successive forestryministers have used Indonesia's parlouseconomic condition as an excuse for theirlack of effective action over the last five years.Each year Jakarta called for more money andtechnology - such as planes capable of waterbombing the fires. Previous governments havefailed to recognise that fundamental change in

the logging and plantation system arenecessary. Malaysia is restrained in its officialprotests about smoke pollution fromneighbouring Sumatra and Kalimantanknowing that Malaysian investors and oil palmcompanies have invested heavily in theplantations which are illegally using fire toclear land.

International financial institutionsare pressurising Indonesia to increaseexports, including timber, paper pulp andpalm oil. These are the very industries whichfuel Indonesia's forest fires.

Law enforcement could make amuch more significant contribution to theprevention and control of forest fires. The useof burning to clear land for plantations hasbeen illegal in Indonesia since 1995. This banwas strengthened under the 1999 ForestryAct. Company staff found guilty of clearingland with fire can be now sentenced to amaximum 15-year jail term and a fine of up tofive billion Rupiah (approx US$500,000). Iffires are found on concession land, regardlessof how they started, company officials can befined for negligence up to Rp1.5bn orimprisoned for five years.

Successive forestry ministershave threatened to impose severe penaltieson companies which burn to clear land, butthere have been few prosecutions. Evenwhere the satellite data has been supportedby field reports, some companies have beenlet off with a warning instead of beingstripped of their concession licences. Forexample, no action has been taken against theoil palm plantation company PT BumiPratama Katulistiwa for clearing half its12,000ha concession in West Kalimantan byburning in 2000. The company is apparentlyheaded by the governor's son90.

Internationally-funded firemonitoring projects cover the island ofBorneo and, until recently, Sumatra. Theymake public information available throughtheir websites. Fires monitoring, including air

Fires sitesDTE dual language website: www.gn.apc.org/dte/camp.htm#forGlobal Fire Monitoring Centre, http://www2.ruf.uni-freiburg.de/fireglobe/ASEAN Haze Action Online http://www.haze-online.or.idSingapore pollution index http://www.gov.sg/env/psi/index.html or http://www.gov.sg/metsin/CRISP - Centre for Remote Imaging, Sensing, and Processing http://www.crisp.nus.edu.sgForest Fire Prevention and Control Project (EU-funded, Sumatra) http://www.mdp.co.id/ffpcp.htm Forest Fire Prevention Management Project in Indonesia http://mofrinet.cbn.net.id/informasi/kebakaran/hotspot.htmIndonesian National Remote Sensing Centre http://www.lapan.go.idGoI Fires & Haze information http://www.bapedal.go.id/kebakaran/ (Bahasa Indonesia only)

For a list of recent legal cases see www.gn.apc.org/dte/cflg.htm, and information on annual fires January March 2002, seewww.gn.apc.org/dte/Cfcr2.htm

86. Jakarta Post 3/Sept/200187. CIFOR press release 30/Jul/0188. Sargeant 200189. CIFOR press release 30/Jul/0190. WALHInews 29/Jul/00

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Fundamentalreforms stillneededThe reforms implemented during the pastfour years have not gone deep enough tomake enough of a difference: they amount totoken efforts to treat the symptoms of theforest crisis, while failing to tackle theunderlying causes. There has been pressurefrom the IFIs to make the forests moreefficient in generating revenues, plusresistance from those who profit from thecurrent system. This has helped prevent therequired shift from the short-term,unsustainable exploitation model to a longer-term, sustainable management model whichrecognises the multiple functions of foresteco-systems and the central role to be playedby forest-dwellers in protecting them.

Despite the forces stacked upagainst them, forest peoples and the NGOs inIndonesia who support them are determinedto continue pushing for fundamental reform.Part III considers this process in greater detailand highlights cases where communities haveacted to protect and develop moresustainable forest management systems whichprovide alternatives to timber-mining.

Continuing violations

All the talk in Jakarta of democracy and reform, consultation with communities and ‘goodgovernance’ has not stopped the abuses against forest communities from continuing. Recentcases include:

w Uncontrolled logging blamed for floods killing tens of people on Nias Island, off NorthSumatra, November 2001 (see DTE 51:7).

w Brimob violence against local people at Aurora Gold’s mine in Central Kalimantan, June2001 and January 2002 (DTE 52:8).

w Manipulation of small-scale logging concession permits on Siberut, West Sumatra to gainaccess to valuable forests (DTE 50:8).

w The ongoing struggle by Dayaks in Meratus, South Kalimantan to defend adat forest landsfrom logging and mining by Canada’s Placer Dome (DTE 50:7).

w The massive violent response in Wasior, West Papua to the killing of five Brimob personnelguarding logging concession; at least ten people killed, tortured and disappeared, mid-2001onward (see DTE 52:4).

w Police and paramilitary forces attack on the village of Betung, Riau, following years ofconflict over theft by PT Arara Abadi of community land (DTE 49:11).

w The arrest by Brimob, forestry company staff and hired thugs of 47 farmers forcibly evictedfrom their land claimed by Perhutani, Banten, Java, November 2001(DTE 52:2)

pollution levels is also carried out by theCRISP programme in Singapore (seebox,p.40). No similar data collection exists forother forested areas of Indonesia such asSulawesi, the Moluccas, the drier islands of theLesser Sundas and West Papua.

Indonesia has come undermounting international criticism for not doingenough to control forest fires. Efforts toaddress the issue by the Association of SouthEast Asian Nations (ASEAN), the region'smain diplomatic grouping, have so far provedineffective. For Indonesia's ASEANneighbours, the problem is the smoke rather

than the fires themselves. Regionalgovernments and environmental fromIndonesia, Malaysia, Singapore, Thailand andBrunei have been discussing common ways ofdealing with the 'haze problem' since the early1990s. There has been a series ofinternational conferences, seminars andworkshops on transboundary pollution since1997 partly funded by ADB loans. The majoroutcome has been a book titled Fire, Smoke,and Haze - the ASEAN Response Strategy, whichoutlines the global and regional context offorest fires, ASEAN's response to the problemand guidelines on fire and haze management

in the region, plus a Regional Haze ActionPlan. There have been protracted negotiationson an ASEAN agreement on the haze.

Current efforts are focussing onpublic awareness programmes and thedevelopment of guidelines and techniques forcontrolled burning methods. In the absence ofany effective action at government level,ASEAN members have recently focused theirattention on local initiatives to fight the fires.For example, a conference on community-based fire management in Balikpapan, EastKalimantan, in Indonesia took place in late July2001 with 200 participants from 25 countries.

42

DOWN TO EARTH Forests, People and Rights Part III, June 2002

Forest peoples have been regarded byIndonesia’s powerful wood industry andsuccessive governments in Jakarta as aproblem, an obstacle to the profitableexploitation of the forests. While the need todeal with forest communities has long beenrecognised by Jakarta, the measures designedto do this have failed. These includecommitments to community development bylogging companies, schemes for small-scaleminers, social forestry schemes, shares for co-operatives - all of which have been designedwithout input from forest communities. Theyfailed because they were cosmetic measures,which paid lip-service to public concerns, anddid not affect company profits or governmentrevenues. There was a complete lack ofpolitical will to carry out the fundamental

changes in forest management needed toeffect real change. The escalation in protestsby communities whose forests and livelihoodswere being destroyed in the meantimeprovided damming evidence of this failure.

Community forest managementprovides a radical alternative approach whichputs forest peoples at the centre of decision-making and sees them, not as a problem to bedealt with, but as a key part of the solution.

Part III of Forests, People and Rights, focuses onthe positive role of community forestmanagement. It explores what communityforest management means, describesgovernment responses to demands forreform and focuses on a number of officially-sanctioned programmes. It then outlines the

community forest movement in Indonesia andhighlights six examples from different parts ofthe country. Finally, the section on challengesand recommendations put forward ideas -garnered from various organisations - formoving forward.

Part III: Community forest management,the way forward

“Wherever local forest-dependent people's rightsare ignored, whenever they are excluded fromforest resources and their management ormarginalised by external forestry managers orforced to interact 'illegally' with their naturalecosystem, the results are socially unacceptable,economically inequitable and ecologicallydevastating.” (Campbell & Raharjo, Feb 2000)

As so many people are talking aboutcommunity forestry, it is important to be clearwhat the term means. For many years,forestry policy internationally wasunderpinned by an assumption that localforest users were ignorant and destructive.Indigenous peoples' skills and knowledge wereunrecognised, until very recently, by decision-makers in capital cities who ignored theobvious incentive these communities have tomanage forests sustainably. Indigenouspractitioners of rotational forest management,land-hungry settlers and illegal loggers werebracketed together as 'shifting cultivators' andbranded the prime agent of forestdegradation.

Since the 1978 'Forests for People'World Forestry Congress was held, there hasbeen a gradual shift in perspectives. Theconcept of community-based forestmanagement has gained internationalacceptability. Decision-makers all over theworld, not just in Indonesia, are realising thatthe people who know most about local forestmanagement are those who live in and aroundtheir forests.

In Indonesia, the communityforestry movement starts from the premisethat the domination of the state, thecentralised nature of forest management and

the state's refusal to recognise adat rights arethe major causes of deforestation and forestdegradation. Civil society groups andacademics who support community forestrygenerally recognise that it is not a panacea tosolve all the problems affecting Indonesia'sforests - it must be accompanied bydemocracy and decentralisation of power anddecision-making. Nevertheless it offers analternative model to industrial forestmanagement as a way of linking local forestryand local development.

The plethora of terms in English -community forestry, joint forest management,participatory forest management, socialforestry - is mirrored by an equally confusingrange of terms in Bahasa Indonesia. Hutankerakyatan, kehutanan sosial, hutankemasyarakatan, are phrases which have beenadopted by various NGOs then graduallyrejected as the government adopts the newterminology, but not the thinking, behindthem. As a result, most civil society groupsnow use the English term 'community-basednatural resource management' (CBNRM) todiscuss sustainable control over naturalresources - including forests - by local people.

The features of community forest managementCBNRM seeks to guarantee access and control over forest resources for people living in andaround forests who depend on them for their economic, social, cultural and spiritual well-being. Forests should be managed to provide inter-generational security and increase thelikelihood of sustainability.

It is based on three principles: w the rights and responsibilities over forest resources must be clear, secure and permanent;w the forests must be properly managed so that there is a flow of benefits and added value;w forest resources must be transferred in good condition to ensure their future viability.

CBNRM incorporates the following features:World view - holistic perspective encompassing ecological, social, political, moral andspiritual factors as well as, not instead of, economic aspects;Morality - based on harmony not conflict;Ecology - integrates people and their environment with economics at a local level by takinga multi-functional and multi-product approach;Economy - promotes poverty reduction, equity and self sufficiency;Social integration - promotes local development based on communities rather familiessplitting up to seek a living elsewhere;Democracy - decisions about local resources are made by local people;Civil society - co-operation and partnerships between community groups;Spirituality and culture - many forest communities regard forests as the homes of theirancestors, sacred spirits and godsi.

i. Munggoro in Aliadi, 1999, p35-7

What is community forest management?

43


Meanwhile, forest communities who havebeen deluged by government and NGOvocabulary continue to refer to theirpractices by their own terms such asmanaging tembawakng, wono, alas etc.

In complete contrast to Indonesia’suniform state model of forest managementthrough 'selective logging and replanting'(TPTI), no single pattern of community-basedforest management can be promoted as analternative model. Historical, forestry andanthropological research testify to the

existence of indigenous forest resourcemanagement systems from almost all parts ofIndonesia. Each developed according to thelocal culture, ecology and climate and has itsown special characteristics.

These adat systems are stillevolving in response to economic andpolitical changes within and outside thecommunity. In some places adat practices arestill alive; in most they have been eroded oreven stamped out by government edicts,resettlement programmes and large-scale

commercial logging.At the same time, forest-dependent

communities have been taking action - settingup alliances at local, regional and national levelwith support from other civil society groups(see section on AMAN, p.46). They are openlypressing for their rights, in particularrecognition of adat rights and re-classificationof forest lands. Some are starting to engage inactive dialogue with the government andforestry companies.

States should "obtain the consent of (tribal andindigenous) peoples, as expressed through theirown representative institutions, in decisionsaffecting their future".

(ILO Convention 169, Article 6.1a)

Conflicts over forest resources continue tochallenge the authority of the state at a timeof political weakness and uncertainty. At thesame time, logging and mining companieswhich are 'on the front line' are petitioninglocal and central government to resolve theirconfrontations with forest communities. Thesituation is a time bomb as Jakarta continuesto prioritise national unity and ignoreindigenous demands for rights. Meanwhile,poverty within and around Indonesia's rapidlydiminishing forests gets worse as people aredenied access to the land and resources onwhich sustainable livelihoods depend.

Forestry policy reform in Indonesiais an essential element of sustainable forestmanagement. Even in government circles, it isnow recognised that there is a need forchange since existing forest policies andmanagement practices have failed to protectforest areas and improve the welfare ofcommunities living in and around forests.

There are essentially three stances to reform:1. Limited reform - maintaining the status

quo as far as possible, including statecontrol of forests and natural resourcesand the role of central government.Pragmatic changes to reduce conflictbetween communities, companies and thestate to ease pressure from civil societyand international donors.

2. Liberal reform - making maximum use ofexisting legislation and regulations toprotect forest peoples' rights and theirautonomy in decision-making on land andnatural resources.

3. Radical reform - changing themainstream positions on forest tenure andmanagement. Making local communities

the key decision-makers and key actors.Recognising the ecological, social andeconomic sustainability of traditionalsystems and using these as the basis fornew models of natural resource ownershipand use.

The government approachTo date, there have been four maingovernment initiatives to address forestcommunities' demands for ecological justice1:1. The community forestry programme -

mainly for areas of degraded forest notwithin existing concessions (hutankemasyarakatan);

2. Recognising some adat forests wheremanagement practices are deemedsustainable (hutan masyarakat adat) (seebox on KdTI p.18)

3. Encouraging tree planting on private land(hutan rakyat);

4. Granting logging concessions to localcommunities in addition to or instead ofto large companies (HPH Kecil - see p.31)

The former state forestry company,

Perum Perhutani, has also introduced its ownform of community forestry on Java throughthe Joint Forest Management scheme (seep.45).

These are only very limitedreforms, despite their use of the term'community forestry'. They only refer tomanagement or access, not tenure. Someforestry officials at central and localgovernment level do have a more progressiveoutlook but, to date, reforms have beenconstrained by the premise of state control offorests enshrined in the Constitution and the1960 Basic Agrarian Law (see p.5). The recentdecision by the Consultative Assembly,Indonesia's highest legislative body, to revisethe legislation on land and natural resourcesopens up new opportunities for a newframework for forest management. (See boxon MPR decree, p.35)

Even so, considerable obstaclesremain. For example, for years the Indonesiangovernment never officially recognised theexistence of indigenous communities. Officialsneed to be able to 'locate' an issue

Pressure for reform and the government's response

Government-approved options for indigenous communitiesA forest farmer or community leader seeking to secure forest access theoretically has anumber of legal options: 1. Under Forestry Act 41/1999 - legal recognition of hutan adat within state forest2. Request a temporary use permit (IPHH) under Law 41/19993. Apply for a community forestry concession (HP HKM) under SK31/2001.4. Form a larger co-operative and apply for a HPH kecil and/or 20% of shares in a

concession holding5. Seek special status (KuTK, formerly KTI)- as for Krui - also under Law 41/1999 6. Use local autonomy legislation to redefine villages as nagari, marga, Kampokng and pass

local regulations which recognise and protect traditional decision-making institutions andforest management systems

7. Use BPN ministerial order 5/1999 on settlement of disputes over customary lands8. In Java only - push for more involvement in the Integrated Village Community

Development (PMDH-terpadu) programme9. In Java only - apply to be a pilot project under the Joint Forest Management scheme

(Pengelolaan Hutan Bersama Masyarakat) with PT Perhutani.Alternatively, forest people have ‘illegal’ options such as occupying forest lands (see

box,p.26).

Adapted from SHK vs HKM:Haruskah Dipertentangkan? Article in Galang SHK No.1, Jan 2001 p.12-161. This section draws heavily from Sirait et al,

ICRAF, Oct 1999

44


“The low-cost community forest (HutanKemasyarakatan) program has providedheartening evidence of poverty alleviation, conflictresolution, reforestation and bottom-upcollaboration among local people andgovernment forestry agencies, notably in Sesaut inLombok and Gunung Betung in Lampung”

(Marzuki Usman in his address to the CGI,April 2001)

HKM was, until the introduction of small-scalelogging concessions, the main thrust of thegovernment's community forestry initiatives2.Its future is now uncertain. The programmehas been the topic of intense public debatebetween foresters, academics, NGOs andindigenous groups. The argument is hard tofollow because the HKM programme hasbeen through several different incarnations,all under the same name, during an eight-yearperiod.

HKM is essentially a lease schemefor forest use by local groups. It can operatein any type of forest - Production, Protectionor Conversion - where no other logging orplantation concessions are currently valid. Itallows local people to use these forests andplantations to harvest timber or non-timberproducts for their own use or on acommercial basis.

The drawbacks of HKM are that:w It does not meet the demands of adat

communities living within 'state forest'lands for recognition of their ownownership and use rights;

w It can only be implemented in very limitedareas, where permits have been withdrawnor expired, since the vast majority offorest is still covered by concessions;

w It is heavily regulated and not allcommunities or co-operatives can meet

the requirements of the scheme.w Each time the system has been changed,

community management elements havebeen weakened in favour of conventionalbusiness operations.

w Officials at district and provincial levelrarely understand the principles ofcommunity-based forest management andhave not always implemented the schemeproperly.

w Policy decisions at central governmentlevel have not been informed by evaluationof existing projects.

The earliest HKM scheme was an attempt byPerhutani to apply the Social ForestryProgramme used on Java to its reforestationwork on other islands. Previous attempts toestablish timber plantations had beenunsuccessful due to conflicts over tenure withlocal communities. Pilot projects in East andWest Nusa Tenggara provinces and EastTimor - set up in 1994 - involved replantingdegraded land with a mixture of trees fortimber (70%) and other uses (30%).Communities were allowed to grow theirown crops between the young trees for thefirst few years. Some local governmentsapplied the same approach to restoring forestcover in watersheds e.g. Tulang Bawang,Lampung.

The results of the pilot projectswere mixed. In some places, plantations weresuccessfully established and local incomesincreased. However, settlers employed fortree planting tended to benefit more thanindigenous communities. In others, the newplantations failed as local people preferred tonurture their own plantations. In NusaTenggara Barat province, farmers withlivestock lost out as their grazing land wasconverted to plantations.

Decree 677Forestry Minister Muslimin also adopted theterm HKM for a radically new community-based forest management scheme. Heworked with forest researchers and NGOstaff from Bina Swadaya, ICRAF, FKKM andFord Foundation, plus progressive elementswithin the department, to draft a new decree.SK677/1998 was eventually introduced inOctober 1998. It was the first policyinstrument to recognise the existence offorest communities and to make them -rather than individual families or companies -the key decision-makers and the beneficiariesof the scheme.

In theory, communities coulddecide what sort of management body to setup and use their own planting schemes, basedon traditional forestry management practices,instead having to stick to a single governmentpattern. The emphasis was on biological andcultural diversity. People could harvest naturaland planted timber, instead of just non-timberproducts, over a 30 year period.

In practice, the scheme had manyflaws even though the list of principles whichaccompanied Decree 677 were welcomed bymany in the community forestry movement.All management plans had to be approved byofficials who tended to adopt moreconventional, business-orientatedapproaches.They translated the ideals ofcommunity management as small-scalecommercial logging operations. Only co-operatives were considered acceptable tomanage these. The community's needs,indigenous knowledge and traditional skillswere overlooked.

The HKM community forestry programme(Hutan Kemasyarakatan)

conceptually and physically, yet thegovernment has no definition of indigenouspeoples and no map of where they are. Evennow, it talks in terms of the forests of‘communities who live by customary law’(hutan masyarakat hukum adat) to avoid thephrase ‘indigenous lands’ or adat forests.

The situation is further complicatedbecause previous governments have forcedmany adat communities to leave theirhomelands. These areas now appear emptyand may even be claimed by more than oneindigenous group. In addition, as the 1999Forestry Act treats adat forest as a part ofstate forest, the government cannot see howto mark the boundaries between state forestand adat forest - an essential step in resolvingconflict over resources. Indigenous peoples

and their NGO supporters argue that theirprior rights to all customary land, includingagroforestry plots and natural forest, must berecognised, not just certificated land. The long-awaited regulation on adat forests whichcomplements the Forestry Act, is due to comeout soon. However, there are no signs thatMegawati's government is going to pay anyattention to indigenous demands for adattenure and management systems to berecognised on an equal footing with statelegislation.

It is a bitter irony that, undercurrent government community forestryregulations, indigenous communities have tosubmit management plans for the use of theiradat lands to the Department of Forestry - aninstitution which has proved incapable of

managing Indonesia's forests. The onlysilvicultural model promoted by the forestbureaucracy for the past thirty years has beenorientated towards the large-scale productionof a single product - timber. This paradigm ishardly appropriate to evaluate themanagement of highly complex indigenousagroforestry systems with their diversity offorest products.

“Between 14 and 20 million hectares of loggedover concessions could be handed over to localcommunities. A further 15-20 million hectares ofmore seriously degraded forest would needrehabilitation through some form of co-operationbetween the state, private sector and localinstitutions.” (Business Indonesia, citing FKKM, 1/Aug/2002)

2. From Sirait, 1999 and pers com. See also Raharjo, 2001.

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ReversesA subsequent decree brought a fundamentalchange. Under Muslimin Nasution'sSK865/1999, the right to manage acommunity forest (Hak Pengelolaan HKM)became a permit to exploit one (IjinPemanfaatan HKM3). Applications fromfarmers groups, co-operatives, Islamic schoolsand other groups piled up at the Departmentof Forestry and some temporary permitswere issued. With the introduction of regionalautonomy, it became less clear who had theauthority to issue HKM permits or whichareas were eligible.

The government introduced yetanother change in 2001 (SK31/2001) whichsuperseded previous policy decisions. Thistipped the balance even further towardsbusiness and forest exploitation and awayfrom the original intention that HKM shouldbe a mechanism for conflict resolution and asustainable model of community-based forestmanagement. This kind of community forestrypermit can only be issued for areas of forestnot covered by other licences - logging,plantation or mining permits. As so much ofIndonesia’s forest has been allocated forthose purposes, it is hard to see where themany groups of dispossessed forest peopleswill be able to apply for a HPHKM.

The situation is further complicatedby HKM community forestry initiativesfunded by loans from OECF (the Japanesegovernment aid agency). This project, whichinvolves the National Planning BoardBAPPENAS, is operating in ten provinces: Riau,W. Sumatra, Jambi, Bengkulu, S. Sulawesi, SESulawesi, C. Sulawesi, East and West NusaTenggara and Maluku. The design of theprogrammes, seedling nurseries, plantingschemes, maintenance and training are allconducted through consultants andcontractors working with NGOs rather thanbeing genuine community-led initiatives. Thisraises the question of whether thegovernment is genuinely interested in thebasic principles of community forestry orwhether HKM is merely a means of accessingmore foreign funds. As the OECF programmeprovides loans rather than grants it could bean expensive option for Indonesia in the longterm.

The intense debates over the HKMhave been highly emotive, yet there has beenno proper monitoring and evaluation. Criticspoint out that HKM has only benefited arelatively small proportion of indigenouscommunities. They claim the beneficiaries todate have been local entrepreneurs, settlersand town dwellers who understand how todeal with the authorities and set up co-operatives. Certainly, hundreds of HKMapplications have been made in someprovinces (for example, Central Kalimantan),the majority by forest-grabbing opportunistswho are nothing to do with indigenouscommunities.

Other local authorities, for examplein Lampung, insist that HKM permits wouldonly be issued to bona fide community groupsand emphasise the responsibility toconservation as part of the right to profitfrom the forest4. At the same time, agenciessuch as the Ford Foundation, claim that thereis much to be learnt from HKM schemes inSesaot (Lombok), Nenggala (Toraja) andGunung Betung (South Lampung) and that -while far from perfect - HKM was a step inthe right direction. It remains to be seen whatwill happen to HKM projects once theforthcoming regulation on adat communityforests is introduced.

The People’sForest Programme

(Program Hutan Rakyat)5

This government programme aims toencourage individual land owners to plantforest trees as small-scale private estates.There are a number of different models, from'People's Forests' established by thecommunity on their own initiative and fromtheir own savings; to government-sponsored'regreening' or job creation projects; toschemes promoted by private companies orco-operatives. They are all directed towardspeople who have certificated land which isnot forested. (If a land owner chooses toplant mostly coffee and fruit trees, this iscalled a 'Peoples Plantation' - part of theagriculture authorities' domain). Thegovernment's input may be technicalassistance, funding (from the ReforestationFund) or assistance with credit facilities.Loans are sometimes available to growers,but this is not an obligatory part of thepackage.

Each farmer may only plant afraction of a hectare with trees but, asvillagers often form 'forest farmers groups',these plantations can be extensive. These nowcover some 1.2 million ha and produce 2million cubic metres of timber per year6,7. Asnatural forests dwindle, the government ispromoting People's Forests as a source offirewood, timber for construction andmaterials for furniture makers and handicraftsas well as a means of supporting localeconomies and reducing soil erosion. Farmerswill usually grow vegetables, fruits and gingersas intercrops between rows of young trees.Pulp mills and their plantation companieshave encouraged local people to plant fastgrowing trees to increase their access tosupplies of pulpwood. Head of the timberproducers’ association MPI-Reformasi, SofjanSiambaton, estimates that if the government

set up a professional team, 10 million ha of‘Peoples' Forest' could be planted in tenyears. If harvested on a ten-year cycle, hethinks this would yield 200 - 250 million m3

timber a year - sufficient to meet allIndonesia's domestic and export needs8.

The timber produced from hutanrakyat can be sold, but only with the correctpermits and a letter from the village headattesting to its origin. Until very recently,Perhutani had a monopoly on selling timberfrom Java, leading to low prices for localtimber growers. Outside Java, illegal leviesimposed by forestry authorities present aproblem.

Nevertheless, many 'People'sForests' are success stories, particularly inJava. Gunung Kidul, near Yogya, was oncerenowned as a barren limestone area whichwas one of the poorest parts of Central Java.After hundreds of hectares of teak, acacia andmahogany trees were planted by villagers, thelocal rainfall has increased and localcommunities can make a reasonable living9.Wonosobo also has extensive areas of'People's Forest' planted under regreeningschemes (see p.49).

The PT Xylo Indah Pratama (XIP) isanother example of a 'Peoples' Forest'promoted as a success story by thegovernment. In partnership with forestfarmers groups, PT XIP has planted 51,000haof land in Musi Rawas, South Sumatra withAlstonia scholaris. The wood is made intopencils for export by Faber Castell ofGermany. Farmers also grow vegetables,chillies and beans in the plantation10. Thewhole plantation is FSC certified (see p.36).

PHBM in Kuningan,West Java

The Joint Forestry Management Approach(PHBM) owes much to pioneering work oncommunity forestry by NGOs like BinaSwadaya, LATIN, Gita Pertiwi and ARuPA overthe last ten years with Perhutani while it wasa state-owned forestry company (see alsobox on Social Forestry p.17). Civil societygroups have urged Perhutani to adopt a multi-stakeholder forest management programmebased on the principles that forest resources

3. This is not the same as the policy decision onsmall-scale logging concession permits (IPHH)made by a director general within theDepartment of Forestry that year. Unlike IPHH,HKM permits are not limited to 100 hectares.

4. Antara 5/Oct/005. Sirait, 19996. Kompas 17/Apr/017. Kompas 4/Sept/008. Bisnis Indonesia 24/Jul/019. Suara Pembaruan 2/May/00; Jakarta Post 31/Jul/0010. Media Indonesia 31/Oct/01

The community forestry movement is a loosealliance of NGOs, indigenous peoplesorganisations and academics concerned withpromoting forest communities at the centreof forest management in Indonesia. Theorganisations highlighted here are some of themajor groups working towards this broadgoal, although they may have differences inaims and approaches. There is insufficientspace to provide detailed information on allgroups, but the contacts box (p.48) shouldprovide a good starting point for furtherinformation.

Through a variety of organisationsand initiatives, community forestry advocatesare going out to research and recordindigenous practices, studying the adat law onwhich they are based and promoting examplesof sustainable management practices as thebasis of forestry policy reform. The intentionis also to strengthen sustainable indigenoussystems and to explore how they are adaptingor can adapt in a changing world.

Meetings at local, national andinternational level have resulted in thepublication of some papers, but more fieldstudies need to be written up in BahasaIndonesia and English in order to reachbroader national and international audiences.

The international research centre,ICRAF, and the forest NGO, LATIN, have ledthe way in producing a number of publicationsexplaining the principles of communityforestry management and addressing the needfor a new paradigm in forest management.

Together, they have championed the Krui'sagroforestry system and played a crucial partin securing special status for their adat lands(see p.50).

To date, the various civil societygroups which make up the communityforestry movement have focused onfieldwork, research, problem analysis andpractical assistance such as providing legalrights training, participatory communitymapping and training for establishing andrunning credit unions. Some have providedadvocacy training for key individuals, usuallyfrom within the community. Typically, thisentails people attending workshops or shortcourses at the NGO’s base and then returningto their villages as key workers or 'communityorganisers'.

"Indonesian agroforests contribute significantly tothe national economy. They provide approximately70% of the total amount of rubber produced inthe country, at least 80% of the damar resin,roughly 80-90% of the various marketed fruits;not yet estimated but rather important quantitiesof the main tree export crops such as cinnamon,clove, nutmeg, coffee and candlenut. In Sumatraalone, about 4 million hectares (of forest) havebeen converted by local people into various kindsof agroforests without any outside assistance. Anestimated 7 million people in Sumatra andKalimantan are living from rubber-basedagroforests that are spread across approximately2.5 million hectares."

(Fay, Sirait & Kusworo, 2000)

AMANLike many other sectors of civil society,indigenous peoples became more outspokenin their demands after Suharto stepped downin May 1998. The position of forest peoples ofIndonesia is very weak. Many indigenouspeoples, particularly those living a traditionalway of life in forests, are completelyunrecognised by the state. They have no voteas they have no national identity card.

A number of well-establishedIndonesian NGOs has supported indigenouspeople's struggles for some years through anetwork called JaPHaMa. In March 1999, itfacilitated the first national indigenouscongress14. Over 200 delegates representingindigenous communities throughout thearchipelago attended the week-long meetingin Jakarta - many of them from forests.Participants strongly expressed their anger atthe way they had been dispossessed of their

are assets which should be shared equitablyand that forest villages are central to themanagement of forests. Increasingly, theypress the case for management systems basedon community practices and draw attentionto the persistence of traditional respect forforests (ngamumule leuweung), even on Java.

Progress has been so slow, due toresistance within Perhutani and the ForestryDepartment to the concept of communityforestry, that many NGOs doubt the extentof official commitment. For example,Perhutani's term for community forestryrefers to 'joint management' not 'community-based management'. Conveniently, theIndonesian acronym PHBM11 can stand foreither. Yet, there is a world of difference -conceptually and practically - between aforest management scheme devised byindustry and government which allows thecommunity to play some minor role and onein which local people are the primary actorsand beneficiaries. More radical NGOs andacademics are critical that joint forestmanagement does not address tenurial issuesand question whether a Perhutani-stylescheme could work outside Java.

A pilot PHBM project was set up byPerhutani and Kuningan district governmentwith the consent of the local community.Around one third of this part of West Java(35,000ha) is classified as state forest but, inthe last 3 years, some 8,000ha have beenstripped of trees. In the government's eyesthis is illegal logging and has caused seriousconfrontations with forest dwellers. There arealso concerns about increased sedimentationin local rivers. The Indonesian forest NGOLATIN mediated an agreement which wasofficially sanctioned by a district head’s decreein July 2000.

The next step is for the districtassembly to pass a local regulation (Perda) tostrengthen the legal basis of the new model ofjoint forest management. LATIN is pressingfor this legislation to give the local communityan equal say in planning and managing forestresources and sharing in the profits. Villagerssee this as a means to reclaim their forestsfrom Perhutani, whereas the localgovernment considers it as another steptowards genuine regional autonomy.

PT Perhutani signed an agreementwith a local forest farmer group in December

200112. This lays down rights andresponsibilities and commits both parties(and the village head) to stick to theprinciples and rules of joint forestmanagement agreed by Cileuya village forum;to draw up all plans for monitoring,evaluation, supervision and security together;and to share the inputs and outputs of thescheme. Meanwhile, West Java provincialadministration assumed full control of theregion's forests from PT Perhutani by passinga local regulation in late 2001. Frustrated bythe lack of progress with Perhutani overcommunity forestry plans, Kuningan councilhas plans to take over that particular unit offorest and form a local authority company(BUMD). The Kuningan Bupati has urged WestJava’s governor to ask President Megawati toallow the district to assume control13.

46


11. PHBM can be taken to mean Pengelolaan HutanBersama Masyarakat or Pengelolaan HutanBerbasis Masyarakat, depending on the speakerand the audience.

12. Kompas 28/Dec/0113. Pikiran Rakyat 25/Feb/02

The community forestry movement

AMAN’s logo

47


customary lands and blamed for thedestruction and degradation of Indonesia'sforests. They demanded recognition of theirsovereignty over their resources andcustomary lands and of their skills andexpertise as practitioners of sustainableforest management.

The result was the creation of theAlliance of Indigenous Peoples of theArchipelago, AMAN, an indigenous people'sorganisation set up to strengthen theirbargaining power vis-à-vis the government andthe private sector. There are an estimated 50-70 million indigenous people in Indonesia: 30-50 million of them directly dependent on adatforest15. At the national level AMAN increasespressure on the government to recogniseadat rights and remove all legislation andsupplementary regulations which violate adatlaw. At the local level, AMAN seeks tostrengthen the local economies of indigenouscommunities by exploring initiatives toimprove their production and marketing offorest products in sustainable, equitable ways.

AMAN is also a vehicle fordeveloping awareness of policy issues - bothgovernment agendas, such as regionalautonomy, and their own concerns, such ashow adat institutions and laws can be revivedor adapted to meet the challenges of amodernising society; what sort of legalframework is necessary to protect indigenousrights; the role of women in adatcommunities. The alliance is controlled by acouncil comprising two indigenousrepresentatives (a man and a woman) fromeach province. West Papua has fourrepresentatives to take account of its size andthe large number and diversity of indigenouspeoples. A small secretariat is based in Jakarta.

It is still early days to gauge thelong-term significance or achievements ofAMAN. The organisation faces considerablecommunications problems in view of the hugesize of Indonesia; the broad distribution ofindigenous groups and their lack of access totechnology; organisational problems to dowith representation, democracy anddelegation of decision-making; strategicproblems relating to negotiating recognitionof indigenous rights with the local and centralauthorities. On the other hand, these areproblems common to indigenous peoples’organisations throughout the world.

Within a relatively short time, thecreation of AMAN has already increased theconfidence and solidarity of indigenouspeoples in Indonesia. Communities in several‘outer islands’ have set up associations atlocal and provincial level and have heldmeetings to work on their own local agendas.There have also been two island-wideindigenous gatherings, for Kalimantan andSulawesi, and a conference for indigenouswomen.

Until the indigenous peoples'movement grows stronger in terms ofalliances and experience, NGOs and other

non-government agencies have importantroles to play in: w making forest communities more aware of

the various legal options available to them;w helping forest communities to articulate

their demands and to present them to thelocal and central authorities;

w assisting communities to maintain ordevelop equitable decision-makingmechanisms;

w helping to lobby for changes in state andlocal legislation to replace legalinstruments which disadvantage forestcommunities with ones which recognisetheir rights;

w mapping community lands to help secureadat rights (see p.51on the Behoa and p.54on West Kalimantan);

w strengthening the local economy throughgiving training in setting up credit unions;

w increasing community awareness of otherservices and roles which outsiders mayprovide. For example, processing andmarketing forest products;

w facilitating the exchange of informationbetween communities and civil societygroups through networks and workshops;

w providing a bridge between forestcommunities and other groups such aspeasant farmers and the urban poor whoare also demanding land rights;

w helping to open up opportunities fordialogue, negotiation and co-operationbetween the community and governmentat local and national levels;

w Enabling forest communities to make useof international legal instruments, bodiesand gatherings to strengthen their positionversus the state.

FKKMAnother important network which emergedas an influential lobby for policy reform onceSuharto was removed from power, is theCommunication Forum for People's Forestry(Forum Komunikasi Kehutanan Masyarakat,FKKM). The group now consists of academics,NGOs, government officials and commercialforesters. Members of the forestry faculty ofthe prestigious Gajah Mada University inYogya have been particularly active.

FKKM has evolved since it wasfounded in September 1997 from being anindependent 'think tank' promotingcommunity forestry in Indonesia to become apressure group lobbying central governmenton forest policy. It played a leading role in theopposition to the Forestry Act (41/1999) andsubsequently lobbied the governmentintensively in an attempt to ensure that forestcommunities' rights are recognised andrespected in the supporting regulations16.One consequence has been that someForestry Department staff tend to see FKKMas 'the opposition' and are reluctant toengage in dialogue. A past criticism of theFKKM has been its tendency to operate in a

'top-down' fashion by not always includingcommunity representatives or indigenousorganisations in stakeholder consultations.

FKKM responded by again changingits structure and activities to focus on twoareas: decentralisation and conflict resolution.It now has a decentralised structure withlocal 'nodes' in the regions and a small, centralsecretariat. Its 2001-2 work programmeincluded comparative studies on how regionalautonomy is affecting community-basednatural resource management in the ‘outerislands’ and the implications for conflictresolution; policy dialogue with localadministrations and assemblies; regionalworkshop or conferences on communityforestry and conflict resolution; working withother parties, including the timber producersassociation, on cases of conflict between localcommunities, the government and the privatesector; developing curriculum materials oncommunity forestry with higher educationinstitutions17.

14. See DTE Special Issue Oct 199915. Nababan, 2002 16. FKKM profile (undated)17. FKKM minutes email 11/Dec/2000

The Santika Declaration

Around 50 representatives of indigenouscommunities, NGOs and individualsconcerned to realise the ideals ofcommunity forestry held a workshop inJakarta in July 2000. The meeting wasorganised by WALHI and funded by DFID.The outcomes were presented togovernment officials, including Minister forthe Regions, Erna Witoelar and SecretaryGeneral of Forestry, Suripto, who attendedthe final day's session, gave their responsesand discussed the way forward. This is partof the declaration on policy reform.

" We consider that the process of constitutionalreform is very important in renewing the socialcontract between the people and the state sothat it includes human rights issues, regionalautonomy and the role of adat/localcommunities in natural resource management. We also consider that it is necessary to reviewall sectoral legislation (forestry, mining, land andconservation)...We demand that spatial planning/zoning isparticipatory, transparent and mostimportantly, based on local community land-useplanning.We are concerned about the tendency forregional autonomy implementation to bedirected purely towards increasing localrevenues through opening up opportunities toinvestments which will destroy local economies.In particular, we demand genuine communityinvolvement in decision-making, primarily indrawing up policy decisions and regulationsconcerning natural resource management andthe existence of indigenous/local peoples'rights.”

KpSHKKpSHK - the Consortium for SupportingCommunity-based Forest SystemManagement - started up in 1997 as a smallgroup of NGOs and individuals keen tosupport community based forestry. Since thenit has expanded its activities from Lampungand East & West Kalimantan to almost allprovinces in Indonesia with 43 members. Theconsortium pursues its overall aims - to act asan advocate for forest peoples' rights -through a small secretariat based in Bogor,West Java and local organisations carrying outresearch and community empowermentactivities in the field. Its programmes,including institutional strengthening, havereceived funding from major donor agenciesincluding Ford Foundation, DFID and HIVOS.

The KpSHK secretariat promotescommunity forestry at national andinternational level, through links with othernetworks such as civil society groupsbelonging to KUDETA (the Coalition forDemocratisation of Natural Resources) andthe multi-stakeholder forum FKKM. It alsogarners support from other NGOs,

researchers and academics. The Consortium's name was

chosen to emphasise two essential elementsof its work. Firstly the phrase 'forest system'acts as a reminder that forests are not just astand of trees, but the whole area used byforest peoples, including mature forest,secondary forest, fields, lakes, settlements,sacred groves and more which supports the

local community. Secondly, the word'community' stresses that the key players inforest management are local people. Indeed,the main purpose of forest management is tosupport and benefit local communities18.

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Main groups working on community forestry - national level AMAN [email protected] www.arupa.or.idBINA SWADAYA www.binaswadaya.org/CIFOR www.cifor.cgiar.orgFKKM fkkm.hypermart.net/Ford Foundation www.fordfound.org/ICRAF www.icraf.cgiar.org/JaPHaMA [email protected] www.jkpp.or.idKEMALA www.bsp-kemala.or.id/KpSHK [email protected] www.latin.or.idLP3ES www.lp3es.or.id/RECOFTC www.recoftc.org/WALHI www.walhi.or.id

The province of South Sumatra can be dividedinto three roughly equal zones: the swampycoast with its many small islands; the lowlandswhere there are many large-scale plantationsand associated industries and settlements; therugged hills which form part of the Barisanrange. Much of the natural lowland forest hasbeen cleared including the coastal mangroves.What remains is a mosaic of mature forest,scrub, secondary forest, grassland andagricultural land. In the western highlands,illegal logging and commercial mining havecaused serious deforestation and erosion.

While it is common to findenvironmental NGOs, peasant farmerassociations, workers organisations,indigenous peoples' alliances, student groupsor civil rights offices at provincial level, it isrelatively uncommon to find a place like SouthSumatra’s provincial capital, Palembang, wherethere are strong links between all thesedifferent types of organisation19.

The legal aid foundation, LBHPalembang, has helped to foster many of thesecommunity groups and NGOs. Over the pastdecade it has taken up hundreds of land rightscases. Typically, indigenous land holdings in thelowlands are quite small, but local farmers canmake a reasonable living by cultivating smallplots of rubber and fruit trees, fishing in localrivers and growing rice and vegetables.Commercial logging operations, large-scaletimber estates to feed the paper pulp industryand oil palm plantations, plus thetransmigration schemes associated with thesedevelopments, have had a tremendous impacton this way of life. Some indigenous people

have joined resettlement schemes as localtransmigrants and work on the plantations;others have drifted to the timber and foodprocessing factories in Palembang and alongthe River Musi; a few have remained to fightfor their rights.

LBH Palembang has encouragedregular local meetings between communitiesinvolved in land disputes where they discusstheir problems and provide practical supportfor each other. The KSKP (SolidaritasKesejahteraan Petani) support network hashelped to strengthen the peasant farmers’association in South Sumatra . This, in turn, hasplayed a leading role in the creation of anational federation of such groups (FPSI). Atthe preparatory stage for the first nationalindigenous peoples' congress, it was easy forPalembang NGOs to contact localcommunities who then organised their ownmeetings to select their representatives. Afterthe congress, South Sumatra was one of thefirst provinces to set up a local indigenouspeoples' organisation, IMASS (IkatanMasyarakat Adat Sumatera Selatan).

The local branch of theenvironmental NGO, WALHI, works closelywith LBH Palembang and with studentorganisations from Palembang's universitiessuch as IMPALM - the student environmentalgroup and MAPESRIPALA. These groups haveheld demonstrations and lobbied theprovincial authorities on a number of localissues, including the PT TEL paper pulp plant,the PT WM shrimp farm, PT Tania Selatan's oilpalm plantations and the Barisan TropicalMining gold mine.

The strength of the movement hasbrought it into conflict with the authorities. InFebruary 2000, dozens of representatives ofworker, farmer and student organisationswent to Jakarta to protest to parliament andthe Peoples Consultative Assembly about 136land cases in the province, workers' low wagesand military intervention in disputes withcompanies20. Four months later, a marchthrough Palembang by hundreds of students,workers and farmers was broken up by police.Demonstrators were attacked and beaten bypolice. Truckloads of security forces laterraided LBH Palembang's office to flush out anysupporters hiding there21.

Such repressive actions have notdaunted civil society groups in South Sumatra.For example, they held a large public meetingto mark the end of 2001 at which journalists,lawyers, environmentalist and studentsrepresenting a number of organisations calledfor a Freedom of Information Act in Indonesia.They also called on the media to make thelocal government more accountable to thepublic, especially over local budgets. TheSouth Sumatra branch of WALHI explainedthe difficulties in getting reliable informationabout environmental destruction, includingforest losses due to fires, caused by theactivities of private and state-ownedcompanies. There were then 75 active cases ofconflict between companies and localcommunities over forests in South Sumatra22.

Solidarity in South Sumatra

18. Taken from address to Lokakarya dan DialogNasional Promosi Sistem Hutan Kerakyatan 3-7July 2000 by Muayat Ali Mushi, KpSHK

19. Information in this section comes frominterviews with several Palembang activists

20. Tempo Interaktif 3/Feb/0021. WALHInews 13/Jun/0022. Email from AJI, 29/Dec/01

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The case of Wonosobo is unusual because itis an experiment in how policy change canbring about changes in the field23. Here locallegislation (Perda) is being used as a tool tosettle long-standing local disputes over forestmanagement. It is also shows how an allianceof local parties has tried to wrest power overresources from central control. This is onlythe first step - it only applies to one districtand remains to be seen how it works inpractice. If successful, the Wonosobo modelcould provide inspiration for othercommunities.

Wonosobo is a rural district inCentral Java, close to the mountainous Diengplateau. Much of its 18,896ha of state forest isdesignated Protection Forest as the hillyuplands are the watershed for several majorrivers. Like all other state forest/plantationson Java, this land was controlled by the state-owned forestry company Perum Perhutani.Local people resented the fact that 'stateforest' had provided little direct benefit tothem over many decades, not least because ofPerhutani's centralised bureaucratic structureand its tight restrictions on access to forestland.

The introduction of regionalautonomy and the privatisation of stateforestry in Java presented new opportunities.Supported by district authorities, local peopleargued that state forest represents a resourcewhich could improve families' welfare andgenerate funding for development inWonosobo, if only it were managed bycommunities and the local government. Theyhave a point: the people of Wonosobo districtalready manage more tree-covered land thanthe local Perhutani unit - over 19,000 ha by1997-8. This 'community forest' is mostlyAlbezia sp and Paraserianthes falcatariaplantations. These trees are fast-growing, easyto grow and provide wood for fuel andhousehold construction plus foliage whichcan be used to feed livestock or makecompost. In contrast, the 'state forest' largelycomprised older, semi-naturalised plantationsof pine, teak and remnants of natural forest.Teak only reaches maturity after 30 years, buthas a much higher commercial value.

Very little community forest inWonosobo has been affected by timber raids,even though adjacent state forests have beenhard hit by large-scale illegal logging since late1998. Forestry office data states that nearly3,500ha of Perhutani forest had been clearedby mid-2000, mostly in operations organisedand carried out by outsiders. But field reportssuggest that well over half the 'state forest'has been severely damaged or destroyed.Local people feel no responsibility to protectPerhutani plantations and may well participatein the timber raids. Even so, they recognise

the value of local forested areas forprotecting watersheds and regulating watersupplies for irrigated rice cultivation.Sedimentation of local reservoirs and - everyrainy season - flooding and landslides areimportant local issues.

Elements of traditional forestmanagement still persist in some parts of Java,despite centuries of colonial administration,the conversion of most lowland forest foragriculture and the establishment ofplantations. The Javanese term wono,incorporated into the names of many villagesand towns, can mean forest, paddy fields ororchards since the same land is used to growtrees, rice and other agricultural crops -sometimes in rotation; sometimes byintercropping.

New PerdaCo-operation between local NGOs anddistrict authorities has resulted in a new localregulation for Wonosobo24. Perda 22/2001on Community-Based Forest ResourceManagement is the culmination of severalyears of consultations and negotiationsbetween various stakeholders. Wonosoboofficials insist that this is a genuine attempt toimplement more democratic, equitableresource use and not simply a means ofincreasing revenues for a hard-pressed localgovernment in a very poor part of Java.

The Yogya-based NGO, ARuPA,carried out an investigation into the raids onstate forest land in the Wonosobo area.ARuPA (an acronym roughly translating as theVolunteers' Alliance for Saving Nature) wasfounded in 1998 as an action committee topromote reform of policy and practice innatural resource management and tenure.Many of its members are students from theforestry faculty of Gajah Mada Universitywho gained some understanding of conflictsover local resources through the practicalwork in Perhutani forests and plantations aspart of their courses. Consequently conflictresolution and sustainable, fair, democraticresource management are high on theiragenda. ARuPA has been actively promotingcommunity-based forestry management forthe past three years, through publications inJavanese for local farmers and a joint forestmanagement pilot project in Randublatungwith Perhutani25.

The Wonosobo local assembly(DPRD), also concerned about escalatingconflicts over state forests in itsadministrative area and protests from localcommunities about erosion problems, wereimpressed by ARuPA's report and invitedthem to discuss possible solutions. Earlymeetings proved so constructive that, by

August 2000, informal discussions hadextended to become a multi-stakeholderforum involving Perhutani and local forestryofficials, security forces, communityrepresentatives and other groups, includingforest farmers. One major sticking point wasthat the state forestry company wanted tomaintain its authority and clung onto themonopoly over commercial forestryoperations on Java granted to it by Jakarta.Local assembly representatives (Komisi BDPRD) continued to explore otheralternatives with ARuPA and Yayasan Koling, alocal NGO, including joint visits to disputedforest areas within the district. Eventually,they decided to make the most of regionalautonomy powers to pass new legislation oncommunity-based forest management.

With expert staff from Gajah MadaUniversity, ARuPA drafted a local regulationwhich was presented to Perhutani and localcommunities through a formal hearing of thelocal assembly in November 2000. This wasfollowed by a series of open meetings chairedby the forest forum, FKKM, attended byforest farmers, local government, forestryofficials, the press, NGOs and forestryacademics. These provided information onhow local autonomy was working in differentsectors, opinions on the legal basis of forestmanagement and evidence on community-based forest management from othercountries, thus providing legitimacy andstrengthening support for the proposedlegislation. At the same time, members of thegroup revisited the villages they had studiedto discuss the draft regulation. Such meetingsgenerated broad-based discussion andgreater understanding of actual conditionsand the potential for change within theWonosobo district.

An initiative to set up a localgovernment-controlled forestry company

Community-based forest management in Wonosobo, Central Java

23. This section draws on information provided ininterviews with ARuPA, C. Krustanto (Head ofKomisi B, DPRD Wonosobo) and Jurnal StudiKebijakan PSDA Vol 2/No.1/Oct-Dec 2001.Wonosobo: Facing decentralised forestmanagement, a paper in English by IrfanBachtiar, is available athttp://www.arupa.or.id/papers/01.htm

24. The full text of this local regulation is availablein English onhttp://www.arupa.or.id/papers/33.htm and inBahasa Indonesia onhttp://www.arupa.or.id/papers/34.htm

25. The farmers news bulletin and comic Wasis (inBahasa Jawa) and Negosiasi Tanpa Henti (EndlessNegotiations) a video on the Randublatungpilot project (in Bahasa Indonesia & BahasaJawa with notes in English) are available fromARuPA secretariat, Karangwuni H-5A, JlKaliurang Km 5, Yogyakarta 55281, CentralJava, Indonesia; website www.arupa.or.id.

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The Krui agroforests in West Lampung,Sumatra, are a landmark in the recognition ofindigenous (adat) rights by the Indonesiangovernment. This was the first forest land inIndonesia to be designated a Special PurposesArea (Kawasan dengan Tujuan Istimewa, KdTI,later renamed Kawasan untuk Tujuan Khusus,KuTK)26.

The Pesisir Krui have lived in thehilly coastal region of West Lampung since atleast the 14th century. Their livelihood islargely dependent on the commerciallyvaluable fragrant resin (damar) and timber ofmeranti trees (Shorea javanica). Theindigenous inhabitants of fifty or so villagesplant and tend these trees - along with rattan,coffee, cloves and fruit trees - to form atraditionally managed mixed forestecosystem, known as wanatani repong damar.This agroforest supports the community inmany ways: it is a source of fuelwood, fish,bushmeat and traditional medicines - for theirown use and occasional sale. Some areas areset aside as permanent rice fields. Thisecosystem extends over 50,000 ha along along, narrow strip of land between BukitBarisan National Park (established during theDutch colonial period) and the coastal plain.

Most of the Pesisir Krui's adat landwas designated 'state forest' and had beenallocated for logging in the early 1970s. Theforestry minister granted the timbercompany Bina Lestari a logging concessioncovering 52,000 ha along the western edge ofthe National Park in 1981. Bina Lestari limitedits operations mainly to the southern part ofits concession to avoid conflict with localcommunities and the Park authorities. The

following decade, the forestry authoritiesdivided the Krui forests into three categories:most became Limited Production Forest,since the terrain is too steep for normallogging; some of the steepest slopes andsummits were designated Protection Forest;and part could be clear felled and used foragriculture.

Until the local governmentapproved the new land use zoning in 1991and demarcation began, these areas were onlylines on a map. The amount of forest whichcould be logged was later reduced from44,120ha to 33,000ha. The 7,800ha ofConversion Forest, located in the mostsoutherly part of the Pesisir Krui's lands, wasallocated to an oil palm plantation (PT KaryaCanggih Mandiri Utama) and another privatecompany in 1994. The state forestry companyInhutani V was made responsible for forestrehabilitation in parts of the former loggingconcession.

Logging and plantations threatenedto destroy the damar forests and the PesisirKrui's whole way of life. The local communitypressed the authorities to recognise theircustomary rights and the value of theirtraditional management system in maintainingforest cover. In this, they had the support oflocal and national NGOs and national andinternational forest researchers. Advocacybecame more urgent during the 1990s, whencompanies used the oil palm boom as apretext to apply for plantation land as ameans of getting their hands on Krui'svaluable timber.

One of the tactics of civil societygroups and reform-minded individuals within

the forestry establishment to protect thePesisir Krui's agroforests was to nominate theindigenous community for the Kalpataruprize. This prestigious national award ispresented annually by the environmentminister to individuals for outstandingcontributions to upholding or improving thequality of Indonesia's environment. In 1997,Jadri Junaidi, a customary leader and head of aKrui clan, was awarded the Kalpataru onbehalf of the whole community.

The Kalpataru award helped toconvince forestry officials and the localauthorities that the Krui's lands wereagroforests, not natural forest; that thesewere economically productive forests andlocal incomes would suffer if the area becameoil palm plantations; and that localcommunities could manage their own forestresources. But the dilemma for the forestryminister was that recognition of the PesisirKrui's customary rights would open thefloodgates and demands would pour in fromother indigenous communities whose landswere classified as 'state forest'. Land reformwas not on the Suharto regime's agenda.Djamaluddin's solution (one of his last acts asforestry minister) was to issue a draft decree(which later became SK49/1988) giving specialstatus to 29,000ha of the Krui agroforest (seep.18).

Agroforestry in Krui, Lampung, Sumatra

was rejected in favour of a second attempt tocreate a community-based system. A newdrafting team representing all parties waschosen and set about further consultations.Unfortunately, local communities were moreprepared to participate than Perhutani, whichonly sent low-ranking officials to meetings.

By early 2001, the multi-partyWonosobo Forest Forum (FKPPH) was upand running. Its first move was urge Perhutaniand forest farmers alike to observe a six-month moratorium on all logging and forestfarming from March to September 2001 sothat dialogue could take place. Once again,Perhutani opted out, but other Forummembers proceeded to go from village tovillage encouraging communities to supportthis initiative and discuss other ways toprotect local forests. The final version of theregulation was drawn up by the team and,after consultations, was passed in October2001. The next stage is participatory mapping

to identify suitable pilot areas. To date thesystem has only been tested on private land,not state or communal forest.

The central element of Perda22/2001 is that forest land formerlycontrolled by Perhutani will become 'districtforest' under a community-based forestmanagement system. The local regulationcovers the roles and responsibilities of thelocal government, farmers' groups, NGOs anddistrict administrator. It lays down what ismeant by community-based forestmanagement and the practicalities of how itwill operate, including how the extent of the'district forest' will be agreed; how forestfarmers groups are to be set up; how themanagement system will be monitored andevaluated. Participation and partnership areimportant elements in all stages of thisprocess. Agreements between forest farmersand the local government (here representedby the local forestry office) are for an initial 6

year period, renewable to a maximum of 30years.

Will Perda Wonosobo 22/2001prove workable or will it need to be revisedin the light of experience? Will the newlyprivatised Perhutani hand over what remainsof state forests in the Wonosobo area tobecome a 'district forest'? Will all parties inWonosobo be able to work together to drawup forest management plans which aregenuinely community-based? Willcommunities in all parts of Wonosobo -mountains and lowlands - participate? Willthere be any tangible results within the initialtrial period? Will corrupt local officials seizethis opportunity to sell off land formerlyclassified as 'state forest'? It is far too early tospeculate, but some civil society groups andacademics are optimistic and many parties willbe following developments in Wonosobo.

26. Information in this section is taken fromLATIN, 2000, Menyelamatkan Wilayah KelolaRakyat; LATIN, 2000, Perambah Hutan atauKambing Hitam; Fay & Sirait, 1999,supplemented by brief interviews with Suwito& Cholis Yung (LATIN & local community, Mar1999) and Buyung ( WATALA, Oct 2001)

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The Krui case has been widelypromoted within Indonesia andinternationally as a positive example of bothcommunity-based forest management andcivil society groups' efforts to effect policychange. Yet it is unique in several ways and isarguably of limited value more generally inIndonesia as a model for sustainable forestmanagement and community activism.w There is good evidence from the

community, backed by scientific research,that the Krui planted their tree crops longbefore the state forest was gazetted. Sothere could be no dispute that this was'virgin' forest, subject to shiftingcultivation;

w Land is owned individually and managed byfamilies belonging to certain clans, unlikemany indigenous communities wheretraditional tenure is a complex mosaicincluding communal land;

w Lampung is close to Java. The Kruiagroforests are accessible to forestresearchers (and forestry ministers) andcommunity leaders can easily travel toJakarta to lobby politicians and officials orto gain support from national NGOs.

The Krui story is not all good news.Initially, many of the indigenous communitywere delighted that their agroforest had beenrecognised and some of it given protectivestatus, even though it was still classified asstate forest. But, before long, the majorityrejected the 'special status' compromise and -like many other indigenous groups inIndonesia - demanded recognition of theircustomary tenure rights over the whole oftheir lands. In practice, the KdTI/KuTK statusmeans little because none of the rules neededfor full implementation have ever been issued.Few other forest peoples have evenattempted to gain Special Purposes Areastatus for their adat land.

Clearing forests for plantations wasbanned in Lampung even before the nationalmoratorium on forest conversion came intoforce and the immediate threat of oil palmplantation encroachment on Krui land hasbeen reduced. But the abolition of theConversion Forest category has brought anew problem. The majority of that forest hasnow been reallocated to Limited Production(i.e. commercial logging). Meanwhile, localpeople cannot re-establish agroforest in the

remainder: that has become ProtectionForest, although it includes a former village.The Pesisir Krui propose a radical change inthe way the government has classified theirforest lands. The Limited Production,Protection and Special Status forestcategories would be replaced by two types offorest: hutan marga or clan forest, wherepeople can live and work; and hutan suaka orprotection forest i.e. Bukit Barisan NationalPark.

Certainly change is needed. In thePost-Suharto era, internal disputes within thePesisir Krui community have become moreevident. Pressure on forest land for repongdamar has given rise to inter-clan rivalries.These could, ultimately, be as great a threat tothe traditional forest management system asappropriation of their lands by the state orprivate sector. Staff from national and localNGOs, researchers from the InternationalCentre for Agroforestry and the University ofLampung and local governmentrepresentatives are currently investigatingthese problems and attempting to establishsome means of resolving conflicts.

The Behoa (also known as Besoa or Katu) areone of the many indigenous forest peopleswho still follow a largely traditional lifestyle inCentral Sulawesi27. However, in the 1970s,their customary lands and those of the ToBada, To Lindu, To Pekureha and To Kulawiwere designated Protected Areas by thegovernment in the shape of the Departmentof Forestry. Plans to create Lore LinduNational Park were announced in 1982, butwere only realised in 1993. The forest-coveredrugged hills and fertile valleys were treated asif they were empty land. There was noconsultation with local communities. At thesame time, the government gave licences toplantation companies to clear adat forestbelonging to these peoples outside the Park.

Lore Lindu National Park covers229,000ha of the Donggala and Poso districtsof Central Sulawesi. The area has a highbiodiversity with many endemic species, suchas the anoa (Bubulus sp), cuscus (Phalangercelebensis), Tarsius sp, Celebes macaque(Macaca tonkeana) and Celebes civet. Itcontains lowland and highland rainforest andsome 60,000 people live within its boundaries.The majority are indigenous. They make aliving by rice farming in the valleys and therotational use of forests for maize, coffee,timber, damar resin, rattan, bamboo andmedicinal plants. The Behoa use a wide rangeof local varieties of food crops: 33 types ofrice; 8 of yam; 8 of maize and 6 of thevegetable root crop talas28.

Ceremonies and rituals must be

held for each part of the forest clearance andcultivation cycle. The tenure and land usesystem is quite complex to outsiders. Primaryforest (called pandulu by the Behoa) is heldcommunally and usually kept intact. It is usedfor hunting and collection of medicinal plantsand rattans. Lopo is land which was oncefarmed (hinoe) but has been allowed to returnto forest. Secondary forest which is more thantwo years old (lopo ntua) is consideredcommunal land which anyone can use forfarming. Young secondary forest (lopo lehe) isheld by individuals. Holu, land which wasrecently farmed but has not yet started toreturn to forest, belongs to the person whooriginally cleared it, but may be loaned toother families to grow crops.

Local communities are prohibitedby law from practising their traditional land-use systems within National Parks. Theseregulations have been the cause of conflict invarious parts of the country (most recentlyRawa Aopa Watumohai National Park inneighbouring SE Sulawesi) due to rigidenforcement by nature conservationauthorities. Local authorities blamedindigenous people for deforestation withinthe National Park and sought to resettle themoutside its boundaries. This became part ofthe Central Sulawesi Integrated Developmentand Conservation Plan, funded by the ADB, inthe mid-1990s. The head of the local planningboard announced in late 1997 that 24,000families from 60 villages in the park would bemoved and resettled elsewhere in the

province. He described this as necessary "topromote the welfare of the indigenous peopleand ensure that they do no pose any morethreat to the Park's natural resources"29 .

According to local NGOs,indigenous villagers in Lore Lindu have beensubjected to intimidation by the parkauthorities, including interrogation anddetention. Their crops have been destroyedand the rattan and timber confiscated. ‘Shiftingcultivators’, ‘national park vandals’ and ‘forestsquatters’ are some of the terms used in therecent past by government officials todescribe the indigenous population. In theeyes of the authorities, the Behoa werenewcomers to the area. However, thisindigenous community had been forced toleave its adat lands by the Dutch authoritiesearly last century and again by the newlyindependent Indonesian government duringthe turbulent political period in the early1950s30. Each time they came back to reclaimtheir ancestral lands.

The Behoa have been helped intheir struggle to hold onto their customarylands through the support of local NGOs. Thisrelationship developed from a campaign in theearly 1990s to prevent the construction of a

The Behoa people of Central Sulawesi

27. Much of this section draws on a WALHISulteng factsheet on Lore Lindu (Sept 2001)and interviews with Pak Banjar and TanahMerdeka staff in Nov 2000.

28. Kompas 7Mar/0129. Jakarta Post 27/Dec/9730. Kompas 14/Jun/99

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The village of Bentek, in North Lombok, is anexample of 'Adat in Action'. The indigenousSasak community has seized opportunitiespresented by political changes and regionalautonomy legislation to revive customaryinstitutions and laws as a means of protectingtheir forest33.

Bentek lies on the edge of theMonggal forest, part of the 125,000ha offorest covering the northern slopes ofMount Rinjani, the volcano which dominatesthe island of Lombok. Traditionally, Sasakcommunities make a living by a combinationof agroforestry and rice farming, cultivatingcoffee, cocoa, cloves, bananas and other fruittrees and crops.

Like most Sasaks, the majority ofpeople in Bentek practise a form of Islamstrongly influenced by Hindu and animistelements. They depend on the forests toregulate the water supply for these crops andas a source of materials for building theirhomes and household goods. Undercustomary law, forest cannot be bought orsold and must be managed collectively.Villagers are allowed to cut timber as long asit is for their own consumption rather thanfor sale. They are also allowed to collectforest products, such as firewood and rattan,by agreement with the village's customarycouncil.

The Bentek village councilcomprises three kinds of authority: theadministrative leader (pemusungan);customary guardians (pemangku) and religiousleaders (penghulu). This is far more thansubstituting customary terms forbureaucratic positions such as village head.The Bentek community had, in 1999, rejectedthe standard model of village governanceimposed by Jakarta in the 1970s and isreturning to traditional institutions. They nowhave a customary court (Majelis Krama Adat

Desa) to settle violations of adat law andteams of people responsible for protectingforests, pest control and maintaining waterquality.

Despite their successes incontrolling illegal logging and maintainingforest cover, the community has no formallegal recognition yet of its adat land,institutions and practices and localgovernment forestry staff still do not fullyacknowledge the authority of its leaders. TheMonggal forest is officially classified as stateforest zoned for logging .

The impact of commercial logginghas reinforced the community's belief in theimportance of forest conservation. PTAngkawijaya Raya Timber (ART) was granteda 10,000ha concession in the Monggal forestin 1990. Within five years, the villagers startedto experience water shortages in the dryseason. Springs and streams dried up; rice andcoffee production dropped. In the rainyseason, logging trails created by heavyequipment turned into streams; paddy fieldsand plantations flooded. The worst floodsoccurred in February 1999 when hundreds ofhectares of land in Bentek and Jenggala wereflooded. Three traditional burial grounds weredamaged. People feared their homes wouldbe swept away and crops worth billions ofrupiah were ruined. They carried out theirown investigation and came to the conclusionthat the logging company was to blame.

Some 700 local people attacked PTART’s base camp in May 1999, ransacking andburning offices, transport and equipmentcausing an estimated Rp1.5 bn (US$150,000)damage. They then demanded that the localgovernment officially close the loggingoperations down. Jakarta has still not actedon local officials' recommendation towithdraw the logging permit (a source of localconcern and resentment), but PT Angkawijayahas never returned.

However, illegal logging replacedcommercial operations. These were well-organised raids: more than five trucks per daycarried stolen timber to the provincial capitalMataram 60 km away. Bribery and corruptionwere suspected since these roads passedpolice and military posts, as well as localadministration and forestry offices in severalsub-districts. Village heads and communityleaders from 25 villages in five sub-districtsaround Mount Rinjani took matters into theirown hands. In 2000, they gathered to discussthe issue and to see how customary controlsand sanctions could be used to prevent forestdestruction by outsiders and members oftheir own communities. Officials from thelocal forestry offices implicated in the illegallogging also attended.

This meeting agreed to revive asystem of customary laws which protect thelocal environment. These awiq-awiq not onlycover illegal logging, but burning to clearforests and using poison to fish. Violations ofadat law incur progressively severe sanctions.Someone guilty of illegal logging must provide10 seedlings for every tree felled and pay asymbolic fine of Rp100,000 (US$10). For asecond offence, the law breaker must takepart in a ritual known as menyowok in additionto paying a fine. This ceremony to appeasenature is carried out by customary leader(pemangku) in the forest in front of the wholecommunity. A goat or chicken is killed and theoffender is marked on the forehead withsacrificial blood (sembek). Fruits, other foodand betel leaves are given as offerings. Theseverity of the penalty depends on the natureof the crime - whether the forest was logged

Revitalising customary laws to protect forests,Bentek, North Lombok

33. Information in this section is drawn from anarticle by A. Rulianto & Mo. S. Khafid in TempoJuly 31 - August 6, 2001, supplemented withshort interviews with Putrawadi and R. AgusBakrie from the Bentek community (pers comNov 2001).

hydro-electric power station and dam on theedge of the National Park. Student groupsfrom the university in the provincial capital,Palu, with Behoa community leaders heldnumerous protests about the resettlementplans outside government offices and theprovincial assembly. Posters read "Do notdestroy the peace of the Katu", "Free us fromintimidation from Park patrols", "Don'ttorture us with your National Park"31. ThePalu-based group Tanah Merdeka pioneeredparticipatory community mapping in CentralSulawesi of Behoa lands at Katu and Doda andused this information to set up negotiationswith the National Park authorities.

Head of Lore Lindu National Park,Banjar Yulianto Laban, is one of a new breed of

park official who publicly acknowledgesindigenous peoples' traditional knowledge andmanagement skills. In a ground-breakingdecision in late 1999, he agreed with localgovernment officials and community leadersthat the 227 people of Katu could stay ontheir land and manage it according to adat law.Initially the agreement was for only for1,178ha, but it now covers a total of 6,659haof the Park. This means that people of Katuand Doda can continue to make a living fromselling timber, rattan and damar resin plusfarming forest land to meet their needs.

The Behoa case is a success story,but it is only a limited success. This is only oneof several indigenous communities threatenedwith resettlement from Lore Lindu. Only part

of their lands have been acknowledged andonly with an agreement over use rights, not arecognition of adat tenure. Moreover, in late2000, the local planning office appeared to bereneging on the agreement since the ADB waswithholding Rp7.5 trillion (US$750 million) incase its project needs 'redesigning' as a resultof the National Park head's stand32.

31. Surya 23/Dec/9732. Republika Online 17/Jan/00; Suara Pembaruan

16/Nov/00

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for someone's own use or for profit. Eachhamlet within the village has its own forestprotection team who ensure that everyoneknows and keeps to the rules.

The Bentek principles of forestmanagement are:w There is no ownership of forests;w Collective (not individual) management;w Planting species which have conservation

value;w Fruits and flowers can be collected, but

not timber;w No digging, burning or clearing is allowed

(except of shrubs);w Each group must have its own

management rules (awiq-awiq);w Priority should be given to the poor.

This application of adat has provedremarkably effective. Apparently it is fear ofpublic humiliation rather than the fines whichis the major deterrent. So far, the menyowokceremony has been used on only twooccasions - one involving a group of eleven

people caught clearing Protection Forest tomake fields. The people of Bentek haveformed their own adat security agency, LangLang Jagat Titik Guna (LLJTG). A recent successhas been the seizure of 18 cubic meters ofillegal timber, sawn into blocks and awaitingcollection to be smuggled out of the village.

Although powerful, adat controlsare not perfect. People who offend more thantwice are dealt with through conventionalcourts. Illegal logging still takes place inforests well away from Bentek village and isrampant in neighbouring areas where villageshave not returned to adat social controls.However, Bentek representatives areconvinced that other people will learn fromtheir example.

The Bentek example is attractingattention and support from local civil societygroups and international donors. Forexample, USAID and AusAid funded trainingfor 40 local people in participatory mappingin July 2000. It also feeds into the growing

indigenous peoples' movement in Lombokand further afield. Bentek communityrepresentatives work with YLKMP, aMataram-based rural development NGO anda forum of people from local villages, NGOs,government and enterprises meets monthlyin an initiative instigated by the NorthLombok association of indigenouscommunities (Perkat Ombara). All of thiscontributes to increased recognition of thevalue of community-based forestmanagement.

The forests in the buffer zone of Bukit TigaPuluh National Park, on the Riau - Jambiborder in Sumatra are threatened by loggingconcessions, oil palm plantations, illegal loggingand a possible coal mine. Indigenouscommunities are in a critical position. Somepeople want to keep their adat land; othersare pro-investor34.

The village of Pejangki in Riau is acase in point. This is one of nine villages(locally called kebatinan) in the Siberida areawhich share the same history and culture. The64 families live in simple houses mainly nearthe R. Tanaku. Their adat lands cover 7,014 haextending south towards the National Park.The area around the settlement is used foragroforestry - with extensive native rubberplantations and some mixed fruit plots - and asmall amount of farming. The hilly southernhalf is largely rainforest.

The Pejangki community faces twomain threats. Firstly, a substantial swathe ofadat forest has been allocated to PT ArvenaSepakat - an oil palm plantation. So far, thecompany has only planted the core zone, butit wants extend the plantation by setting up asmallholder scheme. This would take over allthe village's agroforest and its rice fields.Representatives of PT Arvena, accompaniedby government officials, have come to Pejangkiwith promises of 'plasma' (oil palm plots) toconvince them to sign over their land.Meanwhile, some villagers are trying toreclaim parts of the oil palm plantation byplanting rubber and fruit trees or clearing theland for cultivation. The second threat is illegal

logging. The extreme southern part ofPejangki's adat forest is almost pristine as theterrain is too steep for heavy loggingequipment. The more accessible parts werebeing logged by outsiders.

The community was divided aboutwhat to do. For many generations, they hadbeen largely self-sufficient - selling rubber andother non-timber forest products to buygoods which they could not producethemselves. But, with the encroachingpressures of modern life, people needed moremoney to pay for clothing, schooling andtransport. Rubber prices had hit a low. Theonly options seemed to be to give up theiragroforests and farmland to the plantationcompany in return for a stake in its outgrowerscheme or to join the loggers and strip theirown forests.

The NGO community only foundout about the dilemma facing the people ofPejangki when a representative attended thenational indigenous peoples' congress inJakarta in March 1999 (see p.46). One of thevery few natural resource NGOs in Riau - arelatively new group called Hakiki, went toinvestigate. The situation was more urgentthan it had appeared. There had beenextensive logging within Bukit Tiga PuluhNational Park and its surrounding forests andillegal sawmills had sprung up all over theplace35. The village head had set up a loggingco-operative, PT Makmur Jaya, but this wasonly a front for a much bigger loggingcompany. Villagers were paid the ridiculouslylow sum of Rp4,000/m3 (less than US$0.5) for

valuable tropical hardwoods such as Shorea sp(meranti). Some villagers were already involvedin legal and illegal logging of the adat forest. Asolution was needed quickly.

Hakiki started by helping thePenjangki community to document the extentof their customary land and natural resourcesthrough participatory community mappingfollowed by a complete inventory. Once theyhad produced the map, the villagers had amuch better idea of their position and weremore determined to hold on to their adatforest.

Together with Hakiki, they came upwith a radical proposal. They would set up acommunity logging co-operative and theirown sawmill. This would allow them - ratherthan outsiders - to decide how much timberwas felled and to get a much better price forit. They would start by using trees alreadyfelled and bought, for a bargain price, the 800tree trunks cut by PT Makmur Jaya. Hakikiused their field evidence of deforestationwithin the National Park to convince theWorld Bank to provide a grant of Rp50 million(approx US$5,000) to buy a communitysawmill and chainsaws. If this approach works,Hakiki hopes to spread the initiative toneighbouring areas.

Logging to save the forest:Pejangki, Riau

34. Information from interview with staff andboard member of Hakiki, plus local map.

35. Only one third of the forest in Bukit TigaPuluh National Park remains intact, accordingto WWF (Media Indonesia 16/Aug/00)

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Most of West Kalimantan36 was originallycovered in tropical forest, but extensive areas- especially in the lowlands - have beencleared by irresponsible commercial loggingoperations, plantation companies andtransmigration sites over the last thirtyyears37. West Kalimantan was hit hard byforest fires in 1982 and 1997, but annualcycles of burning to clear land can furtherreduce or degrade forest cover. Illegal loggingand the illegal log trade across the Malaysianborder have accelerated in recent years. Atcurrent rates of forest exploitation, most ofthe forest in West Kalimantan outsideprotected areas could have gone within tenyears . This deforestation not only representsthe loss of biodiversity, but the destruction oflocal people's sustainable livelihoods and theloss of their cultural identities.

This gloomy picture provides thebackground for a thriving assemblage of civilsociety organisations which has genuinelyempowered the indigenous Dayakcommunity. At the heart of this socialmovement lies Pancur Kasih, a local NGOestablished twenty years ago by a small groupof young, idealistic Dayaks. The founder, A. R.Mecer, believed that the way to a betterfuture for Dayaks lay in solidarity, self-helpand critical awareness. They started by settingup a church-based school in Pontianak toprovide a basic education for local children.Income from school fees was ploughed backinto the foundation, which expanded into acluster of schools and a series of socialprojects in Dayak villages in the interior onhealth, food production and incomegeneration. PK then established what hasbecome one of Indonesia's most successfulCredit Unions with hundreds of localbranches providing cheap, easy loans to tens

of thousands of members. As the organisation became more

experienced and financially secure, (throughits own operations and support frominternational donors including churches, andenvironmental NGOs), Pancur Kasih spawneda number of separate organisations. Around20 groups employing some 250 staff nowcome under Pancur Kasih's umbrella (morecorrectly known as KPMD, the Consortiumfor the Empowerment of Dayak Peoples). Itincludes the publishing company whichproduces the monthly news magazineKalimantan Review; a co-operative of Dayakrubber farmers which promotes economicindependence, local control of naturalresources and sustainable development; thelegal empowerment group LBBT (LembagaBela Banua Talino) and SHK-Kalbar whichresearches and promotes sustainable Dayakresource management systems. Eachorganisation operates autonomously in itsown specific field on a day-to-day basis, butmembers of the consortium share the samevision and work together synergistically asthe account below shows. Many of thesegroups also provide training for otherorganisations, so their effect is multiplied farbeyond Pontianak.

The Institute of Dayakology(originally IDRD, now ID) originated as aninformal study group within Pancur Kasih todiscuss political and cultural issues. It has nowsystematically recorded and researched thecultures of thousands of Dayak communitiesthroughout West Kalimantan. This is far morethan an academic survey of belief systems,rituals, customary laws and communitypractices that were doomed to extinction.The aim has always been to increaseindigenous communities' own awareness of

and pride in their rich cultural heritage; togain recognition and respect for theirknowledge and skills from outsiders(including the Indonesian government); tostrengthen their sense of identity so thatthese elements can be passed on to futuregenerations. However, the political aspect ofID's work could only be carried out underthe heading of 'research' until the downfall ofSuharto.

One measure of the success of thistactic has been the revival, since 1998, of largecustomary gatherings where differentbranches of clans meet to carry outimportant rituals and to celebrate. Sharingmusic, stories, food and dancing are central toDayak cultures. Such events also facilitatediscussions about common problems andinitiatives to tackle them, furtherstrengthening the Dayak social movement. IDhas also permeated the formal educationsystem in West Kalimantan, by making themost of the statutory obligation to includesome 'local content' within teaching of theprimary school national curriculum. Itarranges for clan elders and customaryleaders to come into classrooms as 'livinglibraries' of their oral tradition. ID has alsopublishes a range of story books for primaryschool children based on local legends.

It is hardly surprising that the WestKalimantan adat peoples' alliance, AMA, wasone of the first coalitions of indigenousgroups in Indonesia to spring up after Suhartowas forced to resign the presidency. It grewout of a meeting of several hundred Dayakrepresentatives from all over Kalimantan whogathered in Pontianak, through the facilitationof PK and the community mapping groupPPSDAK, to discuss how to protect theirtraditional systems of land and resourcemanagement. West Kalimantan delegates thenwent on to present their views to the localgovernment and to insist these were includedin development planning. AMA, PPSDAK andother PK groups, together with JaPHaMA,were leading players in initiating the firstnational indigenous congress, which gave riseto AMAN (see p.46). AMA continues to beone of the strongest members of AMAN andis now reaching out to non-Dayak indigenousgroups including the Melayu, Chinese andeven the Madurese communities. It is alsopioneering indigenous women's groups.

Forests and communitiesin West Kalimantan

36. This section is compiled from interviews withA. R. Mercer, Paulus Florus, Jon Bamba, StefanusDjuweng, Stefanus Masiun, Mateus Pilin, Mina,Ita Natalia, Pak Nazarius and others in WestKalimantan between 1999 and 2001. For adetailed account see Alcorn J & Royo N (eds),2000, Indigenous Social Movements and EcologicalResilience, a PeFoR Discussion Paper, BSP-Kemala.

37. Holmes, 2000

Land classifications of the Simpakng Dayak Rima magokng Distant forest only used for hunting and collection

of certain forest productsRima Reserve forest nearer villages, used for timber for

construction and rattan collectionJamih Agricultural landJamih mongut Recently harvested fields (1-5yrs)Jamih malakng Fertile fields (up to 7 yrs)Jamih muntuh Old fields (7-25 years)Muh Rice fieldsKambokng Fruit gardens (trees producing coconuts, guavas,

jackfruit, betel nut)Kebotn gotah Agroforests dominated by native rubber trees Tamawakng Forest which was once village gardensKebun tanam Plantations e.g. rubber, coffee or rattanTonah colop torun pusaka Sacred land/forest which must be left untouchedKambokng pasar Burial ground/cemeteryKambokng loboh Current village or settlementAre Sunge Water source, river bank or lake margin

Source: Pilin M, 1999, Hutan; Darah dan Jiwa Dayak, SHK WKal & interviews with other staff, Nov 2001

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The Pancur Kasih consortium hasplayed a leading role in the spread of theparticipatory mapping as a tool for indigenouscommunities to demand recognition of theirland rights. It invited expert trainers to givetraining to a group of young Dayaks who, asthe PPSDAK mapping unit, went on not onlyto help communities in West Kalimantan tomap their lands, but to train people fromother areas in this techniques and, eventually,to train more trainers. In this way, it createdthe national network of participatorymapping groups known as JKPP.

In addition to providing a visualrepresentation of their adat lands andresources, the process of participatorymapping strengthens communities and canrevitalise adat. Too often, mapping revealedthat communities' adat lands were muchsmaller than the local people realised (due toencroachment by companies or land sales).What forest remained was often fragmented.This made them aware that they had toprotect what remained if they were to givetheir children and grandchildren anyinheritance.

Mapping can also help communitiesto negotiate with outsiders, including

companies. One activist told what happenedwhen an oil palm company wanted to takeover his village lands for a plantation. Thecommunity was strongly against this plan, butthe governor and local police came topersuade them to give up their land. After thevisitors had showed the villagers a map of theproposed plantation and described thebenefits they would gain from an oil palmoutgrower scheme, the villagers respondedby showing the officials their own communitymap. They explained that the company waswelcome to use any spare land but, as theycould see, all the land was being used in wayswhich already provided them with a goodliving. They politely suggested the companysought land in some neighbouring villages -knowing that they too had mapped theirlands. The oil palm plantation was neverestablished!

Throughout Pancur Kasih'sexpansion, its overall aim remains that Dayakpeople should determine their own futuresby taking control of social, economic andpolitical factors and by reclaiming their rightsto their own property. It does not describeitself as a political organisation, but itsinfluence in the political arena has become

even more apparent since regional autonomy.Years of cumulative work by Dayaks at grass-roots level on legal empowerment,sustainable resource management, incomegeneration, legal rights and revitalising adat ispaying dividends in terms of local democracy.Well before the legislation came into effect,members of the Consortium embarked on aprogramme of several months of field visits tovillages throughout the province. Theyexplained what the new legislation containedand discussed the potential opportunities andchallenges which laws 22 and 25/1999presented. Based on this input, the NGOs andcommunity representatives could presenttheir views to local government. More thanthat, they have provided training for membersof local assemblies on good governance andfinancial accountability and, in two districts,drafted local regulations which acknowledgeand protect indigenous land and naturalresource rights.

Work is in progress on an updated Englishversion of a book on West Kalimantan communityforest management systems by Pilin M &Petebang E, 1999, Hutan; Darah dan JiwaDayak, SHK Kalbar.

There is a growing consensus among NGOs,academics, development agencies andforward-looking governments that forestcommunities hold the key to the future of theforests. This comes from research into caseslike those outlined in this section, and appliesnot just to Indonesia or tropical countries,but in forested regions across the globe.Research into community forestry systemshas found that secure rights to well-managedforest resources can contribute significantlyto rural livelihoods as well as conservation38.

Secure rights for forestcommunities to manage their lands andresources could prove to be the single mosteffective means of countering the variety ofthreats facing Indonesia’s forests. Indeed,community-managed agro-forests may be theforests of the future.

"…swidden agriculture and rubber cultivation aremutually supportive. This enrichment plantingleads, supported by natural succession, tocomplex agroforestry systems, providing not onlyharvests from the planted crops but also timberand minor forest products from wild species.While natural forests disappear, agroforestrysystems will remain as the only forest-likestructures ".

(F. Momberg, Resource Management of LandDayaks in West Kalimantan, 1992)

The challenges faced by communities wantingto retain, construct or develop community-based management schemes are enormous.They include the wider political and

economic imperatives of internationalfinancial institutions which prioritise revenuesfrom timber; central government policiesentrenched in the past; rampant corruption;the threat of violence and intimidation arisingfrom the weak judicial system coupled with amilitary and police force which continues toact with impunity. The problems are evengreater in the disputed territories of Acehand West Papua and in areas of conflict likeMaluku and Poso.

Decentralisation has brought itsown challenges: a new breed of loggingentrepreneur has emerged to replace orwork alongside the conglomerates owned bythe ‘old guard’ timber barons. These haveteamed up with military, police and corruptgovernment officials to get every last pennythey can out of the forests.

Forest peoples face internalchallenges too. Community-based forestmanagement is not automatically moreequitable than state-owned or private sectorforestry operations. Decision-making withintraditional indigenous communities may behierarchical and undemocratic. Women, thepoorest members of the community -particularly the landless or low status families- and seasonal forest users may not have a sayin how resources are apportioned.

Indigenous societies are dynamic:changing as the societies around themchange. People in traditional communitieswho practised subsistence forest farming andhad little need for cash even a generation agonow want money to pay for clothing, medical

care, outboard motors for canoes (and dieselfor them), school uniforms and books.Transport and accommodation costs incurredduring visits to lobby local and centralgovernment officials are becoming a commonbudget item for forest peoples.

Young people, educated ingovernment, Muslim or Christian schools,may no longer share the traditional beliefsystems of their parents or grandparents ortheir views on development. Communityelders of widely separated indigenouscommunities such as the Dayaks ofKalimantan and the Mentawais of Siberut tellsimilar stories of disaffected young men whoreturn from schooling in provincial capitalswith Reebok trainers and foreign cigarettesand no respect for their former way of life.

The forests on which thesetraditional lifestyles depend have alsochanged. Large tracts of forest formerlyreserved intact as insurance for hard times oras a legacy for future generations have beenat best logged over and at worst cleared forplantations. The valuable resins, rattans andforest fruits which used to be traded arebecoming scarcer, as are the medicinal plantsused by shamans for traditional healing. As theforests disappear, so do the skills andknowledge of indigenous communities.

Indigenous communities are notthe only ones living in and around whatremains of Indonesia’s forests. Migrants fromother areas - even other islands - peasantfarmers dispossessed by plantations and

Challenges to community forest management

38. Nugroho, 1999

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The following recommendations for theinternational lending organisations, theIndonesian government, foreign investors andconsumers have been compiled from varioussources including Indonesian environmentalNGOs, peasants organisations, the indigenouspeoples’ organisation, AMAN, andinternational NGOs and researchers. Theyare aimed at gaining recognition for the rightof communities to own and manage and makedecisions about their customary forest areas.This requires changing the whole nature andculture of the forest bureaucracy in Indonesiaas well as fundamental transformation of thepolitical and economic landscape.

Experience of community-basedforestry in other Asian and Pacific countries,including India, Nepal, Thailand, PNG and thePhilippines indicates the following necessaryconditions for change:w a strong political commitment which

prioritises the rural poor;w a move away from the custodial, policing

approach of most forest bureaucracies;w community empowerment and a change in

the balance of power;w openness to new ways of decision-making

and forest management;w mutual respect and trust between local

communities, government and otherstakeholders;

w networks between empoweredcommunities;

w multi-stakeholder dialogue andparticipation;

w fundamental policy changes towardsownership by and access to forestresources by local communities.

Local priorities and new skillsIn Indonesia this means replacing the uniformcentralised policy-making with a mosaic ofdifferent models of forest management,determined by local priorities. These must benegotiated with local communities, notimposed by officials at central or provincial

level. This will involve developing new skills,including training for local officials who haveonly ever been accustomed to acceptingorders from Jakarta and imposing these oncommunities. A new generation of forestryofficials need to be recruited and educated,including people from local forest-dwellingcommunities. It means that governments -local as well as central - will have to learn tolisten to communities and NGOs and treatthem as equal partners in decision-making.

Forest classificationThe existing classification of forests as stateland needs to be changed. As well as legalreform this requires a systematic, nationwidere-mapping of adat and other lands. A conflictresolution mechanism acceptable to allstakeholders is needed for settling boundarydisputes. A start could be made byestablishing a conflict resolution agency underthe terms of the November 2001 MPRdecree on agrarian renewal and naturalresource management.

Logging MoratoriumUntil these changes are made, the remainingforests need urgent protection, so that forestcommunities are not further marginalised.This means an immediate moratorium onindustrial logging, a radical downsizing of thewood-based industries and a suspension of alltimber concessions. It means a ban on miningor exploration in forests and a total ban onconverting forests to other purposes,including industrial tree plantations. This maymean a short term cut in revenues for centraland local governments, but it will preventimmediate and longer term losses for forestcommunities.

Past injustices and corporate crimesPast injustices need to be addressed too. Theill-treatment of countless communitiesdeprived of forests and other lands withoutfair compensation, and without prior

informed consent, should be recognised andmutually agreed steps taken to rectify pastwrongs. The authorities must act againstcompanies who have committedenvironmental crimes like illegal logging andstarting forest fires, but also those who havedamaged the lands and livelihoods of localcommunities, or have used the security forcesto silence opposition to their projects.

Aid and debtThe international finance community shouldtake immediate action to halt all activities thatare destructive to forests and forest peoples.The IFIs should stop promoting exports of oilpalm, timber and wood products and pulp andpaper as the key to solving Indonesia’seconomic crisis. Instead they should prioritisethe interests of forest peoples and work forsocially and environmentally sustainabledevelopment in all aid programmes. The IFIsshould also acknowledge the damaging rolethey have played in the past by financing theSuharto regime, especially since a largeportion of loans were embezzled bymembers of the elite. They should takeresponsibility for this by cancelling this part ofthe debt, and in future work towards reducingdebt-dependency. They should provide grants,not loans and ensure that all aid packages aresubject to wide public consultation andagreement.

Forest aid should be aimed towardscreating space for forest communities todevelop and strengthen their organisationsand alliances.

Foreign governments and corporatedamageForeign governments should takeresponsibility for the damaging effects ofmines, plantations, pulp mills and otherprojects in forest areas, by imposing sanctionson companies and banks investing in suchprojects. This may mean new laws so that legalaction can be taken against companies

Recommendations

urbanisation, transmigrants and miners are alllaying claim to these lands and resources.Some may have lived there for severalgenerations. Negotiations between all thesegroups must take place to avoid conflict.

Indonesia's forest peoples are well aware ofthe need to adapt their institutions to achanging world and are discussing such issuesas identity, sovereignty and legalrepresentation both within their owncommunities and with others. They are usingnew opportunities provided by the regionaland national indigenous peoples' alliances(AMA and AMAN) to move these debatesforward.

Civil society organisations and agrowing number of donor agencies inIndonesia and abroad recognise thatconsistent support for forest peoples todevelop their own strong, dynamic, inclusiveand democratic organisations is vital to gainwider support for community-based forestmanagement and effect a shift away from 'thetimber-mining' regime that has proven sodisastrous until now.

"….can indigenous peoples maintain the balancebetween their societies and environments whenthey have rising populations and increasingdemands for cash and services? Manydevelopment planners are sceptical of the ability

of indigenous communities to manage theirresources prudently under such changedcircumstances, and use this as an excuse formaintaining control of their lands and institutions.The argument is a difficult one. If, on the onehand, there is unmistakable evidence ofenvironmental decline in many forest peoples'areas where they are exerting increased pressureon their resources, this has often occurred wheretheir social institutions and environments aresimultaneously under heavy pressure fromoutside. On the other hand, the overall record ofgovernment agencies has been far worse andundermines the claim that forests are bestentrusted to their care."

(M. Colchester, Sustaining the Forests, 1992)

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damaging local peoples’ livelihoods in theinvestors’ home countries. They should alsolobby for the drafting of international laws tocurb the damaging practices of largecorporations who take advantage of weaknational laws to gain access to lands andresources belonging to forest peoples.

Wider reformsForest policy reform will need legal reform -including changes to the Constitution and toexisting laws which are used to deny forestpeoples their rights and livelihoods. Theremust be genuine community involvement inthis process and local decision-making aboutnatural resources should be the cornerstoneof good governance. Effective legal reform inturn requires a major effort to stamp outcorrupt practices.

Electoral reform is also needed.Under the current system, governors andBupatis owe most loyalty to their politicalparties who select them. There would begreater democracy and accountability to theirlocal constituents if they were electeddirectly.

Civilian ruleThe powers of the police and military shouldbe reined so they can be properly held toaccount for their actions. This meansadequate funding for the security forces sothat they no longer have the excuse ofneeding to earn extra income from‘protecting’ mines, plantations and loggingoperations. It also includes ending theterritorial system of the army structure: theKodim, Korem and Kodam commands, whichplace soldiers in the regions. In a democraticsystem, there is no place for the territorialstructure: instead security and law and ordershould be in thehands of the police.

The judiciary and the police mustcarve out a new position for themselves insociety as enforcers of the law rather thansupporting their political masters or whoeverpays the most. The military’s political rolemust be ended.

Aceh and West PapuaWider political reform includes adopting achange in approach towards the disputedterritories of Aceh and West Papua, wherethere are strong demands for self-determination. In both areas the military-ledapproach of trying to silence oppositionthrough force, while introducing ‘specialautonomy’ laws has failed. The appalling levelof human rights violations against the localpopulations must end and a genuine, open-ended dialogue restored. There can be nosecurity for many of the forest peoples inthese regions until there is a move away fromviolent repression towards peacefulnegotiation and until past injustices areaddressed.

Specific steps To the international lending community:(multilateral and bilateral donors)

w Listen to and act upon the concerns offorest peoples and civil societyorganisations;

w Support efforts which foster developmentof community forest management;

w Provide grants, not loans;w Stop working with the Indonesian

government and forestry businesses onprogrammes aimed at improvingconcession management - theseprogrammes do not address the need tofocus on community rights, addressovercapacity etc.

w Stop ECA funding for pulp, oil palm andother programmes which destroy forestsand violate community rights;

w Improve donor co-ordination and adopt amore participatory approach toidentifying, monitoring and evaluatingforest-related projects.

w Commit to an international convention oncorporate accountability;

w Open talks on debt cancellation with allstakeholders;

w Acknowledge past mistakes;w Direct grants to:

- support programmes which promotelegal reforms, wider political reforms,anti-corruption, curbing military andpolice actions, opening dialogue inWest Papua and Aceh, to createfavourable conditions for communityforest management;

- support programmes whichstrengthen or help develop CBFMprojects;

- support programmes which raiseawareness of existing CBFM systemsand promote local, national andinternational exchange;

- support programmes which provideincentives for forest communities tomanage their resources sustainably.

w Stop promoting exports of oil palm, timberand wood products, paper & pulp andminerals as a means of solving Indonesia’seconomic crisis;

w Apply policies on land rights,environmental protection andresettlememt (IMF, World Bank, ADB andothers) in all financial assistance toIndonesia, including structural adjustmentloans;

w Suspend investments in oil palm, paper andpulp plantations and mines which destroyforests and violate forest peoples’ rights.

To the Indonesian government

w Impose logging moratorium on industrialoperations in natural forests;

w Maintain total ban on log exports;w Close loopholes in forest conversion ban;w Follow up on commitment to act on illegal

logging and illegal trade by drafting actionpoints aimed at strengthening communityrights;

w Devise, with partner governments,credible, independently verified systems toprove the raw materials for Indonesianplywood, fibre board and pulp and papercome from legal sources.

w Refocus on IDCF action points on adatrights, not just illegal logging and lawenforcement;

w Use illegal logging issue to open debateabout need for wider reform to recogniseadat rights and change forestclassifications;

w Enforce existing laws that regulate the useof fire for land clearing;

w identify and prosecute companiesresponsible for illegal burning

w Examine ways in which the 2001 MPRdecree on agrarian renewal and naturalresources can be applied in a positive wayfor local communities;

w Shut down corrupt, unsustainable timberindustries;

w Resume investigations and prosecutions oftimber barons, pursue compensationclaims from affected communities (withinternational support)

w Resume investigations and legal actionsagainst Suharto family to securecompensation for loss of livelihoods forforests and other communities who lostlivelihoods;

w Draft and enact legislation requiring allpublic employees, including members ofMPR, DPR, DPRD, Pemda, the military andpolice to make public details of theirownership of or involvement in anyforestry operations, including woodprocessing and plantation companies, witha view to banning the military and policefrom holding interests in forestrybusinesses;

w Use Reforestation Fund forreforestation/agroforestry schemes undercommunity management;

w Initiate revision of educational materials toinclude positive examples of CBFM

w Remove terms which denigrate ordiscriminate against indigenous peoples;

w Sign international agreements whichuphold the rights of indigenous peoples: egILO Convention 169.


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