timber smuggling in indonesia

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Critical or Overstated Problem?

Timber Smugglingin Indonesia

Forest Governance Lessons from Kalimantan

Krystof Obidzinski | Agus Andrianto | Chandra Wijaya


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Critical or Overstated Problem?

Forest Governance Lessons from Kalimantan

Krystof ObidzinskiAgus Andrianto

Chandra Wijaya

September 2006

Timber Smugglingin Indonesia


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National Library of Indonesia Cataloging-in-Publication Data

Obidzinski, Krystof Timber smuggling in Indonesia critical or overstated problem?: forest governance lessonsfrom Kalimantan/by Krystof Obidzinski, Agus Andrianto, Chandra Wijaya. Bogor, Indonesia:Center for International Forestry Research, 2006.

ISBN 979-24-4670-234p.

CABI thesaurus: 1. illicit felling 2. logging 3. timber trade 4. forest policy 5. concessions6. plantations 7. forest management. 8. Kalimantan 6. Indonesia 7. MalaysiaI. Andrianto, Agus II. Wijaya, Chandra III. Title

2006 by Center for International Forestry ResearchAll rights reserved

Printed by Subur Printing, Jakarta

Design and layout by Gideon SuharyantoFront cover photo by Yayasan TitianBack cover photos by Agus Andrianto

Published byCenter for International Forestry ResearchMailing address: P.O. Box 6596 JKPWB, Jakarta 10065, IndonesiaOf ce address: Jl. CIFOR, Situ Gede, Sindang Barang,Bogor Barat 16680, IndonesiaTel.: +62 (251) 622622; Fax: +62 (251) 622100E-mail: [email protected] site: http://www.cifor.cgiar.org


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iii

Contents

List of abbreviations iv

Acknowledgements vi

Executive Summary vii

1. Introduction 1

2. Objectives and methods 3

3. The border zone in Kalimantan 5

4. Timber trade across the border in East Kalimantan 104.1 Yamakers tale: new aces, old habits 11

4.2 Stray Roads 13

4.3 Turning to palm oil 15

4.4 Timber trade out o Nunukan: then and now 16

5. Timber trade across the border in West Kalimantan 19

5.1 Trucking and oating the timber 205.2 Timber gangsters? 21

6. How signifcant is cross-border timber smugglingwithin the context o illegal logging in Indonesia? 25

7. Prioritizing government policies against illegallogging in Indonesia 29

Re erences 31

Appendix: The border zone o Kalimantan 35


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v

M C Malaysian imber CouncilNGO Non-Governmental Organization

N FPs Non- imber Forest ProductsOHL Operasi Hutan Lestari (Operation or Sustainable Forest)PLB Pos Lintas Batas (Border Crossing)SKSHH Surat Keterangan Sahnya Hasil Hutan( imber legality

certi cate)S DC Sarawak imber Development CooperationS IA Sabah imber Industry Association

NC Te Nature Conservancy

Yamaker Yayasan Maju Kerja


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vi

Acknowledgements

Te authors would like to thank Cristina Eghenter o WWF-Indonesia orproviding valuable comments on an earlier dra t o this paper. We would alsolike to thank NC or its nancial support o eld research in Kalimantanon which this paper is based. Te success ul collection o necessary data would never have been possible without the commitment and enthusiasmo the project partners (NGOs itian, BIOMA and Otonomi Center) whosecontributions we grate ully acknowledge. NC and WWF sta in West andEast Kalimantan also assisted the project at many di erent junctures and we would like to thank them accordingly. Te analysis and write-up stages o thispaper were greatly acilitated by CIFOR colleagues Agung Prasetyo, AhmadDarmawan and Ambar Liano. We owe them a great deal o gratitude. However,the authors alone are responsible or any errors that may remain in the study.


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vii

Executive Summary

Over the last ew years, illegal logging has been at the center o policy deabout the current state and uture prospects o Indonesias orestry sector. osigni cant extent, the policy dialogues as well as public understanding o thillegal logging problem have been in uenced by the timber establishmentsview that clandestine timber smuggling is responsible or illegal loggingactivities in the country. Echoing this sentiment, the Indonesian governmenthas been at odds with neighboring countries Malaysia and Singapore overtheir perceived lack o cooperation in stemming the illegal ow o Indonesitimber across the border and thus helping to rein in illegal logging. At thsame time, timber smuggling has become the ocus o orest law en orcemoperations in Indonesia.

Tis paper scrutinizes the assumption that timber smuggling is at the coreo the illegal logging problem in Indonesia. aking the border zone betweenIndonesia and Malaysia on the island o Borneo (Kalimantan) as a sample uno analysis and complementing it with data rom other parts o Indonesia,paper shows the intensity o timber smuggling was relatively high between2000 and 2003, but has since declined by over 70%. Despite this declineillegal logging in Indonesia still continues at a rate o approximately 40 milliom3 per year. It seems clear that timber smuggling is not the primary driverillegal logging in Indonesia. Instead, the core o the problem is the extractioo timber by Indonesian orest concession holders, plantation developers, roadconstruction companies and other ventures that abuse company permits andviolate prevailing orestry regulations.


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viii | Timber Smuggling in Indonesia

Te current timber trade system, controlled by the government regulatingbodies BRIK and E PIK, stresses the administrative and documentary

compliance o orestry businesses in Indonesia. However, this is not enoughbecause these requirements are relatively easy to manipulate and theiren orcement is lax. Tere is an urgent need or a timber legality standardthat would be more difcult to manipulate, simpler to en orce and easier toevaluate e.g. the standard developed collaboratively by LEI, NC and otherparties. Tis will require a lot o political will, commitment and sustainede ort rom a range o government agencies to endorse the legality standard,develop the implementation ramework, provide public policy incentives and

remove disincentives, allow third party independent veri cation o legality,and perhaps most importantly develop a comprehensive plan to balance thesupply and demand or timber in Indonesia. While this is a lot to hope or,it seems to be the only way to make meaning ul and lasting progress on theillegal logging issue in Indonesia.


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1. Introduction

Over the last ew years, illegal logging and illegal timber trading havdominated debates on the current state and the uture o Indonesian orestryIllegal logging and the illegal timber trade have been associated with a rano negative impacts on Indonesias environment, economy and society. Bothactivities are major contributors to de orestation and orest degradation inIndonesia (Gatra, 7 November 2003; Pikiran Rakyat, 22 September 2003).Tey also result in a signi cant loss o national tax revenue, estimated atUS$

600 million annually (Asia Pulse, 8 June 2003; Media Indonesia, 8 June2003). Finally, the illicit wealth generated rom illegal timber is a source osocial con ict as well as widespread corruption.

Te decline o Indonesia as a major producer and exporter o plywood ansawn timber is o ten blamed on timber smuggling. A plethora o such activitis taking place in Indonesias key orested regions o Kalimantan, Sumatra anPapua and they are most o ten pointed out as the cause o the orestry se

struggles and o illegal logging as a whole. Tis is the view o Indonesiastimber producer and exporter associations such as APHI ( Asosiasi PengusahaHutan Indonesia - Association o Indonesian Forest Concession Holders)and APKINDO ( Asosiasi Panel Kayu Indonesia Indonesian Wood Panel Association) a view regularly communicated at national and international

orums (Jakarta Post, 20 February 200 ).

Forest Crime as a Constraint on Development by Mark Baird, World Bank Country Directoror Indonesia, 3 September 200


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| Timber Smuggling in Indonesia

While the Indonesian Ministry o Forestry (MoF) ofcially holds a morecomplex view o illegal logging and the illegal timber trade anchored on

structural imbalance between the available supply and e ective demand ortimber, on numerous occasions MoF has echoed APHI and APKINDOssentiments about the causes and implications o the illegal logging crisis. MoFhas criticized a number o timber importing countries, particularly Malaysiaand China, or accepting what it calls stolen timber rom Indonesia and givingan un air advantage to wood-working industries in both countries (JakartaPost, 5 October 2003). MoF has also been complaining about internationaltimber smuggling rings operating in Indonesias border regions, and about the

lack o transparency in major regional timber trade hubs such as Singapore andPeninsular Malaysia (Asia Pulse, 5 October 2003). Forest law en orcement(FLE) measures deployed in Indonesia have o ten re ected the assumptionthat the illegal timber trade is externally unded and it is a key part o theillegal logging problem in vulnerable border and transit regions (Kompas, 28October 2003; Pontianak Post, 9 June 2003).


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2. Objectives and methods

Since FLE measures deployed in Indonesia to reduce illegal logging by zeroingin on the illegal timber trade involve substantial nancial and human resourcesas well as social and political costs, it is important to examine the claims bemade about the importance o tackling timber smuggling in combating theillegal logging problem in Indonesia. In doing so, this paper aims to in ormthe ongoing debates among government institutions, the private sector,donors, NGOs and research organizations about the relationship between

timber smuggling and illegal logging in Indonesia. It also seeks to highlight thadjustments needed in Indonesian government orest policy-making aimed atcombating illegal logging.

Te paper ocuses on the ollowing key questions: What is the extent o timber smuggling in Indonesia? Is timber smuggling responsible or illegal logging in Indonesia? What speci c actors drive timber smuggling? Are current FLE policies to curb timber smuggling and illegal logging

appropriate?

Te sample unit o analysis or this paper is the border zone between Indonesand Malaysia on the island o Borneo. Field work has been carried out iseveral locations along the entire length o the border in the provincesEast and West Kalimantan as well as in the Malaysian states o Sabah aSarawak. Te eld research and subsequent analysis were structured around

the ollowing methodological steps:


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Review o available published and unpublished sources on the cross-border timber trade, plantation establishment and in rastructure

development Analysis o available timber trade documentation Analysis o remote sensing imagery o the border zone in Kalimantan Aerial survey o the borderline to assess cross-border road intrusions

and the potential or overland timber trafc Investigation o a sample o timber trafc points along the border Collaboration and exchange o in ormation with partners engaged in

similar analyses in other parts o Indonesia


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3. The border zone in Kalimantan

Te borderline dividing Indonesias Kalimantan and the Malaysian states oSarawak and Sabah on the island o Borneo is an imaginary line rst drawand agreed upon by the British and Dutch colonial powers in the 9th century.Te total length o the land border is ,840 km, a substantial part o it passthrough some o the most inaccessible parts o the island (MoF 2005). Teindigenous groups (Dayak, Melayu) split by this line have until airly recentlignored it all together, moving reely along hundreds o ootpaths connectinthe villages on both sides o the divide. Once tribal war are ceased at theo the 9th century, the movement o people across the border was largely otrade and barter purposes.

In the 920s and 930s, the Dutch administration began to play closerattention to the border town o Nunukan when emerged as major entry point

or opium smuggled illegally rom awau on the British side. Te smuggling was carried out within the ramework o the barter trade that was alreadlively well be ore the Second World War. A ter the war, it intensi ed urthas hundreds o native vessels, known askumpit boats, crossed the border backand orth bringing raw materials to Sabah and smuggling manu acturedarticles back home (Lee 976:5). While in the 960s and 970s the listpopular Indonesian items eatured raw materials such as rubber and dried sin exchange or consumer goods, since the 990s the most commonly sougha ter Indonesian commodities have been timber, diesel uel, wildli e, N FP(non-timber orest products) and contract labor. In return, products broughtback to Indonesia include electronics, chemicals, clothes and a range o otheconsumer goods. However, the original barter trade system, set up in the earl

900s to exchange an item or an item, does not unction anymore; it h


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been a ully- edged cash-based market system since at least the 960s. In WestKalimantan, a similar system o trade existed between the Sambas area and the

port o Sematan in Sarawak. In the 990s, it came under the ramework o theFree rade Zone (F Z) established in the border belt o the Malaysian state oSarawak (e.g. irtosudarmo 2002)2.

Te Indonesian government ofcially de nes the border zone in Kalimantanas the area within the districts (kabupaten) contiguous to the internationalborderline. Following such de nition, the Kalimantan border zone comprises3 kabupaten in East Kalimantan (Nunukan, Malinau, Kutai Barat) and 5

kabupaten in West Kalimantan (Sambas, Bengkayang, Sanggau, Sintang,Kapuas Hulu) with a total area o 7.2 million hectares. Tis vast area is verysparsely populated. In 2005, the total population o Kalimantans borderzone was estimated at about 260,000 people. Since a substantial part o thispopulation inhabits villages and small towns near the main communicationarteries (rivers), a large portion o the border region in Kalimantan is e ectivelyuninhabited.

Nearly 60% o the land area, or just over 4 million hectares, in the border zoneis orested. In terms o bio-physical characteristics, the area encompasses theupper parts o all major river systems in Borneo e.g. Sebuku-Sembakung,Kayan, Mahakam, Barito, Kapuas, Rajang, Baram. As a result, the orestcover comprises mostly sub-montane and montane orest. Re ecting thecritical importance o this region or the ecology o all major river systemsin Kalimantan, timber extraction in the border zone is limited and a largeportion o the orest estate is protected as national parks or nature reserves. As

o 2005, 4 existing national parks covered about 2.4 million hectares, whileanother 7 conservation areas were under consideration.

Setting aside parts o the headwater regions in the central parts o Kalimantannear the border with Malaysia or conservation purposes is a relatively newphenomenon that dates back only to the early 990s. Te security approachthat allocated all accessible areas to the Indonesian Armed Forces pre-datesthe environmental policy-making by nearly three decades. In the early 960s,

the military was given ull control o all productive orest areas near the2 Press Release: Indonesian Timber Passing Through Malaysias Free Trade Zone (FTZ),(MTC) Malaysian Timber Council 14 May 2004


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Krystof Obidzinski , Agus Andrianto and Chandra Wijaya |

border with Sarawak and Sabah, Malaysia, or political and security reasonsIn 967, this arrangement was ormalized when the Ministry o Forestry

(MoF) granted a company called P . Yamaker (an Indonesian militarycooperative called Yayasan Maju Kerja) orest concessions licenses (HPH,Hak Pengusahaan Hutan) extending over million hectares along the border withMalaysia 843,500 hectares in West Kalimantan and 265,000 hectares in EastKalimantan.

While dominant, Yamaker has by no means been the only player involved inmanaging the orest or timber in the border zone. A number o other HP

concessions have been active as well ( able ). It is interesting to note thanumber o these concessions are military owned or controlled (e.g. P . GirEkawana, P . Duta Rendra Mulya).

Table . Active HPH licenses in Kalimantans border zone as of 00No. Company Location District Area (ha)1. PT. Anuraga S. Engkatat, S. Sey Sanggau 51,0002. PT. Kusuma Perkasa

I.T.S. Sekayam, S.Landak

Sanggau, LandakBengkayang

80,000

3. PT. Benua Indah S. Embaloh Hulu, S.Sunuk

Kapuas Hulu 51,300

4. PT. Lanjak DerasJaya Raya

S. Embaloh, S.Kapuas

Kapuas Hulu 45,740

5. PT. Tawang Meranti S. Ketungau, S. Tawang

Kapuas Hulu 49,200

6. PT. Giri Ekawana - Malinau 110,0007. PT. Duta Rendra

Mulya S.- Malinau, Kutai

Barat215,000

Source: MoF (2005)

Te orest area slated or conversion to other uses in the border zone is vsmall as it amounts to only 23,000 hectares (MoF 2005). It is there ordifcult to understand how active and planned plantation estates in the areacan cover hundreds o thousands o hectares ( able 2). It is possible thatP . Finantara Intiga H I (established to eed the planned pulp and paper millin West Kalimantan) extends over adjacent orest conversion areas beyond theborder zone.


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Table . HTI concessions in Kalimantans border zoneNo. Company District Area (ha) Status1. PT. Finantara Intiga Sanggau, Sintang 299,700 Active2. PT. Lahan Sukses Sanggau 14,460 Not Active3. PT. Mayang Adiwinata Sanggau 8,060 Not Active

Source: MoF (2005)

Other planned plantation development projects, such as oil palm, clearlyindicate that productive orest areas are to be converted to create the necessaryspace or plantation estates ( able 3). While the areas involved are small,they have recently been used as a precedent to propose a -million-hectareoil palm mega project along the border in Kalimantan (e.g. Media Indonesia,30 June 2005; WWF Indonesia, 2006; Wakker 2006). Once the Ministryo Agriculture (MoA) announced the project plan in 2005, it aced strongcriticism rom NGOs, research organizations and donor agencies. o containthe allout, the government agencies in charge have been modi ying theproject, which will almost certainly be downsized. It is clear, however, that it will be implemented.

Table . Oil palm concessions in Kalimantans border zoneNo. Company Permit Area (ha)1. PT. Rentang Nusa Gemilang Persetujuan pencadangan

Menhut No. 1123/Menhut-II/92tanggal 16-12-1992

7,200

2. PT. Yamaker Sawit Sari Persetujuan pencadanganMenhut No. 281/Menhut-II/98tanggal 26-2-1998

13,000

3. PT. Plantana Razindo SK Pelepasan Menhut No. 899/

Kpts-II/99tanggal 14-10-1999

30,551

4. PT. Satrindo Jaya Agro Palma( ormerly Yamaker SatrindoJaya)

SK Pelepasan Menhut No. 174/Kpts-II/2000tanggal 29-6-2000

17,464

5. PT. Usaha Malindo Jaya( ormerly Yamaker MalindoJaya)

SK Pelepasan Menhut No. 175/Kpts-II/2000tanggal 29-6-2000

18,132

Total 86Source: MoF (2005)


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Historically, plantation development in Indonesia, whether H I or oil palm,has been carried out with strong reliance on migrant labor, primarily rom

Java. Te plans or H I and oil palm projects in the border zone o Kalimantenvision similarly extensive employment o transmigrants ( able 4). As o nowhowever, only one transmigration project has been completed, while 4 otherprojects await realization.

Table . Transmigration projects in Kalimantans border zoneNo. Location District Area

(ha)Permit Planned

number o amilies

Realization

1. SeluasPisang

Sambas 1,400 476 Tahun 19967 Oktober 1996

250 -

2. Seluas Sambas 2,200 240 Tahun 198512 Agustus 1985

500 -

3. Berjokong Sambas 4,750 241 Tahun 198512 Agustus 1985

1,500 -

4. SungaiDangin

Sanggau 3,700 153 Tahun 19863 Juni 1986

500 478

5. Dua

Petunggu

Sambas 7,660 342 Tahun 1986

12 Agustus1985

750 -

Source: MoF (2005)

Te border zone in Kalimantan summary: otal land area 7.2 million hectares; 4 million hectares o orest Population 260,000; large areas uninhabited Long history o cross-border interactions, trade

2.4 million hectares o protected areas Until recently, over million hectares o orest under HPH concessions

controlled by the military Over 300,000 hectares o H I plantations Vast oil palm plantations planned to spur development and improve

security


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0

4. Timber trade across the border in EastKalimantan

In 2000 and 200 , or a number o reasons the Indonesian government turnedincreasingly more attention to the border zone in Kalimantan. On the political

ront, Indonesia aced a difcult territorial dispute with Malaysia over theislands o Sipadan and Ligitan a dispute the Indonesian side eventually lost(Te International Court o Justice 2002; JakartaPost, January 20, 2004).Te government in Jakarta was also struggling at the time to manage a wave odecentralization exuberance sweeping across the country. In the borderlands o

East Kalimantan, this wave meant, among other things, practically unrestrictedow o timber or export (Muhtadi 999). Tere has also been an increase in

drug trafcking as well as in the trade o weapons, ammunition and explosives(HRW 2006).

It is estimated that in 200 and 2002, East Kalimantan supplied up to 2million m3 o timber to the Malaysian state o Sabah nearly all o it illegally(Smith et al. 2003, acconiet al., 2004). MoF estimated that large-scale

sea-based smuggling (barges, container ships) through the port o arakanaccounted or up to .2 million m3 o timber smuggled annually (Radar

arakan, 28 September 2004). Small-scale sea-based smuggling (ra ts, woodenvessels) supplied 330,000 m3 per year. Te remaining volume o timber (about500,000 m3) was delivered to Sabah overland. Te overland timber trafcbene ted greatly rom the completion o the Serudong-Kalabakan-Long Pasiaroad that runs or over 00 km along the border with Indonesia, in someplaces less than 500 meters rom the international borderline. From that major

road, dozens o dirt tracks ( jalan tikus ) were constructed into the ex-Yamakerorest concession area in East Kalimantan (Muhtadi 999)


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While 2 million m3 o timber smuggled rom East Kalimantan is indeed alarge volume, it never became the li eline or Sabahs woodworking industry

the mass media in Indonesia o ten like to proclaim. Even in the peak yearssmuggling, timber rom East Kalimantan supplied raw material or less tha4 percent o the installed wood-processing capacity in Sabah which totals

million m3 per annum.

4.1 Yamakers tale: new aces, old habitsDespite P . Yamaker holding one o the earliest and most extensive HPHconcessions in East Kalimantan and in Indonesia as a whole, the company

never developed a comprehensive plan or systematic management o the areit was ofcially in charge o . From the late 960s until the cancellation olicense in 999, Yamakers position was that o a permit holder that acceptesolicited and unsolicited bids or logging operations rom various timbercontractors.

Te scant attention Yamaker paid to its orest concessions turned them into ahotbed o mismanagement and irregularities. Tere are indications that in the

late 960s, Yamaker concession-holders, possessing little orestry experienceand no operational capital, had already been oriented towards arrangements

or cross-border timber trade and investment. Local government reports romthe mid 980s describe heavy boat trafc between Yamakers concession inEast Kalimantan and Malaysia (Kanwil Dirjen Perhubungan Laut, 987). In

987, or instance, at least 50 boats a day plied the Nunukan- awau bordearea between Indonesia and Malaysia without proper documentation.

Alongside the small-scale trafc, large-scale illegal operations were going on as well. An indication o Yamakers large scale timber smuggling came to lightthe rst time in 997. In January o that year, the Malaysian press reporteda timber smuggling case involving a awau based company Syarikat RaspandSdn. Bhd. and a major orest concessionaire rom the Indonesian side othe border. Syarikat Raspand Sdn. Bhd. was caught errying over 3,000undocumented logs rom East Kalimantan (Bangkuai 997). It soon becameknown that this was only about one-seventh o the total amount that hadalready been shipped illegally to Shinko Kaiun Co., Ltd. a timber importingcompany in Japan (Bingkasan 997;New Straits imes 997a, b).


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While Yamaker survived the allout rom this case, it could do little to haltthe criticism and public pressure a ter the resignation o President Suharto in

998. In 999, all Yamaker orest concession areas were canceled and handedover to P . Perum Perhutani. However, P . Perhutanis strength had beenthe management o teak orests in Java, not tropical rain orest concessions inKalimantan. Te companys limited managerial capacity was urther erodedby pressure rom the military or production sharing arrangements. WhilePerhutani struggled to draw up a plan to manage the ex-Yamaker concessionareas, ex-Yamaker players and their Malaysian counterparts used the powervacuum or activities o their own. A Sabah-based company Saleha Sdn. Bhd.

constructed several roads cutting up to 0 km into Indonesian territory,extracting vast amounts o timber as it moved along, and shipping it toKalabakan log yards (e.g. Huttche 2000).

P . Perhutani never produced a comprehensive management plan or theorest areas in Kalimantan it was entrusted with. Instead, in 2002 it proposed

a number o plantation projects or development in the area all starting withthe clearing o orest areas ofcially deemed degraded beyond recovery. In the

same year, a military backed company P . Agrosilva Beta Kartika (ABK) and amilitary cooperative (Inkopad) in Nunukan were given the green light to turna part o the ex-Yamaker concession area in East Kalimantan into a oil palmplantation. Predictably, ABK and Inkopad hired a Malaysian counterpart

rom Sabah unghup Sdn. Bhd. to carry out land clearing (OtonomiCenter, Nunukan pers. comm.). As in the case o Saleha Sdn. Bhd., unghupconstructed dozens o dirt roads rom Sabah into the ex-Yamaker concessionarea, extracting vast amounts o timber or export to Malaysia. However, once

the IPK land conversion permit (IPK,Izin Peman aatan Kayu) expired in2003, all three venture partners disappeared.

Simultaneously with the operations o ABK-Inkopad- unghup, the Riau-based Surya Dumai group also became involved in oil palm projects in theex-Yamaker area ( empo, 2 July 2006). Surya Dumai was less interested inoverland timber trafc, instead relying on river and sea routes or log transportuntil the end o its operations in late 2003. In late 2002, one o Surya Dumais

subsidiaries was caught illegally shipping barges o logs to awau. Althoughthe subsidiary and the parent company evaded any legal repercussions, the


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dispute over their IPK permits proved more difcult to neutralize. In 2003, it was revealed that Surya Dumais IPK land conversion permits, covering over

400,000 ha o the ex-Yamaker HPH concession, had been issued illegally(Kompas, 22 October 2005). Te case implicated top government ofcials inthe province o East Kalimantan, including the Governor and the Head o thProvincial Forestry Bureau.

Te idea o oil palm plantations along the border with Sabah was brie y revivin 2004 by the provincial government as a way to solve the unemploymentproblem caused by thousands o illegal Indonesian workers being expelled ro

Malaysia to the border town o Nunukan ( empo, 4 February 2005). Withinthis context, development and security concerns were also key considerations.Perhaps because previous oil palm ascos were still resh in the public memothis new plan met widespread public criticism.

4.2 Stray Roads While the oil palm plans in the border zone were put o inde nitely, theconstruction o roads proceeded briskly. In most districts, decentralization-

based development plans envisioned the construction o a road network that would eventually connect every sub-district (kecamatan). Te easiest way toaccomplish this plan was through contracts allowing the contractors to extracttimber as compensation during the road building process. Since in most borderkecamatan the nearest competent road builders were in Malaysia, cross-borderroad construction arrangements soon became an established pattern.

While the construction o roads may be economically justi able, neither

districts nor provinces actually possess the authority to approve road projectsthat cross international borderlines. It has also been shown time and timeagain that road construction o this kind is a scam that allows constructioncompanies to log vast areas o orest in exchange or a dirt track barely paduring the dry season, let alone the rainy season. Te di erence between thehigh cost absorbed by the districts rom uncontrolled logging and the ewbene ts gained rom getting a road link is enormous.

In East Kalimantan there have been 3 such cases o cross-border roaconstruction (one is still ongoing). In 2004-2005, district ofcials representing


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Lumbis Subdistrict in the district o Nunukan made an agreement with alogging company in Long Pasia in Sabah to construct a road that wouldalleviate the isolation o thekecamatan. Te Malaysian companies CahayaMatahari and Sariwanto Sdn. Bhd. promptly began construction o a 00-km-long road. In no time, the road started to branch out to various nearbyvillages Labang, Panas and ao Lumbis. As the destruction o the orestalong the road belt became obvious, village crowds con ronted the companiesdemanding compensation. Cahaya Matahari and Sariwanto Sdn. Bhd.promptly evacuated to Sabah, leaving some o their machinery behind.

During the same period (2004-2005) and through similar subdistrict/districtbased arrangements, a road was constructed between the village o Long Bawanin Kerayan Subdistrict and Bakalalan in Sarawak. Te dirt track that was putin place supports no trafc at all; the bulk o consumer goods are still erriedinto Long Bawan by air.

Te only road building project still ongoing in East Kalimantans border zone isin Apo Kayan where a Malaysian rm apak Megah has constructed a 40-km-

long road linking Long Nawang on the Indonesian side to a orest concessionroad network in Sarawak. Te road construction is to proceed beyond LongNawang.

Among the most common ways or Indonesian and Malaysian border businesscircles to extract timber illegally has been to quietly construct roads intoIndonesian territory and ship timber back to the Malaysian side (Kaltim Post,3 September 2003). In 2002, the WWF ofce in arakan came orth with

a report that Sarawak based logging companies Samling Plywood-Miri andBaram River Club had built roads illegally into Kayan Mentarang NationalPark (Kaltim Post, 7 November 2002).

A CIFOR 2005 survey con rmed these intrusions. Te analysis o 2003 satelliteimagery or the border area in East Kalimantan showed at least 56 pointsalong the international borderline where roads rom the Malaysian states oSabah and Sarawak intruded into Indonesian territory. Te breakdown was as

ollows: 43 roads penetrating the ex-Yamaker HPH area road connecting Lumbis with Long Pasia


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road connecting Long Bawan with Bakalalan 2 roads rom the Malaysian orest concession Samling Plywood-Miri

intruding (about 2 km) into Kayan Mentarang National Park road rom the Malaysian orest concession Jebadi Sdn. Bhd. intrudin

(about km) into Kayan Mentarang National Park 6 roads rom the Malaysian side (concession ownership unclear but appears

to be Jebadi as well) intruding (about km) into Kayan Mentarang NationaPark

2 roads rom the Malaysian orest concession Curiah Sdn. Bhd. intrudinginto the Apo Kayan area Long Nawang

A ight over the border area in 2005 revealed that all o these roads wereclearly visible. It seemed certain that all roads in the ex-Yamaker area hbeen out o use or quite some time. Te same was the case with LumbisLong Bawan. On the other hand, the remaining 9 road intrusions into KayanMentarang and Apo Kayan still appeared resh.

With a small number o road intrusions rom Sarawak still possibly in use,

is nevertheless clear that land-based timber trafcking rom East Kalimantanis not particularly signi cant. Since the overall length o road intrusion inKayan Mentarang amounts to approximately km and as timber extractionis unlikely to be possible beyond 200 meters rom the road due to the routerrain, the total volume o timber that could have been harvested is abou

00,000 m3. Te intrusions into Apo Kayan are more difcult to estimatebut are likely to be even less signi cant because parts o the area congrassland.

4.3 Turning to palm oil While it is common knowledge that plantation projects and road developmentin the border zone have, or the most part, been ronts or illegal loggingtimber smuggling to Malaysia, plans or similar enterprises continue to abound.Ideas have been oated, or instance, to construct a northern artery highwaspanning the entire length o the border in East and West Kalimantan (Wakke2006). Tere is also the -million-hectare mega oil palm project proposal thatenvisages the conversion o swathes o the orest along the borderline (MedIndonesia, 30 June 2005; WWF Indonesia, 2006). Te ofcially declared main


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purpose o the project is to stimulate development and strengthen security inthe border zone. Following criticism rom NGOs, research organizations and

international donor agencies, the original project scenario has been replaced bya more modest plan proposing the establishment o several small to medium-sized oil palm plantations. It is still not clear where within the border zoneenough non- orest land will be ound or these plantations, as required by theprevailing orestry regulations. In either case, it seems likely that the originaloil palm plantation applicants, with close connections to Yamaker, will play amajor role (see able 3).

Among the spin-o ideas rom the mega oil palm plantation project has beenthe proposal by the district o Malinau to convert a 3-km-wide belt along itsborders with Malaysia into plantations to spur development and strengthensecurity (Warta Wanariset Malinau 2004). Not least because such a proposal would clear parts o Kayan Mentarang National Park (a world heritagebiodiversity site), the plan has been criticized and, or the time being at least,shelved.

4.4 Timber trade out o Nunukan: then and nowIn 2005, the only continuously ongoing timber smuggling activity in EastKalimantan was centered in the Nunukan area and involved illicit extractionand transport o squared logs to awau, Sabah. imber trade o this kindis carried out within the ramework o a barter trade that dates back to thecolonial period. In 993, barter trade between East Kalimantan and Sabah was ormalized with the creation o awau Barter rade Association (BA S).BA S is an organization that handles what is in e ect the cash-based trade o

raw materials rom Indonesia or Malaysian consumer goods, but in recentyears it has had a strong ocus on timber. Tere are about 40 timber-processingplants in awau that require at least million m3 o raw material annually.

Te timber trade rom Nunukan has historically been ocused on sea-basedtransport through the Nunukan Strait or around the Island o Sebatik to theMalaysian port o awau. Te route around Sebatik Island is the one pre erredby round wood exporters who operated until the re-imposition o a log export

ban by the Indonesian government in 2002. Tis route is also used by squarelog/sawn timber smugglers rom central and southern parts o East Kalimantan.


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In the a termath o the log export ban, log smuggling continued along throute, but on much diminished scale. Te modus operandi o round wood

smuggling reportedly involves small barges or log ra ts being towed rom tcoast to large barges or container ships anchored near international waters anddestined or China, India and Japan (Kompas, 20 November 2004). Sourcesin the eld indicate, however, that these activities have been relatively rare athey require the collaboration o top-level ofcials. Consequently, smugglingo this kind is unlikely to be signi cant in terms o the volume o timchanging hands.

Te Nunukan Strait route is pre erred by timber traders who hire loggingteams in the Sebuku-Sembakung area to produce square logs. BA S ofcialsin awau state that up until 2003, each month about 80 timber boats (each with a load o 40-60 m3 or a monthly total o up to ,000 m3) arrived romNunukan. In addition, numerous other boats ( rom other parts o Kalimantanand Sulawesi) made port calls and ra ts o square logs were hauled in as w

In 2005, the trade in square logs through the Nunukan Strait was still in e e

but in a much diminished orm. Te latest research shows there are still abou50 logging teams spread across the Kalimantan mainland acing the island oNunukan. Teir production output still reaches 4,000 m3 per month. However,increasingly uncertain passage and less interest among awau based buyersdue to increased public, bilateral and international scrutiny, place considerablelimitations on the trade. Te small volumes traded are just not worth therisk or the awau industry operatives who are inclined to obtain more rawmaterials rom Sarawak, Papua New Guinea and elsewhere. It would have

been a di erent story i Nunukan district had a well developed road networin the proximity o the border as is the case in West Kalimantan. All inthe current cross-border timber trafc in East Kalimantans border zone is a

raction o what it used to be. While in 200 -2002 the province suppliedto 2 million m3 o timber to Sabah, the volumes o timber smuggled across thborder in 2005 are estimated at about 200,000 m3.


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imber trade across the border in East Kalimantan summary: imber smuggling at its peak in 2000-2002, up to 2 million m3 annually

large scale sea-based smuggling ( .2 million m3), small-scale sea-basedsmuggling (330,000 m3), land-based smuggling (500,000 m3)

Networks o illegal roads ( jalan tikus ) constructed across the border Even at its peak, smuggled timber rom East Kalimantan supplied less

than 4% o the raw material needed by Sabahs woodworking sector Forest management policy along the Indonesian side o the border

never rmly established. o-and- ro on HPH concessions, Perhutanimanagement, IPK land clearing, oil palm development.

Virtually all in rastructure development (roads, oil palm) aimed attimber extraction or short-term gain

FLE in Indonesia and the international pressure on Malaysia resulted ina drastic reduction o timber smuggling rom East Kalimantan to Sabah.In 2005, timber smuggling was down to about 200,000 m3


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5. Timber trade across the border in WestKalimantan

In comparison to East Kalimantan, West Kalimantan has a much more intensehistory o cross-border interactions with the Malaysian state o Sarawakparticularly overland. One o the largest ethnic groups in West Kalimantanis the Iban, also a dominant indigenous community in Sarawak. As a resulthe trafc o goods and people between the communities on both sides o thborder has always been intense, and it continues to be the case today. Tereare at least 50 known ootpaths connecting native communities on both sides

o the border, along which the trafc is entirely unregulated (Pontianak Post,7 August 2004).

Te uncontrolled trafc o this kind was not a problem within the contexto traditional subsistence-based economies. However, this has changed withthe progress o modernization, li estyle changes and increasing integration o West Kalimantans border zone into the world market. Such intensi cation was acilitated, in part, by avorable geographical and transport conditions.

Practically the entire border belt in West Kalimantan is accessible through theKapuas River and its many navigable tributaries. By the late 990s, a substantiroad network was in place too (e.g. Kartodihardjo and Simangunsong 2004).

Te improved access to the border spurred a boom in trade. While this was thdesired and expected outcome o in rastructure development, what district andprovincial ofcials did not anticipate was that the vast majority o this trade would be uncontrolled or illegal. Since raw materials and natural resources

etch higher prices in Malaysia, they became the key traded items regardle


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0 | Timber Smuggling in Indonesia

o the regulations. Diesel uel, wildli e, sh, chickens, illegal workers, drugs,rearms, ammunition all these and more are standard border contraband

items (Pontianak Post, 30 July 2004, 27 November 2003, 5 November2003).

5.1 Trucking and oating the timberimber was not ar behind. As in East Kalimantan, the timber trade exploded

here a ter 998. Te expansion o illegal timber trading in West Kalimantanappears to have been greatly acilitated by the development o new cross-borderroads and their minimal control (e.g. Lawrenceet al . 2003).

Entikong and Badau are two points in West Kalimantan along the border withSarawak that exempli y how the construction o roads and the lack o e ectivecontrols have led to the escalation in timber trafc. Just a ew years a ter the

eeder roads rom the main Pontianak-Putussibau artery reached Entikong andBadau and linked both towns with the neighboring urban areas in Sarawak,hundreds o timber-loaded trucks plied the routes daily. It is estimated that in2004, about 200 trucks transported timber rom West Kalimantan to Sarawak

through the border crossing at Entikong, an equivalent o ,000 m3 per day,up to 30,000 m3 per month, or 360,000 m3 per year (Pontianak Post, 6December 2004). A similar intensity o truck trafc was observed in Entikongin 2005 (Kompas, 2 March 2005, 5 March 2005). Badau in Kapuas Huluused to be ar ahead o Entikong in terms o the volumes o timber traded. In2003 up to 500 trucks (most o themtronton vehicles capable o errying 20-30 m3 o timber each) plied the route to the Malaysian town o Lubok Antu inSarawak. In 2004, the trafc was reportedly down to 200 regular-sized trucks

(Pontianak Post, 28 July 2004). Tis means the volume o timber leaving WestKalimantan through Badau is up to 360,000 m3 per year.

Te illegal timber trafc in West Kalimantan is not limited to land-basedoperations, although land transport is the dominant means o shipping timberacross the border. River and sea transport also play a signi cant role in cross-border timber trading. Just as in East Kalimantan the main destination otimber- errying boats to Sabah is the port o awau. In West Kalimantans

neighboring state o Sarawak the equivalent is the port o Sematan. In 2004, thetimber trafc in this port was reported to be ar more intensive in comparison with awau (Radar arakan, 28 September 2004). It is estimated that up to


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500,000 m3 o timber is shipped there rom the hinterland o West Kalimantanrst down the Kapuas River and then along the coast (EIA/ elapak 200 ).

Overall, in 2005 the volume o illegal timber traded in West Kalimantan reacheapproximately .2 million m3. Tis gure has been a cause or concern or localgovernment ofcials, NGOs and national development and orest policymakersalike. Te most common response has been to blame agents/ nanciers romMalaysia or ueling the timber smuggling. Te uncontrollability o the timbertrade prompted numerous orest law en orcement (FLE) operations in theborder region. Te situation also generated proposals or a range o mega-

project solutions.

5.2 Timber gangsters?It is true that Malaysian timber buyers are a strong in uence in West Kalimantanborder zone. On the Sarawak side o the border, there is a ree trade zo(F Z) that allows or the import and export o goods with ew regulationTe area also hosts a substantial timber processing capacity. Naturally, theMalaysian sawmill operators seek the raw materials that give them the largespro t margin; and such raw material comes rom West Kalimantan.

Te import o sawn timber and square logs rom West Kalimantan is nocarried out by Malaysians alone. In act, timber trafc to Sarawak wouldnever be possible without the involvement o thousands o people in WeKalimantan rom villages, to loggers, district/provincial ofcials and securityofcers (Pontianak Post, 9 June 2003). In Bengkayang District, timber truckscross the border unhindered a ter paying IDR 00-200,000 per shipment tothe security personnel at the checkpoint. Similarly, in Sambas and KapuasHulu districts, timber trucks pay similar amounts at 3 border posts (police,army and customs) on the way to Sarawak.

I the above payments may be seen as illegal bribes, at least one district inKalimantan, Kapuas Hulu, decided to introduce legislation that would enableit to impose a tax on timber being shipped rom its territory. Te tax went ine ect and, at least until 2004, Kapuas Hulu collected IDR 50,000 rom eachtruck crossing into Sarawak at Badau (Dermawan 2004, Kompas, 24 June2004). Te timber entering Sarawak rom West Kalimantan through all key


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entry points (Sematan, Biawak, Serikin, ebedu and Lubuk Antu) is bought byHarwood Sdn. Bhd., a company appointed by Sarawak imber Development

Corporation (S DC), the main regulator o the orestry sector in Sarawak, topool and process all timber in the F Z. An import tax o 0 Ringgit per m3

is levied on the timber, which can subsequently be distributed to any locationin Malaysia. While originally virtually no Indonesian documentation wasrequired or processing imported timber in Sarawaks F Z, due to increasinginternational scrutiny, in 2005 Harwood Sdn. Bhd. began to require SKSHH(Surat Keterangan Sahnya Hasil Hutan) legality certi cates.

In addition to land and water-based timber trafc, there have also beeninstances o cross-border intrusions by the Malaysian timber concessionaries.Te 2003 satellite imagery indicates there were 8 points along the border in West Kalimantan where roads rom adjacent logging concessions in Sarawakentered Indonesian territory. Tere were 5 roads intruding into BetungKerihun National Park; two rom Hak Holdings Sdn. Bhd. and three romPasin Sdn. Bhd. Other roads along the border originated rom the concessionso Sabal Sawmill Sdn. Bhd., Jangkar imber, Syarikat Jaya Kayu Asal Sarawak

Sdn. Bhd., Lundu Sawmill Sdn. Bhd., B SF, Lanab and Sanyan Lumber Sdn.Bhd. NGOs in West Kalimantan report that these intrusions did not continuein 2005 (KAIL pers. comm.).

Much o the timber shipped rom West Kalimantan to Sarawak comes romconservation areas or national parks. West Kalimantan hosts two conservationareas o global signi cance: Danau Sentarum National Park ( 32,000 hectares)and Betung Kerihun National Park (800,000 hectares). Both parks have

sustained signi cant damage due to illegal logging and the illegal timber trade.It is estimated that between 2000 and 2003, or instance, at least 200,000 m3

o timber was extracted illegally rom Betung Kerihun National Park (Kompas,8 July 2003).

5.3 Groping or solutionsBoth local (district, provincial) as well as central government authorities inIndonesia have been at a loss as to how to address the illegal logging and illegaltimber trade problems in West Kalimantan. Since both activities involvethousands o rural livelihoods, the authorities have tried a combination o FLE


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measures and development incentives to bring the situation under control.Te recurrent key problems, however, are a lack o clear objectives and poo

implementation.

As in East Kalimantan, since 2000 the security apparatus in West Kalimantanhas launched a series o FLE operations codenamed Wanalaga and OHL(Operasi Hutan Lestari , Operation or Sustainable Forest). Te impact o theseoperations has not been clear and is a topic o continuing debate (PontianaPost, 9 June 2005). Wanalaga in particular has come under re or allegedsingling out rural communities rather than hunting down the brains behind

illegal logging and timber smuggling. Wanalaga ofcers have also beencriticized or receiving money rom sawmills and timber traders in WesKalimantan in exchange or their exclusion rom investigation (PontianakPost, 28 July 2004). Te Police Command o West Kalimantan tried to deal with these issues by intensi ying FLE operations, launching air surveillance othe border and participating in OHL orest law en orcement initiatives startedin 2004 (Pontianak Post, 6 August 2004).

On the economic ront, there are several con icting development initiativesbeing proposed, which makes it difcult to predict their implications and

uture outcomes. On the one hand, there is a push to legalize the illegal crborder trafc. Te rst step in that direction was turning Entikong and Badauinto ofcial border crossing posts (PLB,Pos Lintas Batas ). Te provincialgovernment has also set up a Coordinating Body or Border Development(Badan Koordinasi Pengelolaan Border ) tasked with establishing borderdevelopment centers in select locations. It is unclear what the ocus o su

development centers is supposed to be. At one point, the idea was to develoa local wood-working industry. Tere is also an ongoing e ort to promote theestablishment o a string o oil palm plantations in the border zone (Kompa23 December 2005). Incongruously, in 2003, a parallel government-sponsoredinitiative was launched to encourage the districts that host Danau Sentarum andBetung Kerihun national parks in West Kalimantan to become conservationoriented (Kartodihardjo and Putro 2004).


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imber trade across the border in West Kalimantan summary: Long history o cross-border trade Te emergence o timber trafc acilitated by the development o a

network o roads In 2004, land-based illegal timber trafc reached 720,000 m3 through

the Entikong and Badau border crossings Sea-based trafc delivered 500,000 m3 to Sarawak the same year Illegal cross-border timber trafc is condoned by local authorities, who

obtain tax revenue rom it or district budgets, not to mention undsor private enrichment

Liberal trade regulations in Sarawak, Malaysia, particularly in the Freerade Zone (F Z), create an unlimited market or undocumented

timber rom Indonesia Illegal cross-border roads intrude into Indonesian territory FLE operations on the Indonesian side extensive, but their integrity

compromised and impact limited Te international media pressure is pushing S DC to tighten controls

in Sarawaks F Z


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6. How signifcant is cross-bordertimber smuggling within the contexto illegal logging in Indonesia?

It is a commonly accepted view that over the last several years, timbsmuggling has resulted in vast volumes o timber being stolen rom Indonescausing serious economic losses and extensive environmental damage. imbersmuggling has also been presented as the main cause o illegal logging. In 2Indonesias MoF reported that up to 0 million m3 o timber was smuggledout o the country annually (Dephut 2003). Papua alone was estimated tosupply up to 600,000 m3 per month or illegal export, primarily to China.

According to MoF, in 2003 Papua supplied between 6 and 7 million m3

otimber or illegal trade, while the remainder (approximately 3 million m3)came rom Kalimantan and Sumatra. A year later, EIA/ elapak reported thatPapuas contribution to timber smuggling dropped to 300,000 m3 per month(EIA/ elapak 2005).

Following the extensive FLE crackdown on timber smuggling in Papua inearly 2005 a crackdown brought about by MoF 2003 and EIA/ elapak

2005 reports illegal timber shipments rom Papua have virtually stopped.In Kalimantan, while in 2002 cross-border timber smuggling reached about4 million m3 annually, as a result o FLE and international pressure in 2005the smuggling dropped to around .5 million m3. Partner reports romSumatra indicate the current level o timber smuggling rom the island ain the vicinity o million m3 annually. As a result, over the last 2-3 yearsthe overall magnitude o timber smuggling rom Indonesia appears to havedeclined dramatically rom 0 million m3 to less than 3 million m3 a decline

o over 70%. Te combined e ect o FLE operations, international scrutinyand public as well as market pressure appears to have led to this remarkabturnaround.


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While indeed success ul, the progress in curbing the illegal timber tradehas been achieved in what is arguably the area o least concern. Even when

timber smuggling was at its peak in the early 2000s reportedly reachingup to 0 million m3 it was still less than a quarter o the overall volume otimber extracted illegally by Indonesian timber concessionaries or domesticconsumption, processing and export (MFP 2006). Remarkably, with timbersmuggling down by 70%, recently MoF has stated that illegal extraction otimber in Indonesia continues essentially unchanged, hovering at around 40million m3 o timber per annum (Bisnis Indonesia, 6 July 2006).

While it is evident that illegal extraction, processing and trade o timber within Indonesia are much more urgent problems (volume-wise) than timbersmuggling, it also apparent that complete elimination o timber smuggling inIndonesia will be difcult to achieve due to well-entrenched incentives againstlegal timber trade practices. Tese are as ollows: imber export permits are controlled by government bodies such as E PIK

(Registering Body or the Exporters o imber Products) and BRIK (Bodyor Revitalization o Forest Industries) that are heirs to APKINDO

Sti ing bureaucratic red tape: there are at least 3 distinct steps to ollowand a mass o documentation to sort out or timber export o any size toproceed

Export procedures involve high transaction costs Te procedures are oriented towards large companies Small and medium timber operators unwilling to go through them Weak inter-institutional collaboration ( orestry, police, customs, navy etc)

or surveillance and law en orcement

Limited Indonesian-Malaysian bilateral collaboration ( orestry, police,customs, navy etc.)

Limited capacity to monitor the border zone regularly beyond the areasreadily accessible by road or water transportation

For timber traders unwilling to ace the complexity o the Indonesian timberexport system, streamlined border trade regulations in Malaysia o er a muchsimpler alternative. Government policies in Malaysia that acilitate the import

o Indonesian timber include the ollowing:


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Overriding mandate/objective o Malaysian border controls (especiallyCustoms) to encourage trade and minimize market controls

F Z (Free rade Zone) regulations along the Sarawak-Kalimantan borderthat require minimal documentation or imported timber B Z (Barter rade Zone) regulations in the port o awau that impose

minimal documentation on imported timber Limited understanding o , and capacity to veri y trade documents

originating rom the Indonesian side Limited capacity to monitor the border zone regularly beyond the areas

readily accessible by road or water transportation. Most active logging

concessions in Malaysia operate within kilometers (in some cases onlyhundreds o meters) o the border with Indonesia. As logging roads rarelink up with the public road network, monitoring o these remote sites idifcult.

Limiting the illegal timber trade rom Indonesia urther would require stepbeyond FLE such as review, re orm and synchronization o orestry, and traand development policies between Indonesia and Malaysia, particularly in

the border zone. While discussions are ongoing between the two countriesabout making progress on at least a ew key issues (security, labor, roads),unlikely that these processes will have an immediate impact on limiting theillegal timber trade rom Indonesia.


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How signifcant is cross-border timber smuggling within the context o illegal logging in Indonesia? summary: According to MoF, in 2003 timber smuggling rom Indonesia reached

0 million m3 annually including 6-7 million m3 rom Papua and 3-4million rom Kalimantan and Sumatra

By 2005-2006, timber smuggling dropped by 70% to less than 3 millionm3

Forest law en orcement operations, international scrutiny and publicas well as market pressure appear to have led to this remarkableturnaround

Illegal logging continues at a rate o at least 40 million m3 annually.imber smuggling, however, is o least signi cance within the overallramework o the illegal logging problem in Indonesia

Some smuggling will continue despite preventive measures in place dueto administrative disincentives or legal timber trading in Indonesia(particularly or small and medium-sized companies) and due to lenienttrade regulations in the border regions in Malaysia


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7. Prioritizing government policiesagainst illegal logging in Indonesia

Te main problem acing Indonesian orestry is not market distortions,environmental damage or lost tax revenue caused by timber smugglers atremote border crossings. Rather, it is the illegal logging by Indonesian oreconcessionaries, plantation developers, road construction activities etc. thatescapes the checks o the Forestry Service, passes through its administrativsystem and enters trade through the Indonesian export system under E PIK

and BRIK (MFP 2006). Tis is the primary avenue or trade in illegal wooproducts rom Indonesia. A 2004 study by CIFOR and NC shows howthese processes work in Berau and East Kutai districts, East Kalimantan, wherenearly hal o harvested and processed timber was not properly reported antaxes due were not collected, yet the timber entered the ofcial trade system(Obidzinski 2005).

Te current timber trade system under E PIK and BRIK and the way it

loosely links up with orestry administration and on-the-ground supervisiono orestry operations in Indonesia has serious weaknesses that enable tradein vast quantities o timber that is technically illegal. While the governmenholds that both E PIK and BRIK impose sufcient legality requirements thatstress administrative and documentary compliance by orestry businesses inIndonesia, these requirements are simply not enough. Tis is because they arerelatively easy to manipulate and their en orcement is lax.

Tere is a great need or a stricter timber legality standard (e.g. the standardeveloped collaboratively by LEI, NC and other parties) that would be clearer,


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0 | Timber Smuggling in Indonesia

simpler to en orce and easier to evaluate. Such a standard would o er hopeor a real and lasting solution to the illegal logging problem in Indonesia, but

would require a number o courageous steps on the part o MoF, including: Endorsing the legality standard as the only proxy or legality in Indonesia Developing an implementation ramework to enable concessions to achieve

the legality standard in a set period o time Providing public policy incentives or companies to comply (e.g. removal

o disincentives that encourage illegal practices) En orcing mandatory legality veri cation checks by independent third

parties

Reduction o the role o the Forest Service in monitoring (e.g. limited tomonitoring via remote sensing) because it is a disincentive or achievemento legality due to the high costs

Development and implementation o key tools to control, monitorand evaluate timber supply and demand

Te above steps require a lot o political will and sustained e ort rom arange o government agencies. Extensive and e ective collaboration between

the private sector and non-government stakeholders (NGOs, communities,research institutions and donors) will also be necessary. While it is a lot tohope or, it seems to be the only way to make meaning ul and lasting progresson the illegal logging issue in Indonesia.


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Re erences

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Asia Pulse. 2003b.Indonesia Calls on Malaysia to Deal with Illegal Logging Issue . 5 October.

Bangkuai, Joniston. 997. imber Firm Files Suit Against Sabah CM.New Straits imes , 2 June.

Bingkasan, Joseph. 997. Ship Detained over Smuggling o Logs.New Straits imes , 9 January.

Bisnis Indonesia. 2006.Industri butuh 40,6 juta m 3 kayu. 6 July.Dephut. 2003.Departemen Kehutanan Koordinasi dengan Mabes NI Dalam

Pemberantasan Penebangan Liar . Press release No. 5 /II/PIK- /2003Dermawan, A. 2004.Has the Big Bang Hit the rees and People? Te Impacts

o Indonesias Decentralization on Forest Conservation and the Livelihood o Communities.Department o Economics and Resource Management. Aas, Norway, Agricultural University o Norway.

EIA/ elapak. 200 . imber ra cking: Illegal Logging in Indonesia, Southeast Asia and International Consumption o Illegally Sourced imber . Bogor,

elapak and EIA.EIA/ elapak. 2005.Te Last Frontier: Illegal Logging in Papua and Chinas

Massive imber Te t . Bogor, elapak and EIA.Gatra. 2003.Kerusakan Hutan di Indonesia, erparah di Planet Bumi.7

November.Human Rights Watch (HRW). 2006.oo High a Price: Te Human Rights Cost

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Huttche, C. 2000. Illegal logging in Borneos rain orests transgresses borders.ong ana: Journal on rain orests, indigenous rights and timber trade in

Indonesias Forestry Sector . Center or Conservation and Government,Conservation International.International Court o Justice 2002.Case concerning Sovereignty over Pulau

Ligitan and Pulau Sipadan (Indonesia/Malaysia). Press Release 2002/39bis.20 December 2002.

Jakarta Post. 200 .Plywood Group Wants Ban on Log Exports . 20 February. Jakarta Post. 2003.EU Urged to Reject KL Wood Products . 5 October. Jakarta Post. 2004. Mega Urged or Quick Settlement o Border Arrangement.

20 January.Kaltim Post. 2002.Perusahaan Kayu Malaysia Jarah Hutan Kaltim: amanNasional Kayan Mentarang erancam. 7 November.

Kaltim Post. 2003.Patok Perbatasan Indonesia-Malaysia Di Malinau Bergeser .3 September.

Kanwil Dirjen Perhubungan Laut. 987. Angkutan Penumpang Dengan Kapal Laut di Nunukan: Rapat Kordinasi Masalah enaga Kerja Yang Masuk ke Sabah/Sarawak Khususnya dan Malaysia Pada Umumnya. Jakarta.

Kartodihardjo, H., Putro, H. R. 2004.Kajian Kebijakan Kabupaten Kapuas Hulu: antangan dan Peluang Mewujudkan Kabupaten Konservasi.AReport prepared or WWF Indonesia.

Kartodihardjo, H., Simangunsong, B. 2004.Indonesia Case Study or Project on rans orming Chinas Forest Impacts in the East Asia Region . Paperprepared or CIFOR.

Kompas. 2000.Pencuri Kayu Geser Patok Batas RI-Malaysia. 23 May.Kompas. 2003.Kayu Malaysia itu Made in Indonesia. 28 October.

Kompas. 2003. Penebangan Liar di aman Nasional Betung Kerihunumbangkan 30.949 Pohon. 4 May.

Kompas. 2003.Rusak Parah, Habitat Orangutan di Kalbar . 8 July.Kompas. 2004.Cukong Malaysia erus Babat Hutan Kapuas Hulu. 24 June.Kompas. 2004.Penyelundupan Kayu Lewat Laut Jalan erus . 20 November.Kompas. 2005.Diduga Selundupkan Kayu, WN Malaysia Ditangkap. 2

March.Kompas. 2005.Gubernur Kaltim Diperiksa. 22 October.

Kompas. 2005.Ketika enda Biru Bermunculan. 5 March.


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Kompas. 2005.Separuh di Kalbar, Dari 1 Juta Ha Sawit di Perbatasan Kalbar- Malaysia. 23 December.

Lawrence, J., oyoda, N., Lystiani, H. 2003.Importing Destruction: How U.S. imports o Indonesias tropical hardwoods are devastating indigenous communities and ancient orests . San Francisco: Rain orest ActionNetwork.

Lee, Edwin. 976.Te owkays o Sabah. Singapore: Singapore UniversityPress.

Media Indonesia. 2003.Kerugian Akibat Illegal Logging Rp 46 riliun. 8 June.

Media Indonesia. 2005.Kunjungan Presiden ke China: China Investasi US$7,5 Miliar . 30 June.MFP (Multistakeholder Forestry Programme). 2006. imber industry

revitalization in Indonesia in the rst quarter o the 2 st century. PolicyBrie . DFID, Jakarta.

Ministry o Forestry (MoF). 2005.Rencana Stratejik Pengelolaan KawasanHutan Wilayah RI Malaysia. Jakarta.

Muhtadi, D. 999.HPH, Hak Pembabatan Hutan,Kompas , 30 August.

New Straits imes. 997a.Firm Demands Release o Its imber . 3 January.New Straits imes. 997b. Lim to Discuss imber Smuggling with Indon Minister . February.

Obidzinski, Krysto . 2005.Illegal logging is not only about smuggling timber. Jakarta Post June 6, 2005.

Pikiran Rakyat. 2003.43 Juta Hektar Hutan Rusak: Akibat Maraknya Aksi Penebangan Liar . 22 September.

Pontianak Post. 2002. Jalan ikus Itu Jadi Jalan Gajah. 7 May

Pontianak Post. 2003.Illegal Logging Libatkan Mafa Internasional dan OknumPejabat . 9 June.

Pontianak Post. 2003. Aparat Perbatasan Secepatnya Diganti, PenyelundupanKian Marak . 5 November.

Pontianak Post. 2003.Pembukaan Daerah Perbatasan Jagoi-Sirikin (-1-) MakinLama, Semakin Menumpuk Persoalan. 27 November.

Pontianak Post. 2004, Menteri Komin o Soroti Perdagangan Ilegal Perbatasan; Masalah Krusial Bangsa.30 July.

Pontianak Post. 2004.Eleminir Illegal Logging, Kapolda Patroli Udara. 6 August.


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Pontianak Post. 2004.Pemerintah Setuju Badan Otonomi Perbatasan Perjuangan

Panjang Menggolkan Status Border Entikong . 7 August.Pontianak Post. 2004.Pembukaan Daerah Perbatasan Jagoi-Sirikin. 27November.

Pontianak Post. 2004. Penyelundupan Kayu Lewat Laut Jalan Terus . 20 November.

Pontianak Post. 2004.akut Ditangkap, ruk Kayu Sepi Masih Nekad, Beraksi Malam Hari . 6 December.

Pontianak Post. 2004. im Wanalaga ak ransparan Peras Pengusaha Kayu

Perbatasan? 28 July.Pontianak Post. 2005.OHL Kalbar dan Dampaknya di Lapangan -Bagianerakhir dari Dua ulisan. Gusti Hardiansyah. 9 June.

Radar arakan. 2004.Kayu Ilegal Indonesia Masuk awau. 28 September.Smith, J., Obidzinski, K., Subarudi, Suramenggala, I. 2003. Illegal logging,

collusive corruption and ragmented governments in Kalimantan,Indonesia. International Forestry Review 5(3): 293-302.

acconi, L., Obidzinski, K., Smith, J., Subarudi, Suramenggala, I. 2004.Can

Legalization o Illegal Forest Activities Reduce illegal Logging? Lesson romEast Kalimantan. Bogor, Indonesia: CIFOR.empo interactive. 2005.Baru 350 KI Ilegal Asal N Kembali . 4

February.empo Magazine. Akhirnya Suwarna Pasrah. Ed. 8/XXXV/26 June - 02 July

2006.irtosudarmo, R. 2002. West Kalimantan as Border Area: A Political-

Demography Perspective. Antropologi IndonesiaSpecial Volume.

Wakker, E. 2006.Te Kalimantan Border Oil Palm Mega-project . Commissionedby Milieude ensie Friends o the Earth Netherlands and the SwedishSociety or Nature Conservation (SSNC).

Warta Wanariset Malinau 2004. No. 4, Mei 2004, p. 4. Bogor, Indonesia:CIFOR.

WWF Indonesia. 2006.Help WWF to save the unique Heart o Borneo . WWF,08 February 2006.


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The Center or International Forestry Research (CIFOR) is a leading international orestryresearch organisation established in 1993 in response to global concerns about the social,environmental, and economic consequences o orest loss and degradation. CIFOR isdedicated to developing policies and technologies or sustainable use and management

o orests, and or enhancing the well-being o people in developing countries who relyon tropical orests or their livelihoods. CIFOR is one o the 15 centres supported by theConsultative Group on International Agricultural Research (CGIAR). With headquartersin Bogor, Indonesia, CIFOR has regional ofces in Brazil, Burkina Faso, Cameroon andZimbabwe, and it works in over 30 other countries around the world.

Donors

CIFOR receives its major unding rom governments, international developmentorganizations, private oundations and regional organizations. In 2005, CIFOR received

inancial support rom Australia, Asian Development Bank (ADB), Belgium, Brazil,Canada, China, Centre de coopration internationale en recherche agronomique pourle dveloppement (CIRAD), Cordaid, Conservation International Foundation (CIF),European Commission, Finland, Food and Agriculture Organization o the UnitedNations (FAO), Ford Foundation, France, German Agency or Technical Cooperation (GTZ),German Federal Ministry or Economic Cooperation and Development (BMZ), Indonesia,International Development Research Centre (IDRC), International Fund or AgriculturalDevelopment (IFAD), International Tropical Timber Organization (ITTO), Israel, Italy, TheWorld Conservation Union (IUCN), Japan, Korea, Netherlands, Norway, NetherlandsDevelopment Organization, Overseas Development Institute (ODI), Peruvian Secretariat

or International Cooperation (RSCI), Philippines, Spain, Sweden, Swedish University o Agricultural Sciences (SLU), Switzerland, Swiss Agency or the Environment, Forests andLandscape, The Overbrook Foundation, The Nature Conservancy (TNC), Tropical ForestFoundation, Tropenbos International, United States, United Kingdom, United NationsEnvironment Programme (UNEP), World Bank, World Resources Institute (WRI) and World

Wide Fund or Nature (WWF).


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