III. NEW ORDER FORESTRY POLICY AND THE ROOTS OF THE CRISIS
Natural resources are central to economic, political, and social struggles throughout the Indonesian archipelago, and have therefore long served as landscapes in and over which violence and repression have been waged. Forests in particular have played a leading role in these struggles and as such are critical points of inquiry into rural violence, especially in the forest rich countryside of Riau. The Sumatran province of Riau is one of the nation's richest in natural resources (largely oil and forests),1 and is under heavy extractive pressure. Attractive to investors for its close proximity to Singapore and Malaysia, Riau is home to the world's two largest stand-alone pulp and paper operations, which together control 580,000 hectares of pulp plantation and consume almost 20 million cubic meters (m³) of wood annually,2 or 91 percent of Indonesia's total annual sustainable cut (the volume of wood legally harvested each year for use by all Indonesia's wood-based industries).3 In addition, Riau has the nation's largest petroleum concession4 and the largest area of land designated for conversion to oil palm5-extractive industries all primarily controlled by wealthy elites from outside the province. Together with the nation's fourth-largest area of logging concessions (6 million hectares), these resource industries control nearly all of Riau's 9.5 million hectares of land area.6 (See Riau land use map in Map 1). A major contention of this report is that rights abuses and deforestation in Riau today stem from policies set in motion more than a decade ago, under President Soeharto's New Order government, and from continuing conflicts of interest from the involvement in forest business of the very state actors charged with management and enforcement of forest laws. New Order policies permitted seizures of local land for commercial forestry operations-in which government actors often had a stake- the lack of respect for indigenous rights, and the lack of enforcement of forestry and investment laws. These factors all encouraged unsustainable forest use by corporate entities. The low level of regulation and the neglect of local rights to land and resources have, in effect, acted as subsidies to the forest industry by granting cheap and largely unregulated access to vast areas of timber-rich forest, making production costs in Riau among the lowest in the world.7 Although such policies gave the industry a competitive advantage, poor regulation of the industry by the Indonesian government, and of the banking sector that financed it, ultimately led to dramatic over-expansion of capacity and to a disastrous corporate debt crisis. 8 This financial pressure, in turn, has further driven the cycle of deforestation and rights abuse. This chapter unravels this complex chain of events by first detailing the scope of the national problem of forest loss and its consequences for people dependent on forests for livelihoods. It then provides a detailed look at the genesis of the crisis in New Order policies and the role of the Indonesian military in the forestry sector. Then the chapter moves to an historical overview of the growth of the forest industry, and the nature and scope of APP operations, highlighting its facilities in Riau. The following chapter examines the ways in which, despite some useful initiatives, post-Soeharto "Reform Era" policies have made little headway, and in some respects have worsened the situation by bailing out indebted corporations without conditioning such bailouts on improved human rights and environmental practices. Perceived economic imperatives have increasingly brought tensions between local communities and the forestry industry to a boiling point, with little relief in sight. The Loss of Indonesia's Natural Forests: What's at Stake
But the forests have a different meaning for Indonesia's rural populations. The loss of these forests has been devastating to the majority of Indonesia's population, which is rural,10 poor,11 and dependent on forests for livelihood.12 These populations also ascribe forests great cultural value. The majority of indigenous farmers in what are commonly called the Outer Islands-the islands outside the densely populated islands of Java, Bali, and Madura-practice a mixed subsistence and commercial cultivation of dryland (swidden) rice and tree crops.13 In addition, various forest products are harvested for sale and home consumption including rattan, honey, resins, edible leaves and fruits, wild game, and fish.14 An estimated seven million people in Sumatra and Kalimantan depend on income from rubber gardens that spread across approximately 2.5 million hectares. In Sumatra alone, about four million hectares are managed by local people as various kinds of agro-forests (i.e. multiple-species orchards mixed with natural regrowth) without any outside assistance.15 Although they do not possess written titles, indigenous communities understand this traditional form of management as imparting customary (adat) property rights, which are specifically recognized in Article 18 of Indonesia's Constitution.16 President Soeharto, however, had other plans for these vast and lucrative tracts of timber-rich forests that, because they were not under formal private title, were considered "unowned." The New Order "development" agenda was powered by unsustainable forest extraction and founded on the state seizure without due process or meaningful compensation of over 90 percent of the total land area of the Outer Islands as "state forest." Thick stands of tropical forests that have grown over many generations and are rich in plant and animal biodiversity were logged for timber and replaced by vast plantation monocultures of fast-growing exotic species, planted in straight rows and cleared of all understory plants. Expanded production of the forest industry beyond what even the huge plantations could supply and has driven further plantation expansion into natural forest. Critics, among them the World Bank and other members of the donor forum Consultative Group on Indonesia (CGI), have charged that this over-expansion of the pulp industry has also driven illegal logging, much of it in timber-rich national parks and protected forests.17 The pace of forest loss is extraordinary, now at 2 million hectares annually, an area half the size of Switzerland18. According to World Bank estimates, if current conditions persist all lowland dry forest in Sumatra will be gone by 2005.19 To put these estimates in perspective, the United States Agency for International Development (USAID) used these figures to calculate that every minute an area the size of six soccer fields is deforested in Indonesia. From the illegal timber cut in that minute, the Indonesian Government loses U.S.$1300 in foregone revenues (more than three average Indonesian families earn in a year), and a few business conglomerates and elite families earn U.S.$24,000.20 The impacts of rapid and extensive forest loss are wide-ranging. Scientists have long established the severe environmental consequences of large-scale forest loss, including the loss of unique biodiversity, increased flooding and drought, decline of water quantity and quality, and increased forest fires that pollute the air with toxic fumes, ash, and greenhouse gases. 21 But while this litany of environmental ills is by now familiar, the toll of deforestation on human rights has been little discussed, yet can be equally devastating. Over-capacity of forestry industry and the wood supply gap have driven the rapid loss of Indonesia's forest to both legal and illegal logging operations. As in lucrative illegal sectors everywhere, gang networks have developed, acting as extortionists and protectors of the trade and waging violence against those who would interfere. In Indonesia, this illicit sector and the violence around it frequently have clear links to government actors.22 But it is not only the country's illegal sector that threatens the livelihoods and safety of local communities. Indeed, the unchecked boom in demand for wood by the expanding Indonesian forest industry will continue to drive the seizure of land and resources for new concessions, in addition acting as a sink for wood from illicit sources. As long as this is the case, there will continue to be protests, and without some redress for grievances or accountability of security forces, whether private or state organized, violence against protestors is likely to continue unabated. The products of this scenario are not only violence and environmental destruction, but also barriers to economic growth and an adequate standard of living for members of forest communities.. If forest dependent livelihoods are replaced by an unsustainable industry, there will be few economic alternatives after the forest is gone. The World Bank predicts that if current conditions persist, lowland dry forest in the nation's major timber producing areas of Sumatra and Kalimantan will be gone in five to ten years.23 Mark Baird, Indonesia Country Director for the World Bank, noted pointedly at the East Asia Ministers' Conference on Forest Law Enforcement and Governance:
Ironically, the loss of forests, land, and livelihoods all transpired under state policies that were ostensibly aimed at supporting economic growth for all Indonesian citizens. Soeharto's public vision of "pembangunan" or development (literally an "awakening" of a modern Indonesia) was, like that of most newly industrializing nations, one of economic prosperity powered by rapid extraction of natural resources. However, in practice, this agenda took a back seat to, and was ultimately endangered by, Soeharto's implicit objective of consolidating power through political patronage, in which he also made shrewd use of lucrative natural resources. Although Soeharto resigned from office in 1998, Indonesia's people and environment continue to suffer the consequences of this lack of good governance and rule of law in state forest and financial policies. New Order Forest Policy
Such land was classified as "state forest,"30 a vast area that included more than 75 percent (143 million hectares) of Indonesia's total land area, and 90 percent of land area on the Outer Islands, much of it under traditional claim. As state forest, the law designated over one hundred million hectares for logging or `conversion' to plantation (i.e., clear-cutting and replanting in monocultures of pulp or other estate crops). The Indonesian government then issued concessions to companies that gave them rights to the land recognized under the law. A map of state forest classifications for Riau province (Map 1) demonstrates the tiny fraction of total land area (largely confined to urban areas) that is not classified as "state forest. This map gives a clear visual illustration of the degree to which local livelihoods have been hemmed in. The vast majority of the province, as state forest, is under state control. State Security's Stake in the Forest Sector
Since the beginning of Soeharto's rule, agents of the military have been deeply involved in commercial forestry as concession holders, business partners, and enforcers for forest companies, as well as as financial backers and protectors of illegal loggers. Vast concessions were granted to generals in the late 1960s and early 1970s, an effective means of consolidating their political support for Soeharto's new administration. Additionally, involvement in business was seen as a way to make up for insufficient military budgets and salaries; senior officers' institutional and individual involvement in business was not only permitted but encouraged. Indeed, knowledgeable sources, among them the former Minister of Defense, have estimated the military's off-budget income is 65-75 percent of their total budget, and the amount of military budget "leaking" to individuals is 65 percent.32 Over sixty-two million hectares of forest were handed out on a non-bidding basis to fifty-one conglomerates and state forest companies with ties to the military and the Soeharto family.33 As military officials lacked the capital or expertise to establish logging operations, they entered into partnerships with investors, primarily through opaque "charitable foundations" (yayasan)34, limited liability corporations, cooperatives, or holding companies controlled by military interests.35 In 1995, over one million hectares of logging concessions were held by companies owned entirely by the Army's yayasan.36 This does not include companies with minority military ownership or operating without legal permits and concessions. The contribution of military capital to these ventures was typically minimal, but the yayasan "charities" nevertheless received large shares. The military's contribution was not financial but political capital needed to gain access to forest land and pressure national government officials to provide advantageous state investment policies.37 At a local level, the military and police also routinely acted as private enforcers for companies, both quashing protests and hiring themselves out to companies for "land acquisition" from local communities. In Riau, Brimob police have often acted to violently quell local protests against companies. In October 1997, police attacked demonstrators from the village of Delik, who were protesting land seizures for the construction of Riau's second massive pulp and paper mill, Riau Andalan Pulp & Paper. Police fired on demonstrators who were blocking the construction of a road, wounding two and arresting one of the community organizers, the outspoken journalist Marganti Malanoe.38 Malanoe was sentenced to three years in prison for provocation and sabotage.39 Another example from Riau is the oil palm concession PT Tor Ganda in Rokanhulu district, which in 1996 cleared over 10,000 hectares of forest and local rubber gardens, reportedly without any permits. Press accounts and community activists reported that in 1999, when local people from the villages of Mahato and Dalo-Dalo protested the loss of their land, they were attacked by thugs and local police, who burned down 100 houses in three villages and fired on protestors killing one and injuring thirty.40 The military and police continue to have good economic reasons for protecting the forest industry, and little has been done under the post-Soeharto administrations to improve accountability of state security or their formal and informal involvement in forest business. Indonesia's current President Megawati's close contacts with military have proven to be obstacles to reform, compromising attempts to improve accountability for human rights abuses, most notably in her choice for military leadership of individuals formerly within Soeharto's inner circle,41 and in the deeply flawed East Timor human rights tribunals.42 Human rights advocates suggest that the failure to make military business ventures and operating budgets transparent is one of the key stumbling blocks to both increasing accountability and reducing armed conflict in resource rich areas such as Aceh, Papua, Maluku, and Poso.43 After decades of protection by state security, many forms of illegal logging have flourished, both for export to Singapore and Malaysia and to satisfy ever increasing domestic demand. Common forms are logging in protected areas and national parks, and logging without valid permits or outside of the permitted area. Involvement in illegal sectors has been a long-standing strategy for augmenting the military budget as well as individual fortunes, especially through the mining and forestry sectors. According to well-placed observers and undercover investigators, agents of the military, as well as police and local government officials, act as both as financial backers and protectors at all stages of illegal logging operations including log extraction, transport and processing. This pervasive involvement has been well documented in the protected forests of Aceh44 and Central Kalimatan.45 In Riau, World Wide Fund for Nature (WWF) and the U.K.'s Department for International Development (DFID) have done numerous undercover investigations of illegal logging and sawmills around protected areas. In 1998, DFID documented 23 illegal sawmills around Riau's Bukit Tiga Puluh National Park, of which the report documented twelve had military backing, one had police and five had forestry department backing.46 This widespread government involvement in illegal logging was openly acknowledged by former Director General of Forestry Suripto, who claims to have received death threats for his efforts to curtail military and official involvement in illegal logging and was ultimately removed from his post, many observers believe for his actions against forest corruption.47 Suripto handed over to the Attorney General's Office and National Police evidence alleging corruption by major business tycoons and 18 illegal logging syndicates. Among those implicated were timber boss and Soeharto crony Prajogo Pangestu and Soeharto's daughter Siti Hardijanti "Tutut" Rukmana. Suripto alleged that they had been involved, among other things, in fraud and misallocation of reforestation funds (for having over-estimated the amount of land reforested in order to get more reforestation money), tax evasion, and deliberate burning of land for plantations in violation of no-burn legislation. No formal charges or prosecutions have resulted.48 The Indonesian government has at least nominally recognized the economic importance of getting military spending on-budget in its commitment in the January 20, 2000 Letter of Intent (LOI) to the IMF, which states: Any funds remaining outside the budget will be subject to annual audit. In addition, we have instructed the State Audit Board (BPKP) that any future internal audits of financial operations of all government agencies take full account of all extra-budgetary sources of support. This will begin in 2000 and will include the military.49 This commitment also provides the IMF with clear responsibility to press for meaningful action on military off-budget business activity. By 2001, the LOI stated that the government agencies had "been audited as previously envisaged" including eight military foundations and one state police foundation.50 The letter continues, "The implementation of corrective actions in all cases will be publicized on a regular basis." However, in June 2002, IMF representatives told Human Rights Watch and a delegation of Indonesian activists that the IMF had not asked to see the audit, were unaware of progress on corrective actions, and did not know if the audit, carried out by a state agency, would be made public.51 The Indonesian Pulp and Paper Boom
Although the Dutch colonial government began intensely logging teak forests and establishing teak plantations on Java as early as the seventeenth century, wide-scale commercial logging and forest plantation agriculture did not begin until the late 1960s. Since that time, nearly half of Indonesia's forest has been logged and the annual deforestation rate has been on the rise. As described above, New Order policies encouraged political patronage and the rapid conversion of forest to cash, and in this sense were extraordinarily successful. The rapid growth of Indonesia's forest industry has been characterized by the serial development of sub-industries of raw logs, plywood, and pulp and paper, in that order. The first forest industry to boom was the timber industry of the early 1970s, which was granted more than 30 percent of the total national land area as logging concessions issued on a discretionary (non-bidding) basis, largely to business conglomerates made up of Soeharto's family, business partners, and political and military allies. There was little scrutiny of the economic feasibility of these commercial operations, nor their management of public resources. By the late 1970s, Indonesia became the world's largest exporter of tropical timber, more than Latin America and Africa combined,52 with log exports generating U.S.$1.5 billion a year-profits largely controlled by just 64 family conglomerates.53 In the following decade, business elites turned their attention from raw logs to the development of value-added wood products industry in order to capture more profit. By the late 1980s Indonesian forestry became another world leader-this time in tropical plywood, producing 79 percent of the global supply. The success of the domestic plywood industry, however, was ensured by government policies that proved to be economically, ecologically, and socially ruinous. Government regulations accompanying the log export ban as well as subsidies for logging companies that also developed processing units ensured that timber concessions and the plywood processing industry were both dominated by a handful of major producers, while a horizontal monopoly over marketing and exports of plywood was established by Soeharto's close friend and business associate Mohammad `Bob' Hasan and his plywood cartel APKINDO.54 An export ban artificially depressed the price of domestic timber, ensuring the plywood industry's access to cheap wood, and aiding the over-capacity that led to the increased pace of logging and further seizure of local lands. Many analysts, including the World Bank, see this surge in over-production in Indonesia's forest industries as the main driver of illegal logging, and therefore have argued that the policies encouraging industry expansion in fact had perverse effects on forests, forest dependent people, and economic sustainability in the forest sector. 55 A 1999 report from the U.S. Embassy in Jakarta frankly expressed what has long been common knowledge about New Order forestry,
In the late 1980s, the pulp and paper industry began to take off, also catalyzed by large government subsidies, most notably zero-interest loans from the Reforestation Fund, which kept production costs among the lowest in the world.57 From 1988 to 2001, pulp production expanded tenfold from 606,000 to 6.1 tons per year. Paper production expanded sevenfold from 1.2 million to 8.3 million tons per year during the same period. In 2001, pulp and paper became the largest income generator in the forestry sector, at 50 percent of the nation's forestry exports.58 Although promoted as the means to establish a sustainable forest industry, the rapidly expanding plantation sector has devastated Indonesia's natural forests and local access to forests. With the rapid growth of the pulp and paper industry, effective wood demand has also skyrocketed from 3 million m³ annually in 1990 to 30 million m³ in 2002.59 Yet, the majority of this wood continues to come from clearing natural forests, not sustainable plantations. From 1988-2000 only 10 percent of the 120 million m³ wood used for pulp came from plantations.60 APP's Increasing Demand for Wood
The wood fiber for the Indah Kiat mill is supplied by Arara Abadi, also a subsidiary of the Sinar Mas Group. Arara Abadi has one of Indonesia's largest pulpwood plantations, controlling a concession of 300,000 hectares in Riau. The transfer of rights to community land without due process or fair and prompt compensation is a major factor contributing to disputes and violence between Arara Abadi and the surrounding communities. Provincial regulations in place even at the time of the plantation concession's initial establishment require that lands used for community farming and rubber production be excised from a concession's working area.66 A survey was conducted last year in the sub-district of Bunut (Pelalawan district, where the villages of Betung, Angkasa and Belam Merah are located)67 by a multi-stakeholder team including representatives from local government, non governmental organizations, local community leaders, and Arara Abadi, to determine the amount of land inside the concession claimed by local communities. While only a tiny portion of the entire concession, the survey found that some 20,000 hectares of Arara Abadi's concession were under community claim. The fact that a comprehensive and systematic survey of land ownership had never been undertaken is an indication of the government's failure to enforce existing rights: Indonesian law requires that land under third party claim be excised from forest concessions. Arara Abadi's own records show that 113,595 hectares of its concession have been claimed by local communities. Although it asserts that half of these cases have already been settled, it acknowledges that 57,000 hectares remain under dispute. It gives no details regarding the settlements or the exact location of the claims, however, so it is impossible to cross check whether these claims overlap with those found by the multi-stakeholder team.68 APP officials insist, as do provincial police, that Arara Abadi was issued a legal concession by the Indonesian government, and because local residents did not have any formal title to the land, they have no legal rights.69 Arara Abadi's Director admitted that most of their security problems were not from "illegal logging" as many representatives repeatedly insisted, but from traditional land claims from local people.
These comments are revealing on several points. First, they make clear that the imprecise term "illegal logging" is frequently used to obscure community land claims and make legitimate grievances that need to be negotiated appear as criminal activity. This was a factor in both the Angkasa/Belam Merah and Mandiangin conflicts described above. Second, the observation that reform has made communities "more brave" to press their claims is an indication of the extent to which they were cowed by intimidation in the past. Third, the official's comments underscore the second-class status of indigenous rights, even though they are recognized by law. The Arara Abadi official clearly recognizes that communities possess customary rights,71 but implies that ultimately the expense of the compensation is what determines whether these rights will be recognized or not. Even though Indonesia recognizes customary rights in its constitution, there is no formal process for local people to press land claims. Faced with unresponsive and unaccountable company staff and local administrations, communities may try to take their case to court, but the depth of the corruption and the requirement of bribes makes this an impractical avenue for seeking impartial justice for impoverished local people. In fact, companies themselves complain that corrupt courts at times order them to pay compensation to illegitimate claimants. In his June 2002 review of the Indonesian court system, the U.N. Special Rapporteur on the Independence of Judges and Lawyers, Param Cumaraswamy, concluded with shock that he "did not realize that it [corruption] would be so endemic."72 This assessment is corroborated by a detailed research report on the judicial system by the independent government watchdog Indonesian Corruption Watch that documents corruption and bribe-taking at all levels of the judicial process.73 Unable to obtain title and shut out of the justice system, local people have few ways to make their complaints heard, and informal complaints taken directly to local officials are frequently dismissed by authorities, further alienating local communities. As one high ranking provincial police official put it bluntly,
This vast area of land under Arara Abadi was not only removed from local control but clear-cut of its natural forest, which was traditionally used by surrounding communities for local farming and the collection of forest products, including economically and culturally valuable honey trees in natural forest reserves, whose ownership is passed down for generations. Community orchards of fruit and rubber trees were also cleared. The large expanse of land under pulp concession, in addition to logging and oil palm concessions-has left little land on which to pursue traditional forest-based livelihoods (See provincial map showing extent of concession areas in Map 1). Government regulations require that all village sites and fields must be excised from concession working area, and that no concession plantings are permitted with 1.5 km of villages or roads.75 Yet the acacia trees are commonly planted right up to the edge of roads and, in some villages, right up to the back doors of villagers' homes. One man complained, "If we want to build an outhouse, we have to cut down an acacia tree."76 However, APP's debt-fuelled expansion has produced a supply for wood fiber that outstrips the supply of acacia plantation and the available natural forest on Arara Abadi's concession, forcing APP to buy from clear-cut natural forest outside its already massive concession. 77 APP acknowledges its dependence on clearing natural forest to feed its mill: figures supplied by APP/Sinar Mas Group to Human Rights Watch report that the Indah Kiat mill in Perawang currently uses such wood to satisfy 65 percent of its wood demand-a total of 9.8 million tons annually-at present, 25 percent of which comes from outside their concession (although critics suggest it is closer to 50 percent).78 Arara Abadi's concession currently covers six districts. At the time of its issue in the late 1980s, this was one of the largest concessions in Indonesia. Yet in October 2001, Arara Abadi announced its intention to further expand its area of operations by two-thirds logging an additional 190,000 hectares of natural forest in the next five years, to supply the increased capacity of the Indah Kiat Riau mill. This expansion is to be carried out through "joint ventures" with unspecified partners and under unspecified conditions. Further, in order to meet increased demand under the expanded production capacity, APP/Sinar Mas Group plans in the next five years to double the size of natural forest it has cleared for plantation. 79 At present, there is a perverse economic incentive for APP and pulp mills throughout Indonesia to continue to over-expand their capacity and their reliance on clearing natural forest. Likewise, there are strong financial pressures from the huge costs of the mill and debt incurred from a wide array of creditors (some of whom were pursuing repayment through litigation against APP as of this writing in September 2002)80 to continue to cut corners and increase production, regardless of the human rights or environmental consequences. Such perverse incentives, especially in the absence of effective rule of law, will continue to threaten local community members' rights. 1 Sometimes even seemingly mundane natural resources have greatly influenced political events. Recently an unlikely resource has been the subject of intense struggle-not gold or oil or luxury hardwoods, but sand. Sand mining for construction and fill has become big business and a large illegal sector has flourished. Sand exports to Singapore for the construction of its new off-shore airport have exploded in recent years leading to uncontrolled mining. Many speculate business interests in sand mining are behind the push to establish the islands off Riau's coast as a separate province. "Menyalip Pesta di Tikungan," Gatra, July 27, 2002. 2 Christopher Barr, Banking on Sustainability: Structural Adjustment and Forestry Reform in Post-Suharto Indonesia (Washington, D.C.: World Wide Fund for Nature [WWF-International], and the Center for International Forestry Research [CIFOR], 2001). 3 Mulyadi AT, Ministry of Forestry and Estate Crops-U.K. Tropical Forest Management Programme, "Pasokan dan Permintaan Kayu Bulat di Indonesia" ("Roundwood Supply and Demand in Indonesia"), presented at the World Bank sponsored Post-CGI meeting on forestry entitled "Removing the Constraints," Jakarta, January 26, 2000. http://lnweb18.worldbank.org/eap/eap.nsf/ 680c5352d463b70a852567c900770e56/ea9457a51d38757885256877006124a4?OpenDocument (retrieved November 4, 2002). 4 32,000 km2 (3.2 million hectares, or roughly one-third the total area of the province). Caltex produces more than 50 percent of Indonesia's oil production, valued at roughly U.S.$8 billion annually, making it one of the country's largest income sources. 5 Just over one million hectares had been approved for licenses in 1999. Department of Estate Crops, Data Statistik Perkebunan Provinsi Riau 1999 (Pekanbaru, Riau: Dinas Perkebunan, 2000). 6 There is some overlap in oil palm and logging concession areas because forest is first logged and then converted to oil palm. 7 Barr, Banking on Sustainability. 8 Ibid.; David Brown, "Forgive Us Our Debts: Manipulation of IBRA by Indonesian Forest and Plantation Debtors; The Latest Chapter in Indonesia's Rentier Economy," draft consultant's report to CIFOR (copy on file at Human Rights Watch), Bogor, Indonesia, January 7, 2002. 9 In 2001, oil and gas exports brought some U.S.$12 billion, forest product exports (including pulp and paper, plywood and sawnwood, but not oil palm) brought U.S.$5.3 billion. Bank of Indonesia, 2002, http://www.bi.go.id/bank_indonesia2-utama/data_statistik/data.asp?head=7 (retrieved October 3, 2002). 10 In his presentation to the 2001 Consultative Group on Indonesia (CGI), the vice president of the World Bank for the East Asian Area and Pacific, Jamal-ud-din Kassum, noted that in 1999 the World Bank estimated that 65 percent of the population, or 120 million people, lived on U.S.$2 a day or less and that over 27 percent lived on less than U.S.$1. "Flight from Poverty," Jakarta Post, November 14, 2001. 11 Mark Baird, Indonesia country director for the World Bank, "Farewell Remarks to the Jakarta Foreign Correspondents' Club," Jakarta, August 27, 2002, http://wbln0018.worldbank.org/eap/eap.nsf/ Attachments/082702-MB-JFCC/$File/MB-JFCC+Remarks.pdf (retrieved October 3, 2002). 12 World Bank, "Removing the Constraints: Background on Forests" presented at the World Bank sponsored Post-CGI meeting on forestry, Jakarta, January 26, 2000, http://lnweb18.worldbank.org/eap/eap.nsf/ 680c5352d463b70a852567c900770e56/ea9457a51d38757885256877006124a4?OpenDocument (retrieved November 4, 2002). 13 Swidden cultivation is no-till, non-mechanized form of agriculture, which uses no fertilizers, herbicides, or pesticides. After one to three years, the field is allowed to lie fallow, to regenerate tree cover and soil fertility and interrupt pest reproduction cycles. As practiced in Indonesia, fruit or rubber trees are commonly planted interspersed in the natural forest regenerating on fallow plots. 14 Far from being minor economic contributions, nationwide smallholder forest management provides approximately 80 percent of rubber, 80-90 percent of marketed fruits, at least 80 percent of the damar resin (from the tree Shorea javanica for use as an incense, and cosmetic and paint additive), and significant quantities of the tree-crop exports coconut, cinnamon, clove, nutmeg, coffee, pepper, and candlenut. G. Michon, H. deForesta, and A. Kusworo, eds., Complex Agroforests of Indonesia (Bogor, Indonesia: International Center for Research on Agro-Forestry, 2001). 15 H. deForesta, A. Kusworo G. Michon, and W.A. Djamiko, eds., Agro-forest Khas Indonesia: Sebuah Sumbangan Masyarakat Masyarakat (Bogor, Indonesia: International Center for Research on Agro-Forestry, 2000). 16 The Official Explanation of the 1945 Constitution, Chapter IV, Article 18, Section 2 reads "[T]here are roughly 250 types of self-governing villages (Zelfbesturende landschappen) and native communities (volksgemeenschappen) such as desa on java and Bali, negri in Minangkabau and dusun and marga in Palembang and so on. These areas have their own indigenous organizational structures (susunan asli) and because of them can be construed as areas with special attributes (dareah yang bersifat istimewah). The State of the Republic of Indonesia respect the status of these special areas and all the state regulations concerning them shall heed the original hereditary rights (hak-hak asal-usul) of these areas." As amended in August 2000, article 18, paragraph b now reads, "The state shall acknowledge and respect traditional societies along with their customary rights as long as these remain in existence and are in accordance with the societal development and the principles of the Unitary State of the Republic of Indonesia, and shall be regulated by law." 17 Mulyadi AT, Ministry of Forestry and Estate Crops-U.K. Tropical Forest Management Programme, "Pasokan dan Permintaan Kayu Bulat di Indonesia"; and World Bank, "Indonesia: Environment and Natural Resource Management in a Time of Crisis," Jakarta, 2001. See also "Illegal Logging Accounts for Two Thirds of Indonesian Log Output," Asia Pulse/Antara, April 23, 2002, which quotes Directors of the Indonesian Association of Forestry Companies (APHI) as confirming these estimates. 18 Derek Holmes, "Deforestation in Indonesia: A Review of the Situation in 1999," consultant's report to the World Bank (copy on file at Human Rights Watch), Jakarta, January 2000. See also Thomas Walton, Senior Environmental Specialist at the World Bank in Jakarta, "Is There a Future for Indonesia's Forests?" International Herald Tribune, January 25, 2000, http://lnweb18.worldbank.org/eap/eap.nsf/ 680c5352d463b70a852567c900770e56/ddda2de588081cf585256877007f02c5?OpenDocument (retrieved November 4, 2002). For an explanation of data sources and methodologies used to estimate deforestation rates, see Global Forest Watch, Indonesia: The State of the Forest (Washington D.C.: World Resources Institute, 2002). 19 World Bank, Indonesia: Environment and Natural Resource Management in a Time of Transition (Washington, D.C.: The World Bank Group, 2001). 20 Personal communication, Tim Brown, chief of Party, USAID funded Natural Resources Management Project. These comparisons are based on a conservative estimate of the annual cut (both legal and illegal) of sixty million cubic meters (m3) of wood, and an annual deforestation rate of two million hectares, both figures presented at the World Bank sponsored forestry meeting of the Post- CGI meeting, January 26, 2000. One hectare (ha) = 10,000m2 or 2.47 acres, or roughly the size of a soccer field. One cubic meter of timber is about the size and height of an average desk. 21 See also, researchers' reports at the 2001 Post-CGI Meeting hosted by the World Bank in Jakarta, entitled "Removing the Constraints," January 26, 2000,
22 Suripto, Menguak Tabir Perjuangan Suripto (Jakarta: Aksara Karunia, 2001); Environmental Investigation Agency and Telapak Indonesia, "Timber Trafficking: Illegal Logging in Indonesia, South East Asia and International Consumption of Illegally Sourced Timber," Jakarta, September 2001; Environmental Investigation Agency and Telapak Indonesia, "Illegal Logging in Tanjung Puting National Park: An Update," Jakarta, July 2000; Environmental Investigation Agency and Telapak Indonesia, "The Final Cut: Illegal Logging in Indonesia's Orangutan Parks," Jakarta, August 1999; World Wildlife Fund Indonesia, "Report of Survey on the Land Clearing by PT. RAPP (Baserah Sector) and Log Movement," unpublished manuscript (copy on file at Human Rights Watch), August 4, 2001; and Lesley McCulloch, "TriFungsi: Soldiers in Business," presented at the International Conference on Soldiers in Business, Jakarta, October 17-19, 2000, http://www.bicc.de/budget/events/milbus/confpapers/mcculloch.pdf (retrieved October 3, 2002). 23 Holmes, "Deforestation in Indonesia." 24 Mark Baird, "Forest Crime as a Constraint to Economic Development in East Asia," presented at the Forest Leadership and Law Enforcement Conference, Bali, September 2001,
25 Christopher Barr, "Discipline and Accumulate: State Practice and Elite Consolidation in Indonesia's Timber Sector, 1967-1998," MSc thesis (copy on file at Human Rights Watch), Cornell University, 1998; Nancy Peluso, Rich Forests, Poor People: Resource Control and Resistance in Java (Berkeley, California: University of California Press, 1995); and The Center for International Environmental Law and the Indonesian Institute for Research and Community Advocacy (ELSAM), Whose Natural Resources? Whose Common Good? (Jakarta, Indonesia: ELSAM, 2002). 26 William Ascher, "From Oil to Timber: The Political Economy of Off-Budget Development Financing in Indonesia," Indonesia 65: 37- 61, 1998. While most of the reforestation money went to pulp and paper concessionaires as subsidies, a significant portion of it was misallocated for non-forestry project, including the 1997 Southeast Asia Games in Jakarta. Bob Hasan also received Rp250 billion (U.S.$100 million) of reforestation funds to establish a pulp mill. The interest on the loan was 4 percent below commercial banks, which would allow him to make a large profit simply by depositing the money in a bank. Another dubious use of Rp500 billion of reforestation funds was the ill-conceived `One Million Hectare Project' to clear-cut natural forest and covert the infertile and highly flammable peat soils into rice fields, a scheme that resulted in massive forest fires in 1997. In 1994, Soeharto ordered an interest-free loan of Rp400 billion (U.S.$185 million) from the fund for then Technology Minister BJ Habibie's state-owned aircraft manufacturer to help it develop a commuter jet. In 1997, the Forestry Minister denied reforestation money had gone into Soeharto son's doomed `national car' project (funded by state banks), but added that it could at any time if the president wished it. "Mega Queries Use of Reforestation Fund," Laksamana.net, January 24, 2002. 27 Basic Law on Forestry (Undang-Undang Pokok Kehutanan) No. 5/1965 28 Forest Investment Law (Undang-Undang Penanaman Modal Asing) No. 1/1967 29 Domestic Investment Law (Undang-Undang Penamaman Modal Domestik) No. 1 /1968 30 The term "state forest" indicated more of state intention of control than of the actual presence of trees since it is specifically defined in the 1967 Basic Forestry Law as "land, with or without forest (berhutan atau tidak berhutan), that is declared by the state to be forest" (article 1, section 4). State forest is further classified according to its designated "function" (fungsi) as "limited production forest," "production forest," "conversion forest" (for clear-cutting and "conversion to non-forest uses," such as plantation), "protected forest," and "conservation forest." 31 McCulloch observes that the military has justified its role in maintaining security through direct involvement in politics as a legitimate "dwi fungsi," or dual function. Actually, McCulloch argues, the military plays a "tri fungsi" through its additional central role in business. McCulloch, "TriFungsi: Soldiers in Business." 32 McCulloch's personal interviews with former Minister of Defense Juwono Sudarsono. McCulloch, "TriFungsi: Soldiers in Business." 33 David Brown, "Addicted to Rent: Corporate and Spatial Distribution of Forest Resources in Indonesia," Indonesia U.K. Tropical Forestry Management Programme: Jakarta, September 1999, http://www.geocities.com/davidbrown_id/Atr_main.html (retrieved October 3, 2002). 34 Ostensibly to fund the "welfare" of soldiers, yayasan in reality fund all manner of military projects, as well as being a source of personal gain for military elite. 35 Examples of military foundations with business interests have been documented by McCulloch in the forestry sector, including logging, plywood mills and pulpwood and plywood plantations. See Lesley McCulloch, "TriFungsi: Soldiers in Business." 37 Christopher Barr, "Bob Hasan, the Rise of Apkindo, and the Shifting Dynamics of Control in Indonesia's Timber Sector," Indonesia 65: 1-36, 1998. 38 Marganti Manaloe, Penjaraku: Ironi Penegakan Hak Asasi (Pekanbaru, Riau: Opsi, 2001). 39 Surat Dakwaan Nomor Reg Perkara PMD/BKN/EPK/1/1/1998. 40 Human Rights Watch interviews with community activists, Pekanbaru, Riau, January 21, 2002; and "Meningkat, Pengungsi dari Tembusai," Media Indonesia, October 28, 1999. In December 1999, frustrated by the lack of government action on their complaints about the attacks and land seizures by PT Tor Ganda, local residents retaliated by burning down the offices of the sub-district head (camat) and police station (Mapolsec). See "Kasus Pembakaran Kantor Camat, Mapolsec di Tembusai: Belum Ada Yang Jadi Tersangka," Suara Kita, December 15, 1999; and "Warga Tembusai bersembunyi di Hutan," Media Indonesia, December 20, 1999. In March 2000, the community set up a blockade of PT Tor Ganda oil palm trucks in Bukit Harapan over unresolved land disputes. See Riau Pos, March 28, 2000. In 2001, villagers began to charge Tor Ganda company trucks a "village tax" of Rp5 million a month to use their roads, which the company director called "pure extortion." See Antara, May 20, 2001, cited in Lesley Potter and Simon Badcock, "The Effect of Indonesia's Decentralization on Forests and Estate Crops: Case Study of Riau Province, the Original Districts of Kampar and Indragiri Hulu," CIFOR, Bogor, Indonesia, September 18, 2001, p. 80, http://www.cifor.cgiar.org/publications/pdf_files/Books/Cases percent206-7.pdf (retrieved November 4, 2002). 41 Maj. Gen. Sjafrie Sjamsoeddin, appointed the new Indonesian Military (TNI) spokesman, was implicated in the death of three student protestors at Trisakti in 1998. See Tiarma Siboro, "Sjafrie installed as TNI spokesperson amid controversy," Jakarta Post, March 5, 2002. Former commander of Soeharto's presidential guard, Gen. Endriartono Sutarto was appointed as head of the armed forces amid allegation of his involvement in arming East Timor militias. See "Questions on New Commander," Laksamana.net, May 15, 2002, http://www.laksamana.net/vnews.cfm?ncat=2&news_id=2722 (retrieved November 4, 2002). Brigadier General Sriyanto was appointed as head of army special forces although he has been alleged to have been involved in a number of human rights cases, including the attacks on Jakarta protestors in 1998, arming of militias in East Timor, and the Tanjung Priok riots. See "New Kopassus Chief No Stranger to Abuses," Laksamana.net, July 1, 2002, http://www.laksamana.net/vnews.cfm?ncat=48&news_id=3095 (retrieved November 4, 2002). Three of the generals also directly implicated in the East Timor massacres have been reassigned to other areas of separatist conflict; Maj. Gen. Adam Damiri was reassigned to Aceh. See Lindsay Murdoch, "Timor Hard Man Takes over Aceh," The Age, March 27, 2001. Maj. Gen. Mahidin Simbolon was reassigned to Papua, and Major General Hendropriyono was appointed Indonesia's intelligence chief-- both generals allegedly played an important role in relation to intelligence aspects of the TNI's militia operation. See James Dunn, UNTAET's expert on crimes against humanity in East Timor, 2000-2001, "The Indonesian Tribunal: A Matter of Justice or Political Diversion?" August 17, 2002, http://www.etan.org/et2002c/august/18-24/18itribunl.htm (retrieved on October 3, 2002). See also the website "Masters of Terror" for a complete set of profiles of the key suspects in the 1999 destruction of East Timor, http://yayasanhak.minihub.org/mot/SortByAlpha.htm (retrieved November 25, 2002). 42 Tim Dodd, "Megawati and the Military: Too Close for Comfort," Australian Financial Review, July 23, 2002; Human Rights Watch, "The Indonesian Military and Ongoing Abuses," background briefing, July 31, 2002; and Human Rights Watch, "Indonesia Verdict Confirms Justice Elusive for East Timor Crimes," press release, August 15, 2002. See also, International Crisis Group, "The Implications of the Timor Trials," Jakarta/Brussels, May 8, 2002 and International Crisis Group, "Resuming U.S.-Indonesia Military Ties," Jakarta/Brussels, May 21, 2002. 43 Munir, "The Stagnation of Reforms in Indonesia's Armed Forces," International Forum on Indonesian Development (INFID) position paper (copy on file at Human Rights Watch), July 2002; and Human Rights Watch, "The Indonesian Military and Ongoing Abuses" Press Backgrounder, July 31, 2002. See also, International Crisis Group, "Resuming U.S.-Indonesia Military Ties," Jakarta/Brussels, May 21, 2002. 44 Lesley McCulloch, "TriFungsi: Soldiers in Business"; John McCarthy, "`Wild Logging': The Rise and Fall of Logging Networks and Biodiversity Conservation on Sumatra's Frontier," CIFOR Occasional Paper 31, Bogor, Indonesia, 2000, http://www.cifor.cgiar.org/publications/pdf_files/OccPapers/OP-31.pdf (retrieved November 4, 2002). 45 Environmental Investigation Agency and Telapak Indonesia, "Timber Trafficking: Illegal Logging in Indonesia, South East Asia and International Consumption of Illegally Sourced Timber," Jakarta, September 2001; and Environmental Investigation Agency and Telapak Indonesia, "Illegal Logging in Tanjung Putting National Park: An Update," Jakarta, July 2000. 46 World Wildlife Fund Indonesia, "Report of Survey on the Land Clearing by PT. RAPP (Baserah Sector) and Log Movement," unpublished manuscript (copy on file at Human Rights Watch), August 4, 2001. See also, World Wide Fund for Nature and Department for International Development (DFID), "Laporan Perkembangan Sawmill Di Wilayah Selatan Taman Nasional Bukit Tigapuluh & Di Sekitar Area KPHP Pasir Mayang," Unpublished report (copy on file at Human Rights Watch), Indonesia-U.K. Tropical Forest Management Programme, Jakarta, Indonesia, 1998. 47 Lesley McCulloch, "TriFungsi: Soldiers in Business"; and Suripto, Menguak Tabir Perjuangan Suripto. It is widely believed that Forestry Minister Nur Mumudi was removed for refusing to remove Suripto from his post as director general. His successor, Marzuki Usman, fired Suripto as one of his first orders of business, but not after Suripto had deposited information regarding corruption charges against Pangestu and Tutut. Suripto was fired the following week. Former President Wahid also alleged that Suripto had been colluding with military special forces (Kopassus) to topple him, and charged Suripto with treason-an accusation for which he later apologized when Suripto filed defamation counter-charges. "PR Suripto buat dua Marzuki," Detik.com, March 23, 2001, http://www.detik.com/peristiwa/2001/03/23/2001323-085445.shtml (retrieved November 4, 2002); "Official locked horns with big timber and lost," Chicago Tribune, July 7, 2001; "Why was the Forestry Minister Axed?" Laksamana.net, March 23, 2001, http://www.laksamana.net/vnews.cfm?news_id=734 (retrieved November 4, 2002); "Kosa Kata Baru Politik Indonesia: Dinurmamudikan," Radio Nederland, March 20, 2001; "Apa Sebenarnya Akar Permaslahan antara Suripto dan Gus Dur?" Radio Nederland, May 5, 2001; "Minister Says He Was Fired for Defying Wahid's Order to Sack Aide," Agence France Presse, March 16, 2001; and "Forestry Minister Discloses President's Reasons for Firing Him," Antara, March 16, 2001. 48 Information also submitted by Suripto implicated (but never resulted in formal charges) Texmaco chairman Marimuti Sinavasan, Gadjah Tunggal group Chairman Syamsul Nursalim, and Soeharto's half brother Probosutedjo. "Documents on Alleged Graft by Prajogo Submitted," Jakarta Post, April 19, 2001. 49 Letter of Intent from Indonesian government to the IMF, January 20, 2000, paragraph 31. 50 Two from the Ministry of Defense, three from the army, and one each from the TNI headquarters, navy, and air force. Letter of Intent from Indonesian government to the IMF, August 27, 2001, Paragraph 34. 51 Human Rights Watch and International Forum on Indonesian Development (INFID) meeting with IMF representatives Stephen Schwartz (Deputy Division Chief, Asia Pacific Department), Andrea Richter (Economist, Indonesia Program), and Sanjaya Panth (Senior Economist), Washington, D.C., June 18, 2002. 52 M. Gillis, "Indonesia: Public Policy, Resource Management and the Tropical forest," in R. Repetto and M. Gillis, eds., Public Policies and the Misuse of Forest Resources (Cambridge, U.K.: Cambridge University Press, 1988). 54 Barr, "Bob Hasan, The Rise of Apkindo." 55 The IMF clearly recognized the damaging effects of these subsidies and market controls, and required that they be removed by the end of the year in the January 15, 1998, Letter of Intent and Memorandum of Financial Policies from the Indonesian government. See also, World Bank, Indonesia: Environment and Natural Resource Management in a Time of Transition (Washington, D.C.: World Bank, 2001). 56 This report was issued long after the end of Soeharto's New Order (March 10, 1999). U.S. Embassy Economics Section, "If a Tree Falls in the Forest, Who Has the Export Rights? Indonesia Forestry Regulations 1999," http://www.usembassyjakarta.org/econ/forestreg.html (retrieved October 3, 2002). 57 Production costs are estimated to be U.S.$200 per ton of wood, a fraction of what it costs to produce pulp in North America, which leads world production. This is because of cheap access to wood, government subsidies (including start up capital and gasoline subsidies) and tax holidays, cheap labor, and close proximity and low transportation costs to important Asian markets. 58 U.S.$3.5 billion in foreign exchange. 59 Based on installed capacity. N. Scotland, A. Frasier and N. Jewel, "Roundwood Supply and Demand in the Forest Sector in Indonesia," unpublished manuscript, Indonesia-U.K. Tropical Forest Management Program (ITFMP), 1999. See also, Neil Scotland, "Indonesian country paper on illegal logging," paper prepared for the World Bank-WWF Workshop on Control of Illegal Logging in East Asia (copy on file at Human Rights Watch), Jakarta, August 28, 2000. The sawmill industry has also over-expanded and is by far the largest consumer of wood, roughly seventy million m3 annually, also mainly from illegal sources. Large, valuable trees are selectively sold to plywood mills and the remaining smaller, defective or undesirable timber is sold to pulp mills-a combined effect that completely clear-cuts the forest. 60 Barr, Banking on Sustainability. 61 Diarmid O'Sullivan, "Indonesia: Tempting but not without Risks," Financial Times, Industry Surveys, World Paper and Pulp, http://specials.ft.com/ln/ftsurveys/industry/sc7bbe.htm (retrieved October 3, 2002). 62 APP's website http://www.asiapulppaper.com/content/aboutranking.asp?menu=1&smenu=2 (retrieved November 25, 2002). 63 Asia Pulp & Paper (APP), http://www.asiapulppaper.com/content/about.asp?menu=1 (retrieved October 3, 2002); and press release emailed to Human Rights Watch from APP/Sinar Mas Group on June 19, 2002 (copy on file at Human Rights Watch). 64 Riau Andalan Pulp & Paper (RAPP), owned by Tanoto family conglomerate Raja Garuda Mas, is also located in Riau and is one of APP's main competitors. RAPP is tied with Indah Kiat for the world's largest stand-alone pulp mill. RAPP is wholly-owned by Singapore-based holding company APRIL (Asia Pulp Resources International, Ltd). 65 Barr, Banking on Sustainability. 66 "If within the concession area there is land that is privately owned, village land, village gardens, or rice fields that are worked by a third party, this land must be excised from the working area of the plantation. If this land is required for the plantation Arara Abadi must settle the matter with all relevant parties and according to prevailing law." Ministry of Forestry Decree SK No. 743 /KPTS-II/1996 (article 4, paragraph 1). 67 The survey did not even cover the entire sub-district; only fourteen villages were included. Tim Teknis Klarifikasi Penyelasaian Masalah PT Arara Abadi Dengan Masyarakat Petalangan, "Laporan Pelaksanaan Hasil Pengecekan Tata Batas Areal HPHTI PT Arara Abadi," unpublished survey report, Kantor Bupati Pelalawan, Riau, August 1, 2001.. 68 "Land Ownership Disputes" (Rekapitulasi Maslah Lahan di Areal HPHTI PT Arara Abadi Distrik), cited in AMEC Simons Forest Industry Consulting, "APP Pulp Mills & Sinar Mas Group Forestry Companies: Preliminary Wood Supply Assessment," Document 2111 B1754aD10, October 12, 2001, p. 32. 69 Human Rights Watch interviews with APP and Arara Abadi central staff, Tanggerang, February 13, 2002; with APP/Indah Kiat and Arara Abadi field staff, Indah Kiat mill site, Perawang, Riau, February 14, 2002. 70 Human Rights Watch interview with Soebardjo, Director of Arara Abadi, Jakarta, February 13, 2002 (interview conducted in English). 71 He even expressly terms the rights "hak ulayat," which is the term used to recognize and title customary rights in the Basic Agrarian Law No. 5/1960 (one of the first laws passed after Independence). Unclaimed land was assumed to be under state ownership. However, the implementing regulations for the law were never passed and the law has had little effect in practice, as most communities were never made aware that such rights could be titled. 72 Derwin Pereira, "U.N. Condemns Indonesia's Justice," Straits Times, July 23, 2002. 73 "Lifting the Lid on the Judicial `Mafia'," Indonesian Corruption Watch, Jakarta, 2002. 74 Human Rights interview with a high ranking provincial police officer, February 19, 2002. 75 Ministry of Forestry Decree SK No. 743 /KPTS-II/1996, District Regulation Surat Bupati Kampar November 21, 1989. 76 Aliansi Peduli Pelalawan (APPEL), Prahara Abadi? Buku Putih Peristiwa Penyerangan Massal Karyawan Pam Swakarsa PT Arara Abadi, (Pekanbaru, Riau: APPEL, May 2001). 77 Barr, Banking on Sustainability. 79 Human Rights Watch interviews with APP and SMG staff in Jakarta and Perawang, February 13-14, 2002. See also AMEC Simons Forestry Consulting, "APP Pulp Mills & Sinar Mas Group Forestry Companies: Preliminary Wood Supply Assessment," Document 2111 B1754aD10, October 12, 2001. 80 "Secured creditors file suit against APP, asset sell-off could follow," Paperloop.com monthly report, September 25, 2002, http://www.convertingloop.com/news_info/converting_month.shtml (retrieved September 30, 2002)
|
