Forestry

Exploitation of Indonesia’ s rainforests, approximately 10% of the world’ s remaining rainforest, intensified in the late 1960s as the New Order government endeavoured to service the increasing foreign debt and reduce spiralling inflation.¹⁵⁵ Since that time commercial logging of rainforests, and the consequent deforestation, has continued to increase. By the late 1980s Indonesia was estimated to be losing approximately nine hundred thousand hectares of forest every year.¹⁵⁶ Large forest concessions were rewarded to favoured military and business cronies of the Suharto family, the operation of which was often financed by foreign multinationals who benefited from investor friendly laws granting extensive tax breaks.¹⁵⁷ Foreign earnings from timber rose 2800% from 1969 to 1974, allowing the national government to fund five-year development programs through foreign revenue from unprocessed log exports.¹⁵⁸

The economic and political crisis that marked the end of the New Order does not seem to have slowed the rate of deforestation. On the contrary, any remaining forest was seen by regional governments and illegal loggers alike as a valuable source of revenue in a time of economic crisis. As the remaining areas of timber have become scarcer, the level of illegal logging has increased dramatically, to the point where it is now estimated to outstrip the output of logging from legal concessions.¹⁵⁹ Due at least in part to the diminishing area available for forest

154 see page p100

155 Dauvergne, "The Politics of Deforestation in Indonesia," p513.

156 Ibid.: p497.

157 Mark Poffenberger, "Rethinking Indonesian Forest Policy: Beyond the Timber Barons," $VLDQ6XUYH\

XXXVII, no. No. 5, May (1997): p455.

158 Dauvergne, "The Politics of Deforestation in Indonesia," p513.

159 According to a recent statement by WALHI Indonesia’ s annual timber consumption was around 100 million cubic meters a year, of which only 43 million cubic meters originated from legal sources. Thus the majority of the timber supply, some 57 million cubic meters, is the product of illegal logging. Bambang

concessions, illegal logging activities has spread even into national parks. Currently illegal logging is the prime contributing factor to Indonesia’ s annual deforestation rate of around 2-3 million hectares/year.¹⁶⁰ As both legal and illegal logging continue apace, most commentators now predict the extinction of Indonesia’ s primary forests to occur within the next 5-10 years.¹⁶¹

Rapid deforestation in Indonesia has resulted in a devastating loss of biodiversity and serious land degradation leading to increased soil erosion and flooding.¹⁶² Widespread logging has also contributed to higher temperatures, drought and the outbreak of uncontrollable forest fires in 1997 and 1998. The devastating fires consumed more than 5 million hectares of forestland, contributed to the deaths of more than a thousand people and carried an economic toll to Indonesia estimated at over US $9 billion.¹⁶³ International environmental groups described the fires, which resulted in extraordinary amounts of carbon emissions, as a “ planetary disaster” .

Intensive logging has also had serious social consequences for the indigenous communities who lived within the forests and whose livelihoods depended upon them. The mapping of forest concessions, usually ranging from 100,000 to several million hectares, were not based on any consideration of the use of forest tracts by indigenous communities for hunting, gathering or swidden agriculture.¹⁶⁴ In Kalimantan alone some 2.5 million indigenous Dayak peoples were displaced or resettled due to development activities such as logging and related resettlement projects.¹⁶⁵ Indigenous, forest dwelling communities such as these have had no legal recourse, given the lack of legal recognition afforded to DGDW, or traditional community rights over forests.

Given the environmental damage and social dislocation that has accompanied logging activities, it is not surprising that one of the most common types of forestry related disputes are

Nurbianto and Fitri Wulandari, "Kalimantan’s Forests Could Disappear in 5 Years," 7KH-DNDUWD3RVW, 10 December 2001.

160 Edith Hartanto, "Indonesia Forests Dwindling Rapidly by the Year," -DNDUWD3RVW, 27 December 2001.

161 World Bank predictions estimate the disappearance of Kalimantan’ s forests within nine years, whilst Sumatra’ s lowland forests are predicted to last for only another four years.;Ibid. see also;Wulandari,

"Kalimantan's Forests Could Disappear in 5 Years."

162 Over a decade ago the Indonesian government had classified 8.6 million hectares as “ critical land”

defined as “ ...unable to fulfil any of the normal soil functions, including water absorption or the production of even a meagre subsistence crop” . A further 12 million hectares was classified at that time as suffering from serious erosion. Phillip Hurst, 5DLQIRUHVW3ROLWLFV(FRORJLFDO'HVWUXFWLRQLQ6RXWK(DVW$VLD (London: Zed Books), p4.quoted in Dauvergne, "The Politics of Deforestation in Indonesia," p508.

163 Hillary Mayell, "Study Links Logging with Severity of Forest Fires," 1DWLRQDO*HRJUDSKLF1HZV, 3 December 2001.

164 Poffenberger, "Rethinking Indonesian Forest Policy: Beyond the Timber Barons," p456.

165 Ibid.

private interest disputes involving local, indigenous communities long dependent on forest resources, whose livelihood and very survival have been threatened by commercial logging interests. During the New Order period, such communities were generally displaced from their land or resettled, thus severing their traditional (DGDW) rights over their land. Any protests or resistance were routinely suppressed by the military, which itself developed extensive interests in the forestry sector during the New Order.¹⁶⁶

Following the collapse of the New Order regime in 1998 and the corresponding contraction of military control, many of these suppressed conflicts have re-emerged. In March 2000, for instance, the Association of Indonesian Forest Concessionaires (APHI) reported that at least 50 companies with concessions totalling around ten million hectares of forests in West Papua, Kalimantan and Sulawesi had stopped logging because of conflicts with local communities.¹⁶⁷ In East Kalimantan itself 77 logging companies threatened to close in the event authorities failed to resolve disputes, where local people have seized logging equipment and demanded compensation.¹⁶⁸ Illegal logging operations have also resulted in disputes with local communities opposed to the further destruction of forestland. As indigenous communities have resorted to direct action to assert their rights, logging companies have been forced to negotiate or, alternatively, face the closure of their operations.¹⁶⁹ In one case, in February 2000, negotiations resulted in 14 co-operatives and 4 indigenous councils receiving a 20% share in profits worth Rp 100 to Rp 200 million (US $13-26,000) each.¹⁷⁰

Several of the private interest environmental court cases discussed in Chapter 2 are also forestry related. For example, in the /DJXQD 0DQGLUL case members of the Dayak Samihim community in the regency of Kotabaru, Kalimantan brought a legal action for compensation against several companies, including PT Laguna Mandiri, which owned coconut plantation estates adjoining the plaintiffs’ villages. The community claimed that fires intentionally lit by the

166 Owen J Lynch and Emily Harwell, :KRVH5HVRXUFHV":KRVH&RPPRQ*RRG"7RZDUGVD1HZ

3DUDGLJPRI(QYLURQPHQWDO-XVWLFHDQG1DWLRQDO,QWHUHVWLQ,QGRQHVLD (Jakarta: Lembaga Studi dan Advokasi Masyarakat (ELSAM), 2002), p60.

167 "Communities Confront Loggers," 'RZQWR(DUWK 45, no. May (2000).

168 Ibid.

169 see also "Disesalkan, Hti Yang Rusak Hutan Adat," .RPSDV, 20 November 2000.

170 "Communities Confront Loggers."

companies to clear forestland between July and November 1997 had spread out of control, destroying large areas of the plaintiff community’ s crops and housing.¹⁷¹

Several prominent environmental public interest cases have also arisen in the forestry sector.

These cases have emerged out of a growing debate over Indonesian forest policy fuelled by increasing opposition to the continued destruction of Indonesia’ s unique forest ecosystems amongst a range of non-government organisations both within Indonesia and internationally. The (NVSRQHQ  case, which arose out of the devastating forest fires in 1997 and 1998, blended elements of both public and private interest. In that dispute a group of environmentally minded community organisations launched a class action against the Indonesian Forestry Entrepeneurs Association (APHI), headed at the time by timber tycoon Bob Hasan, together with five other timber industry associations. The organisations demanded compensation for the social, economic and environmental damage caused by the forest fires and resultant thick haze which blanketed much of Indonesia in the latter half of 1997. The environmental organisation WALHI also brought an environmental public interest suit relating to the forest fires in South Sumatra in the same year.¹⁷² In that case, WALHI claimed Rp 2 trillion for environmental restoration from a number of plantation and logging companies whose operations had allegedly contributed to the outbreak of fires. Other forestry related public interest cases have been more policy related than site specific in nature. For example, in the 5HDIIRUHVWDWLRQ )XQG ,371 case a group of environmental NGOs mounted a legal challenge to the transfer of money from a fund for the reforestation of logged-over land to a state company involved in aircraft manufacture. The Reafforestation Fund in question was something of a ‘cash-cow’ during the New Order period for a range of state projects other than reafforestation, and became symbolic of the corruption that pervaded the entire sector.¹⁷³ In another case related to the Fund, 37 .LDQL .HUWDV, environmental organisations challenged the transfer of funds from the State Reafforestation Fund to a company funding the development of a pulp and paper factory located in East Kalimantan.

171 see page 96

172:DOKLY373DNHULQDecision No. 8/Pdt.G/1998/PN.Plg

173 Illegal pay-outs from the Reafforestation Fund included a loan of Rp 80 billion to Suharto’s grandson Ari Sigit for a urea tablet fertiliser project; a Rp 500 billion loan for Suharto’ s pet Kalimantan Peat Land project (discussed further in chapter 2); Rp 35 billion was given to the Consortium financing the 1997 Southeast Asian Games (chaired by Suharto's son Bambang); in 1996 over Rp 400 billion was used to