In Brief... DTE 47 - November 2000

Down to Earth No. 47, November 2000

In Brief...

No more forest conversion until forestry plan in place

The forestry ministry has said there will be no further conversion of natural forests for at least two years until a national forest management programme has been approved. All applications received after May 22 would be rejected, said Moc. Toha Bratakusumah, head of the ministry's planning agency, while those still being processed would be re-evaluated. Existing conversion permits could be revoked if companies failed to develop their areas. 259 permits have been granted within the past 20 years, covering an area of 1.87 million hectares, he said.
(Jakarta Post 25/Aug/00)

UK's £24 m forestry grant

The UK government has pledged a grant of £24 million (around US $34 million) for a new five-year forest management programme in Indonesia. British international development minister Claire Short signed the agreement with forestry and agriculture minister Bungaran Saragih in October during a visit to Indonesia. According to Short, the purpose of the project is "to work with the reformers of Indonesia at every level to help drive forward all the changes that everyone knows are necessary..." The programme will involve the government (as did the previous one) but also local and international NGOs, forestry associations and universities. Bungaran said the programme would address the most crucial issues, including improved forest management and conservation, preparations for decentralisation, policy and strategic planning of community-based forestry management, measures to combat illegal logging and multi-stakeholder consultations on forestry policy.
(Jakarta Post 13/Oct/00)

Indonesian NGOs slam World Bank 'consultation'

A group of six Indonesian NGOs and peoples' organisations have issued a critique of the World Bank's "consultation" on forestry programmes held in Singapore in April. The groups - Plasma, Yali-Papua, LPPMA-Papua, FSPPM-Sumut, ICTI and the indigenous peoples' alliance, AMAN - said they did not consider the Singapore meeting a meaningful consultation because: the agenda was not discussed with participants beforehand and as a result the issue of corruption was omitted; Bank staff intervened too much; and the process was not recorded in its entirety "so that it is easy to manipulate the final 'results'". The organisations used their statement, entitled 'World Bank is Only Interested in Giving Debt and Not in Consultation' to highlight the important issues that were discussed. These included: rights of indigenous peoples, overcapacity in the paper and pulp sector; lack of Indonesian government action to punish companies engaged in forest destruction; the problem of too much debt; issues of governance; and the Bank's lack of ability/focus on intersectoral linkages. This last issue is about the need to take into account the impact of other sectors - like mining and plantations - on forests.

The NGOs are now demanding:

1. formal recognition by the Indonesian government of indigenous land and forest rights;
2. no loans of any sort to the Indonesian forestry sector or for non-forest sector activities which have an impact on forests;
3. no conversion of private debts to public debts and no public subsidy for environmental criminals;
4. internal reform of the World Bank including sanctions against staff for violation of policies and incentives;
5. strengthening and expansion of the Bank's ban on financing logging in primary tropical forests, to include a ban on financing logging/exploitation of indigenous adat forests in Indonesia;
6. closure of pulp and paper mills and no new ones to overcome problems of overcapacity in the pulp and paper sector;
7. involvement of indigenous and forest people in any consultation and decision-making process on natural resources management and exploitation. (Statement received 15/Jun/00)

Ammonia poisoning

Twenty eight people suffered the effects of ammonia poisoning in September after a leak from a storage facility owned by PT Pusri in Palembang, South Sumatra. PT Pusri is Southeast Asia's biggest fertiliser company. Most of the victims suffered dizziness, severe headaches, smarting and itching eyes, breathing difficulties and, in some cases, vomiting.

WALHI South Sumatra and a environmental student group, Impalm, demanded that PT Pusri give a clear explanation of the incident and pressed the provincial government to carry out an environmental audit of the company. The company told WALHI and Impalm that the victims had only suffered headaches and sore throats, not ammonia poisoning.
(From article by T. Wijaya, emailed 1/Oct/00)

New oil refinery projects

A British - United Arab Emirates joint venture is planning to build two oil refineries, one on Weh Island, Aceh and the other at Taliwang on Lombok island. PT Mits Indonesia, comprising Mayhill International Trading Services (UK, 50%) and an unnamed 50% partner from UAE, are awaiting government approval for the refineries each costing US $1.4 billion and with a capacity of 500,000 barrels of petrol per day, plus aviation fuel, diesel oil and other products mostly for export. The projects will process crude oil from the UAE.

Two further oil refineries to process crude oil from Saudi Arabia are planned: one in Parepare, Sulawesi, and one on Batam Island, close to Singapore. Construction will start on the US $3 billion Sulawesi project next year. PT Kilang Minyak Nusantara, a joint venture between companies from Saudi Arabia, China, Indonesia and USA, plans to produce 300,000 bpd from each refinery. Project financing is 80% Chinese and 20% from Saudi Arabia, according to one report, but another says financing will come from the US investment fund, Alfax International. The investors are: International Business Company and Al-Banader International Group (Saudi 40%); China National Electrical Equipment Corporation, Investment Pacific Inc., and Law Swee Seng (China, 40%); plus Intanjaya Agromegah Abadi and Inter-Global Technologies (US) (20%). Intanjaya's president says the company is now in the process of acquiring 1,000 hectares of land for the project.

(AFP 21/Sep/00; Jakarta Post 7/Oct/00; Indonesian Observer 5/Oct/00)

Timber boss Hasan on trial

Bob Hasan, top crony of former President Suharto, is being tried in Jakarta for his involvement in a multimillion dollar corruption case. In 1992, Suharto ensured that one of Hasan's companies, PT Mapindo Parama, was the sole contractor in a forestry mapping project, although the company was not capable of carrying out the work alone. Prosecutors have accused Hasan of causing losses to the state of US$75.62 million and to the Association of Indonesian Forest Concessionaires (APHI) of $168 million.

With Hasan on trial, his vast timber empire is showing signs of crumbling. The governor of West Nusa Tenggara province is threatening to stop one of his companies, PT Veneer Product of Indonesia, logging forests on Sumbawa island. Harun Al Rasyid said Hasan's concession on the islands had led to major forest destruction and the company had failed to carry out any reforestation.

Other companies controlled by Hasan ran into deep trouble during the economic crisis. One of these is PT Kiani Kertas, an East Kalimantan pulp mill, which recently secured a debt rescue deal proposed by the Indonesian Bank Restructuring Agency. US$226.5 million in 'sustainable' debts are to be restructured into a 10-year loan, including a two year grace period and annual interest of around 12%.

NGOs have objected to using state funds to rescue timber companies which benefited from Suharto era corruption - see item above.

(Indonesian Observer 27/Sep/00; 4/Oct/00; Jakarta Post 17/Oct/00).

Formula 1 circuit for Bali?

Plans are being aired in Bali for the construction of a Formula 1 race track in Jembrana district, in the west of the island. Some members of the local government support the plan, which was devised by entrepreneur Tinton Suprapto. These include the Bupati (district head) who says the project will bring more tourism to this part of Bali. Others, including Bali's head of planning, have expressed concern about the environmental impact and doubt that the proposed 120 ha development would bring extra income into the area or have direct benefits for the local population.

(Media Indonesia 14/May/00)