Foreign investment and ecological justice

Down to Earth No. 44, February 2000

Although it is only three months since President Wahid's government took office, it is becoming clear that foreign investment is the top priority. As we went to press, the President and a group of ministers were touring European capitals to drum up new business and to try to convince company directors of Indonesia's favourable investment climate.

How a business-focussed administration can implement its commitment to upholding human rights and environmental protection is less clear. There are signs of a split within the cabinet as well as between central and regional governments on how to address the central issues of land and resource rights of rural, urban and indigenous peoples.

Under Suharto, these rights were ignored and investors developed projects on stolen lands. Since his downfall, communities have been struggling to regain their rights from loggers, plantation developers and mining companies and to stop the factories that are ruining their environment. In this issue we cover cases in Sumatra, Sulawesi, Kalimantan and West Papua involving pulp factories, plantations and mines.

Some of the companies investing in these damaging projects are now threatening to withdraw from Indonesia unless the government steps in to control action by local people. They are, in effect, attempting to use economic blackmail to ensure that their interests are prioritised over the resource rights of local communities.

The Wahid government has agreed to implement economic recovery measures designed by its main creditors, led by the International Monetary Fund. This means it must court foreign investors to develop the revenue-earning potential of the country's natural resources. It also means that government will probably be forced to agree to investors' demands.

Indonesia's Anti-Debt Coalition is calling for no more debt and the cancellation of the existing one, but their demands for fundamental reform are being ignored. However, unless there is a serious rethink of economic recovery strategy and a real commitment to put human rights and environmental protection at the heart of government, the marginalisation of peoples, the destruction of forests and pollution of seas and rivers will continue to as they did under Suharto - or even faster.