January 7, 2003

I.  Summary

We all ran inside but Jais didn't make it in time. They caught up to him and he turned to face them [the company militia]. They immediately clubbed him in the mouth, knocking out some of his teeth. It spun his head back and sprayed blood on the wall in front of the house. You can still see [the blood stains].

-Resident of Mandiangin, Riau province, recounting the attack on his village by civilian militias in the employ of the Arara Abadi pulp plantation.

The massive pulp and paper industry located in Riau province on the island of Sumatra, Indonesia has received increasing international attention. The industry is economically imperiled – with debts of more than U.S.$20 billion – and is decimating wide swathes of Sumatra's lowland tropical forests, some of the most biologically diverse and formerly among the most extensive in the world. Yet even in the current climate of increasing international attention to corporate responsibility, relatively little attention has been paid to persistent violations of the rights of local communities who live within Riau's forest concessions, peoples whose livelihood has depended on the forests for generations.

This report documents these violations, and highlights the ways that disregard for rights has facilitated the unsound forestry practices that have produced today's deepening cycle of economic crisis and rampant deforestation. It concludes that addressing human rights violations should be an essential part of efforts to reform the pulp and paper sector by the Indonesian government, key players in the industry, and concerned members of the international financial community.

The vast plantations supplying Asia Pulp & Paper (APP)-Indonesia's largest paper producer and owner of one of the largest stand-alone pulp mills in the world-were established in Riau during the 1980s and 90s largely on land unlawfully seized from indigenous Malay and Sakai communities, without due process and with little or no compensation. These land seizures took place under intimidation by armed police and military agents. Expansion of wood-processing capacity beyond what plantations could supply, in turn, led to wholesale destruction of forests-an outcome which, together with companies' hiring of employees from outside the province, has been devastating to the livelihood of forest-dependent communities.

Since President Soeharto was forced from office by economic crisis and unprecedented public protest in 1998, members of previously powerless communities have begun to openly protest the loss of their land and livelihoods. Frustrated with a dysfunctional justice system and the persistent unresponsiveness of the state to their complaints, villagers have protested, in many cases obstructing company operations in order to get the company's and government's attention. These community protests most commonly include harvesting of plantation trees, land reoccupation, charging "tolls" for use of village roads, or setting up road blockades, and at times have included seizure of company vehicles and equipment. Such actions have been met with violent attacks by organized mobs of hundreds of club-wielding company enforcers, trained by and sometimes accompanied by state police.

This report details three cases of attacks on protesting villagers by security forces of Arara Abadi, APP's primary pulp supplier and sister company (both are owned by parent conglomerate Sinar Mas Group). In all three cases, Indonesian police, who trained the civilian security force and were present during the attacks, were complicit in the attacks. Out of hundreds of assailants, moreover, Human Rights Watch is aware of only two who were brought to trial, and those two, convicted of assault and battery, were released for time served (only thirty days).

Human Rights Watch does not condone illegal actions by community members and recognizes the company's obligation to protect personnel and property. The use of excessive force by company-funded militias, however, cannot be justified as a response to community protests, even where those protests themselves include illegal actions. The acquiescence of state security forces and, sometimes, their direct assistance in the militia attacks, moreover, has meant that villagers have no recourse for the violations. Impunity for those responsible for beatings is directly fueling this cycle of vigilante justice.

The attacks described in this report are only the latest turn in a vicious circle in which environmental depredation and human rights violations have gone hand in hand in Riau. In order to appreciate how this scenario of violence developed and the wide scope of its occurrence, it is essential to understand the history of the development of forest sector and financial policies in Indonesia. Community disputes against Arara Abadi are rooted in routine seizures of community lands during Soeharto's "New Order" administration. Community members say that they were afraid to protest, because those who resisted "government projects" (as commercial operations were often represented to local communities) were frequently arrested or beaten by an unaccountable military and police who served as corporate protection, and who were also direct beneficiaries of and partners in forest businesses. Soeharto used the award of forest concessions as a means of consolidating political power and prioritized industrial uses of resources over subsistence and the claims of local communities-practices that engendered deep resentments that continue to simmer even under post-Soeharto "reform" administrations.

Government reforms have not yet made a difference on the ground, despite numerous promising commitments. The forest ministry under the post-Soeharto administrations of Presidents Abdurrahman Wahid and Megawati Sukarnoputri has engaged in dialog with international donors, scientists, and civil society organizations, and has promised to take action against rampant illegal loggers, clarify forest tenure, and link financial restructuring of heavily indebted companies to downsizing production capacity to balance wood industry output with the legal wood supply. However, progress toward implementation of these reforms remains exceeding slow and fitful, hampered by lack of political will and repeated top staff reshuffles. Meanwhile, land and resource conflicts between local communities, forest companies, and illegal loggers continue-a recipe for further violence.

To effectively address the violations described in this report, it is not enough for the government to curb militia activity and end impunity, though these are essential steps that can and should be taken immediately. It is also vital that the government take longer term measures to strengthen the independence of the judiciary and create a mechanism by which indigenous land claims, which are recognized in the Indonesian constitution, can be effectively addressed. Although indigenous community rights to land are explicitly recognized by the Indonesian constitution and forestry regulations require the consultation and fair compensation of communities whose land is required for the advancement of the "common good," there is no legal mechanism for recognizing indigenous land rights by which people might effectively raise their claims. Many state officials and business leaders continue to operate on the mistaken belief that, in the absence of written title, local communities have no legal or legitimate claims.

For the abuses to end, moreover, the pulp and paper industry and international financial sector must be cognizant of and take steps to address human rights violations associated with the industry. Following environmentalist campaigns and boycotts against APP's buyers in the U.K., some dialog has occurred between activists and company staff on how to improve APP's operations. However, at present, these proposals do not adequately address human rights concerns, focusing instead on wood supply issues. APP should insist on and fully cooperate with Indonesian government efforts to ensure accountability for past acts of violence, and require that abuses are avoided in areas of future plantation expansion, including ensuring that subcontractors who supply wood to APP are not violating human rights.

With no rights protections in place, economic pressures could well heighten tensions between industry and local residents in the coming months, as APP expands its plantation area almost two-fold. Financial pressures to expand output are higher than ever. In March 2001, APP failed to make payments on its massive U.S.$13.9 billion debt; it has avoided liquidation of its assets because of continued support and forbearance from government restructuring agencies. Meanwhile, many of APP's foreign creditors are in litigation against APP to be repaid, thereby creating considerable pressure on the operations to generate substantial profits rapidly. The huge cost of the mill and the debt burden accumulated through rapid expansion of production capacity have made APP "too big to fail"-creating extraordinary financial and legal pressure to continue operations at current levels regardless of ecological or social costs, creating a risk that expedient methods that could violate rights may be used to ensure the slim profit margin.

APP/Sinar Mas Group has argued that expansion of its wood sources will reduce local discontent and it has begun establishing what it calls "joint ventures" that in some cases will include community cooperatives. While a positive step toward broader distribution of benefits from the forest, without a commitment to ensure that human rights are not violated, these arrangements will not in themselves be sufficient to curb the abuses.

Practices of international lenders have also contributed to the problem. Forestry analysts have convincingly argued that heavy borrowing by APP to increase capacity was based on the assumption-accepted by international lenders in part because they did not adequately consider the social or environmental impacts of the operations-that repayment would be possible because of APP's access to an unlimited supply of cheap wood from Sumatra's natural forests and pulp wood plantations. In effect, production expansion in the past was based on the assumption that local communities would continue to be powerless and without a voice. Today, as local struggles over land and timber increase, expansion rests on the assumption that APP/SMG can distance themselves from social conflict while continuing to reap the benefits of an artificially cheap wood supply. The international financial community should recognize that this assumption is not valid and assess the real risks that social conflict and rights abuses pose to the operations in which they invest. Investors should, therefore, institute rigorous assessment of rights into their due diligence procedures.

The cases of abuse detailed in this report have broader significance than pulp and paper or Riau. Although APP officials and local police maintain that the clashes between company security and surrounding communities are being "blown out of proportion," the scenario of resource competition, unsettled land claims and social conflict, corporate violations of community rights, and an unresponsive and corrupt state is a pervasive problem throughout the forest sector and economic stability in Indonesia more generally. Local communities in resource rich areas remain plagued by poverty, and members of such communities increasingly are speaking out. In response, private sector actors, often with assistance or acquiescence of law enforcement authorities, increasingly are relying on civilian militias, "youth brigades," hired gangs, and vigilantes of various types. Immediate state action to investigate past abuses and curb militia and vigilante activity is imperative to protect all parties from abuse.

This report is based on six weeks of field research conducted by Human Rights Watch in January and February 2002. Investigators visited five villages spread over three areas of Arara Abadi's concession in three separate districts of Riau province (Siak, Pelalawan, and Kampar) to interview victims and witnesses. In addition to villagers living inside Arara Abadi's concessions, researchers interviewed company staff at headquarters and field offices of APP and Arara Abadi, as well as at the competing mill Riau Andalan Pulp and Paper. Researchers also met with local forestry and police officials (including provincial police and anti-riot Mobile Brigade, or Brimob, officers), a variety of non-governmental organizations (NGOs), journalists, economists, forest scientists, private security firms, and local political figures. This was supplemented by follow-up interviews from March to June 2002 with  experts on forestry and governance.