Region’s Smog Shows Need for Better Oversight; More Than US$7 Billion Lost
July 16, 2013
The return of the smog is only the most tangible evidence of the damage from Indonesia’s continuing failure to effectively manage its forests. Weak law enforcement, mismanagement, and corruption are to blame not only for the smog but also for the loss of billions of dollars a year in desperately needed public funds.
Joe Saunders, deputy program director

(Jakarta) – Government corruption and mismanagement plague Indonesia’s forestry sector, with serious consequences for human rights and the environment, Human Rights Watch said in a report released today. The smog roiling Indonesia and its neighbors is partly a result of Indonesia’s ‘green growth’ strategy, which involves clearing forests for the rapid expansion of oil palm and pulp plantations.

The 61-page report, “The Dark Side of Green Growth: Human Rights Impacts of Weak Governance in Indonesia’s Forestry Sector,” finds that illegal logging and forest-sector mismanagement resulted in losses to the Indonesian government of more than US$7 billion between 2007 and 2011. Indonesia recently introduced reforms to address some of these concerns and has been touting its forestry policies as a model of sustainable ‘green growth.’ But much logging in Indonesia remains off-the-books, fees are set artificially low, and existing laws and regulations are often flaunted. A “zero burning” policy and a moratorium on forest clearing are manifestly inadequate.

“The return of the smog is only the most tangible evidence of the damage from Indonesia’s continuing failure to effectively manage its forests,” said Joe Saunders, deputy program director at Human Rights Watch. “Weak law enforcement, mismanagement, and corruption are to blame not only for the smog but also for the loss of billions of dollars a year in desperately needed public funds.”

The persistent failures have global implications. The smog causing so much suffering for Indonesia’s neighbors is produced by clearing forests for agriculture, a practice so widespread that it makes Indonesia’s carbon emissions among the largest in the world. The Obama administration announced on June 26, 2013, that it would invest more in sustainable forestry overseas as a way to combat climate change. However, without improvements in governance in Indonesia, greater investments by the international community may not bring significant change in the status quo.

The Indonesian government recently introduced reforms in part aimed at addressing forest mismanagement and corruption, including a timber legality certification system and a freedom of information law, but such efforts have fallen far short of their aims. The new report, an update to the 2009 Human Rights Watch report “Wild Money,” analyzes industry and government data, concluding that the pace of revenue loss has actually increased in recent years. In 2011 alone, the losses totaled more than $2 billion – more than the country’s entire health budget for that year, undermining the government’s ability to provide basic services to its population, Human Rights Watch said.

It is not only during the dry season that Indonesians suffer the negative consequences of forest mismanagement. The significant loss of revenues contributes to the government’s disappointing progress on a number of human rights concerns, notably those related to rural health care.

Indonesia’s forest communities, among the country’s poorest groups, have been harmed the most under the current system. Many of these communities have constitutionally recognized rights to use the land and forests or be adequately compensated for their loss. But the new legality certification system does not address whether timber is harvested in violation of community rights to forest lands.

Increasing demand for land to expand plantations appears to be leading to more violent land conflicts, Human Rights Watch said. The problem is especially acute on the island of Sumatra, where the majority of pulp and oil palm plantations – and most of this year’s fire hotspots – are located, often on land claimed by local communities. The government’s failure to comply with its own regulations for issuing concessions on forest land claimed by communities and its failure to hold companies accountable for violating legally required compensation agreements have led to an escalation in disputes. For example, in 2011, the escalation of long standing land disputes associated with an oil palm plantation in the Mesuji sub-district of South Sumatra led to violent clashes between local villagers and company security, leaving two local farmers and seven company staff dead.

In May the Constitutional Court ruled that the government’s practice of allocating concessions on customary land is unconstitutional, offering some hope to those communities. However, in the current climate of opaque, unaccountable forest governance, without adequate participation and oversight, identifying and registering rights to these lucrative forestlands could easily result in more, rather than fewer conflicts, Human Rights Watch said.

Further, rather than address the underlying causes of land disputes, the government has broadened the scope for potential military involvement in efforts to restore order. That was a step backward for Indonesia, which had been making progress weaning its military from the pervasive internal security role it played under former president Suharto.

The government has also enacted unnecessary restrictions on access to information about forest concessions and land claims. Authorities have harassed and intimidated local activists who have been bringing attention to forest sector abuses, and a number of environmentalists and activists have been arrested or prosecuted in recent months over plantation disputes.

The government has increasingly sought to restrict independent organizations through legislation, which has created a formidable barrier to public oversight of government and company behavior in the forest sector, Human Rights Watch said. This includes using decades-old defamation laws that criminalize speech deemed “insulting” to government officials and institutions and provisions in the freedom of information law that impose criminal penalties for the “misuse” of public information.

In addition, a recently passed regulation restricts the access of nongovernmental organizations to foreign funding and empowers the government to disband groups deemed to pose a danger to the “national interest.” On July 2, parliament passed a law that places further restrictions on the legally permissible activities of nongovernmental organizations.

Without focused government action to strengthen reforms, oversight, and enforcement, the situation in the forestry sector is likely to worsen, Human Rights Watch said. Indonesia is already the world’s largest producer of palm oil, and is a major player in the pulp and paper industry. In coming years, Indonesia is looking to scale-up production of palm oil and pulp, which presents significant human rights risks unless the resources are managed responsibly. These sectors’ massive demands on land and the weak recognition of local land rights have had profound and long-lasting impacts on forests and the communities that depend on them.

“The Indonesian government has been selling the expansion of its forestry sector as an example of sustainable ‘green growth’ and an antidote to climate change and poverty, but the evidence suggests otherwise,” Saunders said. “Funds that could be used to improve public welfare are being siphoned off to enrich a handful of people or needlessly lost through mismanagement. And the regional smog crisis suggests the environment and rural livelihoods are the victims, not the beneficiaries, of the government’s forest policies.”