How corruption is fuelling the haze

Jun 25, 2013

Observers say local officials are key to tackling deforestation in Indonesia. The central government and activist groups need to make sure local governments abide by national laws.

By Sara Schonhardt
RECORD-HIGH air pollution hit Singapore and Malaysia last week as winds blew smoke northward from forest fires raging in Sumatra in Indonesia. Demands from the city-state that Indonesia take tougher action prompted retorts by officials who said Singapore was "behaving like a child". They sought to shift blame to companies based in Singapore and Malaysia.

But the barb-trading over the haze, an annual annoyance that often strains relations between Singapore and Indonesia, overlooks one of the major causes of the burning - corruption.

Observers in Jakarta say rent- seeking local leaders and corporations are taking advantage of lax law enforcement and murky regulations to continue clearing forests at an increasingly rapid rate.

Indeed, as it became clear that the bulk of the burning was taking place in Riau province, analysts were quick to point out that its governor - Mr Rusli Zainal - is the leading suspect in a case involving illegal logging permits.

"The haze disaster shows the impact of corruption in the forestry sector," said Mr Danang Widoyoko, the chairman of Indonesia Corruption Watch, an independent graft monitor.

It recently assessed permit processes in provinces where the heaviest logging occurred, citing five cases of corruption which led protected forest to be converted to plantations. Losses to the state totalled nearly US$195 million (S$249 million).

The forestry sector has long been a source of rampant corruption. When Suharto was president, he doled out concessions to friends and relatives in return for their political backing. As power has devolved over the past decade from the central government to the local level, analysts say, corruption has become both fragmented and more pervasive.
Conservationists say logging and palm oil companies that cut into virgin forests and peatlands are scaling back wider conservation efforts - with the backing of local leaders seeking kickbacks in return for operating permits.

The problem gets worse in election years, when officials need money to fund campaigns. With national elections due next year, this is one reason the burning may be worse this time around.

In many cases, money compels local leaders, who are also charged with supervising plantation operations, to look the other way when companies engage in illegal practices, such as burning land in protected forest areas, says Mr Danang.

"The problem is clearly a lack of monitoring from the forest authority," he adds. "A lot of corruption cases indicate that regents are easily bribed."

Officials in the central government admit that some mining and plantation companies are operating illegally. But they say there is only so much they can do.

"The regents give out the permits; it's outside the Ministry of Forestry's authority," Mr Hadi Daryanto, the ministry's secretary general, has told Eco-Business.

It is the central government's responsibility to prevent and respond to forest fires.

It is also the central government's job to issue national regulations that govern the country's forests - and this is where Indonesia has done well, say forest activists, pointing to several conservation-minded commitments made by President Susilo Bambang Yudhoyono since he took office.

In 2011, for example, Dr Yudhoyono backed a ban that would prevent companies from obtaining new permits to clear virgin forest and peatlands.

The ban is part of a US$1 billion deal with Norway, which has agreed to provide the money in tranches as long as Indonesia is living up to its commitment to curb deforestation. Last month, Dr Yudhoyono extended the ban to 2015, a move commended by the international community.

He did so in the face of lobbying by major logging, palm oil and mining companies, which say the ban hurts their ability to expand, dents profits and could stymie Indonesia's economic growth. The majority of the country's exports are commodities.

But resource analysts disagree.

"There's really no reason why the moratorium would curtail economic development in the palm oil sector," says research associate Kemen Austin at the World Resource Institute in Washington DC. She adds that there is enough degraded land available for oil palm expansion, and the moratorium should be the impetus companies need to utilise their concessions more efficiently.

Another aim of the moratorium on forest-clearing should be to strengthen the permit process, oversight and forest monitoring to ensure companies "don't revert to business as usual" once it expires, she says.

Still, Indonesia has struggled to balance economic growth with sustainability.

Many local leaders have not been convinced that keeping the forests intact will lead to development. It does not help that several schemes floated under the REDD+ programme, a United Nations initiative that aims to pay local governments for preserving their forests, have fallen flat.

Meanwhile, critics of the forest-clearing moratorium say it does not go far enough, since it applies only to new permits and not those already held by plantation companies.

Indonesia has one of the fastest rates of forest clearing in the world, much of it done to make way for palm oil, an ingredient used in everything from shampoos to sweets to cleaning agents.

The country is the leading producer of the commodity, and a top emitter of harmful climate changing carbons. Many of the forests that are being developed stand on swampy peat that releases large amounts of carbon emissions when upended. The peat also becomes highly combustible after it decomposes, part of the reason the fires this year are so severe.

Last week, environmental non- profit group Greenpeace said commercial plantations control half of the land where the biggest fires are burning, and much of it is on deep peat, which is off limits under the moratorium. Forest campaigner Bustar Maitar at Greenpeace in Indonesia says it becomes like "petrol in the forest", and can burn for weeks.

While the latest fires have put a spotlight on corruption in the forestry sector, they have also highlighted the private sector's role in curbing forest clearing.

Last Wednesday, Singapore's Environment Minister Vivian Balakrishnan asked the Indonesian government to name and shame the companies involved in the illegal burning.

Some of the biggest companies operating in Indonesia - Wilmar International, Sinar Mas Group and Asia Pacific Resources International - are based in Singapore or Malaysia. All have issued statements saying they abide by strict no-burn policies, although Wilmar has reportedly told Singapore media that it "cannot prevent local practices of slash-and-burn for agricultural and other purposes".

Some have made even bolder commitments.

In February, Asia Pulp and Paper, one of the world's largest paper companies, said it would immediately stop clearing natural forests within its concessions. Its sister palm oil company, Golden Agri-Resources, has also committed to forest conservation.

Still, companies and governments cannot work independently, argue green groups. Indonesia will need to step up monitoring and ensure that local governments abide by national laws.

Mr Agus Purnomo, a special adviser to President Yudhoyono and the head of the National Climate Change Council, said better law enforcement by local police and the judiciary as well as improvements in land titling and permit issuing processes are some solutions.

Also key is ensuring better oversight from the Ministry of Home Affairs, which is capable of cancelling regulations that contravene national laws on forest protection. But what really needs to happen is that local leaders must be held accountable.

"The heads of the districts are not accountable to the public at large if there are forest fires and ongoing deforestation," Mr Purnomo told Eco-Business.

"If we can create a system whereby the fate of the forests is (tied to) the head of the district, then there is some incentive for him to do more than participate in deforestation activity."

This article first appeared on the sustainable business website www.eco-business.com.

The writer, an eco-business writer based in Jakarta, Indonesia, has covered development issues in South-east Asia for the past six years.