Indonesia Country Paper on Illegal Logging
Prepared for the World Bank-WWF Workshop on
Control of Illegal Logging in East Asia
Jakarta, 28 August 2000
Written by: Neil Scotland (Department for International Development, DFID) with
contributions from: Joyotee Smith (Centre for International Forest Research, CIFOR);
Hikma Lisa, Marc Hiller, Ben Jarvis, Charlotte Kaiser, Mark Leighton, Laura Paulson,
Edward Pollard, Dessy Ratnasari, Ramsey Ravanell, Scott Stanley (Proyek HKM,
Gunung Palung, West Kalimantan); Erwidodo (Ministry of Forestry and Estate Crops,
Centre for Research and Development); Dave Currey (Environmental Investigation
Agency, EIA); Agus Setyarso (WWF - Indonesia)
The paper was edited by William Finlayson and Neil Scotland
Preface
Note: This paper is in draft form. A final version will be prepared after the workshop. Any
comments and suggestions on the paper will be gratefully received by the authors.
This paper has been prepared for the World Bank-WWF workshop on Control of Illegal Logging
in East Asia, held in Jakarta on 28-29 August 2000 by drawing together material from a number of
sources in an attempt to present a comprehensive overview of the problem of illegal logging in
Indonesia. Those who have contributed are: Neil Scotland (Department for International
Development, DFID); Joyotee Smith (Centre for International Forest Research, CIFOR); Hikma Lisa,
Marc Hiller, Ben Jarvis, Charlotte Kaiser, Mark Leighton, Laura Paulson, Edward Pollard, Dessy
Ratnasari, Ramsey Ravanell, Scott Stanley (Proyek HKM, Gunung Palung, West Kalimantan);
Erwidodo (Ministry of Forestry and Estate Crops, Centre for Research and Development); Dave
Currey (Environmental Investigation Agency, EIA); Agus Setyarso (Worldwide Fund for Nature,
Indonesia). The paper was edited by William Finlayson and Neil Scotland. The authors are grateful
for help and comments provided by Erik Meijaard, Rona Dennis and Anne Casson (CIFOR), William
McGrath (World Bank) and Agus Purnomo (WWF Indonesia).
Note: Various abbreviations that are very commonly used, such as “HPH”, are derived from the
Indonesian terms, but are only explained in this text, at their first occurrence, by the English
translation.
Contents
Introduction ..................................................................................................................................... 1
Forests and forestry in Indonesia .................................................................................................... 2
Overview ......................................................................................................................................... 4
National evidence: the imbalance in roundwood supply and demand ........................................ 6
Regional evidence: unlicensed sawmills in Sumatra .................................................................. 8
International evidence: Timber harvesting restrictions and rising smuggling .......................... 10
Different manifestations of the illegal logging trade .................................................................... 13
Illegal logging by concessionaires ............................................................................................ 13
Small-scale illegal logging by local people .............................................................................. 14
Large-scale illegal logging by third parties............................................................................... 19
Bending the rules ...................................................................................................................... 20
Illegal logging under regional autonomy .................................................................................. 21
Encroachment by small scale and subsistence agriculture ....................................................... 23
Corporate encroachment ........................................................................................................... 25
Impact of illegal logging on Indonesia.......................................................................................... 28
Economic .................................................................................................................................. 28
Forest fires ................................................................................................................................ 29
Wildlife poaching...................................................................................................................... 29
Social......................................................................................................................................... 30
Beneficial impacts ..................................................................................................................... 30
Government strategy ..................................................................................................................... 32
Prevention ................................................................................................................................. 33
Detection ................................................................................................................................... 35
Suppression ............................................................................................................................... 36
Conclusions and recommendations ............................................................................................... 38
References ..................................................................................................................................... 43
Introduction
Indonesia, with about 211 million people, is the world’s fourth largest country by population. It
consists of more than 13,000 islands and has some 300 different ethnic groups, who speak an
estimated 365 different languages and dialects. Indonesia's forests were once vast, but massive
deforestation in recent years has led to serious concern over the future of this important resource.
Deforestation has been driven by a number of factors, including a growing population, growing
demand for agricultural land, and a forestry development policy which has condoned 30 years of
heavy and unsustainable exploitation of the forests by big business.
In recent years a new threat has emerged, bound up in the more general problems of corruption
and vested interests which cause such enormous public losses in Indonesia every year. The problem is
illegal logging, which has always been there, but which has grown to epidemic proportions in the flux
of post-Soeharto Indonesia. With dwindling forests, and dwindling respect for the law and central
government policy, it is a daunting challenge for the government to try to control this illegal logging,
and to minimise the threat it presents to the environment, as well as to the economy, and in fact to
many aspects of life in a stable society.
This paper describes different manifestations of the problem, and outlines steps taken so far to
combat it. It is intended to provide a reflection from Indonesia of the broad underlying issues set out
in a theoretical paper, Forest Law Enforcement: Policies, Strategies and Technologies, prepared for
the workshop by the World Bank. (McGrath and Grandalski, 2000)
The paper comprises several sections. First, it presents an overview of the forest sector in
Indonesia. This is followed by an overview of illegal logging as it is experienced here. To illustrate
more clearly how the problem afflicts Indonesia, some of its manifestations are then presented, with
evidence from a number of local examples. Government strategy is then discussed, with particular
reference to prevention, detection and suppression. The impact of illegal logging on the country is
then discussed. The whole question is then recapitulated from a historical point of view, and finally
some recommendations made.
1
Forests and forestry in Indonesia
Forests play an important role in both the formal and informal economies of Indonesia. But in
spite of their importance to the nation, Indonesia has allowed massive deforestation to take place in
recent years. The latest estimates prepared by The Ministry of Forestry and Estate Crops (MOFEC)
present a bleak picture. The annual rate of deforestation has increased until the average for 1985-97
was at least 1.7 million ha, and at the end of this period it is likely to have been even higher, with
about 2 million ha lost annually since 1997. Table 1 shows that in 1985-97 Sumatra lost 6.7 million
ha of forest, Kalimantan 8.5 million, and Sulawesi 2.3 million. While the latest estimates suggest that
there are still about 57 million ha of forest on these islands, only 15% of this area is on non-swampy
lowland plains, where the types of forest grow that are of greatest importance both to biodiversity and
to the economy. At the present rates of loss, forests will be extinct on the dry-land lowland plains of
Sumatra by 2005, and in Kalimantan soon after 2010 (Holmes 1999).
Table 1. Summary of forest conversions, 1985-97
1985
Forest
(million
ha)
1997
% of
total land
area
Forest
(million
ha)
Deforestation
% of
total land
area
Decrease
1985(97
(million
ha)
% loss
ha/year
Sumatra
23.3
49%
16.6
35%
6.7
29%
558,000
Kalimantan
40.0
75%
31.5
60%
8.5
21%
706,000
Sulawesi
11.3
61%
9.0
49%
2.3
20%
189,000
Maluku*
6.4
81%
>5.5
?
>0.8
13%
>67,000
35.0
84%
33.2
81%
1.8
5%
150,000
115.9
68.5%
c. 95.9
57%
20.5
17%
1,709,000
Papua
TOTAL
Source: Holmes (1999).
*Data for Maluku are preliminary.
Loss of the forests will have a very great adverse impact on the economy. Although forestry
contributes only a small part of total gross domestic product (GDP), Indonesia relies heavily on
export-earning sectors such as the wood-processing industries (tables 2-3). Exports of plywood, paper
and sawnwood were all among the highest export earners in the 1990s. Furthermore, while the
calculated GDP shows only limited gains from forestry, it does not show the importance of forests to
smallholder livelihoods and the informal economy. Estimates of the number of people in the informal
sector who depend on the forests for their living vary from a conservative 14 million who actually
live in forest concession areas, to 70 million who in some way rely on either direct benefits such as
the harvest of timber or non-timber forest products (NTFPs) or on indirect benefits, such as
protection from flooding.
The sector also generates large numbers of jobs in harvesting, primary processing and secondary
processing enterprises. Official government data shows that approximately 260,000 people are
employed in Indonesia's licensed sawmills and plymills. Of this total, approximately 52,000 people
are employed in sawmills and 208,000 are employed in plymills. Unlicensed sawmills employ an
estimated 30,000-40,000 people (NRM, 2000).
2
Table 2. GDP by industrial origin (% distribution, 1993 constant prices)
Industrial origin
1996
1997
1998
1999*
15.4
14.9
17.0
17.3
Forestry
1.6
1.7
1.8
1.6
Manufacturing industry
24.7
24.8
25.3
25.9
Wood and wood products
1.4
1.3
1.1
1.0
Paper and paper products
0.9
0.9
1.0
1.0
Non-oil and gas GDP as % of total
91.6
92.0
90.9
91.1
413.8
433.2
376.9
378.1
Agriculture, livestock, forestry and fisheries
of which
of which
Memorandum item
GDP (Rp trillion)
* Preliminary figures
Source: BPS
Table 3. Key exports ($m)
Item
1994
1995
1996
1997
1998
1999
Rank in 1999
Clothing
3,226
3,388
3,576
2,876
2,588
3,818
1
Textiles
2,573
2,816
2,975
3,658
4,740
3,418
2
Plywood
3,716
3,462
3,595
3,411
2,078
2,256
3
671
1,011
955
939
1,426
1,966
4
1,391
2,191
2,227
1,988
1,548
1,236
7
Palm oil
718
747
826
1,446
745
1,114
9
Sawn wood
510
454
473
380
164
296
14
40,053
45,418
49,814
53,444
48,847
4,077
−
Paper & paper products
Processed rubber
Total exports
Source: BPS
3
Overview
Illegal logging takes on many forms, from over-harvesting by licensed concessionaires, to illegal
operations run by criminal syndicates, or to encroachment into conservation areas by smallholder
farmers. It is a highly contentious subject, embracing as it does issues that include corruption,
inequitable distribution of benefits, injustices, and a host of other highly emotive matters. However,
despite the complexity of the problem, there are three fundamental factors that are always present in
the many manifestations of illegal logging found in Indonesia. The first is a demand for timber which
greatly exceeds the sustainable supply. The second is the corruption of the military and police forces,
which are themselves heavily involved in the illegal trade. The third is the misuse of forests by
politicians for purposes of political patronage. These problems, when taken together ensure (a) that
the law is not enforced (b) that no demand for timber goes unsatisfied and (c) that many politicians
were complicit in this state of affairs.
This section examines these factors and undertakes a preliminary analysis of how the nature of
illegal logging has changed over time. The process is intimately related to timber supplies and their
progressive decline both in countries supplying timber and in countries importing timber. There has
also been a rising demand from domestic processing industries as well as from abroad. The process is
also related to the distribution of property rights to forested areas. In the case of Indonesia it is also
closely linked to the recent change in the political regime, the new Forestry Law and and the
Decentralization process.
Under the Soeharto regime the state claimed sovereignty over forested areas and granted 20-year
timber concessions over large areas of these “state forests” to urban elites with strong political
connections (McCarthy 2000a). Large scale concessions supplied 90% of the official timber supplies
up to the late 1980s (Barr 2000). Many concessions were linked to processing facilities whose
capacity exceeded the sustainable timber supplies. The enthusiasm for installing new plant arose from
the high returns on processing due to log export bans and monopolies in timber export. Barr (2000)
reports that in order to provide raw materials for the processing industry, concessionaires went in for
undocumented harvesting above their annual allowable cut, repeat harvesting before the approved
cutting cycle, or logging in unapproved areas both within and outside their concessions. HPH holders
also entered into informal contracts to harvest timber from degraded areas, with the state forestry
enterprises that are responsible for the rehabilitation of these areas (Barr 2000).
Ascher (1999) and Brown (1999) contend that Soeharto implemented policies to favour the
processing sector because the Indonesian-Chinese entrepreneurs who benefited from them in return
contributed funds which he used for off-budget spending to further his political objectives. The
Indonesian-Chinese entrepreneurs' lack of political power allowed Soeharto to avoid becoming
beholden to ethnically indigenous business elites (Ascher 1999). Illegal activities were carried out
with relative impunity because powerful networks of patronage (including Indonesian Chinese
entrepreneurs and the armed forces) had privileged access to forests and processing opportunities
(McCarthy 2000a; Brown 1999). In this way, the forests were sacrificed by the Soeharto regime for
political ends.
Illegal logging by local communities on their own account also occurred during this period.
McCarthy (2000a) provides an example from Jambi province, Sumatra. It shows how this activity
was linked to an allocation of forest property rights which criminalised traditional timber extraction
by local communities. Traditional adat land rights were nullified by the industrial concessions. Land
shortages were created which led to “illegal” logging and “encroachment” by communities into what
had been their own land but were now restricted areas. McCarthy highlights the fact that during the
Soeharto regime "better enforcement" was always put forward as the solution to illegal logging, to
mask the politically sensitive underlying cause, which was the privileged access to forest revenues by
powerful networks of patronage.
4
During the 1990s the dominance of concessions began to decline. The government revoked
concessions or failed to renew licenses. In addition, concessions were given up when their supply of
large-diameter high-value species ran out (Barr 2000). In other cases the profitability of concessions
had declined because of the sharp devaluation of the currency (Scotland, 1999) and the scarcity of
capital resulting from the economic crisis (Barr 2000). Around the same time a proliferation of
smaller sawmills was recorded, as Obidzinski & Suramenggala (2000a) have shown. These new small
sawmills obtained timber almost entirely from illegal logging. Some sawmills were licensed for their
lifetime, while they held logging permits for only one year (McCarthy 2000b). These new small mills
represented an expansion in the processing sector beyond the sustainable yield and were a key factor
in the development of illegal logging.
The processing industries were increasingly fed from the clear felling that took place under
forest conversion permits for large scale plantations (Barr 2000), the issue and use of these permits
(known as IPK) being in many cases contrary to the intention of the law.
An important development has been the rapid increase of capacity in the pulp and paper sector,
which has gone from virtually nothing in the early 1980s to almost 15 million t in 1999 (Sunderlin
1999; Barr, 2000). This development has increased the profitability of IPKs – along with
development of technologies for processing small-diameter timber for plywood (Barr 2000). The
demand from the domestic processing sector has therefore continued to be an important underlying
factor in promoting illegal logging. The nature of the demand and the nature of the processing sector
have adapted to the changing nature of timber supplies.
The suppliers of timber also began to change in response to the scarcity of capital and the
changing nature of the timber supplies. Sawmill owners and independent entrepreneurs increasingly
provided financing to illegal groups, which could employ manual logging methods and provide cheap
raw material for sawmills and pulp mills. Barr (2000) reports that even concession holders also in
some cases financed illegal logging groups. A likely hypothesis is that the demand for timber from
illegal logging groups during this period has been linked to the increasing competitive advantage of
manual logging methods when the profitability of large-scale logging with heavy machinery has been
declining because of the factors mentioned above. The costs of manual logging were declining
because of the plentiful supply of cheap labour released by the economic crisis. However, no legal
role for small-scale foresters existed at this time. In this way the legal framework may have
encouraged illegal logging.
McCarthy (2000b) shows how powerful networks at the provincial and district levels have
supported illegal logging. Timber entrepreneurs and sawmill owners at the district level have
obtained legal immunity by making payments to local officials and the army. These networks of
power and interest made it highly improbable that regulations would be implemented at the local
level. Not only was it an illegal type of logging that was providing their income, but also, under the
current legal framework, the benefits from legal logging accrued largely to the central government.
These findings emphasise the political and legal underpinnings of the illegal logging problem, both in
Jakarta and at the local level.
Demand from abroad also became important in this period. Sizer & Plouvier (2000) report the
increasing demand from Asian (particularly Malaysian) timber companies. They attribute this to the
log shortages faced by timber industries in Japan, Korea, mainland China, Taiwan, Malaysia,
Thailand, and the Philippines. They also claim that more effective law enforcement and tax increases
in Malaysia and logging bans in a number of Asian countries have increased Malaysian investment
abroad. Malaysian companies have apparently obtained capital through family and business networks
and by listing on the Kuala Lumpur stock exchange (Sizer & Plouvier 2000). While many of these
companies are increasingly tapping forests in Africa, the Asian monetary crisis led many to source
timber from places closer to home, and the border with Indonesia in Borneo provided a particularly
convenient point of access.
In theory a number of recent changes should be conducive to the control of illegal logging. The
new political regime has publicly stated its commitment to controlling illegal logging and stamping
5
out corruption. The new Forestry Law of 1999 takes a first step towards addressing some of the
underlying causes analysed above. For one thing it begins to create a legal framework for community
forestry, which may provide an opportunity to take advantage of the probable increase in the
competitive advantage of small-scale forestry. Decentralization allows provinces to design their own
fiscal policies and retain a larger share of revenues from local natural resources, so that arguably it
should encourage them to enforce sustainable forest management. What effect these new
developments will have in practice is however unclear. Early experiences recorded in case studies
given below, indicate that these changes on their own, without supporting policies and institutions,
are unlikely to be successful.
National evidence: the imbalance in roundwood supply and demand
Illegal logging is essentially driven by supply and demand. The export-oriented wood-processing
industry has been allowed to expand without any reference to the sustainable supply of timber, while
domestic demand, in a country of more than 200 million people, has been almost entirely neglected.
Access to the resource has been unrestricted, and since the official log supply is controlled
almost entirely by the export industries, domestic needs have come to be met largely by illegal
logging. In recent years there has also been a marked increase in illegal exports of roundwood and
sawnwood of the more desirable species.
By comparing official roundwood production data with the reported exports, minus the sum of
imports and apparent domestic consumption, it becomes evident that there is an annual discrepancy in
the order of tens of millions of cubic metres between the official roundwood production figures and
the apparent output from the wood-processing sector. Estimates of this discrepancy can only be given
as rough (but sufficiently good) approximations, since they depend on a number of uncertain
variables, particularly the extent of domestic demand and the volume of timber smuggled out of the
country. Evidence of the discrepancy is shown in table 4 below.
Table 4. Estimated timber supply-demand imbalance 1997/98
1997/98
Log supply (‘000 m3)
29,500
Log supply equivalent from imports (‘000m3 rwe)
20,427
Log supply equivalent from other sources (‘000m rwe)
1,600
Total supply (‘000m3 rwe)
51,527
3
Domestic demand (‘000 m3 rwe)*
35,267
Log equivalent of exports (‘000 m rwe)
48,873
Total demand (‘000m3 rwe)
84,140
Net wood balance (‘000 m3)
-32,613
3
* estimate
**Adjusted to account for pulp processed into paper
Source: Central Statistics Bureau (BPS), Ministry of Forestry and Estate Crops, quoted in
ITFMP (1999)
6
The imbalance between supply and demand could be said to have arisen because woodprocessing mills are licensed by the Ministry of Industry and Trade, while forest exploitation is
licensed by MOFEC. At a deeper level, the trouble is that there has been little or no co-ordination
between these two ministries over the exploitation of the country’s forests, and this administrative
shortcoming has had a part in producing the vast over-capacity that can now be seen in the industry.
Even in recent years, the government has continued to encourage rapid development of industry
with scant regard to the supply of roundwood which the remaining forests are capable of sustaining.
Although plywood manufacturing is still predominant, the pulp and paper industry has been
encouraged in recent years to expand aggressively. In 1991, the installed capacity for pulp
manufacture was 1.1 million t per annum, but by 1999 this had risen to 4.9 million t per annum. The
production of one tonne of pulp requires about four cubic metres of roundwood, so the total volume
of roundwood required by the pulp industry, at close to 20 million cubic metres per annum and rising,
is quite staggering.
The imbalance problem can therefore be set out as follows:
1. The natural forest has a limited capacity to supply roundwood.
2. The requirements of the processing industry have been allowed to exceed the forest’s
capacity to supply them.
3. Export-led growth strategies have been pursued, but meeting domestic demand has not been
given adequate attention.
4. The combined needs of a large and growing domestic market and an export-oriented
industry have placed an intolerable strain on the forests.
5. The establishment of industrial forest plantations has not proceeded anything like quickly
enough to meet the shortfall in demand.
6. Forest clearance (actually, or more often fictionally, for either forest plantations or estate
crops) has been used to provide a short-term additional supply of roundwood.
7. The remaining shortfall between the legal supply and total demand has created a niche in
the market which has been filled by illegal loggers. The industry and the domestic market
are now totally dependent on this supply of roundwood. It is bound to prove itself
unsustainable.
Problems caused by the imbalance between the processing capacity and the sustainable supply
are compounded by the political connections (and powerful lobbying power) of the major timber
groups, who have worked hard to protect their operations. A study by Brown (1999) showed that the
largest 10 timber groups held 47% of the 51.3 million ha allocated as production forest under
concessions in 1997/98. Table 5 shows these holdings and the connections of the owners. With good
access by the owners to the top of government, changing the status quo in forestry has been, and still
is, very difficult. The wealth of these groups makes them powerful forces even now after the New
Order has fallen.
7
Table 5. Ranking of timber groups by concession holdings, 1997/1998
Group name
Number of concessions
Concession area
(million ha)
Barito Pacific
52
5.0
Djajanti
29
3.4
KLI
19
2.8
Alas Kusuma
19
2.7
Inhutani I
3
2.6
Bob Hasan Group
12
2.1
Armed Forces/Army
7
1.8
Korindo
8
1.6
Kodeco
3
1.1
Sumalindo
9
1.1
Sub-total
161
24.2
Total (including others)
464
51.3
Top 10 as % of total
35
47
Source: Brown (1999)
As the gap between the supply and the requirements of the processing industry grows wider, so
the forces driving illegal logging will grow stronger, and the vested interests behind the problem will
become more deeply entrenched. Evidence from the province of Jambi in Sumatra shows that
unlicensed sawmills and those who supply them with timber have the backing of members of the
military and the bureaucracy (see box 1), and there is evidence of a repetition of this pattern in many
other parts of Indonesia, including the involvement of local police in an incident in January 2000 in
which two people from Telapak and the Environmental Investigation Agency (EIA) were taken
hostage in Central Kalimantan after exposing an illegal logging racket.
In late May the Minister of Defence, Mr Juwono Sudarsono, warned that the military and police
were facing an acute shortage of funds, and that this was compromising their efforts to act as a
professional security force. He said that state financing covered only 25% of the military's
requirements, and warned that this shortfall in funding would push soldiers (and police) into
supplementing their incomes by alternative means, often outside the law. This is consistent with the
the huge network of business activities (both legal and illegal) controlled by the military, which many
experts argue nullifies its ability to operate as a professional fighting force. Budgetary constraints and
recession may have made many legal military businesses unprofitable, and pushed the security forces
further into illicit activities, including illegal mining and logging. This may be one reason for the
upsurge in lawlessness in the forest sector since 1998.
Regional evidence: unlicensed sawmills in Sumatra
The entrenched nature of illegal logging and the difficulties likely to be faced in tackling the
problem were made clear by a recent survey of unlicensed sawmills around the Bukit Tigapuluh
National Park, conducted in 1999 by the Worldwide Fund for Nature (WWF).
8
Bukit Tigapuluh National Park straddles the border between the provinces of Jambi and Riau in
Sumatra. The park covers about 127,000 ha, of which on the Riau side roughly 57,000 were formerly
classified as “limited production forest” and 37,000 ha are “protection forest”, while on the Jambi
side a further 33,000 ha are “protection forest”.
The area is rich in biodiversity, with 700 recorded plant species, 246 of which are used by
indigenous communities in and around the park. There are also 59 species of mammal and 192
species of bird in the park. Among the mammals living in the area are the highly endangered
Sumatran tiger (Panthera tigris), Sumatran elephant (Elephas maximus), clouded leopard (Neofelis
nebulosa), oriental small-clawed otter (Aonyx cinera), and Malayan tapir (Tapirus indicus).
The park and the surrounding forest concessions are threatened by illegal logging. The survey,
conducted by the local office of the WWF, discovered 25 unlicensed sawmills in the immediate
vicinity of the park. The sawmills visited typically had between one and four saws with a capacity to
process between five and ten cubic metres of roundwood per day. The estimated annual processing
capacity of these sawmills is therefore about 230,000 cubic metres of roundwood.
These sawmills have no official supply of timber, and therefore rely upon an illegal supply from
the surrounding forests, some of which lie in the national park and some of which are on concession
land. Gangs of illegal loggers, some local and some from further away, commonly use the
infrastructure developed by concessionaires to gain access to the forest and then transport illegally
felled timber to their markets. By logging in areas already disturbed by concessionaires, illegal
loggers take the future crop trees and damage the residual stand, often to a point where no future
harvest will be possible.
Typical management arrangements for a sawmill in the area include the provision of capital by
the local business community, with the backing of either government employees or members of the
military. The involvement of uniformed officials as backers – and particularly members of the
security forces – effectively puts the mills beyond the reach of the law. The logging gangs themselves
are often made up of people from the forest fringe communities who lost access rights to the forest
when industrial harvesting licences were granted to logging companies in the 1970s and 1980s. The
combined pressure of concessions and illegal logging in the same areas results in widespread
deforestation and land degradation.
Table 6. Backing for illegal sawmills south of Bukit Tigapuluh National Park
Backer
Number of sawmills
Police
1
Armed Forces / Army
13
Regional Public Works Department / Service
2
Regional Forestry Department / Service
3
Private backing
1
Unknown
5
Total
25
Illegally felled logs are sold to the mills at prices well below their market value. In an interview,
a resident of Seberida on the Riau side of the park boundary revealed that in early 1999 he received
Rp 250,000 (US$30 at the prevailing exchange rate of Rp8,300:$1) per cubic metre of meranti sold to
9
the local sawmills. In other interviews, respondents revealed that the black market price at the end of
1998 was about Rp 380,000 (US$45) per cubic metre, falling to Rp 280,000 (US$35) in the first
quarter of 1999. The world price for meranti at the end of 1998 was reported to be about US$110 per
cubic metre, and even allowing for the fact that illegal loggers rarely handle premium grade timber,
the price they receive for their harvest is excessively low. It is indeed a great folly to allow a resource
as valuable as Indonesia’s forests to be degraded for as little as US$30 per cubic metre of roundwood.
From the above account it can be seen that the illegal felling problem is deeply entrenched. The
institutions that are supposed to be responsible for the sustainable management of Indonesia’s forests
and for upholding law and order are heavily involved in the trade. The weak nature of the state
institutions, and the reluctance to bring errant civil servants and soldiers to task for graft and
corruption, mean that it is likely to take many years to bring about the changes in governance that are
required to eliminate the problem.
International evidence: Timber harvesting restrictions and rising smuggling
There is a strong international dimension to the problem of illegal logging, related both to the
direct demand for timber in international markets, and to policies in other countries which restrict the
domestic supply of timber, leading to spill-over effects in neighbouring countries which do not have
effective controls, with potentially adverse environmental consequences. By effectively enforcing
sustainable management of her forests, Indonesia could prevent the adverse effects of international
demand. Unfortunately however, controls are lax in Indonesia, making her forests a prime target for
illegal exploitation by foreign entrepreneurs.
At least some of the international trade in illegal Indonesian timber is the result of policies to
restrict the harvest of timber in neighbouring Asian countries. Restricting harvesting is just one
option that can be used to assist in balanced long-term forest conservation. However, harvesting bans
and restrictions tend to treat the symptoms of poor policies and management, rather than directly
correcting the underlying conflicts and problems that have led to misuse and non-sustainable
exploitation.
A surprising number of countries in the Southeast Asian regional have imposed restrictions on
timber harvesting in natural forests as a result of severe environmental degradation. The restrictions
now in place are presented in Table 7 below. Trade data show that Asian countries are a significant
market for Asian timber producers, which compounds the pressure exerted on countries with no
restrictions when restrictions are introduced elsewhere.
10
Table 7. Asia-Pacific timber harvesting restrictions
Country
Current regulations or restrictions
Australia
Through Regional Forestry Agreements implemented in the late 1990s
large areas of indigenous natural forest have been set aside as reserves.
China
A log quota and policies designed to encourage plantation development
were deemed inadequate for forest conservation in China, which
introduced a logging ban in natural forest areas in 1998. The ban will be
phased in over a 10 year period.
Indonesia
No restrictions
Malaysia
Unknown. Roundwood production from the natural forest has reportedly
been declining.
New
Zealand
Logging restrictions were first imposed in parts of New Zealand in the
1970s. Criticism of environmental policy in the 1980s led to further
restrictions on commercial logging post-1987, most recently extended to
the West Coast State-owned productions forests, which are due to be
removed from production.
Philippines
After suffering massive deforestation throughout the 1970s and 1980s, the
Philippines has now implemented logging bans covering natural forest in
more than 70% of its 77 provinces.
Sri Lanka
Sri Lanka closed large areas of its natural forest to commercial interests in
1995. Over 22% of the country's timber supplies now come from unknown
sources.
Thailand
Concern over deforestation followed by a landslide tragedy which claimed
373 lives prompted the Thai government to impose a logging ban in 1989.
Nevertheless, deforestation has continued, and has increased in Thailand's
neighbouring countries.
Vietnam
Rapid forest loss prompted the government to introduce a logging ban
extending to large tracts of natural forest in 1997.
Source: Papers presented at the seminar on the Efficacy of Removing Natural Forests from Timber Production
as a Strategy for Conserving Forests, Noosa, Australia, 14 May 2000.
The problems associated with foreign companies operating in Cambodia have been well
documented (Global Witness, 1999). What is less well understood is the impact of Malaysian (and to
a lesser extent Chinese) companies' operations on the forests of Indonesia. The greatest regional
impact in the medium term is likely to come from China's recent decision to introduce logging
restrictions. There is anecdotal evidence that this policy is already leading to an upsurge in imports of
timber from Burma, Cambodia, Laos and Vietnam. Illegal shipments of timber destined for China
have also been intercepted in Maluku and Papua in eastern Indonesia. The magnitude of this aspect of
the illegal timber trade in Indonesia is not yet well understood, but it is likely to be significant and
could become more so given Indonesia's long and porous borders and weak law enforcement.
It is already well known at least that there is an illegal cross border trade in timber from
Indonesia to Malaysia, and to a lesser extent China. Indonesia has recently reintroduced log exports,
and some argue this has allowed an increase in smuggled timber due to the ease with which the
necessary documents can be forged. The secretary-general of MOFEC, who has been overseeing the
Indonesian government's efforts to control illegal logging, has identified several major routes through
which timber is smuggled out of the country: from Jambi and Riau to peninsular Malaysia and
Singapore; from West Kalimantan to Sarawak; from East Kalimantan to Sabah; and from Maluku and
11
Papua to China. His investigation into the trade, which he estimates costs the Indonesian government
$8−10m every month in lost revenues, has been hampered by leaks from within his office, and
logging gangs have been tipped off in advance of raids on their operations. In mid-June efforts to
control the cross-border theft on the island of Borneo led to a tense stand-off between the respective
police forces of both countries (despite the alleged complicity of both countries' security forces in the
trade). According to press reports Indonesia and Malaysia have now agreed to set up a joint inquiry
into the trade, but with the complicity of the security forces on both sides of the border, inadequate
law enforcement (Indonesia's 1000 km-long border with Malaysia is policed by only 30 officers), and
the suspected heavy dependence of the Sarawak and Sabah wood-processing industries on Indonesian
timber, there are considerable impediments to bringing this cross-border trade under control.
In field studies in Kalimantan, researchers were told that Malaysia is a key destination for timber
from the area. Obidzinski & Suramenggala (2000b) found that in Malinau, East Kalimantan, timber
traders were selling planks and squared logs to buyers who, reportedly shipped the timber to the
border crossing with Malaysia. This required payments to officials along the route of about three
million rupiah for 20–30 cubic metres of timber, which is about 8–12% of its selling price at the
Malaysian border (Obidzinski & Suramenggala 2000b). In Berau, the larger mills, which process
large-diameter (40–50 cm) red meranti and keruing, sell their entire output outside the area- much of
it reportedly ending up in Malaysia. Wadley & Dennis (paper in preparation) note that timber
harvested by community co-operatives in western Kalimantan was apparently destined for Malaysia.
Casson's (2000) discussions with timber suppliers and buyers in Central Kalimantan appeared to
indicate that Malaysia is a key destination for timber from the area and that from Malaysia it is
shipped to China, Japan, Taiwan, Hong Kong, Belgium and Holland, the latter two acting as clearing
houses for the European market. While the reported destinations cannot be verified, they are
consistent with the secretary-general’s reports of cross-border trade.
12
Different manifestations of the illegal logging trade
This section examines different aspects of the illegal logging problem, and illustrates them from
studies made by organisations in Indonesia. Although no comprehensive survey data exist, some of
the ways in which illegal logging manifests itself are known to be more widespread than others, and
therefore more important to tackle. Some may be driven by injustice, necessity, or opaque property
rights and a lack of tenurial security, so that if solutions are not to bear harshly on poor people,
measures may be needed that go beyond simple forest protection by better policing.
Illegal logging by concessionaires
Forest exploitation in Indonesia is based on a system of forest concession licences (HPH) issued
for a period of 20 years. Although they only have 20-year rights, concessionaires are obliged to
manage the forest on the basis of a 35-year cycle, under the Indonesian Selective Cutting and Planting
System (TPTI). It is a system of selective felling designed to ensure re-growth of the logged-over
stand in time for the next felling. The concessionaires must submit an annual cutting plan to the
regional office of MOFEC, specifying where felling is to take place. The ministry approves these
plans and is supposed to ensure that the annual cut remains within pre-determined sustainable limits.
Even where it is strictly applied, as is very seldom the case, the system is a rather primitive and
imperfect method of yield control, but at worst it should leave a forest capable of eventually
regenerating itself.
The system is in fact subject to widespread abuse, which is in effect a form of illegal logging.
Self-reporting and the complicity of inspectors allow concessionaires to under-report the amount of
timber they harvest, so while records show that the harvests of timber remain within the legal limit, in
reality substantially larger volumes are removed. This abuse results in the removal of seed trees and
immature growing stock and in excessive damage to the residual stand. It undermines the potential of
the forest to recover and yield a second harvest, even on a much longer cycle than the intended 35
years.
To illustrate the likely extent of this form of illegal logging, Hariadi Kartodihardjo (2000)
examined log production statistics for the period 1977–98. His estimate of the illegal harvest is based
on the difference between the real and the reported production, and he found that annual average
unreported production was in the region of 12.8m m3 per annum.
Over-harvesting degrades the residual forest, making it easier to justify conversion to other uses,
such as industrial forest plantations (HTI), oil palm, or rubber (see also Corporate encroachment
below). Timber obtained from authorised clearings for conversion is very valuable, as it can be
marketed to the pulp industry, and attracts only very low taxes and levies. Apart from the initial overcutting, the sequence of forest degradation and loss is legal, and is encouraged by a series of perverse
incentives which reward the perpetrators of this environmental destruction at every step in the
process.
Illegal logging by concessionaires also includes encroachment into other concessions, protection
forest areas, and national parks. All types of encroachment are encouraged by inaccurate maps, which
leave overlapping claims unresolved and may be used to excuse opportunistic attempts to obtain
illicit timber. Even this excuse is not always used, and for example in Central Kalimantan one
concession was found to have laid a road straight through poorly stocked heath forest in its own
concession and to have begun operating deep into a neighbouring one. The presence of the other
concessionaires means that encroachments do not always go unopposed, but where they succeed they
undermine the management plans drawn up for neighbouring concessions,.
There is less opposition in national parks, where only under-funded conservation staff need to be
pacified. Inaccurate maps sow confusion over the exact boundaries, which allows incursions to be
13
made deep into the parks. This confusion is used to explain what has happened in both Kerinci Seblat
National Park and Gunung Leuser National Park in Sumatra. Once a log-transport infrastructure has
been laid out by concessionaires encroaching into a protected area it is easy for unlicensed loggers to
gain access (see Small-scale illegal logging by local people, below).
Illegal logging by concessionaires is encouraged by the many perverse incentives, including the
requirement to manage a 20-year concession on a 35-year cycle, the absence of secure tenure, and the
frequent reallocation to other uses (such as plantations and transmigration schemes) of forest that has
been logged over early in the management cycle. These features negate the possibility of managing
the concession over a second felling period and encourage "management" aimed only at short-term
gain. Frequent and ill-considered changes to government policy in the sector, such as the recent
proposal to nationalise all forest concessions, have the same effect. Although mills and concessions
are controlled by the same companies, the concessions are often seen as only a secondary aspect of a
timber group’s overall business, and are compelled to provide timber for wood processing plant
regardless of the impact on the concession, however short-sighted this attitude may be.
Small-scale illegal logging by local people
Timber harvesting without a licence is illegal, and until recently the law explicitly made it
impossible for forest fringe communities to obtain rights to exploit the forest which they had once
thought was their own. Under the Soeharto New Order industrial policy, huge areas were granted to
big business and export-oriented industries, and village lands (often including the settlements
themselves) were incorporated into forest concessions drawn on old and inaccurate maps. Overnight,
timber resources once taken for granted were – according to the law – placed beyond reach. This sort
of law of course invites “unlawful” behaviour by its victims. Subsequently, among forest fringe
communities, the introduction of chainsaws, the erosion of informal local laws, and the arrival of the
market economy have increased both the desire and the ability to harvest timber for commercial gain.
Illegal logging by these communities has then greatly increased the threat to the continued existence
of the forests. Disregard of the law becomes in itself part of a great social malaise.
A somewhat similar state of affairs may arise in areas that are put under protection for purposes
of nature conservation, particularly the national parks. The government’s motivation is entirely
different, but the effect on the local communities may be much the same. It becomes illegal for them
to use the forest, especially to gain a living from logging. Similar problems are well known to
conservationists in many countries, and different solutions have been found, adapted to the particular
circumstances of each case.
“Small-scale” logging is possibly the most difficult to tackle, given the large number of
operators and the diverse motives (including poverty and a lack of alternatives) that drive them. The
problem is also complicated by the frequent involvement of outside capital and by backing from the
police and military. Cases have been documented where loggers end up in debt to middlemen, and
must continue logging to pay back loans by deductions from the low wages they earn for their labour.
In other cases, however, timber harvesting simply provides an occasional and supplementary form of
income, undertaken free from the interference of outside parties. In surveys undertaken during the last
three years the Proyek Hutan Kemasyarakatan Gunung Palung (Proyek HKM) has found examples of
both of these outcomes.
Case study: Trends in Small-Scale Illegal Logging from the Gunung Palung Region of
West Kalimantan1
1
This section is based on the work of the Proyek Hutan Kemasyarakatan, Gunung Palung, West
Kalimantan. The authors are acknowledged in the foreword to this report.
14
Gunung Palung National Park (GPNP), covering 90,000 hectares, is the only national park in
Kalimantan that encompasses a continuous gradient of ecosystems, from montane cloud forest to
coastal mangroves. The park also contains the largest remaining area of lowland forest in the
province, and due to low hunting pressure hosts high densities of endangered mammals such as
clouded leopards, sun bears, proboscis monkeys, and the largest population of wild orang-utans in
Kalimantan. As with many of Indonesia’s protected areas, there are numerous threats to GPNP and its
associated buffer-zone including a high incidence of illegal logging and wildfires. The park also
suffers from poor management, and as a result of short-sighted regional land use planning, the
majority of its forested buffer zone is currently destined for conversion to oil palm.
In an attempt to help conserve the park, Harvard University's Laboratory of Tropical Forest
Ecology was invited to implement an integrated conservation and development project in 14
communities living along the north-west corner of the park. In 1998, the resultant project–Proyek
HKM Gunung Palung–carried out a village census in 11 communities and a more detailed household
survey among six. This was followed in late 1999 by interviews with forty illegal loggers. Two
separate studies of illegal logging intensity were also conducted over the same period, in which tree
stumps were identified to species level, assigned an age, and their diameter measured.
Data collected in 1990/91 in the four villages of Benewai Agung, prior to the commencement of
Proyek HKM, when compared to data collected in the 1998 socio-economic survey, reveals a
dramatic increase in the number of households involved in logging. In all four settlements, both the
total number and percentage of households earning a substantial portion of income from logging
increased across the study period, indicating that logging is increasingly important as a source of
local income, and that population growth and migration alone have not caused the rise in total
number of households logging.
Table 8. Logging activities in Benewai Agung
Total number of households receiving a
substantial part of their income from logging
(legal and illegal)
Percentage of total households
1991
1998
% increase
142
235*
65%
27%
38%*
41%
* The figures include only households whose primary source of income is logging. The later survey indicates
that an additional 9% of them earn a substantial, but not primary income from this source. If this is taken into
account, the estimated percentage of households receiving a substantial part of their income from logging is
47%, or a 74% increase.
Source: Data for 1991 from Salafsky (1993).
The increasing importance of illegal logging has come at a time of massive job losses in the
legal forestry sector. At the time of the 1991 survey, at least six timber concessions were active in the
region. By 1998, none were active and the loss of legitimate opportunities to work as a logger means
that the actual increase in localised illegal logging is greater than the 41% increase reported in the
survey.
Not only has there been an increase in the number of households logging, the amount of timber
sold by local, small logging teams has increased substantially. Groups are working more often, for
longer periods of time, and, with the widespread availability of chainsaws, are able to harvest larger
volumes of timber (see table 9).
15
Table 9.
Changing logging intensities
1990-91
1999-2000
Forest Type
Swamp
Swamp
Swamp, Lowland, &
Hill Dipterocarp
Team Size
6
5.4
4.6
Tool for Felling Trees
Hand Axes/Chainsaws
Chainsaws
Chainsaws
Average Trip Length (days)
14-21
38.3
29.4
Average Volume Sold
10-20
50.3
40.6
Price Received per m3
Rp. 15,000-35,000
Rp. 40,000-350,000
Rp. 40,000-350,000
Average Revenue
Rp. 200,000-400,000
Rp. 5,249,714
Rp. 5,465,033
September to January
Year-round
Year-round
per team per trip (m3)
per team per trip
Time of Year Logging Occurs
Source: Data for 1991 from Salafsky (1993).
In the past, logging teams were small in size (4-6 people), from local communities, and
performed all of the associated tasks, from felling and skidding to marketing. Recently though, in
addition to these groups, large, well-organised teams have begun logging in the region. Businessmen
from as far afield as Sarawak in Malaysia finance powerful local operators to recruit and manage
logging teams. Bosses contract groups to complete different tasks; one team to build railways,
another to fell trees, others to pull wood to waterways, and a team to float wood down river. These
groups can be as large as 90 individuals, often attract workers from other regions, and typically stay
in the forest for months at a time.
This emerging trend, with its associated increase in financing, affects the level of damage
associated with illegal logging in the area (parameters such as harvesting intensity, area utilised and
species selection greatly differ). Large, well-organised groups fell a far greater number of trees than
smaller, independently financed groups have in the past. Additionally, large groups are able to enter
much further into forests to extract timber. While smaller groups tend to fell trees within a few
hundred metres of rivers, larger groups have been observed up to eight kilometres from rivers (table
10).
Table 10. Changing logging intensity (1981-1999)
(1981-96)
(1997-99)
Small (4-8)
Large (30+)
Harvesting intensity (trees/ha)
2.41
8.41
249
Average stump distance from river (m)
282
1554
451
Percentage of stumps more than 500 m from river
20
97
385
Logging team size (number of people)
16
% change
A clear distinction between logging group size is the selection of timber species. Larger groups
focus on a limited number of species and can quickly remove nearly all mature trees of those species
in a stand. In study site II loggers cut 80% of the basal area of ramin (Gonystylus bancanus) greater
than 35 cm dbh from an area of 150 hectares, over a period of two years. Unchecked, this high
logging intensity could lead to extirpation of valuable timber species–as in the case of gaharu
(Aquilaria malaccensis) and belian (Eusideroxylon zwageri) –and lower the value local people place
on standing, mature forest.
Income Levels and Wealth
Community members report a surprisingly large income from illegal logging activities. In 1999,
average earnings for labourers (excluding chainsaw operators) was approximately Rp510,000 per
trip. The average logging trip length was 29.4 days and villagers reported working an average of six
trips per year. Therefore, in 1999, the mean yearly logging income for labourers was Rp3,060,000.
Chainsaw operators reported earning approximately 4-5 times that salary, or a conservative estimate
of Rp12,240,000 in the same year. From informal discussions with local logging bosses and loggers,
Proyek HKM estimates that logging bosses sell illegal timber to sawmills for twice the price paid to
villagers. It should be noted that logging bosses may finance more that one team at a time.
Although the income earned by illegal loggers is seemingly high, a generated wealth score from
the 1998 survey reveals that loggers are disproportionately poor (see graph 1). When divided into
wealth categories, logging families were over represented among the poorest families. Additionally,
logging families were less likely to be considered wealthy in their communities. The logging survey
also found that 92% of loggers reported being in debt to either their logging bosses, money lenders,
food and petrol shops, or to many of these people at the same time.
Graph 1. Wealth classes in the survey area
Source: LTFE (1998). Baseline Socio-economic Status Report
60
% in Wealth Category
50
L o g g e r : Po o r
40
O v e r a ll: Po o r
30
L o g g e r : w e a lth y
20
O v e r a ll: W e a lth y
10
0
Ma ka mu r
M a ta n R a y a
R a n ta u
Pa n ja n g
Sedehan
S e m a n ja k
T o ta l
V illa g e
Local Causes
Three major local causes of illegal logging have been identified in the course of the studies,
namely the ease of access to the forest, the physical infrastructure left behind by forest concessions
formerly active in the area, and local economic conditions.
17
Ease of Access
Local communities have easy access to forests in and around the park, and few physical barriers
exist to bar their entrance. In 1998, over 8,500 people lived within a day’s journey of the north-west
corner of the park. Furthermore, a paved road constructed in 1992 has significantly increased ease of
access for communities from further afield. There are effectively no deterrents preventing villagers
from entering protected forests, few guard posts and checkpoints exist around the park, and those
built are typically unmanned. Rivers providing access to forests and transportation for illegal wood
are rarely patrolled and never guarded. As a result, local forests are treated as an open, free resource.
No external costs are associated with illegal logging - no taxes are paid and weak law enforcement
means that no pressure is exerted on loggers to stop their activities. The absence of law enforcement
means that villagers believe they may log illegally with impunity, and the involvement of local police
and the military in the trade further feeds local perceptions of the weakness of state laws.
Although locals acknowledge state ownership of forests, villagers often state that they have the
right to utilise forests close to their communities. Local people have traditionally utilised nearby
forests for timber and NTFPs, and believe that the state does not have the authority to supersede local
rights.
Scaling up the practice of timber harvesting for domestic purposes into commercial operations
requires little additional investment. Capital-intensive methods of harvesting, such as building
logging roads and hiring trucks are costly and infrequently used in the area. Loggers instead construct
a low cost temporary wooden rail line (jalan kuda-kuda) without the use of metal rails, ties, or
chainsaws. These rails can be used to profitably extract wood as far as three kilometres from
waterways. Other methods, such as using bicycles or large carts, can efficiently transport wood
upwards of ten kilometres without the need for motorised equipment. Chainsaws are widely available
locally - many villagers own their own, and those that don't can easily rent. Any additional capital
needs can be met by local logging bosses, money lenders, and outside business interests, and with
eight local sawmills and numerous wood traders in the area, there is never any problem marketing
timber.
The Legacy of Forest Concessions
At least six companies were granted timber concessions in the GPNP region. Operations began
in the late 1960s, but by the mid-1990s all but one had abandoned the area. These companies left
behind an infrastructure which has fostered the development of an illegal logging industry in the park
area. Most importantly, the companies built sawmills in the region, many of which are still active
today. Legal sources of timber have sharply declined and sawmills now accept illegal timber to keep
operating. The companies also cleared vegetation from riverbanks and constructed logging roads,
both of which have improved the ease of access to remaining forested areas.
Employment by timber companies was once an important aspect of the local economy, and
attracted migrants into the area. Many of the young men who came in search of work from other
regions in West Kalimantan have settled permanently in the area and along with many longer
standing residents of the area consider logging to be their occupation. When the concessionaires left
the area in the 1990s many such people were left without jobs and had little choice but to begin
illegally logging local forests.
Local Economic Conditions
The change from an economy based on barter to a market economy based on cash within the last
twenty years has also promoted illegal logging. Residents of the area now need a cash income, of
which there are few sources. Logging can provide a steady source of relatively high income for
individuals that have little capital. Working in sawmills, fishing, collecting NTFPs and sharecropping
all pay, however these activities generally do not pay as well as logging. Buying additional farmland
18
is expensive and beyond the financial means of most villagers, while Indonesia's recent economic
crisis, which resulted in high inflation and further unemployment, has put an additional squeeze on
the area.
Concluding Remarks
From the results of our studies, it is clear that the local reliance, scale, and intensity of illegal
logging has increased greatly over the past ten years. We conservatively estimate that local villagers
in surveyed communities sold over 30,000 cubic meters of wood from the GPNP and its buffer zones
in 1999. As sources of timber continue to decline, illegal logging is expected to penetrate further into
the core zone of the park, reducing habitat quality for endangered species and increasing the chance
of catastrophic wildfires. Without radical changes in forest policy, management, and the political
will to reduce illegal logging, both the future of local protected forests and the people who currently
depend upon them look bleak.
Large-scale illegal logging by third parties
Incidents of large scale logging by third parties have recently been well documented in the
media. There is a blurred distinction between illegal logging by third parties and illegal logging by
local people, discussed above, since in both cases the loggers themselves are poor, mostly local
people. Timber exploitation for commercial gain is nearly always orchestrated by local businessmen,
government officials, and the security forces. The difference between this type of illegal logging and
what is thought of as “local” lies in the degree of outside organisation, the scale of operation, and the
distribution of the benefits.
A well known example of this “third party” type of logging is to be found in the Tanjung Puting
National Park in Central Kalimantan, especially famous for its many primates, including the orangutan. It has been the focus of considerable international, national and local press concern. Two
NGOs, the Environmental Investigation Agency (EIA) and Telapak Indonesia have investigated the
illegal logging and have provided detailed information in two campaign reports.
Illegal logging in Tanjung Puting National Park was initially directed at Ramin, but has now
moved on to other species as a result of growing local scarcity. Ramin is a tropical hardwood which
occurs in lowland freshwater swamp and peat swamp forests. It commands a high international price
and as a result has been highly sought after to a point of dangerous over-exploitation. Its use in luxury
items means that ramin products sell for anything between $600-$1,200 per cubic metre. In
interviews with EIA/Telapak, an official of the company suspected of backing illegal logging in the
park, PT Tanjung Lingga, talked of plans to export ramin blinds to the United States for $1,200 per
cubic metre.
Despite this high value, the EIA/Telapak found that loggers in the national park were paid only
Rp25,000 for every cubic metre of ramin hardwood. In other parts of the park, interviews revealed
that chainsaw operators received Rp12,000 for each tree felled, while lorry drivers received Rp10,000
per cubic metre, and teams of labourers Rp25,000 per cubic metre. Local logging bosses buy timber
for around Rp50,000 per cubic metre, then sell it on to sawmills for approximately Rp250,000 per
cubic metre. The inequitable distribution of income from the trade is self-evident (EIA/Telapak,
1999).
An investigation by EIA/Telapak in the Leuser ecosystem found similar inequities, with logging
teams tied to local sawmill owners on highly unfavourable terms. Loggers work in two-man teams,
are provided with a chainsaw and fuel, and typically borrow Rp150,000-Rp200,000 per week for food
and cigarettes. The assistant is paid Rp10,000 per day. Provided production targets are met, at the end
of an average week's work the team leader will earn approximately Rp175,000 after re-paying credit
from the sawmill owner and paying his assistant (EIA/Telapak, 1999).
19
Besides documenting the illegal activities in print, on video and in photographs, these NGOs
have fought an active campaign through the media, the donor community and the Indonesian
government. To date at least eight foreign film crews have visited the park.
Such high-profile campaigning and detailed information has elicited promises from the
government to stop illegal logging in the park, and to use the law to hold responsible the third party
alleged to be organising the logging, the businessman Abdul Rasyid (EIA/Telapak, 2000). These
promises have come from the President, two successive Ministers of Forestry and Estate Crops, the
Attorney General, and the former Governor of Central Kalimantan. Nevertheless, despite occasional
shows of activity against some sawmills and loggers, illegal logging has continued, illegal sawmills
have reopened, and Abdul Rasyid’s operation has remained relatively untouched (EIA/Telapak,
2000).
The logging in Tanjung Puting has become a test case which raises important questions as to the
actual ability of central government to protect National Parks, which remain under its jurisdiction
despite decentralisation. Central Kalimantan is recognised by many as being governed by “moneypolitics” and Mr Rasyid has been appointed to the Peoples Consultative Assembly (the national
parliament’s upper house) since revelations of his illicit business activities first came to light. Many
incidents have occurred which show that judicial decisions in the province can readily be bought.
Such a climate of corruption has considerably benefited the illegal activities which have been going
on under the noses of the military and the forest department. It has been made clear for more than two
years that many officials are actively involved in the logging, sometimes as sponsors of illegal
logging gangs.
Of even greater concern in the Tanjung Puting case has been the way in which it illustrates in
Central Kalimantan, and by inference in other parts of Indonesia, just how a powerful local figure has
been able to use his wealth and influence to remain beyond the reach of the national law. Under a
package of regional autonomy measures due to be implemented in 2001, regency and provincial
governments will receive considerable devolved powers, but if powerful local figures are able to
exert such a strong influence over the local parliaments, bureaucracies, courts and security forces,
then it is likely that the legislation will also further empower these people, put them further beyond
the reach of the reform forces in Jakarta, and result in a further rise in illegal logging in the era of
autonomy.
Bending the rules
As well as the misuse of IPK permits by big business (see Corporate encroachment), another
method of wrongfully exploiting forest resources has come into existence under the 1999 Forestry
Law. This particular abuse lies firmly in the grey area between illegal logging by local communities
and illegal logging by third parties, described above. Local communities can be organised into cooperatives for opening forested areas for agriculture or plantations (often cocoa and coffee). Under
the new law, the co-operatives are then entitled to IPK for harvesting the timber existing on these
lands before conversion to agriculture or plantations. IPKs for up to 100 ha can be given out at the
district level. Since March 1999, the total of applications for IPKs from co-operatives in Berau has
been for more than 11,000 ha (Obidzinski & Suramenggala 2000a).
Small scale entrepreneurs in Berau, who organise co-operatives explained to Obidzinski &
Suramanggala (2000a) that their operational strategy is to identify places with good supplies of BBS
timber, negotiate with local communities who may claim rights to these areas, and begin logging
before the permit is received, in order to present the authorities with a fait accompli. Obidzinski &
Suramenggala (2000a) conclude that this implies that timber exploitation rather than conversion to
other uses is the main objective. This report is consistent with the admission by entrepreneurs that
payments are made to forestry and security officials (police) who visit the site before granting the
IPK, although such payments are not legally required. Entrepreneurs told Obidzinski & Suramanggala
(2000a) that payments of about ten million rupiah are required for setting up a co-operative. These
funds are increasingly provided by organisations whose stated objective is in fact to assist
20
communities obtain permits for establishing co-operatives. Facilitation fees equivalent to 19% of the
selling price for BBS timber are paid to these organisations. Obidzinski & Suramenggala (2000a)
were told that political parties competed to sponsor such organisations, presumably with the objective
of winning political support at the local level. Although no concrete evidence exists to support such
allegations, they raise the possibility that the rapid increase in community co-operatives may be being
driven by investments from outside the communities and that the motivation behind these investments
may be political as well as financial.
A similar system, based on local co-operatives, is reported by Wadley & Dennis (paper in
preparation) from areas bordering the Danau Sentarum National Park, West Kalimantan, near the
Malaysian border. In this area however, it is mainly selective logging of valuable species that is being
done at present, although some small-diameter timber is also removed. This logging is apparently
financed by Malaysian entrepreneurs and the timber is trucked across the border into Malaysia.
Wadley & Dennis report that although co-operatives claim they have IPK permits, they were unable
to produce them. None of the co-operatives even claimed to have export permits.
Illegal logging under regional autonomy
In April 1999, in compensation for the wrongs and insensitivities of Soeharto era development
policy, the government of President B.J. Habibie passed legislation creating a timetable and
framework to decentralise Indonesia's authoritarian and highly centralised government. The
legislation was introduced to defuse the increasingly assertive secessionist movement which had
crystallised around the existing provincial structures in the resource-rich regions of Sumatra,
Kalimantan, Sulawesi and Irian Jaya (Papua). In the more open environment of post-Soeharto
Indonesia, local politicians and community leaders in these regions have been able to voice their
resentment of the central government's control over revenues from timber, oil, gas, and other mineral
resources. Although it is too early to determine whether the legislation will prove sufficient to
appease this deep-seated resentment, it is at least clear that if Indonesia is to survive as a unitary
nation-state, changes must be made to the balance of power between the centre and the regions.
Law 22/1999 on Regional Autonomy and Law 25/1999 on the Fiscal Balance between the
Central and Regional Governments set out the broad arrangements for decentralisation. It is proposed
that the regency (Kabupaten) and municipality (Kotamadya) governments will be vested with
considerable powers. There have been questions over the capacity of regency governments to perform
the complex range of new duties required of them by the new legislation. Although the provincial tier
of government has largely been bypassed by the legislation, practicalities (and its stronger capacity)
make it likely that it will in fact play an important role under the decentralised arrangements.
Despite its alleged flaws, some analysts believe the legislation has the potential to strengthen
democracy. Government will be brought closer to the people, helping to create "miniature
democracies" with a triangle of accountability joining local electorates, parliaments and executive
bodies, or so the theory goes. The greatest threat to this ideal lies in "crony capture" of local
institutions and the creation of fiefdoms that will replicate only the worst aspects of current central
government structures and practices, such as the problems in Central Kalimantan described above.
Given that Indonesia has about 350 regencies, it would be next to impossible to control policy, steer
reform and ensure legal certainty under this worst case scenario. To date, efforts to eliminate the
systemic legislative flaws which so encourage corruption in Indonesia have focused almost
exclusively on central government (and at that have had little impact) leaving institutions lower down
in the government hierarchy unaffected.
The programme of decentralisation proposed is almost unprecedented, and no country,
developed or developing, has ever set out to decentralise so many services, in so many sectors, in so
short a time. This apparently over-ambitious programme has led to deep uncertainty, and there is little
reason to believe these massive changes will work smoothly when they take effect next year. To meet
the deadline a punishing (and unfeasible) schedule has been set to review all government functions,
capacity, and staffing, including the transfer of up to 500,000 civil servants from central to local
21
government. Local government finance must also be completely overhauled. Amid the administrative
confusion and centralised bureaucratic resistance which has surrounded this decentralisation process,
there has been a growing tendency for local government officials to take the initiative into their own
hands and in particular to take unilateral action to assert their authority over natural resources in their
jurisdictions.
With emboldened local politicians asserting their rights to manage natural resources, the central
government has been left with diminishing control. As a result there are growing signs of tension
between central and regional governments. While the centre can attempt to influence the regions
through policy statements, it is the regions that have de facto control and hold the stronger bargaining
position. Many local governments have sensed this turn in their favour, and are asserting their newfound (but as yet unofficial) authority by staking claims to greater involvement in the management
and taxation of local business. Attempts to strong-arm high-profile foreign investment projects
(particularly mining interests) in remote areas have received widespread coverage in the media.
Conflicts surrounding mining projects such as Freeport in Papua, Newmont Minahasa in North
Sulawesi, and Kaltim Prima Coal and Kelian Equatorial Mining in East Kalimantan have received
widespread analysis and attention. What is less well known is that the forestry sector and forest
exploitation are facing a similar set of challenges and issues.
In the forestry sector, which in many ways has always been beyond the reach of the central
administration by virtue of the remote location of the concessions, the strong political backing
enjoyed by major concessionaires, the involvement of the military (in both legal and illegal forest
exploitation), and the de facto control exerted by local interested parties. To generate much needed
income, local governments appear to be levying unofficial taxes on illegal timber – which effectively
legalises the trade. In parts of Kalimantan there are anecdotal reports of Regents (Bupati, who hold
the state executive power in each Kabupaten) taxing shipments of timber that leave the areas under
their jurisdictions. There are also reports of attempts to levy unofficial taxes on NTFPs produced by
smallholder farmers in Lampung.
In Central Kalimantan, Casson (2000) reports that one district head has imposed a tax of Rp
125,000 per cubic metre of timber transported by ships to destinations outside the regency, without
the nationally required documents. This imposition is said to have yielded a revenue of Rp 21.6
billion during April and May 2000 compared with an annual revenue of Rp 5 billion raised by the
previous district head (Casson, 2000). The tax has since been increased to Rp 160,000 per cubic
metre, and is expected to be increased further, given that it is still lower than the tariff that applies to
truly legal carriers (Rp 192,000).
As it is now implemented, the tax may be acting to some extent as a disincentive to illegal
logging. Casson (2000) reports, for instance, that timber buyers complain that it has increased the
price they have to pay for timber. On the other hand environmentalists strenuously oppose the tax,
claiming that in effect it legalises illegal logging, given that the district head is reportedly trying to
ensure that once the tax is paid, illegal timber is accepted in other Indonesian ports. If he succeeds,
this will counteract the disincentive effect of the tax by reducing the unofficial payments illegal
operators have been paying in these ports.
For a tax to reduce incentives for illegal logging effectively, it would have to be high enough to
bring the profitability of illegal logging into line with that of legal logging. This is unlikely to be
achieved by merely equalising local “taxes” with those paid by legal carriers. Illegal logging may be
cheaper than logging by concessionaires because of the nature of the technology. In addition, other
significant rents are generated by illegal logging which would also have to be mopped up by the tax.
Dissipation of rents in theory would reduce unproductive rent-seeking activity and therefore
incentives for corruption. However, as Cohen (1988) points out, studies in economies susceptible to
corruption show that excessively high penalties for illegal activities stimulate avoidance methods and
therefore corruption. The implication is that taxes have to be supplemented with a greater
commitment to reducing corruption. The significant revenues collected at the district level from taxes
22
on illegal logging show that effective enforcement will require commitment at the district level to the
sustainable management of forest resources.
Available estimates of rents (ie, earnings received without productive activity) from illegal
logging do not appear to capture all unofficial payments. However they indicate that unproductive
rent-seeking activity comprises a significant part of the economic activity generated by illegal
logging. Given that the recipients of unofficial payments include the police, army and government
officials, the estimates also indicate that a wide variety of people at the district and provincial level,
in addition to company employees, may be benefiting unproductively, which implies that illegal
logging may be difficult to eradicate unless mechanisms are identified for dissipating these rents.
Preliminary estimates indicate that unofficial payments made by large sawmills in Berau amount to
about 50% to 75% of wage expenses, while in the case of medium-sized sawmills they are about 20%
of the wage bill (Obidzinski & Suramanggala 2000a). Small sawmills in Malinau were estimated to
be paying out just over 50% of their wage bill, or 16% of total running costs, in unofficial payments
(Obidzinski & Suramenggala 2000b). Timber traders in South Aceh and Kalimantan made unofficial
payments during transport of their products, equivalent to about 10% of their sales revenues. In the
case of community co-operatives, in addition to the unofficial payment of Rp 10 million made to
obtain the IPK permit, facilitation fees amounted to about 12% of their wage bill (Obidzinski and
Suramanggala 2000a).
Encroachment by small scale and subsistence agriculture
Encroachment by smallholder farmers into forest areas is both a serious and an emotive issue.
While each farmer clears only a small area of land, the net impact of many farmers clearing small
plots or practising shifting agriculture (swidden, or slash and burn) is very damaging to the natural
forest. However, this particular form of unlicensed logging and forest clearance is practised by people
who are often poor and rarely have any choice over the way in which they earn a living. Clearing land
by burning, which is the usual method, contributes to the annual haze which covers parts of
Indonesia, Singapore and Malaysia, but small farmers have in the past been used as scapegoats for the
larger and more destructive fires set by large plantation companies.
At low population densities shifting agriculture is sustainable and sometimes enhances the
biodiversity of an area. With growing populations it becomes a less efficient way of cultivation.
Studies have found that it is extensive in terms of its land requirements, which reflects the
circumstances of abundant land, in which the system evolved. Although land is no longer abundant,
use of this system of cultivation is still widespread, in part simply because those who practise it have
few alternatives.
The absence of secure title provides a further incentive to clear forest land and establish crops.
This is particularly true in the face of external threats, including that of land being taken up by central
government projects such as industrial forest concessions. Transition to a market and cash-based
economy has also contributed to the environmental impact which small-scale agriculture has on the
natural forest. The cultivated plots were formerly left fallow on a rotation typically of 10−15 years.
This allowed secondary forest to recover before farmers returned to recultivate the area. The need for
cash income now encourages farmers to plant cash crops, particularly rubber, on the fallow. The
productive life of these plantations is longer than that of the old fallow, meaning that farmers must
continually clear new areas of pristine forest (Norindra, 1993).
Case study: Bukit Barisan Selatan National Park, Lampung2
2
This section draws heavily on work done by S. Suyanto (1999).
23
A study of fire and deforestation in the north-eastern fringes of Bukit Barisan Selatan National
Park in Lampung has revealed two sources of deforestation in the study site: the establishment of
coffee gardens by smallholder farmers and illegal logging (Suyanto, 1999). The establishment of
coffee gardens has greatly increased with migration into the area, in part inspired by the profitability
of coffee production.
The population of Lampung has increased dramatically since the 1970s. In 1971, the province
had a population of 2.8 million people, but by 1997 this had risen to 6.9 million. A large proportion
of the population are dependant on smallholder agriculture to make a living. Lampung lies in the
main coffee-producing area of Indonesia, and migrants to Lampung have been drawn to coffee
cultivation by buoyant domestic coffee prices. It is estimated that between 1977 and 1998 the real
domestic price of coffee increased by 11% per annum. From 1990-98, the real domestic price
increased by 25% per annum (Suyanto, 1999).
The combined pressures of population growth, demand for agricultural land, and rising coffee
prices have resulted in large encroachments into the protected area, with resulting forest loss.
Gintings et al (1999) estimate that natural forest now covers only 34% of Bukit Barisan Selatan
National Park. Population pressure in the area surrounding the park is very high, resulting in
encroachment into the protected area. The settler communities are not indigenous to the region - most
are migrants from other parts of Lampung or Java.
These migrant communities, some of which are permanent and some of which are seasonal, all
practice frontier agriculture, which requires clearing land. In Indonesia, the conversion of natural
forest to agricultural uses has often utilised fire in land clearing. Smallholders and large-scale
plantation managers prefer to use slash-and-burn methods in land clearing because it is cheap and
easy (Tomich et al 1998).
According to official statistics, fires damaged 100 ha of the study site in October 1997.
However, Suyanto (1999) estimates by the study suggest the true area could be closer to 500 hectares.
Forestry officials blamed slash-and-burn cultivators for starting the fires in order to clear land for
coffee gardens. This appears to be the likely cause, although careless behaviour by illegal gangs
operating in the area may also have contributed. Interestingly, there was no evidence of fires
spreading to existing coffee gardens, suggesting that the community-based communal laws designed
to regulate use of fire served their intended purpose. On the other hand, local laws provide no
incentive for farmers to prevent fire spreading to natural forest, and in fact burning forest
considerably eases the task of clearing new coffee land in the following year.
The study demonstrates the impact which smallholder encroachment into protected area can
have on forest cover. While those practising slash and burn agriculture often have little choice, the
aggregate impact of their actions is detrimental to Indonesia's environment. If protected areas are to
be maintained then strategies to mitigate the impact of smallholder agriculture will have to be given
consideration. Simply condemning these activities as illegal will not address the factors which
underlie the problem, and attention will need to be given to providing diversionary activities and
forms of employment which fully compensate for loss of livelihood resulting from conservation
policies.
24
Corporate encroachment
Encroachment into forest areas by corporate interests is a serious problem in Indonesia. It takes
many forms, including encroachment into national parks and conservation areas, which has been well
documented in the Leuser ecosystem. Sometimes encroachment is outright illegal, sometimes it is
backed up by the correct permits but in areas for which permits should not have been allocated to
commercial land uses – for example, a study in the Gunung Leuser National Park found that 80% of
the area allocated for commercial forestry was on land which should by law be classified as
conservation and protection areas. We must include as “encroachment” cases in which no law has
been broken but which have resulted from administrative mistakes, with very bad environmental and
social consequences.
There is a range of perverse incentives that encourage corporate encroachment into the forest
estate. A common one is that weak property rights over forested land provide ample incentive to
replace forest with plantation crops and so obtain the stronger land title which accompanies such
developments. In addition, companies that develop plantations commonly receive windfall profits
from the sale of cleared timber. Until 1998, industrial forest plantation projects (as opposed to
agricultural tree crops like rubber or oil palm) had the added boon of (highly perverse) subsidies from
the reforestation fund, which in fact encouraged the clearance of natural forest. Some of the “forest
plantations” that have resulted are of extremely poor quality; their purpose was not to grow wood
efficiently so much as to acquire title to land and obtain clear-felled timber.
The problem which encroachment has been presenting in recent years can be measured in the
national timber-production statistics by the growth in the importance of timber from clear-felling
operations. In 1994/95 timber from clear-felling operations (IPK) made up 20% of the total official
log production, and by 1997/98 the figure had risen to more than 34%. There is an alarming lack of
transparency with regard to clear-felling statistics, and it is not known what area of forest this in fact
covers.
Table 11.
Roundwood production (000 m3)
1994/95
1995/96
1996/97
1997/98
1998/99
Natural production forest
17,309
16,944
15,268
15,598
10,179
Conversion forest
4,709
5,398
8,021
10,038
6,056
Total production (incl. other
sources)
24,027
24,850
26,069
29,149
19,027
19.6
21.7
30.8
34.4
31.8
Conversion forest as % of total
Source: Ministry of Forestry and Estate Crops, Forest Utilisation Statistics 1997/98 and 1998/99
Figures for the development of cash crop plantations also give an indication of the pressure
brought to bear by the expansion of plantations (table 12).
25
Table 12
Plantation development, 1970-99
Area ('000 ha)
Year
Small
Holders
StateOwned
Private
Production ('000 tonnes)
Total
Small
Holders
StateOwned
Private
Total
1970
0
86.6
46.7
133.3
0
147
69.8
216.8
1980
6.1
199.5
88.9
294.6
0.8
498.9
221.5
721.2
1990
291.3
372.2
463.1
1,126.7
377
1,127.2
788.5
2,412.6
1995
658.5
404.7
961.7
2,025
1,001.4
1,613.8
1,734.7
4,350
1996
738.9
426.8
1,083.8
2,249.5
1,133.6
1,706.9
1,909.6
4,750
1997
813.2
448.7
1,254.2
2,516.1
1,292.8
1,800.3
2,287.4
5,380.4
1998
892
484.8
1,403.1
2,779.9
1,245.7
1,698.7
2,061.5
5,005.9
1999
972.7
489.8
1,494.5
2,957.1
1,326.6
1,830.9
2,501.5
5,659
Source: Casson (2000)
Any resumption of expansion in the palm oil sector after a recovery from the low prices in
1998/99 is likely to result in further encroachment into the remaining forest estate. This
encroachment may not be illegal, but it is nevertheless a significant threat to the remaining forest
estate. Sumatra is the main palm oil producing region of Indonesia, but attempts to develop the more
eastern regions of the country have resulted in some developments in Kalimantan and Papua. Casson
(2000) argues that ethnic unrest and poor infrastructure have discouraged oil palm investment in
eastern Indonesia, but that companies have shown an interest in obtaining timber from the clearfelling licences issued as part of the investment agreement, which in part explains why many of the
companies that have been granted investment licences in eastern Indonesia have strong links with the
timber and pulp industries. Breach of contract is also an issue, since companies receive a licence to
clear timber and develop plantations. Simply stripping the land of timber is not the end of a
plantation company's legal responsibilities, yet Casson reports that in West Kalimantan, up to March
1999 the government had issued permits for the development of 871,211 ha of oil palm, but only
18,278 ha had been planted. This can in part be explained by social unrest in the province, but it may
also be because clear-felled timber is the main objective of these “investment” projects. Barr (2000)
also claims that the national increase in IPK permits is in response to the decline in timber supplies
from HPH concessions, and that it is not uncommon for IPK-holders to abandon the sites once
commercial timber has been removed. Obidzinski & Suramanggala (2000a) report that cases of
“plantation” companies motivated mainly by timber extraction were widely publicised in the local
press in Berau. This is all consistent with the rapid increase in IPKs at a time when the world price of
palm oil has been falling sharply and the share of oil palm in Asia's edible oil market has been
declining (Casson, 1999).
While this paper is primarily about illegal logging, another violation of forest law–arson–is also
associated, on a very large scale, with oil palm developments. Fires in August 1999 and in March and
July 2000 have been linked to oil palm developments (including those involving some Malaysian
companies).
There have also been violations of land-use classifications. MOFEC reports that 4.1 million ha
of land has been converted to plantations since 1982. Of this total, 3.3 million ha was on land
classified as “conversion forest”, but 166,532 ha was on “limited production forest”, 455,009 ha on
“production forest”, and 129,449 ha on forest land designated for other uses. The land classified as
“production forest” and “limited production forest” is supposed to be part of the permanent forest
estate, and their use for oil palm plantations represents a significant and undesirable encroachment.
26
In Riau, MOFEC data show that about 1.25 million ha have been converted to plantations since
1982–more than three times as much as in any other province. The presence of two large pulp mills in
Riau gives rise to the suspicion that the object of clearance is not to develop plantations, but to obtain
clear-felled timber, upon which the pulp mills depend for a supply of raw materials. The second
largest area of forest cleared since 1982 is also in a province with a large pulp mill development–East
Kalimantan, which lost 400,000 ha under IPK clearing permits.
The pulp industry is a particularly interesting example of corporate encroachment into the forest
estate. In recent years, as the large-diameter logs required for plywood have become harder to find,
the major timber groups have turned their attention to pulp and paper production. Typically mills are
granted a limited supply of timber from the natural forest, which they can clear to make way for the
timber plantations (HTI) upon which their operations must depend in the long term. The pulp industry
has expanded aggressively throughout the 1990s, rising from an installed production capacity of 1.1
million t of pulp in 1991 to 4.9m t in 1999. One tonne of pulp requires about 4 cubic metres of
roundwood to produce. In many cases, plantation development has not proceeded apace with the
expansion of the industry, and pulp mills have come to depend on logs recovered from clear-felling
operations in the natural forest. Up to last year, only 21% (1.1 million ha) of the 4.9 million ha
allocated for pulp plantations had been planted. As a result the volume of roundwood coming from
clear-felling permits (IPK) rose from 20% of the official timber supply in 1995/96 to 10 million cubic
metres, or 34%, in 1997/98. In 1998/99 clear-felling operations accounted for about 32% of official
timber production, according to official statistics. The use of fire to clear debris from land after these
clear-felling operations is one of the main causes of the vast conflagrations which recur annually in
Sumatra and Kalimantan.
27
Impact of illegal logging on Indonesia
Huge potential revenues are being lost at a time when the central government’s economic policy
is heavily emphasising the need to strengthen the domestic revenue base. The wood-processing
industry, which is an important employer and export earner, faces an uncertain future as its supplies
of raw material dwindle, and the many people who depend on forests for a livelihood in the informal
economy are becoming increasingly vulnerable as a result of forest loss. The diminishing efficacy of
the protective functions bestowed by forests is resulting in increased erosion and flooding of cities
and agricultural land, and the “charismatic” animals that draw tourists to Indonesia and which are
emblematic of the country are faced with extinction. Traditional institutions, customs and spiritual
beliefs are also jeopardised as a result of rapid and uncontrolled forest loss. Some of these impacts
are examined in detail below.
Economic
There are no officially published estimates of what illegal logging is costing Indonesia in terms
of lost revenue. Basing his calculations on the current forest taxes and fees, the secretary-general of
MOFEC estimates that the annual loss of revenue amounts to $96-$120 million. However, for many
years Indonesia has undervalued its timber resources by protecting the domestic market for
roundwood, a fact which is reflected in the current rates of stumpage fee and obligatory reforestation
fund payments. If timber was valued at world market prices, the revenue would be greater, and so too
would the calculated losses from illegal logging. A study published in 1997 concluded that Indonesia
was losing about $2 billion every year in lost revenues. Of this total, $1.2 billion was as a result of
low taxes levied on the official roundwood harvest, and $600 million was as a result of non-payment
of tax on an estimate of the illegal harvest at that time (Scotland, 1997). Illegal logging has risen
sharply since that study was completed, and so the losses stemming from illegal logging are likely to
have risen even higher.
The costs of public subsidies advanced to enterprises which damage the forest must also be
factored into more comprehensive calculations of the cost to the state of illegal logging. Barr (2000)
argues that pulp producers have to a significant degree been motivated to invest large amounts of
capital in high-risk projects because the Government of Indonesia has provided substantial capital
subsidies for pulp and paper projects. Providing forest industries with cheap raw materials (through
low levies and other mechanisms) also encourages waste and inefficient use, which in turn result in
further resource degradation, and from the early 1990s, direct subsidies issued by the Ministry of
Forestry and Estate Crops from the reforestation fund to help firms establish pulpwood plantations
also inadvertently encouraged clearance of the natural forest. The Ministry of Forestry typically
provided industrial forest plantation projects with 14% of the project's total cost in the form of equity
capital and 32.5 percent in the form of an interest-free loan with a repayment period of 10 years. In
addition, plantation companies were permitted to draw on loans from the DR fund at commercial
rates to finance 32.5 percent of the project's expenses. This arrangement effectively allows the firm
establishing the plantation to commit only 21 percent of the overall investment from its own funds
(Barr, 2000). These generous financing arrangements encouraged companies to apply for licences to
clear land and attempt to develop (often unsuccessfully) pulpwood plantations at state expense.
The Indonesian government has also provided indirect subsidies to environmentally damaging
investments through the weak regulation of the nation's financial system (Barr, 2000). Most of
Indonesia's major forest and plantations enterprises are owned by large conglomerates with
investments in a range of other sectors. Many of these conglomerates control their own banks. In the
years leading up to the financial crisis, the government regularly failed to enforce its own laws in the
commercial banking sector, particularly when they threatened to constrain the lending practices of
banks owned by groups with ties to state elites. Indonesia's largest timber conglomerates and oil palm
companies have taken advantage of this weak regulatory environment to obtain large sums of finance
well below commercial lending rates. They have done so most significantly through the allocation of
28
related-party loans above the government's legal lending limits, the misappropriation of Central Bank
liquidity credits, and the use of financial mark-up schemes (Barr, 2000). Many of these debts will
never be repaid and will instead be written off at state expense.
Forest fires
Illegal logging is compounding forest loss in a number of ways. In some cases it leads directly to
the denudation of land, but more commonly it degrades forest that has already been logged over,
eliminating the prospect of a recovery in the logged-over stand, and making conversion to other land
uses appear more attractive than awaiting the second timber harvest. Logging in protected areas
makes their forests more vulnerable to damage or destruction by fire. Studies have shown that fires in
logged-over forests cause more damage than those in unlogged forest because of the additional fuel,
in the form of rotting wood and logging slash, which litters the floor after logging.
Perverse subsidies which encourage land clearance, and the manipulation of legislation to allow
land clearing are also linked intimately to the problems posed by forest fires. Fires are the favoured
method of clearing land in Indonesia, and in dry years, such as 1997/98, caused enormous damage.
Estimates of the area burnt in the forest fires of 1997/98 vary considerably according to source. The
National Planning Board (Bappenas) reports that in 1997/98 the areas burnt were: Sumatra, 1.7m
hectares; Kalimantan, 6.5m hectares; Java, 0.1m hectares; Sulawesi, 0.4m hectares; and Papua, 1.0m
hectares. Areas burnt included 0.1m hectares of montane forest, lowland forest (3.3m hectares), peat
and swamp forest (1.4m hectares), agricultural and open grassland (4.5m hectares), and timber
plantations and estate crops (0.3m hectares). It is estimated that during the 1997/98 fires, over 700
million tonnes of carbon was released into the atmosphere from the burning of peat. This elevated
Indonesia to one of the largest polluters of carbon in the world, and have prompted sarcastic
observations that the major product of Indonesia's forest sector is not plywood, pulp, paper or
sawnwood, but haze, carbon and smoke. On the basis of a benefit transfer model employed by
Bappenas total losses resulting from the 1997/98 fires were placed at approximately $9.3 billion. A
large part of this cost can be attributed to the various forms of illegal logging, encroachment and
abuse of legislation outlined earlier in this report.
Wildlife poaching
Wildlife poaching is a significant and tragic side effect of illegal logging as well as other
encroachments into the remaining forested areas. Indonesia is world-renowned for its biodiversity. It
lies astride the Wallace Line, the transition from Asian to Australasian flora and fauna, and it has
many endemic species. West of this transitional zone, there are the “charismatic” species associated
with the Greater Sunda Islands, including the orang-utan, Sumatran tiger, several species of gibbon,
Javan and Sumatran rhinoceros, the Sumatran elephant, and the clouded leopard. Unfortunately these
species, all slow to reproduce and demanding of large territorial ranges, are prized as pets, for
pseudo-medicinal purposes, and as trophies. The increased human–animal contacts resulting from
logging, encroachment, and habitat loss has resulted in their numbers plummeting, and in many cases
extinction is now a serious possibility. Orang-utans, tigers and elephants are all severely endangered
as a result. In the Leuser ecosystem, conversion of land to oil palm and illegal logging have
jeopardised the existence of the last remaining viable population of Sumatran elephants;
fragmentation of the habitat has resulted in turn in fragmentation of the population, and small herds
now live in isolated islands in numbers which are not sufficient to maintain a genetically healthy
population over the long term.
The main threat to orang-utan survival is habitat destruction and the secondary effects of this
destruction, which include an increase in the pet trade, poaching for food, and human–animal
conflict. With current rates of habitat destruction and forest loss, the orang-utan populations are
falling by more than 1,000 every year, a rate of loss that will lead to extinction within five years if
urgent steps are not taken. In the Leuser ecosystem alone, a survey has found that an estimated 2,785
29
orang-utans out of a total population of 5,350 have died as a result of human encroachment into their
habitat.
In 1992 there were thought to be only between 400 and 600 Sumatran tigers left in the wild.
Rampant poaching and rapid habitat loss now threaten to send the species the way of the Balinese
tiger, which became extinct in the early 1900s, and the Javan tiger, which died out in the 1980s.
Tigers are killed for their bones, which are valued for use in Chinese “medicine”. Skins also
command a high price on the black market, and cubs are still captured alive for sale as pets. The
eradication of tigers also has an adverse impact on human populations living on the margins of forest
areas because tigers prey on the wild boar, which rise in numbers if tigers are removed. Wild boars
are a very serious pest to subsistence farmers living in forest fringe areas. Human–animal conflict
results in many tigers being killed each year, but the great majority of encounters between people and
tigers are the result of ever shrinking tiger habitat.
Social
Illegal logging also has many adverse social impacts. Loggers work for poor wages and are often
in debt to their middlemen bosses. In the event of crackdowns on illegal logging it is the poor and
vulnerable at the bottom of the pyramid who lack the means to escape justice, and those who reap the
greatest benefits from the violation of forest laws go unpunished. This too has a very negative social
impact and undermines faith in state justice.
The operations of illegal logging gangs sometimes divide communities between those for and
against them. In the long run such conflicts can undermine rural support networks, customary (adat)
laws governing natural resource use, and ultimately lead to weaker social ties between neighbours.
Logging can also result in conflict between neighbouring communities. It has been reported that
the rush to claim small community concessions for clear-felling in East Kalimantan has resulted in
conflicting claims on the same area of forest being made by neighbouring communities.
Work undertaken by loggers and sawmillers is heavy and dangerous, and there are no health and
safety regulations to offer protection. For example, a CIFOR study found that employees of Central
Kalimantan sawmills were paid only Rp 30,000-50,000 per day for their hard and dangerous work.
Many cases were reported of workers losing their hands while manning band saws. Loggers operate
chainsaws under similarly dangerous circumstances.
Beneficial impacts
Illegal logging also generates some very beneficial social and economic benefits. The
importance of employment generated by illegal timber harvesting in rural economies should not be
underestimated. Illegal operations generate considerable employment both for villagers and for
migrants from surrounding areas, particularly as chainsaw operators and other labourers, in floating
wood down the rivers, and as truck drivers, sawmill operators, and administrators, in addition to those
who provide services, such as food vendors and mechanics. For what it is worth – and if a wide net is
cast it is plausible enough – McCarthy (2000b) reports that one informant estimated that each
chainsaw provided employment for 200 people. Although a full accounting of the employment
generated by illegal logging is not available, some preliminary estimates of particular operations are
provided by case studies, as follows.
Detailed calculations of wages in Obidzinski & Suramenggala's (2000a) sawmill survey in Berau
indicate that 28 sawmills of various sizes employed about 605 people, earning wages ranging from
Rp 225, 000 to Rp 1,000,000 per month. About 29% of these were permanent employees. In some
cases food and housing were provided in addition to wages. Obidzinski & Suramenggala (2000b)
estimated that some small sawmills in Malinau were employing a total of about 56 people, with
monthly earnings of about Rp 268,000. These earnings are comparable to the official minimum wage
in East Kalimantan of Rp 233,000.
30
Selective-logging teams surveyed in Berau each consisted of about six or seven people. Monthly
earnings ranged from about Rp 300,000 to Rp 500,000 each, while the leader was estimated to
receive about Rp 750,000 (Obidzinski & Suramenggala 2000a). Income from logging groups is
subject to work stoppages, equipment breakdowns, accidents, bad weather, and adverse floating
conditions. Many loggers therefore consider these earnings as only supplementing those from their
other activities. Income from logging BBS (soft, small-diameter) timber appears to be much higher
than from selective logging, presumably because of the higher rates of timber extracted in these
operations. Teams engaged in it consisted of about 8 to 11 workers, with monthly earnings of about
Rp 900,000 (Obidzinski & Suramenggala 2000a).
In South Aceh, according to McCarthy (2000b), logging teams comprised 6 to 15 workers. Some
villagers earned Rp 20,000 to Rp 30,000 per day in 1998 transporting logs. Although the work was
dangerous, it provided a valuable survival strategy particularly during the economic crisis and during
periods when income from other sources had declined (McCarthy 2000b).
31
Government strategy
Non-governmental organisations and donors active in the forest sector in Indonesia have been
expressing concern about malpractice and environmental destruction since the early 1980s. The
extent of the illegal logging problem facing Indonesia first came to light in early 1999 and has since
been given high profile media coverage as the result of a campaign run by Telapak/EIA. Concern
over forest destruction was first raised at a diplomatic level by donor countries grouped in the
Consultative Group on Indonesia (CGI) forum in Paris in July 1999, and again in February 2000.
In the February meeting of the CGI the government agreed to form an Inter-Departmental
Committee on Forests (IDCF) and to take action on eight points that have been identified as crucial
for saving Indonesia's remaining forests from rapid liquidation. The eight points 3 for action are:
1. To invite co-operation and co-ordination of other ministries to impose strong measures
against illegal loggers, especially those operating within national parks, and closure of illegal
sawmills.
2. To speed up forest resource assessment as a basis for National Forest Programme (NFP)
formulation.
3. To evaluate the policy in conversion forest and put a moratorium on all natural forest
conversion until the NFP has been agreed.
4. To downsize and restructure wood-based industries to balance between supply and demand
for raw materials, and most importantly to increase competitiveness of Indonesia’s wood-based
industry.
5. To close heavily indebted wood industries under control of the Indonesian Bank
Restructuring Agency (IBRA) and link proposed debt write-off to capacity reduction.
6. To connect the reforestation programme with the existing forest industries and those under
construction.
7. To recalculate the real value of timber.
8. To use the decentralisation process as a tool to enhance sustainable forest management.
Although the IDCF has now been formed, there has so far been little contact with other
government departments that have mandates giving them an influence over developments in the forest
sector. This is particularly true of the judiciary, the military and the police.
The government is also under pressure to reform the forest sector for budgetary reasons. Illegal
logging costs the state billions of dollars every year. The Memorandum of Financial and Economic
Policies sent to the IMF on 20 January 2000 sets out broad guidelines for economic policy over the
next three years. The government states, in consideration of receiving loans worth $5 billion, an
intent to "improve greatly natural resource management, arrest the long-term deterioration in the
environment, and ensure the sustainable use of natural resources for future generations".
Furthermore, fiscal reforms set out in the same document are designed to strengthen the domestic
revenue base and reduce the budget deficit. In the budget for 2000, announced on the same day, the
government stated an intent to follow a package of measures designed to strengthen the country's
weak tax base and achieve fiscal sustainability to reduce its reliance upon external sources of finance.
With rising sovereign debt (forecast to be $157.2 billion, or 91% of GDP by the year end) the
government can ill afford to squander the billions of dollars which are lost each year to illegal
logging.
3 Quoted from the keynote address by the Minister of Forestry and Estate Crops to the
Consultative Group on Indonesia, Jakarta, 2 February 2000.
32
Since the government made its commitments in the CGI forum in February, several steps have
been taken to combat illegal logging, although these efforts have to a certain extent been thwarted by
the wider problems facing the legal system. The government now acknowledges that illegal logging
involves a large and varied set of dispersed interests. Illegal logging is therefore not merely a problem
of forest management or a problem for MOFEC, but rather part of a multi-dimensional, national
problem. A national commitment along with consistent implementation is therefore needed in order
to effectively combat it.
Prevention
The government has publicly stated its commitment to controlling illegal logging and the illegal
trading in forest products, and to stamping out corruption. A number of policy initiatives and
measures have been launched, particularly over the last two years. These include:
1.
Making a commitment to eliminate illegal logging and corrupt practices.
2.
Revising forest laws and legislation, including promulgation of the new Forest Law, No.
41/1999.
3.
Making alterations to the procedures for allocating and monitoring timber concessions.
4.
Imposing a moratorium on the issue of new clear-felling timber harvesting licences (IPK)
(but not existing licences).
5.
Imposing a moratorium on forest conversion.
6.
A revision of administrative and monitoring procedures for logs transport (SAKO and
SAKB).
7.
Closer involvement with local communities and NGOs.
8.
Reform of revenue collection arrangements.
9.
Establishment of national and regional collaboration and co-ordination in law enforcement.
10. Co-operation with neighbouring countries, particularly in relation to controlling illegal
logging and the cross-border trade in illegal timber.
The new Forestry Law, No. 41/1999, which replaced the Basic Forestry Law of 1967, takes a
first step towards addressing some of the underlying causes of illegal logging, as well as outlining
legal action against violations of forest law and the penalties that may be imposed. Law No. 22/1999
on Regional Autonomy, and Law No. 25/1999 on the Fiscal Balance Between the Centre and the
Regions, may in the longer run also provide direct incentives for local government and local
constituencies to control illegal logging. By allowing provincial and district government greater
flexibility to design fiscal policy and retain a larger share of revenue generated from the exploitation
of local natural resources, it will arguably provide local incentives to uphold the principles of
sustainable forest management.
Since the early 1990s, the Indonesian government has taken a number of steps to tighten the
enforcement of forestry law and legislation. Despite these efforts, there are still many companies and
forest concessionaires that are not complying with the law. There is strong evidence that powerful
networks have been supporting illegal logging at both provincial and national levels. Timber
companies and sawmill owners at district level have obtained legal immunity by making payments to
local officials and the army. These powerful networks of vested interests have made the
implementation of regulations at the local level a very haphazard and complex undertaking.
The government's commitment to tackling the problem is also reflected in the establishment by
ministerial decree of an inter-agency team (P2LPHHI), to combat illegal logging and the illegal trade
in forest products. Team members come from a number of agencies including MOFEC, the National
Police and the Navy. The team is chaired by the secretary-general of MOFEC, Mr Suripto. In line
33
with this commitment, the government has been undertaking a systematic and consistent investigation
into corrupt practices in the forest industries. Documentation on corruption and illegal practices
involving former president Soeharto and his family and friends has been passed to the Attorney
General, and although no trials have yet taken place, the former president's close friend and associate
Mr Mohamad (Bob) Hasan has been held in special detention since early April as a result of the
team's efforts.
The government has also considered re-imposing export bans on roundwood and rough
sawnwood in order to help control illegal logging and the illegal trade in timber. Prohibitively high
export taxes on these two products were repealed in 1998 after being in place since the early 1980s.
Any discussion about re-imposing bans or restrictions always creates controversy, and many critics
argue that the true objective of these policies is to protect and promote the domestic timber
processing industries, rather than to improve the enforcement of forest laws. Other countries in the
region have also imposed restrictions on log exports and are retaining more of their logs for their
domestic processing industries. Those in favour of trade restrictions argue that banning the export of
unprocessed logs helps to reduce opportunities for malpractice (Richardson, 1981). Logging
restrictions in many Asian countries arise from concerns about the present rates of forest destruction.
In many cases, they are more specifically due also to concerns about illegal logging. Recently, there
has been strong pressure from MOFEC to re-impose an export ban on logs.
Steps are also being taken to tackle the international dimensions of the illegal trade in timber.
According to Mr Suripto, Malaysia and Indonesia have agreed to form a joint fact-finding mission to
investigate the cross-border trade in illegal timber between the two countries (The Jakarta Post, 14
July 2000). The joint mission is expected to investigate and collect evidence on illegal logging and
the timber trade in the region in which, it is alleged, Indonesian and Malaysian companies are
engaged under the protection of military and police personnel from their respective countries. The
bilateral joint fact-finding mission will include officials from the police and military of the two
countries as well as officials from the forestry ministries and local administrations.
In spite of these efforts, there has been no progress towards prosecuting any of the powerful
individuals engaged in the cross-border trade. The failure of efforts directed at both prevention and
suppression of the problem is also bound up in the broader problems facing Indonesia's legal system.
A corrupt judiciary and the widespread involvement of state officials and the military puts the
wrongdoers beyond the reach of the law. Only those without wealth and power can be brought to
justice, while the rich people who organise, finance and benefit the most from the trade evade
prosecution. The resulting difficulties in prosecuting those behind the trade (ie, suppression tactics)
appear to have undermined the motivation of those responsible for policing the forest. Why bother
trying to prevent illegal logging if those behind the trade cannot be stopped anyway?
There have been localised reports of increased law enforcement, but these appear to be isolated
incidents and there is little evidence of a general campaign in other parts of the country. There is one
field study that reports improved enforcement along the waterways in East Kalimantan by which
timber is transported to the Malaysian border (Obidzinski & Suramenggala, 2000b). Police and navy
units unfamiliar to sawmill owners are reported to be patrolling these areas along with joint
inspection teams from the Departments of Immigration, Forestry, and Trade and Industry, although
the impact of these new teams is unknown. This heightened state of alert does not appear to be
replicated elsewhere, and in Central Kalimantan for example the EIA and Telapak have taken video
footage of log rafts passing police and marine posts on the river leading out of Tanjung Puting
National Park, and illegal sawmills which process this wood operate on the riverbank adjacent to
these outposts of law enforcement. Also, in West Kalimantan, logs are blatantly transported by trucks
on a daily basis across the border into Sarawak (Wadley and Dennis, 2000).
The basis of all enforcement activities is legislation, but the Indonesian government lacks the
capacity to enforce existing legislation. This incapacity does not explain why unlicensed sawmills
can process stolen timber next door to security posts, but it does prevent adequate patrols and
investigations being undertaken in more remote areas.
34
Capacity to enforce forestry legislation is limited by a number of factors, including inadequate
human resources, weak judicial support to field staff, inadequate legislation, a failure to vest
enforcement powers in appropriate agencies, and a lack of resources for field enforcement personnel.
The number of forest guards (jagawana hutan) is reportedly only one for every 20,000 ha of forest
(ITTO 1990; Callister 2000). It is unrealistic to expect forest guards to be able to police such vast
areas adequately. They also lack the equipment, funding and facilities required to do their jobs.
Infrastructural support and facilities for forest officers in the field are very poor, so that they may
even have to rely on concession holders for basic needs such as transport and housing. This puts the
officers into an excessively dependent relationship with the concession holders and creates an
environment conducive to collusion and corruption (Callister 2000). Protection for officers who do
attempt to enforce the law is non-existent, leaving them with little choice but to comply with the
status quo.
Another problem hindering enforcement is that forest staff in the field often feel themselves to
be socially or professionally outranked by the people they have to deal with in the logging companies,
so that it is difficult for them to exert any sort of authority over the company staff. The more senior
forest officers are usually based in central offices and field positions are usually regarded as inferior.
While efforts to prevent illegal logging by the conventional methods of enforcement, patrols and
prosecutions have been limited by these obvious constraints, there have been almost no attempts to
reduce illegal logging by more innovative policies which address the fundamental causes of the
problem. Meaningful reform has yet to take place in the sector, and no efforts have been made to
promote forms of forest management which might discourage illegal logging, or which might at least
make adjustments for some illegal logging when setting the annual allowable cut. Government policy
has yet to address the problem of excess capacity in the timber industry, and the pulp industry is
actually still being allowed to expand in spite of growing awareness of the folly of clear-cutting
natural forest, and the illegality which this is promoting (see Corporate encroachment below).
Action on the points raised in the CGI forum would go some way to addressing the underlying
causes of illegal logging, but to date progress towards these objectives has been limited. Other
fundamental issues, such as land rights, land security, greater equity and greater community
involvement in managing forest resources, remain minor items on the policy agenda, with only
lukewarm commitment from within MOFEC and the government in general.
Detection
The government has no systematic procedure for collecting and analysing data on illegal
activity. Efforts to tackle illegal logging in the national parks and the cross-border trade in stolen
timber have been based so far on information provided by donors, student groups, NGOs and
researchers. For example, on 5 May 2000, activists from the local branch of the Indonesian Student
Front and a number of other NGOs in Pontianak, West Kalimantan, foiled a smuggling attempt
involving 35 containers of logs without legal documents which were on board a vessel bound for
Singapore. This, the first successful challenge to the smuggling of timber out of the province, was
made possible only after the activists temporarily took a number of local officials hostage, including
employees of the customs and excise office, the provincial forestry office, and the port
administration.
It is not that the government does not have the means for detecting illegal logging. Recently a
ship belonging to a powerful backer of illegal logging in one of Indonesia's national parks was
intercepted off Karimun island in Riau (see below). Incidents like this are heartening, but if the
problem is to be tackled comprehensively then detection must be based on more than just intermittent
reports from provincial officials, NGOs and donors.
Problems with detection are hampered by the complicity of local officials, often the same ones
as should be arranging for action to be taken against illegal loggers. The involvement of elements of
the military and the police also intimidates officials who would otherwise take action. This means
35
that any future system of detecting illegal activity in the forest sector will need to be insulated against
the possibility of subversion by officials guilty of involvement in the trade.
Detection has been improved by the P2LPHHI team. As a result of this improved detection there
has recently been more open official acknowledgement of the problems posed by the smuggling of
stolen timber to overseas destinations, and of military involvement in the trade. The secretary-general
of MOFEC has gone on record to state that Malaysian timber companies under the protection of the
Malaysian military are alleged to have sponsored illegal logging and timber smuggling in East
Kalimantan in collaboration with Indonesian logging firms, which in turn are backed by Indonesian
military personnel. Timber smuggling activities along the Malaysia-Indonesia border in East
Kalimantan is thought to have been going on for at least 10 years. It is estimated that every month
about 100,000 cubic metres of illegal timber are smuggled out of East Kalimantan into Malaysia
through the port of Tarakan. Cartridge cases and military rations identical to those used by the
Malaysian army were allegedly discovered during raids conducted in the border region of East
Kalimantan, and Malaysia has claimed to have found standard-issue Indonesian military boots with
TNI (Indonesian military) markings in Sarawak. Both of these finds have been taken as proof of
cross-border incursions related to illegal logging.
Suppression
While many of the issues raised in the CGI forum and in broader economic policy require
longer-term action and a more considered approach, prosecuting those responsible for flagrant illegal
logging does not. For this reason, illegal logging was singled out by the government and the CGI as
an opportunity to act immediately, demonstrate intent and send a clear signal of “commitment to
change” in the forest sector. As a result, test cases of well documented incidents of organised logging
in national parks, more specifically the Gunung Leuser and Tanjung Puting National Parks, were
identified as a point for immediate action.
Elevation of these systematic and flagrant abuses of environmental law to the status of test cases
has raised important questions as to the actual ability of the central government to protect the national
parks, which will continue to remain under its jurisdiction next year despite the introduction of a
legislative framework for regional autonomy. Efforts to prosecute those behind the illegal logging in
these parks have failed. In the case of Gunung Leuser, the situation is hopelessly complicated at
present by the separatist uprising in Aceh, but in Tanjung Puting it is much more clear cut. Despite
repeated promises from the President, two successive Ministers of Forestry and Estate Crops, the
Attorney General, and the former Governor of Central Kalimantan, the man allegedly behind the
illegal logging, Abdul Rasyid, remains free. Despite occasional shows of activity against some
sawmills and loggers, illegal logging has continued in the Tanjung Puting area, illegal sawmills have
re-opened and Abdul Rasyid’s operation has remained relatively unscathed by the controversy raging
around it (see Illegal logging by third parties below). Officials from MOFEC were also reportedly
denied access to a sawmill owned by Mr Rasyid, and threatened with physical violence. Since coming
under public scrutiny Mr Rasyid has been elected to represent Central Kalimantan in the upper house
of the national parliament, the People's Consultative Assembly, and attended its recent annual
session.
The problems of pushing this high profile test case through Indonesia's legal system illustrates
the difficulties which the government faces when trying to prosecute any cases involving breaches of
the forest laws. In outlying areas, corruption and a growing resentment of Jakarta-based laws and
policies means that powerful individuals can escape prosecution, even when Indonesia's most
powerful politicians support it. Under such circumstances steering the reform process and enforcing
the law are next to impossible, and for this reason efforts to reduce illegal logging must be linked to
the broader national programmes aimed at judicial reform and the elimination of corruption.
In the meantime the formation of the P2LPHHI team, with the strong personal backing of the
secretary-general of MOFEC, has already done something to strengthen the central government's
position with regard to the suppression of illegal logging. In a recent joint operation a ship was
36
impounded that had been attempting to smuggle logs out of the country through Tanjung Balai on
Karimun Island in Riau. It was later found to have sailed from Central Kalimantan and to be owned
by Mr Rasyid. The team has also undertaken special operations and inspections in a number of
provinces afflicted by illegal logging. To date, 29 ships carrying 45 containers with some 210,272
cubic metres of stolen timber have been seized. The seizures took place in Jakarta, places in West and
Central Java, Surabaya and Gresik in East Java, Sorong in Papua, and various places in Riau, Jambi,
Lampung, West Kalimantan, and North Sulawesi. In addition, the team has impounded vehicles
carrying a total of 109 logs and equipment used for logging on the West Kalimantan-Malaysia border.
However, the difficulties faced by officials who attempt to act against illegal logging and the
shipment of stolen timber were again demonstrated after the seizures in Java, and it appears that even
central government is not able to escape the intimidation and coercive methods used by logging
syndicates to bring honest local government officials to heel. After the seizures in Jakarta, hundreds
of dock workers from the Sunda Kelapa schooner port (the main port of entry for timber into Jakarta)
descended on the ministry and began a threatening and at times violent demonstration. This show of
strength, which passed unchallenged by the police, was designed to intimidate government officials,
and there is a strong suspicion that the demonstrations were organised and paid for by the
businessmen behind the illegal logging. Similar protests were reported at other ports in Java.
37
Conclusions and recommendations
We hope to have shown that the problem of illegal logging in Indonesia is complex one and of
the utmost intractability. At the same time, a major part of the Indonesian problem is its urgency. The
significance of illegal logging is that it is destroying the forests. If any substantial part of the
remaining rainforest is to be saved, effective action must be taken before the last of it has
disappeared. The pessimistic view is that this is impossible, as reform is taking place so slowly that it
cannot achieve enough in the few remaining years that are available. The optimistic view is that a
reforming, more honest and democratic government is in place, that it is steadily gaining power, and
that already some gains have been made. In what follows we go back over some of the main features
of the problem, and try to make a few suggestions as to what can be done.
One thing at least is clear, and cannot be too strongly emphasised: a strategy based only on
improved enforcement is unlikely to work, and it must be supported by policies that address the
underlying causes. We have made a preliminary analysis of these causes in a dynamic context, ie
showing how they change over time. Clearly however much further work is necessary to fully
understand the intricacies of this problem and design solutions that can be effectively implemented.
The case studies that we have referred to are consistent with the importance placed by many
other researchers on demand-side factors. They show that the issue is complicated by the fact that
demand from abroad has become a significant factor in addition to the increasing domestic one.
We have raised the issue of whether the legal framework in the past may have encouraged illegal
logging, by providing no legal role for small-scale manual logging and no fiscal incentives for control
and management of forest resources at the district and provincial level.
The case studies show that although employment in the illegal sector is unpredictable and
dangerous, it provides employment to a wide range of people with few other alternatives. These
people supplement their incomes from illegal logging and use it as an income diversification and risk
reduction strategy. Policies to stamp out illegal logging will have to take this trade-off into account
and provide alternative livelihood strategies.
The case studies also show the key role that has been played by interested parties at the district
level in controlling what goes on in the forests, indicating that decentralisation of control over forest
resources, if correctly implemented, can play contribute to solving the problem. While
decentralization and the new forestry law are moves in the right direction, we also illustrate that the
laws on their own, without supporting policies and institutions, may in fact be exacerbating illegal
unsustainable management of forest resources. The danger is noted that local government, for all its
obvious advantages, may be just as corrupt as any central one has been.
We have gone some way towards explaining why a strategy based primarily on better
enforcement has had relatively little success. Illegal logging appears to be driven by a large and
varied set of dispersed interests, united only by the desire to make money. The line between legality
and illegality is often unclear, and some illegal operators have functioned with a fig leaf of legality,
or even purported benevolence, as in their support for community plantations. Some of the people
who are formally responsible for enforcement at local level have benefited illegally from their high
capacity to subvert enforcement directives from the centre. These characteristics of the illegal system
make enforcement difficult and costly (Cohen 1998).
There are demands for illegally logged timber of a wide range of species and end uses. Policies
for bringing demand into line with sustainable supply will have to consider demand from not only the
sawn timber and plywood sectors, but also other growing sectors like pulp and paper, which
apparently lead to greater environmental havoc (Barr 2000). In particular, the available data highlight
the important role of demand from abroad and show that policies confined to bringing domestic
industrial capacity in line with domestic sustainable yield are unlikely to control the illegal logging
problem.
38
Recommendations
Despite the complexity of the problem, there are a number of steps which the could be taken in
the short to medium term to begin addressing the problem. These measures have been structured
around three key elements of any law enforcement strategy – prevention, detection and suppression.
Prevention
Prevention is the basis of any law enforcement strategy. Successful prevention requires political
commitment, a sound policy framework, and well co-ordinated action between the agencies
responsible for enforcing the law.
Short term

Political will. Immediate, high level commitment from national, provincial and district
government structures to address problems in the forest sector.

Co-ordinated response. Encourage early interaction between forest management and forest
protection staff.

Strong deterrent. Increase perceived risk of illegal activity through quick wins on detection
and enforcement.

Innovative solutions. Provide political and legislative backing for community forest
management and evaluate the potential of this type of management model to mitigate forest law
violations and environmental bad practice.
Long term

Further research. If control is to be sustainable, better (more comprehensive) understanding
of the problem is needed. Comprehensive and sustainable solutions cannot be based solely on
anecdotal evidence.

Further research. Analyse existing policies to establish if they are causing illegal logging
and increased rural vulnerability. Establish who benefits, who loses and what incentives are
created which induce illegal activity and environmental degradation.

Further research. Comprehensive analysis of proposed policy actions is needed to avoid
unwanted consequences.
39

Industry restructuring. Steps should be taken to rationalise the balance between the supply
and demand for timber, including international demand for timber.

Governance. Corruption and systemic weaknesses in the legal system need to be addressed
to discourage abuse of power leading to violations of environmental law.

Governance. Policy action must consider the political economy of forestry, and the manner
in which political agendas are linked to illegalities.

Governance. A review should be conducted to determine how the on-going process of
decentralisation can be used to combat illegal logging, and also to highlight the dangers which it
presents to environmental good practice.

Governance. Introduce a system of independent inspection for forest concessions.

Good policy. Policies need to be drafted to ensure that loggers and enforcement staff are
provided with incentives to operate within the bounds of the existing law.

Innovative management. Give greater consideration to innovative measures which may
reduce illegal logging, including addressing problems with land tenure and ownership, granting
local communities a greater role in management and law enforcement, and possibly even
legalising certain types of illegal logging, as currently defined, in restricted areas

Public education. A public relations programme is needed to change the views of both the
government, the public, the judiciary, and the state security apparatus.

International initiatives. There is a need to strengthen regional co-operation in suppression
of illegal logging, both from government to government and among private sector entities. Transboundary agreements should be set up to develop a system to collect transparent information on
the international trade in timber, which should be placed in the public domain.

Good business practice. Codes of conduct for the investment industry and multinational
companies should be established. The potential for certification and chain of custody monitoring
and trade to provide incentives not to log illegally should be reviewed.

Good business practice. Legislation to ban the purchase of illegally harvest wood should be
drafted.
Detection
40
Detection is the second major element of an enforcement strategy. There are a variety of ways to
detect illegal logging – a particularly important aspect of the debate for Indonesia revolves around the
merits (or otherwise) of investing heavily in expensive, high-technology solutions when simple, less
costly, labour-intensive methods would perhaps be more appropriate and effective.

Good policy. Organisations responsible for fighting illegal logging must be identified, and a
clear division of responsibilities, equipment needs, staffing and areas of co-operation established.

Good management. Operational practice must be defined, including how to handle
confiscated material, management systems, inter-agency co-ordination protocols and practice,
and training requirements.

Political will. More vigorous action backed by stronger political will. To do this increased
awareness among politicians and policy makers is needed along with specific policies targeted at
country and regional levels. Increased public awareness is also essential.

Governance. There is a pressing need for reliable documentation verified by a third
(independent) party. A comprehensive log tracking system and a clear and systematic procedure
for collecting and managing information is also necessary.

International co-operation. The potential for making use of international assistance needs
to be evaluated, including the potential for regional approaches, bilateral initiatives, and NGO
involvement.

Co-ordinated approaches. Donors should avoid individual initiatives and consider coordinated, sector-wide approaches to assistance.

International co-operation. Regional experience offers some interesting lessons for
Indonesia. In Cambodia, a computerised tracking system has been developed to monitor illegal
logging, corruption and arson. A system has been developed to facilitate the flow of information
from the provinces to the central government, leading to charges being brought against illegal
loggers. Good information is being recovered from areas where the “fear factor” has been
overcome – not everywhere – demonstrating the importance of providing adequate protection for
those involved in combating illegal logging.

Good policy. Government resources will always be inadequate, and civil society must be
drawn into detection networks. Basic training to this end is required on the law, basic forest
legislation, and basic guidance on how to gather evidence.

Independent civil society monitoring. Third party monitoring has been successful in both
Cambodia (through Global Witness) and in the Philippines (through Multi-Sectoral Forest
Protection (MSFP) committees, which involve rural populations and local NGOs).
41
Suppression
Suppression is reactive. If prevention and detection work, very little suppression is needed. It is
still, however, an important part of any strategy to combat illegal logging.

Strong institutions. Authority must be clearly designated and a lead agency identified. The
agency will need to have some central co-ordination with a strong regional and local presence. It
may be necessary to create and adequately finance an organisation which deals specifically with
forest crime.

Cross-sectoral approach. Suppression strategies must be linked to the judicial system, local
government and the media.

Governance. Suppression must take place in a transparent and impartial manner.

Capacity building. Training is required in a range of skills, including in pursuing criminal
investigations and resource management laws.

Capacity building. Training is also required for prosecutors and judges to gain a heightened
understanding of the issues which arise in crimes related to the exploitation of natural resources.

Quick wins. Test cases are a vital first step to moving forward. High profile test cases
brought to a successful conclusion will provide a strong symbol of determination to tackle the
problem and will begin the process of rebuilding confidence among the agencies responsible for
enforcing the law.
42
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