Another Loss for Indonesia's Forests

Tuesday, February 26, 2008

By: Fika Fawzia

The Government Regulation No. 2 Year 2008 on Non-Tax State Revenue from Forest Usage for Development Interests Outside of Forest Activities in the Department of Forestry has raised controversies. The regulation that is currently issued permits corporations to carry out open-pit mining practices in Indonesia’s Protected Forests (Hutan Lindung). It will inevitably harm the remaining forests and will cause calamity in the future.

The controversies began with Article 38 (4) of the Indonesian Forestry Law (Law No. 41/1999) that stipulates the banning of open-pit mining in protected forests. Thirteen mining companies have already signed Contract of Work between the Government of Indonesia which allowed them to carry out open-pit mining in Indonesia’s forests, which at the time were not labeled as protected forests. Thus, further continuing their mining practices under the Forestry Law will become a violation of law.

During Megawati’s Presidency, the Forestry Law was amended to protect the interests of those thirteen mining companies. Their Contract of Work was considered valid, which means their open-pit mining practices shall be allowed by the government until the time of the contract has been terminated. Several NGOs objected to this policy, but the Constitutional Court of Indonesia overruled their objection based on the reason of sanctity of the contract and the companies’ vested rights.

The first question that should be asked: are other mining companies allowed to practice open-pit mining in Indonesia? No, because based on the Forestry Law, open-pit mining is prohibited in protected forests and the government is not giving a fair and equitable treatment. Most importantly, the government should give a firm stance to protect Indonesia’s forests rather than the companies’ interests. It should be noted that they can still continue their mining activities in protected forests as long as it does not use open-pit procedures.

The debate thickens when Government Regulation No. 2 Year 2008 was issued. One of the main concerns in this regulation is how the government has put tariffs on the usage of forests for open-pit mining in protected forests. The tariffs are shocking: Rp. 300,- (US$ 0.03,-) per meter square per year. Despite the rising price of soybeans, you could buy a fried tempeh on Indonesia’s street for Rp. 500,-.

It has been criticized that the new regulation is heavily based on fiscal calculations. But for sure, it has failed to include the ecological services value that our forests offer.

Now, compare the prices of “selling” our forest under this regulation to using Clean Development Mechanism (CDM). One hectare of trees can absorb 6 ton CO2e per year (UNEP, 2006). A Certified Emission Reduction (CER) from Clean Development Mechanism (CDM) projects is equal to 1 ton CO2e per year and values about € 15-20 (Point Carbon, 2007). Which means, one hectare of trees in afforestation or reforestation CDM projects approximately equals to Rp. 1.260.000,- (Rp. 126 per meter square per year). Despite the controversies of CDM, it seems that this mechanism is more rational to protect the forests.

The second question that should be asked, are the tariffs in the regulation should then be understood? No. The incentives to protect our forests with afforestation or reforestation projects may seem very low compared to selling our forests for mining activities. But look at it with a different perspective: we can earn money while saving the forests at the same time. We have to keep in mind that the costs for reclamation and mine closure plans are not cheap, in addition to the social and environmental impacts of bad mining practices. At the same time, our forests are undervalued economically under the climate change regime compared to other CDM projects.

It’s hard for mining companies to comply with the law because the law in Indonesia is not a constant variable, yet constantly changing. It should also be noted that in the Forestry Law, mining activities in protected forests are allowed, as long as it does not use open-pit procedures. The government lacks consistency, and the new regulation also proves that the government has failed to implement the 3 Access Principles in making their environmental decisions.

Indonesians do not have access to be informed of decisions such as open-pit mining in protected forests, thus access to public participation is hampered. This is why poor people who are dependent on our forests do not have access to justice regarding their well being. The 3 Access Principles are the key for environmental policies to work effectively in a democratic society. The government must acknowledge that every decision they make will impact directly to its people.

Valuing the forests is a very sensitive and complex issue. Furthermore, we don’t have many forests in Indonesia left to begin with. Indonesia’s lowland tropical forests, the richest in timber resources and biodiversity, are most at risk. They have been almost entirely cleared in Sulawesi and are predicted to disappear in Sumatra and Kalimantan by 2010 if current deforestation trends continue (FWI/GFW, 2002). Does the government want to jeopardize Indonesian forests without asking its people first? Sadly there is no official statement yet regarding their cost-benefit analysis or legal arguments on this new regulation.

Perhaps the final question that should be asked is: does money grow on trees? Allegedly, it does.

Posted by Fiat Justitia at 8:33 AM

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