Learning from the Riau Forests

The natural forests of Riau are being lost at an astonishing rate. In just one decade, more than 3.7 million hectares of forests were destroyed in the province from a total forest area of 6.4 million hectares. By 2005, just 2.7 hectares, less than 33 percent of the forest area of Riau remained. The majority of the remaining forests were in peat forest areas with a peat depth of more than 3 meters.

The timber processing industry is the culprit behind the decline in Riau’s natural forests. In 2000, there were 312 units of forestry industry in Riau with an average production capacity of 49,000 tons/year, which is equivalent to 15.8 million m3/year. At the same time, the capacity of the forests to sustainably supply raw material was only 1.1 million m3/year.

Strangely enough, the Riau Province Regional Forestry Office recorded increases in the quantity and capacity of forestry industry in 2005 to 576 units with a total raw material production of 22.7 million m3/year. This is extremely surprising. How is it possible, with such a large discrepancy between supply and demand, that the Riau Regional Forestry Office instead increased production capacity by granting more than 200 extraction licenses for the continuation and expansion of logging?

Of the total 22.7 million cubic meters of timber needed to fulfill industrial needs in Riau, about 17.92 million cubic meters is destined for the two largest pulp industries in Indonesia, RAPP (APRIL Group) and IKPP (APP Group).

Why do they need so much? This has occurred because these two industries have made no serious attempt to develop their Industrial Timber Estates, while at the same time massively expanding their pulp and paper mill facilities. In October 2003, the Megawati era Minister for Forestry, M. Prakosa, stated that many pulp and paper plants were obtaining illegal timber for their raw materials, “Many pulp and paper industries use raw materials not only from Industrial Timber Estates, but also from the natural forests or even accept illegal timber. The greed of industry for raw materials thus has the potential to become a factor in forest destruction. Pulp and paper industries should not be short of raw materials if they planted Industrial Timber Estates according to schedules based on the needs of the industry that they manage.”

In discussions with representatives from a number of local NGOs, one of the IKPP finance staff arrogantly stated:

“We are in no hurry to establish Acacia plantations as long as cheap mixed timber supply is still available. Why must we exchange these with Acacia? We have access to cheap raw materials. Establishing Acacia plantations not only requires a lot of funds, but is also full of risks. The Acacia plantation that we are establishing now is no different to an insurance policy. We will cash it in when timber supplies from the natural forests are no longer available.”

Ironically, these two companies control 1,544,220 hectares of natural forests and an additional 388,821 hectares through companies that are directly affiliated with them. Less than 350,000 hectares of the 1.8 million hectares they control (21% of the total land area of Riau) has been re-planted. It is a fact that these two companies lack serious intent to establish plantations, even though Indah Kiat has been in operation since 1983 and RAPP since 1994. It becomes even more absurd when these two industries acknowledge that the average age of their plantations is just 6 years.

Since establishment twenty years ago, Indah Kiat has built up to the production level of 2 million tons of pulp each year. RAPP has achieved a similar level of annual production. The two share forest timber from a total 1.8 million hectares of official concessions. More than half is in a zone where conversion is prohibited according to forestry regulations. Two of the four concessions owned by RAPP, for example, are under principle licenses. However, RAPP has carried out logging in these zones despite the fact that the Department of Forestry has yet to issue definitive licenses.

The use of illegally logged timber? These two industries, especially Indah Kiat, are highly skilled. At the end of 2003, it was discovered that one of IKPP affiliates, PT Mapala Rabda, had destroyed natural forests up to 1.3 kilometers from the western boundary of its concession. More than 57,200 m3 were illegally obtained through this practice. At the same year, PT Tuah Sekato carried out illegal logging on 200 hectares of land east of its concession. From this practice, IKPP automatically received 22,000 m3 of “free timber”. Also that year, Arara Abadi carried out illegal logging in Giam Siak Kecil Wildlife Reserve. They provided more than 76,000 m3 of “free timber” to IKPP within a brief time.

The Sinar Mas Group-owned company was also responsible for the destruction of 11,200 hectares of forests in Giam Siak Kecil Wildlife Reserve, which has an area of 55,000 hectares. They then brought the stolen timber through a logpond owned by Arara Abadi so that it appeared to originate from Arara Abadi. Close to Pekanbaru, the capital of Riau Province, IKPP was responsible for the destruction of 4,800-6,000 hectares of the TAHURA Minas conservation zone. More than 80% of timber cut illegally in the conservation zone passed through the gates of IKPP while the remainder headed to the Rusna Sawmill in Pekanbaru. IKPP harvested the following timber species from these locations: Meranti, Kempas, Cengel, Merbau, Kulim, Semenai, Cimpur, Rengas and Gaharu (6000 logs). All this timber was taken directly to IKPP using trucks with police plates: BM 9392 AA, BM 9581 AT, BM 9502 AA and BM 9316 AM.

The modus operandi of RAPP was quite different to Indah Kiat. Also shown to have purchased and used illegal timber, this APRIL Group company actually entered areas where conversion was prohibited according to law. Law No. 41/1999 states that only areas with sparse (cleared) forests and barren land can be converted into Industrial Timber Estates. Similarly, Presidential Decree 32/90 and Governmental Regulation 47/97 state that all peat forest areas with a depth of more than three meters are protected from logging and conversion. However, it seems that regulations are merely paper regulations. The majority of APRIL/RAPP concessions are in forest areas with high vegetative density or in peat forest areas that have peat depths of more than three meters.

Sowing Disaster

Starting with the desire to carry out rehabilitation of areas damaged by industrial logging, and to beome a major player in the pulp and paper market, the Indonesian Government established a forestry program called Industrial Timber Estate and Pulp and Paper Industry Development in the early 1980s.

Dozens of regulations giving special rights to companies were soon passed. These facilitated destructive logging practices on the premise that they would ensure the success of the Government Industrial Timber Estate development program. The Government then injected reforestation funds worth hundreds of billions of rupiah into the Industrial Timber Estates. Of the 8 million hectares made available for Industrial Timber Estate development in 2001 that were given to about 175 companies, 5 million hectares were to be planted with the pulp and paper crops, Acacia mangium and Eucalyptus. This shifted Indonesia’s position from being a net pulp importer to being a net pulp exporter. On the other hand, the apparent quantity of Industrial Timber Estates and pulp and paper industry is a utopia that has created a chain of disasters for the environment and community life, economically, socially and politically.

A Chain of Interconnected Problems

Good at Damaging Things, Reluctant to Fix Them

There are no relevant arguments for claiming that the Industrial Timber Estates and pulp and paper industries are efficient or productive industries. From the available official data, only 1.85 million hectares (23.5%) have been planted. Of course, this figure declines when compared with the reality in the field because Industrial Timber Estates are frequently planted in areas where healthy growth is unlikely, for example in peatforests and swamps (for instance, the odds of seedling survival for APP in peat forests in Jambi are 1:3, meaning that for every 3 seedlings planted in the swamp, only 1 is able to grow).

Moreover, conversion of peat forest areas also gives rise to another serious threat. Industrial Timber Estates planted in peat forest areas fragment the area into small rivers (for instance in Riau, 129,000 ha of peat forests have been converted into Acacia plantations and more than 245,000 ha. are destined for the same fate according to Riau Spatial Plan 2001-2015). The objective of this is to facilitate transportation from one region to another as well as to reduce the acidity of the peat forest. These threats to the peat forests are irreversible. Peat soils store a large quantity of moisture, but does not have the capacity to capture or store groundwater. Close to sea level, drained peat soils will become filled with seawater. Industrial Timber Estate companies do not manage their plantations well. In 2002, the Government retracted licenses from several Industrial Timber Estate companies, for reasons ranging from problematic debt, mismanagement, to abuse of Reforestation Funds. Although this has led to legal polemic, it also proves that the performance of Industrial Timber Estate companies is very poor.

Ironically, logged lands are often abandoned by Industrial Timber Estate companies. There are consequently millions of hectares of land in Indonesia that were formerly healthy forests and the basis for livelihoods of customary communities, that have been damaged and destroyed to supply pulp and paper companies. In turn, the environmental functions of these regions have declined. Thus, when environmental pressure increases due to structural environmental destruction either upstream or downstream, natural disasters such as floods, fires and landslides result.

Balancing Raw Materials and Natural Forests

The seven pulp and paper industries in Sumatra and Kalimantan require about 27.7 million cubic meters per year. There are no facts or data showing that these companies avoid wood from natural forests. Up until 2006, more than 78 percent of the wood demand of these mills was supplied by natural forests. This was not merely an imbalance between raw materials and industrial capacity – the scales have come unstuck.

The situation has a foregone conclusion – the pulp and paper industries will continue to fulfill their raw material needs by cutting down natural forests. In March and April 2004, Indonesian national newspapers ran stories in which APP and APRIL declared that they would cease using raw materials from the natural forests in 2007 and 2008. Yet, this year we have witnessed more than 70% of their raw materials still being sourced from natural forests. IKPP argue that their Acacia plants are too immature because they are aged only 1 to 6 years old. After more than 24 years of operation in Riau, this argument is of course absurd.

Building a Pyramid of Social Conflict

The authoritarian system established by administrators to manage the forestry sector has led to a lack of transparency in the system for awarding Industrial Timber Estate concessions, such that this has become full of corruption, collusion and nepotism. Dispensations provided by recent Ministers for Forestry to companies have not passed audits and some occur in peat forest areas in Riau that are categorized as protected.

On a more technical level, the determination of concession zones pays no heed to customary or local community rights, and therefore leads to conflicts that end in social conflict, which proliferate parallel to the development of Industrial Timber Estates and pulp industry. During the 1990-1996 period, more than 5,700 conflicts directly related to Industrial Timber Estates development (source: Department of Forestry, re-processed by LATIN) in all corners of Indonesia. The modus of conflict was dominated by rivalry between communities and companies over rights to land, as well as lack of clarity on the part of the Government itself over the use of Reforestation Funds by companies.

In Porsea, North Sumatra, conflicts between the Porsea community and PT Inti Indorayon Utama (IIU) led to violence against the people by administrators who colluded with businessmen. Hundreds of people were assaulted, some were disabled for life, dozens were imprisoned, and several were killed. In addition, PT IIU ruined the harmony of the Porsea people with the environment. The air around the factory was contaminated by chlorinated smoke that damaged people’s lungs, and community paddy fields became infiltrated by liquid waste from the factory.

Although PT IIU was subsequently closed, the legal chaos and complexity of conflicting political interests resulted in re-opening by a business group under the flag of Radja Garuda Mas. By buying the rhetoric of a new paradigm, new company name (PT Toba Pulp Lestari), and the claim that they would no longer produce rayon but only pulp, President Megawati not only blessed the renewed cranking of the PT TPL machines, but also turned a blind eye to violence by the state agencies (military and police) against the people of Porsea.

APP had another trick for handling their social conflicts, by forming a private security force (a type of militia funded by the company, with members recruited from the surrounding community who had intimidating physical strength). The Mandiangan community in Riau received a taste of just how vicious the physical violence of the private security forces could be when they demanded a resolution to their land conflict with PT IKPP.

RAPP (APRIL) has even used the military and police to resolve their prolonged conflict with local communities over land ownership. In Jambi, PT Lontar Papyrus (PT LPPI) and PT Wira Karya Sakti (PT WKS) succeeded in using their influence to manipulate these conflicts and the implementation of Government regulations. For example, in Parit Pudin village, an area allocated for agricultural land was converted to Industrial Timber Estate by PT WKS.

At this point, the red line is that the pyramid of social conflict due to the presence of pulp industry and Industrial Timber Estate development is not just the ultimate consequence of the chain of Industrial Timber Estate and pulp industry development, but represents a vicious cycle of structural and systematic policies created by companies and Government, and a paradigm of natural resource management and conflict management that positions nature and poor rural communities as the objects of suffering.

The Tangled Thread of Policy

Excessive expectations of the pulp and paper industries’ brilliance has made the Government willing to infringe the rules of its own policies. A licensing system that lacks transparency and favors the interests of companies is still supported by the capital incentive of zero percent interest rates. The case of PT Menara Hutan Buana (PT MHB) in South Kalimantan is a spectacular example. More than 40 billion rupiah in State funds have been lost because of PT MHB’s manipulation of its own Industrial Timber Estate.

Actually, the problem of blocked credit and manipulation of Government Funds has become a general case among Industrial Timber Estate companies. Unfortunately, although cases of manipulation and blocked credit are rife among Industrial Timber Estate companies and pulp industries and have become a bad precedent, the Government has never regarded this as a valuable experience and conducted a comprehensive review of pulp and paper industry and Industrial Timber Estate policies. The Government has instead continued to produce policies that benefits companies.

At the end of 2003, the Government through the Department of Forestry discussed regulations related to Industrial Timber Estates at a Ministerial level. The Decree of the Minister was launched publicly and, ironically, the regulations were thick with special rights and “amnesties” for the Industrial Timber Estate companies. In these regulations, it is stated that an Industrial Timber Estate company can be established without prior evaluation of its suitability, which is the same as ignoring the poor performance record of the Industrial Timber Estates and paving the way for industry pragmatism towards the environment and other socio-economic problems. In addition, Industrial Timber Estate companies that are already well-off or are in critical condition are given the opportunity to change their capital structures by divestment. Through the Government Capital Addenda scheme, this lays public funds on the line because if divestment is carried out through the sale of assets or shares by the Industrial Timber Estate companies to private parties, public funds shift to private ownership.

The Government’s own paradigm of forestry management is still fixated on commercialization. In the section on Land Rehabilitation in the Forestry Strategy Plan, the concept of Industrial Timber Estate development is clearly still depicted as the solution to the problem of land damaged by timber and plantation industry exploitation.

Problems Ending in Structural Disasters

The cycle of pulp and paper industry and Industrial Timber Estate problems exacerbate a problem suffered by the Indonesian people and environment – natural disasters that are becoming more destructive and widespread each day. The slipshod performance of Industrial Timber Estate companies offers up neglected land or plantations that increase emissions of greenhouse gasses. Industrial Timber Estates are planted on peat forest swamps and thus ruin the water and mud sedimentation cycle, and the canal system is not organized well. In Jambi, the Mendahara Ulu people now number among those who “enjoy” floods because the downstream mangrove forests have been cut down by Industrial Timber Estate companies.

In Riau, 2003 began with severe floods that continued for almost a month. These destroyed all in their path and caused losses of Rp. 764 billion, which is equivalent to 64% of the Riau 2002 regional budget. The analysis of WALHI Riau showed how the quantity of upstream forest conversion was the main factor in the loss of soil anchoring strength. After the floods, forest fires burnt out more than 245,000 ha in no more than 23 days. Of the 54 companies that carried out burning (Bapedalda Riau, 2003), 32 were recorded as being in Industrial Forest Estate plantations.

Disasters, whether they be floods, landslides, fire and smoke, are not the culmination of natural processes, but are more the product of an exploitative environmental management system, with policies that prioritize economic rent and disregard aspects of environmental sustainability and conservation. Clearly, this is a structural disaster, a disaster that is created by a handful of policy entities, superstructure and the corrupt behavior of the State apparatus. The problems of the pulp and paper industry and Industrial Timber Estates must therefore be viewed with an understanding of non-forestry sector domains, both those essentially related and those which have no apparent direct relation to forestry problems.(Walhi)