LEAD                       Law           Environment and              Development                   JournalDEFORESTATION I...
LEAD Journal (Law, Environment and Development Journal)               is a peer-reviewed academic publication based in New...
ARTICLEDEFORESTATION IN DECENTRALISED INDONESIA:      WHAT’S LAW GOT TO DO WITH IT?                                       ...
TABLE OF CONTENTS1.   Introduction                                                                  772.   Contextualising...
Law, Environment and Development Journal1                                                                 of decentralisat...
Deforestation and Decentralisation in Indonesiaoften place little emphasis on role of law in the                   Despite...
Law, Environment and Development Journallocal communities were presumed to be the                        Unitary State of ...
Deforestation and Decentralisation in Indonesiadirect control over the timber industry on Java, but         concessions we...
Law, Environment and Development JournalChinese descent).42 Forest communities and their                 legislatures (Dew...
Deforestation and Decentralisation in IndonesiaIn this context, decentralisation emerged as a way             below. This ...
Law, Environment and Development Journalthe basis for the state’s claims over Indonesia’s          to the exploitation of ...
Deforestation and Decentralisation in Indonesiaopposed to being appointed by regional legislatures.             areas, inc...
Law, Environment and Development JournalRegulations73) are generally drafted in very broad                 3.2.2 Devolutio...
Deforestation and Decentralisation in Indonesiaallocates a significant portion of timber revenues to        as forests or ...
Law, Environment and Development JournalCommunity forests differ from adat forests in that              decentralisation o...
Deforestation and Decentralisation in Indonesiaexample, put the annual loss of Indonesian forest at               communit...
Law, Environment and Development Journalforests and provides few commercial rights over                  neglecting to inv...
Deforestation and Decentralisation in Indonesiapermits were in fact issued within zones on which            land,127 this ...
Law, Environment and Development JournalAlthough many of the Regional Regulations                        is partly respons...
Deforestation and Decentralisation in Indonesiainconsistencies.137 When it is not politically feasible          forests. A...
Deforestation In Decentralised Indonesia Whats Law Got To Do With It?
Deforestation In Decentralised Indonesia Whats Law Got To Do With It?
Deforestation In Decentralised Indonesia Whats Law Got To Do With It?
Deforestation In Decentralised Indonesia Whats Law Got To Do With It?
Deforestation In Decentralised Indonesia Whats Law Got To Do With It?
Deforestation In Decentralised Indonesia Whats Law Got To Do With It?
Deforestation In Decentralised Indonesia Whats Law Got To Do With It?
Deforestation In Decentralised Indonesia Whats Law Got To Do With It?
Deforestation In Decentralised Indonesia Whats Law Got To Do With It?
Deforestation In Decentralised Indonesia Whats Law Got To Do With It?
Deforestation In Decentralised Indonesia Whats Law Got To Do With It?
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Deforestation In Decentralised Indonesia Whats Law Got To Do With It?

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  1. 1. LEAD Law Environment and Development JournalDEFORESTATION IN DECENTRALISED INDONESIA: WHAT’S LAW GOT TO DO WITH IT? Luke Lazarus Arnold ARTICLE VOLUME 4/2
  2. 2. LEAD Journal (Law, Environment and Development Journal) is a peer-reviewed academic publication based in New Delhi and London and jointly managed by the School of Law, School of Oriental and African Studies (SOAS) - University of London and the International Environmental Law Research Centre (IELRC). LEAD is published at www.lead-journal.org ISSN 1746-5893The Managing Editor, LEAD Journal, c/o International Environmental Law Research Centre (IELRC), International Environment House II, 1F, 7 Chemin de Balexert, 1219 Châtelaine-Geneva, Switzerland, Tel/fax: + 41 (0)22 79 72 623, info@lead-journal.org
  3. 3. ARTICLEDEFORESTATION IN DECENTRALISED INDONESIA: WHAT’S LAW GOT TO DO WITH IT? Luke Lazarus Arnold* This document can be cited as Luke Lazarus Arnold, ‘Deforestation in Decentralised Indonesia: What’s Law Got to Do with It?’, 4/2 Law, Environment and Development Journal (2008), p. 75, available at http://www.lead-journal.org/content/08075.pdf Luke Lazarus Arnold, 69/47 Kennedy Street, Kingston, Australian Capital Territory 2604, AUSTRALIA, Email: luke.arnold@gmail.com Published under a Creative Commons Attribution-NonCommercial-NoDerivs 2.0 License * BA (Indonesian) LLB(Hons 1) University of Melbourne, LLM School of Oriental and African Studies (SOAS) – University of London, Barrister and Solicitor of the Supreme Court of Victoria, Australia. The author is a current Commonwealth Scholar, Lawyer with Minter Ellison Lawyers and former consultant to the United Nations in Indonesia. The views reflected in this article are his own.
  4. 4. TABLE OF CONTENTS1. Introduction 772. Contextualising Deforestation and Decentralisation 78 2.1 Forests, Decolonisation and the Unitary State of Indonesia 78 2.2 New Order Indonesia and the Hyper-centralisation of Forestry 79 2.3 Economic Crisis, Political Reform and the Decentralisation of Forestry 813. The Legal Framework for Governing Forests in Decentralised Indonesia 82 3.1 The Constitution 82 3.2 The Otda Laws 83 3.2.1 Devolution of political and administrative authority over forests 84 3.2.2 Devolution of fiscal authority over timber revenues 85 3.3 The Forestry Law 864. The Dynamics of Deforestation under Otda 875. Holding Law Responsible 91 5.1 Flawed Division of Authority between the Central Government and the Regions 91 5.1.1 Lack of clarity about divisions of power 91 5.1.2 Inappropriate allocations of power 92 5.1.3 Insecure transfer of power to the regions 93 5.2 Inconsistent, Ambiguous and Hollow Legislation 94 5.3 Legislatively Entrenched Departmentalism 95 5.4 Marginalisation of Forest Communities 96 5.5 Lack of Legislative Support for Good Governance in Forestry 986. Concluding Remarks 100
  5. 5. Law, Environment and Development Journal1 of decentralisation’.6 This system of decentralisation, known as Otda (from Otonomi Daerah, meaning Regional Autonomy), has involved the devolution of significant amounts of political, administrative andINTRODUCTION fiscal authority to sub-national legislatures and executive governments – including over forestry. ItIt is hard to overstate the value of Indonesia’s forests. therefore represents a ‘near-revolutionary’7 changeApart from their intrinsic worth, these forests in the organisation of the Indonesian state, and hasrepresent the ‘lungs of Asia’, surpassed in area only important implications for any understanding ofby the forests of Brazil and the Democratic Republic contemporary deforestation in the country.of the Congo.1 An estimated 20 million Indonesians Although decentralisation remains one of the leastlive in or near forests,2 which approximately 30 noticed political trends worldwide,8 a number ofmillion people depend upon for their livelihoods.3 commentators realised quite early that these sweepingTimber-based industries play a key role in reforms would have a significant impact on forestIndonesia’s national economic development, having management in Indonesia. However, the literaturelong ranked as the country’s largest export sector relating to decentralisation’s impact on deforestationafter oil and gas.4 However, despite the importance has approached the issue almost exclusively from aof Indonesia’s forests, rapid deforestation is taking political economy perspective, focusing on the riseplace throughout the archipelago. While this is of local politics in forest management and itsnothing particularly new – forest area declined by relationship to centralised power.9 These analyses40 percent between 1950 and 20005 – the drivingforces behind deforestation have changed 6 Jacques Bertrand, ‘Indonesia’s Quasi-federalist Approach:significantly since the fall of Suharto in 1998. Accommodation amid Strong Integrationist Tendencies’, 5 International Journal of Constitutional Law 576, 581 (2007).Whereas most deforestation – both legal and illegal – 7 Id. at 592.during Suharto’s New Order regime took place with 8 Philip Oxhorn, ‘Unravelling the Puzzle ofthe blessing of a highly centralised state, deforestation Decentralization’, in Philip Oxhorn, Joseph S. Tulchin and Andrew D. Selee eds, Decentralization, Democraticnow takes place in the context of ‘a quasi-federal form Governance and Civil Society in Comparative Perspective: Africa, Asia and Latin America 1, 3 (Washington, DC: 1 Total forest cover in Indonesia is estimated at between Woodrow Wilson Center Press, 2004). Oxhorn notes 90 and 100 million hectares. See Christopher Barr et al. that, in terms of worldwide policy reforms, perhaps only eds, Decentralization of Forest Administration in economic liberalisation is more widespread than Indonesia: Implications for Forest Sustainability, Economic decentralisation. Development and Community Livelihoods 2 (Bogor: 9 See, e.g., Eva Wollenberg, ‘Between State and Society: Local CIFOR, 2006). Governance of Forests in Malinau, Indonesia’, 8 Forest 2 See Charles Palmer and Stefanie Engel, ‘For Better or for Policy and Economics 421 (2006); John F. McCarthy, Worse? Local Impacts of the Decentralization of ‘Contesting Decentralization: Transnational Policy Indonesia’s Forest Sector’, 35 World Development 2131, Narratives and the Emergence of Volatile Narratives and 2132 (2007). See also Ida Aju Padnya Resosudarmo, ‘Shifting the Emergence of Volatile Socio-Legal Configurations in Power to the Periphery: the Impact of Decentralization Central Kalimantan, Indonesia’, in Franz von Benda- on Forests and Forest People’, in Edward Aspinall and Beckmann, Keebet von Benda-Beckmann and Anne Greg Fealy eds, Local Power and Politics in Indonesia: Griffiths eds, Mobile People, Mobile Law: Expanding Legal Decentralisation and Democratisation 230, 231 (Singapore: Relations in a Contracting World 153 (Aldershot: Ashgate, Institute of Southeast Asian Studies, 2003). 2005); Semiarto A. Purwanto, ‘Forest Resource 3 Ida Aju Pradnja Resosudarmo, ‘Closer to People and Management and Self-Governance in Regional Autonomy Trees: Will Decentralisation Work for the People and Indonesia’, in Maribeth Erb, Priyambudi Sulistiyanto and the Forests of Indonesia?’, in Jesse C. Ribot and Anne Carole Faucher eds, Regionalism in Post-Suharto Indonesia M. Larson eds, Democratic Decentralisation through a 211 (London: RoutledgeCurzon, 2005); Anne Casson and Natural Resource Lens 117 (Oxford: Routledge, 2005). Krystof Obidzinski, ‘From New Order to Regional 4 See Barr et al., note 1 above at 2. The Indonesian timber Autonomy: Shifting Dynamics of Illegal Logging in industry is thought to directly employ 2.5 million people, Kalimantan, Indonesia’, in Luca Tacconi ed., Illegal with a further 1.5 million employed indirectly. See Logging: Law Enforcement, Livelihoods and the Timber Resosudarmo, note 2 above at 231. Trade 43 (London: Earthscan, 2007) and Resosudarmo, 5 See Palmer and Engel, note 2 above at 2132. note 3 above.77
  6. 6. Deforestation and Decentralisation in Indonesiaoften place little emphasis on role of law in the Despite the clear impact of political and economicrelationship between decentralisation and factors on deforestation in decentralised Indonesia,deforestation, such as the ways in which legislation it is unwise to ignore the impact of law on the issue.and the legislative process supports deforestation and On the contrary, this essay argues that law, throughtheir capacity to promote more sustainable forest both commission and omission, plays an importantmanagement.10 role in supporting unsustainable deforestation under Otda. The corollary of this argument is, however,The lack of commentary on the impact of law on that law also holds significant potential to amelioratedeforestation under Otda has given rise to the the problem. The argument is structured as follows:assumption in Indonesia that, in the words the Part II contextualises the relationship betweenPresident’s Environment and Sustainable deforestation and decentralisation in Indonesia byDevelopment Advisor, ‘the legal instruments are highlighting the historical, political and economicfine’ and that any problems are simply the result of factors which have set the stage for the currentpoor implementation.11 The common response to situation; Part III describes the legal framework fordeforestation, therefore, is to launch ad hoc governing forests in Indonesia, by reference to‘crackdowns’ on illegal logging activities rather than Indonesia’s Constitution, the Otda laws and thecomprehensively examine the normative regime in Forestry Law; Part IV demonstrates the impactwhich deforestation is occurring.12 Presidential decentralisation has had on deforestation; and PartInstruction 4/2005,13 for example, aims to address V builds on these discussions to analyse the ways indeforestation by simply calling on all relevant which law is partly responsible for the situation. Partgovernment agencies to take firmer steps to enforce VI then offers some concluding remarks. It shouldexisting laws. These approaches demonstrate the be noted that the focus here is on the municipal lawexistence of a false dichotomy in which law is seen of Indonesia and that, while highly important, a specificas separate from, and unable to influence, its consideration of relevant bilateral and multilateralimplementation. In this way, the content of instruments is beyond the scope of this essay.Indonesian law and the process by which it is madeare seen as unproblematic; ‘implementation 2problems’ let the law off the hook. This situationconveniently suits the forces behind the ongoingdeforestation. 10 For an exception to this trend, see Jason M. Patlis, A CONTEXTUALISING DEFORESTATION Rough Guide to Developing Laws for Regional Forest AND DECENTRALISATION Management (Bogor: CIFOR, 2004). 11 See State Ministry for the Environment, ‘Exploitasi Alam [The Exploitation of Nature]’, Majalah Serasi, April 2004, 2.1 Forests, Decolonisation and 8. See also Ahmad Syafii Maarif, ‘SOS Hutan Indonesia the Unitary State of Indonesia [SOS Indonesian Forests]’, Gatra, 22 June 2007 (discussing the failure of law enforcement and the need to pay enforcers more) and E.G. Togu Manurung, The Dutch, like many other colonial powers, applied ‘Radical Measures Needed to Stop Illegal Logging’, The a ‘scientific forestry’ approach to the governance of Jakarta Post, 26 January 2005 available at http:// forests in their colonial possessions, including the www.thejakartapost.com/news/2005/01/26/radical- Dutch East Indies (present-day Indonesia).14 This measures-needed-stop-illegal-logging.html stating that ‘the approach was characterised by top-down forestry root cause of [illegal logging] is corruption and non- existent law enforcement’. policies, an emphasis on forest management based 12 See, e.g., Marcus Colchester ed, Justice in the Forest: Rural on modern science rather than traditional knowledge Livelihoods and Forest Law Enforcement 33 (Bogor: and an attitude to conservation ‘in which destructive CIFOR, 2006). 13 Presidential Instruction No. 4 of 2005 concerning the Elimination of Illegal Logging in Forests and the 14 Christopher Barr, ‘Forest Administration and Forestry Circulation of Illegally Logged Timber in the Republic Sector Development Prior to 1998’, in Barr et al. eds, of Indonesia. note 1 above. 78
  7. 7. Law, Environment and Development Journallocal communities were presumed to be the Unitary State of Indonesia. Ironically, given the factproblem’.15 In practice, however, the Colonial that the new Central Government’s forestryGovernment only directly controlled the forests on bureaucrats were generally the same personnel asJava,16 with forests on the outer islands being subject those who worked for the Colonial Government,to adat (customary law) to the extent that this did this ensured that the post-colonial state inherited thenot interfere with Dutch commercial or state scientific forestry approach.21 In 1960, the Basicinterests. 17 This was consistent with a general Agrarian Law22 granted private ownership overpattern of allowing sub-national governments to agricultural lands to local farmers, but this did notexercise some degree of autonomy, albeit within a apply to forested land.23 In Java, the state took overframework of ultimate accountability to the central the direct management of forests from the Dutch,24Colonial Government.18 but the status of the forests on the outer islands – the vast majority of non-plantation forest – remainedAfter a drawn-out war for independence, the Dutch unclear until General Suharto ousted Sukarno fromfinally agreed to transfer sovereignty to a federal state the presidency in 1966.25known as the United States of Indonesia. 19However, Indonesia’s first President, Sukarno, 2.2 New Order Indonesia and theviewed this federal system as a legacy of the colonial Hyper-centralisation of Forestrydivide-and-rule strategy and a way for the Dutch tocontinue to exert influence over the archipelago.20 Suharto came to power on the promise of curbingThe power of the Central Government was then rampant inflation and ensuring high levels ofenhanced in August 1950, only eight months after economic growth. His regime, which he termed thethe official transfer of sovereignty, when Sukarno New Order, saw timber exports as a key way ofdissolved the federal system and established the achieving this. One of the first laws passed under the New Order was the Basic Forestry Law of 15 Craig Segall, ‘The Forestry Crisis as a Crisis of the Rule 1967,26 which asserted that ‘all forest within the of Law’, 58 Stanford Law Review 1539, 1542 (2006). territory of the Republic of Indonesia… is to be 16 See generally Barr, note 14 above. controlled by the state’ (Art.5(1)). In what some have 17 See McCarthy, note 9 above at 166. described as ‘one of the largest land grabs in 18 Ignasius Ismanto, ‘Decentralization and Democratization history’,27 this had the effect of granting the Ministry in Indonesia’s Political Changes’, in T.A. Legowo and Muneo Takahashi eds, Regional Autonomy and Socio- of Forestry authority to manage over 143 million economic Development in Indonesia: a Multidimensional hectares of forest – approximately 70 percent of Analysis 1, 2 (Chiba: Institute of Developing Economies, country’s land mass. The New Order maintained 2003). 19 Sovereignty was transferred in relation to all territory that fell within the Dutch East Indies, with the exception 21 See Barr, note 14 above at 19. of Netherlands New Guinea – the area which now 22 Law No. 5 of 1960 concerning Basic Agrarian Principles. comprises the Indonesian provinces of Papua and West 23 This may have been partly due to the fact that swidden Papua. In 1962, sovereignty was transferred to the United agriculture was not well understood at the time. See Eva Nations and then to Indonesia in 1963 pending an act of Wollenberg and Hariadi Kartodihardjo, ‘Devolution and free choice to determine whether the Papuan people Indonesia’s New Forestry Law’, in Carol J. Colfer and wanted to remain part of Indonesia or secede. Indonesia Ida Aju Pradnja Resosudarmo eds, Which Way Forward? claims that this occurred in 1969 with an unanimous vote People Forests and Policymaking in Indonesia 81, 83 by 1026 representatives, but whether this constituted a genuine act of free choice is disputed. For competing (Washington, D.C.: Resources for the Future, 2002). views, see Permanent Mission of the Republic of Indonesia 24 See Purwanto, note 9 above at 213. to the United Nations, Facts on Indonesia’s Sovereignty 25 Most of Sukarno’s presidential powers were transferred over Irian Jaya: Questions and Answers, available at to Suharto on 11 March 1966, the date usually referred http://www.indonesiamission-ny.org/issuebaru/ to as the commencement of Suharto’s rule. Sukarno was HumanRight/irianjaya.htm and John Saltford, The not formally ousted as President until 12 March 1967. United Nations and the Indonesian Takeover of West Papua, 26 Law No. 5 of 1967 concerning Basic Forestry Principles. 1962-1969: The Anatomy of a Betrayal (London: 27 Chip Fay and Martua Sirait, ‘Reforming the Reformists RoutledgeCurzon, 2002). in Post-Soeharto Indonesia’, in Colfer and Resosudarmo 20 Id. at 3. eds, note 23 above.79
  8. 8. Deforestation and Decentralisation in Indonesiadirect control over the timber industry on Java, but concessions were issued on a ‘single use, single user’outsourced the management of forests on the outer basis, they ultimately led to the marginalisation ofislands to timber companies through the granting forest communities.37 This was exacerbated by theof timber concessions called forest creation of protected forest based on scientificcommercialisation rights (Hak Pengusahaan Hutan forestry principles, such that communities were inor HPH). The state had thus converted common most cases denied any management rights over theproperty forests into public property and then forests that had traditionally been under theirallowed selected private interests to exploit this.28 control.38 This led to an erosion of adat norms and knowledge,39 a trend compounded by two highlySmall-scale loggers were essentially locked out of the top-down Central Government policies. The firsttimber industry from 1970, when the minimum was the Transmigration Programme, which involvedHPH area was set at a massive 50,000 hectares.29 By mass state-sponsored migration from Java to thethe early 1970s, the massive commercial exploitation outer islands. This policy, initially commenced bythat followed saw Indonesia emerge as the world’s the Dutch Colonial Government but not formallylargest exporter of tropical logs.30 The Central abandoned until 2000, involved facilitating theGovernment had a monopoly over the granting of internal migration of millions and millions ofHPHs. Over time, these became more and more Indonesians from the highly the populated islandsconcentrated in the hands of elites who formed part of Java, Madura and Bali to less populated regionsof the New Order’s elaborate system of patronage throughout Indonesia. During its peak between 1979and were almost invariably based in the capital and 1984, almost 2.5 million people wereJakarta.31 By 1995, HPHs had been granted over 60 transmigrated,40 thus having a significant impact onmillion hectares of forest (approximately half of the indigenous communities. The second top-downremaining stock at the time),32 with five companies policy to compound the erosion of adat was thepossessing 30 percent of them. 33 The highly Village Governance Law.41 This Law, passed incentralised military played a key role in protecting 1979, required all villages to adopt a governancethese large areas from ‘illegal logging’ by non-HPH structure based on the Javanese village (desa)holders, while at the same time extracting rents from structure.HPH holders in exchange for turning a blind eye tothose who logged outside their designated HPH areas In addition to granting of exclusive rights to HPHor in breach of selective cutting requirements within holders, scientific forestry-driven conservationthese areas.34 As such, the timber industry became programmes and pro-centre policies oncharacterised by massive over-capacity, sowing the transmigration and village governance, adatseeds for the deforestation taking place at present.35 communities also suffered from an assault on their identity as indigenous peoples. For example, the veryThe Central Government rarely consulted local term ‘ada’ was removed from official vocabulary.communities when issuing HPHs. 36 As these Instead, the New Order referred to isolated peoples (Suku Terasing) and promoting a view – in contrast 28 See Purwanto, note 9 above at 211. to, say, Malaysia or India – that there was no such 29 Id. at 214. See also Resosudarmo, note 3 above at 116; thing as ‘indigenous’ Indonesians (or that all and Casson and Obidzinski, note 9 above at 45. Indonesians were indigenous, except those of 30 See Barr, note 14 above at 18. 31 See generally Resosudarmo, note 3 above. 32 See Barr et al, note 1 above at 1. 33 See Casson and Obidzinski, note 9 above at 45. 37 Jeffrey Y. Campbell, ‘Differing Perspectives on 34 Id. at 47. Community Forestry in Indonesia’, in Colfer and 35 See generally John F. McCarthy, ‘Turning in Circles: Resosudarmo eds, note 23 above. Governance, Illegal Logging and Environmental Decline 38 Id. in Sumatra, Indonesia’, in Tacconi ed, note 9 above. 39 See generally McCarthy, note 9 above. 36 Christopher R. Duncan, ‘Mixed Outcomes: The Impact 40 See, e.g., Wiki Media Foundation, Wikipedia: of Regional Autonomy and Decentralization on Transmigration Program, available at http:// Indigenous Ethnic Minorities in Indonesia’, 38 en.wikipedia.org/wiki/Transmigration_program. Development and Change 711, 716 (2007). 41 Law No. 5 of 1979 concerning Village Governance. 80
  9. 9. Law, Environment and Development JournalChinese descent).42 Forest communities and their legislatures (Dewan Perwakilan Rakyat Daerah orindigenous forest management systems were thus DPRD) became mere advisory bodies.50 Regionssystematically disempowered. During this time, they were not even permitted to develop linkages withcould at best hope to secure employment or rents each other – everything, even planes, were requiredfrom HPH holders.43 to go through Jakarta.51Revenue from timber exports under the New Order 2.3 Economic Crisis, Politicalwas clearly perceived as a driver of national, not Reform and the Decentralisationlocal, economic growth.44 Most of the revenues of Forestryfrom the one-off HPH licence fees went to theCentral Government, together with virtually all The New Order’s political legitimacy wasvolume-based royalties and export taxes.45 This maintained by the fact that it managed to deliverfollowed a general pattern of hyper-centralisation sustained economic growth for over thirty years.throughout Indonesia, as the New Order established When the macroeconomic success ended with theone of the most centralised countries in the world Asian Financial Crisis of 1997, Suharto was forcedin what remained a highly geographically and to resign. This was followed by rapid transition toculturally diverse archipelago. 46 The Central democratic governance, called Reformasi, which sawGovernment collected 93 percent of all government the legalisation of independent political parties andrevenues and allocated 90 percent of this itself.47 the emergence of civil society – including theNational development projects were imposed on ‘dramatic invigoration’ of environmentallocal populations from above, as exemplified by the organisations and village communities. 52 TheMillion-Hectare peat land Project in Central consequent weakening of the Central Government,Kalimantan, which attempted to convert over one including the military, emboldened localmillion hectares of peat land into rice paddies for communities to express their discontent about thethe settlement of 1.5 million transmigrants.48 Such way in which they had been systematically excludedprojects were possible because, politically, all major from the exploitation of local resources. At thedecisions were made by the Central Government. village level, many communities took direct actionRegional civil servants were appointed by – and against timber companies by ‘blocking roads, seizingoften simply sent from – Jakarta,49 and regional heavy equipment, and demanding compensation from firms involved’.53 At the provincial level, 42 See generally Tania Murray Li, ‘Masyarakat Adat, resource-rich provinces demanded greater political Difference, and the Limits of Recognition in Indonesia’s and fiscal autonomy and some – such as East Forest Zone’, 35 Modern Asian Studies 645 (2001). See Kalimantan and Riau – even began to make also Duncan, note 36 above at 714 and Frederick Rawski rumblings about secession similar to those in areas and John MacDougall, ‘Regional Autonomy and Indigenous Exclusivism in Bali’, 11 International Journal such as Aceh and Papua, where serious separatist on Minority and Group Rights 143, 145 (2004). movements appeared to be gathering strength. 43 See McCarthy, note 35 above at 78-79 and Purwanto, note 9 above at 215. 44 See Campbell, note 37 above at 118. 50 Peter Holland, ‘Regional Government and Central 45 See Barr, note 14 above at 24. See also Ida Aju Pradnja Authority in Indonesia’, in Timothy Lindsey ed., Resosudarmo et al., ‘Fiscal Balancing and the Indonesia: Law and Society 200, 211 (Sydney: Federation Redistribution of Forest Revenues’, in Barr et al. eds, Press, 1999). note 1 above. 51 Muriel Charras, ‘The Reshaping of the Indonesian 46 Syarif Hidayat and Hans Antlöv, ‘Decentralization and Archipelago after 50 Years of Regional Imbalance’, in Regional Autonomy in Indonesia’, in Oxhorn, Tulchin Erb, Sulistiyanto and Faucher eds, note 9 above. and Selee eds, note 8 above. 52 Alan Khee-Jin Tan, ‘The ASEAN Agreement on 47 Id. Transboundary Haze Pollution: Prospects for 48 See Duncan, note 36 above at 719. Compliance and Effectiveness in Post-Suharto Indonesia’, 49 Syarif Hidayat, Too Much Too Soon: Local State Elite’s 13 New York University Environmental Law Journal 647, Perspective on, and the Puzzle of, Contemporary Indonesian 719 (2005). Regional Autonomy Policy 30 (Jakarta: RajaGrafindo 53 John McCarthy et al., ‘Origins and Scope of Indonesia’s Persada, 2007). Decentralization Laws’, in Barr et al. eds, note 1 above.81
  10. 10. Deforestation and Decentralisation in IndonesiaIn this context, decentralisation emerged as a way below. This led some commentators to refer to theof ‘saving the nation’54 – and the ruling Golkar party laws as making Indonesia one of the most– from political upheaval and territorial decentralised countries in the world.61 Due todisintegration. Offloading the responsibility of concerns that empowering provincial legislaturesdelivering public services to sub-national and executive governments may encouragegovernments was also seen as a way for the Central separatism, these laws essentially bypassed provincesGovernment to satisfy structural adjustment (provinsi), instead transferring power directly to therequirements, including a reduction of Central next level of government: districts (kabupaten) andGovernment expenditures, as part of an municipalities (kotamadya).62 As forestry was notInternational Monetary Fund loan to support the on the exclusive jurisdiction list, it was to becountry’s economic recovery.55 The international decentralised. Intense pressure from the regions evenfinancial institutions and other international actors, led the Central Government to pass a series ofwhose leverage had grown in Indonesia due to the decrees allowing district/municipal governments tofinancial crisis, generally supported demands for issue small-scale logging licenses (up to 100 hectares)more decentralised governance. This was in part prior to the date upon which the laws came intobecause it was seen as consistent with the effect.63 The Central Government later began to clawWashington Consensus’s calls for smaller back power in the field of forestry, most notably bygovernment and the devolution of power to a place reference to a new forestry law, also passed in 1999,‘where civil society can work its magic better’.56 It and a new set of Otda laws passed in 2004. It is to thiswas clear that the perceived inabilities of the Central legal framework that the essay now turns.Government were more of a consideration than anyperceived abilities on the part of sub-national 3governments.57In 1999, the central Executive hurriedly drafted twolaws to devolve power to the regions, both of whichwere then passed by the People’s Representative THE LEGAL FRAMEWORK FORCouncil:58 one in relation to the division of politicaland administrative authority59 and the other in GOVERNING FORESTS INrelation to the division of public revenues.60 These DECENTRALISED INDONESIAOtda laws, which came into effect in 2001,transferred power to the regions in all sectors except 3.1 The Constitutionthose deemed to be the exclusive jurisdiction of theCentral Government, as discussed in Part III (B) The Constitution of the Republic of Indonesia 1945 contains a number of provisions relating to forestry and regional governance. Chief among these is 54 See Hidayat and Antlöv, note 46 above at 271. Article 33(3), which holds that ‘the land and the 55 See Barr et al., note 1 above at 10. 56 See McCarthy, note 9 above at 156. waters as well as the natural riches therein are to be 57 Oxhorn notes that this is a common phenomenon controlled by the state to be exploited to the greatest worldwide. See Oxhorn, note 8 above at 13. benefit of the people’. This clause therefore provides 58 The People’s Representative Council (Dewan Perwakilan Rakyat, or DPR) is the chamber of the national legislature, the People’s Consultative Assembly (Majelis Permusyawaratan Rakyat), with the power to make 61 Gary F. Bell, ‘Indonesia: the New Regional Autonomy National Laws (Undang-Undang). Laws, Two Years Later’, Southeast Asian Affairs 117 59 Law No. 22 of 1999 concerning Regional Governance. (2003). Hidayat and Antlöv note the subtle but important 62 This is the same level of government, the only difference difference in title from the New Order law it replaced, being that the former refers to predominantly rural Law No. 5 of 1974 on Governance in the Regions. See regions while the latter refers to urban region. There are Hidayat and Antlöv, note 46 above at 273. currently 370 districts and 95 municipalities in Indonesia, 60 Law No. 25 of 1999 concerning Fiscal Balance between with an average population of 500,000 per region. the Centre and the Regions. 63 See Casson and Obidzinski, note 9 above at 65-66. 82
  11. 11. Law, Environment and Development Journalthe basis for the state’s claims over Indonesia’s to the exploitation of natural resources beforests, as indicated by the fact that the current ‘implemented in a just and harmonious way’Forestry Law mentions this clause in its preamble. (Art.18A(2)). It remains to be seen exactly what thisHowever, the clause does not of itself preclude the means. In the meantime, this lack of clarity hasownership of forests by forest communities; the state opened space for the unsustainable management ofneed only ‘control’ forests, which it could do forests.through minimum standards stipulated in legislation.This position would be consistent with the recently Neither the Constitution nor any piece of legislationinserted Article 18B (2), which requires the state to has ever clarified the content or precise status of adat,recognise the rights of customary communities to though recent legislation has begun to makepractice adat to the extent that this is consistent with reference to it. In fact, there is no unified set of adatsocial development and the unitary state. law; the term adat continues to be used to refer to the diverse collection of local-level customary rulesFollowing the passing of the first Otda laws, the which have existed alongside – sometimes inConstitution was amended 64 to insert several harmony with and other times in spite of – otherprovisions relating to regional autonomy. These sources of law. The resultant uncertainty has led toprovisions, expressed in Articles 18, 18A and 18B, the continuation of debates about the role adat hasare very broad and ambiguous. For example, the and should have in Indonesia’s legal system, a debatemain provision on the division of authority, Article that dates back to colonial times but has been18A(1), merely states that: reinvigorated since the collapse of the New Order.65 The relationship between the central 3.2 The Otda Laws government and provincial, district and municipal governments, or between In 2004, the original Otda laws were repealed and provinces and districts and municipalities, replaced with a new Regional Governance Law66 is to be regulated by National Law with and Fiscal Balance Law.67 These are National Laws regard to regional characteristics and (Undang-Undang or UU), which have been passed diversity. by the People’s Representative Council and are the highest source of law within the Indonesian legalThese provisions stand in contrast to the role of system after the Constitution. The substance of theconstitutions in most federal states, where the rights 2004 laws remains similar to their 1999 predecessors,of the central government and other jurisdictions with the major change being that Regional Headsare to some extent spelt out. The essence of the (Kepala Daerah) are now directly elected at bothregional autonomy provisions in the Indonesian provincial and district/municipality levels, 68 asConstitution is rather to mandate a system ofdecentralised governance and simply require that it 65 See generally Peter Burns, The Leiden Legacy: Concepts ofbe regulated by law. These provisions therefore do Law in Indonesia (Leiden: KITLV, 2004) on the legacynot shed any meaningful light on the division of of the debate in the early twentieth century betweenauthority between the centre and the regions. Due Dutch legal scholars based at the University of Leiden –to the limited scope for judge-made law within the who were of the opinion that colonial laws shouldIndonesian legal system – which at present is best accommodate adat – and those at the University of Utrecht – who were less sympathetic to such arguments.described as a civil law system – it is likely that, For an account of adat’s role in a contemporary context,without legislative changes, the uncertainty created see Craig Thorburn, ‘Adat, Conflict and Reconciliation:by these provisions is likely to persist. The Kei Islands, Southeast Maluku’, in Tim Lindsey ed., Indonesia: Law and Society 115 (Sydney: Federation Press,In relation to forestry, there is an additional 2nd ed. 2008).requirement that centre-region relations in relation 66 Law No. 32 of 2004 concerning Regional Governance. 67 Law No. 33 of 2004 concerning Fiscal Balance between the Central Government and the Regions. 64 Second Amendment to the Constitution of the Republic 68 Article 24, Law No. 32 of 2004 concerning Regional of Indonesia 1945, 18 August 2000. Governance.83
  12. 12. Deforestation and Decentralisation in Indonesiaopposed to being appointed by regional legislatures. areas, including forestry, the regions are to ‘exerciseThe new laws also differ from the original laws in autonomy to the broadest possible extent… with thethat they provide the Central Government more goal of enhancing social welfare, public service andopportunities to monitor and intervene in regional regional competitiveness’ (Art. 2(3). This autonomyaffairs. For example, Regional Heads must now is divided between provinces and districts accordingtender reports to the Central Government (Art. 27) to the principle of subsidiarity, with provincesand can be dismissed by the President if convicted granted jurisdiction over matters of a ‘provincialof certain crimes (arts 30-31). The Central scale’ (Art.13) and districts/municipalitiesGovernment has also clawed back some budgetary jurisdiction over everything else (ie matters of aauthority, with the Ministry of Home Affairs ‘district/municipal scale’) (Art. 14). A recentpermitted to control ‘budget deficits’ in the regions implementing regulation, Governmental Regulation(Art. 175) and scrutinise regional budgets (Art. 85). 38/2007, 70 states that provinces can ‘delegate’Interestingly, Article 22 lists a number of regional authority to districts/municipalities, and districts/government ‘responsibilities’, which include municipalities can delegate authority to villages‘improving the community’s quality of life’, (Art.16). This Regulation also creates a distinction‘developing productive resources’, ‘conserving the between ‘compulsory’ and ‘optional’ regionalnatural environment’, ‘conserving social and cultural jurisdictions, with forestry placed in the latter (Art.values’ and ‘other responsibilities as stipulated by 16). This means that the Central Government is tolaw’. The precise legal status of these retain authority over forest management in regions‘responsibilities’ is unclear, though they could which choose not to assume this authority.conceivably be used to justify further clawing backof power by the centre. Regional autonomy applies to both executive governments and regional legislatures (Art.3), bothThe specific ways in which the Regional Governance of which are downwardly accountable throughLaw and Fiscal Balance Law specifically relate to Regional Head elections (Art.56) and parliamentaryforest management are discussed below in turn. elections71 respectively. Regional legislatures, with the approval of the Regional Head, have the right 3.2.1 Devolution of Political and to set their own budgets (Arts.25 and 42) and raise Administrative Authority over Forests their own revenues. Regional legislatures, also with the approval of the Regional Head, can pass RegionalThe Regional Governance Law addresses the Regulations (Peraturan Daerah, or Perda) on anydecentralisation of political (policy-making) and matter within their jurisdiction (Art.136). However,administrative (policy implementation) powers from unlike in a federal system, the People’sthe Central Government to provinces and districts/ Representative Council retains the power to passmunicipalities. Article 10(3) sets out six areas which National Laws on any matter, and Regionalremain the exclusive jurisdiction of the Central Regulations must not be inconsistent with aGovernment. These include the three areas usually National Law (Art.136(4)).72 Given the fact thatallocated solely to central governments in federal National Laws (and other types of nationalsystems – foreign affairs, defence and national legislation which rank above Regionalmonetary and fiscal policy. The three further areasretained by the Central Government in Indonesia 70 Governmental Regulation No. 38 of 2007 concerning theare internal security, the justice system and religious Division of Authority between the Central Government,affairs69 – a selection which reflects perceived fault Provinces and Districts/Municipalities.lines in the nation’s territorial integrity. In other 71 Law No. 10 of 2008 concerning General Elections for Members of the People’s Representative Council, Regional Representative Council and Regional People’s 69 An exception exists for the Province of Nanggroe Aceh Representative Councils. Darussalam, where a peace accord reached between the 72 Confusion has arisen, however, as to the status of Central Government and Acehnese rebels in 2005 Regional Regulations vis-à-vis Ministerial Regulations excludes religious affairs from the exclusive jurisdiction passed by a single department of the Central of the Central Government. Government. See Part V below. 84
  13. 13. Law, Environment and Development JournalRegulations73) are generally drafted in very broad 3.2.2 Devolution of Fiscal Authority overterms, Otda could be categorised as a ‘devolution’ Timber Revenuesmodel of decentralisation, where broad decision-making authority has been transferred to sub- An abundance of case studies – from decentralisednational levels of government. 74 However, the forest management in Senegal76 to decentralisedRegional Governance Law states that Provincial pasture management in Mongolia77 – demonstrateHeads (Gubernur) are, in addition to being a the fact that decentralisation is usually meaninglesscomponent of an autonomous regional government, if sub-national governments do not have‘also representatives of the Central Government in independent access to financial resources.78 Thetheir respective provinces’ (Art.37). This indicates Fiscal Balance Law attempts to address this bythat, with respect to provinces, Otda may to some establishing various formulae for the sharing ofextent represent a mere ‘deconcentration’ of power, revenues between the Central Government and thewhere accountability ultimately remains with the regions. Timber revenues come in three forms:centre.75 No such provision applies to District/ approximately two thirds is derived fromMunicipality (Bupati/Walikota) Heads. compulsory contributions to a Reforestation Fund (Dana Reboisasi or DR), which timber companiesThe Regional Governance Law contains a confusing pay based on their harvest volumes. The remainingqualification concerning the relationship between third comes from one-off licence fees (Iuran Hakthe Central Government and the regions with Pengusahaan Hutan or IHPH) and volume-basedrespect to forestry. It states that regional royalties (Provisi Sumber Daya Hutan or PSDH).79governments have a special ‘relationship’ with theCentral Government in matters relating to, among The Fiscal Balance Law allocates 40 percent ofother things, the exploitation of natural resources revenues from the Reforestation Fund to the(Art.2(5)). This relationship, echoing the district/municipality where the timber was extractedConstitutional provision discussed above, is to be and 60 percent to the Central Government‘implemented in a just and harmonious way’ (Art.14(b)).80 The Central Government is to receive(Art.2(6)). There is no indication within the Law or only 20 percent of revenues from licence fees andits Elucidation as what this entails, other than that volume-based royalties, with the relevant provincialthis special relationship is to be regulated by law government receiving 16 percent (Art.14(a)). 64(Art.17(3)). However, the Law does expressly state percent of these revenues flow to district/municipalthat regional governments have a right to share in governments: for licence fees all of this goes to therevenues from natural resources (Art.21) and a producing district/municipality, while royalties areresponsibility to ensure their sustainable split such that the producing district/municipalitymanagement (Art.22). It also grants the Central receives half of this amount and the remainder isGovernment the power to declare Special Areas shared evenly between other districts/municipalities(Kawasan Khusus) in the national interest (Art. 9(1)), in the province (Art.15). This arrangement thereforewhich the Elucidation describes as areas of ‘strategicnational interest’, including ‘environmental’interests. This forms one of the bases upon which 76 Id. at 474.the Ministry of Forestry continues to exercise direct 77 See generally Robin Mearns, ‘Decentralisation, Ruralauthority over conservation areas. Livelihoods and Pasture-Land Management in Post- Socialist Mongolia’, in Ribot and Larson eds, note 3 above. 78 See generally Arnoldo Contreras-Hermosilla, Hans M. 73 Central Government Regulations (Peraturan Pemerintah) Gregersen and Andy White eds, Forest Governance in and Presidential Regulations (Peraturan Presiden). See Countries with Federal Systems of Government: Lessons and Part V(A)(i) below. Implications for Decentralization (Bogor: CIFOR, 2008). 74 See Oxhorn, note 8 above at 5. 79 See Resosudarmo et al., note 45 above at 63. 75 Arun Agrawal and Jesse Ribot, ‘Accountability in 80 These funds are likely to be ultimately transferred to Decentralisation: A Framework with South Asian and district/municipal Forestry Offices through earmarked West African Cases’, 33 Journal of Developing Areas 473, grants called Dana Alokasi Khusus (DAK), as provided for 475 (1999). by the Fiscal Balance Law.85
  14. 14. Deforestation and Decentralisation in Indonesiaallocates a significant portion of timber revenues to as forests or non-forests’, and ‘regulate and determinedistricts/municipalities, particularly if compared to legal relationships between people and forests’their twelve percent share of income tax (Art.13) or (Art.4(2)). Within this framework, the Law goessix and twelve percent respective shares of oil and beyond its predecessor in requiring the state to ‘paygas revenues (Art.19). This has the potential to regard to the rights of adat communities’, providedencourage over-production in the timber sector, as that doing so does not conflict with the nationaldescribed below in Part V(A). interest (Art.4(3)). The Law makes provision for the recognition of adat forests, though makes it clear that3.3 The Forestry Law these are simply regions within state forests where adat communities can exercise particular rightsSeveral months after the passing of the Otda laws, (Art.5). According to the Elucidation to the Law, thisthe Basic Forestry Law of 1967 was repealed and is a ‘consequence of… the principle of the Unitaryreplaced with a new Forestry Law.81 This Law State of Indonesia’.84 The legal existence of adatreasserts state control over all forests (Art.4(3)), communities is therefore dependent on recognitioncontinuing the massive appropriation of forests by the state,85 and the Law implies in three differentunder the Basic Forestry Law. It establishes three provisions that this can be withdrawn at any time:categories of forest: ‘production forest’, the main articles 4, 5 and 67 all state that adat rights will onlypurpose of which is to support the commercial be recognised to the extent that ‘adat communitiesexploitation of forest products; ‘protection forest’, continue to exist and their existence is recognised [bythe protection of which provides direct benefits for the state]’. The rights of adat forest communities arehuman ecosystems, such as through controlled therefore very insecure, particularly if compared towaterways and the prevention of erosion; and Ancestral Domain Claims in the Philippines or‘conservation forest’, which contains ecosystems Communidades in Mexico.86deemed worthy of protection due to their intrinsicvalue (Art.1). Production forests can be made the The Forestry Law does not clarify a process forsubject of timber concessions or a licence to harvest recognising adat rights, the exact content of thesenon-timber forest products, with only the latter rights or how such rights interact with other forestryavailable over protection forest. The Forestry Law interests. It does state, however, that adatprohibits the granting of commercial licenses over communities, once recognised, have rights to harvestseveral sub-categories of conservation forest,82 and timber for subsistence purposes, ‘conduct forestrequires licensing over other sub-categories to be management activities’ according to adat and gainexpressly authorised by law. Importantly, the access to ‘empowerment for the purposes ofauthority to classify forest remains with the Central enhancing their welfare’ (Art.67). The Law requiresGovernment (Arts.1(14) and 6), which at present has a Governmental Regulation to regulate the matterclassified 56 percent of the areas deemed to be forested in further detail, but no such legislation has beenas production forest, 26 percent as protection forest formulated to date. However, in what appears to beand 18 percent as conservation forest.83 a substitute for such legislation, the Minister of Forestry promulgated a Ministerial Regulation inThe assertion of state control over forests in the new 200787 creating a system of licences in relation toForestry Law contains some important space for the Community Forests (Hutan Kemasyarakatan).recognition of other interests. The Law stipulates thatstate ‘control’ gives the state the authority to ‘regulate 84 The Unitary State of Indonesia is discussed in Part II(A)and organise’ forests, ‘determine the status of areas above. 85 Christina Eghenter, ‘Social, Environmental and Legal Dimensions of Adat as an Instrument of Conservation 81 Law No. 41 of 1999 concerning Forestry. in East Kalimantan’, in Fadzillah Majid Cooke ed, State, 82 ‘Nature reserves’, ‘core zones’ and ‘forest zones in Communities and Forests in Contemporary Borneo 163, national parks’, Art. 24. 171 (Canberra: ANU Press, 2006). 83 Aulia Marti, ‘Pengelolaan Hutan Masih Memprihatinkan 86 See Wollenberg and Kartodihardjo, note 23 above at 83. [Forest Management Still Concerning]’, Borneo Tribune, 87 Regulation of the Minister of Forestry No. 37 of 2007 2 July 2007. concerning Community Forests. 86
  15. 15. Law, Environment and Development JournalCommunity forests differ from adat forests in that decentralisation of forestry functions is to bethey are not linked to customary law and do not regulated by a Governmental Regulation (Art.66).involve management rights or connotations oftraditional ownership.88 Instead, the Regulation Governmental Regulation 6/200791 purportedlyprovides for two types of licences, to be granted by undertakes to transfer forestry powers to the regionsthe Minister, which afford limited rights to forest but in effect it transfers only a selection of minorcommunities. In relation to timber usage, the first powers – possibly because it was most likely draftedkind, a Community Forest Concession (Izin Usaha by the Ministry of Forestry. Most importantly, thePemanfaatan Hutan Kemasyarakatan or IUPHKm), Minister retains the exclusive authority to grantsimply allows forest communities to extract up to large-scale timber concessions (Art.62), called50 cubic metres of timber per year for non- Licence to Exploit Forest Timber (Izin Usahacommercial purposes from production forest zones Pemanfaatan Hasil Hutan Kayu or IUPHHKs)which are not subject to other concessions (Arts.7 under the Forestry Law. Under this provision, theand 17). The second kind, a Community Forest Minister must base his/her decision on aTimber Concession (Izin Usaha Pemanfaatan Hasil recommendation from the relevant ProvincialHutan Kayu dalam Hutan Kemasyarakatan, or Government Head, who in turn must ‘obtain input’IUPHHK HKm), allows forest communities to plant from the District/Municipal Head in which theand harvest timber in areas within production forest forest is located. Given the fact that the Provincialzones which are not subject to other concessions, Government Head is not bound by this input and isprovided they pay royalties on harvests (Art.22).89 a representative of the Central Government, thisForest communities are therefore granted inferior provision effectively circumvents anyrights to other timber concession-holders, who are decentralisation of the process of issuing IUPHHKs.not obliged to harvest only forest that they have Instead, Government Regulation 6/2007 transfersplanted. Additionally, the fact that the Regulation powers to districts/municipalities to issue a rangeis a Ministerial Regulation rather than a of ‘lesser permits’, 92 such as licences for theGovernmental Regulation could mean that regional extraction of timber for non-commercial purposes.governments ignore it, as discussed below. As such, despite the passing of the Otda laws, according to the Forestry Law the CentralEven though it was passed after the Otda laws, the Government retains key decision-making powers inForestry Law essentially ignores the role of regional relation to both the classification of forests and thegovernments. Given that the Law was drafted by the regulation of logging.Ministry of Forestry, this situation appears to be theresult of ‘a systematic effort by the [Ministry] to 4reconsolidate the Central Government’s authorityin the forestry sector’.90 The Law only mentionsregional governments in a handful of provisions,including to say that they share a responsibility withthe Central Government to ‘monitor forestry’ THE DYNAMICS OF DEFORESTATION(Art.60) and ‘forest management by third parties’ (Art62). The Law also states that the Central Government UNDER OTDAhas a responsibility to monitor the forestry activities Deforestation has continued at rapid rates since theof regional governments (Art.61) and that the introduction of Otda. Current estimates, for 88 Community forests are in fact not mentioned in any provision of the Forestry Law. The Elucidation, however, 91 Governmental Regulation No. 6 of 2007 concerning distinguishes them from adat forests, simply stating that Forest Designs, Forest Management Plans and the their purpose is to ‘empower communities’ (as distinct Exploitation of Forest. This repeals an earlier version, from recognising customary rights). Government Regulation 34/2002. 89 It appears that there is no obligation here to make 92 See McCarthy et al., note 53 above at 47-48 (describing contributions to the Reforestation Fund. the situation under the predecessor to Governmental 90 See Barr et al., note 1 above at 14. Regulation 6/2007).87
  16. 16. Deforestation and Decentralisation in Indonesiaexample, put the annual loss of Indonesian forest at communities, it has clearly opened up some space2.76 million hectares (around three percent of the for such communities to vent their ‘accumulatedtotal forested area).93 The dynamics behind this historical frustrations’100 at the extent to which theypattern, however, differ greatly from those under had been excluded from decision-making processesthe New Order. The primary cause of deforestation and benefit sharing in relation to the use of localprior to Otda was the over-issuing of HPHs by the forests during the New Order. Some communitiesCentral Government. This was complemented by have, for example, engaged in disputes with‘non-collusive corruption’ between HPH-holders plantation and timber companies over land control.and Central Government officials, with the latter These disputes have often involved the use of fireextracting rents in exchange for turning a blind eye by both sides to clear the land so as to make strongerto the breaches of the HPH conditions.94 Under claims to it by demonstrating a more profitable use,Otda, the conflicting interests of forest communities, such as the establishment of cash crop plantations.101regional governments and the Central Government In other cases, local communities have insteadhave surfaced and created a far more chaotic cooperated with (or been coopted by) timbersituation. The result has been an increase in the companies in exchange for promises of financialnumber of actors involved in deforestation,95 and a compensation, employment, the building of schoolsgeneral state of lawlessness to the point where and the provision of seeds.102 For their part, theseIndonesian forests to some extent resemble open- communities promise to refrain from interferingaccess regimes.96 Illegal logging is now the main with logging activities. Prior to recent efforts tocause of deforestation, accounting for approximately recentralise commercial licences, companies70 percent of all harvested timber.97 To be sure, Otda colluded with communities to obtain small-scaleis not the only cause of deforestation in present-day timber concessions – which were often only grantedIndonesia. Commentators correctly point out that to local ethnicities103 – in order to log wider areasthe forestry sector was already characterised by over- of forest as well as pay lower royalties and licencecapacity by the end of the New Order,98 and that fees. 104 As such, accelerated deforestation hasfactors such as the economic crisis and subsequent generally taken place regardless of whetherweakening of the state are also key contributors.99 communities have opposed or cooperated withIt is clear, however, that Otda shapes the current timber companies.dynamics of deforestation in very significant ways. Despite the fact that the bargaining power of localAlthough Otda has fallen far short of granting communities vis-à-vis timber companies hassubstantial forest management rights to local forest probably strengthened under Otda, they remain essentially disenfranchised from the management of their local forests. As discussed above, the legal 93 See Idris Arief, ‘Janji pada Anak Cucu Jangan hanya framework makes no serious effort to recognise adat Slogan [Promises to the Grandchildren are Only Slogans]’, Fajar Makassar, 17 March 2008. 94 See generally Joyotee Smith et al., ‘Illegal Logging, 100 See Resosudarmo, note 3 above at 112. See also Collusive Corruption and Fragmented Governments in Christopher Barr et al., ‘Decentralization’s Effects on Kalimantan, Indonesia’, in Tacconi ed, note 9 above. Forest Concessions and Timber Production’, in Barr et 95 See McCarthy, note 9 above at 165. al. eds, note 1 above. 96 See Purwanto, note 9 above. 101 See generally Rona Dennis et al., ‘Fire, People, and Pixels: 97 See Contreras-Hermosilla, Gregersen and White, note 78 Linking Social Science and Remote Sensing to above at 37. See also Sukowaluyo Mintorahardjo and Understanding Underlying Causes and Impacts of Fires Bambang Setiono, ‘Mengendalikan Illegal Logging in Indonesia’, 33 Human Ecology 465 (2005). melalui Perbankan [Controlling Illegal Logging through 102 See Palmer and Engel, note 2 above at 2134. See also G. Banking]’, Indonesian Financial Transaction Reports and A. Guritno, M. Agung Riyadi and Hendri Firzani, Analysis Centre, 4 July 2003. ‘Belantara di Ketiak Cukong [Jungles Under the Thumbs 98 See Barr, note 14 above at 19. See also International Crisis of Brokers]’, Gatra, 30 January 2004. Group (ICG), Indonesia: Natural Resources and Law 103 Often referred to as putra daerah, literally ‘sons of the Enforcement – Asia Report No. 29 of 2001 (Jakarta/ region’. See McCarthy, note 9 above at 165. Brussels: ICG, 2001). 104 See Casson and Obidzinski, note 9 above at 54. See also 99 See Resosudarmo, note 2 above at 237. Barr et al., note 100 above at 102. 88
  17. 17. Law, Environment and Development Journalforests and provides few commercial rights over neglecting to invest economic gains from the forestrycommunity forests. In addition, the commercial sector into improved regulation,113 mismanagingexploitation of timber under Otda still favours reforestation programmes114 and generally failingmedium- and large-scale exploitation. The complex to adopt a sustainable development paradigm. Theapplication procedures, cost of applying and finance problems are not limited to executive governments;required to conduct commercial logging mean that sub-national legislatures have generally failed tomost local communities remain locked out of the prioritise sustainable forestry too. A survey ofmarket. 105 Communities that ‘cooperate’ with Regional Regulations of districts in East Kalimantan,timber companies are therefore not equal partners. for example, revealed that they virtually all lackedThey may not be sufficiently informed of their provisions to support the monitoring of logging andpartner’s logging strategy106 or have the capacity to the prosecution of violators.115ensure that it is sustainable. Evidence is also emergingthat, although Otda has led to an increase in the The role of regional governments in deforestationnumber of forest community households receiving under Otda is not limited to sins of omission; manyfinancial benefits from logging (from one percent to have engaged in practices that have actively90 percent according to one sample 107 ), local supported it. To the newly autonomous regionalcommunity shares are very small (according to one governments, greater economic independence fromstudy, local communities were paid only nine percent the Central Government spells broader and moreof the market value of the harvested timber108), secure political independence. As happened inagreements are often not fully honoured109 and the Bolivia following decentralisation there, regionalbenefits are not spread equitably.110 As discussed governments throughout Indonesia have seenbelow, this ongoing disempowerment of forest logging as a key to establishing independent revenuecommunities serves to undermine attempts to streams.116 Before the Otda laws even came intopromote sustainable forest management. effect, many district/municipal governments proceeded to issue great numbers of small-scaleWith only a few minor exceptions,111 regional commercial timber licences.117 Most of these carriedgovernments have done little to stem deforestation. no obligations to engage in reforestation activities,By most accounts, their monitoring of logging or to refrain from clear-felling or logging inactivities has failed to prevent concession-holders catchment areas.118 As some districts had not evenfrom extracting timber outside the boundaries of established a regulatory agency, they clearly had notheir concessions.112 They have been criticised for intention of ensuring that the holders of these licenses logged strictly according to the terms of their licences anyway.119 In addition, many of these 105 See Purwanto, note 9 above at 222. See also Resosudarmo, note 2 above at 234-239. 106 Moira Moeliono and Ahmad Dermawan, ‘The Impacts 113 Id. at 243. of Decentralization on Tenure and Livelihoods’, in Barr 114 Khairul Saleh, ‘South Sumatra told to Heed to et al. eds, note 1 above. Reforestation’, The Jakarta Post, 22 January 2008. 107 See Palmer and Engel, note 2 above at 2138. See also 115 See Casson and Obidzinski, note 9 above at 49. McCarthy, note 9 above at 165. 116 See McCarthy, note 35 above at 83-84. 108 See Moeliono and Dermawan, note 106 above at 117. 117 See generally Barr et al., note 100 above. 109 In one area, 67 percent of communities reported some 118 James J. Fox, Dedi Supriadi Adhuri and Ida Aju Pradnja kind of non-compliance with their respective agreements Resosudarmo, ‘Unfinished Edifice or Pandora’s Box? on the part of the company. See Palmer and Engel, note Decentralisation and Resource Management in 2 above at 2139. Indonesia’, in Budy P. Resosudarmo ed, The Politics and 110 See Moeliono and Dermawan, note 106 above at 118. Economics of Indonesia’s Natural Resources 92, 99 111 See, e.g., Resosudarmo, note 3 above 124 (discussing pro- (Singapore: Institute of Southeast Asian Studies, 2005). conservation policies in the provinces of West Sumatra See also Ali Akbar, ‘Pemerintah Daerah Rejang Lebong and Jambi). See also ‘Mulai 2008, Tak Satupun Kayu Memberikan Izin Penebangan di Hulu DAS Musi Keluar Papua [From 2008, Not A Single Piece of Wood [Rejang Lebong Local Government Grants Logging Will Leave Papua]’, Gatra, 5 December 2007 (discussing Permit in Musi River Catchment Area]’, Friends of the initiatives in Papua). Earth Indonesia, 26 March 2007. 112 See Resosudarmo, note 2 above at 237. 119 See Resosudarmo, note 2 above at 237.89
  18. 18. Deforestation and Decentralisation in Indonesiapermits were in fact issued within zones on which land,127 this has become an important driver behindlarge-scale concessions had been issued by the deforestation. The problem is exacerbated further byCentral Government.120 This in turn led to a ‘race the fact that, in addition to actually establishingto the bottom’, with large-scale concession-holders plantations, many companies (and villageclaiming that this was ‘forcing’ them to abandon cooperatives) simply use Plantation Permits asselective cutting requirements within their licence pretexts for logging.128 Of the 2.5 million hectareszones.121 Districts/municipalities continued to issue of land cleared for oil-palm in East and Westthese licences even after a Governmental Regulation Kalimantan, for example, plantations have beenwas passed which clearly prohibited this,122 but it established on only about 20 percent.129 It is unclearnow appears most regions have ceased this practice whether this is done with the prior knowledge ofin the hope of being able to negotiate a share of the the regional governments concerned or whether theyrevenues from large-scale concessions.123 As such, are genuinely conned by companies using thelogging remains a prioritised source of revenue. promise of oil-palm revenues to engage in the clear- cutting of forest. The former scenario certainlyThe negative impact of regional governments on appears to be the case in relation to recent proposalsdeforestation extends beyond the issuing of logging to develop a giant oil-palm plantation in theconcessions. District governments in Kalimantan, mountainous and infertile areas of Malinau Districtfor example, have passed legislation allowing illegally in East Kalimantan.130logged timber to be transported out of the districtprovided that the party transporting the timber pays The Central Government is also playing a key rolecertain fees to both the relevant district government in supporting deforestation under Otda. Where it hasand the Central Government.124 At the time the retained decision-making powers it has not exercisedOtda laws were passed, one district, East them in support of sustainable forest management.Kotawaringin, produced almost as much of this For example, regional governments blame the‘legalised’ timber as it did legally logged harvests.125 Ministry of Forestry for being slow to formulate keyBy allowing the private sale of illegally logged policies.131 The Ministry has also been accused oftimber, these policies essentially condone its breaching the Forestry Law by issuing an IUPHHKextraction. Regional governments have also over protected peat land,132 and of being complicitpromoted deforestation by issuing Plantation in allowing the release of forested land for thePermits (Izin Usaha Perkebunan or IUP). over large granting for Plantation Permits.133 Where decision-expanses of forested land. The main type of making has been devolved, the Central Governmentplantation is oil-palm, which now covers over six has proved ineffective at ensuring that it is compliantmillion hectares throughout Indonesia and is with laws relating to environmental sustainability.growing at the astonishing rate of 400,000 hectaresper year.126 Given that approximately 80 percentof new oil-palm plantations are approved on forested 127 Douglas Sheil and Imam Basuki, ‘Future Rides on Land Use’, The Jakarta Post, 30 March 2005, available at http:/ /www.thejakartapost.com/news/2005/03/30/future- rides-land-use.html. 120 Id. at 234. See also McCarthy, note 9 above at 163. 128 Letter from Friends of the Earth Indonesia to the 121 See Barr et al., note 100 above at 101. Minister for Forestry and the Governor of Central 122 Government Regulation 34/2002, as discussed in Part Kalimantan, 7 July 2006.See also Casson and Obidzinski, III(C) above. note 9 above at 53. 123 See Barr et al., note 100 above at 105. 129 Marieke Sandker, Aritta Suwarno and Bruce M. 124 See Resosudarmo, note 2 above at 237. Campbell, ‘Will Forests Remain in the Face of Oil Palm 125 See Casson and Obidzinski, note 9 above at 57. Expansion? Simulating Change in Malinau, Indonesia’, 126 Norman Jiwan, ‘Realitas Kebijakan dan Perizinan Usaha 12 Ecology and Society 37, 40 (2007). Perkebunan: Pembelajaran dari Sektor Perkebunan Skala 130 Id. Besar Kelapa Sawit [Policy Reality and Plantation 131 See Saleh, note 114 above. Licences: Lessons from the Large-Scale Oil-Palm 132 Setri Yasra et al., ‘Menyingkap Surat Izin Menteri Kaban Plantation Sector]’, (paper presented at the Annual [Exposing Minister Kaban’s Licence]’, Tempo Interaktif, Congress of the Indonesian Customary Communities 3 December 2007. Alliance (AMAN), 18 March 2007). 133 See Jiwan, note 126 above. 90
  19. 19. Law, Environment and Development JournalAlthough many of the Regional Regulations is partly responsible for the current dynamics drivingdiscussed above clearly contradict higher laws, such deforestation.as the Constitution and the Forestry Law, only asmall portion of Regional Regulations have been 5.1 Flawed Division of Authorityannulled.134 As discussed below, some of these between the Central Governmentproblems arise from the way in which the Central and the RegionsGovernment has attempted to retain decision-makingrights over key aspects of forestry while offloading The laws governing Otda and forest managementthe responsibility to fund and implement forestry are seriously flawed in the way they purport tomanagement on the ground. This is one of several divide authority between the Central Governmentproblems brought about partly as a result of the and the regions. These flaws can be separated intolegislative weaknesses to which this essay now turns. three inter-related categories: an acute lack of clarity in relation to divisions of authority, inappropriate5 allocations of authority and an absence of secure rights for the regions. Each of these problems, discussed in turn below, result in practices that facilitate deforestation.HOLDING LAW RESPONSIBLE 5.1.1 Lack of Clarity about Divisions of PowerAs the preceding discussion has demonstrated, Otda The lack of clarity as to the division of authorityand the political economy in which it emerged have has led to a situation in which both regionalbrought a range of new challenges for sustainable governments and the Central Government engageforest management in Indonesia. Many of these in the exploitation of timber but neither the regionschallenges involve the classic tale – common to nor the Central Government is prepared to accepttropical forest management worldwide – of gaps responsibility for ensuring sustainable forestbetween law-on-paper and law-in-practice. management. This is evident, for example, in theHowever, to stop the analysis here would be to treatment of ex-timber concession land. While bothignore another type of gap: gaps within law-on- levels of government have scrambled to issue timberpaper. If the call of one environmental lawyer to licences, neither appears particularly interested in‘take Indonesian statutory law seriously’135 is to be monitoring the forests left standing following theheeded, it is necessary to mind this other type of completion of logging in a particular area. This isgap. Doing so exposes the ways in which Indonesian despite the fact that these areas are particularlylaw both passively and actively supports vulnerable to deforestation given that access roadsdeforestation, and in turn points to ways law can already exist in most of them, thus decreasing thebe used to support sustainable forest management cost of bringing heavy machinery into the area.136in the country. With this purpose in mind, thefollowing sections highlight five ways in which law One of the causes of the lack of clarity is the lack of a system for resolving inconsistencies between different legislative instruments. Rather than allowing the development of jurisprudence on the 134 See, e.g., Yance Arizona, Disparitas Pengujian Peraturan resolution of conflicts of laws, Indonesia has a Daerah: Suatu Tinjauan Normatif [Disparities in tradition of simply issuing new laws to clarify Reviewing Regional Regulations: A Normative Appraisal] (unpublished paper, 2008) available at http:/ /yancearizona.wordpress.com. See also ‘Thousand-Island Dressing’, The Economist, 12 November 2004. 136 See generally Nana Suparna, ‘Illegal Logging dari Sisi 135 Sarah Waddell, The Role of the ‘Legal Rule’ in Indonesian Sistem Pengelolaan Hutan [Illegal Logging from a Forest Law: Environmental Law and Reformasi of Water Management System Perspective]’, unpublished paper Quality Management (Doctoral thesis completed at the (on file with author) produced on behalf of the University of Sydney, 2004). Indonesian Forest Concession Holders, May 2005.91
  20. 20. Deforestation and Decentralisation in Indonesiainconsistencies.137 When it is not politically feasible forests. According to this Regulation, the protectionto do this, the inconsistencies simply remain in force. of forests ultimately comes under ‘the authority ofThe direct contradiction between the Otda laws, the Central Government and or Regionalwhich demand the decentralisation of forest Governments’ (Art.3(1)) (emphasis added). Suchmanagement, and the Forestry Law, which ignores provisions – predictably – lead to systemic buckdecentralisation, is a classic example of this. This passing, as has also occurred under similarhas given rise to the current situation where regional circumstances with decentralisation in thegovernments cite the Otda laws to further their neighbouring Philippines.141interests while the Ministry of Forestry cites theForestry Law. 5.1.2 Inappropriate Allocations of PowerThe lack of a clear hierarchy of laws also leads to Where the division of authority is actually clear, itunclear centre-region power divisions. For example, is often poorly suited to the goal of sustainable forestdistricts/municipalities have issued Regional management. This is particularly the case with theRegulations which contradict Ministerial Otda laws. As discussed above, for example, theRegulations from the Minister of Forestry138 on the Fiscal Balance Law allows regions to obtain a muchbasis that Ministerial Regulations (Peraturan Menteri larger share of forestry revenues than of revenuesor PerMen) are not mentioned in Article 7(1) of Law from income tax, oil or gas. This creates clear10/2004,139 which sets out a hierarchy of Indonesian incentives to over-exploit timber at the expense oflegal instruments. Regional Regulations, on the other investment in other sectors. This over-exploitationhand, are mentioned in this hierarchy. However, is exacerbated by the fact that policing remains underLaw 10/2004 also mentions that Ministerial the exclusive jurisdiction of the CentralRegulations are ‘binding’ (Art.7(4) and the Government. This means that, even where there isElucidation), which in turn allows the Ministry of regional political will to support conservation, lawForestry to ignore Regional Regulations that it enforcement efforts remain unaccountable todeems are inconsistent with its Ministerial regional governments and largely unresponsive toRegulations. This mismatch is compounded by the local conditions. This goes against lessons fromvague drafting of many of the legislative provisions decentralisation in countries as diverse as Southwhich purport to allocate authority. One example Africa142 and Finland,143 which instead point theof this is the way Governmental Regulation 6/2007 importance of decentralised policing. The same canstates that Forest Management Units (Kesatuan be said of the justice system, which the RegionalPengelolaan Hutan or KPH) are to be established in Governance Law also makes the exclusiveorder to manage forests on an ecosystem basis, but jurisdiction of the Central Government. This hasdoes not describe how exactly these units will resulted in situations like the refusal of the Westinteract with regional governments. Another Tanjung Jabung District Court to apply Regionalexample is Governmental Regulation 45/2004,140 Regulations in relation to forest crimes,144 with thewhich makes vague calls for government agenciesto coordinate with each other for the protection of 141 See generally Leonora C. Angeles and Fransisco A. Magno, ‘The Philippines: Decentralization, Local Government and Citizen Action’, in Oxhorn, Tulchin 137 Jason M. Patlis, ‘New Legal Initiatives for Natural and Selee eds, note 8 above. Resource Management in a Changing Indonesia: the 142 Steven Friedman and Caroline Kihato, ‘South Africa’s Promise, the Fear and the Unknown’, in Resosudarmo Double Reform: Decentralization and the Transition ed, note 118 above.(discussing how a new piece of from Apartheid’, in Oxhorn, Tulchin and Selee eds, note legislation was passed to resolve inconsistencies between 8 above. legislation relating to mining in protected forests). 143 See generally Sofia R. Hirakuri, Can Law Save the Forest? 138 McCarthy, note 9 above at 162. See also Resosudarmo, Lessons from Finland and Brazil (Bogor: CIFOR, 2003). note 2 above at 242. 144 Sudirman, Dede Wiliam and Nely Herlina, Local Policy- 139 Law No. 10 of 2004 concerning the Formation of making Mechanisms: Processes, Implementation and Legislation. Impacts of the Decentralized Forest Management System 140 Governmental Regulation No. 45 of 2004 concerning in Tanjung Jabung Barat District, Jambi, Sumatra 17 the Protection of Forests. (Bogor: CIFOR, 2005). 92

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