Clearance for palm oil at one of the Tanah Merah concessions, January 2022. (Photo: Planet/Global Forest Watch)
Fate of Indonesian rainforest the size of Belgium hangs in the balance
Did Indonesia just save a forest the size of Belgium? Or open the floodgates for its destruction? Bizarrely, no-one really knows. The answer has big implications for the planet. And one giant, controversial palm plantation development in the heart of a pristine tract of forest, whose permits were among those cancelled, will be a crucial test.
A big problem
In November 2018, Earthsight published an in-depth investigation in collaboration with Mongabay into the Tanah Merah oil palm project in Papua, on the Indonesian half of the island of New Guinea. We revealed that the project, which encompassed an area of pristine rainforest twice the size of Greater London, was the single largest threat to Indonesia’s forests, and was set to release 104 million tonnes of CO2 — more than most nations emit in a year.
Our report, The Secret Deal to Destroy Paradise, also exposed how the project was rotten to the core, built on a foundation of secret, corrupt deals which broke laws and abused the rights of Indigenous people. It hit the front page of Indonesia’s version of Time magazine. The story also won a prestigious journalism award.
Earthsight and others called for the project to be cancelled, and those responsible brought to book. But we also argued that it was symptomatic of a wider problem, requiring a wider solution. To help stem rampant forest loss and meet its global climate commitments, in 2018 Indonesia instituted a moratorium on the issuance of new permits for palm oil plantations, the biggest driver of forest loss in the country.
So far, so good. But the problem with this was that so many permits had been issued already that deforestation could go on largely unabated for decades to come.
Ample evidence had already demonstrated that there was nothing particularly unique about the Tanah Merah project, except its scale and ambition. The majority of the industrial plantations in Indonesian forests had been developed illegally. The permits for most of those awaiting clearance and planting had also been issued in contravention of the law, sometimes by corrupt officials. Case studies from around the archipelago, exposed by civil society organisations, testified to this truth. So did the government’s own studies.
It was in recognition of this historic crime, carried out under an earlier administration, that the 2018 moratorium also included a promised “review” of existing permits. Until recently, there has been little to suggest they intended to honor that promise in the years since, however.
It came as something of a surprise, then, when on Jan. 5, 2022, Indonesia’s forest and environment minister, Siti Nurbaya Bakar, dropped a bombshell. She announced that she had cancelled 192 forest-release permits. The licences, mostly for the development of monoculture oil palm plantations, covered a combined area of 3.1 million hectares (7.7 million acres). An estimated 2.4 million hectares (5.9 million acres) remains natural forest.
Was this a belated Christmas present to the world? No one really knows. As Timer Manurung, executive director of the Indonesian NGO Auriga, told Mongabay: “Out of nowhere, the permits were suddenly revoked. So it’s difficult for us to tell whether the permit revocation would lead to a good thing or not.”
A good thing or not?
One reason why advocates for forests and community land rights in Indonesia are reluctant to declare victory is that the cancellations might actually prove to be the opposite of good news. Indeed, the most cynical interpretation is that they are an act of housecleaning in preparation for a massive feeding frenzy. A whole new cast of corrupt officials and greedy businessfolk may be waiting in the wings ready to rush to obtain fresh licenses to the very same land.
Previous land grabs in Indonesia have correlated closely with palm oil prices, which peaked in 2007 and again in 2011. So it may not be a coincidence that Siti’s announcement coincided with palm prices soaring past all previous records. After starting on their current surge in April 2021, they smashed the record of 4000 RM/tonne set 14 years ago in June 2021, and by the day of Siti’s announcement in January had hit a new daily record close to 5500 RM.
As industry insiders have previously explained to Earthsight, the business of palm oil development at the forest “frontier” in Indonesia and elsewhere is a risky one. As such, it is highly price-dependent.
The cheapest, easiest land across the islands has long since disappeared under the expanding tide of palm. What remains are places like Papua and the foothills of the central uplands of Borneo. Places with difficult geography, poor infrastructure and challenging political environments. This is where many of the cancelled permits were issued during previous boom years, but where little development took place because prices fell again, and the economics simply proved too challenging.
With palm prices far in excess of previous highs, and predicted to remain high, it is surely a safe bet that investors from around the world are flocking once more to these out-of-the-way places, looking for opportunities to “flip” land for a quick buck. The trick is a simple one, which our Indonesia for Sale series documented in detail via a number of case studies. Bribe local politicians eager to finance their next political campaign for the rights to a tract of land, wrap them into an opaque shell company, then sell it on (complete with plausible deniability) to one of the big palm multinationals for a big profit. This time it should be even easier than before, courtesy of a recent bonfire of plantation red tape.
The problem the land vultures have this time is the mess left by the previous booms. All the land has already been parcelled out, packaged up and sold on, but those who bought it have gone bankrupt, moved on, or their true identities simply lost to the mists of time.
Enter Siti and her permit review, wiping the slate clean ready for the next round.
Tanah Merah: A test case
Siti has claimed that the cancellations are about protecting forests. But in truth there have been very mixed messages. Her boss, President Joko Widodo, has instead described them as about ensuring that the country’s natural resources are “used as much as possible.” During a TV interview, meanwhile, one of Siti’s top lieutenants at the forest agency said that the permits had been cancelled because the companies had failed to clear the forest. The land, he said, would be being reissued to new investors. Some of Siti’s statements since have in turn appeared to contradict that — though remain worryingly ambiguous.The fate of this vast area of forest will depend on who can bring the most pressure to bear on the Indonesian government. On the one side sit the agribusiness-billionaire political donors, vast dollops of cash and a raft of wily and charming lobbyists. On the other, Indonesia’s millions of forest-dependent peoples, its vibrant civil society, and an international community which claims to be determined to protect the world’s forests.
The battle will be fought in many places. Behind the closed doors of plush offices in skyscrapers in Jakarta and Singapore. On the streets. At summits of international leaders. But one thing is fairly certain: at the epicenter will be Papua. And the early signs there are not good: by February, Mongabay journalists had already found one cancelled oil palm concession there had continued bulldozing forest regardless.
Earthsight has analyzed the details of the cancelled permits. This shows that 41% of the land affected is in Indonesian Papua. The proportion of intact forest affected which lies there is almost certainly far higher. Papua province, which forms the eastern half of the region (West Papua being the rest) is alone responsible for more than a quarter. And most of that is in just a couple of districts: Boven Digoel and Merauke.
Which brings us back to Tanah Merah. The vast project spans 2,800 square kilometers in Boven Digoel, nearly twice the size of Greater London. It sits at the heart of the largest tract of virgin forest remaining in Asia. Earthsight and others have argued that it must be viewed as a crucial test case for the government’s promises to clean up the mistakes of the past, rein in deforestation and get the country on a path to turning its forests into a net carbon sink.
Now it is a test case for the wider fate of the 3 million hectares potentially granted a reprieve in January, and for the people with an ancestral claim on that land.
The Tanah Merah palm oil project is made up of seven permits, each issued to a different shell company. Siti’s New Year bombshell cancelled every one of them.
As our earlier report revealed, some of the blocks of land in the vast project were later reissued by local authorities to other companies.
But the permits revoked by Siti, though listed against the names of the earlier companies, should apply to the new ones too. Developing an oil palm plantation in Indonesia requires a series of permits to be obtained. What has been revoked is the “release” of the land from the forest estate. The validity of the newer permits rests on this same “release”.
In theory, then, the Tanah Merah project is dead. But is it? The owners, or at least those which can be identified — including a murky property developer from New Zealand who (on paper at least) now holds a minority stake in one slice of the project — have remained silent on the matter. And an absence of valid permits has never stopped it before.
In 2019, local authorities finally declared that other key permits for the project had been falsified. After being alerted by Earthsight, Indonesia’s timber legality outfit shut down the associated sawmill in response. But within less than a year, a fresh permit had been obtained post-facto, the ban was lifted, and operations restarted.
The sawmill, intended to process the estimated $6 billion of timber expected to be produced from the clearance of the land, is owned by a notorious Malaysian logging and plantation multinational, Shin Yang. With its production lines back up and running, in the summer of 2021 it celebrated its first ever shipment. A barge loaded with 1396 cubic meters of veneer worth $1 million slipped anchor on June 7, destined for Shin Yang’s giant parent mill in its home country, to be made into plywood for sale across the world. The local customs agency, far from preventing its departure, actually celebrated it on its website. The local customs chief told reporters he expected the shipment to be the first of many, and for it soon to be followed by loads of palm oil.
The current owners of the broader project are not likely to quit without a fight. Though the development has never progressed at the rate intended — held back in part by civil society campaigning, in part by financial difficulties — some clearance and planting has taken place.
Earthsight has been monitoring the project since it first came to our attention in 2013. In addition to the large sawmill investment, our analysis shows that some 9,000 hectares (22,000 acres) has thus far been cleared and planted, across four of the seven contiguous tracts of land which make up the project. By Earthsight’s estimates, some 4,000 hectares (10,000 acres) of this should now have reached maturity and be ready to produce palm oil. The land cleared and planted thus far may be worth as much as $100 million. Its owners aren’t going to hand it over without a fight.
And they may well have an important new ally. The first permits for the Tanah Merah project were issued in 2007 by the local district chief at the time, Yusak Yaluwo, who was subsequently imprisoned for corruption. Freed from jail, he stood for reelection in 2020 and won by a landslide. His victory annulled by the courts, he had his brother Hengky Yaluwo stand in his place in the re-run. Hengky was inaugurated as bupati of Boven Digoel in October 2021.
Even if the revocations are enforced and the land not simply re-issued, there is much more the government must do. As Timer of Auriga has argued, the government should be blacklisting the companies involved, as well as their owners. They should be reviewing the circumstances of how they came to be issued. They should be publishing all the details about them. Not only should they be protecting the remaining forest, they should also be seeking to reforest the rest. They should be giving the land back to the people who live in these areas, and strengthening their rights to it.
But the first battle will be to prevent the vultures snatching it all back, and triggering a fresh tidal wave of deforestation.