Indonesia's Forest Fires Pose an Economic Threat
8/31/99
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Title: Indonesia's Forest Fires Pose an Economic Threat
Source: International Herald Tribute editorial
Status: Copyright 1999, contact source for permission to reprint
Date: August 31, 1999
Byline: Simon S.C. Tay
SINGAPORE - For the third year in a row, fires are blazing across
parts of Indonesia. Thick clouds of smog have affected inhabitants of
Kalimantan and Sumatra. When the winds blow from the south, as they
often do at this time of year, the haze blankets Brunei, Malaysia,
Singapore and reaches other parts of Southeast Asia.
Images of burning rain forests and of people choking in thick smog
have caught international attention. The fires are a grave threat to
the environment, to the health of millions of people and to
navigation through the region's busy sea-lanes. They also contribute
significantly to global climate change.
The environment ministers of the Association of South East Asian
Nations met recently to discuss the issue. The Indonesian minister
promised action.
Malaysia reiterated an offer to lend firefighters to Indonesia.
Singapore has given money for equipment, and provides satellite
pictures to detect and monitor the fires. ASEAN will now consider a
treaty to deal with transboundary pollution.
Such words hold some hope. But many promises have been made before
without real action. Instead, there has been misunderstanding and
misdirection.
Some Indonesian officials maintain that the fires are caused
primarily by small farmers and local villagers. In 1997 and 1998,
they blamed the El Nio phenomenon for unusually prolonged dry
weather. Even today, many efforts focus on firefighting.
Satellite images show, however, that most fires clearly originate
from large holdings of plantation and logging land, owned by
agribusiness and timber companies. The fires are not accidental; they
are the cheapest means for owners to clear terrain and increase
profits. In many cases, they are a way of claiming forest and
converting it for more profitable use as plantations.
Dry weather makes things worse. In these past months, man-made fires
and haze have increased, with rain providing only temporary relief.
Despite Indonesian decrees against the use of fire to clear land and
international principles against causing environmental harm to
neighboring countries, little has changed.
This is partly because Indonesia is preoccupied with other pressing
concerns.
The economic crisis and the political changes since the President
Suharto's resignation last year have taken center stage. Jakarta is
far from the fires, and winds keep the haze away.
Yet the fires are not only an environmental disaster but also an
economic and political problem.
Studies by environmental groups estimate that the fires and haze in
1997-1998 led to about $4.5 billion in economic losses. Extrapolating
for this year, the fires may have caused another $2 billion in
damage. The losses in tourism and the effects on health, forests and
biodiversity are something that Indonesia can ill afford if it is to
sustain its fragile recovery from recession.
Moreover, the root causes of the fires are economic. Indonesia is
planning huge increases in palm oil production and timber yields,
which drive the increased land clearance.
The benefits of such increased land development are hoarded by a few.
While palm oil and timber are lucra-tive industries, the government
share through rent and taxes is small. In fact, government subsidies
and incentives for large companies have underwritten much of the land
clearing.
In many cases, the land has been taken from local farmers with little
compensation. Poor Indonesians in the provinces suffer in the name of
development. Such policies do not relieve mass poverty.
The fires and haze have their roots in cronyism and nepotism amongst
corporate citizens - the same problems that continue to beset
relations between government and business in Indonesia and which
contributed to Mr. Suharto's downfall. Laws and decrees against the
use of fire to clear land are on the books, but remain unenforced.
The international community is giving Indonesia a hand in its
recovery from the Asian financial crisis. The forest fires, and the
underlying economic and political policies, should be on the
international agenda. The International Monetary Fund and the World
Bank must see this as an issue of unjustified subsidies,
unsustainable development and poor governance that is clearly within
their mandate.
Indonesian leaders should not resent such linkage, but should welcome
it as part of a much needed reform program. National interests are
not at stake, only the illegal actions of bad corporate citizens. For
a sustained recovery, Indonesia needs increased foreign trade and
investment, but this must be matched with corporate responsibility.
The writer is chairman of the Singapore Institute of International
Affairs. He contributed this personal comment to the International
Herald Tribune.