MEMORANDUM
‘ISSUES SURROUNDING INDONESIAN PALM OIL INDUSTRY’
Submitted by:
SAWIT WATCH
July 24, 2009
To:
1. Delegation of the European Commission to Indonesia
RE: The Information Event on EU Renewable Energy Directive (RED)
Introduction
Over the last decade, Indonesia has played a significant role in the world palm oil industry. Recently Indonesia has overtaken Malaysia as the world largest palm oil producer in 2008. The Indonesian palm oil industry has controlled 7.5 million ha oil palm plantations in 23 provinces. In addition, Indonesia envisages becoming the best sustainable-palm-oil industry in the world with set objectives of promoting and investing toward Indonesia sustainable palm-oil system (Indo-SPOSystem), with RSPO as platform and producing differentiated palm oil base products up to 40 million tons in 2020 with food base 30%, energy base 50%, others 20% with 30% domestic consumption and 65% for export.
The ambitious planned oil palm expansion
Map of planned expansion target
Indeed, the Indonesian palm oil industry has brought significant economic development and national prosperity, employment and regional developments. Since the 1990s, many foreign investors flocked into Indonesia to develop oil palm plantations. The influx of investment was so great that the Indonesian government imposed a moratorium on foreign investments in 1998.
However, this industry development has also been associated with numerous adverse environmental and social impacts. Our recent investigations, relevant published documentations, and many other reports have revealed that the oil palm plantation operations, have both directly and indirectly involved and generated social problems with indigenous peoples and local communities including intimidation, repressive actions, detentions, and violent conflicts. Moreover, the findings also show the facts that with inadequate environmental considerations and lack of preventive measures, Indonesia’s oil palm operations and expansions have further destroyed forest and converted peat land, and other high conservation value ecosystems.
ADVERSE IMPACTS OF OIL PALM PLANTATIONS DEVELOPMENT IN INDONESIA
1. Fires and Haze
Map of hotspots
Hotspots between May – July 2007 (Sawit Watch, 2007)
The destruction of carbon-rich peatland and associated forest fires has been responsible for an estimated 2 billion of tonnes of CO2 being emitted into the atmosphere each year from the Southeast Asia region, with over 90% of those emissions coming from Indonesia [Wetlands International, Factsheet, Tropical Peat Swamp destruction fuels climate change,
www.wetlands.org/publication.aspx?ID=d67b5c30-2b07-435c-9366-c20aa597839b].
This is likely to continue or get worse if current expansion plans are implemented, since many new developments are planned for peatland areas (e.g the one in the news in Aceh, funded by UK company Jardine Matheson). Recently the government of Indonesia issues Ministry of Agriculture guideline regulation that allows oil palm cultivation on peatland below 3 metres depth (Permentan 14/2009).
2. Social conflicts with local communities and indigenous peoples
We would like to draw your attention to some of the social conflicts that have been documented as a result of palm oil monoculture expansions:
- customary rights not respected;
- plantations established in circumvention of proper laws and procedures;
- lack of information disclosure to affected communities;
- lack of free, prior and informed consent from affected communities, consent is at times obtained through coercion; customary leaders manipulated into surrendering traditional community domains that legally cannot be put on sale, in which in certain cases, after the take over the land by the companies, the money was not even paid;
- socio-economic benefits promised to affected communities not fulfilled;
- terms and conditions within partnership agreements between companies and smallholder farmers are regularly violated; in some partnerships, communities ended up in debt as a result of their participation in the scheme because they were not informed on the financial management plan of the project;
- environmental impact studies carried out after the plantations have been established;
- lands not developed within the stipulated period raising suspicion that the areas are exploited for other resources like timber, increased corporate image and benefits from international ‘ processes;
- community resistance crushed through coercion and use of force;
- serious human rights abuses.
In January 2009, Sawit Watch documented some 576 ongoing land conflicts between communities and palm oil companies. Some of these conflicts can be traced back to earlier land disputes, particularly from the Suharto era when the land rights of communities received even less recognition than today. Most recent conflicts are also about land rights, but other disputes arise over levels of compensation, unmet promises, and over smallholding arrangements. Demonstrations and land occupations are common, often resulting in a heavy crackdown from the company’s own security forces, the police or the military. Protestors have been arrested, beaten and even killed. Some of these incidences involve Malaysian-linked companies (Sawit Watch, 2009).
UN Committee on Racial Discrimination:
The Committee, while noting that land, water and natural resources shall be controlled by the State party and exploited for the greatest benefit of the people under Indonesian law, recalls that such a principle must be exercised consistently with the rights of indigenous peoples. The State party should review its laws, in particular Law No. 18 of 2004 on Plantations, as well as the way they are interpreted and implemented in practice, to ensure that they respect the rights of indigenous peoples to possess, develop, control and use their communal lands. While noting that the Kalimantan Border Oil Palm Mega-project is being subjected to further studies, the Committee recommends that the State party secure the possession and ownership rights of local communities before proceeding further with this Plan. The State party should also ensure that meaningful consultations are undertaken with the concerned communities, with a view to obtaining their consent and participation in the Plan .
Chart of social conflicts
Growing number and escalating social conflicts in oil palm plantations (Sawit Watch, 2009)
Reduction of income diversity and resilience to shocks
Rural communities are known to have diverse income and livelihood strategies to spread risks from external events such as commodity price fluctuations and other seasonal factors. However the advent of palm oil monocultures clearly put a threat to the human security of rural communities.
In 2006, WALHI/FoE Indonesian carried out a cost analysis of the conversion of 17,998 hectares of mixed-use forest and agroforest land to oil palm plantation in Manis Mata Sub-District, Ketapang District, West Kalimantan. According to their research the total loss incurred by the local people as a result of the land use change amounted to 272.26 billion rupiahs as shown in table below.
Table of economic lost
Total economic loss suffered by communities near the PT HSL operation areas
The present oil palm development model prefers large-scale land transfers from communities to companies and leads to a loss of environmental goods and services as well as common pool resources. As a result there is a strong risk that this plantation model may reduce communities’ abilities to develop sustainable livelihoods through diversification.
RECOMMENDATIONS AND DEMANDS
The European Union and member states:
Much of the responsibility for the situation in Indonesia lies with the Government of Indonesia. But European governments must also face up to their responsibilities in driving the consumption of biofuels, and in particular, the consumption of palm oil.
• Adopt legally binding restrictions on investment in and subsidies for the use and marketing of edible oils and palm oil-derived energy sources (including agrofuels) from unsustainable sources including those which are associated with high levels of CO2 emissions.
• Ban imports of palm oil for agrofuel and energy until safeguards addressing all the issues can be introduced.
• Abandon targets (for example in the Fuel Quality Directive or the Renewable Energy Sources Directive) for agrofuel use in their countries, as this will inevitably lead to oil palm expansion resulting in exacerbation of and increase in the problems detailed in this report.
• Strongly support actions by the governments of producer countries to ensure that member-state companies obey the national law in those countries, and those which do not do so are prosecuted.
• Introduce tighter regulations on companies to ensure they take their social and environmental responsibilities into account.
European Union and the Government of Indonesia:
An agreement should be established between the European Union and the government of Indonesia for the purpose of ensuring that renewable energy for biofuels from Indonesian palm oil are bound by mandatory business practices. This agreement should address the following principles:
1. Responsible and accountable investments and operations
- Upholding social accountability and responsible conduct
- Establishing a redress mechanism for complaints, investigation procedures, and corrective measures
2. Respect, promote, and implement universal human rights
- Upholding and recognising principles and norms on human rights including ensuring effective and full implementation of civil, political, social, economic, and cultural rights of local communities, indigenous peoples, children, women , and workers .
- Ensuring that there is adequate livelihood protection and economic enhancement of vulnerable and marginalised communities.
3. Ecological, biological diversity and livelihoods justice
- Ensuring environmental sustainability and ecological conservation that must be linked to communities’ rights and well-being;
- Ensuring renewable energy policy sufficiently uptake measures on food sovereignty and rights to food of the peoples in developing countries;
4. International conventions, treaties and other laws
- Respect for all international conventions, treaties and other laws on all relevant areas of concern, from human rights to the environment, like Convention of Biological Diversity , RAMSAR, CITES , Environmental charter of the UN, UNDRIP, and ASEAN Charter.
5. Abstention from armed and violent security measures, police brutality and militarisation
- Urgent withdrawal from situations where violent security measures have been employed whether these are employed through private security, police or military.
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STUDIES AND REFERENCES:
- Promised Land: Land Acquisition and Oil Palm Development in Indonesia – Implications for Indigenous Peoples and Local Communities: Case studies on PT. Sime Indo Agro (PT SIA)/Sime Darby, and PT Mitra Austral Sejahtera (PT MAS)/Golden Hope in 2005/2006;
- Land is Life: Land Rights and Oil Palm Development in Sarawak (Forest Peoples Programme) 2007;
- HSBC and the Palm Oil Sector in South East Asia: towards accountability (Forest Peoples Programme with Profundo) 2008;
- Dialogs and follow up communication with the Managing Director of Sime Darby group during RSPO conferences in November 2007 and November 2008;
- Dialog meeting with HSBC Malaysian officers during RT6 conference in Bali regarding the bank’s palm oil clients’ operations in Indonesia and Malaysia;
- Indigenous Peoples and Oil Palm Plantation Expansion in West Kalimantan, Indonesia, January 2009;
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