Indonesia forest moratorium breached on first day: group

JAKARTA Fri Jun 17, 2011 3:05am EDT

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JAKARTA (Reuters) - Indonesia's freshly inked two-year forest moratorium was breached on its first day as a plantation company burned carbon-rich peatlands on Borneo island, an investigation by an environmental group said.

Indonesia revealed a long list of exemptions to its much-delayed two-year forest moratorium on logging that came into effect on May 20, in a concession to hard-lobbying plantation firms in Southeast Asia's largest economy.

The London-based Environmental Investigation Agency (EIA) and its Indonesian partner Telapak said they had documented peat forest in Central Kalimantan province's moratorium zone being burned by Malaysian plantation group Kuala Lumpur Kepong Berhad (KLK) on May 20.

KLK officials were not immediately available for comment and company executives did not respond to queries emailed by Reuters.

The Forestry Ministry told Reuters it had not seen the environmental group's report but forest and peatland burning was against the law and should be investigated.

The environmental group also criticized Norway, which promised $1 billion for Indonesia if it implemented the moratorium, for investing in KLK.

"We should all be aware of countries such as Norway which are able to take a profit from deforestation," said the director of campaigns for Telapak, Hapsoro.

Indonesia is seen as a key player in the fight against climate change and is under intense international pressure to curb its rapid deforestation rate and destruction of carbon-rich peatlands.

Norway and Indonesia signed an agreement in May last year under which Jakarta promised to impose the moratorium. In return Norway vowed to pay $1 billion, based on Indonesia's performance in achieving long-term goals to slow deforestation.

Norway welcomed the plan by Indonesia to impose a two-year moratorium on logging in primary forests despite a five-month delay to the deal.

Siv Meisingseth, spokeswoman of the Norwegian central bank, which oversees Norway's holdings abroad, said it did not comment on individual investments by the fund.

In late March, green policy group Greenomics Indonesia also criticized Norway's sovereign wealth fund for investing in palm oil firm Golden Agri-Resources at the same time as funding Indonesian moves to cut deforestation.

Singapore-listed Golden Agri is the parent of Indonesia's PT Sinar Mas Agro Resources & Technology (SMART), which Greenpeace says has cleared high conservation value forests and carbon-rich peatlands.

Norway's $550 billion sovereign wealth fund will keep investing in Southeast Asian oil palm planters but may exclude firms that severely damage the environment, a Norwegian finance ministry official said after Greenomics' criticism.

(Reporting by Michael Taylor in JAKARTA, Niluksi Koswanage in KUALA LUMPUR and Alister Doyle in OSLO; Editing by Neil Chatterjee and Alex Richardson)

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