Indonesia divided over forest moratorium

JAKARTA (Reuters) - Indonesia’s government is still trying to thrash out the details of a two-year moratorium on forest clearing under a $1 billion climate deal with Norway, leading it to miss a planned January 1 start and continued uncertainty for plantation firms.

Land owned by Indonesian palm oil giant PT SMART Tbk is cleared in Ketapang in Indonesia's West Kalimantan province August 2, 2010. REUTERS/Tommy Ardiansyah

The divergence of views between different Indonesian government ministries mirrors the inability of nations to agree a concrete pact to limit global greenhouse gas emissions at U.N. talks in Cancun last month.

While the government still hopes to finalize the ban in coming weeks, the potential for further delays or a watered-down version of a much-lauded bilateral agreement would be another blow for global efforts to slow climate change.

The delay means continued uncertainty for palm oil, pulp and paper and mining firms hoping to expand.

At issue are different views on how much forest and what type of forest to include in the ban. There is also uncertainty on whether to allow holders of existing permits to clear forest to go ahead or to compensate them instead.

“We are dealing with so many stakeholders, so in a democratic process we need negotiation, discussion, compromises -- as long as the principle is still being held we are on the right track,” Kuntoro Mangkusubroto, a respected technocrat who heads the president’s special delivery unit, told Reuters.

The dispute shows the difficulties for Indonesia of slashing emissions while still spurring economic growth, as the country earns billions each year from cutting down forests to sell timber, paper and palm oil.

Mangkusubroto, tasked with steering the climate deal with Norway, and the forestry ministry have submitted competing drafts for the proposed moratorium, seen by Reuters, and the decision on how to proceed now rests with President Susilo Bambang Yudhoyono.

He has to choose between two starkly differing drafts: the forestry ministry wants the ban only on new permits to clear primary forests and peatlands for two years, while the presidential delivery unit wants it to include secondary forests, to review existing permits and consider extending the timeframe.

Primary forests are untouched while secondary forests have been selectively logged, though boundaries are often unclear and illegal logging is rampant in one of Asia’s most corrupt countries. Forests soak up the main greenhouse gas carbon dioxide (CO2).


Peatlands emit huge quantities of greenhouse gases if drained and cleared, and heavy deforestation led the World Bank to name Indonesia the world’s third largest emitter in 2005.

Yudhoyono aims to slash 26 percent of the country’s emissions by 2020 versus business-as-usual levels, or 41 percent with international support. The Norway deal, which rests on emissions cuts from saving forests being proven, was heralded as an example of how bilateral deals could help fight climate change.

Plantation and mining firms have opposed the moratorium, which could slow the expansion of firms such as Astra Agro Lestari and delay coal and mining projects worth $14 billion by the likes of BHP Billiton.

So far there are few signs that palm oil exports from the world’s largest producer will be hit. Indonesia’s trade minister said on Wednesday palm oil exports are expected to grow 16 percent in value this year amid new investment in the sector.

However, the draft from Mangkusubroto calls for a review on existing permit holders, though firms would be excluded if they have already invested in projects by December 2010 and the forest was heavily damaged.

Mangkusubroto said he is preparing incentives and compensation for firms such as land swaps.

“We cannot just leave them like that. We have to give them options,” he said.

On the other hand, forestry minister Zulkifli Hasan, a politician from a political party allied with Yudhoyono, told Reuters he wanted the freeze applied only to new permits to maintain business and legal certainty.

“Businesses which already hold permits can go ahead, we cannot and may not stop them, because we have exploited (the forest) for 40 years, so there are many firms who hold forest permits,” Hasan said in an interview.

The ministry has identified 35 million hectares (87 million acres) of land that can be used selectively for business, and nine plantation firms have submitted requests to use 320,000 hectares of forest.

He added the ban will still protect 43.8 million hectares of primary forests and half of the 20 million hectares of peatlands, while applying sustainable forest management practices to another 48.5 million hectares.

“This is already January 2011 and after seven months of discourses and reviews in the public and within the government, the government is yet to produce a clear strategy and legal framework,” said Fitrian Ardiansyah, forest climate policy analyst at WWF.

Additional reporting by Chris White; Writing by Neil Chatterjee; Editing by David Fogarty