August 18, 2010 / 12:22 PM / 9 years ago

Indonesia may cancel permits to save forest

JAKARTA (Reuters) - Indonesia’s planned moratorium on the clearing of natural forest from 2011 may lead to the revocation of some firms’ existing permits and will slash the size of a giant food estate, said the official in charge of the scheme.

The two-year moratorium, agreed under a $1 billion deal with Norway to curb greenhouse gases from deforestation, has created uncertainty among investors in plantations, timber and mining, who fear their expansion could be stymied.

Kuntoro Mangkusubroto, head of the presidential delivery unit, told Reuters the moratorium could also extend beyond two years, given that President Susilo Bambang Yudhoyono was determined to protect the country’s extensive tropical forests.

“Climate change is a real problem for the world and for a developing country like Indonesia. Well this is a new agenda and I believe we have to change the way we think about development,” said Mangkusubroto in an interview.

“Parallel to that, we cannot neglect the welfare of the people,” he said, adding that strong economic growth of 7 percent was still possible while protecting nature.

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

“It all depends on how many licenses someone has already, and whether they are affected or not depends on the type of licenses that have been issued,” Mangkusubroto said, adding that compensation could come in the form of land swaps.

“There might be opposition because, for sure, there will be industries affected,” he said. “We are just controlling the way they utilize the forest.”

LAND CHALLENGE

One casualty will be the Merauke food estate in the easternmost Papua region, which he said will be cut to around 350,000-500,000 hectares from an initial plan for 1.2 million, partly because carbon-rich peat lands had been found there.

Investors in Merauke include Singapore palm oil giant Wilmar and Indonesia’s Medco.

Mangkusubroto, who is meeting Norwegian officials this week, said the scheme was still on track for January 2011, even though the two governments have yet to clarify their definition of natural forest and exactly what a moratorium will mean for permits.

For now, he could not be specific on how much of Indonesia’s roughly 120 million hectares of forest would be included under the moratorium. He admitted that enforcing the scheme — given illegal logging is rife — was another problem.

Mangkusubroto said a multilateral agency such as the World Bank may oversee the $1 billion, most to be given by Norway after emissions reductions have been proved, which would reduce the risk that corrupt officials would siphon off funds.

The moratorium could also derail prospects for infrastructure project such as toll roads if they affect natural forests.

Mangkusubroto said a government land acquisition bill was unlikely to be approved by parliament before next year, later than hoped for given poor infrastructure is a key deterrent for many foreign direct investors in Southeast Asia’s top economy.

Editing by Sara Webb

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