World Rainforest Movement

Indonesia: Oil palm expansion for biofuel bringing more exploitation than development

Indonesia is one of the world’s most populous and rural countries, with a total population of 220 million people.

The country now has some 6 million hectares of land under oil palm and has cleared three times as much, some 18 million hectares of forests, in the name of oil palm expansion. Existing regional plans have already allotted a further 20 million hectares for oil palm plantations, mainly in Sumatra, Kalimantan, Sulawesi and West Papua, and new plans are currently under discussion to establish the world’s largest palm oil plantation of 1.8 million hectares in the heart of Borneo.

Since the 1990s, Western European demand for oil palm products has been more or less stable, while demand from India, Pakistan, China and the Middle East has exploded. These new markets, and markets in Eastern Europe, are set to expand further as the people in these countries increasingly adopt ‘western’ consumerist lifestyles. Crude palm oil is also being heavily promoted as a source of ‘bio-diesel’ suited for countries like Japan and Europe, which have adopted renewable energy policies as part of their commitments to implement the Kyoto Protocol. It is the growth in these markets which is currently the main driver of palm oil expansion in South East Asia, which has proven attractive to oil palm developers for a number of reasons, including the favourable climate, comparatively low labour costs, low land rents and concerted government plans to develop the sector, through provision of attractive (or unenforced) legal frameworks, cheap loans and fiscal incentives.

New markets for ‘biofuels’ also provide scope for increased palm oil sales. Global demand for palm oil is set to double by 2020 with an annual rate of increase predicted at near 4% per year (compared to 2% per year predicted for soybean oil), and Indonesia’s national development plans are designed to secure it a large share of these markets.

Putting together all the figures available on provincial land use plans, published in newspapers and various other sources, Sawit Watch has found that almost 20 million hectares of the national territory have already been proposed for oil palm development by local governments. The Indonesian government is now promoting bio-diesel from palm oil for both exports and domestic use.

Potentially, these trends, plans and projections have major implications for Indonesia’s forests and forest dependent peoples. Forest clearance for oil palms is one of the main motors of deforestation in Indonesia and cause of destructive forest fires – though another major driver of this land clearance is for speculators to have access to the timber.

Oil palm expansion imply a major reallocation of land and resources, dramatic changes to vegetation and local ecosystems, substantial investment and new infrastructures, movements of people and settlements, major transformations of local and international trade that impact on local communities, who face serious problems and most are in conflict with companies over land. There is a widespread feeling that communities have been cheated of their lands, inveigled into agreements through false promises and denied a voice in decision-making. Among the many irregularities in the way lands have been acquired and held by companies, the most notable include the following:

-customary rights not recognised; plantations established without a government license; information not provided to communities; consensus agreements not negotiated; customary leaders manipulated into making forced sales; compensation payments not paid; promised benefits not provided; smallholders lands not allocated or developed; smallholders encumbered with unjustifiable debts; environmental impact studies carried out too late; lands not developed within the stipulated period; community resistance crushed through coercion and use of force; serious human rights abuses.

In some oil palm plantations, affected groups are taking collective actions to take back lands that have been forcibly taken from them over the past 32 years. They have been doing this by reoccupying land, destroying company assets like buildings and mills, razing plantations, chasing plantation workers away and so on. Such actions create scope for provocateurs to widen the conflicts and spread social confusion, exacerbating the widespread communal violence (known as ‘horizontal conflict’) that has become such a feature of reform era Indonesia. The lack of mechanisms to resolve long-standing tenurial disputes underlies many of these troubles.

Extracted and adapted from “Promised Land: Palm Oil and Land Acquisition in Indonesia – Implications for Local Communities and Indigenous Peoples”, a new report by Marcus Colchester, Norman Jiwan, Andiko, Martua Sirait, Asep Yunan Firdaus, A. Surambo, Herbert Pane, from Forest Peoples Programme, Sawit Watch, HuMA and the World Agroforestry Centre, published on November 17, 2006, available in English and Bahasa Indonesia at:

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