Indonesia Steps Up Audits of Companies Operating in Rain Forests

Aug 27, 2014 3:11 am ET

Aug. 27 (Bloomberg) -- Indonesia’s latest tactic for slowing the world’s fastest rate of deforestation is to crack down on licensing of companies with concessions for agriculture on peat lands and rain forests.

The agency for Reducing Emissions From Deforestation and Forest Degradation is auditing 18 companies to check for proper licensing, Heru Prasetyo, head of the REDD+ office in Jakarta, said in an interview. The country’s laws and the way they are enforced need to be changed, said Prasetyo.

“After we review the licenses, we register them and we start doing the dirty things like revoking the licenses,” Prasetyo said on Aug. 18. “Three companies are being prosecuted,” he said, declining to identify them.

A lack of central government oversight and corruption in licensing, traditionally done at the local level, contributed to illegal burning of Indonesia’s peat lands and forests. The environment ministry is separately investigating 29 cases this year against 26 companies accused of using fires to clear land in Riau, a national center for palm oil, pulp and paper production, it said Aug. 6. Only seven criminal cases involving forest fires were filed in 2013.

The audits come after Singapore passed a bill last month on trans-boundary haze to fine companies proven to engage, authorize or condone acts that contribute to haze. The city- state endured its worst-ever air quality last year.

Not Pretty

Joko Widodo, who takes over as president of Indonesia in October after winning 53 percent of the vote in July elections, has said the lack of a single national forestry map results in overlapping permits. There may be about 1,000 mid-sized palm oil companies below the radar of international organizations, while nearly a third of local regents are being tried for alleged graft, Prasetyo said.

“The track record of Indonesia in terms of law enforcement is not good,” Prasetyo said. “The condition of our forests is not pretty.”

Indonesia lost more than 6 million hectares of its primary forest, an area the size of England, from 2000 to 2012. The deforestation rate surpasses that of Brazil, scientists including Belinda Arunarwati Margono and Fred Stolle wrote in Nature Climate Change on June 29.

Forestry Crimes

Indonesian companies can be put on trial if they fail to participate with mandatory environmental assessments or used bribery to win licenses, said Prasetyo.

PT Kalista Alam was sentenced this year by a court in Aceh province on Sumatra island to pay fines of 366 billion rupiah ($31 million), and one of its officials was sent to jail for three years for forest fires, according to the Environment Ministry.

Indonesia, estimated to be the world’s largest emitter of greenhouse gases after China and the U.S. because of deforestation, has imposed a moratorium on new permits to develop peat lands and primary forests. The ban, set to expire in May 2015, is part of an agreement for $1 billion from Norway.

Jokowi plans to continue the moratorium, Sonny Keraf, Indonesia’s environment minister from 1999-2001 and adviser to Jokowi, said last month. The president-elect also wants to deploy a network of drones to help monitor and stop land misuse across an archipelago of 17,000 islands that would stretch from New York to Alaska.

“The pressure that we have now is not to end the moratorium at a certain year, but at a certain condition,” Prasetyo said. “When governance is already set and regulations are already proper, then we can say the moratorium is over and you can apply for licenses using the new governance processes.”