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Businesses Warm to Indonesia's Moratorium on Forest Clearing

A pile of logs at a logging operation camp along the coast of Papua province, Indonesia (2006 file photo)

A pile of logs at a logging operation camp along the coast of Papua province, Indonesia (2006 file photo)

The Indonesian government is imposing a moratorium on forest clearing in return for $1 billion grant from Norway to fund projects to curtail deforestation and land degradation. Environmental groups and some businesses welcome the freeze.

Starting in January, Indonesia will bar companies from clearing native forest and peat lands for two years. Timber, pulp and paper operations, and palm oil plantations will be banned from expanding onto new concessions.

The decision initially raised concerns that it would set off a rush of land acquisitions or hurt the economy.

But now many business people and environmentalists say timber industries can still develop land for which they already hold licenses, and they will be able to expand into areas that have been degraded by erosion or previous uses.

The timber and palm oil industries contribute to the destruction of around two-million hectares of Indonesian forest each year, the leading cause of the country's greenhouse gas emissions.

Environmental groups consider the freeze an opportunity for businesses to improve their forest management.

Bustar Maitar works with Greenpeace:

"This moratorium also is the opportunity for the industry to improve the productivity of their plantations," said Bustar Maitar. "The yield of production of Indonesian plantations is very low compared with Malaysian plantations."

Although Indonesia produces more palm oil than neighboring Malaysia, it yields less per hectare. If companies become more efficient, Maitar says they could expand production without destroying the forest.

Some environmental groups, however, say stopping plantations from expanding is unrealistic. They say it is more important to set out clear regulations on forest ownership and land planning.

The government says around 40 million hectares of degraded land could be used for palm plantations, but it has not decided on a formal definition of what degraded land is or where it is located.

Indonesia pledged to reduce its carbon emissions by 26 percent by 2020. Much of that reduction can come from protecting its forests and peat land. They lock in carbon, but release it when they are used for planting.

Greenhouse gas emissions are thought to contribute to global warming. Countries around the world are debating how best to reduce emissions without stalling economic growth.

Aida Greenbury manages sustainability programs at Asia Pulp and Paper, one of the region's largest paper companies. She says government and business must work together to save Indonesia's forests.

"No one company can single-handedly address the issues of protection of rainforest and climate change," said Aida Greenbury. "We are simply not large enough and we do not have influence over enough land."

Greenbury says her company sets aside 40 percent of its 2.5 million hectares for conservation and that it has invested in protecting tiger and orangutan habitats.

She says poverty is the leading cause of deforestation, and that by providing jobs, plantations help reduce illegal logging.

Forestry and its related industries account for about 5.5 percent of Indonesia's $515-billion economy.

Sinar Mas is Asia Pulp and Paper's parent company. Greenpeace accuses the group of clearing virgin forest and peat land and has pressured Nestle, Unilever and Burger King to sever palm oil contracts with the agribusiness giant.

Maitar says Greenpeace wants the government to weigh the costs to the environment against the economic benefits of the timber industry.

"For us Sinar Mas is the example," said Maitar. "Of course it is not only Sinar Mas. We know there are many other companies also doing the same thing. What we want to show to the government is that this is a type of iceberg."

Forest protection groups say the moratorium gives the government time to clarify regulations on forest development. At the same time, the government can determine guidelines for projects that can earn money from REDD, a global program that allows industrialized nations to pay developing ones to reduce their emissions from deforestation and land degradation.

Greenbury says the moratorium is a welcome breather in an industry that has moved very fast for 30 years.

"I think it is really good to have a break," she said. "From 80 [1980] until 2010, we have been under enormous criticism from all over the world. So let us just stop everything, tell us where did we do wrong and let us analyze it, see where we can improve according to national regulations and then come up with a new set of regulations or system."

Indonesia is the world's third-largest greenhouse gas emitter. The international community has lauded its commitment to reducing emissions from forestry, but enforcement is a major problem since the country's massive forests are difficult to police.