Indonesia Sustainable Development News Digest

Starling Resource produces a bi-weekly Indonesia Sustainable Development News Digest email for circulation to a broader cohort of practitioners, funders, and experts. The purpose of the digest is to present readers with a brief, easily digestible summary of significant, recent news items, reports, and papers relevant to conservation, sustainable development, and the environment in Indonesia, compiled from domestic Indonesian and international media sources. The digest is produced once every two weeks throughout the year. If you are interested in receiving the digest, please let us know by email at newsdigest@starlingresources.com.

News Digest
2017 – 21: 31 October 2017

Minister of Marine Affairs and Fisheries, Susi Pudjiastuti continues to be buffeted by political headwinds. National Commission on Human Rights (Komnas HAM) commissioner Maneger Nasution said in a written statement that the ban on cantrang trawling gear ignores the rights of the community. The complaint appears to have been made in Nasution’s personal capacity. In April, the Indonesian Fishermen Front (FNI), along with Muhammadiya, Indonesia’s second largest Islamic organization, reported Ibu Susi to Komnas HAM. Pudjiastuti has since filed a report against the chairman of the FNI for online defamation. Cantrang, a type of Danish seine net, was originally banned in 2015 (Ministerial Regulation No. 2/2015) due to its environmental impacts, but President Joko Widodo delayed enforcement of the ban, which is now set to take effect in December. Separately, Ono Surono ST, a member of DPR Commission IV (which governs agriculture, forestry, maritime, fisheries and food affairs) telling reporters that Minister Susi’s policies have led to “prolonged conflict with the people,” highlighted several policies as well as the Supreme Audit Agency’s disclaimer–or “no opinion” finding–during their 2016 audit of the Ministry. Despite this, Ibu Susi’s popularity remains high. GlobaAsia recently ranked her 8th in the list of Indonesia’s most powerful women, saying she is “without a doubt the most popular figure with the public in the current government.” In other news, political tensions are coming to a head as the ministry of forestry looks to enforce peatland management regulations with global pulp and paper industry leader RAPP.  After several warnings, the ministry issued a decree invalidating RAPP’s work plans and giving the company 10 working days to consult with the ministry and develop alternative plans. Roughly 50% of RAPP’s concessions in Riau are designated as peatland protection area (see Forestry and Land Use below). Finally, Anies Baswedan was recently sworn in as Governor of Jakarta. Observers hoping for a conciliatory tone were disappointed by Baswedan’s use of the term “pribumi” in his remarks. A term created by the Dutch to refer to indigenous Indonesians as the lowest of a three-tiered caste system, “pribumi” can refer to native Jakarta residents, but has also been used to foment animosity towards Indonesia’s large Chinese-Indonesian population. Basuki Tjahaja Purnama, the recent governor of Jakarta who lost to Baswedan, is of Chinese descent and is currently incarcerated after being convicted of blasphemy. The third candidate in Jakarta’s gubernatorial election, Agus Yudhoyono, son of ex-president Susilo Bambang Yudhoyono, posted to Instagram evidence of his coincidentally timed visit to Basuki in prison.


Marine & Fisheries

Mixed response to lower rate on micro credit loans
— Rachmadea Aisyah, Jakarta Post 30 October 2017
A decision by the government to reduce the interest rate on subsidized micro credit (Kredit Usaha Rakyat - KUR) loans to 7% in 2018 from 9% this year has prompted different reactions. The government plans to allocate Rp 120 trillion (US$8.83 billion) to the program next year, up 12.6% from this year’s KUR budget of Rp 106.6 trillion (US$7.82 billion). Just like this year, half of the overall funding will go to the agriculture, fisheries and processing services, production services and the construction sectors. To accelerate disbursement of KUR loans, the fund’s policy committee has also prepared three new KUR schemes for plantations, livestock farms and fisheries. As of September, the Office of the Coordinating Economic Minister recorded more than 3 million debtors under the KUR program. Up to Rp 69.7 trillion (US$5.13 billion), or 65.3%, of the KUR funds have been distributed from the annual target. Meanwhile, the NPL rate has remained at a manageable 0.14%. Meanwhile, state-owned lender Bank Rakyat Indonesia (BRI), the country’s largest KUR distributor, is bracing for the effects of the new rate.  BRI president director Suprajarto stated that the lower rate might cost the bank Rp 700 billion(US$51.57million) in annual revenue.
<https://goo.gl/NhZ9J2>

Fishonomics 101: the illusion of abundance
— Ilima Loomis, Hakai Magazine 26 October 2017
A group of fisheries economists and ecologists have analyzed the beleaguered North Sea cod fishery as a case study illustrating what many instinctively knew: the demand for fish and chips stayed constant because the fish market doesn’t respond to classic “price signaling.” In a typical market, these signals normally tell consumers the state of what they are buying: expensive = rare, and cheap = plentiful. But in today’s globalized seafood industry, multinational companies that trade seafood around the world have created long supply chains, from the fisherman’s hook to the diner’s plate, effectively masking and drowning out price signals to seafood consumers. Ecologists assume that fishermen are just reacting to the demand and, as it becomes more difficult to fish, the price becomes too high and consumers stop eating it,” he says. Many failed to appreciate the complexities of a global market that was made up of local fisheries. Meanwhile, many economists were ignoring the ocean ecosystem underlying fisheries’ productivity. “In the economics circle, we just assume production is a function of how easy the product is to produce—the more you invest, the more output you see. But in fisheries, that’s not the case because you can overexploit the resource.
<https://goo.gl/MLNwwH>


Forestry & Land Use

RAPP faces massive layoffs, financial losses after ministry voids key work plan
— Jakarta Globe
Riau Andalan Pulp and Paper (RAPP), the operations unit of pulp and paper industry leader Asia Pacific Resources International (April), said an investment of about a Rp 100 trillion (US$7.4 billion) could be under threat after the Ministry of Environment and Forestry (MEF) invalidated its 10-year one-year work plans.  The move effectively halted the company's upstream operations in its 480,000-hectare (ha) concession areas in the districts of Pelalawan, Kuantan Sengingi, Siak, Kampar and Meranti Island in Riau province.  April Group corporate affairs director Agung Laksamana said the move would affect about 4,600 people in the company's concessions and transportation services, 1,300 factory workers, and roughly 10,200 workers with suppliers and in supporting industries. According to Agung, MEF asked RAPP to align its work plan with the government's new peatland protection framework, as mentioned by a ministerial decree issued this year on the implementation of Government Regulation No. 17/2016 (Government regulation No 71/2014 on peatland management was revised by No 57/2016 – eds). Agung said the Peatland Restoration Agency (BRG) map indicates that half of RAPP’s concession areas are designated peatland protection areas. The minister has offered a land-swap scheme to compensate companies. However, as Agung notes, "the land could be anywhere, even in Papua, or Sulawesi. It doesn't make sense. According to our calculations, the plantation area should not be further than 100 kilometers from the pulp mill to be economically viable," he said. "The ministerial decree also contradicts PP No. 57, which says concession holders can operate until existing concession permits expire. We have our permits to operate for the next 25 years; they haven't expired," Agung said.
<https://goo.gl/jVr864>

Government to form secretariat for agrarian reform with WWF Indonesia
— Satyagraha, Antaranews 19 October 2017
The Coordinating Ministry for Economic Affairs appointed WWF to the project management office (PMO) of a Joint Secretariat for Agrarian Reform and Social Forestry. Deputy Coordinating Minister for the Economic Affairs Lukita Dinarsyah Tuwo explained that the PMO will help coordinate between the Environment and Forestry Ministry, the Agrarian Affairs and Spatial Planning Ministry, the Agriculture Ministry, the State-Owned Enterprises Ministry and the Disadvantaged Regions and Transmigration Ministry. The government's agrarian reform program includes the legalization and redistribution of assets covering an area of nine million ha.  The government has also prepared 12.7 million ha of land through a social forestry program administered by the Environment and Forestry Ministry, through a scheme granting forest management permits and customary forest recognition. The contract between WWF Indonesia and the Coordinating Ministry for Economic Affairs will last two years, but Rizal said the contract could be either renewed or ended earlier if the reform was completed before the deadline.
<https://goo.gl/GPA3q3>  <https://goo.gl/isQVbC

Indonesia launched palm oil rejuvenation scheme for smallholders
— Indonesia Investment 19 October 2017
Indonesian President Joko Widodo launched the new government program in Lampung, South Sumatra last week that aims to replant 20,000 hectares of smallholder palm oil plantations in 2017 under the condition that farmers meet the Indonesian Sustainable Palm Oil (ISPO) certification. It is estimated that a total of around 2.4 million ha of Indonesian palm oil plantation needs replanting, while 400,000 hectares are considered "old". Indonesia has a total of 11.9 million hectares of palm oil plantation, mostly located on Sumatra and Kalimantan, 40% of which are owned by smallholder farmers. The replanting program is financed through the CPO levy mechanism – US$50 per metric ton levy on CPO exports, and US$30 per metric ton levy on exports of processed palm oil products. Proceeds from these levies are also used to finance the government's ambitious biodiesel subsidy program. Recent rising of palm oil prices has also led to the reintroduction of traditional export taxes, waived earlier amidst low global prices.
<https://goo.gl/yHn5Wr>

Oil Palm Estate Fund struggling to complete tasks
— Prima Wirayani, Jakarta Post 23 October 2017
The palm oil estate fund replanting program has faced with difficulty. Of the 4,400-ha land allocated for plantation, only 2,800-ha had been declared clean and clear. The remaining plots of land, despite having obtained legal certificates, were located within the forest area and could not be converted to plantations just yet, the Indonesian Oil Palm Estate Fund’s (BPDP-KS) supervisory board chairman, Rusman Heriawan, told The Jakarta Post on Sunday. The replanting program is among the BPDP’s tasks to support the government’s sustainable oil palm development program.  The government collected Rp 11.7 trillion (US$870.5 million) of the crude palm oil (CPO) supporting fund (CSF) for the BPDP last year, with Rp 10.6 trillion, or 90% of the fund, allocated for biodiesel subsidies.  It expects to rejuvenate trees in 165,000-ha annually to boost their decreasing productivity due to aging oil palm trees. The country has around 11.91 million-ha of oil palm plantations with annual productivity of 33.22 million tons, or only 2.8 tons per hectare, a far cry from the potential of 8 to 10 tons. Before that, the program hit other bureaucracy stone wall, which centres on Presidential Regulation No. 61/2015 on the collection and disbursement of oil palm funds. It does not outline to which party the agency should offer the replanting program. The regulation also does not specifically mention the use of the funds for replanting.
<https://goo.gl/PEybhH

Indonesia claims success battling land, forest fires
— Moses Ompusunggu, Jakarta Post 23 October 2017
The National Disaster Management Agency (BNPB) has claimed that Indonesia has improved its capacity to deal with land and forest fires following the massive 2015 fires that affected even neighbouring Singapore and Malaysia. “Compared to previous periods, all indicators suggest improvements have been made to control this year’s forest and land fires,” BNPB spokesman Sutopo Purwo Nugroho told a news conference. One of the indicators, Sutopo said, was the number of hot spots detected during the several months this year when forest and land fires broke out in at least six provinces across the country.  Other indicators that demonstrated improvements in fire mitigation measures this year, Sutopo said, were the size of land degraded by fires, cases of respiratory problems, air pollution and the activities of people surrounding the hot spots.  “The air pollution standard index [in provinces hit by fires] indicated a normal level. No cases of acute respiratory problems were recorded, and citizens went about their daily activities as normal,” Sutopo said.  Sutopo also lauded moves by the governors of the six provinces hit by this year’s fires to “immediately issue an emergency status” when signs of danger were looming.

<https://goo.gl/qyyHY6>

China's rubber appetite fails to boost prices amid over-supply
— Jakarta Globe (Reuters)
Chinese imports of synthetic and natural rubber for the first seven months of the year jumped 27.2%   to 2.29 million tones and 21.8% to 1.59 million tons respectively over the same period last year. However, rubber prices have not responded, with Shanghai benchmark futures down 15.5% from the end of last year. The main Japanese rubber contract is also down 16.2% from the end of last year. Recent declines came as Thailand, Malaysia, and Indonesia, accounting for 70% of global supply, decided not to curb output. The big three producers have tried to lift prices in the past, such as in February of last year when they committed to a reduction of 615,000 tons (6% of global supply). However, overall the big three have struggled to rein in excess supply.
<https://goo.gl/SEBjU6>


Energy, Climate Change and Pollution

Inside Indonesia, Edition 130: Mining – who benefits?
— Kathryn Robinson & Maribeth Erb, Inside Indonesia, 19 October 2017
Inside Indonesia’s October-December 2017 issue focuses on changes in mining laws and the impacts on local communities. The issue includes, among many others, articles on the following:
·       The impacts of resource extractive projects and welfare in affected regions and impact on local communities in comparison to palm oil.
·       Changing legal and administrative frameworks and impacts on the way foreign investors interact with local communities in South Sulawesi.
·       A local study of the way the head of East Luwu District, South Sulawesi, has used the direct revenue from mining, opened by decentralisation, for local development.
·       Successful community opposition to mining development in Flores that has been championed across the province by the Catholic Church and local support for the alternative and competing economic development of tourism.
·       The potentially catastrophic consequences for public health and the environment from mercury use in extracting gold in Bombana, Southeast Sulawesi.
<https://goo.gl/wnnMhv>

Awaiting final us ruling over Indonesia's alleged biodiesel dumping
—  Indonesia Investment 18 October 2017
Stakeholders in Indonesia's biodiesel industry are waiting for the final ruling of the US Commerce Department regarding the dumping of biodiesel products on the American market. Under Indonesia's subsidized biodiesel program, diesel is blended with a fixed amount of fatty acid methyl ester, derived from palm oil. However, Indonesia's Trade Ministry emphasized that the biodiesel subsidy program is only allowed for biodiesel that is sold on the domestic market. Biodiesel that is exported, on the other hand, does not fall under the scope of the program. The two issues that remain unresolved are US' allegations that the Indonesian government's biodiesel programs basically imply that biodiesel shipments from Indonesia are subsidized (hence implying unfair trading). Secondly, the US claims that Indonesia's easy export tax policy for biodiesel exports also forms the basis for unfair competition on the global market.
<https://goo.gl/e5DBtF>

Coal dominance crushes LNG utilization in power plants
— Rachmadea Aisayah Jakarta Post 23 October 2017
The Energy and Mineral Resources Ministry has acknowledged that it is difficult for state-run electricity firm PLN to fully absorb natural gas production, leaving much of it unused. The ministry’s electricity directorate general, Andy N. Sommeng, said recently that many power plant operators — including PLN, which operates the country’s major power plants — favored coal over alternative sources of energy.
goo.gl/qg5EXh

Indonesia to miss carbon emissions target under existing climate policies: study
— Hans Nicholas Jong, Mongabay 16 October 2017
Indonesia, a top carbon polluter, has a plan to cut its emissions. Indonesia has pledged to reduce its emissions growth by at least 29% over business-as-usual levels by 2030. That means it can emit no more than 2 Gt of carbon dioxide that year. But even if it follows through on existing policies aimed at reducing emissions, Indonesia will emit 2.3 Gt of carbon in 2030, just a 19% drop, according to the WRI But unless it takes more drastic measures, it will miss the target it has set for itself, according to a new analysis by the World Resources Institute (WRI), a global research non-profit organization. Current policies are a decent starting point, but they could be strengthened to meet or even surpass the emissions-reduction target. Indonesia’s prolific output of greenhouse gases is due less to the burning of fossil fuels than to the conversion of its rainforests and peatlands for agriculture. At the same time, coal consumption is rapidly increasing in the archipelago country. The best thing Indonesia can do is strengthen the moratorium on forest licensing, which so far has done little to curb deforestation in off-limits areas.
<https://goo.gl/wHxWiH%0d>


Conservation & Protected Areas

Watch: 101 pangolins destined for black market rescued from fishing boat
— Rachel Bale, National Geographic 26 October 2017
More than a hundred pangolins have been rescued alive after an anti-smuggling raid on a fishing boat off the east coast of Sumatra on October 24. Indonesian authorities arrested two men who were allegedly paid to transport the scaly mammals to Malaysia, according to a press release from the Indonesian Navy, which was tipped off by members of the community. The seizure lays bare pangolin smugglers’ changing modus operandi. Whereas previously they used to rely on large freezer shipping containers that only major international ports could accommodate, smugglers are increasingly making smaller—but more regular—shipments of live pangolins through remote seaports, says Dwi Adhiasto, a wildlife trade expert at the Indonesia office of the Wildlife Conservation Society (WCS).
<https://goo.gl/yggfn2

Helmeted hornbill, on verge of extensions, finds respite in new zone outside of known range
— Basten Gokkken, Mongabay 23 October 2017
More than a hundred pangolins have been rescued alive after an anti-smuggling raid on a fishing boat off the east coast of Sumatra on October 24. Indonesian authorities arrested two men who were allegedly paid to transport the scaly mammals to Malaysia, according to a press release from the Indonesian Navy, which was tipped off by members of the community. The seizure lays bare pangolin smugglers’ changing modus operandi. Whereas previously they used to rely on large freezer shipping containers that only major international ports could accommodate, smugglers are increasingly making smaller—but more regular—shipments of live pangolins through remote seaports, says Dwi Adhiasto, a wildlife trade expert at the Indonesia office of the Wildlife Conservation Society (WCS).
goo.gl/dnfrbL