The impacts of decentralisation on forests and forest ......Printed by SMK Grafika Desa Putera, Indonesia ISBN 979-8764-81-1 Published by Center for International Forestry Research

case study 3

Christopher BarrEva WollenbergGodwin LimbergNjau AnauRamses IwanI Made SudanaMoira MoelionoTony Djogo

The Impacts of Decentralisationon Forests and Forest-Dependent Communities in Malinau District,East Kalimantan

Case Studies on Decentralisation and Forests in Indonesia

AUSTRALIAN CENTRE FOR INTERNATIONALAGRICULTURAL RESEARCH

ITTO

CIFOR REPORTS ON DECENTRALISATION AND FORESTS IN INDONESIA

Synthesis of Major Findings

Barr, C. and Resosudarmo, I.A.P. 2002. Decentralisation of forest administration inIndonesia: Implications for forest sustainability, community livelihoods, and economicdevelopment. Center for International Forestry Research, Bogor, Indonesia.

District and Provincial Case Studies

Case Study 1. McCarthy, J.F. 2001. Decentralisation, local communities and forestmanagement in Barito Selatan District, Central Kalimantan. Center for International ForestryResearch, Bogor, Indonesia.

Case Study 2. McCarthy, J.F. 2001. Decentralisation and forest management in KapuasDistrict, Central Kalimantan. Center for International Forestry Research, Bogor, Indonesia.

Case Study 3. Barr, C., Wollenberg, E., Limberg, G., Anau, N., Iwan, R., Sudana, I.M.,Moeliono, M., and Djogo, T. 2001. The impacts of decentralisation on forests and forest-dependent communities in Malinau District, East Kalimantan. Center for InternationalForestry Research, Bogor, Indonesia.

Case Study 4. Casson, A. 2001. Decentralisation of policies affecting forests and estatecrops in Kutai Barat District, East Kalimantan. Center for International Forestry Research,Bogor, Indonesia.

Case Study 5. Casson, A. 2001. Decentralisation of policymaking and administration ofpolicies affecting forests and estate crops in Kotawaringin Timur District. Central Kalimantan.Center for International Forestry Research, Bogor, Indonesia.

Case Studies 6 and 7. Potter, L. and Badcock, S. 2001. The effects of Indonesia’sdecentralisation on forests and estate crops: Case study of Riau province, the original districtsof Kampar and Indragiri Hulu. Center for International Forestry Research, Bogor, Indonesia.

Case Study 8. Soetarto, E., Sitorus, M.T.F. and Napiri, Y. 2001. Decentralisation ofadministration, policy making and forest management in West Kalimantan. Center forInternational Forestry Research, Bogor, Indonesia.

Case Study 9. Obidzinski, K. and Barr, C. 2002. The effects of decentralisation on forestsand forest Industries in Berau District, East Kalimantan. Center for International ForestryResearch, Bogor, Indonesia.

Inside front cover 3/25/02, 8:08 AM1

Black

The Impacts of Decentralisation onForests and Forest-Dependent Communities

in Malinau District, East Kalimantan

Christopher BarrEva WollenbergGodwin Limberg

Njau AnauRamses Iwan

I Made SudanaMoira Moeliono

Tony Djogo

front Cases 3 4/3/02, 2:41 PM1

Black

© 2001 by Center for International Forestry ResearchAll rights reserved. Published in 2001Printed by SMK Grafika Desa Putera, Indonesia

ISBN 979-8764-81-1

Published byCenter for International Forestry ResearchMailing address: P.O. Box 6596 JKPWB, Jakarta 10065, IndonesiaOffice address: Jl. CIFOR, Situ Gede, Sindang Barang, Bogor Barat 16680, IndonesiaTel.: +62 (251) 622622; Fax: +62 (251) 622100E-mail: [email protected] site: http://www.cifor.cgiar.org

front Cases 3 4/16/02, 11:16 AM2

Black

iii

Decentralisation and Forests in Indonesia:An Overview of the Study

S ince early 2000, the Center for International Forestry Research (CIFOR) hasconducted research on the decentralisation of forest administration and policies

affecting forests in Indonesia. This project has sought to document the real andanticipated impacts of decentralisation on forest management, forest communitylivelihoods, and economic development at the provincial and district levels. Duringthe initial phase of this research, CIFOR conducted case studies in nine kabupatenor districts, in four provinces: Riau, East Kalimantan, Central Kalimantan, and WestKalimantan. These case studies were carried out in 2000, with follow up visits tosome districts conducted in early 2001. As such, the findings presented in the presentreport and the companion case studies reflect the conditions and processes that existedin the study districts during the initial phase of Indonesia’s decentralisation process.

The following reports have been produced by this project. The first of these representsa synthesis of the major findings from the nine case studies, accompanied by ahistorical analysis of forest administration and forestry sector development inIndonesia, and a discussion of the origins and legal-regulatory basis of the nation’songoing decentralisation process. Each of the nine case studies is published as aseparate report (with the exception of the study districts in Riau, which have beencombined) in order to make the information contained therein more readily accessibleto decision-makers involved in the decentralisation process. It is hoped that readersof the case studies will refer to the synthesis report in order to situate the specificcase study findings in a broader historical and policy context.

During 2002, CIFOR will publish additional case studies from research ondecentralisation and forests in West Kalimantan, South Sulawesi and Irian Jaya.CIFOR also plans to carry out follow-up research at several of the original casestudy districts, and will publish periodic findings from the sites.

Acknowledgements and Disclaimer

CIFOR gratefully acknowledges the financial support of the Australian Center forInternational Agricultural Research (ACIAR) and the United Kingdom’s Departmentfor International Development (DFID). Partial support was also provided by theInternational Fund for Agricultural Development (IFAD) and the InternationalTropical Timber Organization (ITTO) in partnership with the Ministry of Forestry,Indonesia through Project PD 12/97 Rev. I (F) Forest, Science and Sustainability:The Bulungan Model Forest. The opinions expressed in this report are the views ofthe author(s) and do not necessarily represent the official policy of CIFOR. Theseopinions, likewise, do not represent the official policy of ACIAR or DFID or anyother organization involved in funding, conducting or disseminating this study.

front Cases 3 4/3/02, 2:41 PM3

Black

iv

Overview of Indonesia’s Decentralisation Process

Since late-1998, Indonesia has undergone a process of rapid and far-reachingdecentralisation. With this process, considerable degrees of administrative andregulatory authority have been transferred from the national government inJakarta to the country’s provincial and district governments. This transfer ofauthority has occurred across broad segments of the nation’s economy and hassharply redefined the roles and responsibilities of government agencies at eachlevel of the nation’s administrative structure. With the locus of decision-makingshifting decisively away from the national government, Indonesia’s ongoingdecentralisation process marks a dramatic break from the highly-centralisedsystem of governance that characterized Suharto’s New Order regime duringthe period 1966-1998.

To a significant extent, the process of decentralisation now occurring inIndonesia has been driven by the demands of provincial and districtgovernments whose jurisdictions are rich in timber, petroleum, and other naturalresources. Officials from resource-rich regions have long complained that thevast majority of the benefits from these assets have flowed away from theirregions to the national government and to private sector companies closelyassociated with decision-makers in Jakarta. While the New Order governmentkept a tight lid on calls for greater regional autonomy and regional controlover natural resource revenues, the post-Suharto government has not been ableto ignore these demands. On the contrary, since 1998 the country’s seniorleadership has recognised that its ability to maintain Indonesia’s integrity as anation may ultimately depend on its capacity to strike a more equitable balanceof power between the national government, on the one hand, and the provincialand district governments, on the other.

Over the last three years, the national government has issued several importantpieces of legislation aimed at transferring authority to the provincial and districtgovernments, and at allowing resource-rich regions to retain a larger share ofthe fiscal revenues generated within their jurisdictions. The most significantof these have been Law 22 on Regional Governance and Law 25 on FiscalBalancing, both of which were issued in May 1999. Together, these laws providethe legal basis for regional autonomy, laying out a broad framework for thedecentralisation of administrative and regulatory authority primarily to thedistrict level. These laws have been supported by a variety of implementingregulations and sector-specific decentralisation laws, including Law 41 of 1999,a revised version of Indonesia’s Basic Forestry Law, which outlines the divisionof administrative authority in the forestry sector under regional autonomy.

In many parts of Indonesia, provincial and district officials acting in the spiritof regional autonomy have instituted reforms that extend well beyond theauthority granted to them under the national government’s decentralisationlaws and regulations. Indeed, the formal decentralisation process has been

Editor’sPreface

front Cases 3 4/16/02, 11:16 AM4

Black

v

driven, to a significant degree, not by policy decisions made at the national level but,rather, by decisions made by provincial and district level actors. This process hasoften been ad hoc in nature, with national policymakers frequently finding themselvesin the position of having to react to fast-moving changes that have occurred in theprovinces and districts. Far from being a well-planned and carefully-managed exercisein bureaucratic reorganization, the implementation of regional autonomy in Indonesiahas been characterized by intense struggles among the different levels of government,each of which represents a competing set of political and economic interests. In thisway, regional autonomy has stretched well beyond the formal decentralisation ofadministrative and regulatory authority; in practice, it also involves a significant, iflargely informal and unplanned, devolution of power from the national government toits provincial and district-level counterparts.

The formal and informal processes of decentralisation have been accompanied by awide-ranging set of governance and economic reforms, collectively known asreformasi, that are associated with Indonesia’s transition away from Suharto’s NewOrder regime. Broadly defined, reformasi refers to the transformation and dismantlingof the policies, practices, and institutional structures through which the New Orderleadership and a handful of well-connected conglomerates controlled the political andeconomic life of the country prior to Suharto’s resignation in May 1998. Whilesignificant elements of the reformasi agenda coincide with the changes occurringunder regional autonomy, these reform processes are also quite distinct. Whereasreformasi refers to a shift away from the constellation of interests and power structuresthat have supported a particular regime, decentralisation and regional autonomy referto the transfer of authority from the national government to Indonesia’s provincialand district governments.

Decentralisation of Forest Administration

The formal and informal processes of decentralisation that are now occurring inIndonesia have far-reaching implications for forest management and for the livelihoodsof communities living in and around forested areas. On the positive side, experiencefrom other countries suggests that decentralized systems of forest management oftenlead to more sustainable and equitable use of these resources, as decision-makers arephysically located closer to where their policies will be implemented (Conyers 1981;Rondinelli, Nellis, and Cheema 1983). This proximity often brings with it improvedunderstanding of the specific biophysical, social, and institutional conditionsinfluencing forest management at the field level; better capacity to monitor the activitiesof forest user groups; and greater access to local knowledge about the managementand utilization of forest resources — which are sometimes highly specific to particularsocial groups and/or ecosystems (Carney 1995).

In addition, decentralized forest administration often allows for greater participationon the part of forest communities in policy decision-making processes, and more directaccountability of policymakers to peoples whose livelihoods depend on forests(Brandon and Wells 1992). Decentralisation also frequently implies a more equitable

front Cases 3 4/16/02, 11:16 AM5

Black

vi

distribution of benefits from forest resources, as local communities and governmentsin forested regions are able to secure a greater portion of revenues from the extractionof timber and other forest products (Ascher 1995; Ostrom 1990).

In addition to providing opportunities for expanded equity and improved forestmanagement, however, decentralisation also carries significant risks. In manycountries, national governments have decentralized without first creating the necessaryinstitutional capacity at the provincial or district levels to administer forests effectively(Rivera 1996). Often, national governments assign tasks to provincial and districtgovernments without giving them adequate resources for carrying out these tasks.Most provincial and district governments lack essential technical skills and mustlook to other entities for advice, training, and technical information. In cases wherelocal elites have been strong and/or traditionally marginalized groups have been unableto organize themselves, decentralisation has often strengthened pre-existing powerrelations, rather than promoting democratic decision-making processes (Utting 1993).Finally, even when elite groups do not dominate provincial and district governments,it is often that case that these governments have little interest in sustainable forestmanagement.

Indonesia’s Forestry Sector

The manner in which decentralisation affects forest management, communitylivelihoods, and economic development is of particular significance in Indonesia dueto the scale and importance of the country’s forest resources. Indonesia has the world’sthird largest tract of tropical forests, surpassed in area only by those of Brazil andCongo. In 1997, the country’s total forest cover was officially estimated to be 100million hectares (MOFEC, cited in World Bank 2001). It has been conservativelyestimated that at least 20 million people depend on Indonesia’s forests for the bulk oftheir livelihoods (Sunderlin, et al. 2000). Over the last three decades, the nationalgovernment has allocated over 60 million hectares of forest to commercial loggingcompanies, and Indonesia’s forestry sector industries have long ranked second onlyto petroleum in terms of their contribution to GNP (Barr 2001). The forestry sectorcurrently generates approximately US$ 7 billion in annual revenues.

Well before the country’s ongoing decentralisation process began in late-1998,Indonesia’s forestry sector had entered a period of crisis. From the mid-1980s onward,deforestation is estimated to have occurred at a pace of 1.6 million hectares per year(Toha 2000). A major factor driving this high level of deforestation and associatedforest degradation has been overcapacity in the nation’s wood processing industries.Through the mid-1990s, Indonesia’s sawnwood, plywood, and pulp industries arecollectively estimated to have consumed 60-80 million cubic meters (m3) of woodper year (Barr 2001; Scotland et al. 1999). Log consumption on this scale has stoodwell above the Indonesian government’s own widely-cited sustainable timber harvestthreshold of 25 million m3 per year. Moreover, with few effective regulatory structuresin Indonesia’s forestry sector, domestic demand for timber has resulted in large volumesof wood being harvested from illegal sources (ITFMP 1999). At the same time, adecline in the nation’s HPH timber concession system, coupled with rapid expansion

front Cases 3 4/16/02, 11:16 AM6

Black

vii

in oil palm and other forms of agroindustrial plantations, has meant that a growingportion of the nation’s wood supply has been obtained through clearing of naturalforest rather than selective harvesting at multiple-rotation timber concessions (Barr2001).

Scope and Methods of the Present Study

The present study examines the preliminary effects of decentralisation on forests andestate crops in Malinau district, East Kalimantan. It is one of nine district level casestudies carried out during 2000 and early 2001 by the Center for International ForestryResearch (CIFOR) in four provinces: Riau, East Kalimantan, Central Kalimantan, andWest Kalimantan. The findings presented in these studies reflect the conditions andprocesses that existed in the study districts during the initial phase of Indonesia’sdecentralisation process.

Each of the case studies used a rapid appraisal methodology for gathering data at thedistrict and provincial levels. For each case study, preliminary visits were made to thedistrict and provincial capitals to establish initial contacts and to identify key issues.Second visits for data gathering were then carried out for periods of 10-14 days in eachdistrict, with shorter amounts of time in the provincial capitals. The collection of primarydata involved semi-structured interviews with key informants, including: governmentofficials; forest industry actors; members of communities living in and around forests;political party representatives; officers from the regional military and police force;informal district leaders; representatives from nongovernmental organizations (NGOs);university researchers; and individuals involved with donor agencies and developmentprojects. Data collection also involved the review of primary and secondary documents,including: district and provincial laws and regulations; government statistics; regionalnews media articles; industry publications; research studies; and reports prepared byNGOs and donor agencies.

Each of these case studies is structured to focus on processes that have occurred at thedistrict and, to a lesser extent, the provincial levels. To avoid repetition, more generalinformation on the history of forest administration and forestry sector development inIndonesia, as well as significant national policy and legal-regulatory reforms associatedwith decentralisation, has been placed in an accompanying report which synthesizesthe project’s major findings (see Barr and Resosudarmo 2001). Readers are encouragedto review the case studies in conjunction with this synthesis in order to appreciate thebroader historical and policy contexts within which the district and provincialdecentralisation processes are now occurring.

Christopher Barr and Ida Aju Pradnja Resosudarmo

Bogor, Indonesia

front Cases 3 4/16/02, 11:16 AM7

Black

viii

Glossary

Adat Customary rights or practices

APBD Anggaran Pendapatan dan Belanja Daerah, District Budget

APHI Asosiasi Pengusaha Hutan Indonesia, Indonesian ForestConcession Holders Association

BAPPEDA Badan Perencanaan Pembangunan Daerah, RegionalDevelopment Planning Agency

BKPM Badan Koordinasi Penanaman Modal, Capital InvestmentCoordinating Board

Bupati District Head

Camat Head of subdistrict

CDK Cabang Dinas Kehutanan, Branch Office of the ProvincialForestry Service

CIFOR Center for International Forestry Research

CV Commanditaire Vennootschap, Limited Partnerships

Daerah Istimewa Special Region

Daerah Swapraja Autonomous Region

Dinas Kehutanan Kabupaten District Forestry Service

Dinas Kehutanan Propinsi Provincial Forest Service

Dispenda Dinas Pendapatan Daerah, District Revenue Office

DPRD Dewan Perwakilan Rakyat Daerah, Provincial or DistrictLegislative Assembly

DR Dana Reboisasi, Reforestation Fund

HPH Hak Pengusahaan Hutan, Commercial Forestry Concessions

HPHH Hak Pemungutan Hasil Hutan, Forest Product HarvestConcession

IHPH Iuran Hak Pengusahaan Hutan, Timber Concession Royalty

IMF International Monetary Fund

IPK Izin Pemanfaatan Kayu, Timber Clearance Permit

IPPK Izin Pemungutan dan Pemanfaatan Kayu, Timber Extractionand Utilization Permits

Kabupaten District

Kawasan Hutan Forest Estate

front Cases 3 4/16/02, 11:16 AM8

Black

ix

Kecamatan Subdistrict

Kelurahan Village

Kepala Adat Adat Head

Kepala Desa Village Head

Kotamadya Municipality

MOU Memorandum of Understanding

NGO Non Governmental Organization

NRM Natural Resources Program

PAD Pendapatan Asli Daerah, Regionally Generated Revenues,often refers to revenues that district governments obtain fromsources within their districts

Pajak Penghasilan Income Tax

PPN Pajak Pertambahan Nilai, Ad Valorem Tax

PBB Pajak Bumi dan Bangunan, Land and Building Tax

Pemda Pemerintah Daerah, District or Provincial Government

Perda Peraturan Daerah, Regional Government Regulation

PP Peraturan Pemerintah, Government Regulation

PSDH Provisi Sumber Daya Hutan, Forest Resource Rent Provision

PT Perseroan Terbatas, Limited Liability Companies

Putera daerah Child of the region, or ‘local son’

SBU Strategic Business Unit

SKSHH Surat Keterangan Sahnya Hasil Hutan, Permit to TransportTimber and Other Forest Products

TGHK Tata Guna Hutan Kesepakatan, Forest Land Use Concensus

TPTI Tebang Pilih Tanaman Indonesia, Indonesian Selective Cuttingand Planting System

UU Undang-undang, Law

WWF Worldwide Fund for Nature

front Cases 3 4/16/02, 11:16 AM9

Black

xi

Table of Contents

Decentralisation and Forest in Indonesia: An Overview of the Study iii

Editor’s Preface iv

Glossary viii

Abstract xii

1. Background 11.1 Methods 21.2 Overview of Kabupaten Malinau 21.3 Forest Resources Base and Timber Production 5

2. Decentralisation in Malinau 82.1 Establishment of a New District Government and

Regulatory Regime 82.2 District Revenue Generation 9

2.2.1 Securing an Increased Share of HPH Revenues 102.2.2 Generating New Investment 12

2.3 Allocation of IPPK Forest Conversion Permits 132.3.1 New Pressures on Forests 142.3.2 Timber Profits for New Actors 18

2.4. Overlap of IPPK Conversion Areas and HPH Timber

Concessions 192.4.1 Response by Inhutani’s and Other HPH-Holders 22

2.5 Community Claims to Land and Forest Rights 252.5.1 Under the New Order Regime 252.5.2 Adat Unleashed 262.5.3 Defining Adat Claims 272.5.4 IPPK Benefits for Local Communities 302.5.5 Has Space Been Created for the Communities? 31

2.6 Coordinating Land Use 332.6.1 District Spatial Planning 342.6.2 Village Land Use Planning 36

3. Conclusion 383.1 Rapidity of Change 393.2 Focus on Short-term Income Gains 393.3 The Increasing Power of Existing Political and Ethnic

Coalitions 393.4 Decentralisation as Democratisation? 40

4. Endnotes 42

5. References 47

front Cases 3 4/16/02, 11:16 AM11

Black

xii

Abstract

Malinau District, established through partition in 1999, is the largest district in East Kalimantan,and contains some of its largest tracts of forest. With decentralization, the district has sought togenerate revenues from its forests, but these efforts have been handicapped by a concurrent lack ofinstitutional capacities to manage rapid forest exploitation and conflicts over claims. Timberextraction and utilization permits (Izin Pemungutan dan Pemanfaatan Kayu or IPPK) have beenthe main instrument for revenue generation, with 39 IPPK covering 56,000 ha. expected to generaterevenues equivalent to roughly nine times the district’s 2000 budget. The IPPKs have enabledlocal entrepreneurs and communities to gain access to forest land and benefits previously controlledby centrally allocated concessions, however conflict has increased significantly where IPPK’soverlapped with concessions and where IPPKs did not fulfill contractual obligations to communities.Overlapping adat or customary-based claims to land have fueled further conflict. While districtsnow enjoy more control and economic benefits from forests, there is a high risk of reconcentrationof power at the district level, especially as government officials lack accountability to villagersand communities still lack secure legal rights to resources.

front Cases 3 4/16/02, 11:16 AM12

Black

BACKGROUND

Located in the northern corner of EastKalimantan, Malinau officially came intoexistence as a kabupaten, or district, in October1999, following the partition of the expansivekabupaten Bulungan into three districts ofsomewhat more modest size. KabupatenMalinau is now the largest of the province’seight districts, encompassing 42,000 squarekilometers (km2) — an area the size of theNetherlands (Bappeda Tk II 1998). The districthas just over 35,000 inhabitants, over half ofwhich are concentrated in and around the townof Malinau, the kabupaten’s administrativecenter (Bappeda Tk II 1998). In contrast tomuch of East Kalimantan, which has beenheavily logged since the early-1970s, Malinaustill has extensive forest resources, with 95percent of the district’s land area officiallyclassified as Forest Estate (Kawasan Hutan).Roughly three-quarters of the Kayan-Mentarang National Park, Indonesia’s secondlargest protected area, is located within thedistrict’s boundaries.

Indonesia’s decentralization and regionalautonomy processes have placed considerablepressures on Malinau’s fledgling government,like kabupatens elsewhere, to generate newinvestment in the region and to secure asubstantially larger portion of their revenuesfrom local sources (Sekretaris Daerah 2001).Since early-2000, Malinau’s administration hastaken significant steps in both directions byissuing numerous small-scale forest conversionpermits, known as IPPKs (Ijin Pemungutan danPemanfaatan Kayu). Many of the IPPKs thus

far distributed by the Bupati have been allocatedto Malaysian-backed logging companiesworking in collaboration with Malinau-basedtimber brokers and forest-dependentcommunities. The IPPK permits are ostensiblydesigned to provide royalties to the districtgovernment and a range of benefits, includingvolume-based fees, in-kind contributions, andemployment, to the communities. As part of alonger-term strategy, Malinau’s kabupatengovernment is actively seeking to develop roadsand other forms of physical infrastructure inorder to attract further investment in the forestry,plantations, and mining sectors.

This paper offers a preliminary analysis of thereal and anticipated effects of decentralizationon the forests and forest-dependent communitiesin kabupaten Malinau. It examines, in particular,the challenges created by the fact that Malinau’sinception as a kabupaten has come at a time whenthe administrative functions of government arebeing rapidly decentralized. In the forestry sector,the newly-established district government is inthe process of making major land-use decisionsbefore a comprehensive spatial planning processfor Malinau has been conducted. There are strongreasons to believe that this could result in land-use decisions that favor rapid forest conversionin the short-term with little concern for thedistrict’s long-term timber production and forestconservation needs.

As significantly, Malinau’s kabupatengovernment has thus far allocated numerousIPPK forest conversion licenses before it has

11111

case 3 4/16/02, 10:29 AM1

The Impacts of Decentralisation on Forest and Forest-Dependent Communities in Malinau District, East Kalimantan

2

developed the institutional capacity to adequatelyregulate the logging companies receiving thepermits. There are preliminary indications thatsome companies may use the IPPK permits tolegitimize illegal timber felling in areas that wellexceed those assigned to them. Moreover, thestructure of many companies’ agreements withlocal communities offers little guarantee that thenew investors will follow through with promisesto plant agricultural cash crops once commercially-valuable timber is removed from the forest areascleared. This raises serious questions regarding thepotential impacts of decentralization on both theeconomic well-being of forest-dependentcommunities in Malinau and the likelihood ofconflicts arising over how the benefits fromMalinau’s forest resources are distributed.

1.1 METHODS

Our analysis is based on observations made inMalinau district since August 1999. Weconducted interviews with government officialsand timber companies in Kota Malinau for oneweek in March 2000 and in kota Malinau,Tarakan and Tanjung Selor for three weeks inAugust – September 2000. We collectedinformation from communities throughinterviews and direct observation whileconducting an action research project onconflict management and participatorymapping of village boundaries with 27 villagesof the upper Malinau River watershed. Four tonine staff have been based nearly continuouslyin local villages since August 1999 and havehad the chance to observe the changes broughtabout by decentralization first hand. We alsodraw upon observations made from three largeworkshops that CIFOR has facilitated in thelast two years to bring together the multiplestakeholders involved in forest management.

1.2 OVERVIEW OF KABUPATEN

MALINAU

Prior to its partition in late-1999, the originalkabupaten of Bulungan was the second largestdistrict in East Kalimantan, covering nearly

75,000 km2, or 35 percent of the province’s totalland area (Bappeda Tk II 1998). As anadministrative unit, the kabupaten traces its rootsto the Sultanate of Bulungan, which was basedin the town of Tanjung Selor at the mouth of theKayan River (Bappeda Tk II 1998). The Dutchcolonial government administered the areaindirectly, exacting tribute from the Sultan in theform of rattan, gaharu, aloes, eagle wood, andother forest products that were harvested fromthe region’s vast interior. During the post-colonialperiod, Bulungan functioned initially as anAutonomous Region (Daerah Swapraja) and in1955 its status was changed to Special Region(Daerah Istimewa). Bulungan’s status wasconverted to that of a kabupaten in 1960.

By the mid-1990s, the provincial governmentof East Kalimantan initiated the process ofdividing up the kabupatens of Bulungan andKutai, each of which covered an area roughlyequivalent to the province of West Java (TimPeneliti 1999). The official rationale for thispartition was to improve the capacity of thekabupaten governments to administer the areaswithin their jurisdictions and to provide essentialservices to a broader spectrum of their respectivepopulations. In Bulungan, it was particularlynoted that much of the district’s economicgrowth and infrastructural development hadoccurred in lowland and coastal areas, withoutextending to upland areas in the interior (TimPeneliti 1999). Some observers have alsospeculated that the provincial and districtgovernment’s unstated rationale for partitioningBulungan was to facilitate accelerated extractionof the region’s rich forest and mineral resources.

The division of the original kabupaten Bulunganin late-1999 resulted in the creation of three newdistricts: Bulungan, Malinau, and Nunukan. Post-partition Bulungan encompasses an area coveringthe entire lower coastline of the original district,while Nunukan covers the northern coastline andborder with the East Malaysian state of Sabah.Malinau is land-locked in the region’s interior andstretches along much of the original district’swestern border with Sarawak. Of the three newkabupaten, Malinau encompasses by far the

case 3 4/16/02, 10:29 AM2

3

Christopher Barr et.al

Map 1. Malinau District, East Kalimantan

Laut Sulawesi

case 3 4/16/02, 10:29 AM3


4

largest area, covering over 42,000 km2, comparedto roughly 18,000 and 13,000 km2 for Nunukanand Bulungan, respectively (see Table 1).Malinau’s estimated population is just over35,000 people, or less than one-half thepopulation of either Bulungan or Nunukan.

Administratively, kabupaten Malinau isorganized into five kecamatan, or subdistricts:Malinau; Mentarang; Pujungan; Kayan Hilir;and Kayan Hulu. Approximately 20,000 people,or 60 percent of the district’s total population,live in kecamatan Malinau, where the district’sadministrative center is located (see Table 2).There, the population is composed of a diversemix of ethnic groups, dominated by theindigenous Lundaye/Putuk, Punan, and Tidungand with significant numbers of Bugis,Makasarese and Javanese migrants. The othersubdistricts each have small numbers ofinhabitants spread over large areas, withpopulation densities of less than 1.0 person perkm2 .The vast majority of the populace in thesekecamatan are indigenous ethnic groups whoselivelihoods are based on subsistence agriculture

and collection of nontimber forest products. Themajor ethnic groups inhabiting Malinau’s fivekecamatan are presented in Table 2.

Much of the area within kabupaten Malinau’sjurisdiction is characterized by heavily forested,mountainous terrain. Although a paved roadfrom Bulungan’s capital of Tanjung Selor to thetown of Malinau is near completion, channelsfor ground transport through much of the restof the district are limited to unpaved loggingroads. In many of the more rugged or remoteparts of the district, even these are non-existent.Historically, rivers have served as the mainarteries for travel and trade in the Malinau-Bulungan region. Indeed, portions of kabupatenMalinau are traversed by five major riversystems: the Kayan (576 km); Bahau (322 km);Sesayap (278 km); Malinau (231 km) andMentarang (176 km) (Bappeda Tk II 1998). Thetown of Malinau is located at the confluence ofthe Malinau and Sesayap Rivers, and can bereached by speedboat in four hours fromnortheast Kalimantan’s commercial hub ofTarakan Island.

Table 1. Land Area and Population of new Kabupaten in Post-Partition Bulungan

Kabupaten Land Area (km2

) Population

Bulungan 18,010 84,761

Malinau 42,620 35,738

Nunukan 13,841 81,472

Total 74,471 201,971

Source: BAPPEDA & BPS (1998).

Table 2. Land Area, Population, and Ethnic Composition of Kabupaten Malinau’s Five Kecamatan

Kecamatan Land Area (km2

) Population Major Ethnic Groups

Malinau 5,237 20,061 Punan, Merap,

Kenyah,Berusu

Lundaye/Putuk,

Tidung,Bugis

Mentarang 7,101 5,163 Lundaye/Putuk,

Punan, Abai, Milau

Pujungan 11,551 3,253 Kenyah, Punan

Kayan Hilir 12,921 1,490 Kenyah

Kayan Hulu 5,808 5,801 Kenyah

Total 42,618 35,768 --

Source: BAPPEDA Tk II Bulungan (1998)

case 3 4/16/02, 10:29 AM4

5


The administrative challenges posed byMalinau’s general lack of physical infrastructureare compounded by the specific manner in whichthe original kabupaten Bulungan waspartitioned. Contrary to the recommendations ofa provincial government team commissioned toassess various scenarios for partition, theboundaries of the three new kabupaten weredrawn to cut directly across the region’s majorwatersheds (Tim Peneliti 1999). This hasresulted in substantial portions of Malinau’spopulace being physically cut off from thedistrict’s administrative center. In order to reachthe town of Malinau, the inhabitants of someparts of Kayan Hulu, Kayan Hilir, and Pujungan,for instance, might have to travel several daysdown either the Kayan or Bahau rivers toTanjung Selor, the capital of kabupatenBulungan.1 From there, they would have to catcha speedboat up to Tarakan, where they wouldboard a second boat heading up the SesayapRiver to Malinau. The logistical difficultiescreated by the partition of Bulungan are mirroredby the fact that members of particular ethnicgroups living along shared watersheds are, inmany cases, now separated by the newkabupatens’ political-administrative boundaries.

1.3 FOREST RESOURCE BASE

AND TIMBER PRODUCTION

Approximately 95 percent of kabupatenMalinau’s land area is officially classified as

Kawasan Hutan or Forest Estate. Since the earlyyears of the New Order period, forestryactivities in the area currently encompassed byMalinau’s five subdistricts have beenadministered by two branch offices of theProvincial Forestry Service (Cabang DinasKehutanan or CDK).2 CDK Bulungan Tengah,with headquarters in Tarakan, has jurisdictionover five subdistricts, including kecamatanMalinau and Mentarang – which are now partof kabupaten Malinau – as well as Krayan (nowin kabupaten Nunukan), Sesayap (kabupatenBulungan) and Tarakan (now a kota, ormunicipality) (Dinas Kehutanan 1999). CDKBulungan Selatan, which is based in TanjungSelor, has been responsible for administeringforestry activities in Malinau’s three remainingsubdistricts – kecamatan Pujungan, Kayan Hilir,and Kayan Hulu – and in kabupaten Bulungan’ssubdistricts of Tanjung Palas and Long Peso(Dinas Kehutanan 1999).

In 1999, the total area of Forest Estateadministered by CDK Bulungan Tengah andCDK Bulungan Selatan amounted to 1.2 millionha and 3.9 million ha, respectively (DinasKehutanan 1999). Together, the two agencieshold jurisdiction over roughly 2.0 million haclassified as either ‘Permanent ProductionForest’or ‘Limited Production Forest’. As Table3 shows, this represents approximately 20percent of the area classified as such for all ofEast Kalimantan, Indonesia’s largest timber-

Table 3. Land Area According to TGHK Forest Classification for CDK Bulungan Tengah, CDK Bulungan Selatan, and

East Kalimantan, 1999

Forest

Classification

CDK Bulungan

Tengah (ha)

Permanent 285,215 827,605 5,792,198 0,19

Limited Production

Forest 336,911 625,200 4,948,640 0,19

Conversion Forest 237,526 306,981 4,910,612 0,11

Protection Forest 166,247 748,401 3,437,790 0,27

Conservation and

Recreation Forest 184,625 1,448,173 2,030,200 0,80

Total 1,210,524 3,956,360 21,144,000 0,31

Source: Dinas Kehutanan Kalimantan Timur (1999).

CDK Bulungan

Selatan (ha)

Total for East

Selatan (ha)

CDK Bul.Tengah

and Bul. Selatan as %

of East Kalimantan

case 3 4/16/02, 10:29 AM5


6

producing province. CDK Bulungan Tengah andCDK Bulungan Selatan also administer overone-half million hectares classified as‘Conversion Forest’. Moreover, the two agenciesare responsible for administering some 915,000ha of ‘Protection Forest’ and over 1.6 million haof ‘Conservation and Recreation Forest’. InMalinau, most of the area classified as‘Conservation Forest’ falls within the vastKayan-Mentarang National Park, whichstraddles the district’s western border withSarawak and accounts for 80 percent of EastKalimantan’s total parkland.

Commercial logging began in the Bulunganregion in the early-1970s, shortly afterSoeharto’s New Order government openedIndonesia’s forestry sector to private investment.Initially, the Directorate General of Forestry inJakarta allocated only a few large-scale timberconcessions (Hak Pengusahaan Hutan or HPH)in that part of East Kalimantan, and these wereprimarily located in easily accessible areas alongnavigable rivers. It was not until the timber boomof the late-1970s that the Directorate General ofForestry began distributing HPHs in portions ofthe region’s interior which now fall withinMalinau’s boundaries. The allocation of newtimber concessions in the Malinau area taperedoff in the early-1980s as the government phasedin a national ban on log exports. However,several large concession-holders entered the area

in the late-1980s and early-1990s whenIndonesia’s plywood exports underwent rapidexpansion. By the time Malinau was establishedas a kabupaten, 11 HPH existed within someportion of the district’s territory, though four ofthese were apparently inactive at that time (seeTable 4).3

Most of the HPH timber concessions located inMalinau are connected to large forestryconglomerates with ties to national andprovincial elites (Dinas Kehutanan 1999). In atleast one case – PT Giri Ekawana – theconcession is controlled directly by a corporatearm of the Indonesian military. Four of theeleven HPHs that extend into some portion ofMalinau’s territory, covering over 400,000 ha,are managed by the state-owned forestryenterprises, Inhutani I and II (Dinas Kehutanan1999). In at least two of these sites, the areashave been assigned to the Inhutani’s afterconcession licenses held by private timbercompanies have been surrendered or revoked.The Inhutani’s have managed substantialportions of the commercially productive areaswithin these concessions through profit-sharingarrangements with timber contractors.

Cumulative log production targets for six of theseven HPHs known to be active in kabupatenMalinau amounted to 330,000 m3 in 1997/98(Kanwil Kaltim 1998). It is possible that actual

Table 4. HPH Timber Concessions Located in Kabupaten Malinau, 1999

Company Group Year Area (ha) 1998/99

Allocated Production Target (m3

)

PT Essam Timber Kalimanis 1992 355,800 0

PT Intracawood (2 units) Inhutani I 1976 250,000 160,876

PT Susukan Agung (4 units) Alas Kusuma 1989 246,000 71,811

PT Gama Mula Raya Kayu Lapis Indonesia 1979 197,000 10,231

PT Rangga Kesuma (3 units) Segara 1988 112,000 0

PT Giri Ekawana Military 1992 110,500 0

PT Inhutani II (Genwood) Inhutani II 1994 99,100 0

PT Meranti Sakti II Sumber Mas 1978 57,500 37,046

PT Inhutani II (Malinau) Inhutani II 1991 48,300 25,444

PT Sarana Trirasa Bhakti Roda Mas 1990 41,000 24,630

PT Inhutani I (ex-Royindo) Inhutani I n.a.

Total 330,038

Source: Dinas Kehutanan Kalimantan Timur 1999.

case 3 4/16/02, 10:29 AM6

7


timber harvests were considerably higher thanthis, as many concession-holders and timbercontractors operating in the region are believedto regularly under-report the volumes of logs theyharvest. Virtually all of the logs harvested withinMalinau’s boundaries are transported out of thedistrict for processing, as Malinau itself has nosignificant wood-based industries (Kanwil Kaltim1998). (Until recently, the kabupaten had onlyone sawmill, located across the river from thetown of Malinau; now it reportedly has three)4. Asubstantial portion of these logs are processed inTarakan, which has two plywood and blockboardmills, six sawmills, and three moulding facilities(Kanwil Kaltim 1998). Logs from Malinau arealso shipped to processing facilities in other partsof Kalimantan and in Java.

In addition to formal timber extraction on thepart of HPH-holders, Malinau’s forests havealso supported a thriving trade in illegally-harvested logs. Much of the illegal logging thatoccurs in Malinau and other parts of northeastKalimantan is reportedly coordinated by timbersyndicates based in Tanjung Selor and Tarakan.These syndicates are said to work quite closelywith regional units of Indonesia’s military andnational police force. The syndicates alsoreportedly have strong ties to Malaysian timberbuyers. Indeed, over the past several years,significant volumes of illegally-harvested logsfrom Malinau and its neighboring districts havebeen smuggled across the border to Sabah(Suara Kaltim 2000a).

case 3 4/16/02, 10:29 AM7

2.1 ESTABLISHMENT OF A NEW

DISTRICT GOVERNMENT AND

REGULATORY REGIME

The specific effects of decentralization andregional autonomy in Malinau have, thus far,been heavily shaped by the fact that the districtonly came into existence in late-1999. As such,Malinau’s kabupaten government is still in theprocess of developing its core administrative andregulatory structures, and its institutionalcapacity in many areas remains quite limited.For the first 18 months following its inception,Malinau was administered by a provisionalBupati appointed by the Bupati of kabupatenBulungan. Malinau had no District LegislativeAssembly (Dewan Perwakilan Rakyat Daerahor DPRD) during this period, and the newly-formed district government could not, therefore,issue its own district regulations (PeraturanDaerah or Perda). Rather, until Malinau’s DPRDwas appointed in January 2001, the districtgovernment was legally bound to adhere todecrees issued by Bulungan’s Bupati prior topartition and to Perda issued by Bulungan’sDPRD. In this way, the activities of governmentdecision-makers in Tanjung Selor havefunctioned, both formally and informally, as animportant reference point for Malinau’skabupaten government.

Among the first tasks of Malinau’s DPRD onceit was installed was the selection of a new Bupati.In March 2001, the assembly elected Bp. MarthinBilla, who had theretofore served as DistrictSecretary in Malinau’s provisional government.Since taking his seat as Bupati in early-April,

Pak Marthin has moved quickly to present theDPRD with drafts of several Perdas that arelikely to define significant aspects of thedistrict’s new regulatory regime. As of early-May 2001, the DPRD was reviewing six draftregulations on the following topics:

• Village Governance (Pemerintahan Desa);• Formation, Dissolution, and Consolidation

of Kelurahan (Pembentukan, Penghapusan,dan Penggabungan Kelurahan);

• Strengthening, Preservation, Protection, andDevelopment of Adat Practices andInstitutions (Pemberdayaan, Pelestarian,Perlindungan, dan Pengembangan AdatIstiadat dan Lembaga Adat);

• Issuance of Permits for the Extraction ofTimber and Non-Timber Forest Products(Pemberian Ijin Pemungutan Hasil HutanKayu dan Hasil Hutan Bukan Kayu);

• Issuance of Permits for the Utilization ofTimber (Pemberian Ijin Usaha PemanfaatanHasil Hutan Kayu);

• Retribution on Building ConstructionPermits (Retribusi Ijin MendirikanBangunan).

In addition to drafting these six Perdas, Malinau’snew Bupati is taking steps to develop the districtgovernment’s institutional capacity in strategicareas. In particular, Pak Marthin is seeking toestablish a District Forestry Service (DinasKehutanan Daerah), which will undoubtedlyplay a critical administrative function in Malinaugiven that most of the district’s land area remainsunder forest cover. In a conversation in May 2001,Pak Marthin emphasized the need for Malinauto have its own Forest Service, as the district

22222 DECENTRALISATION IN MALINAU

case 3 4/16/02, 10:29 AM8

9


government remains dependent on three CDKfor even basic data:

We continue to rely on the CDK forinformation on HPH boundaries, logproduction, and company royalty payments.This information is critical to the Pemda[Malinau’s district government]’s ability toadminister the area under our jurisdiction. TheCDK’s sometimes don’t want to share thisinformation with us because they still reportto the province.5

Pak Marthin reported that he envisions thatMalinau’s District Forestry Service would have astaff of about 30 to administer the 4.0 million ha offorestland located within the kabupaten’sboundaries. Malinau’s government is currentlyrecruiting these staff from the Provincial ForestService.

2.2 DISTRICT REVENUE GENERATION

During 2000, the first year of Malinau’s formalexistence as a kabupaten, the district had abudget of Rp 5.8 billion (or US$ 865,000 at theJanuary 2000 exchange rate of Rp 6,700 perUS$). As Table 5 shows, approximately 80percent of this originated from petroleum sectorrevenues and 15 percent came from forest sectorrevenues. In both cases, these funds largely cameto the district through allocations from thenational government. Through year 2000, whileMalinau’s provisional district government was

still in place, such allocations reached thekabupaten in a fairly circuitous manner: theywere first allocated by the central governmentto East Kalimantan’s provincial government,which then passed them on to kabupatenBulungan, which in turn reallocated a portionto Malinau.

In September 2000 when interviews for thisstudy was conducted, kabupaten officials inMalinau were still in the process of formulatingthe district’s budget for 2001. While they werenot prepared to release even preliminarybudgetary targets, an official at Malinau’sDistrict Revenue Office (Dinas PendapatanDaerah or Dispenda) indicated that the districtgovernment anticipated sharp reductions infiscal allocations from the national governmentand was, therefore, under considerable pressureto secure revenues from local sources.6 At thatpoint, the kabupaten’s access to district-basedrevenues, or PAD (Pendapatan Asli Daerah)as they are known, were still very limited.Consistent with district regulations issued bykabupaten Bulungan before it was partitioned,Malinau’s government had authority to collectsix relatively minor forms of local tax:

• Group C mining tax (for sand, stones, etc)• Surface and ground water tax• Advertisement tax• Hotel and restaurant tax• Entertainment tax• Street lighting tax

Table 5. Planned Year 2000 District Budget for Kabupaten Malinau (Anggaran Pendapatan Belanja Daerah (APBD),

Rencana 2000 Dati II Malinau)

Source Amount (Rp ‘000)

Rural 7,500

Urban 15,000

Estate Crops —

Forestry 900,000

Mining – Petroleum/Gas 4,800,000

Mining – Non-Petroleum/Gas 120,000

Land Transfer Fees 5,000

Total 5,875,500

Source: Dispenda Kabupaten Malinau

case 3 4/16/02, 10:29 AM9


10

The Dispenda official acknowledged that thekabupaten government held little hope ofsignificantly expanding its revenue base byraising these existing local taxes. Heemphasized, rather, that under decentralisationMalinau would adopt a two-pronged strategy forraising PAD: On the one hand, the kabupatengovernment would take steps to secure a largerportion of the fees and royalties paid bycompanies operating within the district’sboundaries, particularly HPH timber concession-holders. On the other hand, Malinau would seekto attract new capital investment in a variety ofsectors.

2.2.1 Securing an Increased

Share of HPH Revenues

Prior to the onset of the decentralization process,HPH concession-holders were formally requiredto pay eight specific fees to government agenciesat various levels.7 These included the following:

1) Timber Concession Royalty (Iuran HakPengusahaan Hutan or IHPH): a one-timearea-based fee paid at the time the HPHcontract is initially issued.

2) Forest Resource Rent Provision (ProvisiSumber Daya Hutan or PSDH): a volume-based royalty on each cubic meter of timberharvested (Rp 58,000 per m3 of class Ameranti in 2000).

3) Reforestation Fund (Dana Reboisasi or DR):a volume-based fee on each cubic meter oftimber harvested, initially introduced as abond to support reforestation activities (US$16 per m3 of class A meranti in 2000).

4) Land and Building Tax (Pajak Bumi danBangunan or PBB): a flat-rate property taxbased on an estimation of market capitalvalue of land and buildings (approximatelyRp 3,000 per ha in Malinau during 2000).

5) Ad Valorem Tax (Pajak Pertambahan Nilaior PPN): a tax of 10 percent of net earnings.

6) Income Tax (Pajak Penghasilan): a tax of 6percent of net earnings.

7) Retribution for Motorized Transportation(Retribusi Kendaraan Bermotor): a fee

based on number and size of vehicles usingpublic roads.

8) Community Development Fee(Pembayaran Bina Desa): a volume-basedfee paid to communities living in or nearthe concession site (US$ 5 per m3 in 2000).

Under the highly-centralized fiscal structuresthat were in place during the New Order period,HPH-holders paid the vast majority of these feesto the central government. In the case of the DR– the most lucrative of the timber-related fees,by far — the national government retainedcontrol over the full amount collected. However,in the case of the PSDH, the central governmentwas required to redistribute 45 percent of thetotal amount collected to the provincialgovernments for use on developmentexpenditures. Of the PSDH funds allocated tothe provinces, one-third (or 15 percent of totalPSDH receipts) were ear-marked fordevelopment expenditures at the kabupatenlevel. Indeed, much of the Rp 900,000,000linked to forestry revenues in Malinau’s 2000budget originated from PSDH receipts.

Of the remaining tax categories, the centralgovernment was obliged to distribute substantialportions of the PBB, Ad Valorem Tax, andIncome Tax to the provincial governments. It islikely that some portion of these were passedon to the kabupatens as part of their developmentgrants from the provincial government. TheRetribution for Motorized Transport is the onlyfee that the kabupaten governments wereauthorized to collect directly from HPH-holders.Most timber concessionaires have reportedlyfulfilled their obligations related to theCommunity Development Fee by providingmaterial assistance directly to communitiesliving in and around their HPH sites. This isoften done through allocations of seed orfarming equipment or through the constructionof schools or village facilities, with the HPH-holder submitting receipts to the government todocument that the obligation has been met.8

Through the second half of 2000, EastKalimantan’s provincial government engaged inprotracted negotiations with the central

case 3 4/16/02, 10:29 AM10

11


government over fiscal balancing. At the heartof these negotiations was a dispute over whatportion of East Kalimantan’s natural resourcerevenues should flow to the nationalgovernment. East Kalimantan officials arguedthat as a province rich in forest and mineralresources, the existing fiscal arrangementseffectively meant that the bulk of the province’snatural resource revenues flowed to Jakarta,which then used these to subsidize the budgetsof resource-poor provinces. With regard toforestry revenues, East Kalimantan officialssought to secure an agreement that wouldrequire HPH-holders to pay 80 percent of theirDR and 20 percent of the PSDH directly to theprovincial government.9 In this way, theprovincial government would retain a far largerportion of timber rents than in the past, as DRfees had previously been fully controlled by thecentral government and PSDH payments hadgone first to Jakarta before a portion wasredistributed among Indonesia’s provinces.

While negotiations were going on between thenational and provincial governments, thekabupaten governments in Malinau and severalother timber-rich districts were also seeking toensure that they would secure an adequateportion of the rents associated with logsharvested in their jurisdictions. In October 2000,the provincial news media carried reports thatBupati’s in four districts and one municipalityin northeast Kalimantan – Malinau, Bulungan,Nunukan, Berau, and Tarakan – threatened tobreak away from East Kalimantan if theprovincial government did not guarantee thatthese kabupaten would receive fiscal allocationscommensurate with the revenues flowing fromthem (Suara Kaltim 2000b). In particular, theBupati’s in these districts demanded that DRpayments made by HPH-holders operatingwithin their boundaries should be retained bythe kabupaten government. Echoing thearguments made by the provincial governmentin its negotiations with Jakarta, the Bupati’sargued that it was unfair for DR fees flowingfrom their districts to be used by EastKalimantan’s provincial government tosubsidize districts with less timber production.

In a conversation in early-May 2001, MalinauBupati Marthin Billa downplayed these threats,emphasizing that they had only been made tosteer the discourse related to fiscal balancing ina direction that would be more postive fortimber-rich kabupaten.10

In addition to trying to secure a larger portionof existing fees and royalties for HPH-holders,there are indications that both the provincial andkabupaten governments may seek to expandtheir tax receipts by introducing new fees fortimber concessionaires. Indeed, the Governorof East Kalimantan issued a decree (SK No 20/2000) in June 2000 requiring HPH-holdersthroughout the province to pay a ‘compensationfee’ to communities living in and around theirconcession sites.11 This fee was set at Rp 3,000per m3 harvested during the period 1995-2000and Rp 5,000 per m3 for logs harvested from2001 onward.12 Decree No 20/2000 stipulatesthat HPH-holders are required to make thesepayments to the affected communities with theCamat (Subdistric Head), Kepala Desa (VillageHead) and Kepala Adat (Customary Head)present as witnesses. However, according to oneinformant in Malinau, the kabupatengovernment lobbied hard to have this fee paidto the districts instead of directly to thecommunities involved, ostensibly so that itcould ensure that the funds reach communitieswith legitimate claims to compensation fromtimber companies.13

In interviews conducted in September 2000,Malinau officials reported that they wereseriously considering the possibility ofintroducing a volume-based royalty for logsharvested by HPH concession-holders.14

However, at that point they were reluctant todiscuss either the potential size of this royaltyor when it might be implemented. In aninterview, the manager of one HPH reported thatthe district government had signaled that itmight impose two new fees on timberconcessionaires: a ‘compensation fee’ of Rp20,000 per m3 for local communities and a feeof Rp 50,000 per m3 for the kabupatengovernment. The unit manager at Inhutani II in

case 3 4/16/02, 10:29 AM11


12

Malinau indicated that the uncertaintiesassociated with which levels of government holdthe authority to impose new fees have createdconsiderable difficulties for timber companiesto run their businesses:

HPH-holders used to interact largely with thecentral government (pusat). Now we have toengage with the regional government(Pemda) but the regulations aren’t clear.Pemda has been making lots of demands onus. Sometimes these come from the provincialgovernment, but often they come from thekabupaten government as well. Pemda shouldnot be making demands directly on the HPHs– they should make demands on the centralgovernment. Our company is fully preparedto pay whatever fees are required of us, butPemda and the central government first needto agree on what the fees will be and to whomthey are to be paid.15

2.2.2 Generating New Investment

In addition to seeking increased revenues fromHPH-holders, Malinau’s district government isalso taking steps to attract new investment to theregion. Priority sectors that have received attentionthus far include: forestry; mining; plantations;agriculture; and tourism (Sekda Malinau 2001).In discussing the district’s economic potential,Malinau officials generally emphasize the fact thatthe kabupaten encompasses a vast area that is richin natural resources and yet has a relatively smallpopulation.

While much of the region’s land area wasallocated to HPH-holders during the New Orderperiod, industrial timber extraction has thus farbeen limited by the rugged terrain that exists inmany parts of the district. As a result, Malinauhas some of East Kalimantan’s last large tractsof primary forest. Malinau’s mineral resourcesare, likewise, still largely unexplored, thoughindustrial-scale coal mining operations isoccuring near Long Loreh and community-rungold mining exists in parts of the Apo Kayan(Sekda Malinau 2001). Moreover, feasibilitystudies conducted before the 1997 financial

crisis suggested that much of the lowland areasalong the Malinau river basin would beconducive to plantation development, due to itsflat terrain and relative accessibility.16 Districtplanners view tourism as a potentially significantnew revenue source, particularly if they canpromote the unique cultural and ecologicalfeatures of the Kayan-Mentarang National Park(Sekda Malinau 2001).

Malinau policymakers are keenly aware that thedistrict’s proximity to the East Malaysian statesof Sabah and Sarawak offers strategicadvantages in terms of access both to investorsand to markets. Since Malinau’s partition fromBulungan, a steady stream of Malaysianinvestors has come to the district in the hopesof arranging business deals with the newkabupaten government. Investors from Sabahhave been particularly eager to secure access tothe district’s timber resources, as log suppliesin that part of eastern Malaysia are heavilydepleted. In August 2000, one Malinau-basedtimber broker described the situation as follows:‘The investors are on stand-by. They’re justwaiting for Pemda [the kabupaten government]to sort out the permit process [for timberharvesting].’17 This particular individual alsonoted that he had made several trips not only toSabah but also to Sarawak and Singapore to seekout investors interested in financing loggingoperations in Malinau.

Investors from Malaysia and other countries havebeen drawn to Malinau, in part, because theongoing processes of decentralisation and regionalautonomy are likely to greatly expedite theprocedures for obtaining investment approval.During the New Order period, foreign investorsnormally had to secure approval from the CapitalInvestment Coordinating Board (BadanKoordinasi Penanaman Modal or BKPM) andrelevant Ministries in Jakarta, as well as from avariety of local and provincial governmentagencies. This process often consumed inordinateamounts of time, and frequently requiredsubstantial formal and informal payments. TheAustralian manager of an oil palm companyoperating just north of Malinau reported, for

case 3 4/16/02, 10:29 AM12

13


instance, that under the New Order regime’scentralized approval process, his company had toobtain permits and/or letters of recommendationfrom the Ministry of Agriculture, Ministry ofForestry, the Governor of East Kalimantan, theBupati of Bulungan, and Inhutani I before it couldbegin planting.18 This process took nearly twoyears and required informal payments amountingto approximately one-half of the US$ 12 millionthat the company had invested through March2000.19 This individual expressed a clearenthusiasm for the decentralisation process,speculating that ‘it will cut out Jakarta and possiblySamarinda from the investment approval process.Investment and project operations will be muchsmoother and more efficient if companies can dealstraight with the Bupati.’

To attract capital investment and facilitate theregion’s economic development, Malinau’sgovernment is actively seeking to improve thedistrict’s very limited physical infrastructure.The Bupati has indicated that his administrationwill make it a priority to build roads linkingMalinau’s five subdistricts; to improve portfacilities near Kota Malinau20 ; and to expandair travel to some of the more remote parts ofthe district. Already, the district is close tocompleting a road from Bulungan’s capital ofTanjung Selor to the town of Malinau, whichwas initiated before the onset of Indonesia’sfinancial crisis in 1997 and largely funded byallocations from Jakarta. Kabupaten officialshave indicated that this road will be extended instages to eventually reach Long Bawan inKayan-Mentarang area, which would open thedistrict to expanded investment and trade withSarawak.21 In May 2001, the Bupati reportedthat a more immediate priority would be toconstruct a road south from town of Malinau tolink the Malinau basin with the upper Bahauregion. Such a development would likelyfacilitate large-scale forest conversion forplantation development in this area.

District officials have indicated that withdecentralisation underway, this and otherinfrastructural projects will now need to befunded largely by local sources. The kabupaten

government is, therefore, seeking the assistanceof HPH-holders, mining companies, and otherpotential investors in the region who would becapable of building roads and bridges. The headof Malinau’s District Planning Agency (BadanPerencanaan Pembangunan Daerah orBAPPEDA) described the kabupaten’s effortsas follows:

Until now, virtually all of the profits fromHPH timber concessions have gone tosupport development in the center (pusat).And if you go to Jakarta, you see lots andlots of bridges. They even have bridges thatgo over bridges. But there aren’t many riversthere. Here in Malinau, we have lots and lotsof rivers, but very little money to buildbridges. So now the district government isasking HPH-holders to offer some assistancefor local development.22

Thus far, it appears that the district governmenthas formulated its plans for road developmentwithout first carrying out either acomprehensive spatial planning process orserious assessments of these projects’ likelyenvironmental impacts.

2.3 ALLOCATION OF IPPK FOREST

CONVERSION PERMITS

In April 2000, Malinau’s districtgovernment began issuing small-scale forestconversion licenses known as TimberExtraction and Utilization Permits (IjinPemungutan dan Pemanfaatan Kayu or IPPK).The immediate legal basis for the allocation ofIPPK permits in Malinau stems from DecisionNo 19/1999 signed by the Bupati of Bulungan,R.A. Bessing, on July 28, 1999 several monthsbefore kabupaten Bulungan was divided.23 24

Bupati Decision No 19/1999 stipulated thatIPPK permits could be allocated to allow timberharvesting associated with forest conversion inareas designated as ‘Social Forest’ (HutanRakyat) or ‘Privately-Owned Forest’ (HutanMilik). In assuming authority to issueconversion permits in these areas, the Bupati

case 3 4/16/02, 10:29 AM13


14

cited Government Regulation (PeraturanPemerintah or PP) No 62/1998 regarding thedelegation of partial authority in the forestrysector to the regions.25 Signed into law byPresident B.J. Habibie, PP 62/1998 stipulatedthat district governments would have authorityto oversee activities related to the managementof ‘Privately-Owned Forest’ and ‘Social Forest’,including ‘tree planting, maintenance,harvesting, utilization, marketing, anddevelopment.’26

According to the Bulungan Bupati’s Decision No19/1999, IPPK permits can be assigned toindividual land owners; village and governmentcooperatives; farmers’ groups; communityconservation groups; and companies or otheragencies that are legally managing areas of‘Privately-Owned Forest’. Permit-holders areallowed to clear-fell forest in the areas definedin the IPPK contract ‘as long as this does nothave a negative effect.’ Permit-holders are notrequired to pay PSDH or other national andprovincial-level royalties associated with theHPH concession system, though they are subjectto fees imposed by the kabupaten government.The IPPK permit may range in duration between3 and 6 months, and if stands of commercialtimber remain by the time the license expires, itmay be renewed up to three times.

With the IPPK regulations on the books, thekabupaten government in Bulungan movedaggressively to generate new revenues for thedistrict budget. Between August 1999 and August2000, Bulungan’s Bupati and District Secretaryissued some 75 IPPK permits covering just under10,000 ha (Bagian Perekonomian 2000).27

Following the district’s partition in late-1999, theBupati in Malinau began issuing IPPKs in April2000. Through February 2001, Malinau’s districtgovernment issued at least 39 IPPKs coveringan aggregate area of 56,000 ha (see Table 6).These permits cover areas ranging in size from100 ha to 3,000 ha, and are located in two of thedistrict’s five kecamatan: Malinau andMentarang.28 In each case, the IPPK-holder hasbeen given the right to clear the designated areaof standing timber in order to convert the land to

agricultural use or plantations. Whereas theBulungan Bupati’s Decision No 19/1999stipulates that IPPK permits should be valid forperiods of 3-6 months, the permits issued by theBupati of Malinau often state that the IPPK-holdermust only initiate activities at the cutting sitewithin six months from the date that the permitwas issued. Companies receiving IPPKs inMalinau reported that their permits are valid forperiods ranging from six to twelve months, thoughit is often unclear if these time limits have beenformally imposed by the district government.

Malinau’s kabupaten government has sought togenerate formal revenues from the allocation ofsmall-scale forest conversion permits through theintroduction of two new fees. First, IPPK-holdersare required to pay a one-time ‘third partydonation’ (sumbangan pihak ketiga) of Rp200,000 per ha.29 Second, recipients of IPPKpermits are required to pay a ‘productionretribution’ (retribusi produksi) of Rp 15,000 perm3 of timber harvested. With these two fees, itcan be projected that the kabupaten governmentshould be able to collect approximately Rp 53billion in revenues for the district budget fromthe 39 IPPKs issued through February 2001 (orUS$ 5.3 million at an exchange rate of Rp 10,000/US$). This amounts to roughly nine timeskabupaten Malinau’s planned budget for 2000.

2.3.1 New Pressures on Forests

There are clear indications that the allocation ofIPPK permits by the kabupaten government inMalinau is placing significant new pressures onthat district’s forests. Until recently, commercialtimber extraction in the Malinau area wasorganized, at least formally, around HPH timberconcessions, which require logging companies topractice selective felling, rotational harvesting,and enrichment planting. While many HPH-holders and their contractors are believed to haveregularly overharvested their cutting blocs and tohave carried out only minimal replanting, theirconcession sites have generally left large areas ofsecondary forest standing. Although often quitedegraded, these secondary forests have played a

case 3 4/16/02, 10:29 AM14

15


Table 6. List of IPPK Permits Issued by Malinau District Government, April 2000-February 2001

IPPK Holder SK No. Date Location Area(ha) Volume(m3)

CV Putra Mentarang Kaltim 17/2000 April 17, 2000 Desa Long Pala 100 5,019

Kec. Mentarang

CV Putra Mentarang Kaltim 20/2000 April 20, 2000 Desa Luba/ 500 25,694

Selidung Kec. Malinau

CV Putra Mentarang Kaltim 21/2000 April 24, 2000 Desa Kabiran/ 600 38,644

Tg Sepatui Kec. Malinau

CV Putra Mentarang Kaltim 27/2000 May 4, 2000 Desa Long Loreh 1,050 44,404

Kec. Malinau

CV Wana Bakti 38/2000 May 29, 2000 Desa Sesua 500 25,244

Kec. Malinau

Pemegang Kuasa Tanah 50/2000 June 21, 2000 Desa Long Sulit 700 37,839

Adat Long Sulit Kec. Mentarang

CV Putra Mentarang Kaltim 80/2000 June 21, 2000 Desa Paking 2,600 130,344

Kec. Malinau

CV Wana Bakti 51/2000 June 23, 2000 Ds. Long Adiu/ 1,500 75,773

Punan Adiu Kec. Malinau

CV Wana Bakti 81/2000 July 21, 2000 Desa Batu Lidung 1,500 74,150

Kec. Mentarang

CV Lestari Timur Indonesia 68/2000 July 5, 2000 Desa Paking 1,000 49,493

Kec. Mentarang

Koperasi Berdikari 69/2000 July 7, 2000 Sungai Segudang 1,000 40,935

Kec. Malinau

Koperasi Kehutanan 66/2000 July 13, 2000 S. Gita Bengalun 1,000 50,005

Kec. Malinau

CV Hanura 72/20000 July 7, 2000 Desa Langap 3,000 147,889

Kec. Malinau

Koperasi Galik Hasa Bulet 76/2000 July 24, 2000 Batang Indai/Gong 1,500 73,967

Solok Kec. Malinau

CV Putra Mentarang Kaltim 77/2000 July 7, 2000 S. Gong Solok 1,600 94,773

Kec. Malinau

CV Putra Mentarang Kaltim 78/2000 July 7, 2000 Desa Seruyung 600 31,401

Kec. Malinau

CV Putra Mentarang Kaltim 79/2000 July 7, 2000 Desa Salap 600 30,687

Kec. Malinau

CV Putra Mentarang Kaltim 80/2000 July 21, 2000 Desa Paking 2,600 130,000*

Kec. Mentarang

CV Wana Bakti 81/2000 July 21, 2000 Desa Batu Lidung n.a. n.a.

Kec. Malinau

CV Gading Indah 83/2000 August 10, 2000 Setarap/Punan 1,200 60,000*

Setarap Kec. Malinau

Pemegang Kuasa 92/2000 September 4, 2000 Desa Long Sulit 1,300 65,000*

Tanah Adat Long Sulit Kec. Malinau

CV Kelawing Jaya 129/2000 November 1, 2000 Desa Adiu/Punan 1,500 75,000*

Adiu Kec. Malinau

Koperasi Tumu Bagu 130/2000 November 2, 2000 S. Pandan, 2,000 100,000*

Gong Solok Kec. Malinau

Koperasi Tumu Bagu 131/2000 November 11, 2000 S. Gulama, Gong 1,500 75,000*

Solok Kec. Malinau

CV Sinar Busakan 133/2000 November 17, 2000 Desa Long Simau 2,000 100,000*

Kec. Mentarang

CV Putra Surip Wijaya 140/2000 November 17, 2000 Desa Nunuk Tanah 2,000 100,000*

Kibang Kec. Malinau

CV Putra Surip Wijaya 142/2000 November 17, 2000 Desa Sengayan 2,000 100,000*

Kec. Malinau

PT Lestari Timur Indonusa 145/2000 November 21, 2000 Desa Paking n.a. n.a.

Kec. Mentarang

PT Bakti Bumi Perdana 153/2000 December 12, 2000 Desa Kelapis 1,000 50,000*

Kec. Malinau

PT Bakti Bumi Perdana 154/2000 December 13, 2000 Desa Selidung 1,000 50,000*

Kec. Malinau

case 3 4/16/02, 10:29 AM15


16

vital role in maintaining forest cover and insustaining the subsistence livelihoods of forest-dependent communities.

With the emergence of the IPPK system, formaltimber extraction in Malinau and other partsof East Kalimantan is becoming increasinglyorganized around forest conversion. The IPPKpermits allow the clear-felling of designatedforested areas, ostensibly so that these sites canthen be used for agricultural purposes.Averaging just under 1,500 ha each, theexploitable areas delineated by the 39 IPPKpermits issued in Malinau through February2001 would, at first glance, seem to berelatively small — particularly whencompared to the size of HPH timberconcessions in the region. The areas assignedto IPPK-holders take on considerably greatersignificance, however, when it is consideredthat the permits are valid for periods of six totwelve months. This effectively means that the56,000 ha thus far allocated to IPPK-holdersthrough February 2001 represents the

Koperasi Serba Usaha Meranti 6/2001 January ?, 2001 Desa Tg Nanga 2,000 100,000*

Kec. Malinau

PT Bakti Bumi Perdana 9/2001 January 30, 2001 Desa Putat 1,000 50,000*

Kec. Malinau

PT Bakti Bumi Perdana 10/2001 January 30, 2001 Desa Selidung 1,000 50,000*

Kec. Malinau

PT Bakti Bumi Perdana 11/2001 January 30, 2001 Desa Selidung 1,000 50,000*

Kec. Malinau

PT Bakti Bumi Perdana 12/2001 January 30, 2001 Desa Luba 1,000 50,000*

Kec. Malinau

PT Malinau Jaya Sakti 21/2001 February 12, 2001 Desa Sesua/Punan 3,000 150,000*

Bengalun Kec. Malinau

CV Putra Harapan 26/2001 February 16, 2001 Sungai Gita 5,000 250,000*

Bengalun Kec. Malinau

Pemegang Kuasa Tanah Adat 30/2001 February 20, 2001 Desa Long Sulit 3,000 150,000*

Desa Long Sulit Kec. Malinau

CV Wana Bakti 32/2001 February 21, 2001 Desa Sesua 1,500 75,000*

Kec. Malinau

Total (39 IPPKs) 55,950 2,806,261

Source: Pemerintah Daerah Kabupaten Malinau.(2000; 2001). *Volume figures with asterisk are estimates based on the

assumption that each hectare yields 50 m3 of merchantable timber. Otherwise, estimated volumes are those recorded in

the IPPK contract.

aggregate area that district officials havescheduled for conversion by early 2002.

Moreover, according to one local timber brokerwho has been involved in arranging severalIPPK permits, ‘the kabupaten government hasindicated that investors will be able to obtainnew conversion permits once their initial IPPKsexpire.’ 30 Indeed, one IPPK-holder reported thathe had secured the right to exploit an area thatcovered 25,000 ha, but that he would do so instages, using IPPK permits for 1,000 ha at atime.31 To the extent that Malinau officials domake similarly large areas of forest availablefor clearing in future years, the loss of forestcover associated with IPPK conversion willultimately be quite substantial. Moreover, thenegative social and environmental effectsassociated with large-scale forest conversion arelikely to be exacerbated if the districtgovernment continues to allocate IPPK permitsbefore a comprehensive and participatory spatialplanning process has been carried out.

Table 6. Continued

IPPK Holder SK No. Date Location Area(ha) Volume(m3)

case 3 4/16/02, 10:29 AM16

17


It is also significant that the Malinau districtgovernment has issued the IPPK permits wellbefore an effective forestry regulatory agencyhas been established at the kabupaten-level. Inthis regard, there is little evidence that the districtgovernment has either the political will or theinstitutional capacity to effectively monitor theactivities of IPPK-holders once they haveinitiated their operations.32 A forestry officialfrom CDK Bulungan Tengah who is posted inMalinau agreed that Dinas Kehutanan’s capacityto regulate IPPK-holders is still quite limited,noting that ‘the rules are altogether unclear.’33

Moreover, among timber industry actorsinterviewed in Malinau, Bulungan, and Tarakan,there is a widely-held sense that the IPPK systemhas been structured, in part, to legitimize theregion’s theretofore informal timber economy.According to one timber company officer, ‘thereis no agency to regulate the IPPKs. The area tobe cut by the CV [IPPK-holder] depends on thecompany’s arrangement with the localcommunities (masyarakat).’34

Some industry sources claim that the IPPK-holders have already brought much largernumbers of heavy equipment into the region thanthey would need to log the areas that have beenformally allocated to them. In September 2000,for instance, Inhutani I officials in Tarakanreported that the IPPK-holders had brought over370 pieces of new heavy equipment intoBulungan, Malinau, and Nunukan districts overthe preceding year.35 At that time, they describedthe situation as follows:

A year ago, there were probably 200 piecesof heavy equipment in the region. These wereall formally registered, so that petrol couldbe allocated…36 The flood of equipmentcoming in now from Malaysia is mostlyunregistered and of questionable legalstatus… Now [the head of the region’s mainillegal logging syndicate] is planning to bringin 400 more pieces of heavy equipment.37

The Inhutani officials attributed this influx ofbulldozers, logging trucks, log loaders, and

graders to decentralisation both in the forestrysector and in the government’s procedures forregulating imports:

In the past, timber companies seeking toimport heavy equipment were required toobtain permits from the Ministry of Forestry(with prior recommendations from bothKanwil and Dinas Kehutanan) and theMinistry of Industry and Trade in Jakarta.Now, the CVs [i.e. the IPPK permit-holders]are not going through the Departments [to getimport permits]. They are just going throughthe Bupati’s and the [regional] CustomsOffice in Tarakan.38

A Tarakan-based Customs official confirmedthat his office had, indeed, approved importpermits for a significantly larger number ofpieces of heavy equipment in 2000 than it hadin previous years. He indicated that these permitsdid not require prior approval from the Ministryof Industry and Trade in Jakarta because theywere for ‘used equipment’ (barang bukan baru)that was being ‘imported temporarily’ (imporsementara).39 He claimed that the nationalgovernment still regulates imports of goods thateither are new or that are classified as ‘definitiveimports’ (impor definitif) – that is, which willnot later be ‘re-exported.’ Inhutani officials,however, vigorously questioned whether theregulations governing ‘temporary imports’ werebeing applied systematically, arguing insteadthat Malaysian investors were exploiting theloose regulatory environment to move theirequipment across the border from Sabah.

These reports may indeed signal that the newinvestors expect either to be granted much largerareas of forest than those assigned to IPPK-holders thus far, or to gain informal access toareas outside of those delineated in their IPPKpermits. In either case, the IPPK system oftimber extraction is likely to place considerablygreater pressures on Malinau’s forests thandistrict policymakers have yet acknowledged.

case 3 4/16/02, 10:29 AM17


18

2.3.2 Timber Profits for New Actors

In addition to generating revenues for Malinau’sdistrict budget, the allocation of IPPK permits bythe kabupaten government has created profit-making opportunities for a range of actors whohad theretofore been largely excluded fromIndonesia’s formal timber sector. To date, most ofthe logging companies to receive IPPK licenses inMalinau are joint ventures between localentrepreneurs – or putera daerah (literally,‘children of the region’ or ‘local sons’), as theyare known in Malinau – and either regionally-basedIndonesian or Malaysian Chinese timber buyers.

In such partnerships, the role of the localentrepreneurs is typically two-fold: On the onehand, they play a critical function in identifyingaccessible forest areas that are well-stocked withcommercial timber species and in brokeringharvesting agreements with nearby communitiesthat may have tenure claims to these areas.40 Onthe other hand, the putera daerah are generallyresponsible for arranging the IPPK permit andall supporting documentation with the kabupatengovernment. These individuals invariably havestrong political connections among the officialsin charge of Malinau’s government offices, whichin some cases, are reinforced by family ties and/or shared ethnic bonds.41

For their contribution, the local entrepreneursoften receive a 30-40 percent share in the venturesassociated with each IPPK they arrange.42 Theremaining shares are held by the investor (orinspektur, as many in Malinau call them), whoprovide much of the financing and equipmentneeded to log the areas specified in the IPPKpermit. When interviewed for this study, mostlocal entrepreneurs were reluctant to identify thespecific investors who are backing their activities.However, it was widely acknowledged that muchof the recent investment in Malinau’s burgeoningtimber industry has come from MalaysianChinese timber buyers, who are seeking to securenew supplies of logs for wood processingindustries in Sabah. In the case of one companythat has received multiple IPPK permits, theprimary investor is an Indonesian Chinesebusinessman who apparently has roots in the

Malinau region, but who has been based inBalikpapan for the past decade.

Many of the investors now active in the Malinauregion are reported to be closely tied to illegallogging syndicates that operate out of TanjungSelor in Bulungan and Tarakan to smuggle logsacross the border to Sabah. As noted above, thereis speculation that these syndicates may, in fact,seek to use the IPPK permits allocated by thekabupaten government to expand their operationsunder the guise of legality. For logging companiesthat had previously been engaged in illegal timberharvesting, securing an IPPK permit offers twoimportant advantages: First, it provides a semi-legal cover for continued informal loggingactivities in areas near those specified in the IPPKconversion license. Second, it provides thesecompanies with an apparently legitimate reasonto bring large numbers of heavy equipment intothe region. Without the IPPK permit, it would bedifficult for small-scale timber companies tojustify – either to government regulatory agenciesor to local communities — the need to land heavyequipment at their logging sites.

At least at the discursive level, forest-dependent communities represent a third set ofactors who stand to benefit from the allocationof IPPK licenses. Indeed, the kabupatengovernment requires that logging companiesapplying for an IPPK permit must, first, securea harvesting agreement with communitiesliving in or around the forested area which willbe logged. In interviews, district officialsemphasized that this requirement is designedto ensure that the new logging permits issuedby the kabupaten government will generatetangible benefits for the people (masyarakat)of Malinau in a manner that the HPH systemhas failed to do. The District Secretary, amongothers, explained that the HPH systemcategorically marginalized local peoples, asconcession maps were routinely drawn up inJakarta without concern for the land and foresttenure rights of adat communities.43 Inaddition, he noted that the local developmentexpenditures that HPH-holders were obligedto make often went unpaid and rarely amounted

case 3 4/16/02, 10:29 AM18

19


to much, when compared to the profits thetimber companies took out of the region. (Thespecific cash and non-cash benefits that IPPK-holders have agreed to provide to communitiesare examined in detail later in this paper).

In addition to the formal profits flowing to thebrokers, investors, and local communities, theallocation of IPPK permits has also apparentlycreated lucrative opportunities for informalprofit flows to government officials involvedin the permit process. Several informantsinterviewed during the course of this studyindicated that informal payments wereroutinely required at each step of the permitapproval process where a signature is needed.Timber brokers interviewed in September 2000indicated that they had paid as much as Rp 50million (or roughly US$ 7,500 at an exchangerate of Rp 6,700/US$) for individual signaturesneeded to secure the IPPK permit.44 Theynoted, however, that the investors willgenerally recoup such fees by withholding anequivalent amount from their payments to thelocal communities whose forests they arelogging.

2.4 OVERLAP OF IPPK

CONVERSION AREAS AND

HPH TIMBER CONCESSIONS

With the issuance of PP No 6/1999, the centralgovernment gave authority to districtgovernments to allocate ‘Forest ProductHarvest Concession’ (Hak Pemungutan HasilHutan or HPHH) in areas classified as ‘ForestEstate’. The implementing regulations relatedto HPHHs were detailed in a series of decreesfrom the Ministry of Forestry and Estate Cropsin May 1999. Specifically, Ministerial DecisionNo 310/1999 stipulated that districtgovernments could issue HPHHs up to 100 hain size for the extraction of timber within areasclassified as ‘Conversion Forest’ or areas ofProduction Forest “that was going to beconverted or reclassified.”45 Decision No 310/1999, moreover, stated that HPHHs for the

extraction of timber could not be issued forareas that were already encumbered with aHPH timber concession license or an IPK (IjinPemanfaatan Kayu) timber clearance permit.However, a subsequent decree, MinisterialDecision No 317/1999, outlined a processthrough which adat communities can obtainHPHHs to extract both timber and nontimberforest products from ‘Production Forest’ areasthat have already been assigned to HPHconcessionaires.46

While many kabupaten governments in EastKalimantan and elsewhere responded to thesenew regulations by allocating large numbers ofHPHHs, neither the Bupati in Bulungan nor hiscounterpart in Malinau have done so. On thecontrary, the small-scale timber extractionpermits allocated by the Bupati’s of Bulunganand Malinau have been limited to IPPKs, whichare legally restricted to areas designated asHutan Rakyat (Community Forest) or HutanMilik (Privately-Owned Forest) – that is, to areasthat fall outside of the Permanent Forest Estate(Kawasan Budidaya Kehutanan). In practice,however, the kabupaten governments in Malinauand Bulungan have allocated numerous IPPKpermits in areas that fall within the boundariesof active HPH timber concessions.

In both districts, concession areas managed bythe state-owned forestry enterprises, Inhutani Iand II, have been particularly susceptible to theallocation of overlapping IPPK permits. InMalinau, for instance, the kabupatengovernment has issued at least two IPPKs inareas that overlap directly with portions ofInhutani II’s 48,300 ha concession. One of thesewas issued to CV Hanura, and one to CV SebukuLestari (see Map 2). The area assigned to SebukuLestari under the IPPK permit extends acrossthe northern boundary of Inhutani II’s HPH areainto a neighboring concession held by InhutaniI. The area assigned to CV Hanura is dividedinto two locations, leading to themisinterpretation by some that the companymanages two IPPK’s in the concession.

case 3 4/16/02, 10:29 AM19


20

Map 2. Location of IPPKs at PT INHUTANI II Malinau, East Kalimantan

case 3 4/16/02, 10:29 AM20

21


In interviews, several industry actors andgovernment officials speculated that the Bupati’sin both kabupaten have been targetingconcessions held by the Inhutani’s in order tochallenge the national government’s ability tocontrol timber exploitation in their districts. Anofficial in Malinau’s district auditing agency, forinstance, argued that the kabupaten governmentshave been acting strategically to expand thedistrict’s role in the timber sector beyond simplyreceiving a larger share of formal loggingrevenues:

The national and provincial governments arestruggling with each other over how toredistribute the HPH royalties. They think thatthe kabupatens will accept whatever portion theCenter and the Province decide to give them.But actually, the kabupatens are implementingregional autonomy in a purer form (‘dalambentuk yang lebih murni’). Just like in Kutai47 ,the Bupati’s in Malinau and Bulungan areshowing that they can control forests beingmanaged by HPH-holders. They’re not justlooking for a share of the HPH revenues – theywant to decide who gets the permits, who getsto operate there.48

Another informant suggested that the Bupati’shave been allocating IPPKs in areas theretoforemanaged by the Inhutani’s in order to send apolitical message to other HPH-holdersoperating within their districts.49 Specifically,he argued, the Bupati’s have sought to make itclear to large-scale concessionaires that theircontinued access to timber profits is nowdependent upon the support of the kabupatengovernment and cannot be guaranteed, as in thepast, by political backing from Jakarta. Theinformant implied that this show-of-force on thepart of the Bupati’s was necessary to ensure thatHPH-holders are responsive both to the districtgovernment’s new regulations and to periodicrequests on the part of local officials for informalpayments.

Officials at both Inhutani I and II claimed thatwhatever their motivations, the Bupati’s have,

in fact, transgressed the limits of their legalauthority in allocating IPPKs within theboundaries of existing concession-holders. TheDirector of Inhutani I’s Tarakan Unit, forinstance, emphasized that there is no legal statuteto support the issuance of IPPK permits in areasclassified as ‘Permanent Forest Estate’; rather,the only permissible forest conversion permitsin such areas are IPKs, which may be issued bythe Ministry of Forestry. The manager ofInhutani II’s Malinau Unit, likewise, questionedhow the Bupati could have the right to allocatean IPPK conversion permit within an existingtimber concession, when that company’s HPHlicense had not first been revoked. Furthermore,staff at both Inhutani’s noted that the districtgovernments have shown little inclination orcapacity to ensure that recipients of IPPKpermits operate only within whatever areas havebeen assigned to them. According to an InhutaniI camp manager,

There is no regulatory agency to oversee theactivities of IPPK-holders. The area to be cutby the CV [logging company] depends on itsarrangement with the local communities(masyarakat)… The IPPKs don’t seem tohave any clear boundaries. Many of thecontracts don’t even have real maps attachedto them.50

Individuals involved with the companies thathave received IPPK permits overlapping withHPH areas offered a strikingly differentperspective. The proprietor of CV Hanura, forinstance, argued in an interview that the term‘overlap’ (‘tumpang tindih’) in this context haslittle meaning:

The local communities (masyarakat) havealready rejected Inhutani, so Inhutani no longerhas any rights. CV Hanura has obtainedauthority from the communities to log in the‘ex-Inhutani’ area…. Inhutani has donenothing for the communities for the last 32years, so they have no basis to make a claimto this area.51

º

case 3 4/16/02, 10:29 AM21


22

A local timber broker who works closely withCV Putra Mentarang described the situation invery similar terms, claiming that localcommunities had seized back large areas fromInhutani:

After 35 years, what has Inhutani given tothe communities? It used to be that Inhutaniwould chase off the communities. Now, it isthe communities that are chasing Inhutani. IfInhutani tries to operate their loggingequipment in these areas, the communitieswill stop them. In Semendurut and Sembuak[two areas where IPPKs have begun operatingwithin Inhutani concession boundaries],Inhutani has thrown up its hands. The IPPKsare operating in areas that have been‘released’ (‘areal lepas’).52

When interviewed in September 2000, then-District Secretary (and now Bupati) MarthinBilla denied that the kabupaten governmentwas targeting concession areas controlled bythe Inhutani’s or other concession-holders.Both he and members of his staff attributed theallocation of IPPKs in areas that overlap withInhutani HPH boundaries to technical errorson the part of the branch office of the ProvincialForestry Service (Cabang Dinas Kehutanan,or CDK). They pointed out that the IPPKpermit application process required the Bupatito obtain a ‘Letter of Technical Advice’ fromthe CDK indicating that the area in questiondoes not fall within the Permanent ForestEstate.53 The District Secretary claimed thatthe Bupati’s office has, until now, been ill-equipped to evaluate applications for IPPKpermits, as it has not had access to HPH mapsand other basic data related to timberproduction in Malinau. He noted that thekabupaten government had requested maps, logproduction data, and other relevant informationfrom the Provincial Forestry Service, but CDKhad not yet complied with this request.

Another district official pointed out that thevarious CDK offices, in fact, have a distinctinterest in maintaining tight control over forestrydata, as that is ultimately what allows CDK to

maintain a critical role in the timber licensingand revenue collection processes.54 He furthernoted that CDK officials have often exploitedtheir role in these processes to generate lucrativeinformal profits.

2.4.1 Response by Inhutani’s and

other HPH-holders

Officers interviewed at both Inhutani I and IIindicated that they received no advance warningthat IPPK permits would be issued for areas thatfell within those companies’ HPH boundaries.Rather, they first found out about the IPPKs whenthe new permit holders appeared in the Inhutaniconcession sites and began organizing their ownlogging operations. In most cases, the Inhutaniofficials reported, they initially had no clearinformation about the identity of the companiesthat had obtained the IPPK permits or what otheractors were involved in backing their activities. Ineach instance, the Inhutani’s filed grievances withthe Bupati’s office. However, officials of bothcompanies interviewed in September 2000 claimedthat the Bupati had thus far offered no clear stepsfor resolving the issue of overlapping timberharvesting permits. As one Inhutani officer put it,‘The Bupati simply said that it would be up to thecommunities to decide which company they wantto work with.’55

In the weeks following the initial round of IPPKallocations by the Bupati of Bulungan in late-1999,the Inhutani’s began lobbying for intervention onthe part of both the national and provincialgovernments. In Jakarta, these efforts resulted inthe Director General of Production Forestry, Ir.Waskito Suryodibroto, sending a letter to EastKalimantan’s Governor Suwarna, requesting hisassistance in suspending the issuance of additionalIPPK permits in Bulungan.56 Dated September 30,1999, Pak Waskito’s letter explained that theimplementing regulations for the centralgovernment’s transfer of forest administrationresponsibilities to the regions (daerah) had not yetbeen finalized. Within this context, Pak Waskitoclaimed, it was imperative to ‘avoid the possibilityof overlapping timber extraction permits that couldconfuse the populace (‘membingungkan

case 3 4/16/02, 10:29 AM22

23


masyarakat’).’ Governor Suwarna responded byissuing a letter on November 10 to the Bupati ofBulungan, ordering that the implementation of theBupati’s Decision No 19/1999 regarding theallocation of IPPK permits be suspended.57

Inhutani officials interviewed for this study pointedout that the Governor’s order would haveautomatically applied to the Bupati of Malinau, aswell, being that the new kabupaten was still subjectto regulations issued in Bulungan before itspartition.

The Governor’s order had little practical effecton the allocation of IPPKs in Bulungan orMalinau. Through early-2000, the Bupati ofBulungan issued dozens of new IPPKs, whilethe Bupati of Malinau only began issuing IPPKsin April of that year. Similar processes playedout in most other districts of East Kalimantanduring this period, as Bupati’s allocated largenumbers of IPPKs and HPHHs. In response tointensive lobbying efforts by the Inhutani’s andthe Indonesian Forest Concession Holders’Association (Asosiasi Pengusaha HutanIndonesia or APHI), the Ministry of Forestryand Estate Crops issued a decree on April 13,2000 revoking Ministerial Decision No 310/1999, which gave kabupaten governmentsauthority to issue HPHHs. On May 22, MinisterNur Mahmudi Ismail also sent a letter to all ofIndonesia’s Governors and Bupati’s calling fora complete halt on conversion of areas withinthe ‘Forest Estate’ (Kawasan Hutan).58

Specifically, he called on the Governors andBupati’s to stop allocating conversion permitsand to push companies that have obtainedconversion permits for areas that have alreadybeen released from the Forest Estate to plantthese areas immediately. In this letter, theMinister noted that the Government of Indonesiahad made a commitment to the InternationalMonetary Fund (IMF) to stop forest conversion,implying that the country’s financial recoverycould be jeopardized by the allocation of newIPPK permits.

During mid-2000, APHI’s East KalimantanRegional Branch, of which Inhutani I and II areactive members, focused its lobbying efforts on

the provincial government. At each of itsmonthly meetings, the Concessionaires’Association raised the HPHH/IPPK issue withthe Governor, and the heads of both Kanwil andDinas Kehutanan (APHI 2000). At APHI’s June29 meeting in Surabaya, the Governor publiclycalled on the head of Dinas Kehutanan toinstruct heads of CDK throughout EastKalimantan to: 1) stop issuing ‘Letters ofRecommendation’ for HPHH and IPPK permitsunder consideration by the district governments;and 2) not release log transport permits SuratKeterangan Sahnya Hasil Hutan (SKSHH) forwood that had been harvested under HPHH orIPPK permits. At the Concessionaires’Association’s August 9, 2000 meeting inSamarinda, the Governor gave a similarinstruction directly to the heads of the CDK.Inhutani officers interviewed later that monthwere skeptical, however, that such directiveswould have much effect on the behavior of thebranch offices of the Provincial Forestry Service,as the government’s decentralisation process hadseriously weakened the formal chain-of-command. According to one informant:

The CDKs are supposed to report to DinasKehutanan, which in turn reports theGovernor. But the CDKs are now scared ofthe Bupati’s (‘takut sama Bupati’) becausethey know that they will soon be reporting tohim. Many of CDK’s decisions are now basedon what the Bupati wants…. Unfortunately,many of the CDK’s decisions are also beinginfluenced by ‘envelopes’ [i.e. informalpayments].59

In their efforts to maintain control over theirconcession sites, Inhutani officials have arguedthat the allocation of IPPK permits in areasdesignated as HPH timber concessions poses avital threat to the future of sustainable forestmanagement in the region. Specifically, theypoint out that the overlap between IPPKs andHPHs means that areas previously classified asPermanent Production Forest are now beingslated for conversion. In many instances, theIPPKs have apparently been assigned for areasthat correspond to some of the most valuable

case 3 4/16/02, 10:29 AM23


24

stands of commercial timber within a HPH’sconcessionary boundaries. According to the unitmanager at Inhutani II in Malinau,

The IPPKs are being placed in areas that stillhave lots of commercial timber. In fact, theareas assigned to CV Hanura [the IPPKrecipient] directly overlap with some of ourrichest secondary stands. It’s almost certainlythe case that somebody on the inside showedthe CV where these were, as the IPPK permitsoften directly follow the borders of particularcutting blocks. We logged some of these areasin 1988/89, so the trees are now quite big.However, in accordance with the IndonesianSelective Cutting System (Tebang PilihTanam Indonesia or TPTI), we have beenwaiting to reenter those areas until the 35 yearrotation is up. If the CV goes into these areas,they will cut everything.60

On a related point, Inhutani officers claim thatthe allocation of IPPK licenses within HPHconcession areas has drastically undermined theincentives for HPH-holders to employ sustainablemanagement practices in other parts of theirconcessions, as well. They emphasized thatwithout legal certainty (‘kepastian hukum’) anda secure business environment (‘kepastianusaha’), it would make little sense of HPH-holders to make any significant expendituresassociated with sustainable forest management.As one Inhutani official put it,

A significant portion of our firm’s revenueseach year are spent on selective felling,enrichment planting, and managing theconcession area in accordance with the criteriastated in the HPH contract – not to mentionRIL (Reduced Impact Logging). Why shouldwe continue carrying such costs if Pemda isgoing to allow IPPK-holders to cut whateverwood we leave standing?61

Another informant stated that unless HPHboundaries were recognized by the districtgovernment, HPH-holders would be “forced”(‘terpaksa’) to abandon the TPTI selectivecutting guidelines. To do otherwise, he

asserted, would effectively mean that the HPHconcessionaires were simply leavingcommercially valuable timber “to be taken byother parties” (‘untuk diambil oleh pihaklain’).62

Officials at both Inhutani I and II speculated thatwithin the current political climate, theircompanies’ access to continued timber profitsover the long-term will ultimately depend uponfinding ways to share benefits more directly withthe regional governments and with localcommunities. To accomplish this, the Inhutani’sformulated a strategic plan in mid-2000 aimedat establishing a number of joint ventures tomanage individual HPH concession areas,Industrial Timber Plantation (Hutan TanamanIndustri or HTI) sites, or wood processingfacilities.63 Each ‘Strategic Business Unit’ (orSBU), as these ventures are called, wouldinvolve a division of equity shares among theInhutani, a private sector operating company,Pemda, and local communities or a cooperative.In late-August 2000, Inhutani I and II signed amemorandum of understanding (MOU) withEast Kalimantan’s provincial government whichoutlined the terms of collaboration for four pilotSBUs, one of which would operate an InhutaniHPH site in Malinau. At that time, Inhutaniofficials in Malinau and Tarakan were confidentthat similar MOUs would soon be signed withthe district governments and local communitiesnear the concession site. They also indicated thatthey believed other HPH-holders would soonbe entering into similar agreements with thedistrict and provincial governments, and withcommunities located near their concession areas.

In interviews in August and September 2000,these same Inhutani officials reported that theircompanies had also sought to communicatedirectly with the IPPK-holders and thecommunities that the new investors aresupposedly working with. The manager ofInhutani I’s Tarakan unit reported that hiscompany had proposed to some communitiesthat they work with Inhutani rather than theIPPK-holder, and that Inhutani would, in turn,pay a higher per unit fee than the new investor.64

case 3 4/16/02, 10:29 AM24

25


At that time, the communities had turned downthe offer. Officials at Inhutani I also indicatedthat they had approached the IPPK-holders todiscuss the possibility of working together toexploit timber from the areas in question. Thecompanies holding the IPPK permits were thenreportedly reluctant to enter into any formaldiscussions with the Inhutani’s. More recently,however, unconfirmed reports have emergedfrom both Malinau and Bulungan suggesting thatthe Inhutani’s may have established informalpartnerships of this sort with some IPPK-holders. In Malinau, for instance, CV Hanura issaid to be using the same contractor (PT BinaBenua) to manage its IPPK timber harvestingoperations as Inhutani II uses at its surroundingconcession site. Moreover, Inhutani has agreedto allow logs harvested from CV Hanura’s IPPKsite to be transported over Inhutani’s road. Someobservers have speculated that this may beindicative of a profit-sharing arrangementbetween the three companies – CV Hanura, PTBina Benua, and Inhutani II – as the logs areharvested and transported from the HPH andIPPK sites by the same set of actors.65

2.5 COMMUNITY CLAIMS TO

LAND AND FOREST RIGHTS

Provisions for the recognition of customary or‘ada’ lands in Indonesia’s revised Forestry Law,or Undang-undang (UU) No 41/1999 and a decreeby the Minister of Agrarian Reform (Kepmen No5/1999) have opened up new possibilities underdesentralisation for local communities to claimrights to forests resources. Because districtauthorities are now allocating rights to forest andland, local people can more easily gain access todecision-makers and decisions can be made morequickly. Unfortunately, the criteria and legal basisfor determining land rights have been unclear.Overlapping claims and conflict have increaseddramatically, without the necessary institutionalcapacity for resolving them being developed at theappropriate levels of government.

2.5.1 Under the New Order Regime

Rights to land and forest in Malinau historicallyhave been determined by a combination ofcustomary agreements among localcommunities and by formal laws and contractualarrangements driven by the center. Customarily,neighboring communities defined communalterritories through agreements betweenleaders.66 Through the 1950s, groups of familiesmoved to a new location as needed (oftenbecause of disease, hard times, the search formore fertile land or family differences), basedon whatever political alliances or power theymight have with (or over) groups claiming aterritory. Freedom to move declineddramatically however with government effortsto register and resettle people in the 1960s and1970s using the model of the Javanese villageor ‘desa’. The government formally recognizedsettlements as villages through decrees issuedby the Bulungan district leader, although mostgroups that received such decrees hadpopulations far smaller than the minimumthreshold set by national law, and a number ofPunan settlements were never formallyregistered. The boundaries of the registeredvillages have never been formalized throughfield surveys. Existing government maps ofvillages bear little, if any, relationship to currentsettlements and the territories they use or claim.

Despite the recognition of villages asadministrative units, New Order policiespromoted the belief that local people had norights to the forest land or resources aroundthem. These resources were rather at thediscretion of the central government. Timberconcession-holders became the primary brokerof formal rights to forests in areas classified as’Production Forest’. Concessionairessometimes negotiated directly with villages todetermine where shifting cultivation and smallstrips of village forests (hutan desa) could occur.Concession-holders also gave rights to otherparties, such as the Bara Dinamica Muda Suksescoal mining company that acquired the rightsto excavate forest land in Long Loreh, Langapand Tanjung Nanga. In the protected forests of

case 3 4/16/02, 10:29 AM25

what is now the Kayan Mentarang NationalPark, the Provincial Forestry Service and, since1990, also the World Wide Fund for Nature(WWF) Indonesia Programme have been themain parties with responsibility for informingand guiding local people about their rights andhow to comply with national conservationobjectives, although the degree to which theyhave achieved this has been mixed. WWF hasworked more directly with local people, whilethe provincial government rarely had anypresence in the area.67

Regardless of the New Order government’sefforts, the remoteness of the region ensured thatnational policies were difficult to implement.Therefore, villagers operated under a dualsystem of rights. For the most part, they usedthe forest as they always had and observedcustomary traditions regarding access to forestand land, as described above. Only where therewas direct conflict with HPH timberoperations,the coal mine, or a conservation effort like theenforcement of a no-hunting rule among localpeople employed by WWF staff were nationalinterests more visibly imposed. With police ormilitary officers usually hovering nearby (exceptin the WWF activities), villagers generally feltthey had no alternative but to comply withnational laws and regulation. Nevertheless, fieldstaff of timber concessions acknowledged thatsome compromises were necessary on their part,as it was impossible to enforce rules about noburning or hunting. One official mentioned thatit was more practical to allow local people tomaintain their livelihoods than to prevent themfrom engaging in such practices.

During this time, battles between those seeking toextract resources (concessions, illegal loggers,mining companies) and communities for accessand control to resources were fought on the groundthrough political alliances, intimidation and vaguereferences to government policies. The preciselegality of any of formal claims (berita acara) usedby the state and concessionaires remains unclearand perhaps will never be known. Verbalagreements between local leaders about boundariesbetween village territories are difficult to verify

and some of the original parties are now dead.Existing documents suggest that it was (and stillis) common for signatures to be attached from otherdocuments or solicited on false premises. The lackof access to many documents in governmentarchives makes it difficult to investigate whetherappropriate permissions and procedures (e.g. beritaacara).

2.5.2 Adat Unleashed

Regional autonomy and decentralisation have ledto several key changes. With the recognition ofadat rights in the recent forestry and agrarianreform policies, local communities now assumethat customary rights are no longer part of a ‘dual’system where state rights superceded local rights,but rather rights that can be formallyacknowledged. They are acting as owners of theland and forest they have traditionally used, evenin interactions with government and outsideparties. Local people note that police rarelyaccompany officials anymore when they visitvillages located in and around forests. There is awidespread perception that the era of repressionhas ended, and that forest communities are now‘bebas’ (free). Participatory mapping activitiesby WWF68 and CIFOR have provided tools formaking land claims and have added to thegeneral impression that villages can nowformally claim rights in their territories. Onelocal person said ‘Once we produce our map,that is it, the land is ours.’ As a result of aGovernor’s decree in 2000, villagers are alsonow filing compensation claims for timberpreviously cut in their area by HPH timberconcessionaires. The way adat land is beingdefined and used has become one of the keydeterminants of how resources are allocated onforest lands.

In addition, opportunities to re-define villagesinto more locally meaningful units have openedthe door for Malinau communities to try to re-organize existing allocation of lands. Threerelated trends have been taking place. First,groups are making claims based on adat.Ironically, these claims have often been aimedat securing recognition of existing or former


26

case 3 4/16/02, 10:29 AM26

village (desa) boundaries and negotiating toexpand those boundaries. For a few influentialor ambitious individuals, like the customaryleader of the Merap in the Upper Malinau River,claims have been made on more encompassingareas (see discussion below). Second, somegroups are seeking to use the re-definition ofvillages as an opportunity to remove unwantedneighbors. In some cases, those being targettedfor removal arrived only 30 years ago, yet theyhave been more enterprising and economicallysuccessful than groups that are indigenous tothe region. Third, local government is interestedin rationalizing settlements to cluster groups inone location as one village, ostensibly to providemore efficient distribution of resources to asmaller number of settlements.

The recent allocation of IPPK forest conversionpermits and the potential to secure compensationfrom companies involved in logging or coalmining have increased the incentives for localgroups to make these claims. Althoughcompetition for resource claims existedhistorically over birds nest caves and, since 1996,over areas to be mined, the availability of IPPKpermits has raised this competition to newheights. In addition, the Governor of EastKalimantan issued a decree in May 2000 (SKNo 20/2000) instructing HPH concession-holdersto pay compensation to communities for timbercut since the mid-1990s. Compensation levelswere set at the rate of Rp. 1,500/m3 for merantiand Rp. 1,000/ m3 for mixed timber for the period1995 – 1999 and Rp. 3,000/ m3 for meranti andRp. 2,500/ m3 since 2000.69 As a consequence,people representing various groups or interestshave scrambled to make claims quickly. Theseclaims are being made in an atmosphere ofconfusion and fierce competition amidst a generallack of information about the legal basis forvillage boundaries or rights to forest resources.Government officials and logging companieshave been willing to endorse adat claims to helpprocess applications for the IPPK permits. Asone official explained, however, Malinau’sdistrict government cannot turn down IPPKapplications that fail to meet technical criteriafor fear that communities will protest.

2.5.3 Defining Adat Claims

How the terms ‘adat’ and ‘village’ are definedin Malinau will having enormous implicationsfor how land and forest benefits will bedistributed under decentralisation. What do adatclaims mean in Malinau? There is no single oreasy answer. Legal provisions offer littleguidance70 and few people in the district areeven sure of what the laws say. Theimplementing regulation for ‘hutan adat’ in therevised Forestry Law (UU No 41/1999) wasnever passed. As of January 2001, the districtshave had the authority to pass their ownregulations, although Malinau’s government hasnot yet had the time to do so. Similarly, theimplications of Decree from the Minister ofAgrarian Reform (Kepmen No 5/1999) areunclear at the district level. Legally, the onlyoperational local reference to adat occurs undera district regulation inherited from Bulungan onthe ‘Strengthening, Preservation, Protection, andDevelopment of Adat Practices and Institutions’(Pemberdayaan, Pelestarian, Perlindungan danPengembangan Adat Istiadat dan LembagaAdat) which is currently under review byMalinau’s Legislative Assembly.71 Thisregulation, however, offers no criteria fordesignating adat lands, no process for doing so,and no means for resolving conflicts.

Among people in the villages, most interprettanah adat as either ‘traditional’ lands where agroup came from or the land where they currentlylive. Adat units are defined first by ethnic groupand second by location. They usually fall alongexisting village territories or the territory of ahigher-level customary leader, as in the case ofImpang Alang, the Merap leader on the MalinauRiver or Anye Apui, the Lepo’ Ma’ut leader onthe Bahau River. In the race to grab land, somevillagers are using previous adat rules aboutownership being conferred through cutting theforest (merimba) and tree planting to make claimsto even larger areas for their villages or forindividual families. However the introductionof specific legal meanings of adat associated withwilayah adat, masyarakat adat, lembaga adat,tanah adat and hutan adat under decentralization

27


case 3 4/16/02, 10:29 AM27


28

policies have now become intermeshed with thevernacular usage, resulting in further confusion.No one is sure if the government still has anyclaims to forest. Many villages are increasinglyof mixed ethnicity.

Discussion among local communities about there-definition of villages and possibilities forclaiming rights has been limited and has raisedmore questions than answers. Informal debatehas concentrated on the length of time a groupneeds to have been in an area to be able to claimadat rights. Most local people are not even awarethat the definition of village is up for legalrevision. WWF, Plasma (a Samarinda-basedNGO) and CIFOR have sporadically facilitateddiscussion or distributed information about newpolicies, but the information conveyed has notalways been reliable. When communitymembers asked the Inhutani representatives andother concession holders in a CIFOR-sponsoredmultistakeholder dialog in December 2000 whathutan adat was, they declined to respond. Thelocal land registration office in the same meetingoffered the advice that people could now applyfor certificates of land titles, even though nearlyall the land in the Upper Malinau is technicallystate forest land that has been allocated to HPHtimber concession-holders. Government officialshave urged repeatedly that this is a ‘masa transisi’(transition period) and that people have to bepatient for things to be worked out.

Overlaps among adat claims have complicatedmatters further. Descendents of aristocraticDayak and Sultanate families that once controlledlarge areas of Malinau have sought to makesweeping adat claims encompassing severalsmaller village territories and even overlappingwith each other. Some of these people have notbeen resident in their self-proclaimed territorties.One Lundaye individual attempted to establishhimself as the adat leader for the entire Malinaudistrict, although the Merap adat leader and senta letter to the district government in protest andthe request was never approved. Because of thehistorical migration patterns of the local rice-cultivating and hunter-gather populations, anyone location in the district has most likely been

the past home of at least two different ethnicgroups. Using historical presence in an area as acriterion for making land claims is thusproblematic to apply fairly.

Groups that migrated during the resettementera in the 1960s and 1970s feel especiallyvulnerable to definitions of adat based onhistorical presence, especially since many havesince given up their original lands. Ethnicgroups like the Merap, Abai, Tidung, Berusuand some Punan that settled earlier in theMalinau area have from the start claimed priorrights to ‘their’ wilayah adat. During thecourse of the year 2000 they became moreoutspoken about their claims and have soughtto persuade others to recognize these rights.On the Malinau River, four villages—Sentaban, Setarap, Gong Solok and Langap—argue that they were first in the area and thatthe others asked permission from them. Thisargument has had mixed results depending onthe political strength of the villages. In the caseof Sentaban and Setarap, neither had thepolitical connections or strength of numbersto win their case and Setulang has been able tomaintain its claims. In the case of Langap, asmall neighboring Punan village was pressuredto give up its land rights completely andanother neighboring Punan village was forcedto accept boundaries dictated by Langap. Themore politically connected and larger Kenyahvillages of Tanjung Nanga and Long Lorehnegotiated boundaries that gave theseneighbors reasonably large territories.

Pressure by these earlier residents has resulted insharp conflict among a number of villages(Setulang and Sentaban, Long Rat and Langap).Most consider the debate and process ofdesignating boundaries still unfinished.Government officials have confessed that historicalclaims would be difficult to accommodate withoutalienating a large groups in the district. Indeed,the largest settlements along the Malinau River(Setulang, Loreh and Tanjung Nanga) arecomposed of Kenyah families that settled in the1960s and 1970s and which alone constitute apopulation of nearly 2000.

case 3 4/16/02, 10:29 AM28

29


In many locations, the national government’sresettlement program also resulted in clusters ofseveral different ethnic groups or subgroups livingtogether, having separate village designations. Thisraises questions about whether such groups shouldclaim adat rights together or separately in theircurrent territory, or whether they should claimrights in their previous place of residence. Somevillages have chosed to claim land together (GongSolok and Punan Gong Solok, Long Adiu andPunan Adiu, Paya Seturan, Punan Rian, Setarapand Punan Setarap72 ), while most over time haveopted to make independent claims (Mirau andHalanga versus Laban Nyarit, Long Sengayan,Pelancau and Long Loreh versus Bila Bekayuk).Others have chosen to make claims in previousvillages (Pelancau, Metut, Long Rat, Bila Bekayuk,and ten Punan villages in the resettlement villageof Sembuak). The smaller, usually Punancommunities have become increasingly reluctantto claim lands together with other villages in onelocation, feeling that this would expose them tothe risk of further domination.

Punan groups face the additional difficulty thatthey have historically not defined their space interms of territories. Most Punan groups havemoved repeatedly and depended on vast areasof forest because of their nature as a semi-settledand nomadic hunting gathering group. Manyhave historically lived and moved in associationwith Merap, Tidung, Abai or Lundaye‘sponsors.’ A few Punan settlements face theadditional problem that they do not hold formalvillage status and therefore are categorized asinhabiting the villages of other (usually Punan)groups. How does one define the adat areas ofPunan groups under these circumstances? Is itpossible or desirable to provide adat use rightsin addition to ownership rights? Will thecodification of adat rights unfairly disadvantagegroups who have maintained a nomadic lifestyleby making them legally landless?

Despite the confusion about the term ‘adat’ andits implications, local communities, districtgovernment agencies and even companies inpractice are treating registered villages as the mostcommon unit for adat claims. Three pieces of

evidence point to this conclusion. First, in 1999,when villagers were asked in the mapping projectfacilitated by CIFOR what they wanted to map,they unanimously responded that mapping theirvillage boundaries was their highest priority.Since 1999, 22 communities of the UpperMalinau have mapped their boundaries based onregistered village territories. Second, timbercompensation claims have been based on villageboundaries. For example, Langap requestedcompensation of Rp 225 million (30,000 cubicmeters of wood x Rp 1,500 x 5 years) for woodcut during the period 1995-2000 in their villageboundaries. Residents of the Liu Mutaisettlement, a Punan group registered to thePelancau village but living within Metut villageboundaries, were not allowed to makecompensation claims, even for timber activitiesadjacent to their settlement. Third, the districtgovernment has been issuing IPPK forestconversion permits almost entirely to villages,and referring to these villages in terms of ‘tanahadat,’ ‘hutan tanah adat,’ ‘tanah adatmasyarakat,’ ‘tanah masyarakat adat’ ‘hutanadat,’ ‘ hutan milik’ and ‘tanah warisan.’ Usingexisting villages territories has probably beenthe most expedient and most conflict-minimizingmeans of allocating adat rights.

At least until May 2001, however, no claims toland or forest appear to have been finalizedlegally, and an atmosphere of confusion andcompetition still reigned in Malinau. Indirectly,however, the IPPK licenses have become a criticalinstrument for acquiring land and forest tenure.Every IPPK has included in its title a statementabout the location of the land where timber is tobe harvested. In 32 out of the 38 IPPKs that hadbeen issued in Malinau by that point, ‘ownership’and location were conflated, such that the licensesstate that permission was granted, for example,‘in the location of the the land of the customarysociety of Sesua village’ (‘di lokasi tanah adatmasyarakat desa Sesua’). The IPPKs haveprovided villagers with enough confidence to feelthat these rights supercede those of the timberconcessions. Villagers in Langap, people used anIPPK license granted to CV Hanura to procurebenefits from cutting timber in the Malinau

case 3 4/16/02, 10:29 AM29


30

concession of Inhutani II. Most IPPKs have beenlocated within a particular village, although a fewIPPK’s have also been issued enclaves withinvillage territitories. 73

2.5.4 IPPK Benefits for Local

Communities

Logging companies that have secured IPPKforest conversion permits typically promised toprovide four types of material benefits tocommunity members. First, they have often madedonations of rice and basic food stuffs,agricultural tools, clothing, or other materialgoods when they first enter a village to negotiatea timber harvesting agreement. They also havepromised donations of such material goods,including short-wave radios, outboard motors,roofing material or rice mills, and infrastructuralimprovements, including the construction of newroads, health care facilities, offices and schools.

Second, the timber companies have agreed toprovide community members with a set fee foreach cubic meter of wood harvested. These fees,which are negotiated on a case-by-case basis,are known to range between Rp 5,000 and Rp40,000 per m3 of roundwood.

Third, the companies have hired local peopleas laborers to cut the timber and have paid themdaily wages for this work. Wages paid forchainsaw and tractor work have been based onunits of timber produced. Wages have rangedfrom Rp 2,500 to 3,000 for chainsaw operatorsand around Rp 2,500 for tractor operators.

Fourth, IPPK permit-holders have generallyagreed to finance the development of cash cropplantations on the areas logged once these havebeen cleared. Local entrepreneurs involved inthese negotiations indicated that the loggingcompanies often allowed community membersto choose whichever kind of crops they wished.Among communities near Malinau, severalhave chosen to have the companies establishrattan, coffee, cocoa, or pepper gardens whenthe specified areas had been cleared.74 In somecases, the company’s willingness to make such

investments has been tied to future purchasingagreements for once these products are readyfor harvest.

The extent to which such benefits have beenrealized is another question. In many cases,members of forest communities have indicatedthat under the New Order regime, they receivedlittle if any benefits from forests associated withHPH timber concessions. Many reportedly findIPPKpermits attractive because they expect to beable to enjoy significant direct benefits fromforests for the first time. Under decentralisation,they are also often dealing with companiesinvolving people they know, frequently includingrelatives.75 Many apparently feel that theirinterests are protected by signed and notarizedcontracts (surat perjanjian). Yet increasingly,these contracts have included absurd agreementsor have been unfulfilled. Consequently,community protests against IPPK loggingoperations since mid 2001 have been on the rise.

Because of the eagerness to capture benefits,their lack of information and inability to controlthe logging companies, communities have oftenbeen vulnerable to companies’ abuse ofcontractual agreements. In the creation of theagreements, communities have been anxious tograb whatever opportunity they can, and theyfrequently do not know or fully consider theiroptions. In many cases, forest communities haveaccepted the first offer companies provided tothem. In the enforcement of IPPK agreements,the absence of legal support has meant thatcontracts have carried little weight. Althoughthese problems have been common elsewherein Indonesia where forests were cleared bycompanies for perennial crops like oil palm, thisis the Malinau communities’ first experiencewith the unreliable and unaccountable behaviorof the IPPK holders.

Examples of abuse by IPPK-holders arenumerous. After operating for about six monthsand removing wood from the village of BilaBekayuk, CV Sebuku Lestari had not paid anyof the promised benefits as of May 2001, orreplanted the cleared area as promised in their

case 3 4/16/02, 10:29 AM30

31


Box 1. Benefits Promised by IPPK Holders: the Case of CV Gading Indah

In the village of Setarap, CV Gading Indah acquired an IPPK permit to clear 1,200 hectares of forest in two

blocks, situated on either side of the Malinau River. According to villagers, the company promised by a

notarized contract to provide the following benefits to local community members:

• Advance payment of 125 million rupiah

• Assistance in creating wet rice fields

• A road connecting the village to the main access road

• Assistance in establishing perennial tree crop plantations

• Construction of a church

• Assistance in leveling land for expansion of the village

• A fee of Rp. 40,000 for each cubic meter of timber harvested

joint contract (see box). In the village of Adiu,community members protested in November2000 when their advance payment of Rp 50million was not received from CV Wana Bhakti,after a month of operation. Chainsaw operatorsfrom Adiu had also not been paid yet. In October2000, youth from Setarap, protested because thecompany had employed only non-locals, despitepromises otherwise. They also protested thatthe distribution of the advance payment fundswas not transparent or fair and accused thevillage leader of not being honest about thebenefits he, himself, was getting from the deal.Reflecting a different problem related to landclaims (see discussion below), the contractbetween Sengayan and CV Putera Surip Widjayastates that the company has the right to an areaof 35,000 hectares, but the total area of the jointterritory in the Long Loreh settlement (whereSengayan is located) is only 12,000 hectares!In another case in Bila Bekayuk, a local maninvolved in negotiations with the company wasnot even sure of how much one hectare was.Local communities will remain disadvantagedunder these circumstances until more fairnegotation and enforcement mechanisms can beworked out.

2.5.5 Has Space Been Created For

The Communities?

The use of IPPK permits appears to beproducing an informal codification of land rightsin Malinau and establishing a precedent forallocating adat rights primarily on the basis of

existing village boundaries. Yet, because of thediverse appellations used (see above), they aredoing so in a way that suggests there is noconsistent understanding of how land claimsshould be justified or which rights are conferred.

It is also not clear who is really benefiting fromthe adat claims asserted through IPPKs.Although it is reflective of decentralization thatcommunities’ permission is sought and benefitsare being offered, one might question whethercommunities are sufficiently informed andprotected to ensure that they are not, in effect,signing away their rights and foregoing long-term benefits through IPPKs. One governmentofficial informed us that the ownership claimswere necessary in the application for the IPPKpermit for the Forestry Department to allowcommercial timber harvesting in areas classifiedas ‘Protection Forest’. Some have hinted thatmoves to claim adat lands may be a measure toreduce central government claims to land inorder to free up forest land for conversion touses that are more economically lucrativefordistrict-level stakeholders. Others havespeculated that people are anxious to acquireland ownership though IPPK permits andconversion of forest because applying for a landcertificate through the National Land Agency(Badan Pertanahan Nasional or BPN) is toocostly and time-consuming. At the village level,negotiations with the companies andgovernment officials have often been done byonly a handful of village leaders, who usuallyrequest a disproportionate portion of benefits forthemselves or their families.

case 3 4/16/02, 10:29 AM31


32

Box 2. Village Experiences with IPPK Permits

The two cases below demonstrate contrasting experiences with IPPK forest conversion permits. They show the techniques

companies used to negotiate IPPKs and what kinds of benefits were received by forest communities. The contrast

highlights the role of ethnicity, information and political influence in affecting the degree to which communities are

benefiting from the economic opportunities provided by decentralisation.

Bila Bekayuk is one of the four villages located in the settlement of Long Loreh. The population of Bila Bekayuk consists

of Punan Tubu who migrated from the Tubu River to the Malinau River in the early 1980s. Until recently, all four villages

had decided to claim their 12,000 ha of adat land as one unit and had mapped it as such in February 2000.

In March 2000, however, villagers in Bila Bekayuk, particularly the Punan, began discussing the offer of a local entrepreneur

to establish cash crops . The topic generated heated debate among the four villages of Long Loreh, with many skeptical

about the entrepreneur’s plan. The entrepreneur tried to convince villagers that he was interested in helping the economic

development of the Punan and brought other Punan and Dayak people, as well district government officials, to discuss

the matter with the people of Bila Bekayuk. In July 2000, the other three villages recognised that Bila Bekayuk would

proceed with the plan to establish cash crops and decided to divide the village area into four parts. Each part would be

fully controlled by a village, and people from other villages would even if they live in Long Loreh have to ask for formal

permission to enter.

Before this decision was made, however, the entrepreneur had already obtained the necessary letters, including an

IPPK permit for 1,050 ha and government permission to bring in heavy equipment. Two roads were cut into the area to

be logged. According to one of the Bila Bekayuk men involved, they were only going to allow the entrepreneur to cut an

initial 100 ha that would next year be converted into coffee and candlenut gardens. In an interview with CIFOR researchers,

however, the same person asked ‘How much is actually one hectare?’ On 13th August the village head of Bila Bekayuk

said they also had no agreement in writing stating the obligations of the entrepreneur, or the conditions pertaining to the

establishing of the cash crop plantation. Logging occurred in an area of approximately 1000 hectares (according to the

agreement) between about July and December 2000. The logging company left suddenly at the end of the year after the

logging was completed, without any further communication with the community. Local laborers were left without their

wages paid. When the village tried to contact the entrepreneur, they found that he had fled. One villager saidin retrospect,

We cry when we think of what has happened and now urges everyone to take caution in negotiating with IPPK seekers.

Langap is a village about midway along the Malinau River (at the confluence with the Ran River) with close to 400

inhabitants mainly of the Merap ethnic group. The Merap of Langap have resided in this area for a long time (according

to oral history eleven or thirteen generations, depending on the source of information); however the village location has

moved several times. They have been powerful and well connected with outsiders and have been relatively prosperous.

They claim a huge village area of over 35,000 ha, although parts of this area are also claimed by other communities. A

large part of the Inhutani II Subunit Malinau logging concession is located within the Langap village area.

It seems that only as ‘late’ as June 2000 the people of Langap started seriously to investigate the possibility of exploiting

their forest. During the initial discussions, during a village meeting attended by about 30 persons, the villagers agreed to

hand over the rights to 30,000 ha of their adat land to the entrepreneur. The entrepreneur in return promised to establish

cash crop farms. The deal was almost sealed, but one community member was shocked by the area promised to the

company. This individual managed to talk the people into drawing up an agreement covering only 15,000 ha., which

would be ‘converted into coffee and black pepper farms for the use of the villagers.’ The permission for the land was

granted before any signed agreement about the obligation of the company was finalized. The entrepreneur meanwhile

promised to pay only Rp. 5,000/m3 for the timberharvested, one of the lowest figures so far promised to villagers in the

Malinau area.

Only in hindsight have Langap residents become worried. The son of the local customary leader (Kepala Adat Besar)

visited Langap in in early August while he was still a member of the DPRD Legislative Assembly in Bulungan76 , after he

had been on a tour investigating IPPK operations in Bulungan and Nunukan regencies. He described experiences in

nearby Sajau, Sekatak, Salimbatu (in Bulungan District) and Sebuku (in Nunukan District) where similar schemes have

been implemented. He said ‘We thought that logging companies (i.e. HPH-holders) were bad, but this is far worse.’

However, members of the community noted that the entrepreneur had already threatened to claim Rp 2 billion rupiah in

compensation if the scheme fell through. This intimidation tactic of the entrepreneur worked. The entrepreneur also

promised to provide a free 1.8 ton of rice to the village, presumably to encourage the community to pressure their

leaders to support the scheme.

Complicating the case further, the area to be logged was on the Inhutani II concession In the agreement between the

villagers of Langap and Punan Rian and the company,dated 20 May 2000, with the entrepreneur it states that the

community guarantees that the land is not under dispute. Thus far, commuinties have received 2.5 tons of rice, 2

bushcutters, 25 million rupiah to establish a cooperative and a second hand truck. benefits and are negotiating a second

contract with another company for logging in their territory, also on the Inhutani concession.

case 3 4/16/02, 10:29 AM32

33


Throughout this process, conflict has increased.Most of all stakeholder groups have seeminglybeen trying to figure out a way to make orincrease their own claims. A trend is occurringamong villages to claim locations where theyhad previously settled (Nunuk Tanah Kibang,Pelancau, Sengayan, Metut, Liu Mahan77 ).These conflicts frequently amount to strugglesover the immediate economic goods at stake,either from timber harvesting, the possibility ofcompensation claims, or the availability of fruitand perennial trees for consumption or cash. Theincreased economic gains made possible bydecentralization have therefore also helped toescalate conflict over land and forest claims.

Where informal agreements over boundariessupposedly have been reached , they have beenshort-lived or partial because both villages didnot take part fairly in the boundary markingprocess. Differences of opinion have alsofrequently existed among members of a singlevillage. No criteria have been promulgated bythe district government or among villages forestablishing what constitutes a fair agreement orhow conflicts should be settled. It has beencommon instead for village leaders and elders tooften negotiate in a nontransparent way withoutthe involvement of the rest of their own village.Decisions have often been justified on the basisof small meetings. When asked about theprocedure to obtain permits for local loggingactivities, the sub-district head said that if the‘people’ approve (that is, if a letter is producedwith the signature of the village head and the adatleader) he automatically provides therecommendation to the next level. He explained,‘I can not act against the wish of the people.’Decentralisation has thus encouraged attentionto local people’saspirations, but the process foridentifying those aspirations has been leftunspecified. In addition, the individuals with theauthority to make decisions on behalf of thecommunity are often different from the ones withthe knowledge of boundaries on the ground. In afew cases, boundaries were marked before anyeven nominal agreement had been reachedbetween villages. Where conflicts have occurred,some Punan and other groups have sought to

resolve the discord by simply moving (Mirau,Halanga and Long Rat) or at least threatening tomove (villages in Respen Sembuak).

The Punan, as a politically marginalized, nomadichunter-gatherer group, have been especiallydisadvantaged in negotiations about boundariesand benefits. Participation of communitymembersis often limited, as a large contingent of thepopulation of a village is often in the forest. It israre to meet all inhabitants of one community inthe settlement, as happened in Mirau in mid-2000during a boundary negotiation. Inhabitants ofMirau returned from a forest product collectingtrip and immediately pulled up border markers thathad been just put in a place by a joint Mirau –Laban Nyarit mapping team. Where Punan haveshared decision making with other ethnic groups,they face the additional burden of prejudice,smaller numbers and lack of political clout.

Even where negotiations have occurred andagreements have been stable, villages have hadlimited success in enforcing them. IPPKactivities that involved cutting roads through theterritory of other village have in at least threecases (Setulang, Laban Nyarit and Long Loreh),removed timber or destroyed valued fruit treesgenerating anger among villagers withacknowledged claims to these lands. While localcommunities have tended to casually monitorIPPK activities, there have been considerableopportunities for heavy machinery andchainsaws to damage large extents of forestunobserved. The absence of better monitoring,strong NGOs,78 media or other ‘third’ partyactors in the area has meant that companies haveoften worked without critical evaluation.

2.6 Coordinating Land Use

In Malinau, the rapid increase in timberextraction and the staking of land claims broughtabout by decentralization has occurred with littlecoordination. Because of the speed of events,there has been little opportunity for carefulplanning of long-term resource use. Instead,people appear to be operating according to freemarket principles, guided by immediate

case 3 4/16/02, 10:29 AM33


34

economic incentives and the readiness of‘investors’ to enter the region. Local conflictabout land and forest use has increased.

In this heady atmosphere of the boom economy,officials and villagers seem to have madeimproving land use coordination a secondarypriority. At the district level, spatial planningand technical advice about forest managementhave been noticeably absent. Impact assessmentand conflict resolution measures have beeninformal and weak. Through mid-2001 whenthis study was conducted, there was noconservation strategy for the district and KayanMentarang National Park was viewed more asa burden than an asset. At the village level,decisions about forest exploitation have oftenbeen negotiated among only a few individuals.Only a handful of villages have begun to identifytheir own land use priorities.

The Malinau district thus faces the dilemma ofhow to continue to generate revenues throughthe exploitation of forests and other naturalresources, while also maintaining the integrityof the resource base for the future. Districtofficials also most cope with rising conflictamong different populations in the district. Thefollowing sections review efforts that have thusfar been made to analyze how longer-term andmore balanced resource use strategies mightevolve.

2.6.1 District Spatial Planning

Procedures for spatial planning under the NewOrder regime gave central and provincialgovernment agencies authority to determineforest boundaries and functions. A 1999 reportby NRM – the USAID-funded Natural ResourceManagement program states that BAPPEDA inEast Kalimantan saw itself as more of a funnelof information, with the kabupatens providinga service role to the provinces, than as aproactive planning body. BAPPEDA’s role wasto compile decisions made by other agencies.The Governor was responsible for resolvingconflicts, often in consultation with the Ministry

of Home Affairs and other relevant ministers,with the strongest party winning. Actual landuse depended more on the permits issued byagencies and executive officials than on plans.As a result spatial planning has been more of apaper exercise than a tool to encourage analysisand debate of appropriate land use practices. Assuch, the government’s formal spatial planningprocess has historically done little to providetransparency and accountability in thecoordination of land use.

With decentralisation, decision-makingauthority is now vested in district officials overthe spatial planning process. This presentsopportunities in that spatial planning is nowlikely to involve closer cooperation betweengovernment and communities; to better reflectlocal communities’ interests; and to beconducted at a finer scale of resolution. The localBAPPEDA’s are responsible for producing andcoordinating five-year spatial plans among thedifferent sectors for the region. Many of thechallenges to good spatial planning remain thesame, however. Unless these are addressed,spatial planning will remain a paper exercise.As elsewhere in Indonesia (NRM 1999), spatialplanning in Malinau has been handicapped by:

• A lack of good field data;• The tendency for private sector timber and

mining companies to produce and use theirown maps;

• The use of consultants to produce planningdocuments who have no accountability tostakeholders or the agency mission;

• Planning documents produced to fulfilldeadline or contractual obligations rather thanreflecting ground-level realities andstakeholder interests (i.e. documents are oftenphotocopied from one region to the next);

• The lack of authority on the part ofBAPPEDA to enforce plans, and thestronger influence of mining or forestrygroups in making land use decisions;

• The lack of participation and informationfrom communities or even kabupaten-levelgroups, including BAPPEDA;

case 3 4/16/02, 10:29 AM34

35


Malinau officials have found it difficult to visitthe region’s most remote locations andpopulations due to the district’s limitedinfrastructure and resources , and the diversionof attention created by the establishment of thenew kabupaten. Decentralization has alsobrought the encumbrance of a close-knit set oflocal political and economic networks andpowerful local investor interests, suggesting thateven greater challenges will be faced in creatinga democratic land use planning or decisionmaking process.

In Malinau, BAPPEDA officials reported in 1999that they did not physically have any maps of thenew kabupaten, even though a Forest Land UseConcensus (Tata Guna Hutan Kesepakatan orTGHK) map from the province existed. Theydid not have any mapping specialists. Acomparison of village level census, economic andland use data available with CIFOR’s own datashowed considerable discrepancies. As a newand relatively remote kabupaten, Malinau’sBAPPEDA office was classified as a ‘Class C’facility, or one with the minimal offices andpositions. With the need to set up the newgovernment offices, BAPPEDA and othersshowed little interest until mid-2000 in spatialplanning and until that time, were uncertain abouthow the spatial planning process might work. Indiscussions about land use planning, the aspectof greatest interest to several government officialswas in gaining access to community maps,presumably for their use in negotiating timberextraction. By mid-2000 BAPPEDA hadacquired a copy of the provincial TGHK map.

When the district government did initiate itsspatial planning process, the initiative lackedcredibility and seemed to falter for lack ofinterest. In mid-2000, a consultant with familyties to the BAPPEDA project leader prepared ateam and a proposal detailing plans for how thespatial planning process should occur. Theproposal was reviewed in a multi-stakeholdermeeting in September 2000. The meeting wasconducted hastily, however, and lackedparticipation from the Bupati’s office. Nocommunity representatives or subdistrict leaders

attended. No further public reviews ordiscussion have taken place, and the report wasnot made publicly available, at least throughmid-2001.

Schedule and budget considerations reportedlyconstrained the spatial planning team’s fieldwork. The process of producing a draft planwas to be completed by November 2000, with areport available in December; a revision processwas expected to occur in 2001. Because of therushed schedule, the team intially intended toundertake only two weeks more of field workin the remote regions of the kabupaten—Pujungan, Kayan Hilir and Hulu— with the teamleader making the statement, ‘We know theMalinau River areas already.’ According toteam’s Terms of References (TOR), a scenarioplanning exercise was supposed to have beenconducted, but as funds were limited this activitywas cut. In the end, the report was completedwithout any field work having been done.

The process also lacked more meaningful andbroad participation by district stakeholders inreviewing alternative plans and makingrecommendations, as would be hoped underdecentralization. The proposal mentioned thatthe plan should reflect the ‘aspirasi masyarakat’(communities’ aspirations), however theactivities planned did not involve communitiesor their representative bodies.

The articulation and discussion of technicalcriteria for land use decision making has beenlimited in the process observed to date. Nocriteria were discussed in the proposal, and theteam leader appeared to lack familiarity withsuch criteria. In a casual conversation withCIFOR researchers, he stated his vision that 60percent of Malinau should be classified as‘Protected Area’, because there would inevitablybe encroachment. He explained that this wouldleave a 50:50 balance between areas allocatedfor various forms of exploitation and use, onthe one hand, and conservation, on the other.When questioned, he was non-plussed abouthow topography, land-use potential or nationalpark constraints might affect this vision.

case 3 4/16/02, 10:29 AM35


36

Consistent with the overall tone ofdecentralization, a number of local peopleobserving the spatial planning process over thelast year concluded that the main interest of theBAPPEDA team appeared to be in assessing theeconomic potential of the region. The teamleader also noted the difficulty of producing aspatial plan when (by 4 September 2000) 16IPPK forest conversion permits had alreadybeen issued. The question was raised about towhat extent BAPPEDA would have the authorityto change the zoning of these lands.

Bupati Marthin Billa has stated his enthusiasmfor engaging in the spatial planning process. Abudget is available for mapping administrativeboundaries, and the BAPPEDA office appearsto be acquiring more information like recentsatellite imagery. Discussion in a CIFOR-sponsored multistakeholder meeting in May2001 showed that a number of groups, includingthe Inhutani state forestry enterprises, localcommunities, and district government officialshoped that the district would develop principlesof land-use and a land-use plan in a transparentand participatory way before pursuing resourceextraction. Officials have promised to withdrawthe small-scale timber licenses to enable such arational process, but no real action has occurredto stop the IPPKs, despite ostensiblesuspensions. Despite genuine good intentions,the pressures on Malinau for quick economicgain have been too high and distracting fordistrict officials to undertake what has yet to beproved as more than a paper exercise.

Coordination between district planners andforestry technical advisors has been weak underdecentralisation. As noted above, Malinau onlybegan to assemble its own district forestryservice in mid-2001. Coordination continues tobe by default under the provincial governmentin the CDK Bulungan Tengah. Because theCDK is located in Tarakan, a two to four hourboat ride from Kota Malinau, its participationin district decision making has been limited. Itsprimary function appears to have been to providethe technical approval of IPPK applications,which has occurred, CDK officials confess, with

little time or resources to conduct the fieldsurveys that are supposed to accompany theseapplications. A number of IPPKs have beengranted within protected forest zones, and mostwithout field surveys. A CDK official explainedthat regional autonomy has raised communityexpectations. CDK has granted approvals tocommunities even on protected lands on thebasis that these communities have claimed adatrights, which CDK argues provides a legitimatebasis for exceptions. Informal incentives alsoencourage the bending of rules in the permitallocation process. CDK officials say they feeltorn between trying to serve both industrial andcommunity interests. One of the major gapsunder decentralisation has been the lack ofclarity about the role of these provincial bodies,especially vis-à-vis district agencies. CDKofficials claim that they expect to play asignificant role in coordinating cross-districtforest management.

2.6.2 Village Land Use Planning

Although not required by law, land use planningat the village level is another key means ofcoordination. Villages within the KayanMentarang National Park have been most activein this regard, with facilitation from WWF.Since 1994, WWF has worked with peopleliving in the park to identify zones for differentlevels of use and protection, especially thelocation of tana’ ulen or protected forest areas.The villages have produced maps to this effect,although the stability of the agreements and theirenforcement remain to be tested.

These efforts have occurred in addition totraditional practices of collective planning thatfocused on the location of shifting cultivationfields each year and the occasional setting asideof protected areas.

On the Malinau River, outside the national park,people tend to only meet with families planningto have adjacent plots to select shiftingcultivation locations. Formal protected areas aremore rare in the Malinau River area, perhapsbecause of the stronger presence of HPH timber

case 3 4/16/02, 10:29 AM36

37


concessions, as well as the weakening ofcustomary practices (due to mixing of ethnicgroups) wherein the aristocrats of Dayakcommunities often set aside and controlledprotected lands. Although villagers appeartonot share any single vision about desired longerterm land use, villagers actively discuss amongthemselves which lands are appropriate forwhich use.

These discussions appear to have increased withIPPK activity. People in several villagesexplained to us their desire to see forest set asidefor the short-term and long-term, as well assome forest set aside for shifting cultivation useand other forest for hunting and collecting offorest products only. There was, however, littleagreement about what land use categories meant

and how much forest should be set aside forspecific functions. We observed communitymembers using the term ‘hutan adat’ to meanalternately their entire village area, the forestwithin their claimed territory, or a protectedforest. ‘Hutan lindung’ or ‘protected forest’referred to no use according to some people, orlimited use according to others. ‘Hutan kas desa’was often used to refer to forest set aside forspecific uses to benefit the community. Likedistrict government, most communities seem tobe giving first priority to securing economicbenefits before determining their long-termresource plans. However, there has been agrowing interest in planning land use, especiallyas distrust of IPPK permit holders has grownand more forest has disappeared.

case 3 4/16/02, 10:29 AM37

Decentralisation has encouraged anunprecedented race for claims to forest benefitsand resources in Malinau. During this time, thenew kabupaten has had a limited capacity tomanage the resulting competition and conflictover forest resources. These circumstances,when taken together, suggest disturbingimplications for long-term forest managementand the well-being of groups likely to get leftbehind in the competition.

As demonstrated above, IPPKs have been a keyinstrument affecting these trends. With authorityto grant small-scale timber harvesting and forestconversion permits, the newly founded districtgovernment has suddenly gained tremendousrights and responsibilities in relation to avaluable resource. The allocation of IPPKpermits has allowed quick profits to be madefrom timber exploitation. These profits havecreated incentives for nearly everyone in thearea—including district government officials,provincial forestry authorities, investors fromMalaysia, local timber brokers, and forestcommunities — to seek to clear forest arearapidly. Consequently, licenses have been issuedon lands with other designated functions,including areas classified as ‘Protection Forest’or ‘Production Forest’ in an existing timberconcession. There do not appear to be adequatecontrols over the amount of area to be cut, oreffective monitoring of the impacts of loggingnow being carried out by IPPK permit-holders.Communities, government officials, industryactors refer to regional autonomy and a historyof centrally-managed timber exploitation under

the New Order regime to justify their shared lackof regard for these previous uses or users.

Similarly, the lack of clarity about adat landsand abuse of the opportunities to make claimshave contributed to the atmosphere ofconfusion and conflict. Adat claims haveoften been more oriented towards carving upthe spoils from rapid resource depletion ormaking demands for compensation for forestdamage, than towards maintaining localidentity and ties to a territory. Claims to forestand land are being made primarily throughadat-based associations of a group with aparticular territory and have been codifiedmost noticeably through the participatorymapping and the issuance of IPPKs. Existingregistered villages have frequently been theunit of these claims, and within-village claimsto resources remain determined by customarymeasures, or in relation to deals withcompanies, which often obscure anddominated by a few people. With thewidespread issuance of IPPK permits byMalinau’s district government, forestcommunities have been enticed by smalltimber companies’ offers of fees,infrastructural development, employment andluxury goods to enter into contractualarrangements for cutting timber in their areas.However, the fulfillment of contractualobligations has been uneven and severalincidents of community protest have occurred.The legitimacy of these claims and theirmeaning in conflicts with other stakeholdersremain to be tested.

CONCLUSION33333

case 3 4/16/02, 10:29 AM38

39


From this analysis of Malinau’s experience inthe last two years, we identify four mainconclusions.

3.1 RAPIDITY OF CHANGE

The rapidity of change in the adminstrationmanagement of the region’s forests is unlike anythat the areas now encompassed by kabupatenMalinau have ever experienced. The geographicextent of impacts on the forest is potentiallyhuge, with more than 50,000 hectares alreadyscheduled for clear-cutting in the first year ofdencentralisation. Moreover, these areas arescattered throughout several river basins. Theprevalence of illegal logging and the quantitiesof heavy machinery being brought into theregion suggest that the total area of deforestationwill ultimately be even larger than that formallyapproved for conversion by the new districtgovernment. In the rush to secure immediatemonetary profits from timber harvesting, thedistrict’s forest resource base is likely to beexploited much faster than either districtgovernment agencies or local communities areable to monitor or control. Large areas of forestwill be fragmented, damaged and even clearedcompletely, quite possibly before effectivemeasures can be taken to manage theseprocesses. The institutions for administeringMalinau’s forest resources have only limitedcapacity to manage the pace and the intensityof environmental damage and social conflictthat are now occuring. Many of these changeswill be irreversible with long-term losses ofbiodiversity and negative effects on thelivelihoods of forest communities, and pressureson the districts’ economic resource base.

3.2 FOCUS ON SHORT-TERM

INCOME GAINS

In Malinau, decentralization has createdpressures and opportunities for revenuegeneration, but has not created concomitantcontrols for long-term resource management.

As a consequence, the pattern of timberexploitation established during the New Orderperiod has been repeated at a more localizedscale. Local stakeholders increasingly see theforest as a new source of significant income tobe exploited over the short and medium term,not generally as a capital resource to be managedsustainably for its own sake. This exploitationappears to be guided by a free market-drivenapproach to generating immediate andmaximum profits, and not by specific budgettargets or a longer-term vision of economicdevelopment and forest management. Even withregards to the Kayan Mentarang National Park,kabupaten officials have placed more emphasison how to turn the park into an asset throughecotourism than on the need for a protectionstrategy. Communities, especially, seem to nothave an understanding that the forest might oneday disappear, although their views are changingas they learn of forest conversion experienceselsewhere. Many Malinau stakeholders are alsooperating under the assumption that greaterprofits will be generated through converting landto plantation crops, rather than managing theseareas under a sustainable timber harvestingregime.

3.3 THE INCREASING POWER OF

EXISTING POLITICAL AND

ETHNIC COALITIONS

Because of the fast pace of change and poordissemination of information, members ofinfluential commercial and political networkshave been generally the first to know about theopportunities created by decentralisation. Manyof these individuals have sought to mobilize theirresources to take advantage of theseopportunities. These have been the people withlinks to outside trade and government networks,powerful families, and higher levels ofeducation. Most are based in Kota Malinau.

Local communities in some forested areas havenot been far behind, however. Village leadershave worked quickly to follow-up on offers from

case 3 4/16/02, 10:29 AM39


40

logging companies and timber brokers seekingto obtain IPPK permits by entering into variousforms of profit-sharing arrangements. In mostcases, only a limited number of people, usuallyvillage elders, have been involved and benefitedfrom these agreements. The leaders have oftennot had the information or perhaps influence tonegotiate optimal deals for themselves or thecommunities they claim to represent. Severalof the Punan groups in the Malinau basis havesuffered the most in this regard. In theirenthusiasm to seek even small amounts ofincome, several leaders have negotiatedagreements quickly and have suffered later fromweak agreements with the companies in whichpromises about benefits were never fulfilled.Punan groups have also lost their land in at leasttwo cases and may face more constricted accessto forest resources in the future — both becausethere will be less forests standing and becauseof the move towards territorializing propertyrights.

Due to the close-knit nature of relationshipsbetween some villages, companies andgovernment officials, coalitions based on familyand economic ties have become more influentialin allocating favors. Decisions that might beconsidered technical have become politicizedand it has not been uncommon for the membersof one office at the district level to fail to attendan official meeting if the members of anotheroffice hosted (or even attended) the meeting.Ethnic affiliations appear to have become moredivisive than they were before the regionalautonomy process began.

The interests of groups not present in Malinau—i.e., future generations and groups located at theprovincial level and above—have been left un-represented for the most part in the districtdecision-making process, raising questionsabout whether any “public” forest goods willbe managed.

3.4 DECENTRALISATION

AS DEMOCRATISATION?

Decentralisation has given substantial authorityand power to district leaders, but the flow ofbenefits to local populations and their role indecision-making about forests and forest landremains unclear. There is a real risk thatdecentralisation will result in a (re)concentrationof government authority and power at the districtlevel.The absence of democratic, transparentinstitutions for deliberation both at the villagelevel and between the village and the kabupatengovernments has meant that, the links betweengovernment agencies and their constituents havebeen weak. Almost no district governmentofficials are accountable to district residentsthrough direct elections, open meetings , publicrecords, an independent press and the like.Members of Malinau’s DPRD LegislativeAssembly are accountable to their parties, notto a geographic constituency, and there are nolinks between the local village assembly and theDPRD. Adat institutions have lost theircredibility for many people, to the point wheresome villagers are inclined to trust districtgovernment decisions more than those of adatleaders. There thus remains no clear way totranslate populist interests to district-level policyabout forests.

Institutionally, the re-definition of village unitsand the possibility for working with astrengthened lembaga adat provideopportunities for meaningful participation fromthe grassroots. Because it is a new district,Malinau also has been able to bring together staffthat are largely from the area itself. However,either because of precedent or pressures forexpediency, mechanisms for district governmentconsultation and coordination with communitiesremain to be developed. Two new regulationscurrently under review (on lembaga adat’srelationship with government and on thedefinition, creation and removal of villages) maymake progress on integrating community-levelinstitutions with those of the district

case 3 4/16/02, 10:29 AM40

41


government. However, because these are basedon regulations inherited from Bulungan, theymay be structured to allow Malinau’sgovernment to take fullest advantage of thepotential for reform.79 Among Malinaugovernment officials, there appears to be agrowing appreciation of the importance ofinvolving communities in decision making,although progress in this area has been hinderedby a lack of resources, political will orexperience in how to go about securing broaderparticipation. Communities also lackinformation about their legal rights andpossibilities for becoming more involved indistrict decision-making processes

Although the provisions for adat claims throughexisting national policies are potentially far-reaching, the indirect formalization of adatclaims through IPPK licenses has occurredindependently of these policies and withoutsystematic criteria or review. . Legally,communities still lack secure rights to land andforest resources and the competition for theseresources is only growing. There are no clear

criteria or processes for how adat should bedefined and conflicts over resources resolved.Also, the benefits from adat claims associatedwith IPPK’s have thus far been skewed, withvillage leaders and their families receiving adisproportionate share of benefits. The list ofbenefits promised, however, suggests thatcompanies are seeking to satisfy short-terminterests of communities, and communities havebeen easily attracted by offers of material goodsthat they have previously considered luxuryitems, even though the value of these goods isrelatively insignificant. Communities havegenerally lacked information and outsidesupport in negotiating contracts with loggingcompanies and timber brokers. This has oftenresulted in inequitable agreements that givecommunity members a relatively small share ofthe value of logs harvested and weak guaranteesthat the timber company will meet itsobligations. The lack of enforceability of theIPPK contracts has, in many cases, meant thatlogging companies have been able to exploittimber without providing the promised benefitsto communities.

case 3 4/16/02, 10:29 AM41

44444 ENDNOTES

1 It is, perhaps, important to note that it is notonly upriver peoples who must endure thelogistical challenges associated with fragmentedmanner in which the new kabupatens have beenorganized. One informant in Malinau noted, forinstance, that if the Bupati of Nunukan wants tovisit his kabupaten’s subdistrict of Krayan, hemust first travel to Tarakan. Although he cancatch a MAF flight from Tarakan to Krayan, theflight stops in Malinau along the way. By thesame token, much of the area within KabupatenMalinau is not accessible by air travel and cannotyet be reached by road.2 According to Bupati Marthin Billa, some HPHtimber concessions that extend into Malinau’sKayan Hulu sub-district are also regulated byCDK Kutai Barat, as their operations are basedin Kutai. CDK Kutai Barat, however, does nothave formal jurisdiction over forestry activitiesin any of Malinau’s subdistricts, as have CDKBulungan Tengah and CDK Bulungan Selatan.3 It should be noted that not all of the HPHconcession areas listed in Table 4 are fullylocated within Malinau’s district boundaries.Some of them overlap substantially with theneighboring kabupatens of Bulungan andNunukan.4 Interview with sawmill owner, Malinau,September 9, 2000.5 Personal communication, Malinau, May 2,2001.6 Interview with official at Dinas PendapatanDaerah, Malinau, September 6, 2000.7 Interview with officials at Inhutani II, Malinau,September 8, 2000.8 Interview with officials at Inhutani II, Malinau,September 8, 2000.

9 Interview with officials at Inhutani II, Malinau,September 8, 2000.10 Personal communication from Marthin Billa,Malinau, May 2, 2001.11 Keputusan Gubernur Kalimantan TimurNomor 20 Tahun 2000, tentang Penetapan DanaKompensasi Kepada Masyarakat Didalam danSekitar Hutan di Propinsi Kalimantan Timur,dated June 9, 2001.12 These amounts were reported byknowledgeable informants in Malinau.However, they are substantially higher than theamounts specified in SK No 20/2000, whichprescribes that companies pay Rp 1,500 per m3of meranti/kayu indah harvested during April1995 – March 2000, and Rp 3,000 per m3harvested after April 1, 2000. The reason for thisdiscrepancy is not clear.13 Interview with Sekretaris Inspektorat

Wilayah, Malinau, September 7, 2000.14 Interview with head of Bagian SosialEkonomi, Kantor Bupati, Malinau, September10, 2000.15 Interview with Unit Manager of Inhutani II,

Malinau,16 Interview with Manager of PT Comismar,Tarakan, March 25 2000.17 Interview with timber broker, Malinau,September 9, 2000.18 Interview with Manager of PT Comismar,Tarakan, March 25, 2000. This individualclaimed that he had gone to Malinau lookingfor land that would be suitable for oil palm, butwas only able to find small parcels. He indicatedthat a minimum of 7,000 ha is needed for newoil palm plantations, and that the committee thatreviews HGU (Hak Guna Usaha) land

case 3 4/16/02, 10:29 AM42

43


utilization applications in Samarinda will notgrant permits for areas less than this. HGUpermits, moreover, are required to have 100percent clearance from other land-owners. Theinformant reported that in Malinau, ‘it appearsthat third parties are going through villages totie up land in anticipation of investors.’19 The informant reported that such payments

often went into the private bank accounts ofgovernment officials, yet the company wouldstill receive an official receipt. In one case, herecalled, company officials went to a bank withan official to make a payment of Rp 68 trillion,which the official insisted be paid in cash. Uponreceiving the payment, the official immediatelytook the money to his own bank. The companyreceived an official receipt for the full amountpaid.20 Interview with head of Dinas PekerjaanUmum, Malinau, September 9, 2000. The headof Malinau’s Public Works office indicated thatthey plan to develop a shallow port near thebridge in Kota Malinau, which would be usedfor small boats; and to construct a deep-waterport downriver from the town, which wouldallow 100-tonne vessels to enter the area.21 Malinau officials have also reported that theyare considering the construction of a road linkingthe Kayan Hulu region to Sarawak, and areencouraging their counterparts in KabupatenNunukan to support the development of a roadthat would link the Town of Malinau to Sabah.One informant noted that these roads would playan important function in enabling heavyequipment to be brought into the region.22 Interview with head of Bappeda, Malinau,

March 26, 2000.23 Keputusan Bupati Kabupaten BulunganNomor 19 Tahun 1999, tentang Tata CaraPemberian Ijin Pemungutan dan PemanfaatanKayu Pada Hutan Rakyat dan Hutan Milik, datedJuly 28, 1999.24 It should be noted that the legal genealogy ofthe IPPK permits issued by Malinau’s districtgovernment is, in fact, rather sketchy. Many ofthe IPPK permits signed by the Bupati do notcite the Bulungan Bupati’s Decision No 19/1999.Moreover, many of these permits mistakenly cite

Government Regulation No 62/1998 asGovernment Regulation No 63/1998. Within thepermits themselves, several clauses refer to thelicense being granted as ‘Ijin Pemanfaatan Kayu(IPK)’ rather than ‘Ijin Pemungutan danPemanfaatan Kayu’, or IPPK. This conflationof the IPPK permits with IPK permits reflectsthe common practice among Malinaugovernment officials, industry actors, andcommunity members to refer to the new permitsas IPKs or small-scale IPKs (‘IPK skala kecil’).In fact, Ijin Pemanfaatan Kayu, or IPK, is alicense for timber removal on forest areas slatedfor conversion, which only the Ministry ofForestry has the authority to allocate.25 Notably, Decision No 19/1999 issued by the

Bupati of Bulungan makes no reference to PPNo 6/1999 regarding forestry enterprises and theextraction of forest products in areas designatedas Production Forest, which was issued onJanuary 27, 1999. Among other things, PP No6/1999 gave authority to district governmentsto issue permits known as HPHH (HakPengusahaan Hasil Hutan, or Forest ProductConcession), which allow the extraction oftimber and/or nontimber forest products in areasof 100 ha that are located within the government-controlled Forestry Estate (Kawasan Hutan).The process for allocating HPHHs was furtherelaborated in Ministerial Decision No 310/1999.(See the chapter on decentralization in Beraufor further details).26 Government Regulation of the Republic of

Indonesia Number 62, Year 1998 ConcerningDelegation of Part of Government’s Affairs inthe Sector of Forestry to the Region.27 Informal reports suggest that by May 2001,

the number of IPPKs issued in KabupatenBulungan had reached 300 and that these coveran aggregate area of 30,000 ha. These data haveyet not been confirmed.28 In cases where the IPPK permit has beenissued for an area larger than the legal limit of100 ha, the Bupati’s Decision assigning theIPPK specifies that the area has been dividedinto 100 ha parcels, each of which is associatedwith a specific individual or family from thecollaborating community.

case 3 4/16/02, 10:29 AM43


44

29 Surat Keputusan Bupati Kabupaten MalinauNomor 16 Tahun 1999, tentang PenerimaanSuumbangan Pihak Ketiga Kepada PemerintahKabupaten Malinau dan Tata Cara Pemberiandan Penerimaam Sumbangan.30 Interview with timber broker, Malinau,September 9, 2000.31 Interview with timber broker, Malinau, May2, 2001.32 It should be noted, however, that BupatiMarthin Billa indicated in early-May 2001 thathe has suspended the issuance of new IPPKpermits in order to allow time for the districtgovernment to evaluate the impacts of the IPPKpermits issued thus far.33 Interview with CDK official, Malinau,September 9, 2000.34 Interview with Inhutani I officials, Malinau,September 9, 2000. These officials argued thatmost of the companies receiving IPPK permitsappear to be ‘fly-by-night’ companies. One signof this, they claimed is the fact that most IPPK-recipients are registered as CVs (CommanditairVennootschap, or Limited Partnerships) ratherthan PTs (Perseroan Terbatas, or LimitedLiability Companies). As they explained thedifference between the two classes ofcompanies, CVs are generally registered onlywith a notary and not at the Department ofJustice; are individually owned and do not havea Board of Directors; and can only be held liablefor the value of their assets. PTs, on the otherhand, are more tightly regulated and their ownersare personally liable for the activities of thecompany.35 Interview with Inhutani I officials, Tarakan,September 12, 2000.36 The officials explained that Inhutani isassigned an annual quota for petrol, and isrequired to order its fuel a full year in advance,for which it deposits a cash bond at a regionalbank. The large numbers of new heavyequipment coming into the region triggered ashortage of fuel in mid-2000, leading todemonstrations at Pertamina and long lines.37 Interview with Inhutani I officials, Tarakan,September 12, 2000.38 Interview with Inhutani I officials, Malinau,September 9, 2000.

39 Interview with official at Kantor Bea Cukai,Tarakan, September 13, 2000. According to theregulations governing this category of imports,the importer is required to register the purposeof the equipment; the location where it will beused; and the length of time that it will be inIndonesia before being ‘re-exported.’ Theimporter is not allowed to move the equipmentfrom the registered location, without approvalfrom the Customs office. Moreover, the importeris required to post a cash bond to guarantee thatthe equipment will be sent out of Indonesia atthe end of the permit period.40 In several cases, the timber brokers are also

traders in rotan, gaharu, damar, and other non-timber forest products. Many of theseindividuals have long-standing ties to forest-based communities engaged in collecting theseproducts. It is often the case that householdswithin such communities are heavily indebtedto the NTFP traders, and there is a stronglikelihood that debt relations of this sort haveshaped the agreements made between thebrokers and communities regarding IPPK timberextraction.41 For instance, the local timber broker whoarranged CV Hanura’s IPPK permits withinInhutani II’s HPH concession boundaries (seebelow) served as the local treasurer for thegovernment-controlled political party,GOLKAR, during 1993-1998. He also sat onthe committee that oversaw the selection ofDPRD members.42 Interview with timber broker, Malinau,September 9, 2000.43 Interview with Sekretaris Daerah, Malinau,

September 11, 2000.44 Interview with timber broker, Malinau,September 7, 2000. Among industry observersin Malinau, there is considerable speculation thatpayments for signatures on IPPK permits may,in fact, have been much higher than the amountacknowledged by the timber brokersinterviewed.45 Keputusan Menteri Kehutanan danPerkebunan Nomor 310/KPTS-II/1999, TentangPedoman Pemberian Hak Pemungutan HasilHutan, dated May 7, 1999.

case 3 4/16/02, 10:29 AM44

45


46 Keputusan Menteri Kehutanan danPerkebunan Nomor 317/KPTS-II/1999, TentangHak Pemungutan Hasil Hutan MasyarakatHukum Adat Pada Areal Hutan Produksi, datedMay 7, 1999.47 Through August 2000, when this interviewwas conducted, the Bupati of Kutai Induk hadreportedly issued over 260 HPHHs, many ofwhich were located in areas being managed byHPH timber concessionaires.48 Interview with Sekretaris InspektoratWilayah, Malinau, September 7, 2000.49 Interview with timber broker, September 7,2000.50 Interview with Inhutani I officials, Malinau,September 12, 2000.51 Interview with timber broker, Malinau,September 10, 2000.52 Interview with timber broker, Malinau,September 9, 2000.53 Interview with Sekretaris Daerah, Malinau,

September 11, 2000.54 Interview with Sekretaris InspektoratWilayah, Malinau, September 7, 2000.55 Interview with Inhutani I officials, Malinau,September 12, 2000.56 Surat Direktur Jendral Pengusahaan HutanProduksi Nomor 1563/Menhutbun-VI/1999,mengenai Penundaan Keputusan Bupati KDHTk II Bulungan No 19 Tahun 1999, Tanggal 30September 1999.57 Surat Gubernur Propinsi Kalimantan Timur

Nomor 521/12788/Proda.2.2/EK, Tanggal 10November 1999.58 Surat Menteri Kehutanan dan PerkebunanNomor 603/Menhutbun-VIII/2000, mengenaiPenghentian/Penangguhan Pelepasan KawasanHutan, Tanggal 22 Mei, 2000.59 Interview with officials at Inhutani I, Tarakan,September 13, 2000.60 Interview with unit manager at Inhutani II,Malinau, September 8, 2000.61 Interview with unit manager at Inhutani II,Malinau, September 8, 2000.62 Interview with officials at Inhutani I, Tarakan,September 13, 2000.63 Interview with unit manager at Inhutani II,

Malinau, September 8, 2000.

64 Interview with officials at Inhutani I, Tarakan,September 13, 2000.65 In Kabupaten Bulungan, it appears that theInhutani’s and other HPH-holders may have anadded incentive to enter into such profit-sharingarrangements with IPPK-holders: In January2001, the DPRD considered a draft Perda whichwould allow the Bupati to issue export permitsfor logs harvested under IPPK permits allocatedby the district government. It is not clear whetherthis Perda has been approved in Bulungan or ifthe district government in Malinau isconsidering similar legislation. If such aregulation were to be introduced, this wouldenable IPPK-holders to legally export logs toMalaysia without needing to obtain an exportlicense from Jakarta. Although the nationalgovernment legalized log exports in 1998 inresponse to pressure from the IMF, the Ministryof Industry and Trade has since issued exportpermits for only a relatively small volume oflogs. There are indications that the Ministry ofForestry has been reluctant to support large-scaletimber exports from Indonesia and, in any case,would be highly unlikely to provide supportingrecommendations for the export of logsharvested under IPPK permits issued by districtgovernments.66Four additional rules, common elsewhere inKalimantan, further guided rights to forestresources. First, a person who cleared anagricultural field from primary forestautomatically obtained ownership66 of that plot.Second, a person could borrow a plot ofsecondary vegetation from a fellow villager forone rice season, but was not allowed to planttrees. Third, the planting of trees was taken as asign of ownership, being associated with regularuse of the land over time and proof of continuedinterest in the plot. People often refer to fruittrees as their “land certificate” (segel). Fourth,hunting and the collection of fallen fruit or wildspecies was permitted across territories,although it was considered polite to requestpermission from the village head before enteringanother group’s territory.67 WWF-Indonesia Program worked from 1990to 1996 to convert the status of the area from a

case 3 4/16/02, 10:29 AM45

46


nature reserve (cagar alam) to national park(taman nasional), with the later status grantingresident communities the rights to consumptiveuse of resources within specified zones of thepark. They also have worked to encourage localpeople to identify where these zones should beand to develop a stewardship approach to theforest more generally.68 Which began in 1994 before decentraliationpolicies took place.69 This decree was based on a provision in the1999 basic forestry law (UU No 41/1999) thatrequires companies to pay compensation tocommunities.70 The only criteria currently available are thoselisted in UU No 41/1999.71 This fairly recent policy was adopted inboilerplate fashion across Indonesia in responseto Peraturan Menteri Dalam Negeri No. 3/1997and states that ‘wilayah adat adalah wilayahsatuan budaya tempat adat istiadat itu tumbuh,hidup dan berkembang, sehinga menjadipenyangga keberadaan adat istiadat yangbersangkutan.’72 Although initially the Punan wanted a separateterritory but due to a subsequent uneven divisionof the territory, they settled for a joint villageterritory.73 Rights to these enclaves were often derivedfrom historical agreements.74 In interviews with local communities in theMalinau area, there was relatively little interestin the development of oil palm. Several sourcesindicated that Malinau communities andofficials, alike, are deeply skeptical about theprospects for oil palm development, given thatmany estate crop companies in neighboringBulungan district never planted their concessionareas after clearing the timber from them.75 The wife of the owner of C.V. Hanuraoriginated from the village of Batu Kajang, asdid the wife of one of the staff members of C.V.Putra Surip Wijaya.76 He is presently head of the MalinauLegislative Assembly (DPRD Malinau),

77 Langap could be included in this list as wellbecause of their efforts to claim the entire upperwatershed as part of the Merap adat area.78 Relatively few NGO’s or other organisationsare active in this area. The only NGO with an on-going presence is Yayasan Adat Punan, based inKota Malinau. This foundation aims at assistingthe development of the Punan communitiesthrough formal and non-formal education,however it faces problems of co-ordinating andvisiting its constituency due to the large area overwhich the Punan communities are scattered andthe lack of financial means. The more accessiblecommunities have been visited more often (e.g.,Bila Bekayuk and Mirau/Halanga). The position/strategy of the Yayasan Adat Punan seems to beto try to obtain full control by the Punancommunities over their territories and theresources found in it. This is especially the casefor the Tubu area, which is (regarded as) anexclusively Punan area. That approach might notalways provide the expected result e.g. in the caseof Setarap when the Punan community requesteda separate village area they were assigned a verysmall part of the village area. It will be interestingto see in how far the new arrangement of equalrights for everybody in the village will work out.In the case of Bila Bekayuk the Punan actuallysold of their part of the combined Long Lorehvillage territory before it was eventually divided.79 For example, the adat regulation indicates that

government should control how adat is definedand sanctioned. This control is to be exercisedin a hierarchical fashion from the districtdownwards, yet the regulation is vague howeverabout whether a relationship exists at all betweenvillage government and adat institutions. Shouldgovernment regulate the recognition of adat toensure fairness and possible conflicts? Somelocal people think so given the uncontrollednature of adat claims to date. Others think adatis weakened and no longer genuine to the extentit is merged with government

case 3 4/16/02, 10:29 AM46

Ascher, W. 1995. Communities and sustainableforestry in developing countries. ICS Press,San Francisco.

Asosiasi Pengusaha Hutan Indonesia (APHI).2000. Catatan Hasil Rapat, Unpublisheddocument. June 29, 2000.

Bagian Perekonomian Sekretariat KabupatenBulungan. 2000. Rekapitulasi IjinPemungutan dan Pemanfaatan HutanRakyat Yang Dikeluarkan Oleh Bupati Kab.Bulungan. Unpublished data. September 15.

Bappeda Tk II Bulungan and Kantor StatistikKabupaten Bulungan. 1998. Ikhtisar StatistikKabupaten Bulungan 1997. CV KramaAgung, Samarinda.

Barber, C. V., Johnson, N., & Hafild, E. 1994.Breaking the log jam: Obstacles to forestpolicy reform in Indonesia and the UnitedStates. World Resources Institute,Washington, DC.

Barr, C. 2001. Banking on sustainability:Structural adjustment and forestry reform inPost-Suharto Indonesia. Center forInternational Forestry Research and WWFMacroeconomics Program Office,Washington, DC.

Barr, C. and Resosudarmo, I. A. P. 2001.Decentralisation and forest administration inIndonesia: Implications for forestsustainability, community livelihoods andeconomic development. Draft. Center forInternational Forestry Research, Bogor,Indonesia.

Brandon, K. E. and Wells, M. 1992. Planningfor people and parks: Design dilemmas,World Development 20 (4): 557-70.

Carney, D. 1995. Management and supply inagriculture and natural resources: Isdecentralisation the answer? Overseas

Development Institute Natural ResourcesPerspectives No. 4. Overseas DevelopmentInstitute, London.

Conyers, D. 1981. Decentralisation for regionaldevelopment: A comparative study ofTanzania, Zambia and Papua New Guinea,Public Administration and Development I(2): 107-20.

Dinas Kehutanan .1999. Dinas KehutananDalam Angka Tahun 1998/1999. PemerintahPropinsi Daerah Tingkat I Kalimantan Timur,Samarinda.

Indonesia-UK Tropical Forest ManagementProgramme (ITFMP). 1999. Illegal loggingin Indonesia. Report No. PFM/EC/99/03,Jakarta.

Kantor Wilayah Propinsi Kalimantan Timur(Kanwil Kaltim). 1998. Pemutahiran DataPengusahaan Hutan Tahun 1997/1998.Departemen Kehutanan dan Perkebunan,Samarinda.

Ostrom, E. 1990. Governing the commons: Theevolution of institution for collective action.Cambridge University Press, Cambridge.

Rivera, R. 1996. Decentralización y gestión localen América Latina. FLASCO, San Jose.

Rondinelli, D., Nellis, J. R., and Cheema, G. S.1983. Decentralization in developingcountries: A review of recent experience.Staff Working Papers No. 581. World Bank,Washington, DC.

Scotland, N., Fraser, A., and Jewell, N. 1999.Roundwood supply and demand in the forestsector in Indonesia. Indonesia-UK TropicalForest Management Programme, Report No.PFM/EC/99/08 (November 23rd draft).Jakarta, Indonesia.

Sekretaris Daerah Kabupaten Malinau (SekdaMalinau). 2001. Paparan: Potensi dan

55555 References

case 3 4/16/02, 10:29 AM47


48

Pandangan Kabupaten Malinau.Unpublished paper.

Suara Kaltim. 2000a. Daerah Lintas Batas danRawan Penyulundupan. November 1.

Suara Kaltim. 2000b. Utara Pisah dari KaltimTinggal Tunggu Waktu Saja. November 2.

Sunderlin, W. D., Resosudarmo, I. A.P., Rianto,E. and Angelsen, A. 2000. The effect ofIndonesia’s economic crisis on small farmersand natural forest cover in the Outer Islands.Occasional Paper No 28 (E), Center forInternational Forestry Research, Bogor,Indonesia.

Tim Peneliti Pemekaran Wilayah Tingkat IKalimantan Timur. 1999. Laporan: HasilStudy Pemekaran Wilayah KabupatenDaerah Tingkat II Bulungan, Propinsi DatiI Kalimantan Timur.

Unpublished document.Toha, M. 2000.Estimated deforestation rate for Indonesia.Unpublished presentation prepared for theCGI seminar on Indonesian Forestry, Jakarta.January 26.

Usher, G. 2000. Discussion paper on: Whydonors should concentrate their programs atthe kabupaten level, or why focusing donorsupport at the kabupaten level is more likelyto achieve better natural resourcemanagement. East Kalimantan NRMProgram.

Utting, P. 1993. Trees, people and power: Socialdimensions of deforestation and forestprotection in Central America. Earthscan,London.

World Bank. 2001. Indonesia: Environment andnatural resource management in a time oftransition. World Bank, Washington, DC.

case 3 4/16/02, 10:29 AM48

Documents

The impacts of decentralisation on forests and forest ......Printed by SMK Grafika Desa Putera, Indonesia ISBN 979-8764-81-1 Published by Center for International Forestry Research