Green Activists Sound Warning on Foreign Investments in Oil Palm Estates


A young palm oil plant is seen as a back hoe machine makes new clearings for palm oil plantations near a forest habitat of endangered Sumatran orangutan at Langkat regency. (AFP Photo)

Environmental activists have responded with alarm to new data showing Indonesia has the third-biggest area of land in the world given over to foreign control since 2000, warning of dire implications to the country’s rainforests, wildlife and indigenous communities.

The Land Matrix Partnership’s Global Observatory, a crowdsourced database launched earlier this week, put the estimated figure of foreign land deals in the country at 2.84 million hectares, mostly for oil palm plantations.

That puts Indonesia behind only South Sudan, at 4.09 million hectares, and Papua New Guinea, at 3.91 million hectares.

The Land Matrix Partnership, an independent land monitoring initiative that includes groups such as the International Land Coalition and the University of Bern’s Center for Development and Environment (CDE), defines a land deal as “an intended, concluded or failed attempt to acquire land through purchase, lease or concession.”

The database focuses only on major land deals of more than 200 hectares that involve the “potential conversion of land from smallholder production, local community use or important ecosystem service provision to commercial use.”

As of Thursday evening, the database, which is updated constantly, showed that there were 85 transnational deals for Indonesian land, coming from places as far afield as the United States and Belgium, to Sri Lanka and South Korea. However, Malaysian companies were the biggest investors, responsible for 32 deals covering a combined 1.27 million hectares, or nearly half the total area.

The biggest identified land contract was for 300,000 hectares for the Malaysian conglomerate Genting to develop oil palm plantations in Papua. The Global Observatory noted that the deal was concluded by 2011 but operations had not yet begun.

The next biggest contract was for 299,262 hectares in Sumatra, also for oil palms and also for a Malaysian company, Sime Darby. The plantations are already in operation, according to the database.

Oil palm plantations dominated the amount of foreign land investment, accounting for 2.45 million hectares, or 86 percent of the total area.

Aditya Bayunanda, the global forest and trade network national coordinator for WWF Indonesia, said the figures put into perspective the amount of forest being cleared for commercial plantations and helped explain why Indonesia was a major carbon dioxide emitter.

“There are more negative implications than positive ones for the environment as a result of foreign or domestic companies using Indonesia’s land for oil palm plantations,” he told the Jakarta Globe.

He added that besides the obvious loss of valuable forest habitats and the biodiversity they supported, there was also an impact on local communities, many of whom were currently in conflict with the new concession holders over areas that they had long considered ancestral lands.

“There’s a huge gap between land ownership by local people and by foreign companies. As a result of this gap, we get land disputes as well as social discrepancies between locals who work for the foreigners and those who don’t,” Aditya said.

He warned that such disputes, if conflated with existing social and economic grievances, could prove extremely dangerous, especially in Papua, which for decades has been the scene of an armed insurgency and is now becoming a prime target for plantation and logging firms looking beyond the fast-diminishing forests of Sumatra and Kalimantan.

Aditya said that a positive development on this front was a recent Constitutional Court ruling on indigenous community management of forests.

The court ruled in May that indigenous people had the right to manage forests where they lived, which Aditya said was important in preventing foreign or domestic developers from clearing the land for commercial use.

However, observers say the complex matter of how to define indigenous land could give rise to even more problems.

Aditya also noted that the amount of oil palm plantations being developed would severely hamper the government’s bid to cut carbon dioxide emissions by 26 percent by 2020.

A recently extended moratorium on issuing new forest-clearing permits for primary and peat forests will be of little help in reversing the deforestation trend, he argued, given that most of the land deals identified in the new database predated the moratorium that first went into force in May 2011.

“The moratorium is more about preventive action than about fixing the problem. The government doesn’t appear to be making any real steps to fix the deforestation problem, and its policies only tend to be stop-gap measures to stop the problem from getting bigger,” Aditya said.

Dedi Ratih, the forest program campaigner at the Indonesian Forum for the Environment (Walhi), agreed that national policies to tackle carbon emissions were inadequate in light of the amount of forests being cleared.

“The government’s decision to extend the forest-clearing moratorium is simply not enough to mitigate the negative impact of the huge amount of land being allocated for oil palm plantations, or to support the government’s campaign to reduce greenhouse gas emissions,” he said.

Aditya urged the government to learn how to more efficiently allocate land for commercial use, by looking at other countries as examples.

“Malaysia has very strict rules for land usage. They have regulations stipulating how much land may be used for oil exploration, for forestry and so on,” he said.

“So it figures that most of the foreign companies that manage land for oil palm plantations here come from Malaysia.”

The Global Observatory listed Malaysia as the No. 2 country for the amount of foreign land investments made since 2000, behind only the United States.

  • Wonderer

    1. “If the price increases, the price disparity between the domestic and international fuel price will narrow.” how does that generate useful data?!?

    2. Agree that “selling out one’s resources” is a big issue for any country. Indonesia ahould make sure that it properly benefits and that the developing world is not cheaply exploired first and when resources get scarce depends on other countries for supplies. This does not really fit to plantations thou and more to timber and fossil resources.

    3. I do NOT agree that foreign investors cause more harm though. Locals are often MUCH more reckless and oblivious on safety and living standards for workers or the right of locals previously on that land than international listed corporates under world wide scrutiny.

  • 22roles

    Best news so far , tax them all with carbon taxes and rehab the area if they decide to leave, sooner the better action taken to recoup all losses and destruction linked to palm plantations , specially with sovereign funds involvement in palm plantations…pay attention to mining locations as well, that could have created larger more severe destruction on tropical forest.

  • Putra

    First, I would say that Malaysian are opportunist. Malaysian also make some problems with Indonesian but they still search money in our country. Second, from my point of view, Indonesian government must restrict land-using permit for oil-palm plantation because the number of land cleared bigger and bigger. As a country having the largest forest area, Indonesia should be an oxygen supplier for world community. But we can see deforestation activities happen easily in the name of business in our beloved-country. We must remember that we have to keep the forest not only for us but also for our children and grandchildren in the future….

    • MikeOfAston

      Foreigners including Malaysian don’t get Indonesian lands for free, they buy/lease them from Indonesians. Why Indonesians sell/lease out their lands? Money, money, money.

  • stewy

    Palm oil plantations are the main cause of present deforestation in Sumatra..a sad and alarming fact. Wake up people..before its too late.

  • Palm Hugger

    Reading this article leaves little doubt that greenies all tend to sing from the same
    hymn book with a great propensity to be liberal with and to even fudge stats.

    For instance, one hack even reported that 80% of the Sumatran jungles have been overtaken by palm oil!! see:

    A study by a group of researchers from S Dakota University conducted scientific mapping backed by NASA there using sophisticated multi-resolution remote sensing data from the Landsat enhanced thematic mapper plus (EMT+) and moderate resolution imaging pectroradiometer (MODIS) sensors found that the total cover loss for both Sumatera and Kalimantan for the years 2,000-2008 was only 5.3% of land area and 9.2% when juxtaposed against the forest cover existing in the year 2,000!

    So when greenies get out of their fixation for gross exaggeration and hyperbole, they might begin getting some credibility.

  •! Muffinman

    The race to scourge the last few remaining tracks of rainforest in order to stuff already overflowing greedy pockets, is gaining speed. It’s happening world wide , but here in Indonesia, we have it down to a fine art. Plus we get to smoke screen those pesky Malaysians on a yearly basis.
    And when all the world’s forests are gone, the guy with the biggest air-con unit wins.