Decentralisation-Case8

AUSTRALIAN CENTRE FOR INTERNATION-ALAGRICULTURAL RESEARCH

Decentralisation of Administration,Policy Making and Forest Managementin Ketapang District, West Kalimantan

Endriatmo Soetarto, MT Felix Sitorus and Yusup Napiri

© 2001 by Center for International Forestry ResearchAll rights reserved. Published in 2001Printed by Subur Printing, Indonesia

ISBN 979-8764-85-4

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

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S ince early-2000, the Center for International Forestry Research (CIFOR) has conducted research on the decentralisation of forest

administration and policies affecting forests in Indonesia. This project has soughtto document the real and anticipated impacts of decentralisation on forestmanagement, forest community livelihoods, and economic development at theprovincial and district levels. During the initial phase of this research, CIFORconducted case studies in nine kabupaten or districts, in four provinces: Riau,East Kalimantan, Central Kalimantan, and West Kalimantan. These case studieswere carried out in 2000, with follow up visits to some districts conducted inearly 2001. As such, the findings presented in the present report and the companioncase studies reflect the conditions and processes that existed in the study districtsduring the initial phase of Indonesia’s decentralisation process.

The following reports have been produced by this project. The first of theserepresents a synthesis of the major findings from the nine case studies, accompaniedby a historical 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 readilyaccessible to decision-makers involved in the decentralisation process. It is hopedthat readers of the case studies will refer to the synthesis report in order to situatethe specific case 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’sDepartment for International Development (DFID). The opinions expressed in thisreport are the views of the author(s) and do not necessarily represent the officialpolicy of CIFOR. These opinions, likewise, do not represent the official policy ofACIAR or DFID or any other organization involved in funding, conducting ordisseminating this study.

The authors acknowledge the assistance of a large number of persons in researchingand preparing this study. In Riau, these included staff of government departments,in the areas of forestry, estate crops, planning, environment and finance, at both

Decentralisation and Forests in Indonesia:An Overview of the Study

provincial and district levels. Academics from UNRI, together with membersof NGOs, mostly Pekanbaru-based, provided fellowship and collegiality.We were also helped by staff from the two pulp and paper companies, fromprivate timber and oil-palm concerns and from numbers of villagers in alldistricts. All Bupatis and temporary Bupatis in our study areas madethemselves available to talk to us, for which we were grateful. We wouldespecially like to thank Viator Butar-Butar in Pekanbaru, former director IrWaldemar Sinaga and his staff at the Bukit Tigapuluh National Park Unitand the former staff of WWF Bukit Tigapuluh, especially Mangara Silalahiand Bobby Berlianto. In Jakarta many other people contributed, particularlythe forest specialists from Manggala Wanabakti, while colleagues fromCIFOR in Bogor, especially Chris Barr, provided stimulation and werepatient through our drafts. Our fellow researchers, especially Anne Cassonand John McCarthy, gave us the opportunity to exchange many useful ideasand experiences.

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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 administrativeand regulatory authority have been transferred from the national governmentin Jakarta to the country’s provincial and district governments. This transferof authority has occurred across broad segments of the nation’s economyand has sharply redefined the roles and responsibilities of governmentagencies at each level of the nation’s administrative structure. With thelocus of decision-making shifting decisively away from the nationalgovernment, Indonesia’s ongoing decentralisation process marks a dramaticbreak from the highly-centralized system of governance that characterizedSuharto’s New Order regime during the 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 othernatural resources. Officials from resource-rich regions have long complainedthat the vast majority of the benefits from these assets have flowed awayfrom their regions to the national government and to private sectorcompanies closely associated with decision-makers in Jakarta. While theNew Order government kept a tight lid on calls for greater regional autonomyand regional control over natural resource revenues, the post-Suhartogovernment has not been able to ignore these demands. On the contrary,since 1998 the country’s senior leadership has recognized that its ability tomaintain Indonesia’s integrity as a nation may ultimately depend on itscapacity to strike a more equitable balance of power between the nationalgovernment, on the one hand, and the provincial and district governments,on the other.

Over the last three years, the national government has issued severalimportant pieces of legislation aimed at transferring authority to theprovincial and district governments, and at allowing resource-rich regionsto retain a larger share of the fiscal revenues generated within theirjurisdictions. The most significant of these have been Law 22 on RegionalGovernance and Law 25 on Fiscal Balancing, both of which were issued inMay 1999. Together, these laws provide the legal basis for regionalautonomy, laying out a broad framework for the decentralisation ofadministrative and regulatory authority primarily to the district level. Theselaws have been supported by a variety of implementing regulations andsector-specific decentralisation laws, including Law 41 of 1999, a revisedversion of Indonesia’s Basic Forestry Law, which outlines the division ofadministrative authority in the forestry sector under regional autonomy.

Editor’sPreface

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In many parts of Indonesia, provincial and district officials acting in the spirit ofregional autonomy have instituted reforms that extend well beyond the authoritygranted to them under the national government’s decentralisation laws and regulations.Indeed, the formal decentralisation process has been driven, to a significant degree,not by policy decisions made at the national level but, rather, by decisions made byprovincial and district level actors. This process has often been ad hoc in nature,with national policymakers frequently finding themselves in the position of havingto react to fast-moving changes that have occurred in the provinces and districts. Farfrom being a well-planned and carefully-managed exercise in bureaucraticreorganization, the implementation of regional autonomy in Indonesia has beencharacterized by intense struggles among the different levels of government, each ofwhich represents a competing set of political and economic interests. In this way,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 governmentto its 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 politicaland economic 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 decentralised 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 theactivities of forest user groups; and greater access to local knowledge about themanagement and utilization of forest resources — which are sometimes highly specificto particular social groups and/or ecosystems (Carney 1995).

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In addition, decentralised forest administration often allows for greater participationon the part of forest communities in policy decision-making processes, and moredirect accountability of policymakers to peoples whose livelihoods depend on forests(Brandon and Wells 1992). Decentralisation also frequently implies a more equitabledistribution 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 many countries,national governments have decentralised without first creating the necessary institutionalcapacity at the provincial or district levels to administer forests effectively (Rivera 1996).Often, national governments assign tasks to provincial and district governments withoutgiving them adequate resources for carrying out these tasks. Most provincial and districtgovernments lack essential technical skills and must look to other entities for advice,training, and technical information. In cases where local elites have been strong and/ortraditionally marginalized groups have been unable to organize themselves,decentralisation has often strengthened pre-existing power relations, rather thanpromoting democratic decision-making processes (Utting 1993). Finally, even whenelite groups do not dominate provincial and district governments, it is often that casethat these governments have little interest in sustainable forest management.

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 wood peryear (Barr 2001; Scotland et al. 1998). Log consumption on this scale has stood wellabove the Indonesian government’s own widely-cited sustainable timber harvest threshold

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of 25 million m3 per year. Moreover, with few effective regulatory structures inIndonesia’s forestry sector, domestic demand for timber has resulted in large volumesof wood being harvested from illegal sources (ITFMP 1999). At the same time, a declinein the nation’s HPH timber concession system, coupled with rapid expansion in oilpalm and other forms of agroindustrial plantations, has meant that a growing portion ofthe nation’s wood supply has been obtained through clearing of natural forest ratherthan selective harvesting at multiple-rotation timber concessions (Barr 2001).

Scope and Methods of the Present Study

The present report examines the preliminary effects of decentralisation of forestadministration in the Ketapang district of West Kalimantan Province. This report presentsthe findings from one of nine district level case studies carried out during 2000 andearly 2001 by the Center for International Forestry Research (CIFOR) in four provinces:Riau, East Kalimantan, Central Kalimantan, and West Kalimantan. The findingspresented in these studies reflect the conditions and processes that existed in the studydistricts during the initial phase of Indonesia’s decentralisation 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 tothe district and provincial capitals to establish initial contacts and to identify keyissues. Second visits for data gathering were then carried out for periods of 10-14days in each district, with shorter amounts of time in the provincial capitals. Thecollection of primary data involved semi-structured interviews with key informants,including: government officials; forest industry actors; members of communities livingin and around forests; political party representatives; officers from the regional militaryand police force; informal district leaders; representatives from nongovernmentalorganizations (NGOs); university researchers; and individuals involved with donoragencies and development projects. Data collection also involved the review of primaryand secondary documents, including: district and provincial laws and regulations;government statistics; regional news media articles; industry publications; researchstudies; and reports prepared by NGOs and donor agencies.

Each of these case studies is structured to focus on processes that have occurred atthe district and, to a lesser extent, the provincial levels. To avoid repetition, moregeneral information on the history of forest administration and forestry sectordevelopment in Indonesia, as well as significant national policy and legal-regulatoryreforms associated with decentralisation, has been placed in an accompanying reportwhich synthesizes the project’s major findings (see Barr and Resosudarmo and 2001).Readers are encouraged to review the case studies in conjunction with this synthesisin order to appreciate the broader historical and policy contexts within which thedistrict and provincial decentralisation processes are now occurring.

Christopher Barr and Ida Aju Pradnja Resosudarmo

Bogor, Indonesia

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APBD Anggaran Pendapatan Belanja Daerah, Regional Budget

Bappeda Badan Perencanaan Pembangunan Daerah, Regional Development PlanningBoard

BPKMD Badan Koordinasi Penanaman Modal Daerah, Regional Investment CoordinatingBoard

BPN Badan Pertanahan Nasional, National Land Agency

BPS Balai Pusat Statistik, Central Bureau of Statistics

BUMN Badan Usaha Milik Negara, State Owned Enterprise

CPO Crude Palm Oil

DAD Dewan Adat Dayak, Dayak Adat Council

DPRD Dewan Perwakilan Rakyat Daerah, Provincial or District Legislative Assembly

Dispenda Dinas Pendapatan Daerah, District Revenues Office

DR Dana Reboisasi, Reforestation Fund

GRDP Gross Regional Domestic Product

HGU Hak Guna Usaha, Land Use Permit issued by Ministry of Agrarian Affairs or NationalLand Agency

HKm Hutan Kemasyarakatan, Community Forest

HPH Hak Pengusahaan Hutan, Commercial Forestry Concession.

HPHH Hak Pemungutan Hasil Hutan, Harvest Concession for Forest Products

HPHKM Hak Pengusahaan Hutan Kemasyarakatan, Community Forestry Concession

HPHTI Hak Pengusahaan Hutan Tanaman Industri, Timber Plantation Concession

HTI Hutan Tanaman Industri ,Timber Plantation

IHH Iuran Hasil Hutan, Forest Products Payment, now called PSDH

IHPH Iuran Hak Pengusahaan Hutan Forest Concession Royalty

IHPHH Iuran Hak Pemungutan Hasil Hutan Forest Product Harvest Concession Royalties

IPK Ijin Pemanfaatan Kayu, Timber Clearance Permit

KKPA Kredit Koperasi Primer untuk Anggota, Members’ Primary Credit Cooperative

KPH Kesatuan Pemangkuan Hutan, Forest Management District

KSDA Konservasi Sumber Daya Alam, Natural Resource Conservation

KSM Kelompok Swadaya Masyarakat, self-help community group

LIPI Lembaga Ilmu Pengetahuan Indonesia, The Indonesian Institute of Sciences

MoFEC Ministry of Forestry and Estate Crops

NES Nucleus Estate Smallholder project

NTFP Non-Timber Forest Products

PAD Pendapatan Asli Daerah, Regionally Generated Revenues

PBB Pajak Bumi dan Bangunan, Land and Building Tax

PBS Perkebunan Besar Swasta, Private Large-Scale Plantation

PBSA Perkebunan Besar Swasta Asing, Foreign Large-Scale Plantation

PIR Perkebunan Inti Rakyat, People’s Nucleus Plantations

Glossary

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PBSN Private National Large-Scale Plantation

PSDH Provisi Sumber Daya Hutan, Forest Resource Rent Provision

RTRWK Rencana Tata Ruang Wilayah Kabupaten, District Spatial Plan

RTRWP Rencana Tata Ruang Wilayah Propinsi, Provincial Spatial Plan

RUTR Rencana Umum Tata Ruang,General Spatial Plan

SAKB Surat Angkutan Kayu Bulat,Permit to Transport Timber

SAKO Surat Angkutan Kayu Olahan, Permit to transport Processed Wood Products

SKSHH Surat Keterangan Sahnya Hasil Hutan, Permit to Transport Timber and OtherForest Products

TGHK Tata Guna Hutan Kesepakatan, Forest Land Use Consensus

TNGP Taman Nasional Gunung Palung, Gunung Palung National ParkUPP UnitPelayanan Pembangunan, Development Service Unit

UPT Unit Pelaksana Teknis, Technical Executive Unit

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Table of Contents

Decentralisation and Forest in Indonesia: An Overview of the Study iiiEditor’s Preface vGlossary ixAbstract xiii

1. Profile of the Research Area 11.1 Province of West Kalimantan 1

1.1.1 Geography and people 11.1.2 Land use 11.1.3 Economy and finance 3

1.2 Profile of the Ketapang District 51.2.1 Geography and people 51.2.2 Land use 61.2.3 Economy and finance 6

2. Decentralisation of Forestry and Plantation Policies andAdministration in West Kalimantan 82.1 Present State of Forestry and Plantations 8

2.1.1 Stakeholders and their roles 82.1.2 Forestry and plantations 112.1.3 The economic role of the forestry and plantation sector 14

2.2 Decentralisation of the Forestry and Plantations Sector 142.2.1 Conflicts between stakeholders 142.2.2 Indicators of decentralisation 172.2.3 The provincial government’s response to

the decentralisation process 18

3. Decentralisation of Forestry and Plantation Policies and Administration inKetapang District 193.1 Forestry and Plantation 19

3.1.1 Stakeholders and their roles 193.1.2 Forestry and plantations 213.1.3 Contributions to the regional economy 23

3.2 Decentralisation of the Forestry and Estate Crops Sector 253.2.1 Conflicts between stakeholders 253.2.2 The different forms of decentralisation 28

3.3 Response to the Issue of Decentralisation 333.3.1 Local government response 333.3.2 Response of the private sector 34

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4. Decentralisation in Three Areas: Adat Communities, Plantations andThe Gunung Palung National Park 364.1 Dayak Adat Communities 36

4.1.1 Dayak adat communities and their land 364.1.2 HPH concessions and illegal logging 374.1.3 Participatory mapping 384.1.4 Forest product collection rights 38

4.2 Agro-industrial Plantations 394.2.1 Plantation investment systems 394.2.2 Location licences for plantations 414.2.3 Oil palm versus rubber 414.2.4 Plantations as a source of local revenues 42

4.3 Management of the Gunung Palung National Park 424.3.1 Gunung Palung National Park 424.3.2 Management and activities in the TNGP area 434.3.3 Responses to the TNGP management activities 43

5. Conclusions 475.1 De Facto Decentralisation 47

5.1.1 Illegal logging 475.1.2 Harvest Concession for Forest Products (HPHH) 475.1.3 Plantation investment procedures 485.1.4 Local community autonomy 48

5.2 Linking Decentralisation and Forest Conservation 485.3 Empowerment of Local People 485.4 The Role of the Private Sector 495.5 Land Use Planning 495.6 Financing Local Development 495.7 Human Resources for Decentralisation 495.8 Non-forest Resources (Mining) 505.9 Protected Areas 50

6. Endnotes 51

7. References 53

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Abstract

This study examines the preliminary impacts of Indonesia’s decentralization process on the ad-ministration and management of forest resources in Ketapang District, West Kalimantan. The casestudy is based on field work carried out in mid-2000, using a rapid appraisal methodology. Thereport covers the impacts of decentralization in three areas, in particular: customary adat commu-nities, oil palm and rubber plantations, and conservation issues related to Gunung Palang NationalPark. In each of these areas, the authors examine struggles among competing interest groups thathave arisen under decentralization. The study finds that with the shift of administrative authorityto the district level, the district government in Ketapang took measures to generate local sources ofrevenues by issuing large numbers of small-scale timber extraction permits and to ‘legalize’ thetransport of timber that had otherwise been harvested illegally. The study also finds that the verylimited flow of formal revenues form the Gunung Palang National Park to the district governmenthas encouraged an escalation of illegal logging within the park’s boundaries. The authors recom-mend that the Ketapang District government become more involved in administering the nationalpark to ensure that economic interests of both the district government and local communities areaccomodated in the park’s management.

1.1 PROVINCE OFWEST KALIMANTAN

1.1.1 Geography and peopleWest Kalimantan is the fourth largest province inIndonesia, covering 146,807 square kilometers(km2) (7.53% of the area of Indonesia). When firstformed in 1956, this province consisted of sixdistricts (Pontianak, Sambas, Sanggau, Ketapang,Sintang, Kapuas Hulu) and one municipality (thecity of Pontianak). In 1999, two new districts wereadded: Landak (an offshoot from the Pontianakdistrict) and Bengkayang (originally part ofSambas). Mainland West Kalimantan, bordered inthe north by the Malaysian state of Sarawak,consists mostly of lowlands with a few hills, whilethe marine area contains scores of islands.Vegetation types include coastal vegetation,mangroves, swamp land and upland rain forest.The soils of West Kalimantan are predominantlypure or composite yellow red podzol. Thehydrological regime is dominated by the KapuasRiver, the longest in Indonesia (1,086 km), andSentarum Lake, with an area of 117,500 hectares.There are hundreds of rivers in West Kalimantan,all originating in either the Kapuas Hulu Range(Kalingkang) or the Schwaner Range.

West Kalimantan is sparsely populated. In 1998,the province had 3,826,800 people, with anaverage population of 26 people/km2. Thepopulation is unevenly distributed among thedistricts. Outside the municipality of Pontianak(4,364 people/km2), the most densely populateddistrict is Sambas (72 people/km2), and the leastdense is Kapuas Hulu (5 people/km2). Coastal

regions are home to two-thirds of the populationwith a population density of 75 people/km2, whileinland areas have only 6 people/km2 (BPS 1998).The 1998 National Socioeconomic Survey(Susenas) showed that, of the 1,787,677 WestKalimantan residents classified as of working age,94.63% were working. This workforce wasdominated by the 10–24 age group and 60% ofthe working-age population was employed inagriculture (age 14, and 18 for heavy labour).

1.1.2 Land useThe development of West Kalimantan’s economyhas traditionally been based on the utilisation ofits natural resources, particularly its forests. Asdevelopment continues, the demand for land is nolonger limited to the forestry sector, and therequirements of a number of other growth sectorsbecome strategically important in the allocationof land. With this in mind, the Directorate Generalof Forestry, supervised by the Ministry ofAgriculture classified land use for the allocationof sectoral interests based on land use functions.This national system, developed in 1981, wascalled Forest Land Use Consensus (TGHK).1

The TGHK planning process was conducted at themacro level and was heavily dominated by forestrysector interests. This is reflected in the definitionsof utilisation functions: other sectors were onlyable to use land classified as ‘land with other uses’or ‘conversion forest’ area. The TGHK was alsoheavily centralist, paying inadequate attention toactual land use in the field. Moreover, inaccuraciesin the databases used to determine forest limitscaused a number of overlaps in area functions. In1998, The Regional Development Planning Board

PROFILE OF THE RESEARCH AREA1

Decentralisation of Administration, Policy Making and Forest Management in Ketapang District, West Kalimatan

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(Badan Perencanaan Pembangunan Daerah orBappeda) identified the following overlaps:• 1,294,035.5 ha of Commercial Forestry

Concession (HPH) area was in a protectedzone2

• 29,687.5 ha of the area recommended forplantations was a conservation zone

• 44,371 ha of Timber Plantation (HTI) area wasin conservation zone

This situation arose partly because the TGHK wasdecreed in 1982 and HPH allocations hadcommenced in 1967. To resolve suchinconsistencies, although somewhat belatedly, the

central government attempted to modify landallocations by issuing Land Use Law No. 24/1992.Based on this law, West Kalimantan’s provincialgovernment drew up a Provincial Spatial Plan(RTRWP).3 After a two-year struggle, principallybetween the provincial government and theMinistry of Forestry, this RTRWP was finallyendorsed by the Minister of Home Affairs, to beeffective until 2008.4

The next step in improving land use planning wasto resolve differences between the Ministry ofForestry’s TGHK and the provincialgovernment’s RTRWP in terms of land use

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functions (Table 1). In this way only one set ofguidelines would govern allocations of land forutilisation. The “harmonised map” (peta paduserasi) was endorsed by the Governor of WestKalimantan in 19995 and was printed by theprovincial office of the National Land Agency(BPN). However, the process of harmonisationbetween the TGHK and the RTRWP plans remainsincomplete. The allocation of areas classified asForest Estate (Kawasan Hutan) for non-forest useis still an issue of contention between the nationaland provincial governments.

1.1.3 Economy and financeAgriculture is a strategic sector for WestKalimantan’s economy and people. Its averageannual contribution to the Province’s GrossRegional Domestic Product (GRDP) from 1993to 1998 was 24%. Over the same period,contributions from the forestry sub-sector, whichis included in the agriculture sector, were anaverage 8% per year. Other sectors that play asignificant role in the regional economy areindustry and trade, although the contributions from

these two sectors registered a decline during the1993–1998 period (Table 2). Mining is still only asmall contributor to the GRDP, with productionbased on C-classified (mineral classified as non-strategic and non-vital by Law No.11/1967 onBasic Principles on Mining) extractive.

Between 1993 and 1996 West Kalimantan’seconomic performance was satisfactory. Theeconomy grew by 10.75% in 1996, before slowingin 1997 to 7.53% as a result of a combination offactors including a long dry season, forest fires andthe eruption of social conflicts in 1996. Thisdeterioration continued into 1998 with the economyactually contracting by 5.16% as a result ofIndonesia’s national financial crisis. The sector thatshowed the sharpest decline was the processingindustry; this can be attributed to the high cost ofraw materials and reduced purchasing power. In1999 the rate of economic growth started to recover,with growth of 2.01% (Accountability Report ofthe Governor of West Kalimantan 2000).

West Kalimantan’s GRDP reached Rp 15.7 trillion

Table 1. Land classifications in West Kalimantan under TGHK and RTRWP

Land Classification RTRWP TGHK(ha) (ha)

1. Protected AreaNature Reserve 153,257National Park 1,252,859 1,336,750Natural Tourism Forest 29,310Protected Forest 2,161,465Protected Peat Forest 124,380 2,047,125Mangrove Forest 69,200Marine Park 22,215

Sub Total 3,812,686 3,383,875

2. Cultivation AreaLimited Production Forest 2,408,775 2,988,750Production Forest 2,255,010 1,323,000Conversion Forest 514,350 1,508,750Land with other Use 5,689,825 5,476,325

Sub Total 10,867,960 11,296,825TOTAL 14,680,700 14,680,700

Sources: RTRWP: West Kalimantan Forestry Office (1999), RTRWP based on Regional Regulation of the Provinceof West Kalimantan No. 1/1995.TGHK: West Kalimantan Regional Forestry Office.


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(at current prices) in 1998, compared to only Rp5.15 trillion in 1993. Per capita GRDP also rose,from Rp 1.5 million in 1993 to Rp 3.8 million in1998. However, the growth in per capita GRDPwas not felt in real terms, as there was asimultaneous—and significant—rise in inflation.Between 1993 and 1997 the average annualinflation rate was 8.77%; and following the onsetof the economic crisis, in 1998 it reached 78.85%(Bappeda and BPS 1998).

The provincial government’s administrative,development and public service activities aredetailed in the Provincial Budget (APBD). Thetarget for West Kalimantan’s APBD for the 1999/

Table 3. West Kalimantan Regional Budget (target and realised), 1999/2000

Item Target Realised(Rp million) (Rp million)

I. Revenues 256,479.19 254,630.89Carried over from 1998/99 budget 18,579.49 18,579.49Local revenues 50,746.27 54,070.29Allocations from central government and 175,285.42 170,131.10other higher government agencies

Total local government loans 11,850.00 11,850.00

II. Expenditures 256,479.19 230,149.78Routine expenditures 107,622.69 96,211.57Development expenditures 148,856.50 133,938.21

Source: Accountability Report of the Governor of West Kalimantan (2000).

Table 2. West Kalimantan GRDP by sector, 1993–1998 (percentage)

Sector Contribution (%)

1993 1994 1995 1996 1997 1998

Agriculture 25.08 24.23 23.80 23.21 23.13 24.13Mining 0.99 1.18 1.27 1.34 1.41 1.46Industry 20.04 20.30 20.00 19.61 19.42 18.57Electricity 0.59 0.63 0.69 0.74 0.78 0.86Buildings 5.64 5.82 6.28 6.52 6.46 6.26Trade 21.13 21.05 21.10 20.72 20.26 19.41Transportation 9.94 10.23 10.13 10.17 10.26 10.68Finance 7.58 6.79 6.76 6.07 7.06 7.07Services 9.01 9.77 9.97 10.68 11.22 11.55

GRDP 100 100 100 100 100 100

Source: Bappeda and BPS (1999).

2000 budget year was Rp 256.5 billion (Table 3).6

Under the centralised finance system, the mainsource of regional revenue came from centralgovernment allocations, whether directly orthrough sectoral departments.

By the end of March 2000, total revenue amountedto Rp 254.6 billion, with local revenues7

contributing approximately Rp 54.1 billion (orroughly 20%). Revenue from the production sectorsis included in central government allocationsbecause this was considered national revenue until2000, with the regions merely receiving a share ofthese profits. For example, revenues from theforestry sector, in the form of the Reforestation Fund

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(DR), Commercial Forestry Concession (HPH) feesand Forest Resource Rent Provision (PSDH) wentinto the central treasury. Prior to the introductionof Law No. 25/1999 on fiscal balancing betweenIndonesia’s central and regional governments, theregions received only a share of the PSDH revenues:30% to the province and 15% to the district.

1.2 PROFILE OF THE KETAPANGDISTRICT

1.2.1 Geography and peopleLocated in the southern part of the province, withan area of 35,809 km2, Ketapang is the largestdistrict in West Kalimantan. Much of its area(52.14%) is flat, with a gradient of less than 2%,particularly along the coast, which stretches northto south. Part of this is swampland with potentialfor rice cultivation. Meanwhile, the inland areaconsists of plains, hilly and mountainous areas,including the Schwaner Range (RePProT 1987).Much of the area is still covered in primary forestwhile the rest is under plantations and agricultural

cultivation (Table 5). The upland regions are thesources of the Melawi, Kapuas and other rivers thatflow through the district. Ketapang is divided into12 watershed divisions.

The Ketapang district is not densely populated, withonly 11 people/km2 in 1998, when there were403,010 residents. The sub district with the highestdensity is Matan Hilir Utara (49 people/km2) whilethe most sparsely populated is Sandai (4 people/km2). Population growth in Ketapang can beattributed both to natural increase and totransmigration programmes in a number of subdistricts (Sandai, Tumbang Titi, Marau, NangaTayap and Simpang Hilir) since 1990/1991. Theactual number of transmigrants arriving in Ketapangbetween 1990 and 1999 was 23,118 households or73,965 people (Ministry of Transmigration 1998).In addition, spontaneous in-migration occurred inthe form of newcomers working in the forestry andplantation sectors. The Ketapang district has arelatively young population, with 41.5% of thepeople aged under 15. Because only 48.9% are of

Table 4. RTRWK, RTRWP and TGHK land classifications, Ketapang District, 1999

Land Classification RTRWK RTRWP TGHK(ha) (ha) (ha)

1. Protected AreaNature reserve/ National park/ 269,182 292,611 292,611

Natural tourism forestProtected forest 495,411 312,629 312,629Protected moss forest 63,856 67,347Mangrove forest 273,000Marine park 26,202

Sub Total 859,068 672,587 605,240

2. Cultivation AreaProduction forest 548,011 621,345 621,305Limited production forest 622,145 870,360 870,360Conversion forest 337,349 239,659 239,659Land for other uses 1,214,327 1,176,949 1,244,336

Sub Total 2,721,832 2,908,313 2,976,660

TOTAL 3,580,900 3,580,900 3,580,900

Sources : RTRWP: West Kalimantan Provincial Bappeda (1999).RTRWK: Ketapang District-level Bappeda (1999).TGHK: Provincial Forestry Office (1999).


6

productive working age, these dependants imposea significant burden on the workers. A highproportion (66.8%) of working-age people areemployed in the agricultural sector, which includesforestry, and the rest are evenly distributed betweentrade, services and industry.

1.2.2 Land useThe land use plan for the Ketapang district reflectsthe different economic priorities of the regional andcentral levels of government. There are threeversions of the planned land use functions in thedistrict which vary based on the following factors:• Forest Land Use Consensus or TGHK (from the

central Ministry of Forestry and Estate Crops);• The Provincial Spatial Plan or RTRWP; and• The District Spatial Plan or RTRWK.

Law No. 24/1992 defines a land use hierarchywherein the RTRWK should be a refinement of theRTRWP, with greater detail and precision at thedistrict level. However, the three land use plansshow discrepancies in distribution based on theclassification of land functions (Table 4).

The major discrepancies appear for protected forest,conversion forest and land for other uses. In thedistrict plan, the area of protected forest is 182,782ha greater than that in the provincial and centralgovernment plans. This is not the result of the districtplacing a higher priority on conservation andprotection, but is caused by the use of differentcriteria for defining protected areas, as well aschanges to actual conditions on the ground.8

The areas designated for cultivated land, particularlyunder the classifications of conversion forest andland for other uses, are again greater in the RTRWKthan in TGHK and the RTRWP. This reflects thedesire of the Ketapang government to increase thearea of land that it can control and manage itselffor the purpose of regional economic development.These land classifications are more likely togenerate local revenues than production forest. Anincrease in the area classified as conversion forestand land for other uses will reduce the area availablefor production forest. In 1997, forest actuallycovered most of the Ketapang district, includingdense forest (63.4%) and secondary forest (23.2%)(Bappeda Ketapang district 1999). Forested areaswill therefore have to be used by the district toallocate land for non-forestry purposes.

1.2.3 Economy and financeLike much of the province, Ketapang’s economy isdominated by the agricultural sector, which includesforestry. This sector contributed an average of 25%each year over the period 1994–1998 (Table 6).Thereafter, the contribution from agriculturedeclined slightly (26% in 1994 became 24% in1998), partly because of increased contributionsfrom other sectors such as industry, trade andtransportation. This pattern of economicdevelopment is different to what happened at theprovincial level, where increased contributions wererecorded in the wholesale trade and inlandwaterways and sea transportation subsectors.Ketapang’s strategic position, enabling direct sealinks with Java, supports the movement of people

Table 5. Land Use in the Ketapang District, 1997

Land Use Type Area (%) (ha)

Inhabited 38,400 1.07Rubber plantations 67,500 1.89Palm plantations 13,500 0.38Oil palm plantations 58,200 1.63Rice cultivation 68,600 1.92Cultivated fields 67,700 1.89Brushwood 165,000 4.61Secondary forest 830,300 23.19Dense forest 2,271,700 63.44

Total 3,580,900 100.00

Source: Ketapang District Bappeda (1999).

7


and goods in interregional trade. This growth isclosely related to the expanding wood processingindustry and the transport of processed wood toJava.

The economic crisis and the prolonged dry seasonof 1997–1998 had considerable adverse effects oneconomic growth in Ketapang district. From 1994to 1996, economic growth increased each year,reaching its highest figure (10.15%) in 1996. In1997, when the national economic crisis started,this growth rate dropped to 7.47% and reached itslowest point in 1998 when the economy contracted

Table 6. Ketapang District GRDP by sector, 1994–98 (percentage)

Sector 1994 1995 1996 1997 1998

Agriculture 26.34 25.97 25.16 24.88 23.72Mining 4.74 6.04 1.34 6.13 4.61Industry 22.00 21.72 20.37 19.75 20.61Electricity, Use 0.20 0.26 0.31 0.35 0.38Buildings 2.99 2.95 3.45 3.41 3.47Trade 21.54 20.96 21.15 20.65 21.72Transportation 13.96 13.60 13.95 14.80 15.65Finance 4.20 4.59 4.88 5.17 5.22Services 4.04 3.90 4.24 4.86 5.91

GRDP 100 100 100 100 100

Source: BPS (1999).

Table 7. Realised Regional Budget (APBD) of Ketapang District 1997–1998

Item Total(Rp million)

I. Revenues 65,356.00Carried over from previous year’s budget 1,480.00Local revenues 1,238.00Tax/non-tax allocations 11,812.00Government, higher agency donations and aid 26,946.00Development revenues 17,780.00Cash and accounting matters 6,100.00

II. Expenditures 59,181.00Routine expenditures 35,993.00Development expenditures 17,088.00Cash and accounting matters 6,100.00

Source: Ketapang BPS (1999).

by 2.92%. Inflation over the same period rose from12.11% in 1997 to 26.57% in 1998 (based on theGRDP figures); in 1994 it had been 8.14%.The greatest contribution to the district’s revenuein 1997–1998 came from the central government,higher agency donations and aid (41.23%) (Table7). District-generated revenues (PAD) provided thelowest contribution at only 1.89%. This clearlydemonstrates the local government’s limitedcapacity to deal independently with its owndevelopment, resulting in total dependency on thecentral government and the private sector forinvestment.

2.1 PRESENT STATE OFFORESTRY ANDPLANTATIONS

2.1.1 Stakeholders and their roles

2.1.1.1 Government agenciesIn a legal and formal sense, level I, or provincialgovernments (including the government of WestKalimantan) have wide-ranging authority overforestry activities, including the exploitation, saleand distribution of forest products, and theprotection of forest resources. This authority isbased on Government Regulation No. 64/1957,which mentions ‘the transfer of some forestrymatters to level I swatantra9 regions’. However,the Basic Forestry Law of 1967 and GovernmentRegulation No. 21/197010 revoked part of thisauthority. While the provincial government did stillhave some authority, this was generally limited toan auxiliary role. Since 1970, the provincialgovernment of West Kalimantan has lost authorityover the management of strategic activities in theforestry sector, despite the fact that the forests, withall their riches, have considerable potential tostimulate the provincial economy.

Law 5/1974 on the Basic Principles underlyingRegional Administration were highly centralist andgreatly empowered the central government. Thiswas also the case with the Minister of HomeAffairs’ Decree No. 363/1977 on the Guidelinesfor the Establishment, Organisational Structureand Working Procedures of Local GovernmentOffices, which strengthened the centralgovernment’s supremacy over local government.

As a result of Decree No. 363/1977, the functionsof the Forestry Office (Dinas Kehutanan)

established by the provincial government11 had tobe brought into line with the demands of centralgovernment. The institutional authority of thisoffice was, in practice, restricted to the role setout in the provisions of the decree. Thus, from thelocal perspective, this regionally establishedforestry-sector administrative institution wasineffectual, in the sense that it could only act underinstructions from the center and had littleindependent authority. At the district level, theDinas Kehutanan was only established in 1986.There are now nine such district-level forestryoffices referred to as Forest Management Districts(Kesatuan Pemangkuan Hutan or KPH) or theirequivalents, with the status of ‘branch offices’.12

These KPHs had little real authority, despite beingdirectly involved with all matters in the field; andto a significant extent, their operations were alsorestricted by their limited facilities.

Regional Regulation No. 8/1980 declares ‘that thefunction of the Forestry Office is to be theexecutive agency of the Level I Government ofthe Province of West Kalimantan which carriesout work in the forestry sector bearing in mindtechnical directives from the Minister’. Thisreinforces the role of the office as a regionalinstitution acting merely as an ‘assistant’ to thecentral government. This situation is compoundedby the composition of the Dinas Kehutanan budget,in which 80% of income constitutes moneyallocated from the centre.

Another area where the central governmentintervenes was in the appointment of the head ofthe Forestry office. A provincial Bappeda officialexplained that, although Dinas Kehutanan wasindeed an agency under the provincial government,it was effectively still under central government’s

DECENTRALISATION OF FORESTRY AND PLANTATIONPOLICIES AND ADMINISTRATION IN WEST KALIMANTAN2

9


control. Effective management is difficult (inpractice) even when simply trying to gain accessto accurate data. These problems appear to berelated to the fact that it was an organisational unitwith a relatively high concentration of financialresources, suggesting that particular interests werebeing protected.

Strong centralised intervention in forestry mattersbecame more evident with the establishment ofthe Regional Office (Kantor Wilayah, or Kanwil)by the Ministry of Forestry. In theory, the Kanwilwas originally intended to assist in forestry matters,particularly in improving economic efficiency. Inreality, with almost identical and overlappingfunctions to the Provincial Forestry Office (DinasKehutanan), the Kanwil not only diminished thefunctions of the Provincial Forestry Office, but alsoactually created further red tape.

Even greater central control came with theformation of Technical Executive Units (UPT)13 ,responsible to the Kanwil, to manage specificforestry sectors. These included the following:• Area VI Forest Exploitation Management Unit

(BEH): to supervise the exploitation of forests;located in Pontianak.

• Area III Forest Inventory and MappingManagement Unit (Biphut): to handleinventory and mapping; located in Pontianakand assisted by three sub-Biphuts in Pontianak,Ketapang and Sintang.

• Kapuas Reforestation and Land ConservationManagement Unit (BRLKT): to rehabilitateland outside forest areas, located in Pontianak.

• Natural Resource Conservation (KSDA) Unit:previously under the Director General ofNature Protection and Conservation; locatedin Pontianak and assisted by three subsectionsin Sintang, Kapuas Hulu and Ketapang.

• West Kalimantan National Parks Unit tomanage the province’s four national parks:Gunung Palung, Bukit Baka-Bukit Raya,Bentuang Karimun and Danau Sentarum.14

It is clear from the authority, organisationalstructure, personnel support and facilities, that thecentral government’s priorities for forestmanagement are focused on exploiting forestproducts rather than on conserving andrehabilitating forest areas. The Head of KSDA

noted that an operational conservation area in WestKalimantan that is almost as large as the island ofJava is managed by a sub-UPT with relatively low-level staff15, while the sector exploiting forestproducts is managed by an UPT with more seniorofficials. As a consequence, the small NaturalResource Conservation Unit has had little successin handling the frequent cases of illegal logging inthe Kendawangan Nature Reserve or the goldmining in the Mandor Tourism Park.

A similar situation has arisen in the agro-industrialplantation sector, where the authority of theprovincial government is severely limited in termsof both determining activities and exercisingcontrol. For example, in order merely to revokethe licence of an entrepreneur or investor who hasfailed to undertake required investment, arecommendation from an official in the centralgovernment must first be obtained. This is becausethe legal provisions state that an investor receivesa plantation license from the central governmentand not the local government.

2.1.1.2 Business and investmentThe utilisation of forests in West Kalimantan,based on Government Regulation No. 21/1970,is carried out by the private sector under thesystem of Commercial Forestry Concessions(HPH) and Harvest Concession for ForestProduct (HPHH). As soon as the regulation wasissued, entrepreneurs adopted strategic economicpositions in order to exploit the forests. However,by taking this stance, the business community hasfailed to make any significant contribution to thequality of life of the people of West Kalimantan,or to its economic growth. Similarly, therelationship between the central and regionalgovernments is limited, as reflected in the smalldistribution of funds from Land and Building Tax(PBB), Forest Product Fees (IHH) andReforestation Fund (DR). At the time of thisstudy, the respondents from West Kalimantangovernment strongly felt that the regulations andpractices relating to the exploitation of forestareas favoured only big business and the centralgovernment.

However, the business community offers adifferent assessment. Business people holdingHPH timber concessions believe that their


10

exploitation of the forests has made a realcontribution to the overall economic activity inWest Kalimantan. For example, people in remoteforest areas have benefited from the arrival of theconcessionaires through access to the employmentmarket that is created by their activities. The sameapplies to the programme concessionaires havecalled ‘Rural Development’, which they claim hasimproved the lives of those living in and aroundthe HPH area. Another benefit they put forward isthat remote areas have become less isolated as aresult of the road network constructed throughoutthe forests.

In year 2000, to demonstrate its commitment todeveloping a people-based economy, the Ministryof Forestry and Estate Crops transferred theauthority to issue HPH timber concessions for areasup to 10,000 ha to the Governor and for TimberClearance Permits (IPK) for areas up to 100 ha tothe Bupati16. Although the Director General ofForest Production subsequently postponed theenactment of this decree, the provincial and districtgovernments had already acted on this authority anddecided to continue. This action was partly relatedto establishing a framework to self-finance regionalautonomy and partly based on the demands of localpeople. As a result, the Bupati of Sintang districtcontinued to issue 100 ha HPHH permits tocommunity groups, even after the Ministry hadsought to postpone the transfer of such authority.The governor did not prohibit such actions and, inOctober 2000, he also issued a decree17 regardingHPH of less than 10,000 ha.

There are some problems related to the issue ofthese HPHH permits. In West Kalimantan, whenlocal people have obtained the rights to harvestforest products but do not have the capital orequipment to operate the HPHH area, they haveteamed up with timber companies holding HPHconcessions under a ‘profit-sharing’ arrangement.In this way, a few well-established big players willcontinue to dominate forest utilisation in WestKalimantan even under decentralisation. Despitethe provincial government’s plans for forestexploitation to contribute to regional development,it is clear that HPH activities and theaccompanying wood industries have alreadyexceeded the capacity of the forest areas. Anofficial of the Regional Office of the Ministry of

Industry and Trade explained that the plywoodindustry is experiencing problems with theprocurement of raw materials due to log scarcityin some areas. The industry is being forced tooperate below capacity and a number of businesseshave already closed.

Similar conditions are reported in the sawmillingindustry of West Kalimantan, following a rapidincrease in the number of mills established withoutdirect links to a HPH timber concession holder ora logging company holding an IPK (TimberClearance Permit). In such a climate it is hardlysurprising that the national parks of the provinceare being seen as alternative sources of timber.One member of the provincial legislative assembly(DPRD) even believes that some of these interestsregard the national parks as the only logical optionleft open to them to support a range of operations,including raw materials for the wood industry,despite the fact that this breaks formal laws.

2.1.1.3 Local communities and adatcustomary rights

Based on the historical origins and local traditions,many local communities or adat (customary law)community groups living in and around the forestsclaim to be the legal and authentic heirs to themanagement and utilisation of forest resources.Indeed, before the existence of the HPHconcession system, forest products had long beenutilised by adat community groups, both forexchange and consumption. Adat leaders in manyareas claim that the forests and their communitiesare inextricably linked, such that it is impossibleto separate the people from their source oflivelihood whether from an economic, political orcultural standpoint, especially as this relationshipalso has a sacred religious and cultural value.

In many areas, the issuance of timber concessionlicences to the private logging companies has hadtragic consequences for the people around theforest. Their use of the forests has been severelyrestricted and, not infrequently, even deniedcompletely. This was particularly true during the1990s, with the establishment of IndustrialTimber Plantations (Hutan Tanaman Industri,HTI) and large-scale agro-industrial plantations.At that time it became clear that the sources oflivelihood for the community groups in and

11


around the forests were disappearing rapidly.Moreover, many of these communities havebecome socially isolated. Community leaders inthe Ketapang district explain that their socialexclusion is reflected by their declining economicstatus. Originally the owners of the land, theyhave become labourers selling their services tothe big companies who have come onto their landto exploit the forests.

Where large-scale private plantations surroundvillage dwellings, these communities becomeenclaves in the sense that the socio-economicneeds of the surrounding people are not integratedfunctionally into the plantation company’soperations. Aware of this situation, the centralgovernment issued a decree requiring plantationsto develop investment schemes that includecommunity cooperatives as shareholders.18

However, for the greater part of the regionalcommunity, the provisions contained in this decreeare not the solution. For plantation investors, it isvery difficult to find a cooperative capable ofacting as an equal partner. Officials at theProvincial Plantations Office, for example,claimed that they were ‘forced’ to be innovativeand ask investors to draw up a formal, witnessedcontract indicating willingness to facilitate the

establishment of a cooperative involving localpeople as their business partners. The cooperativeinstitution formed would be a Members’ PrimaryCredit Cooperative (KKPA) that would enablelocal people to own a plantation. This would bedeveloped by a plantation company, which wouldprovide the necessary loans to run the project.

2.1.2 Forestry and plantations

2.1.2.1 ForestryThe issuance of Government Regulation No. 21/1970 marked the beginning of the intensiveutilisation of the forests in West Kalimantan bystate-owned enterprises, private sector investorsand joint venture companies.19 The first HPH inWest Kalimantan, totaling 538,500 ha, wasobtained by PT. Jamaker Kalbar Jaya, a companyowned by the Indonesian Armed Forces.20 Thisconcession ran the entire length of the borderbetween Indonesia and Malaysia and was officiallyjustified by ‘national security considerations’.

By March 1998, 71 HPHs had been issued for WestKalimantan, covering 7,136,000 ha. By March1999, 17 of those licences were inactive; theremainders were either still active or in the processof renewal as state-owned enterprises, joint

Table 8. HPH Timber Concessions in West Kalimantan, 31 March 1999

Item Number Area(ha)

HPH Decisions, issued 71 7,136,000HPH Decisions, still active: 33 4, 035,400Continuing 19 1,797,300Joint ventures with state-owned enterprises 4 446,000Renewed 2 832,500Currently in extension/renewal process 8 959,600

Decrees on HPH awarded to state-owned enterprises: 21 1,980,000PT. Inhutani II 20 1,784,000PT. Inhutani III 1 196,000

HPH Decrees, not active: 17 1,120,600Revoked 11 673,500Expired and not renewed 5 388,000Returned to Minister of Forestry and Estate Crops 1 59,100

Source: West Kalimantan Forestry Office (2000).


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ventures or private companies (Table 8). Total sizeof this area covered 63.17% of total forest in WestKalimantan, categorized as a cultivation area inthe TGHK (Table 1).

The granting of HPH timber concessions to privatesector investors has resulted in the rapid growth ofwood processing industries, especially withIndonesia’s 1985 ban on log exports. The first woodprocessing company to operate in the province wasthe plywood producer, PT. Rimba Ramin,established in 1971 with an annual productioncapacity of 27,000 m3; this company remains activetoday (Ministry of Industry and Trade 1998).Currently active industries include: 17 plywoodmills (with a capacity of 1,500,950 m3 per year);42 sawmills (631,680 m3 per year); and 60woodworking businesses (1,270,798 m3 per year).These industries can produce 2,664,537 m3 ofprocessed wood products consisting of: plywood(977,953 m3); sawn timber (131,206 m3); moulding(81,939 m3); dowel (3,902 m3); blockboard (69,070m3); wood working (6,015 m3); particleboard(182,280 m3); fancy plywood (16,239 m3); veneer(1,037,855 m3) and other products (159,074 m3).

This rapid growth in the capacity of the woodprocessing industry has outstripped the supplyof raw materials, which is declining steadily. Thelog production target for 1999/2000 was1,252,560 m3, of which 896,965 m3 was fromHPH Annual Management Plans, 54,967 m3 wasfrom Forestry Work Programmes21, while327,628 m3 was from Timber Clearance Permits(IPK). The actual wood felled during the year was704,828 m3 (56.27% of the target). This meantthat production fell far short of the capacity ofthe wood processing industry. The total capacity

of the wood processing industry is 3,403,428 m3

per year (West Kalimantan Regional Forestry andEstate Crops Office 2000). The province’s woodprocessing industry partially filled this deficit byobtaining 1,690,038 m3 of logs from outside theprovince22 to meet its effective demand of 3.4million m3. This indicates that more than 0.8million m3 timber was supplied from illegalsources.

A national shortfall in industrial wood raw supplyled the central government to institute the HutanTanaman Industri (HTI) development policy in theearly 1990s.23 In West Kalimantan the developmentof HTI plantations began in 1991/1992, with theallocation of large forested areas for conversion totree plantations. By 1999, 887,040 ha of forestlandwas reserved for HTIs, although the actual areaplanted was a mere 117,179 ha or 13.21% (WestKalimantan Kanwil Office 2000). This low figureis partially a result of land conflicts with the localcommunities. It also reflects the fact that it iscommon for companies that have been awarded HTIconversion permits to not actually carry out anyplanting but merely harvest the timber from theforested areas allocated.

2.1.2.2 Agro-industrial tree plantationsThe West Kalimantan provinical government hasalso prioritised the development of agro-industrialtree plantations to maximise the potential of theprovince’s agro-ecosystem. The traditional cropwidely grown by the local people, is rubber. A1991 study by Institut Pertanian Bogor (IPB) inWest Kalimantan showed that 5,200,000 ha of landwas suitable for agricultural development. Of this,2,500,000 ha was for plantations; this is reflectedby the allocation in the Provincial Spatial Plan

Table 9. West Kalimantan Agro-industrial Plantations by ownership

Ownership 1997 (%) 1998 (%) 1999 (%)(ha) (ha) (ha)

Community plantations 704,474 86.23 717,405 82.56 709,965 80.02State-owned

large-scale plantations 28,557 3.50 31,100 3.58 29,230 3.29Private large-scale plantations 83,961 10.28 120,442 13.86 148,079 16.69

TOTAL 816,992 100 868,947 100 887,274 100

Source: West Kalimantan Plantations Office (2000).

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(RTRWP). The types of crop recommended by thisstudy were rubber, kelapa dalam24, hybrid palm,oil palm, coffee, pepper and cocoa. By early year2000, there were 887,274 ha (27% of reservedplantation area) (Table 9), while a total of 125companies had been issued with licences inprinciple by the West Kalimantan ProvincialPlantations Office, covering a land area of 1.17million ha. It is interesting to note that landallocated for plantations by the governor exceeds(3,319,328 ha, the land allocation in the RTRWP)by 819,328 ha (Table 10). The introduction of thePeople’s Plantation Development Project (PPKR)in 1979–1980, funded by the World Bank, was thefirst plantation project in West Kalimantan. Thiswas carried out under a system of ProjectExecutive Units, whose main job was to reviveand expand the area of peoples’ rubber plantationsby 13,000 ha; these activities were restarted in1985–1986 with a target planting of 30,000 ha.25

The second system used was the PIR scheme(Perkebunan Inti Rakyat or People’s CorePlantations), which started in Ngabang in 1980–1981. At that time, oil palm was becoming morefamiliar to the people as a result of aid from theWorld Bank’s NES V (Nucleus EstateSmallholder) project. Plantations covering 14,500ha were started, consisting of core plantations of3,500 ha and plasma plantations of 11,000 ha for5,500 participating families. With further supportfrom the World Bank’s NES VII, a 15,000 harubber plantation was developed as a project

executive company in Monterado, Sanggaudistrict; it consisted of 3,000 ha of core plantationand 12,000 ha of plasma plantation for 6,000participating families. The PIR system remains inuse both in its original form and in conjunctionwith the transmigration program. TheTransmigration-PIR system was first implementedin 1985–1986 in Kembayan, Sanggau district, byPTP VII with 15,000 ha of land for 6,000participating families.

The Private Large-Scale Plantation (PBS) systemwas first used in 1986 with cocoa crops in Toho,Pontianak district. By December 1999, theGovernor had issued 159 licences for PBSs in WestKalimantan, with a total area of 2,394,233 ha.Meanwhile, 100 PBS companies had received‘plantation business clearance in principle’documents for 993,983 ha. As of 2000, the statusof these mostly oil palm PBSs was as follows: 54had planted 91,231 ha; 19 were at the survey stage;five were at the pre-survey stage; and 11 were notyet at the pre-survey stage. The operating licencesof the other 24 PBSs may be revoked because theyare assessed as having neglected 15,000 ha of land.The amount of land allocated for the latter PBSs isactually 268,692 ha (West Kalimantan ProvincialPlantations Office 2000). Land allocated toplantation in West Kalimantan (Table 10) wasdominated by PBS that covered the total area of71.91%; the remainder were PIR-Bun (peoples’ coreplantation), PIR-trans (transmigrants’ coreplantation), and PIR-KKPA (member’s primary

Table 10. Land Allocated to Plantations in West Kalimantan, 2000

District PBS PIR- PIR- PIR- PTP Total Actual(ha) BUN Trans KKPA (ha)

(ha) (ha) (ha)

Pontianak 534,839 41,700 33,500 12,000 0 622,039 210,547Sambas 294,892 64,500 37,830 0 0 397,222 167,340Sanggau 408,400 30,000 207,850 85,550 24,000 755,800 236,540Sintang 424,862 31,500 22,800 28,500 0 507,662 110,161Kapuas Hulu 299,250 0 0 0 0 299,250 30,621Ketapang 431,980 0 144,225 171,150 0 747,355 131,165

TOTAL 2,394,223 167,700 446,205 297,200 24,000 3,329,328 886,374

Source: West Kalimantan Plantations Office (2000)Notes: PBS = private large-scale plantations; PIR-BUN = people’s core plantations;

PIR-Trans = transmigrants’ core plantations; PTP = state-owned enterprisesPIR-KKPA = members’ primary credit cooperative-people’s core plantations;

credit cooperative-people’s core plantation) of totalarea 27.37% and PTP (State-owned enterprises)(0.72%). The fact that PIR (People’s NucleusPlantation) had smaller area than PBS indicated thelow level of local communities’ participation in thedevelopment process of modern plantation and informal forest management in West Kalimantan.

Much plantation ownership in West Kalimantanis still in the hands of local communities (Table9). However the declining percentage highlightsthe priority given to big businesses, whether state-owned enterprises, Indonesian private sectorcompanies or foreign investors. Many informantsindicated that they anticipate conflicts will ariseif local people find it increasingly difficult to gainaccess to plantation development because land isonly being allocated to big businesses.

Rubber remains the most important plantation crop,both on community and private plantations, with887,274 ha used for rubber plantation. This isfollowed by kelapa dalam with 93,224 ha, hybridpalm with 11,889 ha, oil palm with 290,732 ha,cocoa with 8,629 ha, pepper with 4,377 ha, coffeewith 9,930 ha, and other crops with 7,364 ha.

Many entrepreneurs and provincial and governmentofficials interviewed for this study asserted thatinvestment in the plantation sector is hampered bylegal provisions that oblige investors to use thecooperative system.26 This system is perceived asbeing Java-biased, because the capacity of humanresources in West Kalimantan is inadequate for thiscooperative system to be effective, and because ofthe province’s low population density. Additionalfactors that have constrained investment include alack of capital, high interest rates, limited amountsof palm oil seed, and overlapping regions and landallocations. Moreover, the administrative processesthat entrepreneurs have to follow to rehabilitate ex-forest areas are long and complicated. This hasbecome a frequent excuse for many investors simplyto leave these areas once the timber is harvested.Many informants also reported that it is not unusualfor entrepreneurs to apply for a plantationdevelopment permit when they are really onlyinterested in the IPK permit, which they can thenuse to freely exploit the wood. They have no plansto rehabilitate the land once they have extracted thetimber.

2.1.3 The economic role of theforestry and plantation sectorThe forestry subsector remains one of the mostdependable contributors to the West KalimantanGross Regional Domestic Product (GRDP), eventhough it is relatively small in absolute terms. In1999, forest utilisation in West Kalimantan resultedin total Provisi Sumber Daya Hutan, or ForestResource Rent Provision (PSDH) of Rp 47 billionand reforestation funds of nearly Rp 60 billion andUS$1.6 million. Based on the prevailing legislation,West Kalimantan received only 30% of totalPSDH—almost Rp 14 billion (non-tax profitdistributions)—whilst it was reported that all thereforestation funds went to the central government.

Meanwhile, plantation activities were increasing,with a total production of all crop types in 2000 of573,000 tons. Of this, 129,000 tons with a value ofUS$69 million were exported. The total contributionof plantations to the 1999 GRDP was Rp 497 billion(at 1993 prices), with a growth rate of 9.49%.

Clearly the forestry and plantation sector remainsa major contributor to the regional economy. Inaddition, these two subsectors play a strong rolein supporting the growth of other sectors, such asindustry and trade, and also attract new investorsto the province. Investment activities have apositive impact on the GRDP. Domesticinvestment in West Kalimantan up to December1999 amounted to Rp 3 trillion, with 266companies and 204 projects employing 76,018people. The largest investment was in theplantation subsector where 68 companies investednearly Rp 2 trillion, followed by the forestrysubsector and the wood industry. Meanwhile,foreign direct investment reached US$125 millionin 62 projects employing a total of 8,729 people.

2.2 DECENTRALISATION OFTHE FORESTRY ANDPLANTATIONS SECTOR

2.2.1 Conflicts between stakeholdersThe extremely high potential of West Kalimantan’sforest resources has resulted in a three-way tug-of-war among the adat community groups, thegovernment and the business community, at bothregional and national levels. The most striking

14


illustration is given by attempts by some intereststo convert land designated as part of the ForestEstate under the Forest Land Use Consensus(TGHK) Spatial Plan so that it can be used fornon-forestry activities. The multitude of problemsand challenges means that many forestry issuescan no longer be dealt with at the sectoral level.Forestry problems in West Kalimantan haveescalated into a complex dilemma to be faced atlocal, district/provincial and national levels. Inareas like the prevention of forest fires andconservation of national parks, they have alsobecome matters of concern to the internationalcommunity. The conflicts among stakeholderspartly were caused by weakness of formalaccessibility of local communities and localauthority to forest resources. These conflicts wereone of the indicators of de-facto decentralisation(informal) or indeed indicated that there was a needfor decentralisation in this area.

2.2.1.1 Forest area land use andmanagement

The provincial government has been and willcontinue to be forced to carry out non-forestry sectoractivities on land classified as ‘forest’, particularlyon the TGHK map. Law No. 24/1992 gives regionalgovernments the authority to re-classify the landuses in their regions through the Provincial SpatialPlan (RTRWP). However, the compilation of thisplan must somehow take into account the differentinterests of the provincial and district governmentsand the forestry sector. It is often a long andcomplicated process to officially change the land’sfunction from its original status as part of the ForestEstate area (Kawasan Hutan), even though theactual utilisation of this land has frequently alreadychanged on the ground. This creates problems forthe provincial and district governments because ofthe strict limitations on the kind of activity allowedon land within the Kawasan Hutan. For this reason,provincial and district governments and relatedoffices and agencies believe a new agreement isnecessary by creating a provincial-scale‘harmonised’ map which will be the basis for allland use matters. At the time this field research wascompleted, the process of creating the ‘harmonised’map, combining TGHK and the RTRWP, had yet tobe completed.

A provincial Bappeda official commented that the

Governor has, on several occasions during the lastfew years, acted on his own initiative andoverridden all existing legal regulations, forexample, by allocating more land for plantationinvestment than was available for that purpose.This kind of action has been prompted by theprovincial government’s need for a rapid increasein regionally-generated revenues (PAD).

It is interesting to note that the province is notinvolving the district governments or any sub-offices in the preparation of the new ‘harmonised’map. In the context of decentralisation and regionalautonomy, this promotes suspicions that there is aprovincial-level interest (as well as a centralgovernment one) in retaining authority over forestadministration. This notion is supported by the factthat the transfer of authority over forestadministration to the district governments is notexplicitly mentioned in Government RegulationNo. 25/2000, creating the opportunity for drawn-out disagreements about decentralising authorityin forestry matters.

Officials at the national government’s RegionalForestry and Estate Crops Offices (or Kanwil) andat the provincial government’s Dinas Kehutanan,generally believe that the time is not right forforestry matters to be fully transferred to thedistrict-level government because of humanresource limitations. For this reason, these twooffices recommend that decentralisation would bemore effectively carried out in stages, based onthe district government’s capacity. Officials in theProvincial Forestry Offices tend to reject the ideaof forming an autonomous forestry office at thedistrict level, proposing only Technical ExecutiveUnits at the subdistrict (Kecamatan) level. Underthis arrangement, the district government wouldstill have no authority over forest management.

2.2.1.2 Protected areasThe weakness of the provincial government in thedecentralisation process is also displayed in thecase of the protected forest area in Bukit Baka inthe Sintang district. The provincial governmentcould do nothing when the Kanwil included a partof this area as a HPH timber concession. Provincialauthorities tried to uphold the area’s status asprotected forest by referring to the existing legalprovisions. However, the central government

15



16

ultimately came down in favour of the HPHconcessionaire, although there was anaccompanying agreement that this overlap areawould be returned to its status of protected forestafter two years. This is just one example amongmany of the weak position of the provincialgovernment when dealing with the centralgovernment.

2.2.1.3 The timber industryA careful assessment of the soaring number ofsawmill businesses shows there are conflictsbetween sectoral interests, i.e., between theForestry offices and Industry Offices at provinciallevel. The Forestry Offices tend to limit the numberof large-scale wood businesses with HPH timberconcessions and IPK wood utilization permits sothat the forest management process willtheoretically be more accountable. The IndustryOffices tend not to take HPH/IPK decisions intoaccount when granting a commercial licence for awood business. Their sectoral interest is to expandindustrial development as much as possible. Thescarcity of raw materials resulting from a sharpincrease in the number of these wood processingindustries is one factor behind ‘illegal logging’, bothby HPH concessionaires (within and outside theHPH areas) and by non-HPH entrepreneurs whoorganise the local people as loggers.

2.2.1.4 Illegal loggingConcern has been mounting in a number of quartersabout the rapid increase in illegal logging in WestKalimantan, much of which is carried out by thelocal people, many of whom are organised andbacked by the private sector. The provincialgovernment believes that without local policiescapable of dealing with the situation, these illegallogging practices pose a serious threat to forestpreservation. It sees illegal logging as a result oftwo main factors: 1) the push factor created by animbalance in access to production forest betweennon-local HPH concessionaires and the localpeople; and 2) a pull factor of high demand forproducts from wood industries, both within theprovince and outside, particularly Java and Malaysia(Sarawak). At the same time, neither the provincialor district governments have the capacity to controlillegal logging without the authority to regulateforest management (e.g., issuance of HPHs) andthe wood trade (e.g., transportation licences). The

central government formally holds this authority,but legislation is such that the regional forestryofficials- who make the decisions- appear to be ableto freely obtain special treatment as individuals.Consequently, they are likely to favour continuationof the old system of control.

It should be noted that while West Kalimantan hasthe capacity to produce 2.4 million m3 of wood, amember of the provincial legislature believes abouthalf this capacity is supplied through ‘illegallogging’. It is also believed that Malaysia issupplying the international market withunprocessed timber from Indonesia, particularlyfrom West Kalimantan. This is despite a formalban on Indonesian log exports.

Generally, officials of the provincial governmentinterviewed for this study seemed to be largely‘unconcerned’ by illegal logging. They proposethat the practice actually constitutes a form of localresistance to forestry policies that are unfriendlyto the local economy of the area. Illegal loggingdoes not directly contribute to regional revenues(PAD), but indirectly, the multiplier effectsgenerate growth in other sectors like transportationby (land/inland waterway/sea), hotels, wholesaletrade, and small scale wood industries, as well asinformal employment and business activities.Since these sectors contribute to the local economythrough contributions to GRDP and theemployment of local people. The local governmenttends to overlook illegal logging. Moreover, thecosts of eradicating illegal logging cannot becompared to the economic benefits directlyreceived by the local government.

2.2.1.5 State-owned enterprisesResponsibility for the rehabilitation of former HPHforest areas has been delegated to PT. Inhutani II, astate-owned enterprise (Badan Usaha Milik Negaraor BUMN). However, a number of subdistrict headsin the Ketapang area assert that Inhutani is actuallycontinuing to exploit the remaining forest in theseareas, leading to calls for its operating permit to berevoked. Several officials interviewed for this studyargued that the central government (through itsBUMNs) is actually participating in illegal loggingon a major scale.

Members of the Provincial Legislative Assembly

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(DPRD) have also highlighted the processwhereby PT. Inhutani II was assigned the rights torehabilitate former HPH areas and thensubcontracted its management rights to otherparties. These other parties were apparently onlyinterested in making a profit. They acted like newHPH concessionaires, extracting all of theremaining wood from areas allocated to them. OneHPH concessionaire explained that PT. InhutaniII had neither the financial nor physical capacityto rehabilitate these areas; it had a file full oflicences and permits that it was sold tosubcontractors. Provincial and district officialsinterviewed for this study claimed that Inhutani IIcan be regarded as having failed to meet itscommitment to reforestation; and that it was reallyonly seeking financial profits.

2.2.1.6 Incentives and disincentivesWhen 60% of the Kapuas Hulu district wasdeclared a conservation area, a general ban wasplaced on extracting timber and processing woodproducts within it. The head of the WestKalimantan KSDA (Natural ResourcesConservation) Unit describes the reaction of localgovernment officials and people as one ofperceived injustice—they saw that other districtswere gaining greater benefits from their forests.By declaring the district a conservation area, thepotential of the forest areas to contribute to PADwas seriously diminished. This situation must beresolved before a satisfactory response can bemade to demands such as that by the head of theKapuas Hulu district for the amount of protectedland to be reduced so that its forest resources canbe exploited. This will necessitate cross-districtcooperation in creating an incentive system thatsuits the Kapuas Hulu district, which in this caseacts as the ‘steward’ for preserving the flow of theKapuas River.

2.2.2 Indicators of decentralisationThe reversal of the central-regional imbalance incontrol over forest management is alreadybecoming apparent. An important milestone waswhen governors and heads of districts were giventhe right to issue HPHH (Hak Pemungutan HasilHutan or Forest Product Harvest Concessions),which permit people to extract timber on a small-scale. In addition, adat/local community groupsare being recognised as the main stakeholders in

forestry affairs. This is directly attributed to theefforts of non-governmental organisations(NGOs) in West Kalimantan, who have foughthard for the rights and empowerment of adatcommunities in natural resource management.These efforts have been ongoing for some time,beginning even before regional autonomy andLaws 22 and 25 of 1999. This increased power isreflected, for example, by local officials havingthe opportunity to participate in drawing upregional maps of the local area and itsresources—an initiative by a local NGO. Theresulting map can be seen as a symbol of thenormative authority of the communities over theregulation and utilisation of their own naturalresources. The people in the hamlet of Sahamp,Pontianak district, already have their ownparticipatory map of the area, and they made acollective decision not to allow oil palm plantingin their area.

Decentralisation will also bring significantadministrative changes in the institutional andorganisational sectors. The power of the Kanwil,as representatives of the central government, wasgradually reduced, leading to the ultimate closureof these agencies in December 2000.

In the plantation sector, decentralisation has resultedonly in a backlash against the provisions in DecreeNo. 107/1999 dealing with systems suitable forplantation development. The decree stipulates thatthe local community must be involved in large-scaleplantation businesses through investment in partnercooperatives specifically set up for such a purpose.In reality, these conditions are hard-to-implementin the interior of West Kalimantan because thegeographic distance between inhabited areasinhibits implementation. There are other structuralproblems too, such as the relatively low level ofskilled human resources available. One solution tothis problem, according to provincial-level DinasPerkebunan officials, is to require potentialentrepreneurs to draw up a legal agreement that theywill, at some time in the future, set up a partnercooperative as intended under central governmentpolicies. By merely producing this document, anentrepreneur will be judged to have met therequirements of the decree, even though there is noguarantee that the partner cooperative will ever beformed.

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2.2.3 The provincial government’sresponse to the decentralisationprocess

At the time this report was written, the process forimplementing regional autonomy was not clear,because there had only been one regionalregulation detailing the functions and duties of theprovincial government. By the end of 2000, theprovincial government had made an inventory ofthe areas in which it held authority, and hadconsulted with the district governments over theirresponsibilities. In the struggle between conflictinginterests, there are clearly opportunities forofficials at the provincial level to assume (andabuse) responsibilities that they believe the districtcannot handle effectively. In other words, powersthat should be held by the district government willremain in the hands of, or will be taken over by,the province. These matters particularly concernfinancial issues.

The most significant question of concern toprovincial government officials is whether andhow the province uses its sources of local revenues(PAD) to stock the regional treasury. However,officials in centrally administered provincialoffices had few of the same concerns, despite yearsof experience in West Kalimantan.

The discrepancies between areas set aside forplantations by the centrally defined TGHK anddata issued by the provincial governor’s officehave been an incentive for the provincial anddistrict governments’ Spatial Plans to stronglypromote regional growth, and hence maximise itsPAD. The governor’s data specifies 3.3 million haas reserved for plantations compared to 2.5 millionha in the Provincial Spatial Plan. Decentralisation(and hence access to a greater area) will allow theprovince to attract greater numbers of plantationinvestors, especially in oil palm. Some communitygroups explain that subdistrict heads actually wantto attract investors who are interested indeveloping and/or rejuvenating community-basedrubber plantations through partnerships. In part,this is because district governments do not have

the funds to invest in projects to rejuvenate localpeople’s rubber plantations.

In order to resolve this division of authority,provincial officials took the stance that forest andplantation management should be devolved to theregions as a complete package. Under such a plan,decentralisation would not only mean the delegationof authority over forest management but also anaccompanying, appropriate share of the finances(especially reforestation funds) as compensation forthe loss of forest resources. Thus, the provincialgovernment would be given ‘ownership to forestrights’. Provincial officials argued that this wouldensure that decentralisation of administrativeauthority from the central government to the regionswas not merely a repackaging of the old practices,which were viewed by informants as exploitingforest resources for maximum profit. Instead, theyfelt that, if properly carried out, decentralisationwould focus more on rehabilitating damage toexisting forest areas. They maintain that, if thecentral government does not accept this goal fordecentralisation, district governments will try tomaximise exploitation of the forestry, plantation andwood industry subsectors as dependable sources oflocal revenues. This would result, they furtherconclude, in forest degradation.

With the central government’s transfer of the rightto grant licences for Community ForestryConcessions (Hak Pengusahaan HutanKemasyarakatan, or HPHKM) to the provincialand district governments, there is concern thatcommunity groups, which are given these rights,will be unable to finance their operations, and willtherefore be forced into inequitable partnershipswith large-scale HPH entrepreneurs. They wouldthen make an agreement, as a cooperative, to ‘give’their HPHKM to a large-scale concessionaire, eventhough the latter is legally obliged to share its gainsfrom its wood products with the cooperative. Thus,if decentralisation policies are not accompaniedby close scrutiny of activities on the ground, theymay prove to be redundant, despite the fact thatmore members of local community groups are ableto legally enjoy the spoils from forest resources.

3.1 FORESTRY ANDPLANTATIONS

3.1.1 Stakeholders and their rolesThere are three groups of stakeholders in forestryand plantation activities in the Ketapang district:government agencies, industry enterprises (privateor state-owned) and local communities. Each ofthese groups has its own role in the context offorestry and plantation activities, reflecting theirdifferent interests. These may either co-exist inharmony, or come into conflict with one another.

3.1.1.1 Government agenciesThere are two categories of government agencieswith interests in the forestry and plantation sectorin the Ketapang district. The first covers thetechnical (sectoral) agencies that directly administerforestry and plantation activities; while the secondincludes those agencies that are not directly involvedin, but benefit from, or provide limited services toplantation and forestry activities.

Throughout 2000, all the technical (sectoral)agencies directly involved in forestry and plantationactivities were under the authority of the provincialor central governments. At the time research wasconducted for this study, there was no autonomousforestry and plantation agency in the KetapangDistrict that was authorised to make decisions inaccordance with the district government’s policies.The Technical Executive Units (UPT) that directlyimplement policies are described below:

1. Forest Management District (KPH) Office:an agency of the provincial Dinas Kehutanan thatis located in the district to assist with supervision,protection and development of forestry activities.

The Ketapang forest area is divided into two KPHoperational areas: Ketapang KPH, south of thePawan River (nine subdistricts), and Batu amparKPH, in the Pontianak district, north of the river(five subdistricts).

2. Plantations Branch Office: operates under theProvincial Plantations Office to assist in thesupervision and development of plantationactivities in the Ketapang District. As with theKPH Office, it acts merely as a support agencyand is unable to make administrative decisionsrelated to plantation activities.

3. Gunung Palung National Park (TamanNasional Gunung Palung, TNGP Authority: aspecial UPT responsible to the Director Generalof Nature Protection and Conservation (PKA). TheTNGP Authority is located in the city of Ketapang(not within the national park boundaries).

4. Sub-Management Unit for Forest Inventoryand Mapping (Sub-Biphut): an agency under thedirection of the Pontianak Biphut that inventoriesand maps forest in the Ketapang district.

5. Natural Resource Conservation (KSDA)Subsection: duties cover the conservation ofnatural resources in the protected areas of theKetapang district. It is responsible to the provincialKSDA unit.

In theory, the head of the district has coordinatingauthority over all agencies in a region. However,these executive offices feel more responsible tothe policy guidelines issued by their supervisingbodies. This is because almost all operating costsare paid by these bodies (central budget and level

3 DECENTRALISATION OF FORESTRY AND PLANTATIONPOLICIES AND ADMINISTRATION IN KETAPANG DISTRICT


20

I regional budget). The level II (district) regionalbudget allocates no expenditure to the UPTs,leaving the district head in a weak bargainingposition when dealing with these agencies. As aresult, the formal role of the Ketapang districtgovernment in matters of administration, policy-making and forestry and plantation managementhas become peripheral. At the time this study wasconducted, it was difficult to predict whether thecosts of financing the sector would be theresponsibility of the regional areas (province/district) or would remain with the centralgovernment. No clarification of policy wasavailable at the time this report was written.

This peripheral standing is also clearly reflectedby the limited authority of those technical and non-technical agencies in the local government that areindirectly involved in the sector by using andproviding services to forestry and plantationactivities. These bodies include:

1. National Land Agency (Badan PertanahanNasional, BPN): issues companies with locationpermits for Commercial Forestry Concessions(HPH), Timber Plantations (HTI) and plantationsbased on the instructions from the head of thedistrict. District heads have been authorised toissue these licences since the October 1993 PolicyPacket (Pakto 1993) was first implemented; priorto this, the Governor was the issuing authority.

2. District Revenues Office (Dispenda): theregionally autonomous office for identifying districtrevenues (PAD) through district taxes and levies.In the case of forestry activities, Law No. 18/1997determined PAD sources to include business taxes,business levies and wood-piling services.

3. Regional Development Planning Board(Bappeda): responsible for compiling the DistrictSpatial Plan (RTRWK).

4. Regional Industry and Trade Office (DinasPerindustrian dan Perdagangan)

3.1.1.2 Private and state-owned companiesThere are a number of private and state-ownedcompanies in the Ketapang district that areinvolved in the forestry and plantations sector. Theactivities of these companies are closely related.

1. HPH concession holders are private companiesgiven rights by the national government to logwithin an assigned timber concession. From theperspective of district officials and localcommunity figures, these HPH companies controlthe greatest part of the Ketapang forest area.

2. PT Inhutani II was specifically set up toundertake rehabilitation programs for ex-HPHforest areas, that is, areas relinquished by or takenaway from HPH-holders by the Ministry ofForestry. In addition to reforestation activitiesInhutani II also carries out timber extractionthrough joint ventures and subcontracts. It isdirectly under the authority of the Kanwil RegionalForestry and Estate Crops Office.

3. HTI companies are private companies thatoperate industrial timber plantations. There arethree HTI systems in the Ketapang district: thePatungan (joint venture) HTI, the TransmigrationHTI, and the Murni (sole operator) HTI.27

4. Plantation companies: there are now 12plantation companies operating in the Ketapangdistrict, all producing oil palm. Five are People’sCore Plantations (PIR); seven are Private NationalLarge-Scale Plantations (PBSN) consisting of fourpure PBSNs and three Members’ Primary CreditCooperative (KKPA) PBSNs.

5. Wood processing industries include theplywood, sawmilling, moulding, and planingindustries. The majority of these industries in theKetapang district are sawmills. There are 52 woodprocessing industries registered with the KetapangKPH Office, many of which are located in thesouthern part of the district.

6. Illegal wood entrepreneurs (known as cukong)finance and organise both legal and illegal loggingactivities in the forests. The cukong are involvedin wood processing industries and/or wood trading,including exports.

7. Sea transporters are the backbone of thetransportation of products from illegal logging,particularly to Java. At the same time, they providethe transport system for trade in the nine basiccommodities (sembako). The transporters will onlybring sembako into Ketapang district if their ships

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can return to Java with a cargo of wood. One ofthe leading sea transporters in the district explainedthat almost all wood brought into Java is fromillegal logging.

3.1.1.3 Local communitiesMost adat (customary law) or rural communitiesin the Ketapang district carry out traditionalforestry and/or plantation activities. Part of theforest area claimed as adat forest (collective title)is used for swidden agriculture, while another partis reserved for construction materials, forest honeycultivation activities, tengkawang (Shorea spp.)cultivation and hunting. A third part has beenconverted into a community rubber plantation (Seesection 4.1 for a discussion of the Dayakcommunities).

Historically, the people of Ketapang district didnot manage the forest areas for large-scale timberextraction, as under the HPH system. It was onlyafter this system came into operation (in about1975) that an adat community group decided toclaim collective ownership of certain forest areas,so that this could then be ‘sold’ to illegal loggers.Efforts to prevent this type of forest exploitationwere undertaken by Harvard University’sLaboratory of Tropical Forest Ecology (LTFE), incooperation with local NGOs. This pioneeringproject in community forestry was aimed atproducing wood in the Gunung Palung NationalPark buffer zone using an ex-HPH area of 8,000ha. Some local people were organised into anumber of community self-help groups (KSM).In mid-2000, this project was temporarily halted

following clashes between members of the KSMforum and non-KSM local residents employed inillegal logging in the TNGP area.

In the Ketapang district, local NGOs and other civilsociety groups have made little progress as mostof these were established only in the late 1990s.However, the Dayak Adat Council (DAD), whichwas established about two decades ago, has madesignificant progress. The DAD was formed on theinitiative of the district government andcommunity leaders, and consists of a district DADand several subdistrict DADs (notably in areaswhere the Dayak groups are in the majority). Itsgoal is to empower indigenous Dayak peoples, intheir struggle for the community’s adat titles toland and forest resources, and to deal withhorizontal and vertical social conflicts, includingthose in the forestry and plantation sector. TheDAD also works to secure the political rights ofthe Dayak community at the local level.

3.1.2 Forestry and plantations

3.1.2.1 ForestryIn the Ketapang district, HPH concession-basedforestry only started in 1975. In 1990, there were24 HPH timber concessions operating in thedistrict. The 1999 data shows only six HPHcompanies remaining in the Ketapang KPH area,with a total area of 813,000 ha (Table 11).

Of the six HPH concessions remaining in 1999,only four HPH units are still active and theseproduced 238,547 m3 of logs in 1998–1999

Table 11. Status of HPH Companies in Ketapang KPH, 1999

Name Status Area Location (Subdistrict)(ha)

Suka Jaya Makmur Active 207,000 Nanga Tayap; SandaiHarjhon Timber Active 161,000 Tumbang Titi; Manis MataMarsela Wana S Non-active 59,100 Nanga TayapSumber Jaya Baru Utama Non-active 84,000 Matan Hilir UtaraDuaja Corp II Active 125,000 Sei Laur; SandaiKawedar MT Active 90,000 Sandai

Total 813,000

Source: Ketapang KPH Office (1999).


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Table 12. Condition of Timber Industries in the Ketapang KPH Area, 1999/2000

Licence Status Operational StatusIndustry Number Total Capacity

(Registered) (m3/year)Licensed Unlicensed Active Non-active

Plywood 3a 163,000 3 - 3 -Sawn wood 11 126,250 - 10 1 11Planing 28b Insufficient data 8 20 28 -Sawmill 2 Insufficient data 1 1 2 -Furniture 7 Insufficient data 6 1 7 -Moulding 1 Insufficient data - 1 - 1

Source: Unpublished data, Ketapang KPH Office, 2000.Notes: a. Two of these have a sawn timber unit.

b. In practice, all planing industries operate as sawmills.

(Ketapang KPH Office 1999). This productionlevel was insufficient to meet the demand for atleast 289,250 m3 of raw materials for the 52plywood and sawmill companies registered at theKetapang KPH in 1999 (Table 12). Companiestherefore had to bring wood in from outside thedistrict; about 80,000 m3 of wood was brought inwith the biggest supplier being the province ofCentral Kalimantan (Ketapang KPH Office 1999).These figures do not reflect the true supply anddemand for wood because KPH monitoring revealsthat there is a large amount of ‘unregistered’ woodproduction and also a large number of ‘illegal’companies.28

There were three HTI companies in Ketapang in1999: PT Basuki Rahmat (pulp HTI), PT LinggaTedja (transmigration HTI) and PT Tawang Maju(murni HTI). In practice, only the murni HTI ofPT. Tawang Maju was active, actually planting 350ha. This extremely slow development—which hasalso occurred at the provincial level—indicates alack of commitment to reforestation by both thedistrict government and the investors who haveobtained IPK wood utilization permits, whichallowed them to clear all remaining timber froman area.

Another activity within the forest is themanagement of protected/conservation areas. Oneof the most important protected areas in the districtis the Gunung Palung National Park, which ismanaged by a special UPT outside the structure

of the Forestry Branch Office (the national parkis discussed in Section 4.3).

3.1.2.2 PlantationsAt the time this research was conducted, the totalland area in Ketapang that had been designatedfor plantation development was 961,805 ha. Thisincludes plantation land of 330,474 ha as well as631,331 ha of dry fields. In April 2000, 123,523ha of the potential plantation land was alreadybeing used: 89,715 ha for oil palm, 22,157 ha forrubber, 9,703 ha for coconut, and 1,948 ha forcoffee. (A more detailed discussion of theseplantations is presented in Section 4.2).

There are currently four plantation systemsoperating in the Ketapang district, particularlyrelated to rubber and oil palm plantations, whichare outlined below:

1. Swadaya (self-sufficiency) system: this isaimed at developing people’s plantations throughcommunity-based management, and is commonlyused for rubber.

2. Private National Large-Scale Plantation(PBSN) system: within this system companies caneither work alone to develop oil palm plantations(murni), or in partnership with the local communityvia Members Primary Credit Cooperatives (KKPA),thus providing investment opportunities formembers of the community. This system is mostcommonly used to develop oil palm plantations.

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3. People’s Core Plantation (PIR) system : thisis a cooperative system where private and nationallarge-scale companies develop and manage thecore plantation, while the people in thesurrounding area are able to develop plasmaplantations. Again, this system is most commonlyused to develop oil palm plantations.

4. Development Service Unit (UPP) system (forrubber plantation)Between 1993 and 2000, forty-three investors hadbeen allocated land to develop oil palm plantations,with a total area of 741,809 ha. By 2000, onlytwelve of these companies had actually beenestablished, consisting of five Transmigration-PIRcompanies and seven PBSN companies (four ofthese had formed partnerships with communityMembers Primary Credit Cooperatives (KKPA)and there were three murni, or sole operator PBSN.Five of these twelve plantation companies(operating in Tembelina, Singkep, Sungai Laur andManis Mata) already had CPO processing plantswith a capacity of 1,000 tonnes/month per plant.The area of oil palm plantations developed by these12 companies by 1999 was only 89,433 ha (51,112ha of PIR and 38,321 ha of PBSN).

The Transmigration-PIR and the KKPA-PBSNsystems are structured differently in relation to thedivision of management responsibilities betweenlocal people and the company involved in thescheme. In September 1999, under theTransmigration-PIR system, the majority of land

was either managed or designated for managementby local farmers to develop plasma plantations(33,912 ha). The total core plantation area managedby the company was about half of this area (17,200ha). The actual area of land converted to outrightfarmer-ownership under the Transmigration-PIRsystem remains small, about 10.2% (3,453 ha) ofthe total plasma area developed Under the KKPA-PBSN system, most of the plantation land ismanaged by the company (target of 43,300 ha forthe companies), while the area controlled ordesignated for management by farmers is very small(8,000 ha); of this only 1,696 ha (24.2%) hasactually been realised (Tables 13 and 14).

3.1.3 Contributions to the regionaleconomy

Forestry and plantation activities made a significantcontribution to the Ketapang district’s regionaleconomy. Between 1994 and 1998, the four maincontributions to the Ketapang Gross RegionalDomestic Product (GRDP) came from theagriculture, industry and trade and transportationsectors; the forestry and agro-industrial plantationoperations did generate a significant share of thecontributions provided by each of these subsectors(for example, via employment generation).However, forestry and agro-industrial plantationoperations played a smaller role in providing directcontributions to the GRDP. Revenues from thissector are categorised as profit sharing (betweenthe central and provincial governments); as taxsources (particularly Pajak Pertambahan dan

Table 13. Transmigration-PIR Oil Palm Plantations in the Ketapang District, September 1999

Name of Company Core Plantation Plasma Plantation Conversion(ha) (ha) (ha)

PT. Subur Ladang Andalan 4,000 5,182a 905Bangun Maya Indah 4,000 5,827 883PT. Duta Sumber Nabati 3,000 8,915b 398PT. Antar Mustika Segara 2,200 8,800 813PT. Poliplant Sejahtera 4,000 5,188c 454

Total 17,200 33,912 3,453

Source: Unpublished Ekspos data, Plantations Branch Office, Ketapang, 2000.Notes: a. Based on company reports, 6001 ha, but 819 ha of this land is extremely poor quality.

b. Based on company reports, 11 800 ha.c. Based on company reports, 9,763 ha, of which 3,333 ha of this land was damaged by fire in1997 and 1,242

ha of the land is extremely poor quality.


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Bangunan, Land and Building tax or PBB); and asnon-tax revenues (particularly Iuran Hasil Hutan,Forest Products Payment or IHH). In the 1999/2000budget year, the Ketapang district governmentreceived Rp 1.13 billion and Rp 379.3 millionrespectively from the forestry and agro-industrialplantation subsectors. In the forestry subsector thisamounted to only 18.6% of the total PBB profitsharing revenues. This amount was far less than theincome received from mining sector, which was3.41 Billion (55.9%). Receipts from IHH profit

sharing, one of the non-taxable items, were also low:only Rp 2 billion in 1999/2000 (Table 15). Theimplementation of Law No. 25/1999, whichspecified the fiscal balance between central andregional governments, meant that the provincialgovernment could expect to set targets for revenuesfor this subsector, and to obtain a higher share ofthe revenues generated by this subsector.

Up to the time this study was conducted, directcontributions to regionally generated revenues

Table 14. Private Plantations in the Ketapang District, September 1999

Company Company Plantation (ha) KKPA Plantation (ha)Target Realised Target Realised

PT. Harapan Sawit Lestari 8,000 3,923 2,000 1,000PT. Ayu Sawit Lestari 8,000 6,066 3,000 0PT. Harapan Hybrida Kalbar 10,600 4,100 2,000 0PT. Prakarsa Tani Sejati 16,700 9,981 1,000 696PT. Swadaya Mukti Prakarsa 12,000 808 (non-KKPA)PT. Budi Naya Agro Lestari 10,000 1,643 (non-KKPA)PT. Sandika Nata Palma 17,000 3,800 (non-KKPA)

Total 82,300 30,321 8000 1696

Source: Unpublished Ekspos data, Plantations Branch Office, Ketapang, 2000.

Table 15. Ketapang District Revenues from Tax and Non-Tax Profit Sharing, 1999/2000

No. Revenues Item Target Realised(Rp 000 000) (Rp 000 000)

I. Tax Profit Sharing 106,660.60 77,667.00Land and Building Tax (PBB) 9,461.19 6,076.00Rural sector (tad) 31.66Urban sector (tad) 125.26Forestry sector (tad) 1,132.73Mining sector (tad) 3,408.09Plantations sector (tad) 379.27Share allocated to the level II (tad) 999.07region by the central governmentDuty on the acquisition of title to land or property 32,000.00 283.34Tax on Fuel for Motor Vehicles 2,326.25 1,624.16

II. Non-Tax Profit Sharing 2,145.00 2,012.351. Forest Product Payments (IHH) 2,100.00 2,002.382. Granting of Title to State Land 10.00 3.323. Land Rent Profit Sharing 30.00 6.654. Fisheries Auction Profit Sharing 5.00 0.00

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(PAD) from the forestry and plantations sector hadbeen relatively small, consisting of groundwaterand surface water utilisation taxes, uangsempadan; construction permits; and unloadingfees levied on the transportation of timber productsthrough ports. Law No. 18/1997 imposed limitson local government revenue-raising from theforestry and agro-industrial plantation subsectorsthrough taxation and levies. This limits the sourcesof PAD from 12 to only six types of tax29 and from25 to only 12 types of levy.30 One of the sourcesof PAD removed under this law was the levy onwood warehouses.

There was a perception amongst district andprovincial officials interviewed for this study thatLaw No. 18/1997 limits the ability of the area to befinancially independent. For the Ketapang district thistranslated into an estimated drop in PAD of Rp 400million per year. The Ketapang district governmenthas therefore even considered reinstating the regionalregulations regarding taxes and levies that wereremoved under this law. Officials from The DistrictRevenues Office (Dispenda) who were interviewedfor this study asserted that that forestry and agro-industrial plantation operations are potentiallysubstantial sources of regionally generated revenues(PAD). At the time this study was being conducted,the district DPRD was in the process of drawing upa regional regulation on the commercial regulationof timber products, whereby timber product tradingin Ketapang, will incur local levies or taxes. TheDPRD was also considering proposals to introducea regional levy on each fresh fruit bunch (FFB)harvested from all types of oil palm plantations. Thistype of levy had previously been limited to large-scale companies.

3.2 DECENTRALISATION OF THEFORESTRY AND ESTATECROPS SECTOR

3.2.1 Conflicts between stakeholdersIn Ketapang district, the task of coordinating thedifferent interests of the stakeholders in forestryand agro-industrial plantation operations officiallyfalls to the Badan Perencanaan PembangunanDaerah or Regional Development Planning Board(Bappeda). This is a difficult task, as conflictsbetween stakeholders’ interests are not uncommon.In the resolution of conflicts, regional interests

(those of the district governments and thecommunities) are generally overridden. Many ofthe district level officials interviewed for this studyclaimed that the frequency of such conflictsindicated the need for decentralisation, or a transferof some of the policy-making and administrativeauthority from the central to the districtgovernment. Previously, the benefits from forestryand agro-industrial activities went to the provincialgovernment, under the control of the centralgovernment. They felt that increasing district-levelauthority over forestry resources would improvethe opportunities for forestry and agro-industrial-related benefits to be directed towards district-levelsocio-economic development.

3.2.1.1 Vertical inter-agency conflictsVertical inter-agency conflicts occurred betweenthe Ketapang District government, and betweenthe provincial government and provincial/centraltechnical executive units (UPT) located in thedistrict. The UPTs with responsibility for forestryand agro-industrial plantations in the Ketapangdistrict include the KPH (District ForestManagement Office), the Gunung Palung NationalPark Authority and the Plantations Branch Office.

Conflicts of interest between the district andprovincial governments are centred on theallocation of land for forestry and plantationactivities. The Ketapang district governmentcomplies with the District Spatial Plan (RTRWK)when developing the sector. When a private sectorinvestor applies for a HPH timber concession or aHPHTI timber plantation concession, the localgovernment administration, in this case, NationalLand Agency (BPN), will refer its decision to theprovisions laid out in the RTRWK. However, inpractice, it was not uncommon that the Bupati hadto accept land allocations made by the Governor.District level officials interviewed for this studysaw many of these allocations by the Governor asinappropriate and contrary to the provisions madein the RTRWK. In one case, the Bupati cancelleda private sector investor’s HPHTI (timberplantation) location licence as there were no signsof any operations being carried out on the landallocated. However, the licence in principle (fromthe Minister of Forestry and Estate Crops) and theland use rights (HGU) (from the State Ministerfor Agrarian Affairs/head of the National Land


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Agency) remained in force because of a lack ofcoordination between the agencies. This situationindicates that there is a requirement for improvedadministrative coordination between the variouslevels of government administrative functions.

Conflicts that occurred between Bappeda and theKetapang KPH Office (under the control of theProvincial Forestry Office) are centered onincreasing regionally generated revenues (PAD).The Bappeda of Ketapang district asked theKetapang KPH Office to focus on their PAD. Onanother hand, the KPH could not fulfill the task asthey are formally under the Provincial ForestryOffice, which is not one of the departments underthe district’s autonomy. The KPH Office isfinancially supported by the central (APBN) andprovincial (APBD) government for their routinebudget and program. For example, for the BudgetPlan 1999/2000, realisation of routine budget inKPH Office was Rp 15 million that came fromKanwil Hutbun (8.5 million) and provincial DinasKehutanan (6.4 million). The Kanwil of forestryand plantation (Kanwil Hutbun) and the ProvincialForestry Office (Dinas Kehutanan) manage thisbudget and therefore KPH often had to run theprogram first and later the budget would becovered through a reimbursement procedure.

An official in the KPH office said that if theKetapang district government asked for source ofincome for PAD from the KPH office, they had toinvest through the district PAD allocation. In orderto fulfill the requirement, the stated budget 1999/2000 was estimated at 150 million, but theBappeda of Ketapang district disagreed andhanded in the plan to Provincial APBD. Theamount of budget allocated for forestry sector forthe budget plan 1999/2000 was only 49 million.This was categorised in the district generaldevelopment budget as Forest Monitoring Projectand Distribution of Forest Products. In fact, theKPH Office could support PAD by implementingleges (Regional retribution) over the SAKB/SAKO(Permit to Transport Timber/Processed WoodProducts) documents (now SKSHH or Permit toTransport Timber and Other Forest Products).

3.2.1.2 Horizontal inter-agency conflictsThe most prominent example of inter-agencyconflict was between the forestry and industrial

government administrative sectors. Forestryagencies commonly seek to impose limits on thegrowth of the wood processing industry, whileindustrial agencies’ aims are to expandopportunities for new private sector investment inthe district. An example of this is the fact that onlyseven of the 54 sawmills in the Ketapang districthave active HPH (commercial forestryconcessions) or IPK (timber clearance permit), butthey have been issued with SIUP (sawmilloperator’s licences).

Another source of conflict is generated by theallocation of administrative authority to set andimplement timber trade regulations. Underprevailing legislation, the responsibility for theregulation of trade in raw and unprocessed timberproducts is held by the Regional Forestry andEstate Crops Office or Kanwil Hutbun (an agencyof MoFEC) and the Provincial Forestry Office(Dinas Kehutanan). A suggested resolution of thistype of conflict was made by an official at theRegional Industry and Trade Office who indicatedthat the authority of the Ministry of Forestry andEstate Crops should be limited to upstreamactivities, i.e., to raw timber materials only, thiswould include the authority to issue permits totransport timber (SAKB). Downstream activities,i.e., wood processing and domestic andinternational timber trade, would be moreeffectively regulated by the Ministry of Industryand Trade through the Provincial Industry andTrade Office. At present, the latter agency isfrequently unable to monitor transactions in thewood trade, as it has neither the authority noraccess to necessary data.

The issuance of location licences for private sectortimber plantation investment has also generatedfriction between the National Land Agency (BPN)and the Plantations Branch Office. For examplethe BPN issued one location licence for an 11,000ha increase in a plantation area. The legallypermitted maximum is 3,500 ha. For an increaseof this size, a new operating license should havebeen obtained.

3.2.1.3 Local community resistanceThere are frequent cases where local communities,particularly Dayak groups, resist forestry and agro-industrial plantation activities by external private

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sector timber investors. This resistance ismotivated by their claims that these externalinvestors’ activities deny local communities’ adatrights to benefit from forest areas. In cases suchas these, where a settlement is reached, usuallyby involving the Dayak Adat Council (DAD), itgenerally involves some compensation to the localcommunity, e.g., provision of roads, bridges,places of worship, schools and other physicalinfrastructure and facilities by the investor.However, there are also many cases where thelocal adat communities reject the offeredsettlement, maintaining their claim for the land inquestion to be handed over to the local community.

In addition to private investors holding HPHcommercial forestry concessions and HTI timberplantation permits, PT. Inhutani II, timber-processing companies (particularly sawmills) andagro-industrial companies have also experiencedresistance from local community groups. Thisresistance included instances where localcommunities had directly taken over ex-HPHforest areas—which should have been controlledby PT. Inhutani II—by staking them out or turningthem into demarcated lots. Sawmilling operationshad also been affected by local community claimsto adat rights over these forest areas, which areused as sources of raw material for processing.In this situation, companies (licensed orunlicensed) usually negotiate with the localresidents, to buy and sell areas for logging. Therehave been instances where negotiations have failedand sawmill operators have found themselvessubject to adat punishments.

In this environment, companies developing agro-industrial plantations in the Ketapang district havealso experienced community resistance, particularlyin the north where Dayak groups are relativelystrong. These Dayak groups’ resistance toplantation investors are motivated by the followingbeliefs: 1) modern agro-industrial plantations willlead to increased local poverty and because theiraccess to land and forests will be limited; and 2)private sector investors are more interested indeveloping oil palm plantations, whilst the localcommunity groups favour rubber plantations.

In the south, particularly in areas with apredominantly Malay ethnic population, there is

less resistance to the development of oil palmplantations. Resistance has decreased as theventures have become more successful. Here,there is interest amongst local communities inparticipating as oil palm farmers through the KKPAsystem. In the future, however, the KKPA systemmay well come into conflict with the legalprovisions regulating the five plantationinvestment systems (see Section 4.2.1).31

Moreover, NGO representatives interviewed forthis study claimed that companies would exploitthe KKPA system as a means to gain access toland which over the local communities haveclaimed adat rights. The companies usually usethe murni (sole operator) PBSN system. It is feltthat this is because sole management by theinvestment company is simpler.

3.2.1.4 Horizontal conflicts within the localcommunity

It is not unusual for overlapping adat claims toforest areas to result in disputes betweencommunities. In these cases, the subdistrict head,supported by the Dayak Adat Council (DAD), willbecome involved in mediating between differentgroups. One such conflict occurred in 2000between community groups in the subdistricts ofNanga Tayap, Tumbang Titi and Jelai Hulu over a(natural) ironwood forest on the borders of thethree subdistricts. This forest was actuallyprotected (by a gubernatorial decree) so that anyfelling of natural ironwood was a violation. Whena group of Tumbang Titi residents felled 20ironwood trees at the site communities in the twoother subdistricts because they felt they also hadadat rights to the forest, which would includefelling rights. The three groups ultimately agreednot to exploit the ironwood forest, but to protectits sustainability by applying their respective adatlaws as supervisory measures.

Other serious horizontal conflicts have occurredin relation to the Hutan Kemasyarakatan(Community Forest or HKM) project in theGunung Palung National Park (TNGP) bufferzone. This project was designed by the HarvardLTFE (Laboratory of Tropical Forest Ecology) in1994 to conserve the park’s forests by involving2000 families from the surrounding rural area. The8,000 ha areas requested for allocation as HutanKemasyarakatan had formerly been allocated as


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HPH timber concessions held by Wanawati andSumberjaya Baru Utama, which had both beenturned over to PT. Inhutani II for rehabilitation.The Kanwil Office issued a temporary decree forthe area to be turned over to the project. Thisresulted in conflict between the pro-HKMcommunity groups and the anti-HKM communitygroups. One of the opposition groups includedlocal private sector investors who had receivedlarge benefits from logging in the former HPHtimber concession. They did not protestthemselves, instead, workers employed in fellingand who were economically dependent on thecukong (illegal wood entrepreneurs) were involvedin protests. The members of community groupswho had had no access to employment or benefitsfrom the operation of the HPH timber concessionwere generally in favour of the HKM plans. Theconflict reached its peak with the burning of theLubuk Kuali camp and a member of the KSM(Kelompok Swadaya Masyarakat or Self-helpcommunity group) being assaulted.

3.2.2 The different forms ofdecentralisationThere is both formal and informal decentralisationin policy-making and administration of forestryand plantations activities in the Ketapang district.Formal decentralisation takes the form ofgovernment policy, centralised or local, with orwithout a clear legal basis. Informaldecentralisation occurs at the regional level or atthe community level and does not constitutegovernment policy.

3.2.2.1 Formal decentralisationA number of formal decentralisation processes inthe forestry and agro-industrial plantations had orwere taking place in the Ketapang district whenthis study was conducted. Formal decentralisationprocesses have been identified in the areas ofreforestation and conservation, forest productexploitation rights, plantation investment patterns,and the zoning of plantation commodities.

The delegation of authority over reforestation andconservation to the district government has itslegal basis in Government Regulation No. 62/199832 . Regional government officials interviewedfor this study indicated that they saw this legaldelegation more as the transfer of responsibilities

from the centre to the region. These matters, atleast in the short term, were seen as needinginvestment rather than yielding direct revenue forthe region. As a result the regional governmenthas not welcomed it with much enthusiasm—evident from the fact that no autonomous officehad been established to deal with these matters.

Other conspicuous decentralisation trends relateto the implications of the Decree of the Ministerof Forestry and Plantations regarding theauthority to issue concessions of up to 10,000 hafor governors and up to 100 ha for district heads.Local people responded positively to thisMinisterial policy, thinking it would allow themaccess to exploit the forest. The Ketapang districtgovernment intended to direct HPHH concessionsprincipally to former HPH concession areas,which were ‘neglected’ (because PT Inhutani IIhad not undertaken reforestation) and toproduction forest areas that were to be converted.Although this Ministerial Decree wassubsequently postponed (by a Circular Letterfrom the Director General of Forest Protection),the Ketapang district government was alreadydetermined to put it into effect. The regionalgovernment saw the HPHH as an opportunity torestore traditional community rights to the forest,as well as being a potential source of regionalrevenue. In order to put the HPHH into effect,and in the interests of regulating illegal logging,the Ketapang district government issued RegionalRegulation No. 26/2000 regarding theManagement of Forests and Forest Products.33

This Regional Regulation grew out of, among otherthings, the regional government’s desire to controlillegal logging by allocating HPHH concessions.The regional government was optimistic that in thisway, the management of forests and forest productswould provide real economic benefits both for localcommunities and for the regional government,through regional revenue generation.

This optimism was clearly reflected in the forecastregional revenue targets from the forestry sector.The regional revenue target from the forestrysector for 2001 was Rp 36.74 billion, or 16% ofthe total regional revenue target for that year (Rp231.45 billion). This figure was way above theforestry sector target for 2000, which was Rp 1.57

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Table 17. Estimated Regional Revenue from the Forestry Sector, Ketapang District 2001

Source of Revenue Type of Revenue (Billion Rp.)

IHH/ PSDH DR Auction IPMDH HPHH Leges TotalIHPH SKSHH

I. HPH & HPHH 5.40 8.19 23.04 - 0.15 - - 36.781. HPH

(250,000 m3) 5.24 5.12 14.40 - - - - 24.762. HPHH

(150,000 m3) 0.16 3.07 8.64 - - - - 12.02

II. Control - 1.43 4.04 - - - - 12.47IPKH - 1.23 3.46 6.00 - - - 10.691(60,000 m3)

Ill. Logging - 0.20 0.58 1.00 - - - 1.78(10,000 m3)

Total 5.40 9.62 27.08 7.00 0.15 49.25

Source: Revenue Office, Ketapang District, KPH Ketapang Estimate February 2001.

billion, or 11% of the total regional revenue targetfor the year concerned (Table 16). This very highrevenue target for 2001 was certainly related inpart to the change in the structure of revenuesharing between the regions and the centre (Law25 Year 1999)34 .

The size of the target was linked in part to themeasures taken by the regional government toimplement decentralisation, in the form of theplans to realise HPHH and the control of processedtimber products logged legally (IPKH/Wood

Processing Primary Industry) and illegally. TheKPH Office in Ketapang district indicated that therevenue target for the district in 2001 from HPHHwas Rp 12.02 billion, and from the control ofprocessed timber products, Rp 12.47 billion. Thetotal revenue from these two sources would be Rp24.49 billion, or the same as the total target revenuefrom HPH (Table 17). There was even thepossibility that this revenue would increase further,once estimates of revenue from the issuance ofHPHH concessions and Forest Product Certificates(SKSHH) were included in the calculation of the

Table 16. Regional Revenue Targets and Realisation from the Forestry Sector, Ketapang District2000–2001

Type of Revenue Year 2000 Year 2001(Billion Rp.) (Billion Rp.)

Target Realised Target Realised(Dec 00) (Mar 01)

IHH/PSDH 1.5 1.87 7.37 0.68IHPH/IHPHH - - 8.63 -DR (reforestation fund) - - 20.74 -

Total 1.571) 1.87 36.742) 0.68

Source: Revenue Office, Ketapang District, March 2001.1) 11% of the targeted Rp 13.92 billion.2) 16% of the targeted Rp 231.45 billion.


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target35 . From these figures it is clear that for theKetapang district government, forestrydecentralisation was seen an opportunity to vastlyincrease regional revenue.

Others interviewed for this study were lessoptimistic about the potential of the HPHHconcession system. This was based on experienceof situations in which local communities hadrequested a HPHH concession for a forest area,which had frequently turned out to be alreadyincluded in a HPH area whose licence was issuedby the central Ministry of Forestry. In Sandai, forexample, three large community groups (withabout 100 families per group) own about 2,000 haof forest. This forest contains damar (ShoreaJavanica) trees, whose resin is sold by the localcommunity groups. Because the price for damaris currently low, these groups are more interestedin felling the wood and selling it, so they appliedfor a HPHH concession for this forest area.However, the area they claimed as communityforest was also covered by a HPH concession heldby a company in Jakarta36.

The public has welcomed what they see as goodopportunities provided by the HPHH concessionsystem. By the middle of 2000, some 30community groups had expressed interest inHPHH concessions and ten of these had filedproposals. In one sub-district, a community grouphad even erected demarcation markers around theex-HPH concession area where they had appliedfor a HPHH concession. Some of these communitygroup applicants are financed by local sawmillentrepreneurs. Nevertheless, it seems that it is noteasy to get a 100 ha forest concession in theKetapang district. The reason is that the HPHconcessions, which are about to expire, haveusually already been extended by the centre(MoFEC), leaving very little opportunity for thepeople of Ketapang to claim these areas.

In practice, the technical and operational costs ofobtaining a licence for 100 ha of HPHH concessionare high. In the Sintang district the cost can be ashigh as Rp 25 million (although the official cost isRp 10 million), which is a large amount of moneyfor a local community to raise. One way to meetthis cost is to enter into an agreement with a large-scale HPH concession holding company. This

gives rise to a ‘cooperative system’ whereby thelocal community apply for a HPHH concession,backed by a private sector company. This enableslarge-scale HPH timber concessionaires to benefitunder decentralisation from a scheme aimed atdeveloping local community’s socio-economicopportunities.

In the plantations subsector, the Ketapanggovernment had plans to zone plantation cropsunder the RTRWK in order to avoid developinglarge areas of land under monoculture plantations.One reason for this was that a recent locustinfestation in the area was partly attributed tothe expansion of oil palm plantation in thesouthern part of the district. Thus, in line withthe local communities’ wishes, Bappeda wasseeking investors interested in developing rubberplantations. In the north of Ketapang district,there are a number of location licences thatcannot be put into operation because of localresistance, both because of the type of crop andbecause of an inappropriate investment system.Some of the local government officialsinterviewed for this study saw the people’sresistance as a means of support to help themprevent the over expansion of oil palm plantations.In fact, the zoning of plantation commoditiesplanned by Bappeda includes plans for oil-palmplantation in the southern part and rubberplantation in the northern part.

3.2.2.2 Informal decentralisationOne of the most obvious examples of informaldecentralisation in the Ketapang district,particularly since 1998, has been illegal loggingcarried out by members of the local communities,paid by local and non-local entrepreneurs. Thelocal community sees illegal logging as amanifestation of its adat traditional rights to forestresources, which they feel have been marginalisedby the allocation of large-scale HPH concessionsto private sector companies from outside theregion. When entrepreneurs who hold noconcession over an area give members of the localcommunity illegal access to the forest, althoughthey are only hired to fell and transport the timber,this is seen as an opportunity to restore traditionalaccess to forest resources.

Illegal logging is carried out by small groups of

31


4–8 people or large groups of 10–20 people. Themost experienced loggers use chainsaws andunderstand felling techniques; they generally comefrom Sambas. The wood sawyers are hired fromthe local community, while those who transportthe wood (along small tracks) are recruited fromother areas - this is because if local people wereused, they might move the timber to their ownhomes. The logging group obtains a loan fromthe head of a local group, which is funded by anentrepreneur from outside the area (cukong/tauke).This cukong or tauke is usually connected to thesawmill entrepreneurs in Ketapang or other areasin West Kalimantan.

Research by the Harvard LTFE and the DirectorGeneral of Forest Protection in 1998 shows that,under the logging system described above,loggers are paid based on the amount of timberthey fell, with a floor price of about Rp 50,000/m3. The head of the group (the local boss) willtake the workers’ loans out of the total value ofthe felled wood, which means that the loggersgenerally receive only about Rp 75,000– Rp150,000 for three weeks’ work in the forest. Thehead of the group then sells the wood to the taukefor between Rp 100,000 and Rp 150,000/m3 andthe tauke sells it to the sawmill for about Rp250,000/m3. The price of the processed illegalwood when it leaves the sawmill for the localmarket (and sometimes for the internationalmarketplace) is about Rp 500,000/m3. To theconsumer, the price of this wood–balau/bangkirai (Shorea laevis), for example—canreach Rp 1.5 million/m3.

Although no precise figures are available, the localgovernment and Ketapang KPH personnelinterviewed for this study believe that very highquantities of timber are being extracted by illegallogging in the district—from the Batu ampar KPH(in the north) and the Ketapang KPH (in the south)areas. It is estimated that one cukong (tauke) canobtain about 1,000 m3 of wood per month.37 Withas many as 100 cukong in each northern watershed(Pawan, Siduk, Air Hitam, etc.) illegal removalcould be as much as 100,000 m3 of wood from theforest each month. These figures could be anoverestimation; but they do indicate that in the lastthree years, the volume of illegal timber extractedwas very high.

An important factor in the increase of illegallogging in this area was the scarcity of rawmaterials resulting from a rapidly expanding woodprocessing industry in West Kalimantan duringthe 1980s, following Indonesia’s ban on theexport of unprocessed logs. Both HPHconcession holders and non-concession holdersmay become involved in hiring local communitymembers to log areas for which they hold noconcession. HPH concession holders may alsolog illegally within their own concession area inviolation of the annual management plan, or RKT,to overcome a lack of raw timber to supply thelocal plywood industry or to gain access to logsat a lower price. Illegal logging by non-HPHentrepreneurs is usually carried out to meet thehigh demand for wood from the housing andfurniture-making industries.

Non-HPH entrepreneurs carry out illegal loggingin several types of forest area including ex-HPHareas (under the authority of PT. Inhutani II),protected areas (TNGP and other nature reservesand protected forests) and even active HPH areas(in some cases with the knowledge of the sitemanager). Illegal logging can also occur in ex-HPHareas. As PT. Inhutani II does not have the capacityto effectively manage reforestation in all areas, thereis little surveillance and therefore few risks involvedin illegal logging. The nature reserves most seriouslydamaged by illegal logging are Kendawangan andKarimata, which open onto the Java Sea, making iteasy to transport illegally harvested timber.

A large number of people benefit economicallyfrom illegal logging. The greatest benefits accrueto the cukong/tauke who invest in these activities,because they get cheap raw materials for theirbusinesses and/or they can sell the wood withouthaving to pay the usual fees and taxes (particularlyLand and Building Tax), Reforestation Funds(DR), Forest Products Payment (IHH), the costsof Permits to Transport Timber (SAKB) andPermits to transport Processed Wood Products(SAKO). There are informal costs involved but,according to a large-scale entrepreneur in theKetapang district, these are less than the formal costs.

Local communities, in addition to being employedas loggers, have also been ‘creative’ in their effortsto secure a share of the economic benefit derived


32

from illegal logging activities by claiming certainareas of forest as community-owned forest. Anillegal logging tauke then buys the wood from acertain piece of forest in bulk for a price of aboutRp 35,000–Rp 50,000 per m3 of wood, dependingon the distance from transportation routes. Afterclear-felling this forest area, the owner(s) will burnit so it can be used as a rubber plantation.

Another beneficiary from illegal logging, is thecargo shipping industry. Ships owned by Ketapangentrepreneurs routinely sail between Ketapang andSemarang, Tegal, Cirebon and Jakarta/SundaKelapa in Java, taking wood from the district(usually from illegal logging without SAKO/SAKB documents) and returning with a cargo ofthe ‘nine essential commodities’ (sembako) neededby local people. Transportation of wood fromKetapang is much more profitable than thetransportation of sembako from Java. Without awood cargo, shipping operators would not bewilling to sail to Java as it would be unprofitable.

Therefore, the shippers are a vital link in the illegallogging chain. Without the support of seatransportation, illegal logging would declinebecause the local market could not possibly absorbthe large amount of wood produced. One sourceinterviewed for this study estimated that as manyas five ships leave Ketapang district every daywith a cargo of around 300–400 m3 of illegallyharvested timber. (It is said that each ship isprovided with Rp 8–10 million by the cukong tobe used to cover informal costs that might ariseshould any arrest or inspection occur). With 20shipping days each month and nine shippingmonths in one year, this means that as much as270,000–360,000 m3 of wood from illegal loggingcould be taken out of the Ketapang district eachyear.

The local government officials interviewed for thisstudy were aware of the vital role that seatransportation plays. In one effort to eradicate illegallogging in 1999, a local government operations teamattempted to close all ports in estuaries or smallbays that were transport points for wood fromKetapang. These ports included Jelai, Air Hitam,Rantau Panjang, Pulau Maya, Teluk Batang, BalaiBekuak, Kendawangan, Teluk Melano and Pawan.As a result of this action, ship operators stopped

sailing both to and from Java—Ketapang ships wereunwilling to sail to Java without a cargo of wood,while the ships in Java were unwilling to bringsembako because there would be no timber cargoon their return trip. Without these shipping activitiesa serious scarcity of sembako developed. Localgovernment attempts to acquire sembako fromPontianak failed to overcome the shortages anddiscontent arose among the local communities. Assoon as the operation to ‘close’ the points of exitfor wood ended, ships started sailing again and atthe same time the supply of sembako to Ketapangresumed. There was no official statement from thegovernment, but ship operators and some localofficials stated that there had been pressure in theform of a threatened boycott on transportingsembako from Java to Ketapang if the operatorswere not allowed to transport a cargo of (illegal)timber to Java.

The Ketapang district government suffers thegreatest loss from illegal logging. These activitiesdo not make any contribution to the PAD, exceptindirectly through the taxes and levies imposedby the companies in the wood processingindustry and shipping companies. Local officialsinterviewed for this study regarded illegal loggingas a process of large-scale ‘forest resource assetflight’ from the Ketapang area. With one estimateputting the volume of illegal timber exports atleast 270,000 m3, which indicates that the lossesin Forest Resource Rent Provision (PSDH) couldbe as high as Rp 30,000 per m3, which wouldmean that the state could be losing income of upto Rp 8.1 billion per year. As already noted, thelocal government plans to levy charges forunofficial logging, through the allocation of HPHHconcessions and this is expected to contributesignificant amounts of income to the PAD.Forestry agencies have been strongly opposedto this approach because it is seen as anendorsement of illegal logging, which willstimulate over-exploitation and threaten thesustainability of the forests in the Ketapangdistrict. In contrast, the illegal timberentrepreneurs and shipping operators havegreeted the these plans with enthusiasm as theysee it as a means of continuing their operations,for which they would be willing to pay leviesand fees under the HPHH concession scheme tothe government.

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3.3 RESPONSE TO THE ISSUEOF DECENTRALISATION

3.3.1 Local government responseThe Ketapang district government hasenthusiastically welcomed decentralisation,particularly in relation to the opportunities forautonomy in the forestry and agro-industrialplantations sector. This enthusiasm is founded ona desire to increase PAD in order to financeregional autonomy. The district governmentofficials interviewed for this study believed thatthe greatest economic potential and source ofPAD for the Ketapang district lay with its forestresources and plantation development capacity.However, up to now the exploitation of forestassets by HPH entrepreneurs has notdemonstrated a significant contribution to theeconomic development of the region and itspeople. In theory, a portion of the income fromthese assets should come back to the district inthe form of a share of the PBB, IHH and DRreceived from higher government agencies but,in practice any amounts involved are relativelysmall. In fact the Ketapang district governmenthas never received any share of DR. HPHconcession holders cannot be asked to contributedirectly to the regional treasury, because theauthority to distribute local revenues from thissource belongs lies with the Ministry of Forestryand Estate Crops (IHH/DR) and Ministry ofFinance (PBB). To date, the HPH concessionholders have made no direct contribution to localrevenues, although the district government isobliged to safeguard HPH concessions and toprevent environmental damage, including thedeclining quality and flow of the rivers associatedwith timber clearance on HPH concessions.

There was a perception amongst district officialsinterviewed for this study that the centralgovernment is not wholly committed toimplementing autonomy. Government RegulationNo. 25/2000 (related to the implementation of LawNo. 22/1999) does not provide for the completedecentralisation of forestry matters to the districtlevel, since it only gives a clear definition of theprovincial government’s authority in this area.When the Minister of Regional Autonomy declaredthat details of the regional autonomy processshould be worked out by the district governments

themselves, at the time this study was conducted,the Ketapang district government began draftingand was pushing to obtain 28 types of authorityover forestry and agro-industrial plantationactivities. Thirteen of these are directly related tothe following forestry activities:1. Forest inventory and mapping.2. Designating and safeguarding borders for

production forest and protected forest.3. Implementation of the regulation of forest

borders, reconstruction and regulation ofborders for production forest and protectedforest.

4. Management of district forest preservation.5. Rehabilitation and reclamation of production

forest and protected forest.6. Licensing within the district/municipality,

including utilisation of wood forest products,utilisation of unprotected flora and fauna,plantation businesses and management offorest products.

7. Supervision of germination, fertilisers,pesticides, equipment and machinery in theforestry and estate crops sector.

8. The implementation of monitoring ofpredicted organic pests and integrated pestcontrol for forestry and plantations crops.

9. Implementation and supervision ofrehabilitation, reclamation, silviculture,cultivation and management systems.

10. Implementation of sustainable forest parkmanagement in the district.

11. Stipulation of guidelines to determine therates of cross-district levies on NTFPs.

12. Active implementation, in conjunction withthe province, of the delineation of areas andchanges to the function and status of forestsin respect of planning land use in the district.

13. Protecting and safeguarding of forests in thedistrict.

In addition to this list of requested authorities,the Ketapang district government had also startedplanning the organisation and management of thenew administration. These plans included theformation of a district-level Forestry Office andForestry Branch Offices at the subdistrict level.Another proposal is to merge the forestry agency(KPH) at the district level with the agricultureagency to become the Agriculture and ForestryOffice. This proposal carries a significant risk of


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conflict with the provincial government becausethe Provincial Forestry Office itself prefers theestablishment of a provincial-level ForestryBranch Office with UPT status at the subdistrictlevel, which would be under the authority of theprovincial Forestry Branch Office. The ProvincialForestry Office appears unwilling to relinquishcontrol over forest areas in the district, whilethe district government wants to implementstructures which would give them more directauthority.

The Ketapang Bupati identified the actualdecentralisation and devolution of authority to thedistricts as the major difficulty with autonomy anddecentralisation. This was more of an issue thanany specific difficulties related to financialpersonnel and technical capacity. Heacknowledged that if the district government cansecure these responsibilities—and it will be achallenge— this would have to be followed by aperiod of learning related to their implementation.

While the Ketapang district government’s primaryinterest in decentralisation is with securingautonomy in the forestry sector, Law No. 2238

makes no mention of this area. However, officialsat the Regional Forestry and Plantations Officeindicated that the administration of forests wouldbe best left—initially at least—under the authorityof the provincial level, which, they felt had thenecessary professional capacity for this task. Theyalso indicated their opinion that devolution ofauthority to the district-level should be carried outin stages to give time for district administrativeinstitutions to build capacity. According to oneProvincial Forestry Office official, a strongdistrict-level Forestry Office is necessary toimplement authority effectively. Districtinstitutions must first be strengthened. Once thishas happened, then, he said the provincial levelgovernment should be restricted to policy-making.

Control over the management of forestry resourcesas a PAD source is not the only authority soughtby the Ketapang district government. It also seesthe decentralisation of non-forestry resourcemanagement as a potential means of increasingPAD. Such resources, including gold mining andsea (estuary) sand quarrying are expected toprovide considerable income for the region, if they

can be self-managed. Gold mining is currentlyunlicensed (PETI or Penambang Emas Tanpa Ijin)and therefore yields no official revenues for theregional treasury. On the contrary, these PETIactivities have resulted in environmental damage,which will cost the government a lot to repair.This situation of ineffective regulation of goldmining has arisen because the Ministry of Minesand Energy, despite having the authority, is notactive in the field. The sea, and particularly theestuaries in the Ketapang region, hold sandextractives that are estimated to be worth hundredsof billions of rupiah. A Bappeda official estimated39

that the value of this sand could be as high as Rp1 trillion, or the equivalent of the Ketapang regionalbudget for about 10 years. The head of Bappedaand the Ketapang district head believe that if theincome from sand quarrying can be realised, therewould be no need to exploit the forest to financeregional development, at least not for 10 years.

3.3.2 Response of the private sectorThe private sector representatives interviewed forthis study viewed autonomy as a possible way ofeliminating conflicts of interest between thegovernment and local communities. At presentprivate sector forestry entrepreneurs see theregulations on forestry and timber as being out ofstep with the communities’ situation on the ground.For example, industrial agencies have issuedlicences for the development of small-scale timberindustries (construction materials, etc.) to localcommunity groups, but the forestry agencies hadbeen unwilling to issue Timber Clearance Permits(IPK), which would have been required toguarantee a supply of raw materials for these small-scale enterprises. Consequently, small-scale timberentrepreneurs have faced difficulties in acquiringraw materials legally. The representativesinterviewed for this study indicated that they wouldbe willing to comply with the regulations and paythe relevant fees and levies if they were given apermit.

Because of the difficulty of acquiring raw materialslegally, small-scale timber entrepreneurs may oftenresort to illegal logging. Regional autonomy is seenas an opportunity to develop local policies toregulate and secure legal access of small-scaleenterprises to raw materials. It is hoped that theDPR (Legislative Assembly) will enact regional

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regulations over log felling by the community,partly by imposing costs (levies and taxes) to bepaid to the district government. The illegal timberentrepreneurs interviewed for this study indicatedthat official regulation would be acceptable as itwould increase security and stability for theiroperations. They indicated that this might limittheir susceptibility to informal requests forpayments by some members of the governmentand security apparatus.

The forestry agencies in general do not agree withthe idea of regulating (or effectively legalising)illegal logging. Therefore they continue to applythe old approach to handling illegal logging: ‘seizeand auction’. Such seizures are usually illegallyfelled timber that has entered an industrial locationwithout documentation. According to the KSDA,the forestry agencies are often reluctant to arrestmembers of local communities involved in illegallogging activities, due to the threat of fiercecommunity resistance.

Small-scale timber entrepreneurs interviewed forthis study disagreed with the forestry agencies’stance that ‘the people are destroying the forestthrough illegal logging’. They argued instead thatthe felling technology used for small-scale timberextraction is relatively basic, and therefore causesfar less destruction than the industrial methodsused in HPH concession areas. They also madethe case that the methods of transportation oftimber used for small-scale unlicensed timberextraction causes less damage than the heavy

equipment used by large-scale HPH concessionholders. Wood is dragged from the forest alongtracks to the main roads and then taken to theriver. It is then brought to the subdistrict town(usually on an estuary) or to Ketapang (alonginland waterways or by sea), from where it isshipped to Java. Because of this transportationsystem, illegal logging usually stops or diminishesduring periods of low water levels (June toAugust). At these times the loggers willcommonly support themselves by taking loansfrom the cukong, which are repaid when waterlevels rise again.

The documentation required for legal timberharvesting includes SAKB and SAKO permits, aswell as proof of payment of IHH and DR fees.Individuals interviewed for this study indicatedthat a significant amount of the timber transportedto Java did not usually have the relevantdocumentation. They also said that if this timberis intercepted in Java, the port authorities usuallyjust impose a fine. One entrepreneur’s estimatewas that the total (informal) costs incurred bytimber entrepreneurs operating without therelevant documentation between the forest andJava are about the same as the official cost ofpaying for SAKB/SAKO permits and IHH/DRfees. Thus, many of the entrepreneurs interviewedfor this study would prefer to be involved inofficially regulated timber harvesting which wouldmean that the local government’s sources ofofficial revenue would increase.

4.1 DAYAK ADAT COMMUNITIES

At the regional level, the focus on decentralisationhas been primarily concerned with the transfer ofauthority from central to provincial and districtgovernments; the issue of authority beingtransferred from these governments to localcommunities has not yet been considered. Theissue of granting to local communities a degree ofautonomy, particularly with respect to the adatcommunities rights to land and forest resourceshas received little attention in the discussionsrelating to decentralisation. The case of the Dayakadat communities in the Ketapang districtillustrates local people’s efforts to secure what theysee as their rights over land and forests. This typeof situation consitutes a de facto form ofdecentralisation.

4.1.1 Dayak adat communities andtheir land

The Dayak are indigenous to the Ketapang area.‘Dayak’ is a collective name that encompasseshundreds of ethno-linguistic groups on the islandof Kalimantan, and inherent in its meaning is arich and diverse range of cultural elements.

Djuweng (1996) described the Dayak as an oralpeople. It is through their oral traditions that thisethnic group has identified itself as an autonomousand distinct group. This tradition is also how aDayak tribe identifies itself as part of a collectivewhole. Their oral tradition encompasses their basicconcepts of ideology, philosophy, history,language, literature and social structure, as wellas the Dayak peoples’ way of relating to the naturaland supernatural worlds. The Dayakcharacteristically have an integral relationship withnatural eco-systems. Many sub-tribes share thissame concept of the inextricable inter-relationship

between humans and the land and the naturalresources on it. In the context of a sub-tribe,ownership of a specific area the land will beclaimed as an adat law unit. This area is oftencalled a binua (by the Kanayan group), manoa(Iban) or banua (Simpang, Laur, Jeka, Krio Laraand Bakati). The concept of a banua is geopolitical.Within the boundaries of the banua there is landwith assets in the form of natural resources. Thepeople living within a banua are governed by aset of adat rules (laws), and individuals are chosenby the people to enforce these rules. The methodof land use management within a banua can becompared to a collective, indigenous integratedfarming system. There are at least sevencomponents in this system (Djuweng 1996).

1. Forest areas protected or reserved for thefuture. Individuals are free to take products (byhunting or collecting wood for personal, non-commercial use) from these areas. They arecollectively owned by the adat law community.Members of other adat law communities areallowed access to products after receivingpermission from the local community. The Dayakcommunity recognises adat-owned forest orcustomary forest. This forest has cultural,ecological, political, social and economicfunctions. There are sacred places, where theforest’s sustainability is carefully guarded. Theforest provides a natural ecological equilibriumby functioning as a buffer and regulator of waterand heat (rain, climate and weather). There arealso individual and collective rights to honey beetrees, damar (Shorea Javanica) trees andironwood. This is also where constructionmaterials are found. There can be agreement thatthe forest will become a cultivated area in thefuture. It is also a hunting area, and the source ofmany kinds of vegetable and medicinal plant.

DECENTRALISATION IN THREE AREAS: ADAT COMMUNITIES,PLANTATIONS AND THE GUNUNG PALUNG NATIONAL PARK4

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2. Land planted with fruit trees. This landusually belongs to an individual but when the fruitis ripe and falls from the tree, anyone is entitled tocollect and enjoy it. In this case, there is acombination of individual and collectiveownership.

3. Land planted with rubber trees, coffee,pepper, cocoa and other tree crops. This landbelongs to the person who plants the trees/crop.The land and plants growing on it may be inheritedby descendants or become collectively owned. Inmany places, rubber plantations are the mainstayof the Dayak community economy.

4. Agricultural land. There are two types ofagricultural land: land in use and fallow land.Dayak people understand the sustainableexploitation of natural resources. The originalagricultural methods of the Dayak have a 5–15year cycle, to allow plants to regenerate.

5. Burial grounds and sacred land. Burialgrounds are collectively owned. Sacred land, onwhich there are holy places of worship, are alsocollectively owned. This land cannot be cultivatedand the wood on it may not be collected.

6. Village land. This consists of individual homesand gardens with areas for livestock (chickencoops and pigsties).

7. Rivers and lakes for fisheries. These areowned collectively and no one is allowed to stakean individual claim to the ownership or control ofthese assets.

In summary, for Dayak communities, the landholds their unwritten history, and a link with theirancestors. It is a foundation for their present-daylives and something to bequeath to futuregenerations. The land links the past, present andthe future (Djuweng 1996).

4.1.2 HPH concessions and illegalloggingThe Dayak have been affected by the impacts of‘development’ or modernisation, which have beenprimarily introduced by central governmentpolicies and programmes. In the forestry sector,the issuance of HPH concessions to large-scale

entrepreneurs from outside the area has had far-reaching impacts on the local communities,particularly the Dayak. HPH concessions havebeen allocated for large areas of forest land,dividing up the traditionally managed forest intolots, which has made it difficult for localcommunities to continue their traditional forms ofaccess to, and use of forest resources. A Dayakcommunity representative at the provincial levelexplained that this process effectively makes hispeople ‘the outsiders’. The process of allocatingconcessions granting the right to exploit forest-based resources to external private sector and statecompanies, has effectively led to the take-over offorest areas which were traditionally collectivelymanaged under adat systems. This has in the pastled to the Dayak people’s eviction from their nativehomes, in the interests of developing industrialforests and large-scale agro-industrial plantationprojects. Local adat claims to land use rights havenot been recognised by the central government.Many community representatives interviewed forthis study felt that local communities’ beingmarginalised by successive central governmentpolicies and regulations, which introduced andimplemented to meet the needs and interests oflarge-scale state and private enterprises, rather thanthe needs of local communities.

As a result of this situation, governmentadministrative functions at all levels willcommonly be in conflict with the adat community.Moreover, the duties, objectives and levels ofresourcing of the forestry institutions, fromprovincial to district level, indicate that thegovernment is more oriented to promotingprofitable short-term production and exploitation,than sustainable long-term management of theforest resources. For example, the units that havebeen set up specifically to preserve forest areas(protected forest or national parks), such as theKSDA Unit, have neither the political nor thebudgetary support to enable them to functioneffectively. Whilst the local communities havebeen implicated by some officials in governmentas being responsible for environmentaldegradation through illegal logging, one of themost successful timber-transporting entrepreneursin the Ketapang district stated that members of thelocal community are actually merely labourers—one link in the illegal logging chain. It is also


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evident that their involvement in illegal loggingis stimulated by their belief that this constitutesan opportunity to gain a share of the benefitsaccrued from the exploitation of forest resources,which they continue to see as traditionally ownedby them under adat law.

4.1.3 Participatory mappingA matter that is frequently discussed in the contextof community involvement in spatial planning isthe need for forest areas to be more clearlydemarcated; to help resolve some of the conflictsbetween adat, state and corporate rights over forestland. Local communities and NGOs working ontheir behalf believe that this process will involvegreater recognition of adat rights and more accessto processes of boundary setting for localcommunities. An initiative by one NGO (PPSDAKPancur Kasih Pontianak) involved participatorymapping, which aimed to clearly identify thenature and extent of the adat community’s role inland use.

Participatory mapping is a method of map-makingthat combines modern maps (topographical maps,aerial photography and satellite imagery) with theadat community’s mental maps for traditional landuse. Combining these two types of map creates aland use map (of a specific territory or kampung)that is agreed as accurate by all the stakeholdersinvolved in the process.

These maps are also very useful in a practical sense,because they also allow comparisons to be madebetween the local government’s Regional Land UsePlan (RTRW), the ‘harmonised map’ and theallocations of land based on the community’sinterests illustrated in the participatory map. Publicinformation processes about the planned allocationsof land and strategies for development that arecontained in the ‘harmonised map’ should alsoinvolve feedback based on the participatory map.This level of input has not been reached, asconsultative mechanisms have yet to be developedto the stage where the local community’s interestsare considered as a matter of course during landallocation processes. These efforts must beaccompanied by other initiatives to stimulate thecreation of land use allocation maps that are bothmore transparent and equitable.

4.1.4 Forest product collection rightsForest Product Harvest Concessions (HPHH), areregulated under Regional Regulation No. 6/1999.40

There were no implementing guidelines for thisregulation until the issuance of the Decree of theMinister of Forestry and Estate Crops No. 310/1999 regarding HPHH concessions. This decreegave individuals or groups the rights to legally usetimber and NTFPs from a maximum area of 100ha for a period of one year, with the permission ofthe Bupati.41 However, although numerousapplications by local communities submitted theMinistry of Forestry and Estate Crops subsequentlyissued a new decree canceling the district-levelauthority to issue HPHH concessions.

This situation resulted in local level conflicts overtimber exploitation rights. For example, in theSundai Ketapang subdistrict a community group hadapplied for a HPHH concession over a former HPHconcession area whose licence had been revoked.The local community declared that this area wasrightfully theirs under adat law and had beenunlawfully seized by the government. At the sametime, the Minister of Forestry and Estate Crops hadclassified this area as a new HPH (PT. KaruniaHutan Lestari) amounting to 41,700 ha.42 TheKetapang district government was unaware of thiscentral allocation of a HPH concession until afterthe submission of the Environmental ImpactAssessment report on the area. This case emphasisesthe lack of co-ordination and integration betweenthe district, provincial and central governments andindicates that greater co-ordination and clarificationof roles is required to achieve effective regionalautonomy. The Bupati and the DPRD believe thatdistrict government should retain the authority toissue HPHH concessions, because this provideslocal communities with small-scale economicdevelopment opportunities. At the time this studywas conducted, this issue was yet to be resolved.

This unclear division of roles, authorities andresponsibilities between the various levels ofgovernment creates uncertainty over the futuremanagement of forestry resources, and increasesthe risk of conflicts of interest between differentstakeholders. In a situation where different levelsof government are issuing concessions over landwith little co-ordination between them, it is likelythat these allocations will overlap, or that the

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amount of land available for new allocations willbe limited. This situation could increase thepressure on conservation forest areas and thenational park. These uncertainties indicate thatunder decentralisation, the struggles over theseinterests are likely to continue and could evenintensify in the future.

Some commentary offered by individualsinterviewed for this report indicated that thisuncertainty is partly caused by the fact that regionalofficials view autonomy only in terms of thedecentralisation of administrative functions; andas and the need to increase local revenues. Thisfocus has excluded consideration of the widerimplications of decentralisation processes, suchas how decentralisation will take account of theinterests and needs of local communities.

The key question in this province is whether theauthority to issue HPHH concessions —as a typeof formal decentralisation of authority to thedistrict level—will exacerbate the destruction ofnatural resources, which would in turn bedetrimental to the region and the peoplethemselves.

4.2 AGRO-INDUSTRIALPLANTATIONS

The situation in relation to plantation activities inWest Kalimantan in general and in KetapangDistrict in particular was described in Sections 2and 3. This section focuses on the specific impactsof decentralisation processes on the plantationssector. In the Ketapang district, decentralisation islikely to have an impact on the implementation ofplantation investment systems; licensing forplantation investments (particularly locationlicenses); specification of crop types (rubber or oilpalm); and the potential of plantations as a sourceof local revenues (PAD) for the district government.

4.2.1 Plantation investment systemsIn order to promote local-level economicdevelopment, the Minister of Forestry and EstateCrops issued a decree in 1999 outlining fiveinvestment systems for the plantations sector.43

These systems take the form of the followingprivate and community partnerships(cooperatives):

1. Plantations Business Cooperative (KUP):100% of the shares are owned by a cooperative.

2. Cooperative-Investor Joint Venture (PAT-KI): 65% of the shares are owned by a cooperativeand 35% by a private investor.

3. Investor-Cooperative Joint Venture (PAT-IK): 80% of the shares are owned by a privateinvestor/company and at least 20% by a cooperative,and this share will be increased in stages.

4. Build, Operate and Transfer (BOT): a privateinvestor/company carries out the development andoperations for a certain period, after which theproject is transferred to a cooperative.

5. Bank Tabungan Negara (BTN): a privateinvestor/company develops the plantation orfactory, after which it is transferred (sold) to aninterested party/the owner, who is member of acooperative.

Personnel at the Plantations Branch Office andBappeda who were interviewed for this studyregard the investment systems outlined in thedecree as lacking relevance to the social andeconomic situation of communities in the district.Firstly, these investment systems rely on theexistence of strong cooperatives, which will bedifficult to develop in Ketapang district. Given thedistances between villages, it is not easy to formcooperatives among rural Dayak communities. Therequirement for cooperatives has therefore been adisincentive to potential investors in the plantationssector. Secondly, these investment systems requireindividual ownership of shares by members ofcooperative. This concept of share-ownership isunfamiliar to the Dayak whose concept of rightsover land use involves collective rights over land,and not the outright individual ownership of sharesin forest land.

This study also identified concern among NGOrepresentatives interviewed, that the communitymembers could be open to exploitation by privatesector investors, as the Dayak have littleexperience in the application of such systems.Because these investment systems were seen tobe inappropriate, the provincial Plantations Officedecided to continue to apply Presidential


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Instruction (Instruksi Presiden or Inpres) No. 1/1996 regarding the development of plantations,since the authority of a Decree of the Minister ofForestry and Estate Crops is below that of aPresidential Instruction. This instruction providesfor plantations under the four systems outlined in3.1.2.2: Swadaya (self-sufficiency), People’s CorePlantation (PIR), Development Service Unit (UPP)and Private National Large-Scale Plantations(PBSN). This last system can be either murni (soleoperator) or in partnership with the community(KKPA).

Regional plantations agency staff interviewed forthis study indicated that they always stress theimportance of developing partnerships with thecommunity to prospective investors. In additionto this, the location licence document for plantationinvestments issued by the Ketapang BPN officeexplicitly recommends that a) the investor involvethe community as participants/owners in theplantations, and/or b) the investor develop aplantation for the community membersparticipating in the program. At the provinciallevel, the Plantations Office and RegionalInvestment Coordinating Board (BPKMD) ask theinvestor to enter into a legally binding commitmentto the effect that, as part of the process ofimplementing the investment, he/she will involvemembers of the community by establishing acooperative for them. Without this writtencommitment, the plantation investment applicationwill not be processed.

Despite these mechanisms to safeguard communityinterests, to date, the development of PrivateLarge-Scale Plantations (PBS) has commonlyresulted in restrictions on the community’s accessto the land. In Ketapang district, this has resultedin conflicts between private sector investors’ andcommunities’ interests, particularly in relation tothe release of titles to land. If a private investor isgiven a Land Use Permit (HGU), the localcommunities commonly regard this as a ‘loss ofland’. Private sector investors view the acquisitionof a clear title to the land as essential, if they areto make an investment.

Under the Members’ Primary Credit Cooperative(KKPA) system, members of the communityacquire guaranteed ownership of shares in the

plantation through a credit scheme. However, oneproblem associated with this system is thatcompanies often experience difficulty with findingbanks willing to lend the capital for the KKPA.Another problem identified by the NGOrepresentatives interviewed for this study is therisk that, in practice, the system can be used byprivate sector companies to gain access to landfor commercial plantation development and couldeffectively result in the loss of adat communityland rights. In Manis Mata in Ketapang district,PT. Harapan Sawit Lestari applied the KKPAsystem in 1995 in order to develop a plantation onabout 2,000 ha of the local adat land. Withoutconsulting the community, the company thenchanged the status of the land title from ‘traditionalright to land’ (hak ulayat), by acquiring a LandUse Permit (HGU), which enabled the companyto legally claim ‘ownership title through thegranting of a title to state land’. This actionprovoked conflict with the local community, whotook action by occupying and taking control ofthe oil palm plantation managed by the company.

Under the KKPA system, a company is sometimessimply not able to develop the plasma plantationsfor the participating farmers. This is the case wherefor example, the land available is not suitable forplantation development, where the soil containshigh quantities of quartz sand or kaolin. In suchcases, community participants who have already‘given up’ their land for the plantation haveprotested. In order to avoid this type of protest,the Ketapang government and the plantationcompanies in the district created an emergencysystem known as the ‘core plantation loan and usesystem’. Under this scheme, the company lends apart of the ‘core’ plantation to the participatingfarmers who have not received ‘plasma’ land.When the plasma plantations are available for thefarmers who have borrowed land, the coreplantation reverts to the company. This system wasdeveloped to prevent instances of conflict betweenthe participating KKPA farmers and the privatesector companies involved in plantationdevelopment in the area.

A desire to prevent this type of conflict canmotivate the local government to take steps thatactually conflict with standard legislation. Forexample, in the case of one Transmigration-PIR

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unit, the plantation was already in production, theparticipating farmers had yet to receive the landallocated to them under the agreement. Theparticipating farmers demanded that the entireplantation be transferred immediately to them. Thisdemand was accompanied by threats that theplantation would be damaged or burned if thecompany refused to comply. To avoid this difficultsituation, the head of the Plantations Branch Officein Ketapang asked the company to distribute theplantation land to the participating farmers through‘profit sharing’, whereby the responsibility formaintenance and harvesting was transferred fromthe core company to the participating farmers.The provincial Plantations Office finally approvedthis measure due to a fear that the plantation mightactually be destroyed.

4.2.2 Location licences forplantationsInvestors wishing to put capital into the plantationssector in the Ketapang district must comply witha number of procedures:1. The investor first must obtain a land allocation

from the governor, with a maximum of 20,000ha of land per district.

2. After being allocated the land, the investor mustarrange a location licence from the NationalLand Agency (BPN) office in the district.

3. Based on the land allocation and the locationlicence, the investor then obtains an investmentlicence from the Regional InvestmentCoordinating Board (BPKMD) in the province.

4. Having completed the first three steps, theinvestor arranges a plantation licence inprinciple from the Directorate General ofPlantations (in this case the provincialPlantations Office).

Although the authority to issue location licenceswas transferred to the Bupati from the Governorunder the October 1993 Policy Packet. As is thecase with the issuance of concessions over forestryland (see section 2.2.1.1. Forest area land use andmanagement), in practice, the Governor also stillretains a degree of control over the issuance ofplantation licences.

However, there has been an instance in which theKetapang government successfully rejected thegovernor’s proposed land allocation, by arguing

that the area allocated had long been used andmanaged by the community. The community onthe allocated land had also voiced their oppositionto the plantation investment. The sub-district headexplained that the local government had indirectlyused the ‘voice of the people’ as its power toenforce authority over the district. Because thedistrict head issues the location licence, he or shecan also revoke it if there is sufficient reason todo so. However, revoking the license does notautomatically free up the land for reallocation. Forexample, the district head revoked the locationlicence of the plantation company PT. AlamKendawangan Indah because there were noactivities underway in the field. However, thecompany still had an investment licence for theland; and, as the authority to revoke this is in thehands of the Director General of Plantations; thestatus of the plantation land became unclear andthe district head could not reallocate it.

These examples illustrate the perception held bya number of officials in the Ketapang localgovernment interviewed for this research, whoview the investment licensing procedure as overlycomplex and inefficient; and who have proposeda transfer of the whole licensing process to thedistrict level. This, they assert would bothencourage more investment and avoid theproblems which arise due to the lack of clarityover provincial and district-level authority overlicence allocation.

4.2.3 Oil palm versus rubberFor more than two decades, the rubber industryhas been experiencing a recession. One reason isthat there has been relatively little investment inrejuvenating old plants whose productivity hasstarted to decline. This recession is marked bythe number of crumb rubber industries in WestKalimantan declining from 13 to 6 in year 2000.Almost half the existing industries were forcedto close down because of a shortage of rawmaterials.

The introduction of oil palm through theTransmigration-PIR system changed the map ofplantation crops in Ketapang. Oil palm plantationswere pioneered and developed in the south of thedistrict. As outlined in section 3.2.1.3 (Localcommunity resistance), initial community


42

resistance to oil palm plantations was overcomeonce the Transmigration-PIR scheme started toshow real profits. Dayak communities in the north,however, generally rejected the oil palmplantations (Table 10). Thus in Ketapang district,the preferred plantation crop in the south (southof the River Pawan) is oil palm, while the northtends to reject oil palm in favour of rubber.

The north’s rejection of oil palm is supported bythe Institute of Dayakology, a Pontianak-basedNGO formed by indigenous people. This NGOappears to have succeeded in spreading themessage that, based on past experience, modernplantations are detrimental to the localcommunities and that rubber cultivation is moreprofitable and appropriate to the Dayak culture(Florus and Petebang 1999).

4.2.4 Plantations as a source of localrevenues

Plantations have so far provided very little in theway of local revenues (PAD) for the Ketapangdistrict because local government does not haveauthority over these activities. The DistrictPlantations Branch Office is an agency of theprovincial level office. However, a DPRD memberinterviewed for this research claimed that somedistrict administrations were already charging Rp 5per Fresh Fruit Bunch (FFB). Other potentialsources of PAD from the plantations subsector arelevies on product processing units (CPO factories),Land and Building Tax (PBB), which is not yetoptimal, and seed quality inspection and supervisionfees. It would also be possible to impose levies ona number of types of licensing related to privateinvestment in the plantations sector.

The Ketapang DPRD has begun to consider theoption of a drafting a regional regulation that givesdistrict government the authority to raise localrevenue from the plantations subsector. It wasexpected that this source could be an importantcontributor to PAD in the future, as a substantialarea of land had already been or was allocated foragro-industrial oil and rubber plantationdevelopment. With respect to regional autonomy,the officials at the regional Plantations Officeinterviewed for this study asserted that that itwould be better for Ketapang district to focusattention on developing plantations (both oil palm

and rubber) rather than on exploiting forestresources. However, ensuring that the role of agro-industrial plantation sector as significant sourceof PAD, would require the local government toeither attract investors into the area or to allocatea significant proportion of their budget toinvestment in developing this subsector. To date,the Ketapang Regional Budget allocation for theplantations sector remains very small. In 1999/2000, it was only Rp 180 million, comprising fundsfor the People’s Plantation Development Project(Rp 130 million) and the People’s PlantationProduction Growth Project (Rp 50 million).

4.3 MANAGEMENT OF THEGUNUNG PALUNG NATIONALPARK

In the Ketapang district, the management of theGunung Palung National Park is a good illustrationof where conflicts of interest have occurred overthe utilisation of a protected area and the naturalresources within it.

4.3.1 Gunung Palung National ParkGunung Palung National Park (TNGP) is one offour national parks in West Kalimantan. It wasestablished in 193744 as a forest nature reservecovering 30,000 ha. In 1981 its status was raisedto that of a wildlife reserve and the area wasincreased to 90,000 ha.45 The status of nationalpark was conferred on 24 March 1990.46

The topography of the TNGP consists mainly oflow plains with a few mountains; the highest peakis Gunung Palung (1,116 m asl). Based on the latestmap issued by the Ministry of Forestry in 2000(see attachment), the surrounding areas containpermanent and limited production forest, andconversion forest. An area of about 8,000 ha inthe north functions as a permanent productionforest (the proposed location for the Harvard(Community Forest) under Community ForestryConcession (HPHKM), which is located within thepark. A sealed main road runs through the east ofthe TNGP, linking Ketapang to Teluk Melano.There are a number of settlements along the road.

The TNGP is a globally significant site, in termsof bio-diversity conservation. The region containsseven types of tropical rainforest ecosystem: sub-

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alpine rain forest, montane rain forest, lowland rainforest, alluvial forest, moss forest, swamp forest,mangrove forest and rheofite vegetationformations that grow along river banks. Thiscomprehensive range of vegetation is home to awide range of fauna; it is also the endemic habitatof the orangutan (Pongo pygmaeus), with thehighest population density in Kalimantan (fourindividuals per km2 (UPT-TNGP 2000).

The TNGP area is divided into five subdistricts(Matan Hilir Utara, Sukadana, Simpang Hilir, SeiLaur and Ng Tayap). Most people living in andaround the park are farmers, some of whompractice swidden agriculture. Based on a surveycarried out by the park management (1996), thecommunity has a good understanding of the term‘conservation area’ and is well aware that theTNGP has this status, although a number do carryout timber harvesting activities.

4.3.2 Management and activities inthe TNGP area

A national park is a nature preservation area withan original or unique ecosystem, managed throughzoning for research, science, education and cultural,tourism and recreational activities.47 As with othernational parks, the authority over, and responsibilityfor managing TNGP lies with the centralgovernment through the TNGP Technical ExecutiveUnit (UPT), which is directly accountable to theDirectorate General of Nature Protection andConservation at the Ministry of Forestry.48

TNGP is managed by zones based on site plandocuments: they comprise the core, forest, researchuse, tourism use, traditional and rehabilitation zones.The main aim of the park is the conservation of thiswet, tropical rainforest ecosystem, the preservationof its natural resources; and to ensure its protectionas a habitat for wildlife in the interest of research,science, education, ecotourism and sustainable useby the communities living in the area. At the timethis research was conducted, allowable activitiesin the buffer zones, which are outside but closelyrelated to the management zones, had yet to bestipulated and delineated by the local government.49

The local communities living in the area carry outa number of activities within the park boundariesincluding exploiting timber and NTFPs, cultivation

and mining C-classified extractives. This areaattracts international interest as a site for research.TNGP UPT’s records show that from 1987 toMarch 2000, there had been 98 researchersworking in the area of whom 47of whom wereforeigners. The most well known researchactivities have been conducted by HarvardUniversity, which has had researchers exploringthe wealth of biodiversity in this area for about 15years. Research activities are still being carriedout by the LTFE, based in a research station atGunung Panti.

4.3.3 Responses to the TNGPmanagement activitiesUntil 1996, TNGP was still classified as a naturereserve, and few difficulties were recorded (KSDAUnit records). Mackinnon (1990) even used GunungPalung as an example of a protected area supportedby the local adat laws and traditions, which werealso respected by incomers to the area. There wasminimal disturbance, and the management of thearea was sustainable (conservation rangers were notconsidered necessary). This is no longer the case.The TNGP area has come under significant pressure,particularly from logging activities. An official fromProvincial Bappeda claimed that TNGP was undergreater threat than any other national park in theprovince. Increased demand for timber, which hasnot been met by production forest (HPH) areas, hasmeant that the park has become an alternative sourceof timber. Individuals interviewed for this researchindicated that adat regulations and traditions wereno longer being observed and the security systemput in place by the TNGP UPT was not sufficient.Open accesses from all sides, by both land and river,and the activities of some members of the localcommunity, who are involved in commercial timberexploitation have all served to exacerbate thesituation. It is estimated that a third of thehouseholds in and around TNGP derived asignificant proportion of their income from timberexploitation.

At the field level, there is a need to increase localawareness of conservation issues within the park.Local communities also need to be able to useforest resources, particularly timber, as a sourceof income. Amongst those interviewed for thisresearch there were widespread indications thatthe centralised management system, does not take


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local community interests and needs into account.This in part, was identified as a cause of the failureof the current conservation system. In other words,whilst the centralised control of the park has beenclaiming successful conservation; it has dependedon, what some saw as a repressive approach, whichcarries high social costs, and has failed to securereal benefits for the local communities living inand around TNGP. This is supported by Mackinnon(1990), who states that one criterion for a nationalpark is that it should provide clear benefits for localcommunities within the region.

At present, the authority for the management ofprotected areas, including national parks, is heldby the central government. There are no plans totransfer this authority under the implementationof regional autonomy. The central government’sperceived ability to maximise the real benefits ofTNGP, together with the increasing pressure onits natural resources are causing a number ofstakeholders to consider applying for independent,local management of the area. At Kutai NationalPark (East Kalimantan), the local governmentdeclared itself capable of independently managingthe area; and this was approved by the UPTthrough the head of the park informing the DirectorGeneral of Nature Protection and Conservation.50

4.3.3.1 TNGP Technical Executive UnitA UPT, directly accountable to the DirectorateGeneral of Nature Protection and Conservation,was set up in 1997.51 Whilst this was a positivestep, those interviewed for this research claimedthat it was not yet supported by the neededinfrastructure, apparatus and funding resources.

In order to safeguard the 90,000 ha of TNGP, theUPT is supported by 31 forest police in fourregional units (Pangkal Tapang, Sukadana, BatuBarat and Kubing), which operate along theborders of the park. No other infrastructure as setout in the site plan has been put in place.

Although the UPT represents the centralgovernment and is fully authorised in managementmatters, several matters remain at the discretionof other government bodies and individuals. TheUPT has no control over licensing research,particularly that initiated by LIPI (The IndonesianInstitute of Science), and only receives a copy of

the licence once it has been issued. Researchfindings are also retained at the central level. Thusthe park management has been unable to fullybenefit from Harvard University’s 15 years ofresearch; the UPT has few copies of the resultsand, furthermore, officials interviewed for thisresearch did not know how to acquire them.

There is also limited capacity to carry out outreachactivities with the local communities. Harvardestablished 35 Community Self-Help Groups(KSM) in the region and, with support, these groupsgot as far as submitting a model for theempowerment of the community economy throughCommunity Forestry Concessions (HPHKM). TheTNGP UPT felt that the proposed HPHKMs couldactually become buffer zones for the national parkif there were clear regulations, and these wereimplemented consistently. However, they could alsopose a threat to the preservation of forest resourcesbecause of limited capacity within the KSM,resistance from those communities not included inthe Harvard scheme and, more importantly, the factthat the status of the regions and the managementplans for the buffer zones are not yet clear.

With all these limitations, TNGP UPT officialsthink it is necessary to involve other stakeholdersin the park’s management. At present, other parties,such as the local government, security forces andadat communities, have limited involvement,particularly in cases involving conflicts with thecommunity groups. In the future, it will benecessary to accommodate a wider range ofstakeholders in the park’s management. This wouldinclude developing a greater role for the districtgovernment. The current regulations do not defineany role for the district government in themanagement of the area within the national park.The district government, is, however responsiblefor the management of buffer zone outside thepark. The head of TNGP indicated that an overhaulof the legal foundations governing themanagement of the park was required. He also feltthat, given the current condition of the park, anytransfer of responsibility for its management couldbe more of a financial burden than a source ofrevenue for the district government. One Bappedaofficial, in contrast, claimed that an expandeddistrict government role would provide greateropportunities to increase local revenues (PAD), for

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example through transferring control of tourismin the park.

4.3.3.2 Local government and the DPRDSince it was declared a national park, GunungPalung has not demonstrated clear socio-economicbenefits for local communities living in and aroundthe park. In fact, it’s status as a national park hasbeen the source of a number of controversies.Based on the regulations in force at the time thisresearch was conducted, sources of real incomefrom the park were to be generated by tourismactivities, distributed 30% to the centre, 30% tothe province and 40% to the district. As the UPT’sactivities are limited, particularly in themanagement of tourism, the district governmenthad demanded an increased role. Available recordsrecorded just 134 visitors to TNGP in 1999compared to as many as 66,000 visitors to the GedePangrango National Park in Java (MTGPNP 1996).These statistics demonstrate that there waspotential for TNGP to be further developed as anecotourism attraction, which could, in turn providea good source of revenue for the local communitiesand for the district government.

Another potential source of income is the traditionalexploitation of rubber plantations and NTFPs suchas durian fruit, in addition to opportunities for localpeople to carry out cultivation activities within thenational park. A member of the DPRD interviewedfor this research indicated that there was room formore co-ordination of commercial opportunities byBappeda, as a means of securing income for localcommunities and thereby improving theenvironmental sustainability of the park itself. As aregional and a national asset, it is important thatthe TNGP is managed sustainably in the interestsof the local communities and the conservation ofthe park.52

The local government has looked carefully atHarvard University’s activities, focusingparticularly on the idea of recommendingallocating Community Forestry Concessions(HPHKM) to the Self-help Community GroupsKSMs in buffer zones. This issue has now becomea topic for public debate following the burning ofthe Lubuk Kuali camp (see section 4.3.3.3.). Thisdiscussion has attracted attention at theinternational level as it concerns the activities of

supporting international institutions, such as theBiological Conservation Network. It can be arguedthat improved communication with all of thestakeholders, including the local government, mayhelp to avoid some of these problems in the future.District government officials interviewed for thisresearch claimed that, despite the fact that thedistrict government is responsible for managingthe buffer zone, it has been excluded fromdecision-making processes related to the parkitself. For example the agreement over CommunityForestry Concessions (HPHKM) was made at thecentral level (Harvard’s MoU was with theDirector General of Forest Protection, Ministry ofForestry). At the time this research was conducted,Harvard had become involved in discussions withthe local government to try to resolve some of thesedifficulties, but in the meantime the HPHKMproject had had to be delayed. One DPRD memberasserted that the whole project should be revised,and that Community Forestry Concessions shouldnot be granted within TNGP. This position hassince been supported by the provincialgovernment, which enforced a status quo on allactivities in the TNGP (Pontianak Post 26.07.00).

4.3.3.3 Harvard University and the NGOsIn 1994, some researcher from Harvard Universitydeveloped a concept of ‘production forest’management (outside TNGP area) by localcommunities. In relation to the HutanKemasyarakatan (Community Forest or HKM)project (discussed above in section 3.2.1.4,Horizontal Conflicts within the Local Community),the Director of Harvard University LTFE said in adiscussion forum that the goal of these activitieswas to find solutions leading to sustainable timberproduction and the conservation of the biodiversityin logged-over areas, particularly in the bufferzones on TNGP’s borders. It was also hoped thatthis model would produce an incentive for the localcommunities to protect the park’s naturalresources. The second goal was to assist inincreasing the capacity of the local governmentand NGOs to apply community-based forestmanagement (CBFM) in other places and tointegrate economic development with biodiversityconservation through production forestmanagement. The final aim was the establishmentof an institution for entrepreneurs from thecommunity, dealing with forest management in ex-

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HPH areas, low-impact logging, wood processingin the form of sawn timber (seen as more profitablethan selling logs) and developing a marketingsystem, including seeking ecolabeling certificationfor the products.

Here, the aim was to empower local communitiesto manage forests in collaboration with timberprocessing businesses. When they wereinterviewed for this research the heads of the localsubdistricts, Sukadana and Simpang Hilir, both hada negative view of the Harvard HKM controversy.They saw the initiative as having caused unrest intheir administrative areas. While the project mayhave been operating in the area for 15 years, thesubdistrict heads knew little about its current andfuture activities.

They argued that the project had actually servedto divide the people into two groups, which theyclassified as participants (the minority) andobservers (the majority). Resentment haddeveloped towards the participants, as they appearto be an exclusive group. Local and provincialNGOs have become increasingly critical of themanagement of TNGP a number of NGOs haveheld discussion forums on TNGP for stakeholders,with the backing of foreign donors. USAID’sNatural Resources Management Project is alsocurrently running a programme to develop theinstitutional strength of several new NGOs. Thesedevelopments have been positively received bythose involved, including local government, asthey hope it will also contribute to a solution toconflicts in the area. A central concern for NGOsand international institutions working in the areais to find methods of integrating conservationobjectives with socio-economic needs of thecommunities living in and near the park. This isconsidered to be an important issue to take intoaccount to prevent new controversies arising.

4.3.3.4 Communities in and aroundGunung Palung National Park

With the official declaration of TNGP as aprotected area, the community’s access to itsresources has been replaced by what is called a

‘conservation benefit’. At the time this study wasconducted, economic hardship had led to increaseddemands for local community access to forestproducts. Given the present condition of the park,and the relative underdevelopment of eco-tourismopportunities, the advantages of conserving theforest in the park are not clear to the localcommunity members. One NGO based inPontianak observed that pressure on the park’snatural resource, particularly in relation to timberextraction is increasing. This is reflected by theincreasing number of people becoming involvedin logging within the park.

Feedback from interviews with stakeholderssuggests that one way to halt this exploitation ofthe forest, particularly within the TNGP, is to havean alternative source of income that is moreattractive to the community. Other potentialbenefits of conservation must therefore be realised,for example, ecotourism, which could open up anew employment opportunities and increaseregional revenues from taxes and levies. The sameapplies to research activities, which could also bea source of revenue.

The main difficulty is how efforts to protectconservation areas can balance competing demandsfor ecological and economic benefits. Any effortsmust be supported by legal actions that are clear andauthoritative in the eyes of the local communities,who feel they have not been treated fairly in the past.53

The behaviour of the government agencies reportedlyinvolved in logging must also be brought undercontrol (Silva Indonesia Pontianak, Harian Equator,25 June 1999). The Ketapang DPRD itself isattempting to address some of problems associatedby the pressure on the natural resources in TNGP bypreparing a regional regulation regarding themanagement of logging and the control of cultivationactivities and C-classified extractives in the area. Thisregulation will relate to the local government’sauthority to manage the buffer zones, which basicallyinvolves controlling natural resource exploitation inthe area in a way that limits incursions into GunungPalung National Park’s core area.

Conflicts of interests, diverse in both horizontaland vertical ways, have pervaded across thedecentralized forestry and plantation sectors inKetapang district, and West Kalimantan in general.The local governments and communities risklosing out on the opportunities and benefits of goodgovernance, which calls for proper devolution ofauthorities as an urgent priority. The previousanalysis at the provincial and district level as wellas the thematic cases (adat communities,plantations and National Parks) showed indicatorsof decentralisation on decision making andadministration/management of the forestry/plantation sector, which is summarised as follows:

5.1 DE FACTODECENTRALISATION

Regional autonomy represents an opportunity forregional governments, at both provincial anddistrict levels, to develop policies, and takeadministrative measures related to forestry andplantations beyond the centralistic guidelines (lawsand regulations) of the Ministry of Forestry andEstate Crops. This is illustrated by the formal(government policies) and informal (non-government policy) de facto measures adopted.

5.1.1 Illegal loggingThe district government is aware that a significantproportion of government revenue is lost throughillegal logging. It also realises that it is not possibleto stop these activities because of the wide rangeof stakeholders (who benefit from these activities)and local resistance to forest management policiesthat do not benefit the local economy. As in otherareas in Indonesia, in West Kalimantan the

escalation of illegal logging would seem to havebeen more related to the economic crisis and‘reformasi’ euphoria than the structured and properdevolution of governing authorities. Whilst Illegallogging does not make any direct or officialcontributions to PAD, benefits are accruedindirectly through the associated multiplier effectsin the transportation services (land and inlandwaterways/sea), hotel, wholesale trade and small-scale timber processing sectors. The latter industrycontributes to the local economy both throughcontributions to the GRDP and by providing local-employment. Because of these indirect benefits,the district government has tended to turn a blindeye to illegal logging activities. Moreover, someofficials interviewed for this research wereconcerned that the economic benefits that couldbe directly derived by the local government didnot compare favourably with the costs oferadicating these activities. The Ketapang districtgovernment’s response to decentralisation was todraw up regulations aimed at increasing its shareof the revenue derived from logging activities, andto replace informal revenues (generated by illegallogging) with legal levies and fees.

5.1.2 Harvest Concession forForest Products (HPHH)Within the Ministry of Forestry and Estate Crop’sdecree, authorization is given for a shift in theadministrative authority to the provincial anddistrict level to grant small-scale timber extractionpermits in an effort to ‘legalize’ the transportationof illegally harvested timber. The timber’s originis not in question. The district government is‘laundering’ the status of illegal logs, which are

5 CONCLUSIONS


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referred to as ‘local community produce’. Thedecree gives the impression that the centralgovernment is committed to democratic economicdevelopment. Pursuant to that decree, the RegionalRegulation on HPHH gives more opportunities tolocal communities to manage Production Forest.The HPHH has been seen as an opportunity torestore traditional community rights to the forest,as well as being a potential source of regionalrevenue (PAD). In practice, local people do not havethe capital nor equipment to operate the HPHH areaand they cooperate with timber companies holdingHPH concessions under a ‘profit-sharing’arrangement. In reality the utilisation of forestresources is centred around a few establishedcompanies. This benefits the government by havingless concession holders to control.

5.1.3 Plantation investmentproceduresThe five plantation investment systems, thatrequire the participation of cooperatives asshareholders, were seen to be impeding the processof investment in the plantations sector. This wascaused by the difficulties in ensuring equalpartnerships and benefit sharing between localcommunities and private sector investors.

5.1.4 Local community autonomyThe perception of most local communities is thatthe private forestry sector and agro-industrialplantation companies limit their access toforestland and resources, thereby causing them afinancial loss. The district government, however,wants to increase investment to stimulate theregion’s economic growth, and to generate muchneeded district revenue. In some areas, this hasled to a conflict of interest between the districtgovernment and local communities. An exceptionwas in Ketapang, where the local governmentshared the concerns of the local communitybecause the investors’ proposals did not conformto its desire to limit the expansion of oil palmplantations. These were seen as detrimental froman ecological perspective. In cases such as this,the local government cites ‘local communityautonomy’ as justification for its decisions andactions. A participatory map clarifying adattenurial rights must be developed as a tool thathelps further justification of the local communityautonomy.

5.2 LINKINGDECENTRALISATION ANDFOREST CONSERVATION

Despite the fact that forest exploitation e.g. illegallogging, in the sense of people’s resistance, hasbeen viewed as a form of de facto or informaldecentralisation, the decentralisation itself does notnecessarily mean that forest resources will bethreatened by an uncontrolled increase in forestdestruction. It has also the potential to bring aboutpositive results for forest conservation. Althoughit can be anticipated that the immediate action ofthe district government will be aimed at makingthe forests the primary source of PAD, this doesnot automatically mean that forest exploitation willincrease. Boosting revenues from the forestrysector does not have to be achieved by increasingwood production, but could also be met by raisingtaxes and levies on a wide range of current (legaland illegal) timber extraction, transportation andprocessing activities. After all, decentralisation isonly as good as the governance practices itemanates from.

5.3 EMPOWERMENT OF LOCALPEOPLE

At the local level decentralisation tends to beinterpreted as empowering the regionalgovernment through the transfer of authority fromthe central government. The pattern may be viewedas shifting the ’centralisation’, from the nationalto the district level. Whilst this interpretationinvolves a power struggle between the provincialand district governments, where each party triesto secure the greatest portion of the decentralisedauthority; there was little or no consideration ofhow decentralisation processes could lead to theempowerment of local communities. NGOrepresentatives interviewed for this research, mostof whom were based in Pontianak, held that localcommunities must be empowered through theprocess of regional autonomy, and that they receivean equitable share of the socio-economicopportunities offered by decentralisation. Havingaccepted that to be effective decentralisationshould orient towards the lowest commondenominator namely ‘local people’, legal provisionshould be taken into account as well. No matterhow tattered the state’s law has been, the legal

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framework should be factored in policydeliberations. We could find a better, legal basesof ‘empowerment’ as well as practical ways to it,e.g., the strengthening of ‘adat’ claims over forestland, including the use of participatory mapping(by the local communities) as a counterbalance tothe formal maps used by the government whenplanning resource management. Eventually thealliance forged between district government andcommunity leaders (DAD or Dayak Adat Council)should be viewed as a measure of empowerment(namely pro-community) for which progress needsto be monitored.

5.4 THE ROLE OF THE PRIVATESECTOR

Decentralisation processes do offer increasedopportunities for district governments to regulateand raise revenue from the forestry and agro-industrial private sector. Nevertheless, the districthas yet to develop the local economy to providethe level of investment required to ensuresuccessful development of the sector in the long-term. Thus, the district government is likely tocontinue to rely on the private sector forinvestment. This dependence on private sectorinvestment may result in the private sector interestspredominating forestry and agro-industrialdecision-making. For example, land allocationsby the governor for plantation sector developmenthas exceeded the amount of land available for thispurpose in Ketapang. The introduction by thedistrict government of a regional regulation thateffectively ‘legalises’ timber harvested without apermit can also be seen in this light. However, thedistrict does have the authority to revoke a locationlicence if the investor does not undertake activitiesin the field. Decentralisation may direct districtgovernment policy towards providing greaterincentives to companies, which could produce realand sizeable revenues for the government. Thiscould also have a significant effect on thedevelopment of the local economy.

5.5 LAND USE PLANNING

In the context of decentralisation, land useplanning is an area where in which a complexset of competing interests converges. Theseconflicts over authority over land use planningoften occur between the provincial Bappeda and

the Forestry Office (Dinas Kehutanan) on onelevel and between the provincial and districtgovernments on another. The conflict betweenthe provincial Bappeda and the Ministry ofForestry over the construction of the ‘harmonisedmap’ represents the struggle for authority overland areas between the region and the centre. TheBappeda wanted to change the status ofdeforested areas so that they could be used forregional development, whereas MoFEC rejectedthis proposed change of status, which wouldreduce the area of land under its administrativeauthority. The case of the Ketapang districtgovernment’s conflict with the provincialgovernment over the granting of plantationconcessions, illustrates the type of conflict arisingbetween the provincial and district governments.

5.6 FINANCING LOCALDEVELOPMENT

The official revenues derived by regionalgovernments (at the provincial and district level)from forestry activities, are very limited comparedto the value they represent to the centralgovernment and the private sector. Therefore,decentralisation represents an opportunity forregional governments, particularly at district level,to increase local revenues to finance localeconomic development. This is reflected by theproposed concept of a ‘district forest’ (a forest areaunder the authority of the district), for the forestryand plantations sector, and the transfer of forestutilisation licensing from the centre to the region.This latter action is also intended to help preventoverlaps between HPH areas (the centre’s authorityover licensing), HPHH areas (the district’sauthority over licensing) and community forestbased on adat claims. The results of a participatorymapping activity by the local people (withassistance from an NGO) clearly show theseoverlaps.

5.7 HUMAN RESOURCES FORDECENTRALISATION

The transfer of forestry matters to the districtgovernment level is not stated explicitly in RegionalRegulation No. 25/2000, leaving opportunity for atug-of-war in the process of decentralising forestryaffairs. The agencies of the Ministry of Forestry and

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Estate Crops, The Regional Forestry and EstateCrops Office (Kanwil), and the Provincial ForestryOffice (Dinas Kehutanan) officials interviewed forthis research, cited limited professional capacity atthe district level as a reason for deferring any realtransfer of authority over forestry and agro-industrialplantation activities. Instead, these agenciesrecommend that decentralisation be carried out instages, to allow time for the district government’sability to manage forest resources to develop. TheProvincial Forestry Office official refused the ideaof making a District Forestry Office instead theyproposed the establishment of a UPT Forestry atthe sub district level. Such a scheme(decentralisation to sub-district rather than districtlevel) has yet to form a good legal base. As aconsequence, the district government will have lessor no authority in the district forestry sector.However, the district government favours theimmediate transfer of authority over the forestmanagement sector, to the district level. If the localagencies felt unable to implement managementeffectively, they would be entitled by law to returncontrol temporarily to the provincial level. To thisend, the Ketapang government is thinking ofreplacing the KPH Office with an Agriculture andForestry Office, so that neither the Ministry ofForestry nor the Provincial Forestry Office wouldhave an ‘extension’ in the district. They have alsoconsidered transforming the UPT of TNGP (anagent of the Ministry of Forestry) into a regionalUPT.

5.8 NON-FOREST RESOURCES(MINING)

The decentralisation of authority over themanagement of non-forest resources may resultin the exploitation of forest resources declining as

a source of PAD for the district. One of the non-forest resources that could potentially substituteforest resources, to provide revenue for the region,is mining. It is assumed that gold and sand miningin Ketapang District would give significanteconomic contributions to the region if the districtgovernment were authorised to manage theirmining resources. In this case, the districtgovernment would not have to use forest resourcesas a source of PAD, instead the regional revenueswould have been provided by the mining sector.

5.9 PROTECTED AREAS

Protected forest zones constitute areas whereecological interests (under the Ministry of Forestryand Estate Crops) are frequently in conflict witheconomic interests (under the regionalgovernment, local entrepreneurs and localcommunities). The case of TNGP indicates thatthe very small economic benefit derived by theregional government and the local communitiesmay, in part, have contributed to the escalation ofillegal logging in the area. A system of managementand incentive, which automatically involves thedistrict government and the local communities, isrequired. This is to ensure that the park’smanagement meets the needs and interests of thelocal community. The utilisation areas (KawasanPemanfaatan) and non-timber forest resources ofTNGP could potentially provide the localgovernment and communities with economicbenefits such as ecotourism. Based on Article 10paragraph 1 of Law No. 22/1999, the districtgovernment hoped to manage the ecotourismpotential of the national park, to increase the park’scontributions to the local economy.

6 ENDNOTES

1. Decree of the Minister of AgricultureNumber 680/Kpts/Um/8/1981 regardingGuidelines for Forest Land Use by Consensus.

2. The total area for HPH was 7,136,000 ha,while the total protected area, according to theRTRWP, was 3,812,740 ha.

3. Regional Regulation of the Province of WestKalimantan No. 1/1995.

4. Decree No. 143/1995. 5. Decree No. 316/1999. 6. Regional Regulation No. 4/1999. 7. Under the APBD, local revenues are

obtained from regional taxes, local levies, profitsfrom regionally owned enterprises and other items.

8. Bappeda, in cooperation with consultants,completed the Ketapang RTRWK in 1998 basedon field data.

9. Swatantra is the term applied to agovernment region during the 1950s, and is nowequivalent to a province.

10. Government Regulation No. 21/1970regarding Forest Utilisation through HPH andHPHH.

11. Pursuant to Decree of the Regional AffairsBoard (DPD) of the Level I Swatantra of WestKalimantan No. 8/DPD-1959.

12. Decree of the Governor of WestKalimantan No. 331/1986.

13. The UPTs came under the control of theRegional Office with the Decision of the Ministerof Forestry No. 144-147/Kpts-II/1991.

14. Danau Sentarum National Park wasdeclared as such pursuant to Decree of the Ministerof Forestry and Estate Crops No. 34/Kpts-II/1999,but remains under the management of the KSDAUnit.

15. Decree of Minister of Forestry No. 185/Kpts-II/1997 about functions and structures ofNational Park and its Technical Executive Unit

16. Decree of Minister of Forestry No.05.1/Kpps/II/2000 about transfer authority to issue HPH

timber concessions for areas up to 10,000 ha andTimber Clearance Permit for areas up to 100 ha tothe regional government

17. Decree of the Governor of WestKalimantan No. 389/2000.

18. Decree of the Minister of Forestry andEstate Crops No.107/1999.

19. This followed the issue of Law No. 5/1967regarding Forestry, Law No. 1/1967 regardingForeign Direct Investment, Law No. 6/1968regarding Domestic Investment and GovernmentRegulation No. 21/1970 regarding ForestUtilisation through HPH and HPHH.

20. Decree of the Minister of Agriculture No.Kep 79/11-1967.

21. Forestry Work Programmes (BKPH) arethe permanent annual work plans for former HPHsnow managed by state-owned enterprises. It isequivalent to an Annual Management Plan for aregular HPH.

22. The province supplying the greatestamount of wood to West Kalimantan in 1999/2000was Central Kalimantan (860,059 m3), followedby East Kalimantan (375,3739 m3). Otherprovinces supplied less than 100,000 m3.

23. Government Regulation No. 7/1990. 24. Kelapa dalam is a plantation term for a

local palm of a different type to hybrid palms. 25. Memorandum of the Governor of West

Kalimantan 1983–1988. 26. Decree of the Minister of Forestry and

Estate Crops No. 107/1999. 27. The patungan (joint venture) system is

operated by a private investor with a DR loanfacility from government equity financing througha BUMN (state-owned enterprise); the murni(pure) system uses only private capital.

28. The KPH Office’s assessment is thatproduction from community logging totalled150,000 m3 and approximately 300,000 m3 of sawntimber was produced per year by hundreds of

52


‘illegal’ sawmills from 600,000 m3 of logs. 29. Approved tax sources include hotels and

restaurants, entertainment, advertising, streetlighting, C-classified extractives and groundwater.

30. Approved levies include market levies,uang sempadan on construction permits, settransportation route levies, uang pangkalan levies,levies on livestock inspection fees, levies on theleasing of land or property, bus station and taxilevies, hospital and clinic levies, the lease ofregional government-owned equipment, levies onresident’s identification cards, parking lots andpublic cleaning.

31. Decree of the Minister of Forestry andEstate Crops No. 107/1999.

32. The delegated authority includesreforestation/conservation, management ofcommunity/protected forests, and the managementof non-timber forest products including those inforest concession zones.

33. Stipulated on 18 October 2000 and enactedon 1 November 2000. This Regional Regulationessentially regulates the implementation of forestmanagement in the form of HPHH, timberexploitation licenses, forest product management,disbursement of forest product fees (IHH),procedures for the receipt and use of IHH,procedures for filing applications for forestmanagement licenses, the stipulation of forestareas in Ketapang district and timber tradeprocedures. The implementation of each of thesematters will be regulated in a Decree of the DistrictHead, which is currently pending approval fromthe Regional Legislative Assembly (DPRD)(March 2001).

34. Based on Law No. 25/1999, districts areentitled to 64% of IHPH/IHPHH, 32% of PSDHand 40% of DR.

35. The amount will be stipulated through aDecision of the District Head.

36. Regulations that accommodate recognitionof adat communities, ulayat land rights and adatlaws can be found in Act No.5/1960 article 2,3and 5) on the Basic Agrarian Law and Act No.41/1999 article 37 on Basic Forestry Law

37. Estimates from a member of staff at theEconomics Division of the Ketapang localgovernment.

38. Law No. 22/1999 on Regional Governance.

39. Based on a Singaporean entrepreneur’sinvestigations.

40. This regulation replaces RegionalRegulation No. 21/1970, in conjunction withRegional Regulation No. 18/1975 regarding HPHand HPHH.

41. Until then, the utilisation of forestproducts, particularly wood, had been granted onlyto large-scale entrepreneurs through HPHs despitethe fact that Regional Regulation No. 21/1970explicitly regulates HPHHs.

42. This new HPH was stipulated by Decreeof the Minister of Forestry and Estate Crops No.938/Kpts-VI/1999 dated October 14, 1999; Letterof Recommendation of the Governor of WestKalimantan No. 650/3425-A/18 dated 10-10-1999in the ex-HPH area of PT. Djuaja II Sandai.

43. Decree of the Minister of Forestry andEstate Crops No. 107/1999.

44. Pursuant to Staatsblad No. 4/13.ZB/1937. 45. Based on Decree of the Minister of

Agriculture No. 1014/Kpts/UM/12/1981. 46. Based on Decree of the Ministry of

Forestry No. 448/Kpts-II/90. 47. As defined in article 1 paragraph 14 of Law

No. 5/1990 regarding natural resourceconservation and ecosystems.

48. Decree of the Minister of Forestry No.185/Kpts-II/1997.

49. Circular Letter of the Minister of HomeAffairs No. 660.1/269/V/Bangda dated 16February 1999.

50. Letter No. 984/BTNK-2/2000 to theDirector General of Nature Protection andConservation regarding the transfer of themanagement of the Kutai National Park to the localgovernment.

51. Decree of the Minister of Forestry No.185/Kpts-II/1997.

52. In accordance with article 10 paragraph 1of Law No. 22/1999.

53. The people of the Laman Satong Village,who live in the TNGP area, explained to theKetapang DAD ‘that the efforts to protect theTNGP that have been made up to now will bemeaningless; if there is an invasion of loggers fromoutside the area nothing can be done as they haveno legal authority to do anything.

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Decentralisation-Case8

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