Tree stumps stand naked in a peat swamp in Riau, Indonesia. WWF-Indonesia/Eye on the Forest

04/06/2012 (Jakarta Post) -Indonesia is on the brink of transformation.

Committing to a bilateral deal with Norway, it has run a series of efforts to reduce emissions and introduced stronger forest governance under the Reducing Emissions from Deforestation and Forest Degradation (REDD) regime, including halting the issuance of forest-clearing permits for primary forests and peatland.

If considered successful, Indonesia could secure up to US$1 billion from the Norway government.

But the road to that has been stormy. Commemorating the second year of the deal last month, the government announced the second revision to its forest-clearing moratorium map (PIPIB), in which it excluded 92,245 hectares of primary forests and peatland from protection. This leaves only 65.2 million hectares protected under the deal.

The government said the revision was made after corrections from ministries and ground checks.

In fact, rouge deforestation is still occurring. The Central Kalimantan branch of the Indonesian Forum for the Environment (Walhi) reported last month that two oil palm plantations had been issued new operational permits for concessions in protected forests in Pulang Pisau regency.

Telapak environment watchdog found last year that the Norway government was indirectly involved with companies engaged in illegal logging.

In its report, Telapak stated that palm oil firm PT Menteng Jaya Sawit Perdana, a subsidiary of Kuala Lumpur Kepong Berhad (KLK), had opened up 7,400 hectares of primary forest and peatland in East Kotawaringin, Central Kalimantan, last year.

This was despite having only a location permit but not a business permit as required under the 2007 Plantations Law, or a permit from the Forestry Ministry releasing the land from its protected status.

Norway’s Government Pension Fund Global (GPFG) owns shares in KLK. GPFG also holds shares in the Hong Kong-based Noble Group, which controls PT Henrison Inti Persada (PT HIP), a company that paid landowners in Sorong, West Papua, a pittance for their land and timber.

The Gilik clan of Malalis village received a one-off payment of US$923 (Rp 8.5 million) for 14.2 square kilometers of forested land — equivalent to just $65 per square kilometer, or 65 cents per hectare.

“Oil palm development is a very lucrative industry for investors, including developed countries. So it may not just be Norway,” said Abu Meridian, Telapak’s forest campaigner.

Norway’s Finance Ministry has confirmed the ownership of less than 1 percent of the two companies, which has been reduced since the report was release. Runar Malkenes, the ministry’s deputy director general for information, said the holdings had been reduced from $41.5 million to $3.5 million since the report was published last year.

“We have a set of ethical guidelines for our investments. The ministry can exclude companies from the fund based on recommendations from the Council on Ethics,” he said.

It has also decided to reduce investment in the Noble Group from $38.9 million in shares to $27 million.

The GFPG’s ethics council acknowledged the two cases but refused to comment as it could not give any information on companies until a conclusion was reached.

“If a company in which the fund has holdings is involved in illegal logging, this may in itself provide a basis for recommending the exclusion of a company,” said Hilde Jervan, the council’s chief advisor.

The council previously advised against investment in Malaysian Samling Global and subsidiary Lingui Developments on these grounds.

Another case of new permit issuance involved an operational license for the Tripa swamp in Aceh last year.

Walhi’s Teguh Surya said the Indonesian government had shown weakness by excluding the area from protection in the first revision of the moratorium map but has since reinstated it. The Tripa peat swamp is located on the west coast of Aceh. The new controversial operational license is for PT Kalista Alam.

“[The map verification process] is not transparent. The freeze on forest clearing is not going to work to improve the REDD regime,” he said.

UN Development Program Indonesia climate change specialist Tomoyuki Uno said the government should engage more with the private sector and local administrations to agree on a plan for REDD.

“The talks should be happening in provinces on strategy,” he said

Yuyun Indradi, a forest campaigner from Greenpeace Indonesia, said the bilateral deal with Norway was a major test case for Indonesia on whether or not REDD could be implemented. “If Indonesia succeeds, it will have a better bargaining position in the UN climate forum and will secure more interest in protecting its forests,” he said.

The head of the working group on legal review and law enforcement of the Presidential’s REDD+ Taskforce, Mas Achmad Santosa, said that the team had acknowledged the cases and would push the legal process against the companies if they are proven to conduct black logging.

“We don’t care who owns or the share holders of the perpetrators of the illegal logging. Justice must prevail and law stands above all,” he said.

The taskforce is also preparing a special legal enforcement squad, consisting of the Forestry Ministry, the National Police, the Attorney General Office and the Environment Ministry to combat the illegal practices.