7/2/06 JAKARTA (AFP) - Activists and economists are outraged at Indonesian plans to cut a swathe through one of the world's largest remaining areas of pristine rain forest to create a massive Chinese-funded palm oil plantation.

The remote stretch of land on Borneo island, home to countless species of rare birds, plants and mammals including the largest remaining wild orangutan population, could be decimated in what critics fear is a ruse to access timber.

The 2,000-kilometre-long, five-kilometre wide (1,242-mile, three-mile) plantation proposed by the economics ministry in mid-2005 would traverse almost the entire border between Indonesia and Malaysia, slicing through three national parks.

"The question is, why there on the border, when Indonesia has such huge abandoned, unproductive palm oil plantations or degraded forest areas across the country," said Togu Manurung, from Forest Watch Indonesia.

Indonesia is already losing rain forest equal to half the size of the Netherlands every year, or some two million hectares (4.9 million acres), conservation group WWF estimates.

Prominent economist Faisal Basri accuses the economics ministry of offering timber in exchange for Chinese investment in infrastructure projects, knowing that it is unlikely the area will actually be farmed once it is cleared.

News of the planned plantation hit headlines weeks after President Susilo Bambang Yudhoyono returned from a trip to Beijing last July which saw several pacts inked.

Details of what was agreed on the plantation have not been made public.

"I think that the final objective of the project is to exploit logs -- yes, giving free timber in exchange for developing infrastructure," Basri told AFP.

The spoils would include valuable ramin timber, exports of which are officially banned by Indonesia.

"It's too ridiculous from an environmental point of view, but also from a technical point of view too," Basri said.

Separate studies by Indonesia's agriculture ministry and WWF have found the region is too mountainous to support effective palm oil farming, which is most productive on flat terrain.

A preliminary ministry study found that only 10 percent was suitable for palm oil, Ahmad Dimyati, director-general for plantations in the agricultural ministry, told AFP.

Greenomics, an environmental auditing group, has estimated Indonesia would lose 15 trillion rupiah (1.5 billion dollars) annually for five years after the area is cleared, then 2.7 billion dollars for each of the next five years.

The figures take into account the loss of legally and illegally logged timber, loss of access to forest resources for tribal people located along the border, and the cost of landslides and flooding.

The economics ministry argues that the plantation would bring an estimated eight billion dollars in investment to an impoverished backwater and create as many as half a million jobs.

"The border area has many serious problems, mainly poverty. Compared to other parts of Indonesia, it is behind," deputy coordinating economics minister Bayu Krisnamurti told AFP.

Developing the under-policed border region would also strengthen security and create a government presence, thus reducing the smuggling of illegal logs and other goods into Malaysia, Krisnamurti said.

The deputy minister, who insisted development would take into account people's welfare, national security and environmental concerns, said criticism of the proposal was being evaluated.

Defence Minister Juwono Sudarsono said this week the overstretched military was unable to guard much of Indonesia's vast borders, so economic development of remote regions was part of defence policy.

Environment groups say the clearing of the land would speed up the extinction of the orangutan and be remembered as one of Indonesia's largest agricultural failures.

"In 2005, when they stated they would like to have the plantation along the border, we were shocked," said the WWF's Fitrian Ardiansyah.

The area is home to 14 out of 23 of Borneo's watersheds, he said, warning that clearing it could damage clean water sources for much of Indonesian Borneo.

At least three new species have been discovered each month in the past decade in the heart of Borneo, WWF says.

Development could wipe out hundreds of species and also prevent scientists from researching more undiscovered plant, animal and fish species, it warns.

"Borneo is a hotspot for biodiversity. Along with the Congo, it has an amazing level of biodiversity," said the WWF's Bambang Supriyanto.

Large mammals, such as orangutans and the Borneo pygmy elephant, would be particularly affected because they need vast areas of interconnected forest to survive, he noted.

"Palm oil is the number one enemy of orangutans and all wildlife in Borneo," Birute Galdikas, founder of Camp Leakey, Kalimantan's main orangutan sanctuary. told AFP in 2005 just before the plans were announced.

"Time is running out for the orangutans because the palm oil plantations are spreading. Illegal logging may seem horrific but at least illegal logging leaves some canopy in place. Palm oil plantations leave nothing."