18/10/05 (financial time com) - When Jusuf Kalla, Indonesia'sbusinessman vice-president, travelled to China in August he signed an $8bnfinancing deal with the China Development Bank that cleared the way forone of the world's biggest agricultural projects.

Thanks to the funding by the state Chinese bank, it seemed that theorangutans, pygmy elephants, monster cockroaches and other inhabitants ofBorneo's jungles would need to prepare for life alongside a 1.8m hectarepalm oil plantation " at two-thirds the size of Belgium, the largest ofits kind.

The deal appeared to be a coup for a government trying to lure foreigncapital back to Indonesia, while Susilo Bambang Yudhoyono, the country'spresident, told Tempo, a local magazine, that the project was a chance "tokeep on nurturing the sense of nationhood and being Indonesian".

Almost two months later, however, a loose coalition of environmentalists,development activists and even palm oil industry figures are gathering tooppose the idea, and Indonesian officials say they have questions aboutwhether it will go ahead.

Environmentalists argue that the China Development Bank is not saddledwith the "green" regulations its western counterparts have to adhere to.So its financing comes with few, if any, environmental conditionsattached. More immediate, however, are questions over whether the projectmakes any sense economically or ecologically.

Environmentalists say it would grant access to loggers, which would bedisastrous for one of the world's last great equatorial forests and therare species within. "If [the plantation] was realised, then the term ‘wilds of Borneo' would be an historic reference only," says StuartChapman, the Briton co-ordinating the World Wide Fund for Nature (WWF)campaign against the project.

Documents outlining the plantation show it would be situated mostly in thehighlands along Indonesia's 850km border with Malaysia. But those areaswould be ill-suited for productive palm oil plantations, industry expertssay.

Derom Bangun, chairman of the Indonesian Palm Oil Producers Association,says most successful plantations sit at altitudes below 400 metres, whilemost of the land identified in the project proposals is at 1,000 metres orhigher.

That has yielded suspicions the project is more about politicallyconnected timber barons gaining access to valuable hardwood trees than theeconomic boost the government claims would benefit Kalimantan, theIndonesian part of Borneo.

"The only thing that's valuable up there are the trees," says a consultanttracking the project for a big development bank. "If you look at the mapof where people live within Kalimantan it's not on the border. It's amountainous, nasty place.” These worries have been amplified by secrecyover the origins of the idea and who might benefit. Officials say onlythat discussions began during a meeting earlier this year between HuJintao, China's president, and Mr Yudhoyono.

Of added concern is the fact that Mr Yudhoyono, a retired general, andother officials have touted the plantations as a way to secure the Borneoborder, the subject of 1960s clashes with Malaysia over post-colonialcontrol of the world's third-largest island.

This kind of strategic language, opponents say, links the project to theIndonesian military, or TNI, an institution allegedly long connected withillegal logging. They also point out that Mr Kalla was accompanied on hisAugust visit to China by one of Indonesia's most colourful businessmen,Tommy Winata, whose Artha Graha Group has a longstanding relationship withthe TNI.

The campaign against the palm oil project is accelerating. The WWFyesterday took journalists on a week-long tour of Borneo in an effort togenerate attention on the issue. The World Bank has been quietly lobbyingbureaucrats in Jakarta, as has the palm oil producers' association, whichis keen to improve a tainted environmental image.

Raden Pardede, a government policy adviser working on the project, saysJakarta is considering both whether to proceed and whether to move theplantation to lowland sites, already designated for development, to allaycampaigners' fears. But Mr Pardede also says the economic benefits mayoverride any environmental concerns.

Chinese state-owned companies working alongside Indonesian public andprivate partners could create up to a million jobs directly and indirectlywith the project, he says, and bring roads, ports, power plants, andschools to an underdeveloped Kalimantan.

"We have to preserve the forests of Kalimantan," Mr Pardede says. But "ifwe can do this over the next 10-15 years it would have a very significanteconomic impact."