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7 conglomerates control 9M ha of land in Indonesia

Efforts to slow deforestation in Indonesia should include curtailing further expansion of forestry holdings by giant conglomerates, says an Indonesian activist group.

Analyzing data from the Ministry of Forest’s Production Forest Utilization Quarterly Report, Jakarta-based Greenomics-Indonesia found that seven conglomerates in Indonesia control more than 9 million hectares of land, including large forest concessions that will likely be exempt from any moratorium on forest clearing established under the country’s Reducing Emissions from Deforestation and Degradation (REDD) program. The extent of holdings could complicate Indonesia’s efforts to reduce emissions from logging and plantation development.

Two companies — Sinar Mas and Raja Garuda Mas — account for nearly 40 percent of the landbank. Both hold substantial areas of natural forest.

Forest conversion in Central Kalimantan

Data for Sinar Mas Group and Raja Garuda Mas holdings by number and location of their companies.

Sinar Mas Group

Riau 17
Jambi 4

South Sumatra 6
West Kalimantan 3
East Kalimantan 3

Total: 35 companies
Total: 2.31 million ha

Raja Garuda Mas

Riau 22
North Sumatra 4
East Kalimantan 2

Total: 28 companies
Total: 1.19 million ha

“The licenses for the establishment of industrial forestry plantations (Hutan Tanaman Industri/HTI) are dominated by just two business groups, Sinar Mas and Raja Garuda Mas, which between them and their 63 subsidiaries control 3.5 million hectares,” said Greenomics-Indonesia Executive Director Elfian Effendi.

Sinar Mas controls Asia Pulp & Paper and Golden Agri Resources, Indonesia’s largest palm oil company, among others. Raja Garuda Mas controls APRIL, a pulp and paper firm, and Asian Agri, a palm oil company.

Effendi added that five conglomerates — Kayu Lapis Indonesia (KLI), Alas Kusuma Grup, Barito Pacific Grup, Jati Grup and the Korindo Grup. — control more than 5.5 million hectares of logging concession licenses (Hak Pengusahaan Hutan/HPH). Like Sinar Mas and Raja Garuda Mas, these conglomerates control a web of subsidiaries — 37 in total.

Effendi is calling on the Indonesian government to halt these companies’ acquisition of new concessions. He says these groups’ current holdings violate a 1999 forest law (Forestry Act 41) that bans “oligopolistic practices” in the forestry licensing process.

“These regulations must be followed by a Minister of Forestry Regulation that prevents continued oligopolistic practices in the granting of licenses for the exploitation of such damaged secondary forest,” Effendi said, referring to a draft version of the presidential instruction imposing a forestry moratorium which allows the government to continue granting concessions in secondary forest areas. “The expansion of business shouldn’t be allowed to be used as an excuse for allowing the existing oligopolistic practices to continue.”

He told the 1999 law “prioritizes small and medium enterprises and cooperatives for business opportunities in the forestry sector.”

“By contrast, what has actually been happening is the continued growth of oligopolistic practices in forest exploitation,” he said.

deforestation in Indonesia

Wood-pulp and oil palm plantations have emerged as major contributors to deforestation in Indonesia over the past two decades. By one estimate, nearly two million hectares of forest and peatland in Sumatra has been converted to pulp and paper plantations in recent years. Another study calculated that more than half of Indonesia’s palm oil expansion between 1990 and 2005 occurred at the expense of forest.

Logging, mining, fires, and agricultural expansion by smallholders and agribusiness also contribute significantly to forest loss in the country. Several studies have linked deforestation to corruption at local, provincial, and national levels.

Indonesia is thought to have past Brazil as the world’s largest deforester in recent years.

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