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Experts see minefield of risk as Indonesia seeks environmental deregulation

Gold mining tailing pond near Mandor in West Kalimantan, Indonesia. Photo by Rhett A. Butler.

Gold mining tailing pond near Mandor in West Kalimantan, Indonesia. Photo by Rhett A. Butler.

  • The government is pushing for the swift passage of more than 1,200 amendments to at least 80 existing laws in a bid to deregulate the economy and boost investment, including in the environmental sector.
  • Chief among the proposed changes is the scrapping of environmental impact assessments and environmental permits as prerequisites for business permits to be issued for various kinds of projects.
  • Other planned amendments would get rid of criminal charges for businesses violating environmental regulations; deprive indigenous communities of a say in projects that would affect them; and redesignate forest areas, which would allow illegal plantations and mines to whitewash their operations.
  • Experts say these changes, and the rushed, opaque manner in which the government is pushing the bills, will give rise to greater risk for investors and spark more conflicts over land and resources.

JAKARTA — Experts have warned that a slate of sweeping deregulation planned by the Indonesian government could prove disastrous for the environment and create even more conflicts over land and resources.

The administration of President Joko Widodo is preparing to submit to parliament two bills containing more than 1,200 proposed amendments to at least 80 existing laws. The government says these provisions are all aimed at easing the investment climate in Indonesia in a bid to boost economic growth beyond the 5% pace it’s been stuck at since 2014.

But the so-called omnibus bills threaten to dismantle already tenuous protections for the environment, while the process of drafting them has been opaque and rushed, according to Hariadi Kartodihardjo, a forestry researcher at the Bogor Institute of Agriculture (IPB).

“The process [to discuss] the substance [of the bills] is still long,” he said. “But it seems like the politicians want it to be fast. I hear the omnibus bills will be passed in May or June by parliament.”

President Widodo’s ruling coalition controls three-quarters of seats in parliament, making it likely that any bill introduced by the government will pass relatively unchanged. The government says it expects the bills to pass within 100 days of submitting them.

But rushing through so many deregulatory provisions in such a short time leaves virtually no room to consider them properly and still maintain some semblance of environmental regulation, according to Laode Muhammad Syarif, the executive director of the NGO Kemitraan Partnership.

“How do you make a law in 100 days? Impossible,” he said. “If officials at the government support that, where did they go to school?”

Hariadi said that when legislation is rushed, risks arise. “And who will bear the risks? It’s actually investors themselves,” he said.

Flash flood in Jakarta. Image courtesy of Indonesia’s National Disaster Mitigation Agency.

End of environmental assessments

One of the most contentious points in the bills is the easing of requirements for businesses and developers to carry out an environmental impact analysis, known locally as an Amdal. Under current law, an Amdal is required to obtain an environmental permit from either the environment ministry or local authorities, depending on the scope of the project. The environmental permit is itself a prerequisite to obtaining a business permit, which will then allow the project to go ahead.

The omnibus bills call for revising or revoking 39 existing articles on environmental permits, including articles in the 2009 law on environmental protection and the 1999 law on forestry. In effect, environmental permits will no longer be a prerequisite for a business permit. And the environmental impact assessments that underlie them will only be required for projects deemed high risk, according to Bambang Hendroyono, the secretary-general of the environment ministry.

“Amdal is only [needed] if [the projects] are heavy and have a large impact on the environment,” he said. “[In that case], it will need public communication.”

He said environmental protections would remain robust despite this because companies were as a principle considerate of environmental conservation.

“So there’s nothing to be worried about because Amdal is a moral message,” he said. “In businesses, environmental principles have to be paid attention to.”

Another ministry official said the government was still discussing what kinds of projects would be designated as high risk and therefore still required to have an environmental impact assessment.

Even then, companies will still be able to obtain a business permit before carrying out the assessment, according to Mahfud M.D., the coordinating minister for legal and security affairs. He said the safeguard to ensure their projects were environmentally sound would be an audit carried out after they had both secured the business permit and carried out the Amdal.

“If the permits are issued after the Amdal, it’s going to take a long time,” Mahfud told local media. “People will run out of money [before the permits are issued].”

Rocks and tree logs carried by floodwater and landslide hit hundreds of houses in Jayapura, Papua Province. Image by Asrida Elisabeth.

A car without wheels

Forestry researcher Hariadi said revoking the requirements for an impact assessment and an environmental permit, all for the sake of facilitating investment, would be disastrous for a country that’s already prone to natural disasters. He cited the floods and landslides at the start of the year that hit Jakarta and surrounding areas, killing at least 67 people and displacing more than 173,000.

Environmental activists have attributed the severity of the disaster to deforestation and environmental damage in upstream areas. These include residential and commercial developments built in flood plains and water catchment areas, in violation of zoning and environmental regulations.

Hariadi said things could get even worse if the omnibus bills discount environmental protections entirely, noting that many such protections were in place for good reason.

“What about the articles that indeed prevent investment in certain sectors for environmental reasons?” he said. “The problem is you can’t throw these articles away. Let’s say you want to make a car. The car has to have wheels, but the wheels are expensive. If you get rid of the wheels, then you won’t have a car, right?”

Hariadi said the current high cost and long wait for an Amdal to be carried out and environmental permit issued was not because of onerous requirements for due diligence and scientific surveys, but rather because of the myriad opportunities for corruption in the process by bureaucrats. He cited a study carried out by his university that identified at least 32 stages within the process that could either be abused by officials to solicit bribes or gamed by applicants to bypass regulations.

Deforested slopes in the Cyclops Nature Reserve are prone to landslides. Photo by Rhett A. Butler/Mongabay.

Mitigating risk

Henri Subagiyo, the former executive director of the Indonesian Center for Environmental Law (ICEL), said another factor was the lack of environmental data, such as the carrying capacity of the country’s rivers. Each time a company wants to set up a factory near a river, for example, it has to collect its own data from scratch to determine how much waste it can discharge safely into the river.

“Environment data can’t be made in an instant, it has to be measured over a long period of time,” Henri said. “But the problem is that these data are often not available because our government doesn’t have them. We never know how much waste we can discharge into rivers, and yet permits keep being issued.”

Henri also said environmental protections, including the requirement to carry out an Amdal, should not be seen as a roadblock to investment. Instead, it’s an integral part of safeguarding investors against future uncertainty, he said.

“Amdal isn’t merely an administrative document. It’s guidance for businesses to protect the environment,” Henri said. “If it’s ignored, then there will be environmental risk for the businesses themselves. Amdal actually protects businesses from legal threats.”

He noted that similar requirements were in place in other Southeast Asian countries seen as friendlier to investors, indicating it’s not the environmental regulations keeping them away from Indonesia.

Mas Achmad Santosa, a maritime expert from the Indonesia Ocean Justice Initiative, agreed that Indonesia risked being an outlier among its peers in the Association of Southeast Asian Nations (ASEAN).

“Environmental impact assessments are practiced universally, especially in developed countries,” he said. “All 10 ASEAN countries require it and the trend is actually toward strengthening it, not weakening it.”

A map of Indonesia shows at-risk areas for landslides in red. Image courtesy of the National Disaster Mitigation Agency

No criminal charges

There are other worrying provisions in the bills being drafted, Hariadi said. One crucial amendment is the scrapping of criminal charges for businesspeople who commit environmental violations. The proposed maximum punishment will instead be a revocation of their business permits.

The bills also call for limiting public participation in the permit application process, as a means of speeding up their issuance. Hariadi said this would prevent the public from being properly informed about projects that affect them, and could trigger conflicts over land and other resources.

“In order to issue permits swiftly, all [public] participation will be stopped as long as [the projects] are in line with zoning regulations,” he said. “There will be [environmental and zoning] problems of such big magnitude, but public participation will be limited. Won’t that create conflicts? Instead of the quality of public participation being improved, it’s being ditched just like that.”

The environment ministry’s Bambang said the public would still have a chance to participate — but again only in the case of high-risk projects.

Batin Sembilan indigenous peoples gather food inside Harapan rainforest in Jambi, Indonesia. Image by Elviza Diana/Mongabay-Indonesia.

Bypassing indigenous communities

Another proposed amendment is to curtail the process by which an area is designated a forest area. This would be an important change, as forest areas are currently off-limits to oil palm plantations, one of the leading drivers of deforestation in Indonesia. As with the limiting of public participation, this change in designating forest areas also has the potential to spark land conflicts, Hariadi said.

The designation process currently requires the approval of indigenous and forest communities, but will bypass these largely marginalized groups if the government has its way. The subsequent mapping process will be carried out electronically, using satellite imagery to speed up the process, Bambang said.

Hariadi said this would only deepen the divide between the forest communities, on one hand, and the government and businesses eyeing their land, on the other, who would be more likely to have access to the technology for drafting the electronic maps. Most of the existing conflicts over land in Indonesia center around disputed boundaries, and communities without access to electronic maps would be hugely disadvantaged in staking their claim to the land, Hariadi said.

“Just imagine them having to rely on the local government and the private sector, who have possession of the electronic maps,” he said. “An area has social and cultural functions, it’s not just a commodity on paper.”

Also related to forest areas is a proposed amendment to scrap a requirement for all regions to maintain a minimum 30% of their territory as forest area.

Muhammad Iqbal Damanik, a researcher with the environmental NGO Auriga Nusantara, said this would allow mining and plantation companies currently operating illegally inside forest areas to whitewash their crimes. The companies, under the proposed change, would be able to request that the forest status of the land be revised to non-forest area, thereby legalizing their operations, Iqbal said.

“So the perspective [of the omnibus bills] is exploitation,” he told Mongabay. “There’s no conservation perspective.”

Anggalia Putri, a researcher at the NGO Madani, said the government should actually be pushing to increase the threshold above 30%, especially for regions like Papua in Indonesia’s east, which still has a lot of intact natural forest. Maintaining minimum forest area in Papua of 30% would effectively greenlight a massive spate of deforestation, she said.

Forest in West Papua. Photo by Rhett A. Butler
Forest in West Papua. Image by Rhett A. Butler/Mongabay.

Legal yet illegitimate

Despite the significance of the changes being proposed in the omnibus bills, the public still hasn’t been able to see the drafts.

President Widodo in December ordered his officials to make the drafts available to the public for the sake of transparency. That still hasn’t happened, prompting labor unions to stage protests against the bills amid speculation about sweeping cuts to worker welfare and job security regulations.

The office of the national ombudsman has also been left out of the loop; when it requested a meeting with the office of the chief economics minister to discuss the bills, it was rejected. Ombudsman Ahmad Alamsyah Saragih said this was the first time his office had been denied a meeting by a government institution. Instead, the minister’s office told the ombudsman to submit a written recommendation about the bills.

“How can we give a written recommendation if we’ve never received the drafts?” Alamsyah said. “We’ve also seen NGOs [ask for a meeting with the minister’s office] and receive the same response.”

Laode from Kemitraan Partnership, who until recently served as a commissioner with the national antigraft agency, the KPK, said the lack of transparency indicated the omnibus bills were ridden with problematic articles. He likened them to the controversial anticorruption bill drafted by the government and passed by parliament in similarly lightning fashion last year, with the KPK left out of the deliberations. While the government insisted the bill would strengthen the agency’s fight against corruption, the reality is that, once passed, the law has severely curtailed the KPK’s ability to carry out investigations.

In the cases of both the anticorruption law and the omnibus bills, the deliberations have been carried out behind closed doors, civil society groups have been shut out, and the government has pushed for speedy passage. If the government has nothing to hide and the omnibus bills truly serve the greater good, then why the secrecy, Laode asked.

“What’s being hidden such that the drafts aren’t being shared [with the public]?” he said.

Hariadi also called on the government to be more transparent about the bills.

“Don’t limit participation,” he said. “Don’t let the bills become legal and yet illegitimate by failing to involve the public in the deliberations.”

He said public participation was important because neither the bills nor prevailing legislation adequately addressed the real problems hindering greater investment in Indonesia, including corruption and land conflicts.

“The roadblocks [for investors] are actually caused by abuse of authority,” Hariadi said. “The government and lawmakers have to see the facts on the ground in order to solve the problems that the omnibus bills are supposed to solve. The problems on the ground are so many and they’re very complicated. They can’t just be simplified.”

If anything, he said, the bills are a potential minefield for investors, threatening to create more of the problems — environmental degradation and land conflicts, among others — that already deter investors from coming to Indonesia.

Dzulfian Syafrian, an economist with the Institute for Development of Economics and Finance (INDEF), agreed that the bills “are actually counterproductive in attracting investors.”

He said loosening environmental protections would harm investors because environmental damage would lead to more problems.

“From the economic perspective [businesses and the government] are looking for short-term gain and profit,” Dzulfian said. “They don’t see sustainability as something important for the development of their businesses.”

The kinds of investment that would be encouraged by the bills are those in hydrocarbons, he added, which won’t serve Indonesia’s emissions reduction goals or its long-term plans for sustainable growth.

“With the relaxation of environmental regulations, these businesses will be happy,” Dzulfian said. “But investors who are pro-environment will have doubts.”


Banner image: Gold mining tailing pond near Mandor in West Kalimantan, Indonesia. Image by Rhett A. Butler/Mongabay.


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