MANAGEMENT OF TROPICAL PEATLANDS IN INDONESIA:
MEGA RECLAMATION PROJECT IN CENTRAL KALIMANTAN
Nabiha Zain Muhamad
School of Geography, University of Nottingham, Nottingham NG7 2RD, UK;
Email: nabiha@indo.net.id

In Indonesia, peatlands generally are regarded as ‘idle’ land and considered economically worthless. There is no ministry or other government body that specifically manages peatlands in Indonesia. Their management depends on the designation of the land-use. This land-use should be something economically productive and socially useful. The notion of economically productive is usually a use that gives immediate financial return, such as logging concessions, plantations or settlements.

In 1995 more than a million hectares, mostly of peatland, in Central Kalimantan was the subject of a huge project to establish the biggest rice producing area in Indonesia. This project was popularly known as the "Mega Rice Project" (Proyek Pengembangan Lahan Gambut) and it absorbed a very large amount of Indonesian financial resources in the attempt to establish it. It was planned that in five years the project would lead to the production of more than 5 million tonnes of rice each year from approximately 200,000 households inhabiting the area. The project went ahead despite without carrying out a prior environmental impact assessment. The attempts at land conversion by draining peat for human settlement and irrigating for rice cultivation made the area unusually dry and, as a consequence, widespread fires in 1997 devastated most of this area bringing the project to a stop.

In 1997, Indonesia experienced an economic crisis that led to a change in Government. Despite widespread economic and social reforms, the country remained in political uncertainty that caused breakdown of law and order in the regions. Illegal operations are rampant and are carried out at full view of the local authorities.

This paper reviews the establishment process of the Mega Rice Project in Central Kalimantan and the current Government's efforts to restore the rights of local people and rehabilitate the destruction caused to the peatland landscape.

Peatland, land-use management, forest fires, Mega Rice Project

Indonesia has almost 30 million hectares of intact peatland, the largest area in Southeast Asia (Siegert, 1997), five million of which are targeted for conversion to smallholder farming and plantation agriculture (Rieley, 1999). The island of Kalimantan is one of the three regions in Indonesia together with Papua and Sumatra that has most of this peatland area. Smaller tracts of peatlands are found in other islands.

There is no Ministry or other Government body that specifically manages peatlands or controls their development in Indonesia. Their management depends on the designation of the land-use. Forested peatland comes under the auspices of the Ministry of Forestry. Most forested peatlands are given out to logging concessions. Investments for palm oil plantations in the islands of Sumatra and Kalimantan are lately gaining the interests of foreign investors. Some of these plantations are established on peatland areas. Peatlands generally are regarded as ‘idle’ land of no or little economic value whose land-use should be changed to something more economically productive and socially useful.

In 1995 more than a million hectares, mostly of peatland, in Central Kalimantan was allocated by the Indonesian Government to promote a huge project to establish the biggest rice producing area in Indonesia. This project was y known popularly as the "Mega Rice Project" (Proyek Pengembangan Lahan Gambut). All of the logging concession licences in the area were called in by the Government and land-clearing permits were issued to authorise tree removal by clear-felling and land preparation for rice padi. Within the project site there were large areas of landscape where the peat thickness exceeded 3 metres and therefore according to Presidential Decree No 32/1990 should be designated for conservation and not for agriculture. This decree was overruled by Presidential Decree No 82/1995 on the establishment of the Mega Rice Project.

It took a large amount of Indonesian financial resources to establish this ambitious project because foreign aid money was not sought for its implementation. It was planned that in five years the project would be producing more than 5 million tonnes of rice each year from up to 200,000 households inhabiting the area. In the early stages of the project, many scientists doubted the feasibility of the project and predicted that it would be a huge disaster unless it was planned carefully. The political situation of the country at the time, however, prevented people from speaking up against this favoured project of the President of Indonesia at the time, Soeharto, and it was started regardless of the lack of an environmental impact assessment.

Land conversion by draining peat for human settlement and irrigating for rice cultivation made the area unusually dry. (Excavation of deep drainage and irrigation ditches led to water flowing out of this area and did not provide the water reservoirs necessary for irrigation.) As a result widespread fires in the second year of the project devastated most of the area bringing the project to a stop. 1997 was an unusually dry year with the El Niño Southern Oscillation (ENSO) phenomenon causing an extended drought throughout the Southeast Asia-southern Pacific region. As much as 1.45 million hectares of peatland were damaged in Indonesia by the fires (Page et al, 2000). A study that embraced most of the Mega Rice Project area estimated that the amount of carbon released from peat combustion was in the range of 0.167 to 0.367 Gt C (Page et al, 2000) within a few months only.

By December 1998 more than 15,000 migrants were living within the Mega Rice Project area. Although the project was not stopped officially until 1999, the fire disaster prevented further transfer of migrants into the project area. Even though the settlement of people was halted, channel excavation work continued and was completed throughout the project area as originally planned. Political uncertainty and economic crisis in Indonesia caused the project to be set aside from the top national agenda. While the Central Government was fighting to get the country back on its feet again, the Mega Rice Project remained practically abandoned.

In 1998 the Transitional Government led by President Habibie issued Presidential Decree No 170/1998 that ordered the complete cessation of the Mega Rice Project and replaced it with a potentially more destructive scheme that included the ex-project area and more, embracing an area twice the size of the failed project into a new land development programme. The new scheme caused a major controversy and protests against it were voiced by non-governmental organizations and scholars. Although this new Presidential Decree has not been annulled officially yet, the Government gave their word that further development of the area would not proceed according to this "Kapet Das Kakab" and amelioration of the damage caused by the ex-Mega Rice Project would be promoted. There is, of course, very little money available from Indonesian Government sources to promote this peatland rehabilitation and restoration process.

At the commencement of the Mega Rice Project, sawmills mushroomed all over the area in response to the large number of logs coming out of the project area because of land clearing. Demand for timber locally to construct the houses needed for the new settlers escalated as logs were transported out of the project area. This lack of logs put the project’s building contractors in a difficult position because houses for the settlers required a large amount of wood for their construction. The price of logs increased and this pressured the contractors to buy logs from illegal operators. Lack of security and the vast area of the region provide the conditions for illegal logging to flourish. The channels built for the project provided convenient transportation routes for illegal loggers to take out wood from areas that otherwise would have been inaccessible.

The problems of maintaining the integrity of peatlands in Central Kalimantan remains as the Government have no control over illegal logging operations and pressure for development in the province has escalated in the wake of regional autonomy. Informal estimates suggest that if the illegal logging continues all peat swamp forest in Indonesia will disappear within the next ten years.

This paper will review the establishment process of the Mega Rice Project in Central Kalimantan chronologically and discuss the current Government's effort to return the rights of residents within the project area and rehabilitate the condition of the land that was destroyed by the establishment of the project.

Chronological review of the project establishment was conducted by media research, using newspaper reports and other sources. A series of interviews and discussions to key players were carried out in Jakarta, Palangkaraya, Kuala Kapuas and the villages of Lamunti and Dadahup of the Kapuas Regency in Central Kalimantan to compile information on the latest developments.

On November 14, 1985, President Soeharto received an award from the FAO for successfully bringing Indonesia into self-sufficiency in rice production. In 1985, Indonesia produced 26.3 million tonnes of rice, which exceeded the demand of 19.8 million tonnes (Kleden et. al., 1999). The success story didn’t remain for long because Indonesian rice production dropped drastically in subsequent years. With the purpose of maintaining the title of a rice production self-sufficiency country, President Soeharto met with 8 ministers on June 5, 1995 to discuss his plan for opening new rice production areas that supposedly would produce 5.1 million tonnes of rice per annum (Walhi, 1999). The province of Central Kalimantan was selected to host this ambitious project.

It was the success of Tay Juhana, owner of the Sambu Group, an agribusiness company based in Singapore that inspired the major peatland reclamation project in Central Kalimantan. Juhana claimed that he was successful in managing 60 thousand hectares of industrial plantation on peat swamp areas in Sungai Guntung, Riau Province. In Riau, Sambu owns two hybrid coconut plantations and works in association with the Indonesian Government’s transmigration programme for the source of labour. It employs 30,000 migrant workers (Kompas, 1993a).

Sambu had been given a concession to manage 200,000 hectares of peat swamp in the Indragiri Hilir district in the eastern part of Sumatra. Before the company took over, local farmers used to plant coconuts on part of this land along the coast and on surrounding islands. As a result, over the years, the peatland had slowly subsided and compacted, leading to flooding when the tide rose to high levels. The dried coconut crops dropped from 30,000 tonnes each month to less than half (Kompas, 1993b). Unfortunately, because they did not have the skill and money to maintain the drainage channels and dikes, the farmers eventually abandoned this land. Subsequently, the Sambu Group took over the abandoned land in 1990 and introduced modern tidal water management techniques. These included construction of dams, drainage canals and automatic water control gates.

The company claimed that after years of hard work and diligence, they are now successfully cultivating hybrid coconuts, high quality pineapples and oil palm. Hybrid coconuts and pineapple plantations covering an area of more than 30,000 hectares were established in 1988. Today every 1,000 hectares of the coconut plantation produces 1.5 million coconuts daily. Similar successful crops of pineapples are produced. In order to accommodate the excess production, Sambu built an integrated pineapple cannery that exports 60 per cent of its products (Jinu, 2000).

Oil palm was the last type of commodity that they planted in 1998 on an area of 20,000 hectares and these plants are now starting to bear fruits. This company then became the role model for the Mega Rice Project and won the contract to build the infrastructure for this major land conversion scheme in Central Kalimantan. They were entrusted to build the 111-km main primary channel and the primary channels. Their success in coastal parts of Riau, however, was not a guarantee that the same management system could be implemented in the much larger area of over one million hectares in the interior of Central Kalimantan. A proper study and assessment of the hydrology of the peat swamp forests in the two areas was not carried out beforehand in order to guarantee successful management in the latter area.

From the original plan of 5.8 million hectares in Central Kalimantan, only 1.7 million hectares was finally agreed by the ministers for the project (Kleden et. al. 1999). The project was planned to be completed in 5 years, starting at the end of 1995, at an estimated cost of US$ 2-3 billion (US$1.00 = Rp2,300 at the time). The funding was to be provided from the Indonesian Ministry of Forestry Reforestation Fund (Rp527billion) with the remainder coming from the national budget.

The project started in a big way, using huge resources, all of which were funded, by the state without any foreign financial contribution. The inclusion of foreign aid could mean public scrutiny and demands for a thorough feasibility study. A thorough study would prove that the project was not feasible or at least needs more preparation. On December 26, 1995, an executive team was formed by Presidential Decree No 82/ 1995, for the ‘Development of Peat Swamp Areas for Agriculture in Central Kalimantan’. More than one million hectares, mostly peatland, was taken over by this project. Physical land preparation work began on January 4, 1996. The main infrastructure was a network of channels criss-crossing the peatland landscape for the purpose of regulating the water. It was necessary to provide effective drainage in times of flood and irrigation for the rice fields in times of drought.

Official figures for planned channel development in the Mega Rice Project announced by the Indonesian Government are as follows: the main primary irrigation channel is 111 km long and the total length of the primary channels is about 344 km. The extent of secondary and tertiary channels is 1,512 km and 3,989 km, respectively. All of these channels amount to a total of 5,956 km (Kompas Daily, 4 January 1995). The figure quoted in the regional EIA (carried out after construction) stated two different figures: the main primary irrigation channel 133.20 km and primary channels: 568.80 km (TTPLG, 1997).

Logging concession rights within the project area were frozen and land clearing rights were issued to facilitate removal of all trees and associated vegetation. Thirteen timber concessions, including state-owned Inhutani III were asked to return their lands to the Government (Kompas, 1996a). As a reward for their co-operation, they were given special rights in the land clearing process. They did not have to go through all of the bureaucratic procedures normally attached to land clearing rights, including corridor permits, base camp permits, log landing and pontoon permits. In addition, they were allowed to remove protected tree species such as jelutong (Dyera costulata) and tengkawang (Shorea macrophylla) (Kompas, 1996a).

Logs of more than 30 cm diameter breast height were transported out of the project area and permitted to be sold elsewhere. Ironically, this caused a wood shortage within the project area. The building of houses for the intended 200,000 households of migrants to be settled in the project area required a large amount of wood. For instance, in the financial year 1997/98, it was planned to construct 20,000 houses, each of which needed about 7.5 cubic metres of wood. The shortage of wood caused the price of logs to rise and the only source of logs was from illegal operators. This practice was recognised by the Government authorities within the area, who also profited from the bribes given by the development contractors so that they could continue their work undisturbed (Kompas, 1997a).

Lack of co-ordination in building the infrastructure was strikingly apparent. Channel construction was supposed to be followed by the building of three stages of dams but even after the channel digging started there were no plans available for building dams within the project design. The contractors said that they had brought this to the attention of the Government as project owner, but there had been no response (Kompas, 1996d). The contractors said that without the dams, the channels were useless.

This infrastructure development of the Mega Rice Project started without an environmental impact analysis (EIA) being carried out beforehand. It is clearly stated in Article 16 of the Indonesian Environmental Act No 4/1982, that ‘every plan that is foreseen to have an impact to the environment should have an environmental impact analysis and its implementation is regulated by a Government regulation.’ Further, Government Regulation No 29/1986 on Environmental Impact Analysis, ‘requires for every action that will cause an impact to the environment, procedures of information gathering should be carried out first and an environmental management plan should be prepared.’ A token analysis was carried out almost three months after the project started (TTPLG, 1997).

Despite initial warning statements from the Minister of Environment that the project would cause major impacts on the ecosystem (Kompas, 1996c), a compromise was agreed between the Ministry of Environment and the project promoters. As a result, the EIA law and project implementation regulations were bypassed by using the excuse that the project completion would be delayed by at least two years if environmental surveys were to be carried out before work started (Kompas, 1996b).

Two types of EIA were eventually conducted. Firstly, a sectoral EIA analysed the plans for the wetland reclamation network and rice field establishment. Secondly, a regional EIA looked at the whole project plan. The results of the regional EIA came out at the beginning of 1997, one year after the project commenced. The regional EIA concluded that from the total project area of 1,457,100 hectares (including the buffer zone north of the project area), only 586,700 ha were suitable for agriculture and the rest, 870,400 hectares, should not be developed (Kompas, 1997b).

From the total agricultural land of 586,700, applying certain assumptions for land allocation for each inhabitant plus public facilities, the analysis concluded that the project area has the capability of accommodating 211,000 households. The document also concluded that by applying some correction to the number above the project area is estimated to be able to accommodate a maximum number of 672,000 people (TTPLG, 1997).

In mid-1997, a region-wide economic crisis hit most countries in Southeast Asia. Indonesia was the worst hit. In the period of 1967-97, Indonesia had experienced average annual economic growth of 6.5%; in 1998, the economy contracted by 13.6% (Sunderlin, 1999). This crisis led to the change of Government. Soeharto gave up his presidency of 32 years to B.J. Habibie his Vice President. The regime changeover led to much political instability, which compounded the economic problems. A study of the effect of this crisis on the environment, specifically the forestry sector, found that the conditions of two-thirds of the people in forested areas had become worse during the crisis. Small farmers were increasingly interested in clearing forests for perennial tree crops rather than raising food crops in shifting cultivation systems (Sunderlin, 1999).

Another destructive trend that started before the crisis but which was made worse by the crisis is illegal logging. A report by the UK Tropical Forest Management Programme finds that the illegal supply of logs from the natural forest is now about equal to the legal supply (ITFMP, 1999). The transitional Government led by B.J. Habibie has now been replaced by a democratically elected Government lead by President Abdurrahman Wahid. The main improvement in dealing with illegal logging has been in the form of greater transparency. This has allowed open discussion of the issues between Ministries, NGOs and the international community (EIA/Telapak, 2000). However, this transparency has not been followed by action and illegal logging remains rampant in Indonesia’s remaining forested areas.

During the height of the economic crisis, many development projects were suspended or cancelled. Many projects were frozen as a result of the crisis, including the Mega Rice Project. Multiple effects caused by the economic crisis and forest fires of 1997/98 added pressure on the transitional government of B.J. Habibie to stop the Mega Rice Project. This Government issued Presidential Decree No 80/1999 that, in essence, put the Mega Rice Project on hold officially. The story didn’t end there because the same decree also put into effect a new scheme called the Integrated Economic Development Zone of the Kahayan, Kapuas and Barito Embankment Area. This was known popularly by its acronym of Kapet Das Kakab.

The Kapet Das Kakab was one of thirteen Integrated Economic Development Zones (Kapet) planned throughout the country. These form one of the National Planning Board’s strategies for the development of relatively under developed Eastern Indonesia. Kapet are special zones (Kawasan Andalan) that were chosen from 55 Special Zones in Eastern Indonesia out of a total of 111 Special Zones in the whole of Indonesia (DPKTI 1997). These Kapets, were formed to attract the private sector to invest in these areas (Pemda Tk I Kalteng, 1999). The Kapet Das Kakab, established by Presidential Decree No 170/1998, was not a new scheme but a legacy of the previous Government that tended to initiate this kind of giant project. Mega-projects are usually centralized and do not take regional conditions into account either during their planning or after establishment. They usually lead to many land disputes and environmental problems.

In principal, conservation zones can be included within Kapet Das Kakab if these are seen as necessary and critical for the ecological balance or to maintain sustainable development of the area (Pangaribuan pers. comm.). Conservation designation within the Kapet, however, needs approval of the Central Government and is therefore out with the control of the Provincial Government that has the responsibility for implementing development activities. The Kapet Das Kakab includes the Greater Sebangau water catchment area to the west of the Mega Rice Project area that is rich in biodiversity and vital for the natural functioning of a vast peatland landscape. Approximately half of this Sebangau catchment that is in the process of being proposed as a conservation area, has been included in the Kapet Das Kakab.

The policy and implementation plans of the new Kapet Das Kakab were very unclear. Most people, including farmers in the ex-MRP Project areas have heard of it but they did not know what it means or how it would affect them. The establishment of the Kapet Das Kakab also attracted protests from non-governmental organizations, mainly because of its lack of clarity and potential dangers for the environment.

This scheme (Kapet Das Kakab) has also been put on hold, pending its dissolution as a result of petitions to the Indonesian Government about its lack of ability to solve past land development mistakes and the omission of environmental and resource function protection. The situation for the peat swamp areas of Central Kalimantan is now in a vacuum in which there is no overall control, integration or direction.

By December 1998 there were more than 15,000 migrants within the Mega Rice Project area that originated from surrounding areas and from outside of Kalimantan. About 53.2 per cent came from the islands of Java, Madura, Bali and Nusa Tenggara (Simatupang, 1999). The rest, 46.8 per cent, are people whose land was taken and incorporated into the Mega Rice Project and these are known more familiarly as local migrants.

Table 2. Planned migrant placements in the Mega Rice Project

Source: Simatupang, 1999

Table 2. Realised migrant placements in the Mega Rice Project Working Area A*

* There are no migrants in other working areas.

Source: Depkimbangwil, 2000

The migrant housing units in the villages of Lamunti and Dadahup were established in the Mega Rice Project to house the first wave of migrants in 1996. Of the four harvests since 1996, only the first rice harvest was successful. Reports (Jinu, 1996) indicated that a pilot project in an area of 1,000 hectares was producing an average of 2.4 tonnes of rice per hectare which is a low yield compared to the 7-8 tonnes of rice per hectare produced in Java (Sanda, 1996a). Subsequent harvests failed mainly because of rat pests, a problem that never occurred in the area before because the land was usually constantly waterlogged. Rat eradication tests were tried but traces of pesticide were found in the nearby river system (PPLH, 1999).

At the beginning of June 1997 extreme drought was reported within the project area. This meant that the planting season that year was affected and the farmers could not sow their crop seeds. In several locations severe aridity caused the peat soil to break up. Lack of water in the two pioneer villages of Dadahup and Lamunti occurred because of inadequate water management and the low river water level in this long dry season. In some places the river water level was about 40 cm below the paddy field level. Mitigation efforts, including redirecting the river water and pumping water onto the fields, did not help the situation (Kompas, 1997e). In many cases, owing to the uneven surface and different levels of the new rice fields, irrigation could not be done effectively, because when one field was watered then another did not get enough water (Kompas, 1997c, Kompas, 1997f).

Not depending solely on Government assistance, farmers spent their own money to buy rice seeds but, to their disappointment, crops keep failing thereby causing great financial loss. Other commodities such as bananas grow exceedingly well on peat but could not be marketed because of the distance to markets and low prices. This situation is extremely worrying for the tens of thousands of people that depend upon the success of this project. Roads that connect the migrant's area to other points of distribution are in a very poor condition and cannot be used by trucks that are essential for transporting production; meanwhile river transportation is very expensive. As a result many farm products are left to rot in the fields. Lack of productive work to undertake on their farms has forced many farmers to work outside of the project area including in wood related industries such as logging, wood processing and gold mining.

Some farmers are still trying to work on their farmlands because they have no other choice, especially those who came from outside of Kalimantan. These migrants sold everything they owned before they left their previous homes. Even though the farmers have a strong feeling of anger against the Government for the unfulfilled promises of a better life, they are not giving up yet and are still prepared to try everything possible to make their efforts succeed.

The extended drought that affected the Malesian region in 1997 led to severe and disastrous forest and land fires in the islands of Sumatra and Kalimantan. The smoke from these fires affected the health of 20 million people that had to live in the smoke for several months. The Government of Indonesia announced a national disaster after neighbouring Singapore and Malaysia pressed for immediate action.

In Indonesia the damage was extensive. The basis for much of the agribusiness was damaged, numerous flights were cancelled, respiratory infection cases increased dramatically and thousands of mail items were undelivered (Kompas, 1997i). It was estimated that the fires resulted in over US$3 billion in damage from losses in agriculture, timber, non-timber forest products, hydrological and soil conservation services and biodiversity benefits, whilst the haze cost an additional US$1.4 billion, most of which was borne by Indonesians for health treatment and lost tourism revenues (Schweithelm, 1998 cited in Page et al, 2000).

Most of the fires that contributed to the thick haze originated from peatland areas where land development was in progress. The Mega Rice Project was a major contributor. Satellite imagery showed that intensive fires were located around the two villages of Dadahup and Lamunti. According to the local government of Central Kalimantan, of the total of 27,000 hectares of land burned in the province, 10,000 hectares were within the Mega Rice Project area (Kompas, 1997g).

Other reports indicated that the fires within the project area was started by the farmers that were burning piles of wood waste in order to clear their fields. These piles of waste also provided breeding places for rats (Kompas, 1997h). Other evidence showed that several plantation companies started fires to clear land by burning the remaining vegetation within their area (Kompas, 1997i). In June 1997, thick smoke was reported to cover Palangkaraya, the capital of Central Kalimantan province. Visibility was reduced to 3-5 metres (Kompas, 1997d) and at times the fires were so bad near Palangkaraya that it rained ash. An assessment of burn scars within the Mega Rice Project caused by the 1997/1998 fires showed that approximately 80% of the 1.4 million hectare project area was burned (Page et al, 2000). The distribution of fire scars was strongly correlated with the channels (Figure 1) that provided access to local people to reach their land or to undertake illegal logging and forest clearance.

In 1998, the Mega Rice Project re-evaluation team was formed by the National Planning Board (Bappenas) led by Professor Dr Ir Gunawan Satari from Padjajaran University. This team submitted their inception report on 28 August 1998 containing the following recommendations:

1. Total revision of the concept of development of the Mega Rice Project (MRP) area
2. Continue land development work in Zone 'A' (pioneer area) where migrants have settled with development concepts that are based upon appropriate environmental characteristics.
3. Empowerment of the migrant farmers in the ex-MRP area, establishment and maintenance of the existing infrastructure.
4. Implement policies for integrated development of wetlands as a prerequisite to peatland development, so better co-ordination of the managing bodies is achieved.
5. Rehabilitation of conservation and preservation areas should be carried out in stages.
6. Compensate locals for their loss of income source as a cause of the project.
7. Development of the ex-MRP area should be funded from the national budget and should not use the Reforestation Fund.
8. Publicizing the ex-MRP project area development programs including to lending agencies.

A more focused research team was formed as a result of the inception study mentioned above. This Expert Team on Integrated Wetlands Development published their report on April 1999. Their report consists of an environmental audit and integrated and sustainable development proposals, action plans and recommendations for the future of the ex-MRP project.

A further report was issued by the Centre for Environmental Research (Pusat Penelitian Lingkungan Hidup or PPLH) of the University of Palangkaraya. This study scrutinized the implementation of the Environmental Management and Monitoring Plan of the MRP Project for the financial year 1999/2000. The main points of their findings and recommendation are as follows:

1. Rats mostly caused crop failures. Suitable means of eradication should be found, for past trials left traces of pesticide in the river. Remove the piles of wood waste on the agricultural fields to avoid rat pests.
2. Traditional rights violation. A thorough inventory of local people’s land rights should be carried out by an independent body before proceeding to court.
3. Increased crime rate. Community guarding activities should be increased to avoid incidents of crime.
4. Drought. Shallow canals need to be dredged.
5. Extinction of forest ramin (Gonystylus spp.) and swamp meranti (Shorea spp.) species. These two species may have to be reintroduced into the area.
6. Land use: there should be improvement of the transportation network, re-evaluation of the main use of the land from rice production to various other crops according to the condition of the land. Revise the land-use plans of the Mega Rice Project at the macro level.

The Indonesian Government's effort to return the rights of residents in the project area and rehabilitate the condition of the land that was destroyed by the establishment of the ill-fated Mega Rice Project will be discussed, commencing with an evaluation of the current environmental and socio-political situation in the region.

In the case of the Mega Rice Project there seems to be little that can be done to help the situation. Although, helping the bad economic conditions of the local people including the migrants, may prevent further encroachment on to bordering pristine forested peatlands. There are not many pristine areas left in Central Kalimantan but one of the best is the Greater Sebangau water catchment to the west of the Mega Rice Project. The Sebangau River is a blackwater river that originates in, and drains, a densely forested 15,000 km² large peat swamp in the floodplains between the Kahayan and Katingan rivers in Central Kalimantan, south of the Provincial capital of Palangkaraya (GAA/CIMTROP/AIDEnvironment, 1999). The peat within the Sebangau catchment has formed over a period of at least 20,000 years and, in places attains thickness of over 10 metres. The Greater Sebangau water catchment area is important for wildlife conservation because of its vital ecological functions, environmental resources and natural biodiversity. The Greater Sebangau water catchment supports a forest ecosystem containing many of the endangered animals within Kalimantan’s structure of biological diversity. It is probably the most valuable and largest remaining (lowland) refuge for a significant population (i.e.> 5,000 individuals) of the critically endangered and officially protected orang utan (pongo pygmaeus).

The Greater Sebangau water catchment has been the focus of a unique international research programme since 1993 carried out by a consortium of the Universities of Palangkaraya (Indonesia), Nottingham (UK), Leicester (UK) and Hokkaido (Japan) together with BPP Teknologi (Indonesia) and Kalteng Consultants (Germany). The consortium operates through the Centre for International Co-operation in Sustainable Development of Tropical Peatland (CIMTROP) that is based at the University of Palangkaraya. This consortium has formal custody over a protected peat swamp forest research area of 50,000 ha in the Greater Sebangau water catchment, called the Natural Laboratory. Change in land-allocation and illegal logging in the Greater Sebangau water catchment will make this long-term research programme and its unique, valuable database of 10 years obsolete. This would be a major wasted opportunity for institutional strengthening of Indonesian research institutes and Government Agencies.

To date, illegal logging is one of the most worrying problems threatening Indonesia’s forests. The ex-Mega Rice Project is now mostly devoid of trees and satellite imagery (Figure 2) shows that no big stands of trees remain. What is more worrying is that because there is a shortage of timber in the ex-Mega Rice Project area, illegal logging is now focusing to the remaining pristine area of the Greater Sebangau water catchment area. This is as bad as, if not worse than, threats of developing the area for agriculture.

Immediate action needs to be taken now to restore law and order to the forested areas. Huge timber businesses operate freely in Central Kalimantan, with the mask of a legitimate logging and sawmill operation. At present, illegal operations are carried out in full view of the local authorities (EIA/Telapak, 1999). If this situation continues then there may be no hope for Kalimantan’s remaining peat swamp forest. Independent investigation is being conducted together by local and international NGOs. Since the anti-illegal logging campaign was launched in 1999, there is almost no follow up efforts by the Government of Indonesia despite clear evidence of these illegal operations.

By late 1999 the newly elected Government made commitments for reform and eradication of corruption, collusion and nepotism within the Government. One manifestation of this gesture is giving more governing autonomy and financial control to the provinces. For many years, Central Kalimantan was a major producer of timber logs but barely any of the revenue came back to the province.

The Government of Indonesia issued Regulation No 22/1999 on Regional Governance and Regulation No 25/1999 on Financial Balance Between Central and Regional Government. It was hoped that the issuance of these regulations would bring fairness and justice and taking regional aspiration into consideration.

The two Regulations were issued as a response to regional demand for increased rights to their own resources and fairer financial balance for regional development. The Government has been very centralized in the past, resulting in many ineffective and impractical regional policies. In most instances policies were prepared in Ministry offices in Jakarta, thus causing difficulties of implementing them on the ground. This centralized approach was also applied to the collection of local revenues, mostly taken from the exploitation of natural resources. People from areas such as the island of Kalimantan, which is rich in natural resources, received only a very small portion from the royalties paid by the extractors of these riches. Most of the money made was transferred to Java.

In relation to land use assignments, in Regulation No 22, Chapter IV, Article 7, point (2) it is said that the exploitation of natural resources and conservation is an exception to regional rights. This can be interpreted that proposals for the establishment of conservation areas have to be directed to the Central Government. Mechanisms for establishing conservation sites still need to be studied further. The existence of areas with thick peat and blackwater ecology in areas designated as development zones can cause an overlapping of jurisdictions between Central and Regional Government. Failure to acknowledge this problem and find a solution to it will cause enormous environmental loss.

In theory, the Regional Government will be able to take accurate decisions because they are closer to the area that they manage, compared to regional policies that were drawn up, stipulated and implemented by the Central Government in the past. However, a lot of scepticism is expressed on the readiness of Regional Government to take on this responsibility. If not accompanied by strengthened institutional systems, the regulation will increase opportunities for more corruption and misuse of funds by the Regional Government. Inaccurate and unsynchronized maps of each province may potentially cause provincial border disputes. Finally, the clearest example is the difficulty of eradicating illegal logging. The Provincial Government stands to benefit from many businesses in the region including the lucrative logging and sawmill businesses. These are only a few of the potential problems that could come up. It is very difficult to uphold the law and fight corruption when there is little incentive to do so.

With a population density of 9 persons per square kilometer (BPS, 1996), Central Kalimantan became a desirable target of the Indonesian Government's transmigration program. A program was initiated in the 1950s to disperse some of the large population of the 'inner' islands of Java, Bali, Madura and Nusa Tenggara to the sparsely populated outer islands of Sumatra, Kalimantan and Papua. This program has brought severe problems to many parts of Indonesia, mainly because of land rights and ethnic/social compatibility.

Many residents of the inner islands, who were promised land and a chance of a better life, took the chance and left their homes. Once they arrived in their new locations they found out that this land was not as fertile as the one they had been used to in their previous homes. Some of the lucky ones kept trying and eventually succeeded but many left their newly acquired land and moved into the nearest town where they tried to find paid work. If available, this work was usually at the lower end of the market as labourers or pedicab drivers.

In Central Kalimantan, the native Dayaks live by planting forest rice, harvesting forest rattan, tapping rubber and fishing. Their income from these resources are relatively high although it has been reduced substantially as a result of their land being taken away by development projects. In the ex-Mega Rice Project alone there are around 34,000 legal claims for lost property and lost opportunity of income to the Government totalling up to Rp. 300 billion. This huge number of claims has led the Government to prepare a re-inventory scheme to check their authenticity. This plan has been highly criticized by the residents. Ironically this resistance slows down the process that in the end creates more resentment.

This trend spreads throughout the region. Latest development shows that tension was growing between the locals and migrants because of limited sources of income (Walhi, 2001). This tension culminated in mid-February 2001, where a small incident in the city of Sampit turned into ethnic cleansing, claiming the lives of at least 118 immigrant Madurese and 30,000 people lost their homes. Over the past 40 years, more than 100,000 Madurese have been settled in Kalimantan. The first major clash occurred in 1997 in West Kalimantan province, where about 1,000 people were killed.

There are many issues that need to be addressed in the current natural resources crisis in Indonesia, especially the sustainable management of unique and critical landscapes such as peat swamp forests. Continuing political instability of the country is not conducive to the sustainable management of natural resources. Without the political will of the Government, better management practices will not be achieved and illegal logging will be unstoppable.

The current democratically elected Government made commitments to correct the mistakes made under the past regime. The liquidation of the notoriously corrupt Ministry of Public Works was one of their ways of showing this commitment. In late 2000, this Ministry was replaced by the Ministry of Settlement and Regional Development. The latter had its name changed again this year to the Ministry of Settlement and Regional Infrastructure. This ministry is headed by Erna Witoelar, a renowned environmentalist and a founder member of one of Indonesia’s leading environmental NGOs, Wahana Lingkungan Hidup (Walhi), Friends of the Earth Indonesia.

The case of the ex-Mega Rice Project, a main campaign area of Walhi, became one of the issues that received first and special attention by the Minister of Settlement and Regional Infrastructure. In March 2000, after only a few months in office, the Minister called a meeting of related Ministries, experts and local people's rights advocates to determine solutions to rehabilitate problems of the former Mega Rice Project area. This meeting resulted in a commitment from Witoelar to embargo all development projects planned for the ex-MRP area, including the Kapet Das Kakab. In that meeting the Governor of Central Kalimantan made a promise not to accept investments for plantations in the area. These commitments were made at a time when several investors, domestic and foreign, expressed their interests to invest in the area and when the new regulation on Regional Autonomy guaranteed to return a big share of the profits to the Regional Government.

Five months after the meeting, the Ministry of Settlement and Regional Infrastructure produced a Draft "Grand Strategy Plan for the Management of the Ex-Mega Rice Project area in Central Kalimantan". The Plan listed the problems faced in managing the area and proposed actions necessary to solve these problems. The programs proposed in the plan were integrated and realistic, incorporating precautionary principles, and socio-cultural approaches to achieve a community-based development concept (Depkimbangwil, 2000).

This draft Grand Strategy Plan was then discussed at the village level with the help of the Advocacy Team. The planning area is divided into three river catchments, Kahayan, Kapuas and Barito. Between 10-12 September 2000, the team presented the plan to 23 villages within the three river catchment areas. This meeting was a preparation for a meeting between villages in every river catchment. The result of these meetings was clear in that the peoples’ main concerns were about the claims to the Government for their confiscated property and lost opportunities for income. The people also expressed their mistrust of NGOs that had been promising many things to them without any delivery.

The village meeting was followed up with meetings between villages in the Kahayan, Kapuas and Barito water catchment areas between 16-24 October 2000. These meetings formulated rehabilitation and development programs for each village. At the next meeting held on 28 October to 1 November 2000, representatives of the people presented results of the previous meetings to the Local Government. A further meeting to refine the people's aspirations was held on 11-13 February 2001. The results of all these meetings is scheduled to be brought to Jakarta and discussed with the Minister of Settlement and Regional Infrastructure and incorporated into the finalized ex-Mega Rice Project Management Plan.

There is very little hope that the area will return to its previous state as a pristine peat swamp forest that was once the pride of Kalimantan, but it is pleasing to say that despite other problems happening in the country at the macro level, the effort to stop bad management practices can still go ahead.

Presidential Decree No. 170/1998- Establishment of Kapet DAS Kakab.

Government Regulation No. 22/1999 on Regional Governance.

Interview, Jakarta, 26 October 1999

Name: Jaco Salahuddin, Head of Environmental Division

Institution: Member of Partai Amanat Nasional (National Mandate Party); owned a concession in the ex-MRP area

Salahuddin's family together with a local resident co-owned a logging concession in Central Kalimantan under the name PT Kahayan Lumber. The concession starts in 1971 with about 150,000ha. In the mid-80s, the Government took back 50,000ha for the transmigration program. At the time, anybody can register to get a concession if they know about it. He had family working in the Attorney General's office and that was how they get hold of the information. In order to get the concession papers out and start exploitation, they need foreign investors.

The company take out mostly Ramin (around 90 per cent) and other mixed species (Meranti, Bangkirai, etc.). Salahuddin admits that the Annual Work Plan (Rencana Kerja Tahunan) that was reported was always a lot less than what they actually take out. The company also buys local people's logs, mostly illegal logs. The majority of these logs goes to a dowell factory in Gresik, Java. The factory can take small pieces of wood. Minimum requirement for logs are those with diameter at breast height of 50cm, but they can take logs less than this legal requirement.

In 1993, the company's concession has been officially extendend until 2013. The state-owned Inhutani entered the company with 30% stake and installed the President Commissioner and Director as representatives of Inhutani. By the time the Mega Rice Project was established, their concession was put in hold by turning down their Annual Work Plan. At the same time land clearing rights (Izin Pemanfaatan Kayu) were issued for anybody who registered with the Ministry of Forestry. The rights were issued by volume (meter cubic) and not by area (hectares).

Interview, Palangkaraya, 12 November 1999

Name: Ferdinand, Director of PPLH

Institution: Pusat Penelitian Lingkungan Hidup (PPLH) - Centre for Environmental Research of the University of Palangkaraya.

PPLH study the implementation of the Environmental Management and Monitoring Plan of the MRP Project and issue a report for every financial year after the project started. Ferdinand mentioned that the Agricultural Institute of Bogor (Institut Pertanian Bogor/IPB) carried out a number of studies on the environmental impacts in the Block A area of the project. He pointed out that there are no clear and good relationship between researchers and the Government. Usually (Government) projects are carried out before any studies are carried out.

Ferdinand pointed out the fact that there are no co-ordination in the implementation of the project between the relevant Ministries. There are three Ministries that are involved in the management of the project, the Ministry of Public Works, the Ministry of Transmigration and the Ministry of Agriculture. Ferdinand mentioned that even though the line of responsibility were clear between the three ministries, the reality on the ground is different - all three offices feel that they are equally positioned and have equal level of authority and they do not want one ministry to supervise the other. This creates problems and resulted all three offices lack co-ordination in their work and carry on with their own agenda. Operational managers are always sent from the central office in Jakarta, not an officer from the regional office. They usually operates with direct orders from Jakarta and do not respect the Provincial or the Regency Government.

Interview, Kuala Kapuas, 17 November 1999

Name: JS Lamon, Deputy Regent

Institution: Kuala Kapuas Regency

Deputy Regent Lamon pointed out that the region is not yet ready for Regional Autonomy at the time of interview. The Ministry of Home Affairs needs to issue decrees to explain the details especially in the financial balance element. In Kapuas, the concept needs more preparation time particularly in improving the quality of human resources. The Regency is in the process of identifiying what they need to support this process. The Deputy Regent remarked that his Regency have many problems, other than the Mega Rice Project which covers most of his constituency, including annual flooding in the Tumbang Nusa area and mercury pollution from gold mining in the rivers.

Interview, Dadahup Village, Transmigration Housing Unit A1, 19 November 1999

Name: Alian

Local migrant, Dayak ethnic

Alian had to join the transmigration project and live in the project area because his old home was taken over by the project. He said he had no choice but to join otherwise he will lose everything he own. Alian was a fisherman before the project took over the area. Now, fish are very scarce. It was promised that the land will be ready when they move in but that wasn’t the reality. Life support rations from the Government were only given for the first year and half of 10kgs of rice per month. He was one of the first batch of farmers to be placed in the settlement and from the first year of the project there were only one successful harvest of rice in 1996. By the time there was a Ministerial visit it was said that the area was producing 3.5 tonnes/ha, when the truth was only about 1 tonne/ha. Many of the operational managers from the project are corrupt, even if there are subsidies from the Government, the farmers will only receive a small part of it if any. For example they read in the news papers that there will be Rp. 100,000.- paid for every quarter of a hectare of land cleared, they received only Rp. 50,000.-

Interview, Dadahup Village, Transmigration Housing Unit A1, 19 November 1999

Name: Joko

Transmigrant, Javanese

Joko left his village in Java and move to Kalimantan with a dream of a better life. He sold everything he owned in his hometown and joined the Government's transmigration project. Like other farmers he received 2.25 hectares of land to plant rice. Like Alian, his harvests kept failing except for the first one in 1996. Besides his hardworking nature, he have an undying faith that his efforts will bring results one day. Joko used his own savings to buy seeds and work in his field. His biggest problem is rat pests.

Interview, Lamunti Village, Transmigration Housing Unit A1, 20 November 1999

Name: Henan

Local migrant, Dayak ethnic

Henan, like Alian also joinned the transmigration project because he had little choice otherwise will lose his land. Henan owns another house outside the project area and rather lived in his old house than the one given by the project. The transmigration house units are poorly made with cheap wood. Henan recalls the day the project started -- there were no announcements to the community, suddenly there were heavy machineries in the area. Law enforcement from Mentangai came and threatened people not to fight against this big Presidential project.

In his village 61 households lost their land, rice fields, fish ponds, rattan and rubber plantations. Life quality from before the project came are far degraded. There are no harvest for the past 3 years. Rice seeds ration from the Government are always late in the dry season so its unusable and wasted.

Discussion, Jakarta, 7 March 2000

Venue: Ministry of Settlement and Regional Development (former Ministry of Public Works)

Participants: Minister of Settlement and Regional Development; Governor of Central Kalimantan; Regents of Kapuas and South Barito; representatives from the Ministries of Forestry, Transmigration, and Agriculture; re-evaluation team from the Bogor Institute of Agriculture and Padjajaran University; representatives from non-governmental organisations.

Objective of discussion: identifying problems and the current condition in the ex-Mega Rice Project area, particularly to the newly appointed Minister of Settlement and Regional Development and Governor of Central Kalimantan.

Structure of the discussion: The discussion was preceded by presentations from the MRP re-evaluation team and representatives from non-governmental organisations and followed by discussions to identify further steps to take to solve the problem.

Outcome: The Minister made a commitment to stop all destructive development plans including the Kapet, drawing out an integrated plan taking local people's aspiration into consideration. The Governor made a commitment not letting investors open palm oil plantation in the ex-MRP area.

Follow up actions: The Ministry of Settlement and Regional Development produced a draft "Grand Strategy Plan for the Management of the Ex-Mega Rice Project area in Central Kalimantan" in August 2000 as a result of this meeting. This draft plan is currently being discussed at the village level assissted by an advocacy team from non-governmental organisations and local residents.

Discussion, Kuala Kapuas, 11-13 February 2001

Venue: Kuala Kapuas

Participants: 65 members of residents from the ex-Mega Rice project, representing three river catchments; advocacy team as facilitators of the discussion; Deputy Regent of Kapuas, provincial parliament members and representatives from local provincial Government.

Objective of discussion: Continuing previous discussion on the draft "Grand Strategy Plan for the Management of the Ex-Mega Rice Project area in Central Kalimantan" proposed by the Ministry of Settlement and Regional Infrastructure (former Ministry of Settlement and Regional Development). Presentating the results of the first two day's meeting to the local Government.

Structure of the discussion: On the first and second day of the meeting, residents discuss their and formulate their request for desired development programs for their area. To overcome the inter-regency bureaucratic problem in the ex-MRP area, an autonomous planning body was proposed.

On the third day the result of the discussion was presented in front of the Deputy Regent of Kapuas, provincial parliament members and representatives from local provincial Government.

Outcome: The people's version of a grand strategy plan for the ex-MRP incorporating the desired development programs for every village.

Follow up actions: This version of the grand strategy plan will be taken to the Ministry of Settlement and Regional Infrastructure in Jakarta presented and discussed until a Final "Grand Strategy Plan for the Management of the Ex-Mega Rice Project area in Central Kalimantan" is formulated.

Figure 2. A composite of two Spot-Asia scenes of Central Kalimantan, taken on August 1, 1999. The black-water river shown in the centre of the image is the Sebangau River and the river on the right is the Kahayan River. It is shown in the image that part of the Mega Rice Project area on the right of the image is mostly open. The Sebangau watercatchment area, to the west of the Kahayan River is seen to have more vegetation cover. This quick-look image was taken from CRISP-SPOT Homepage [ http://crisp.nus.edu.sg/ ]

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