ENVIRONMENTAL DEGRADATION CONTINUES IN SOUTH

UNCLAS SECTION 01 OF 02 JAKARTA 011930

SIPDIS

SIPDIS

DEPT FOR EAP/IET, OES/IET, AND OES/ETC

E.O. 12958: N/A
TAGS: SENV TPHY TBIO EINV ID
SUBJECT: ENVIRONMENTAL DEGRADATION CONTINUES IN SOUTH
KALIMANTAN



1. (SBU) Summary: Although South Kalimantan's legal forest
products industry has suffered a sharp decline, illegal
mining and logging continue to degrade the province's
environment. Overlapping and conflicting central and
provincial government responsibilities and a lack of local
resources compound the problem, although police in the
province have had some success in prosecuting illegal miners
and loggers. With few realistic development alternatives,
local governments in the province continue to encourage
investment in both mining and plantations to better use idle
land and create jobs. End Summary.


2. (U) We made a September 18-20 swing through South
Kalimantan province to assess the degree of illegal mining
and logging in the area and assess the province's response
to avian influenza (AI). South Kalimantan Province is the
smallest of four provinces in Kalimantan, and occupies both
river and swamp territories. It has three million people
living in 11 regencies and two cities. The province's
capital, Banjarmasin, is the largest city with a population
of 540,000). The province's per capita income is only $692
per year in 2004, far below Indonesia's average per capita
GDP of $1,140 (World Bank, 2004) and $1,280 (World Bank,
2006). The leading economic sectors are agriculture, mining
and industry (mostly forest products),contributing 22, 18
and 17 percent to provincial production respectively.

FOREST LOSS LEADS TO EMPLOYMENT DECLINE
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3. (U) According to local government officials, the forest
products industry dominated the economy of South Kalimantan
through the late 1990s. However, after years of forest
exploitation, the wood industry collapsed in 2000 due to
inadequate sources of raw materials, and only small saw
mills and limited forest concessions operate today. The
province has no remaining significant original tropical
forests, with the exception of an area close to Meratus
Mountain. Even among the limited remaining forests, the
authorities are unable to control illegal logging and fires.
During our visit, a forest fire erupted in a protected area.
The authorities let the fire burn itself out rather than
attempting to contain the flames due to a lack of equipment
and firefighting staff. Deforestation also has resulted in
significant job loss in the province and contributed to a
massive landslide in the area in 2005 that killed more than
20 people.


4. (U) In an effort to repair some of the environmental
damage, the Ministry of Forestry has cooperated with
Japanese NGOs and private companies to reforest 300 hectares
(741 acres) along the banks of the Barito River. We also
visited a state-owned acacia plantation, used primarily for
paper and pulp products, that operates in once deforested
land. The plantation is now sustainable, with lands rotated
for tree planting and tree harvesting on a scheduled basis.
According to the concession owners, animals are returning to
the area after leaving following the destruction of the
original forests.


5. (SBU) According to Governor Dr. H. Rudy Ariffin, with the
closure of saw mills in 2000, the government began to
encourage investment in mining (coal, diamond, gold, nickel,
iron ore, quartz, sand, and lime stone) and plantations
(palm oil, rubber, coconut, coffee, sugar palm and cinnamon
bark) to help create jobs. Ariffin explained that while
mining requires different skills than those used in the wood
industry, the plantations are able to utilize effectively
former wood industry workers.

COMBATTING ILLEGAL ENVIRONMENTAL ACTIVITIES
--------------


6. (SBU) Police and local government officials in
Banjarmasin reported that increased mining and agricultural
activity is contributing to environmental degradation in the
province. South Kalimantan's Head of Police, Brigadier
General Halba R. Nugroho, described the challenges involved
in combating illegal mining and associated crimes, including
the convening of unlawful protest rallies, the creation of
illicit road blockades, and the development of various
shakedown schemes. He identified three factors fueling
illegal mining in the province:


JAKARTA 00011930 002 OF 002


--Overlapping and conflicting central and local government
responsibilities that lead to inappropriate issuance of
permits, misuse of authorizations, and overlapping
concession areas. Poor regulation of the sector also
presents relatively easy opportunities for permit forgery,
illegal purchasing, embezzlement, fraud and corruption;
-- A 15% disparity between the market fuel prices legal
mining companies pay and the subsidized fuel illegal miners
can buy on the black market.
--Widespread poverty in the community that creates an
environment conducive to illegal activities.


7. (SBU) Nugroho presented statistics on 65 illegal mining
cases the police investigated in 2005 that resulted in 74
arrests. Although prosecutors successfully reached
convictions in a number of cases, sentences averaged only
three to five months. The short sentences act as a
disincentive for robust police enforcement activities.
Police data for illegal logging raids are similar. In 2005,
the authorities successfully prosecuted 183 cases covering
237 suspects. However, the resulting sentences were limited
to prison terms of roughly three to five months. The crimes
prosecuted include unlawful cutting and transport of non-
documented wood, smuggling, misuse of forest documents,
bribery of police and military officials, and manipulating
forest production reports. Nugroho requested training for
staff to better handle investigations and resources to
further expand their operations.


8. (SBU) NGO contacts and local forestry officials expressed
pessimism about current efforts to protect the environment.
Without clearer lines of authority between local and central
authorities, increased resources and heavier penalties to
more effectively deter criminal activity, these observers
believe degradation will only continue.

HEFFERN#