Indonesia enjoys a vibrant economy and growing middle class, though much of the growth is based on a system of natural resource extraction that is just starting to seek real sustainability goals
When Facebook decided recently to establish an office in Indonesia, it wasn’t hard to understand the reasoning – the country is Facebook’s fourth largest market worldwide. That’s because Indonesia, a chain of more than 13,000 islands, is the world’s 16th largest economy, and its population of 250 million is young, eager and digitally smart.
Indonesia is rife with contrasts. Nearly 40% of its people live on less than $2 a day. And yet Indonesia is erecting the world’s first net-zero skyscraper, scheduled for completion in 2019.
The Pertamina Tower, as the 99-storey building is called, will get 25% of its energy from on-site wind turbines, a significant step towards net-zero status. The primary design consideration of this tower was energy use, and it will have features such as mobile “leaves” on its outer surface to protect from solar heat.
The Pertamina Tower will rise up like a shiny badge of modernism in the middle of bustling Jakarta. This capital city, meanwhile, suffers from regular flooding, as sections of its land are sinking through overuse of groundwater and its canals are stuffed with trash from its slums.
Indonesia is considered one of four “Mint” countries – the others are Mexico, Nigeria, and Turkey – that economist Jim O’Neill (who coined the term Bric for the economic powerhouses of Brazil, Russia, India, and China) says will be the next global growth engines. Young demographics, proximity to other vibrant markets, and the chance for double-digit growth are characteristics of the Mints.
In Indonesia’s case, the promise is equally matched with peril. Economically, 2014 has been a bad year thus far, with growth rates revised downwards and currency weakness. Upcoming presidential elections are looked to with hope that popular candidate and current Jakarta governor Joko Widodo will bring stronger leadership and governance.
As is the case elsewhere, Indonesia’s strong commodity sectors are also the cause of part of its environmental degradation. Deforestation and loss of biodiversity are intricately linked to the fibre and palm oil industries. In 25 years the country has lost nearly a third of its forest cover; the Sumatran tiger and orang-utan are threatened wildlife, while 88% of the country’s many coral reefs are in danger from poor fishing practices.
Both forestry and palm plantations are powerful contributors to Indonesia’s rank as the world’s 13th largest emitter of greenhouse gases. Deforestation and slash-and-burn agricultural practice in Indonesia are implicated in some of the brown haze threatening big Asian cities.
Indonesia has a moratorium in place on forest clearing until 2015, but basic zoning of forests for land-use and planning purposes are only 14% complete, and corruption of the forest ministry is considered endemic.
Seeing the forest for its trees
In spite of the challenges, Indonesia has inched its way up in sustainability rankings regionally. It is still behind neighbours Malaysia and Thailand, yet is ahead of laggards Vietnam and Cambodia.
The sustainability movement among Indonesia-based companies is only nascent; Indonesia joined the World Business Council for Sustainable Development (WBCSD) in 2011 and has 20 Indonesian companies have signed up.
Indonesia’s key sustainability strength is actually the international prominence of campaigns to conserve and manage its rainforests, while supporting the unique species and people that live there.
A pivotal moment in slowing deforestation by pressuring companies to improve their supply chains might turn out to have occurred back in 2010, when Greenpeace launched a notorious video showing a bored office worker biting into a Nestlé Kit Kat and finding it contained an orang-utan’s finger instead of a chocolate biscuit. Nestlé tried to ban the video but quickly turned to working with NGO the Forest Trust, and liaising with Greenpeace, to develop a sustainable palm oil strategy.
What has shifted since then has been Greenpeace’s focus on Asian multinational companies. At the beginning of 2014, Asia’s second-largest pulp and paper company Asia Pacific Resources International (known as April), announced a new sustainability policy placing a moratorium on plantation developments until a forest conservation assessment is made, and committing to “only use plantation fibre by the end of 2019”.
April’s move was the result of many pressure points on the company (which is part of holding company RGE, in turn owned by Indonesian businessman Squanto Tanoto and headquartered in Singapore). Greenpeace had waged a successful campaign against Asia Pulp & Paper – as featured in Ethical Corporation – via viral videos in the US, and switched to pressuring April as soon as it let up on APP, following the latter’s 2013 commitment to plantation-only fibre and to not clear any virgin forest.
Yet, surprisingly, another key pressure point has come from the WBCSD, which took the rare step of putting April on probation. WBCSD has also suspended April from its Forest Solutions Group until the company fulfils its own promise not to use a majority of rainforest wood for its fibre supplies.
Greenpeace has deep doubts about April’s integrity and commitment to do what it has promised, and has decided not to let up on the campaign pressure.
“April/RGE hasn’t made a sufficient commitment to end its role in deforestation,” says Andy Tait of Greenpeace. Tait says that as April is only one company in the RGE conglomerate, “the promises still leave the door open for April to rely on Indonesian forest destruction until 2020”.
For its part, WBCSD is now on a stakeholder committee to hold April to the promises it has made. Attorney Joe Lawson sees the process as a new one to April that will yield “enhanced transparency” on the company’s journey.
“I would like to stress that this is a journey and a new process for April,” Lawson says. “April should be commended for taking this first step.”
Palm oil dominoes
There have been a number of corporate commitments that aim to make palm oil less devastating for rainforests and its supply to become more sustainable.
US cereal company Kellogg, the giant US grocery chain Safeway and huge US personal care company Procter & Gamble have all pledged to get “deforested” palm oil out of their supply chains. Agribusiness conglomerate Cargill has also written a letter saying it would establish a policy to eliminate deforestation, peatlands conversion and social conflict from its palm oil supply chain.
The importance of both Greenpeace and the Rainforest Action Network in the process of pressing first fibre producers APP and April and then palm oil producers such as Golden Agri-Resources and Wilmar (both headquartered in Singapore) cannot be overstated. In addition, the work of the Forest Trust has helped companies formulate their non-deforestation policies.
While Greenpeace is great at headline-grabbing campaigns, other NGOs such as TFT and WBCSD are marshalling resources for the ongoing work.
There can be no doubt that the promises and initiatives of corporations are positive, but palm oil and forestry are also unfortunately part of Indonesian poverty alleviation. Grumblings among small local palm oil producers were immediate after Wilmar, the world’s biggest palm oil company, announced its “no deforestation” guidelines.
Kinari Webb, a physician who studied medicine specifically to open a health clinic in Indonesia, says deforestation policies have to do more to take into account the needs of local people. Webb founded Health in Harmony (HIH), a non-profit fundraising entity, because she believed that providing healthcare to rural and remote Indonesians is a key to stopping deforestation and destructive palm oil practices.
Through sister NGO Asri (Alam Sehat Lestari), Webb and her team of doctors provide healthcare in exchange for forest guardianship. Anyone coming to the HIH clinic is given six months to pay for health services through providing work, or offering tree and other plant seedlings, or other goods in trade. Asri has thus built a network of “forest guardians” that monitor the 90,000-hectare Gunung Palung National Park near where the HIH clinic is located.
“In a perfect world,” says HIH managing director Michelle Bussard, “there would not be the international demand there is for oil palm. Even locally, it’s not as if community members truly have a choice whether to use the ‘golden liquid’ or not. Alternatives are beyond their budget and jobs to support their families are few and far between.”
Webb says deforestation around Gunung Palung has “vastly decreased” and community health increased through the HIH healthcare-for-barter system. In a survey, active individual loggers declined from 9% of respondents to 3% over four years. Webb says the palm oil company PT Kal has asked HIH to help improve local community relations so that forest in an area the company has set aside for conservation will not be illegally cleared for cash.
Both Bussard and Webb say local communities have a good idea of how to develop sustainably if they are truly listened to and urgent needs such as access to healthcare are provided. Asri hopes to replicate the HIH conservation/clinic model widely – the first project will be to attempt a mobile clinic in the Indonesian region of Raja Ampat so that villagers can maintain a marine protected area even if illness and financial woes strike.
“I see the critical principle as what I call radical listening,” Webb said. “When NGOs or companies truly don’t ask [communities] what the solutions are then, whatever outside actors choose to do, it will fail. My experience is local communities know what the best solutions are for the environment, community economic development, and their health.”
As this sustainability work in forestry and palm oil progresses, Indonesia’s best commodity may be its young population. Alex Deghan, a former USAid worker involved with a new startup called Conservation X, and Rhett A Butler, founder of an Indonesian-language environmental news service, believe Indonesia can make a paradigm shift and become Asia’s “green leader”.
They say the essential ingredient is investing in Indonesia’s human resources to do the assessments and on-the-ground knowledge work required for sustainability of forests, palm plantations and everything else – rather than turn those tasks over to western consultants.
A sustainability “sea change”, Deghan says, “requires a profound shift in the government including significant investment. This is ultimately Indonesia’s choice.”
Indonesia – fast facts
|Area||1.9m sq km|
|Population (2014 est):||254m|
|GDP (PPP):||US$1.3tn (2013 est)|
|GPP (PPP) per capita:||US$5,200 (2013 est)|
|GDP composition:||agriculture 14.3%; industry 46.6%; services 39.1%|
|Export partners:||Japan 15.9%; China 11.4%; Singapore 9.0%; South Korea 7.9%|
|Import partners:||China 15.3%; Singapore 13.6%; Japan 11.9%; Malaysia 6.4%|
|Energy generation by source:||87% fossil fuels; 0% nuclear; 9.9% hydro; 3.1% other renewables|
Source: CIA World Factsheet
April Streeter is an associate with One Stone. A Certified B Corporation, One Stone has a global team offering sustainability consultancy and communications expertise, based in Stockholm, Edinburgh, Sydney, Portland and Washington DC.community relations Indonesia labour practices Palm Oil south-east Asia