The Multinational Monitor


G L O B A L   N E W S W A T C H

An Indonesian Activist Is Trying to Awaken an Authoritarian Government to Social and Environmental Damage Multinationals Are Causing

An interview with George Aditjondro

Like many other developing countries, Indonesia is considering what controls to place on the extraction and export of valuable raw materials - in Indonesia's case, principally oil, natural gas, minerals and timber. Along with agricultural export crops such as rubber, coffee, and palm oil, these' primary materials provide the foreign exchange to support Indonesia's current 7% growth rate, the highest in Southeast Asia.

A few multinational companies handle much of this luccrative export trade. In oil and natural gas, 85% of production in 1980 was exported, bringing in $16 billion, or 72% of the nation's foreign exchange. The state oil company Pertamina * produces and markets Indonesian oil through agreements with Gulf, Cities Service, Total, Arco, Mobil, Natomas, Santa Fe, Standard Oil of California, Sun Oil, Tesoro, Phillips Petroleum, Union Oil, Texaco, Exxon, and Marathon.

Timber, the second-largest foreign exchange earner, is dominated by Japanese and American firms such as Weyerhaeuser, Georgia Pacific, Mitsubishi, Sumitomo, Mitsui, and C. Itoh. Smaller national timber companies often sell their production to the multinational firms for marketing abroad or, especially more recently, for primary processing into plywood or cut lumber. Last year, Indonesia supplied 47% of Japan's tropical hardwood imports such as meranti, an indigenous species.

In minerals, the New York-based Freeport Minerals Co. extracts tin, nickel and copper in different parts of Indonesia, while the International Nickel Co. (INCO) also mines nickel, and Kaiser has plans to build an aluminum refinery complex on Bintan Island near Jakarta.

Dependent on these international firms for access to international markets for the nation's products, Indonesia's government has encouraged the companies to do the necessary processing of Indonesian products on Indonesian soil, and to adopt ecologically-sound extraction and processing techniques.

But in the eyes of some, the government's actions are more often determined by corruption than by a real concern for the economic and environmental welfare of the country. "It is difficult to do anything without paying extra for it," one U.S. businessman told The New York Times in February. "There is so much red tape - so many permits and procedures. And at each step somebody wants money to speed things up."

In a nation where unemployment hovers around 30%, inflation is more than 15 % annually, life expectancy is less than 50 years, and 30 million adults out of the total population of 148 million - the world's fifth-largest - are illiterate, the government's priorities in using the benefits of the Indonesian oil wealth are frequently matters of life and death. Although the nation's per capita income is about $300, 80% of the population lives in rural areas where the benefits of the oil boom have yet to reach, and for working people, the average daily wage is scarcely over $1.

Indonesia's current military government, headed by President Suharto, came to power after' an unsuccessful leftist coup attempt in 1965 which dramatized the tensions between the military and Indonesia's 90%-majority Moslem population. In repressing the rebellion, the military killed hundreds of thousands of people; tens of thousands more remain in jail. Embarking upon a policy of export-financed industrial development, the government opened Indonesia for foreign investment in oil another sectors in 1966, under generous terms. Foreign oil companies, for example, received 40% of net operating income from joint ventures with the state oil corporation, Pertamina, in that year. When Pertamina ran into grave financial difficulties in the mid-1970's, the terms were tightened to 15% of the value of the oil marketed. And in the forestry sector, the government in April of 1980 put meat into its long-standing request that firms process Indonesian timber inside the country by forbidding firms which had made no investments in the timber-processing sector to export logs.

Several small national firms, unable to come up with the capital to build sawmills or plywood factories, went out of business as a result of this ruling. And it has been cited, along with government insistence on a gradual transfer to Indonesian control of all foreign subsidiaries, as one possible reason for Weyerhaeuser's decision last month to pull out of Indonesia entirely - after investing nearly $40 million in the nation since 1969, on which it earned a return of about 33%, according to a study done by Pacific Research.

Multinational Monitor's Patricia Perkins and Matthew Rothschild spoke in mid-November with Indonesian environmentalist George Aditjondro.

Aditjondro, a former editor of the Indonesian newsmagazine Tempo, is the executive director of the Indonesian Environmental Forum, an umbrella organization of professional, consumer, conservationist and grass-roots groups concerned about the future of Indonesia's forests and about environmental protection in Indonesia. Currently studying at Cornell University on a Hubert Humprey fellowship, Aditjondro has done extensive research on the environmental effects of the timber industry in Indonesia and is currently working on a study of the social and economic effects of short-term, intensive mineral extraction activities in Indonesian mining towns. `

Monitor: Timber ranks as Indonesia's second-largest export earner, and it is an industry dominated by foreign companies. What have been the effects of foreign timber companies in Indonesia?

George Aditjondro: Indonesia was, you could say, the Johnny-come-lately to this forestry business. After Weyerhaeuser and the other American companies raped Hawaii, then they proceeded to Mindanao; after they raped Mindanao, they proceeded to Indonesia.

The timber-producing provinces, like East Kalimantan, are regarded as the Indonesian development frontiers on the local level, a lot of things have to be questioned.

For instance, after ten years of giving freedom to all these companies to export logs from Indonesia, starting from the first of April, 1980, no logs could any longer be exported, as logs. That created, suddenly, big unemployment, because these big companies started to fire their workers.

MM: So one of the reasons Weyerhaeuser may have for pulling out is the 1980 regulations that it couldn't export logs?

G.A.: Well, it could be like that, but Indonesia is one of the last countries where it could go. I think maybe it has something to do with the rivalry between Weyerhaeuser and Georgia Pacific. In East Kalimantan, I would say now that the position of Georgia Pacific has been strengthened by the pullout of Weyerhaeuser - Georgia Pacific and the growing national companies. When I mention "national," it is usually a combination of domestic Chinese and high-ranking officials. At least, capital-wise, they are national companies.

There's also the matter of their partners. In Indonesia, what I have observed is, if there is competition between the giants, those who are closest to the ruling elite will win. And Georgia Pacific's partner, Bob Hasan, although he is not a native - he is a Chinese Indonesian - is one of the businessmen who have been contributing a lot to the government party, directly. He is an old friend of the military in power.

While on the other hand, although Tri Usaha Bhakta, which was Weyerhaeuser's partner, is a company owned by the army, one of the major figures was a general who signed the anti-Suharto petition in 1979 or '80. Maybe you've heard of the Petition of 50 - there were 50 retired generals and student leaders' and other leaders who signed a petition of non-confidence in the government - and there have been steps taken by the government to squeeze them out. . . I see Weyerhaeuser's pullout in this light. It is purely speculation.

MM: Weyerhaeuser said another problem they had is that the Indonesian government wasn't going to allow them to employ the long-term forestry techniques that they wanted to use.

G.A.: It seems to be that Weyerhaeuser wants not to do the traditional replanting which the Indonesian government wants them to do, which is planting the same species of wood they cut, and at the rate they were cutting it. The plantation kind of forestry for them will be more profitable, but for the Indonesians, it means changing the whole ecosystem from a complex forest, where there are lots of species of wood, where they are only taking the meranti woods, to a monoculture plantation.

MM: The effect of that would be what?

G.A.: Every ecosystem, if it is uniform, is more susceptible, more sensitive, than a complex ecosystem. That is one of the basics of ecology. In Kalimantan, for example, the frequency of floods has increased. And I think that this has something to do with the intensive timber cutting which has been happening over the last ten years.

MM: What are some of the social effects of the forestry development?

G.A.: The local people are urged to live in resettlement schemes, and become the food crop suppliers for the forestry base camps. But that doesn't work so easily because people are people, people are not game which you can easily herd into one place.

The timber companies regard the local people as being undisciplined - that they work for a couple of weeks, and when they want to leave, they just leave the company and open a farm. And so, most of the timber companies prefer to bring people in, either from the Philippines, from Malaysia, or from other parts of Indonesia, especially from Java and Sumatra, which are much more densely populated.

MM: Is that true with oil and mining enclaves as well?

G.A.: Yes. And even within an enclave itself there is a three-tiered society, with the highest rank being the expatriates and Indonesian bosses, and the second tier being Indonesians from other parts of the country, and in the lowest group you see the local people. In Irian, it is the native Irianese. So it is not a coincidence that in the last years, there has been increased unrest from the local population against these big companies.

The first step is, they have to give up their land, either very cheaply or sometimes they are evicted from the land. And then they only get the bad jobs. And then they usually live in barracks outside the nicely-built areas. In the oil-mining society in East Kalimantan, the Americans and Australians live in these nice well-built houses with their own golf carts and things, while the local people, whether they are workers or still want to remain farmers, they have to live with an oil well across the field, with all its implications.

MM: So the question becomes, once again, to cite the cliche, "Development for whom?" The local people there are not the ones who are benefiting. Do you think that the benefit for the country as a whole outweighs that factor?

G.A.: Indonesia being a highly centralized country, although the government says there is some trickle-down, there is more trickle-up. So, it will just strengthen the antagonism between the regions and the center. Between the periphery and the core.

MM: You have written about discriminatory employment practices concerning Freeport Minerals. Could you go into that a little bit?

G.A.: Freeport has been proud that it has provided employment opportunities for local people - at least they say 10 % of their employees are native Irianese. But. . . those people are the pariahs in that area, having worked for eight years for Freeport without any improvement, a salary increase or an increase in stature - all the things which workers from other parts of Indonesia have got. That's why the local people say, "The moon is shining, but it doesn't shine on us. It shines on our brothers from other parts of Indonesia but we are kept in the dark and the cold." The local population can be stirred up by some rebellious elements when their feelings are hurt, to sabotage the plant. And that's what happened in 1977.

MM: How?

G.A.: They cut the ore concentrate pipe, which transported the ore from the mine which is high up the mountains, to the shipping port. And that's how Freeport lost $1 million a day.

MM: For how long?

G.A.: For maybe a couple of weeks.

MM: Is it known who was responsible for that sabotage?

G.A.: It is known that it was done by the West Irianese Freedom Movement.

MM: And why? Was it because of those local kinds of concerns, or was it done as more of a national political statement?

G.A.: That was a regional movement, the West Irianese movement, but in every guerrilla movement they look for certain blind spots or certain weak points, that is the way of operating.

MM: How much political support is there in Indonesia for the environmentally-conscious position that you are espousing?

G.A.: One thing is for sure, that Indonesian voters don't play a big role in the whole political structure. The government usually reacts to pressure from below - but with a time-lag. For instance, the government has reacted to pressure from the Moslems against the excesses of the tourism business - all these steam bath and massage clubs, and gambling, in Jakarta and other tourism centers.

Because it is not directly votes which count in Indonesia. There is a general election, but the general election is only for 39% of the members of Congress, the Indonesian Congress. The other 61079 are appointed by the government. So the majority is still in the government's hands.

MM: Do you think that an overall environmental law will be passed?

G.A.: I'm not optimistic for that. And even if it should pass, then enforcement is another problem. In '78, the minister of industry issued a regulation that every industry has to have waste pollution equipment - water pollution equipment, air pollution equipment. And the companies built before '78, before the issue of the decree, got three years' tolerance.

It's 1981 now, and in reading the papers, it seems that even that decree has not been implemented strongly. Again, it is a matter of action and reaction. When there are cases where there are explosions, or people are affected by pollution, and you make it a strong enough case, then the government will react to it. This is what they call in Indonesia, "ad-hocracy."

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