The Indonesian Quarterly Vol. XXIX no. 2 Second Quarter 2001

130 Pages·2001·6.4 MB·English

by  CSIS Indonesia

VOL. XXIX NO. 2
SECOND QUARTER
The
Indonesian
Quarterly
CURRENT EVENTS
The Bush Administration's Policies
Challenges & Opportunities in the West Pacific Region
REVIEW OF ECONOfv4lC DEyELOP^4ENT
Indonesian Economy at Stake: Up or Down
REVIEW OF POLITICAL DEVELOPMENT
The Impeachment of President Wahid
ARTICLES
Forests as Strategic Assets
The Implementation of Decentralization in
the Forestry Sector
Forestry Developments with Regard to Decentralization
Forestry Management in the Era of Regional Autonomy
DFID Multi-Stakeholder Forestry Programme (MFP)
The Political-Economy of Fiber, Finance and Debt
Building Government-Donor Co-ordination
Indonesian Forestry from World Bank's Point of View
Government-Donors Interaction
Foreign Assistance to the Indonesian Forestry
The Quarterly The Indonesian Quarterly is a journal of policy oriented studies pub-
lished by the Centre for Strategic and International Studies (CSIS), Ja-
lan Tanah Abang 111/23-27, Jakarta 10160. It is a medium for research
findings, evaluations and views of scholars, statesmen and thinkers on
the Indonesian situation and its problems. It is also a medium for In-
donesian views on regional and global problems. The opinions ex-
pressed in The Indonesian Quarterly are those of their authors and
do not necessarily reflect the opinion of the CSIS.
The Logo To better represent the underlying ideas that gave
birth to the CSIS in 1971 the Centre uses as of 1989
the logo that figures on the front cover of this jour-
nal. The original, in bronze, designed by C. Sidharta,
it consists of a disc with an engraving that depicts
the globe which serves as a background to a naked
man with an open book laid on a cloth over his lap, his left hand
pointing into the book, his right hand raised upwards. Altogether it
simbolises the Centre's nature as an institution where people think,
learn and communicate their knowledge to whoever are interested,
to share it with them, mankind the world over being their concern and
the globe their horizon. The nakedness symbolises the open-minded-
ness, the absence of prejudice, in the attitude of the scholars who
work with the Centre, just as it is with scholars everywhere. The
inscription reads "Nalar Ajar Terusan BUdI", which in the Javanese
language essentially means that to think and to share knowledge are
only the natural consequence of an enlightened mind. It is a surya
sengkala, that is chandra sengkala, ajavanese traditional way to sym-
bolise a commemorable year in the lunar calendar, adapted to the
solar calendar system. It consists in using words that express the per-
ceived meaning of the commemorated year while marking the year at
the same time, each word having a numerical value. Thus, the inscrip-
tion, in reverse order, represents the year the CSIS was established; 1971.
Editor Bantarto Bandoro
Advisory Board Mari Pangestu, Hadi Soesastro, Kristiadi, Rizai Sukma, T.A. Legowo,
J.
ofEditors Medelina K. Hendityo, Pande Radja Siialahi, Tubagus Feridhanusetyawan
SIT 01381 /SK/Dlrjen PG/SIT/72
ISSN 0304-21 70
The
Indonesian VOL XXIX NO. 2
SECOND QUARTER,
2001
Quarterly
CONTENTS
ABSTRACTS 95
CURRENT EVENTS
The Bush Administration's Policies: Implications for the Asia Pacific
JusufWanandi 99
Challenges and Opportunities in the West Pacific Region:
Is There Any Need for A New Forum?
Hasjim Djalal 106
lb
REVIEW OF ECONOMIC DEVELOPMENT
Indonesian Economy at Stake: Up or Down
Staff, Department ofEconomics 112
REVIEW OF POLITICAL DEVELOPMENT
The Impeachment of President Wahid and
the Emergence of Mega-Hamzah Leadership
M. Djadijono 119
ARTICLES
Forests as Strategic Assets
RaymondAtje, Linda Christanty, Tubagus Feridhanusetyawan,
andKumya Roesad 132
The Implementation of Decentralization in the Forestry
Sector within the Framework of Sustainable Forest Management
in the District of Kutai Kertanegara.
H. Syau/can/ H.R. 143
Forestry Developments with Regard to Decentralization
Silverl-1utabarat 151
94
Forestry Management in the Era of Regional Autonomy
Nana Supama
DFID Multi-Stakeholder Forestry Programme (MFP)
The MFP ManagementandFacilitation Team
The Political-Economy of Fiber, Finance, and Debt
in Indonesia's Pulp and Paper Industries
Christopher Barr
Building Government-Donor Co-ordination
to Implement Forestry Reforms
NeilScotlandand Boen Purnama
Indonesian Forestry from the World Bank's Point ofView
Thomas E. Walton
Government-Donors Interaction in Indonesian Forestry
jozsefMicski
Foreign Assistance to the Indonesian Forestry
Agus Setyarso
ABSTRACTS
FORESTS AS STRATEGIC ASSETS
By Raymond Atje, Linda Christanty, Tubagus Feridhanusetyawan and Kurnya Roesad
Forests have provided a vital resource base for the Indonesian economy. However, the
short-term economic interests have threatened the existence of forests as a resource
base due to forest exploitation, which undermines the long-term ecological and social
benefits that forests may offer. The current rapid rate of deforestation - compounded
by the economic crisis - makes it imperative to re-think the overall development strategy
in terms of emphasizing the links between human, economic and environmental se-
curity. The article also summarizes the current ongoing CSIS research on forestry issues.
Specific topics of interests covered in the research include: the impact of the crisis on
regulatory and institutional developments in the forestry sector; a quantitative and qual-
itative analysis of the crisis on the forestry sector; the links between property regimes
and economic incentives in adopting sustainable forest management principles; and the
decentralization process in forestry management.
THE IMPLEMENTATION OF DECENTRALIZATION IN THE FORESTRY SECTOR WiTHIN
THE FRAMEWORK OF SUSTAINABLE FOREST MANAGEMENT IN THE DISTRICT OF
KUTAI KERTANEGARA
By H. SyaukanI H.R.
The author emphasizes the importance of gettihg the pre-conditions right for forestry man-
agement in facing regional autonomy. Focusing on the district of Kutai Kertanegara, he
discusses several important ecological, social and economic benefits of sustainable
forestry management. The article also describes the process of decentralization in the
forestry sector since 1995 and concludes with a discussion of four alternative forest
management systems.
FORESTRY DEVELOPMENTS WITH REGARD TO DECENTRALIZATION
By Silver Hutabarat
The reform era brought a new path to democracy, followed by the emergence of a
shift from a centralized to a decentralized government. The problems with decentralization
in the forestry sector occur because of weak government; differences in vision, mission.
96 THE INDONESIAN QUARTERLY, Vol. XXIX/2001, No.
and strategic concepts between the central and local governments regarding the issue:
on decentralization; the lack of government regulations following the issuance of the
new forestry law (Law 41/1999); the inadequate human resource capacity; the regional
focus on increasing revenues; the difficulty in managing cross border forests; and the
lack of understanding the principles of sustainable forestry management. Decentralization
in forestry can only be successful if regional autonomy is implemented in stages; there
is a fair share between forest-rich districts and forest-poor districts; and if the central
govemment facilitates the process of developing the National Forest Program.
FORESTRY MANAGEMENT IN THE ERA OF REGIONAL AUTONOMY
By Nana Suparna
The lack of sustainable forest management practices to secure forest resources belies
the significant contribution of the forestry sector to the national economy. The forest
area is increasingly diminishing, while timber plantation developments dc not match
with the rapid expansion of the pulp and paper industry. There are four basic factors
causing the bad performance of forestry management: the insecure property rights "-e-
gime; the incapability of monitoring and implement the rule of law; the low profebsionaiism
in managing the forests; and the centralization of forestry management. The successful
implementation of regional forestry management depends on how regional governments
handle those four issues. Efforts to decentralize authority from the central government
to the regional governments do not automatically mean that problems of 'centralization'
will be solved. The required policy change depends very much on a change from a
mechanistic to an ecological paradigm. The stakeholders' forum could provide the con-
text in which such a change could take place,
THE POLITICAL ECONOMY OF FIBER, FINANCE, AND DEBT IN INDONESIA'S PULP
AND PAPER INDUSTRIES
By Christopher Barr
This article examines the factors that have led Indonesian pulp producers to make
large-scale investments in processing facilities without first securing a legal and sustain-
able raw material supply. It is argued that the countr/'s pulp and paper conglomerates
have been willing to invest billions of dollars in high-risk projects because their owners
have been able to avoid much of the financial risks involved. Three factors that have
allowed them to do so are: (1) heavy government subsidies, including access to wood
from natural forest at costs well below its stumpage value; (2) weak regulation of Indo-
nesia's financial sector; and, (3) failure on the part of international financial institutions
to adequately assess the risks involved in pulp and paper investments. The paper con-
cludes with several policy options to promote sustainability, including the elimination of
ABSTRACTS 97
the wood supply subsidy to the pulp industry, the introduction of a credible indepen-
dent monitoring program of plantation development and a moratorium on new
pulp and paper processing capacity extensions until public audits of companies' pulp
wood supply plans are carried out.
BUILDING GOVERNMENT-DONOR CO-ORDINATION TO IMPLEMENT FORESTRY
REFORMS
By Neil Scotland and Been Purnama
The article looks at the merits and otherwise of closer donor co-ordination. Experience
with closer donor co-ordination in other countries and in other sectors is reviewed. The
authors also discuss recent steps towards closer donor collaboration in the Indonesia
forestry sector and possible options for the future. As the article is intended only to
provoke further discussion on donor co-ordination, and as such draws only broad and
impartial conclusions.
INDONESIAN FORESTRY FROM THE WORLD BANK'S POINT OF VIEW
ByThomas Walton
E.
Indonesia needs a new approach to managing Its forests, developed with participation
of all stakeholders. The details should be left to the stakeholders, but one can project
the key elements this new National Forest Program will need to include. The Govern-
ment of Indonesia has already begun to take steps in this direction, but there has
been little progress in the forests. The article lists several causes of deforestation including
excess wood processing capacity, under-valuation of forests, official corruption, failure
of governance and the rule of law, and estrangement of forest communities because of
the failing past government policies. In addition, the author describes the Bank's role
in providing policy inputs to the reform agenda in the forestry sector, such as its
activity in coordinating the interaction between CGI donors and the Government of
Indonesia. The author notes that the Government of Indonesia has recently been more
receptive to advice on forest policies and showed political will to address the dif-
ficult issues such as illegal logging and corruption. These are encouraging developments that
could pave the way for additional forest management assistance in the future.
GOVERNMENT-DONORS INTERACTION IN INDONESIAN FORESTRY
By Jozsef Micski
The article describes the process of institutionalizing government-donor cooperation in
developing and implementing an integrated national forest program and to enhance inter-
98 THE INDONESIAN QUARTERLY, Vol. XXIX/2001, No.
agency cooperation. Three bodies have been established to achieve these targets: th
Inter-Departmental Connmittee on Forests (IDCF), the Working Group for Coordinatin
the Implementation of the National Forest Program (NFP) and the Donor Forum on Forestry
The author raises several critical points about the effectiveness of those bodies an
discusses several negative and positive current policy achievements and developments
ii
the field. The negative developments include: the continued illegal logging and defot
estation; the debt restructuring process of the largest wood companies which do no
sufficiently address sustainable forest management principles; the practice of severa
districts under the decentralization program to allocate concessions in an unsustainabU
manner and the lack/absence of prosecution of offenders. On the positive side, the
author mentions the Ministry of Forestry's progress in making public the results of forest
inventory and mapping (but without addressing the land tenurial issues); the establish-
ment of a Directorate of Forest and Estate Crops Fire Control; the recent moratorium
on cutting of ramin species and a public statement of the President against illegal
logging. In addition, eco-labeling/certification schemes deserve special attention to address
the linkages between illegal logging and trade. Finally, the article proposes several
priority measures which need to be undertaken: a high level joint political statement of
the main decision-makers in the country (the President, Vice-President, DPR anrl MPR);
rigorous implementation of the rule of law; promoting further the role of the IDCF as
the main coordinating instrument for the NFP and continued policy dialogue.
FOREIGN ASSISTANCE AND INDONESIA'S FORESTRY SECTOR
By Agus Setyarso
Indonesia started to receive foreign assistance since the early 1980s and it was in-
tensified after 1992, i.e. through GTZ, ODA, DFID, USAID, JICA, and EU. Other inter-
national institutions provided funding for research. After the crisis, forest management
practices are greatly influenced by international agreements, i.e. in the 7 points in the
Letter of Intent between the government of Indonesia and the IMF and the commit-
ments to the CGI in October 2000. Although international assistance has intensified
during the past decade, there has been little impact in the national performance of
the forestry sector. There is a need for reviewing and institutionalizing forestry strategy
and policy, and redefining international collaboration to meet the demand of Indonesia
rather than merely receiving donor-driven assistance.
CURRENT EVENTS
The Bush Administration's Policies:
Implications for the Asia Pacific
jusuf Wanandi
INTRODUCTION The Bush Administration appears
to be eager to review a lot of ,the old
ANEW
presidency in the US always policies of the Clinton Administration,
creates some uncertainty partly which they consider not realistic, too
due to campaign rhetoric and ideological, or falling behind with time.
platforms that hardly ever materialize. Of particular importance is the re-exam-
One can never be sure whether the new ination of US strategic doctrine, including
president would be committed to imple- the concept of mutual assured destruction
ment all the points that have been pro- (MAD) of the Cold War era. Nevertheless,
the Bush Administration has to face a
posed. That happened with President Gar-
ter on the issue of the withdrawal of US major constraint caused by the very late
land troops from South Korea. It was also presidential election results, which has left
many political appointees unconfirmed.
the case with President Clinton on the issue
This resulted in both lack of new policies
of accepting gays in the armed forces.
and insufficient people to implement them,
It is also true that most new admin- which impedes their efforts to go ahead.
istrations think that they have to reinvent
They now only have nominated about
the wheel when the'f assume the office.
This creates some havoc in the first year 1/3 of the officials who had been ap-
pointed during the Reagan Administra-
of the administration because they will
try new policies as if what has happened tion. The Bush Administration is con-
servative in outlook and, appointed at
so far has been in a vacuum. However,
the same juncture, can be compared
usually they will come to their senses
sooner rather than later, and well-estab- with the Reagan Administration in 1980.
lished policies, especially those that have In the first year of their office, the
bi-partisan support, will be resumed and Reagan Administration also had some
continued. problems in setting their policies right.
:
100 THE INDONESIAN QUARTERLY, Vol. XXIX/2001, No.
especially with regard to China. Gener- no nuances or different priorities, oi
ally they tend to be very unilateral at even differences in implementation.
the beginning as had been shown in
extremis by Jeanne Kilpatrick, the US The Republicans seem to focus on
the security part of foreign policy. They
Representative, at the United Nations.
But there are differences between the also pay particular attention to open
two administrations. The Reagan Ad- trade and human rights as well as the
ministration took place when the Cold ideals of democracy. Nevertheless,
War still existed. Today, with the end these have been part of any party's for-
of the Cold War there is a greater sense eign policy and are not necessarily
of unity among allies and friends in facing given first priority. While Democrats are
one common enemy. However, such kind more inclined to accept- multilateral ap-
of glue no longer exists. Therefore it is proaches in foreign policy. Republicans
going to be more difficult for the US to tend be unilateral rather than multilateral
assert its own policies upon its allies and in their attitude.
friends. The Clinton Administration was more
This administration, being strongly willing to support free trade, especially
conservative in ideology, is supported at the beginning of the first term, by
by a very experienced team for national pushing for NAFTA, the First Summit of
security: Dick Cheney (Vice President); APEC, and the conclusion of the WTO.
Donald Rumsfeld (Secretary of Defense); These are efforts to help sustain and
Colin Powell (Secretary of State); Con- expand free trade regionally and globally.
doleeza Rice (National Security Adviser); Since the loss of the fast track authority
Paul Wolwofitz (Deputy Secretary of in trade in the last year of his first ad-
Defense); Richard L. Armitage (Deputy ministration, Clinton's retreat from a pro-
Secretary of State); and James Kelly active free trade stance due to pressures
(Assistant Secretary of State for East from organized labor and some influential
Asian Pacific Affairs). Some of them used members of the Democrats in Congress,
to be the members of the "dream team" among others Representative Gephardt.
for East Asians under Secretary George Thus, the divide between the two camps
Schultz. However, times have changed are sometimes blurred, especially when
in the last decade and there is a slight facing circumstances that do not leave
worry that they still continue to be any administration with much choice.
'cold warriors'. Yet, they are too smart
More unilateralist tendencies could
not to understand that things have
be discerned in the Bush Administration,
changed in the meantime.
because the National Security team is
strong ideologically, and having no in-
EAST ASIA AND THE US
hibitions about the Cold War and re-
So far US policies towards East Asia cognizing that the USA is the sole sur-
have been bipartisan. This does not viving superpower. They really believe
mean that in reality there have been in their policies and therefore tend to