The effects of Indonesia's decentralisation on forests and estate

case studies

6 & 7

Lesley Potter and Simon Badcock

The Effects of Indonesia's Decentralisation

on Forests and Estate Crops in Riau

Province: Case Studies of the Original

Districts of Kampar and Indragiri Hulu

Case Studies on Decentralisation and Forests in Indonesia

AUSTRALIAN CENTRE FOR INTERNATIONALAGRICULTURAL RESEARCH

cvr_all case 7/31/02 2:05 PM Page 4 (1,1)

CIFOR REPORTS ON DECENTRALISATION AND FORESTS IN INDONESIA

Synthesis of Major Findings

Barr, C. and Resosudarmo, I.A.P. 2002. Decentralisation of forest administration in Indonesia:Implications for forest sustainability, community livelihoods, and economic development. Centerfor International Forestry Research, Bogor, Indonesia.

District and Provincial Case Studies

Case Study 1. McCarthy, J.F. 2001. Decentralisation, local communities and forest managementin Barito Selatan District, Central Kalimantan. Center for International Forestry Research, Bogor,Indonesia.

Case Study 2. McCarthy, J.F. 2001. Decentralisation and forest management in Kapuas District,Central Kalimantan. Center for International Forestry Research, Bogor, Indonesia.

Case Study 3. Barr, C., Wollenberg, E., Limberg, G., Anau, N., Iwan, R., Sudana, I.M., Moeliono,M., and Djogo, T. 2001. The impacts of decentralisation on forests and forest-dependentcommunities in Malinau District, East Kalimantan. Center for International Forestry Research,Bogor, Indonesia.

Case Study 4. Casson, A. 2001. Decentralisation of policies affecting forests and estate cropsin Kutai Barat District, East Kalimantan. Center for International Forestry Research, Bogor,Indonesia.

Case Study 5. Casson, A. 2001. Decentralisation of policymaking and administration of policiesaffecting forests and estate crops in Kotawaringin Timur District. Central Kalimantan. Center forInternational Forestry Research, Bogor, Indonesia.

Case Studies 6 and 7. Potter, L. and Badcock, S. 2001. The effects of Indonesia’s decentralisationon forests and estate crops in Riau Province: Case studies of the original districts of Kampar andIndragiri Hulu. Center for International Forestry Research, Bogor, Indonesia.

Case Study 8. Soetarto, E., Sitorus, M.T.F. and Napiri, Y. 2001. Decentralisation ofadministration, policy making and forest management in West Kalimantan. Center forInternational Forestry Research, Bogor, Indonesia.

Case Study 9. Obidzinski, K. and Barr, C. 2002. The effects of decentralisation on forests andforest Industries in Berau District, East Kalimantan. Center for International Forestry Research,Bogor, Indonesia.

front pages Cases 6-7 7/31/02, 9:46 AM14

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The Effects of Indonesia’s Decentralisation on Forestsand Estate Crops in Riau Province: Case Studies ofthe Original Districts of Kampar and Indragiri Hulu


Associate Professor,Department of Geographical and Environmental Studies,University of Adelaide, Australia


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© 2001 by Center for International Forestry ResearchAll rights reserved. Published in 2001Printed by SMK Grafika Desa Putera, Indonesia

ISBN 979-8764-84-6

Published byCenter for International Forestry ResearchMailing address: P.O. Box 6596 JKPWB, Jakarta 10065, IndonesiaOffice address: Jl. CIFOR, Situ Gede, Sindang Barang, Bogor Barat 16680, IndonesiaTel.: +62 (251) 622622; Fax: +62 (251) 622100E-mail: [email protected] site: http://www.cifor.cgiar.org


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S ince early-2000, the Center for International Forestry Research (CIFOR) has conducted research on the decentralisation of forest

administration and policies affecting forests in Indonesia. This project has soughtto document the real and anticipated impacts of decentralisation on forestmanagement, forest community livelihoods, and economic development at theprovincial and district levels. During the initial phase of this research, CIFORconducted case studies in nine kabupaten or districts, in four provinces: Riau,East Kalimantan, Central Kalimantan, and West Kalimantan. These case studieswere carried out in 2000, with follow up visits to some districts conducted inearly 2001. As such, the findings presented in the present report and the companioncase studies reflect the conditions and processes that existed in the study districtsduring the initial phase of Indonesia’s decentralisation process.

The following reports have been produced by this project. The first of theserepresents a synthesis of the major findings from the nine case studies, accompaniedby a historical analysis of forest administration and forestry sector development inIndonesia, and a discussion of the origins and legal-regulatory basis of the nation’songoing decentralisation process. Each of the nine case studies is published as aseparate report (with the exception of the study districts in Riau, which have beencombined) in order to make the information contained therein more readilyaccessible to decision-makers involved in the decentralisation process. It is hopedthat readers of the case studies will refer to the synthesis report in order to situatethe specific case study findings in a broader historical and policy context.

During 2002, CIFOR will publish additional case studies from research ondecentralisation and forests in West Kalimantan, South Sulawesi and Irian Jaya.CIFOR also plans to carry out follow-up research at several of the original casestudy districts, and will publish periodic findings from the sites.

Acknowledgements and Disclaimer

CIFOR gratefully acknowledges the financial support of the Australian Center forInternational Agricultural Research (ACIAR) and the United Kingdom’sDepartment for International Development (DFID). The opinions expressed in thisreport are the views of the author(s) and do not necessarily represent the officialpolicy of CIFOR. These opinions, likewise, do not represent the official policy ofACIAR or DFID or any other organization involved in funding, conducting ordisseminating this study.

The authors acknowledge the assistance of a large number of persons in researchingand preparing this study. In Riau, these included staff of government departments,in the areas of forestry, estate crops, planning, environment and finance, at both

Decentralisation and Forests in Indonesia:An Overview of the Study


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provincial and district levels. Academics from UNRI, together with membersof NGOs, mostly Pekanbaru-based, provided fellowship and collegiality.We were also helped by staff from the two pulp and paper companies, fromprivate timber and oil-palm concerns and from numbers of villagers in alldistricts. All Bupatis and temporary Bupatis in our study areas madethemselves available to talk to us, for which we were grateful. We wouldespecially like to thank Viator Butar-Butar in Pekanbaru, former director IrWaldemar Sinaga and his staff at the Bukit Tigapuluh National Park Unitand the former staff of WWF Bukit Tigapuluh, especially Mangara Silalahiand Bobby Berlianto. In Jakarta many other people contributed, particularlythe forest specialists from Manggala Wanabakti, while colleagues fromCIFOR in Bogor, especially Chris Barr, provided stimulation and werepatient through our drafts. Our fellow researchers, especially Anne Cassonand John McCarthy, gave us the opportunity to exchange many useful ideasand experiences.


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Overview of Indonesia’s Decentralisation Process

Since late-1998, Indonesia has undergone a process of rapid and far-reachingdecentralisation. With this process, considerable degrees of administrativeand regulatory authority have been transferred from the national governmentin Jakarta to the country’s provincial and district governments. This transferof authority has occurred across broad segments of the nation’s economyand has sharply redefined the roles and responsibilities of governmentagencies at each level of the nation’s administrative structure. With thelocus of decision-making shifting decisively away from the nationalgovernment, Indonesia’s ongoing decentralisation process marks a dramaticbreak from the highly-centralized system of governance that characterizedSuharto’s New Order regime during the period 1966-1998.

To a significant extent, the process of decentralisation now occurring inIndonesia has been driven by the demands of provincial and districtgovernments whose jurisdictions are rich in timber, petroleum, and othernatural resources. Officials from resource-rich regions have long complainedthat the vast majority of the benefits from these assets have flowed awayfrom their regions to the national government and to private sectorcompanies closely associated with decision-makers in Jakarta. While theNew Order government kept a tight lid on calls for greater regional autonomyand regional control over natural resource revenues, the post-Suhartogovernment has not been able to ignore these demands. On the contrary,since 1998 the country’s senior leadership has recognized that its ability tomaintain Indonesia’s integrity as a nation may ultimately depend on itscapacity to strike a more equitable balance of power between the nationalgovernment, on the one hand, and the provincial and district governments,on the other.

Over the last three years, the national government has issued severalimportant pieces of legislation aimed at transferring authority to theprovincial and district governments, and at allowing resource-rich regionsto retain a larger share of the fiscal revenues generated within theirjurisdictions. The most significant of these have been Law 22 on RegionalGovernance and Law 25 on Fiscal Balancing, both of which were issued inMay 1999. Together, these laws provide the legal basis for regionalautonomy, laying out a broad framework for the decentralisation ofadministrative and regulatory authority primarily to the district level. Theselaws have been supported by a variety of implementing regulations andsector-specific decentralisation laws, including Law 41 of 1999, a revisedversion of Indonesia’s Basic Forestry Law, which outlines the division ofadministrative authority in the forestry sector under regional autonomy.

Editor’sPreface


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In many parts of Indonesia, provincial and district officials acting in the spirit ofregional autonomy have instituted reforms that extend well beyond the authoritygranted to them under the national government’s decentralisation laws and regulations.Indeed, the formal decentralisation process has been driven, to a significant degree,not by policy decisions made at the national level but, rather, by decisions made byprovincial and district level actors. This process has often been ad hoc in nature,with national policymakers frequently finding themselves in the position of havingto react to fast-moving changes that have occurred in the provinces and districts. Farfrom being a well-planned and carefully-managed exercise in bureaucraticreorganization, the implementation of regional autonomy in Indonesia has beencharacterized by intense struggles among the different levels of government, each ofwhich represents a competing set of political and economic interests. In this way,regional autonomy has stretched well beyond the formal decentralisation ofadministrative and regulatory authority; in practice, it also involves a significant, iflargely informal and unplanned, devolution of power from the national governmentto its provincial and district-level counterparts.

The formal and informal processes of decentralisation have been accompanied by awide-ranging set of governance and economic reforms, collectively known asreformasi, that are associated with Indonesia’s transition away from Suharto’s NewOrder regime. Broadly defined, reformasi refers to the transformation and dismantlingof the policies, practices, and institutional structures through which the New Orderleadership and a handful of well-connected conglomerates controlled the politicaland economic life of the country prior to Suharto’s resignation in May 1998. Whilesignificant elements of the reformasi agenda coincide with the changes occurringunder regional autonomy, these reform processes are also quite distinct. Whereasreformasi refers to a shift away from the constellation of interests and power structuresthat have supported a particular regime, decentralisation and regional autonomy referto the transfer of authority from the national government to Indonesia’s provincialand district governments.

Decentralisation of Forest Administration

The formal and informal processes of decentralisation that are now occurring inIndonesia have far-reaching implications for forest management and for the livelihoodsof communities living in and around forested areas. On the positive side, experiencefrom other countries suggests that decentralised systems of forest management oftenlead to more sustainable and equitable use of these resources, as decision-makers arephysically located closer to where their policies will be implemented (Conyers 1981;Rondinelli, Nellis, and Cheema 1983). This proximity often brings with it improvedunderstanding of the specific biophysical, social, and institutional conditionsinfluencing forest management at the field level; better capacity to monitor theactivities of forest user groups; and greater access to local knowledge about themanagement and utilization of forest resources — which are sometimes highly specificto particular social groups and/or ecosystems (Carney 1995).


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In addition, decentralised forest administration often allows for greater participationon the part of forest communities in policy decision-making processes, and moredirect accountability of policymakers to peoples whose livelihoods depend on forests(Brandon and Wells 1992). Decentralisation also frequently implies a more equitabledistribution of benefits from forest resources, as local communities and governmentsin forested regions are able to secure a greater portion of revenues from the extractionof timber and other forest products (Ascher 1995; Ostrom 1990).

In addition to providing opportunities for expanded equity and improved forestmanagement, however, decentralisation also carries significant risks. In many countries,national governments have decentralised without first creating the necessary institutionalcapacity at the provincial or district levels to administer forests effectively (Rivera 1996).Often, national governments assign tasks to provincial and district governments withoutgiving them adequate resources for carrying out these tasks. Most provincial and districtgovernments lack essential technical skills and must look to other entities for advice,training, and technical information. In cases where local elites have been strong and/ortraditionally marginalized groups have been unable to organize themselves,decentralisation has often strengthened pre-existing power relations, rather thanpromoting democratic decision-making processes (Utting 1993). Finally, even whenelite groups do not dominate provincial and district governments, it is often that casethat these governments have little interest in sustainable forest management.

Indonesia’s Forestry Sector

The manner in which decentralisation affects forest management, communitylivelihoods, and economic development is of particular significance in Indonesia dueto the scale and importance of the country’s forest resources. Indonesia has the world’sthird largest tract of tropical forests, surpassed in area only by those of Brazil andCongo. In 1997, the country’s total forest cover was officially estimated to be 100million hectares (MOFEC, cited in World Bank 2001). It has been conservativelyestimated that at least 20 million people depend on Indonesia’s forests for the bulk oftheir livelihoods (Sunderlin, et al. 2000). Over the last three decades, the nationalgovernment has allocated over 60 million hectares of forest to commercial loggingcompanies, and Indonesia’s forestry sector industries have long ranked second onlyto petroleum in terms of their contribution to GNP (Barr 2001). The forestry sectorcurrently generates approximately US$ 7 billion in annual revenues.

Well before the country’s ongoing decentralisation process began in late-1998,Indonesia’s forestry sector had entered a period of crisis. From the mid-1980s onward,deforestation is estimated to have occurred at a pace of 1.6 million hectares per year(Toha 2000). A major factor driving this high level of deforestation and associatedforest degradation has been overcapacity in the nation’s wood processing industries.Through the mid-1990s, Indonesia’s sawnwood, plywood, and pulp industries arecollectively estimated to have consumed 60-80 million cubic meters (m3) of wood peryear (Barr 2001; Scotland et al. 1998). Log consumption on this scale has stood wellabove the Indonesian government’s own widely-cited sustainable timber harvest threshold


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of 25 million m3 per year. Moreover, with few effective regulatory structures inIndonesia’s forestry sector, domestic demand for timber has resulted in large volumesof wood being harvested from illegal sources (ITFMP 1999). At the same time, a declinein the nation’s HPH timber concession system, coupled with rapid expansion in oilpalm and other forms of agroindustrial plantations, has meant that a growing portion ofthe nation’s wood supply has been obtained through clearing of natural forest ratherthan selective harvesting at multiple-rotation timber concessions (Barr 2001).

Scope and Methods of the Present Study

The present report examines the preliminary effects of decentralisation of forestadministration in the original districts of Kampar and Indragiri Hulu in Riau Province.This report presents the findings from two of nine district level case studies carried outduring 2000 and early 2001 by the Center for International Forestry Research (CIFOR)in four provinces: Riau, East Kalimantan, Central Kalimantan, and West Kalimantan.The findings presented in these studies reflect the conditions and processes that existedin the study districts during the initial phase of Indonesia’s decentralisation process.

Each of the case studies used a rapid appraisal methodology for gathering data at thedistrict and provincial levels. For each case study, preliminary visits were made tothe district and provincial capitals to establish initial contacts and to identify keyissues. Second visits for data gathering were then carried out for periods of 10-14days in each district, with shorter amounts of time in the provincial capitals. Thecollection of primary data involved semi-structured interviews with key informants,including: government officials; forest industry actors; members of communities livingin and around forests; political party representatives; officers from the regional militaryand police force; informal district leaders; representatives from nongovernmentalorganizations (NGOs); university researchers; and individuals involved with donoragencies and development projects. Data collection also involved the review of primaryand secondary documents, including: district and provincial laws and regulations;government statistics; regional news media articles; industry publications; researchstudies; and reports prepared by NGOs and donor agencies.

Each of these case studies is structured to focus on processes that have occurred atthe district and, to a lesser extent, the provincial levels. To avoid repetition, moregeneral information on the history of forest administration and forestry sectordevelopment in Indonesia, as well as significant national policy and legal-regulatoryreforms associated with decentralisation, has been placed in an accompanying reportwhich synthesizes the project’s major findings (see Barr and Resosudarmo and 2001).Readers are encouraged to review the case studies in conjunction with this synthesisin order to appreciate the broader historical and policy contexts within which thedistrict and provincial decentralisation processes are now occurring.

Christopher Barr and Ida Aju Pradnja Resosudarmo

Bogor, Indonesia


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Glossary

Adat Customary rights or practicesAPBD Anggaran Pendapatan dan Belanja Daerah, District or Provincial

BudgetAPRIL Asia Pacific Resources International Ltd.Bapedalda Badan Pengendalian Dampak Lingkungan Daerah, Regional

Environmental Protection AgencyBAPPEDA Badan Perencanaan Pembangunan Daerah, Regional

Development Planning AgencyBBS Bahan Baku Serpih, for chips/pulpBBPF Bukit Betabuh Protected ForestBPHTB Bea Perolehan Hak atas Tanah dan Bangunan, Land and Building

Titles Administration FeeBPMD Badan Penanaman Modal Daerah, District Investment OfficeBPS Badan Pusat Statistik, Central Statistics AgencyBTNP Bukit Tigapuluh National ParkBUMN Badan Usaha Milik Negara, state-owned companiesBupati District HeadCamat Head of SubdistrictCDK Cabang Dinas Kehutanan, Branch Office of Provincial Forestry

ServiceCIFOR Center for International Forestry ResearchCPO Crude Palm OilDAK Dana Alokasi Khusus, Special Allocation FundDAU Dana Alokasi Umum, General Allocation FundDephutbun Departemen Kehutanan dan Perkebunan, Ministry of Forestry and

Estate CropsDinas Kehutanan Tingkat I Provincial Forestry ServiceDinas OfficeDispenda Dinas Pendapatan Daerah, District/Provincial Revenue OfficeDPD Dewan Pertimbangan Daerah, district councilDPRD Dewan Perwakilan Rakyat Daerah, District/Provincial Legislative

AssemblyDR Dana Reboisasi, Reforestation FundHKm Hutan Kemasyarakatan, Community ForestryHPH Hak Pengusahaan Hutan, Commercial Forestry ConcessionHPHKM Hak Pengusahaan Hutan Kemasyarakatan, Community Forestry

ConcessionHPHTI Hak Pengusahaan Hutan Tanaman Industri, Timber Plantation

ConcessionHTI Hutan Tanaman Industri, Timber PlantationIHH Iuran Hasil Hutan, Forest Products Payment, now called PSDHIHPH Iuran Hak Pengusahaan Hutan, Forest Concession RoyaltyIKPP Indah Kiat Pulp and PaperInhutani A State-Owned Forest ConcessionIPK Ijin Pemanfaatan Kayu, Timber Clearance PermitIPKH Industri Pengolahan Kayu Hulu, Upstream Wood Processing

IndustriesKabupaten DistrictKanwil Kantor Wilayah, Provincial Government Line AgencyKBK Kayu Bulat Kecil, small diameter logKecamatan Subdistrict


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KPH Kesatuan Pemangkuan Hutan, Forest Management UnitKSDA Konservasi Sumber Daya Alam, Natural Resources Conservation

AgencyLAP Lembaga Adat Petalangan, Petalangan Cultural GroupNGO Non Governmental OrganizationNTFP Non Timber Forest ProductsPAD Pendapatan Asli Daerah, Self or Regionally Generated IncomePanglong Shipping timber, firewood and charcoalPBB Pajak Bumi dan Bangunan, Land and Building TaxPerda Peraturan Daerah, Regional Government RegulationPIR Perkebunan Inti Rakyat, Smallholders Nucleus PlantationPKT Dinas Perhutanan dan Konservasi Tanah, Office for Reforestation

and Land ConservationPMDH Pembinaan Masyarakat Desa Hutan, Forest Village Community

DevelopmentPP Peraturan Pemerintah, Government RegulationPSDH Provisi Sumber Daya Hutan, Forest Resource Rent ProvisionPTP Perseroan Terbatas Perkebunan, government estate companyRAPP Riau Andalan Pulp and PaperReformasi Broader Reform ProcessRetribusi Charges/LevyRKT Rencana Karya Tahunan, Annual Logging ScheduleRTRWK Rencana Tata Ruang Wilayah Kabupaten, District Spatial PlanRTRWP Rencana Tata Ruang Wilayah Propinsi, Provincial Spatial PlanSuaka Margasatwa Wildlife ReserveTBS Tandan Buah Segar, Fresh Fruit BunchesTGHK Tata Guna Hutan Kesepakatan, Forest Land Use ConcensusUU Undang-undang, LawWWF World Wide Fund for Nature


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Table of Contents

Decentralisation and Forests in Indonesia: An Overview of the Study iii

Editor’s Preface v

Glossary ix

Abstract xiii

1. Riau Province: Resources and Land Use 1

1.1 The Study and Its Major Findings 1

1.2 Background 2

1.3 Resources: Minerals and Forests 5

1.3.1 Minerals 5

1.3.2 The forestry sector 6

1.4 Land-Use Change 9

2. The Decentralisation Process at the Provincial Level 13

2.1 The Decentralisation Framework 13

2.2 The Changing Picture: January to October 2000 15

2.3 The Administration of Forestry and Estate Crops 18

3. Decentralisation at the District Level 20

3.1 The Original Kabupaten Kampar 20

3.1.1 Kampar: the truncated induk 20

3.1.2 Pelalawan: district of future promise, but

what of the present? 25

3.2 The Original Kabupaten Indragiri Hulu 29

3.2.1 Introduction 29

3.2.2 An overview of forests in Indragiri Hulu and

Kuantan Singingi 30

3.2.3 Bukit Tigapuluh National Park 32

3.2.4 Illegal logging and sawmills 36

3.2.5 The clearance of Bukit Betabuh 37

3.2.6 The economic implications of decentralisation 39

3.2.7 Forestry reforms emerging from decentralisation 43

4. Conclusion 46

5. Endnotes 48

6. References 54


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List of TablesTable 1. Predicted balancing of funds between the central and

provincial and district governments, as of 2000 5Table 2. Planned and actual HTI plantings, IKPP and RAPP,

to Jan 2000 8Table 3. Production and royalty income, by district, from

different types of forest products, calendar year 1999 10Table 4. Land-use classifications for Riau, TGHK and RTRWP 11Table 5. PAD and percentage of total district income

(mid-2000 data) 14Table 6. Budgets for sample districts, Riau Province: PADs,

property and resource taxes and government grants,mid-2000 data (million Rupiah) 15

Table 7. Taxes levied on oil palm properties per subdistrict,districts of Kampar, Rokan Hulu and Pelalawan,1999 (million Rupiah) 25

Table 8. Pelalawan district, estimated income and expenditure,2000 and 2001 (billion Rp) 27

Table 9. PT RAPP’s timber plantation concessions inKuantan Singingi 31

Table 10. Contribution of locally generated tax revenues(PADs) to district revenues of Indragiri Hulu 1994-95to 1998-99 43

List of MapsMap 1. Riau Province and study areas 3Map 2. Industrial timber plantations (HTI), including those

of RAPP and IKPP 7Map 3. Major estate crops 1999 (rubber, coconut and oil palm),

plus selected conservation areas 12Map 4. District and subdistrict boundaries of Rokan Hulu,

Kampar and Pelalawan 21Map 5. District and subdistrict boundaries of Kuantan Singingi

and Indragiri Hulu 30Map 6. Bukit Tigapuluh National Park and surrounding villages 34

List of FiguresFigure 1. Logs in the Siak River 4Figure 2. An example of the pressures on forests in one

part of Bukit Betabuh 41


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Abstract

The focus of this study is on the impacts of decentralisation on forests and estate crops, particularlyin the original districts of Kampar and Indragiri Hulu, located in Riau Province, Sumatra. Theresearch was conducted mainly during 2000, preceding the beginnings of decentralisation in January2001, with a brief follow-up to March of that year. Unhappy with the previous distribution ofrevenue by the centre, a vocal urban group was calling for independence for resource-rich Riau. Itwas thus considered important to chart attitudes to decentralisation at provincial level, as well asexamine the deconcentration of the regional office of the Jakarta-based Ministry of Forestry andEstate Crops. Similarly the demands for fibre of the two immense pulp and paper companies(RAPP and Indah Kiat) needed to be analysed on a province-wide basis. The initial third of thestudy is thus occupied with these broad issues, before the selected districts are examined in detail.Both of the original districts were recently subdivided: Kampar became three, adding Rokan Huluand Pelalawan, while Indragiri Hulu was halved to add Kuantan Singingi. The existence of thesenew entities, struggling to create separate infrastructure and administrations, has complicated thedecentralisation process.

The focus of the studies has been somewhat different in each case. Much of Indragiri Hulu isoccupied by Bukit Tigapuluh National Park and its buffer zone, with many stakeholders and conflictsover illegal logging, while Kuantan Singingi has large areas under pulp plantations. Kampar andRokan Hulu are dominated by oil palm, the plantations’ occupancy of the land being contested bylocal populations. Pelalawan still has natural timber, the swamp forests of the sparsely populatedlower Kampar basin, but is also the headquarters of RAPP in the rapidly expanding centre ofPangkalan Kerinci. The study found that during 2000, the most serious impact on the forests wasa result of political reformation and the economic crisis, with the Soeharto government’s rulesbeing ignored and timber being cut for its quick return under conditions of high demand. Depressedrubber prices gave further impetus to forest clearing. After decentralisation, despite greatly increasedavailable income in the districts, serious environmental and social problems remained to be tackled.While local pride was a positive outcome, signs of both xenophobia and a rush to develop at allcosts were worrying aspects.


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RIAU PROVINCE: RESOURCES AND LAND USE11111

1.1 THE STUDY AND ITS MAJORFINDINGS

From 1 January 2001, the Indonesiangovernment implemented a policy of regionalautonomy and decentralisation. The provincialand district governments have been handedresponsibility to raise revenues locally to fundregional activities and development. However,the central government has retained somerevenue raising powers, and the full details ofthe process of devolution have yet to be fullyspelt out. This study was commissioned at theend of 1999 to look especially at policymakingand administrative practises relating to forestsin sample districts of Riau province, Sumatra,as these evolved in the year prior to 1 January2001. The research presented in this reportfocuses on the original large districts ofKampar and Indragiri Hulu, already subdividedinto five smaller entities before the studybegan. It provides examples of the real andanticipated impacts of decentralisation in twoof the most forest-rich regions of Riau. Majorfieldwork was carried out on several visits tothe province between January and October2000. A workshop in Pekanbaru in March 2001permitted further discussion withrepresentatives from government, privatecompanies and NGOs, and short visits weremade to three of the study’s districts – IndragiriHulu, Kuantan Singingi and Pelalawan – toupdate our information. We thus have theadvantage of hindsight now that thedecentralisation process has begun, but the bulkof our study is based on the situation existingin 2000.

Administrators and others involved withthe decentralisation process in Riau during 2000found the situation uncertain and frustrating.Administrators at the provincial level wereconcerned with the apparent unwillingness ofthe central government to relinquish power insome areas, such as forestry, and to specify thedifferent levels of responsibility between theprovince and the district. They also criticisedJakarta’s tardiness in providing accurateinformation about the distribution and levels offunding, particularly the partial refunding ofincome from mineral and forest resources. Atthe district level, there was the additionaldifficulty of setting up new administrations andinfrastructure after the subdivision of theoriginal large districts and drafting appropriatelocal legislation. Key people, such as Bupatis(district leaders), had only temporary tenure inthe new districts until the end of 2000. A majorcause of concern was the level of funds thatcould be raised locally, as the permitted tax basewas limited. Large companies paid taxes onlyto Jakarta, especially the two huge pulp andpaper companies that dominated the economiesof their districts, at the same time providing aprovince-wide market for wood fibre.

The situation of Riau’s forests worsenedduring the year 2000. Encroachment onprotected areas and forest concessions and‘illegal’ logging and removal of forest productshad greatly increased since the fall of Soehartoin 1998. Local people, imbued perhaps with‘the euphoria of reformasi’1 challenged thevalidity of the forest boundaries laid down bythe previous regime, just as they challenged the

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The Effects of Indonesia’s Decentralisation on Forests and Estate Crops in Riau Province

land holdings of oil palm companies. Localpeople faced economic hardship as a result ofboth the economic crisis and the impact ofglobalisation on rubber prices. The unlimitedmarket for wood provided by the pulpcompanies and by a myriad of small sawmills,with extra encouragement from outside‘operators’ who lent heavy equipment, meanteasy cash to village people cutting forests.During 2000, even remote indigenous groups,whose cultures stressed the importance of theforest, were caught up in the logging networks.The consequences for Bukit Tigapuluh NationalPark (BTNP) have been serious, and the park’sviability is now threatened. Though none of thepressures on Riau’s forests is directlyattributable to decentralisation, attempting tochannel raised local expectations into productivedirections has been a challenge for districtadministrators.

Now that regional autonomy has arrived,more development money is available to thedistricts than was originally anticipated. Howwill such funds be distributed? Will the serioussocial needs of the communities be addressed?Can the extra funds substitute for forest revenue,thereby protecting the remaining forest? Theavailability of extra income to the districts fromthe Reforestation Fund (Dana Reboisasi or DR)is designed to assist forest rehabilitation.Though it is still too early to make finaljudgements, so far there is no indication of realchange. New district-level forestry regulationsappear to be both complex and short term, thuslikely to benefit the outside ‘operators’ and tolegitimise the present illegal loggingarrangements. We remain pessimistic about thefuture of Riau’s forests.

1.2 BACKGROUNDAlthough the province of Riau in CentralSumatra is strategically located with referenceto Peninsular Malaysia and Singapore, thebenefits of such a location accrue more to theRiau Islands, especially Batam, than to themainland (Map 1). Much of the mainland is low-lying and swampy,2 with hilly regions mainlytowards the western and southern borders. Soilsare either highly acidic, developed over peat, or

the podsolic and leached soils of the Sumatranpeneplain (Rice 1989). Lying south of thecentres of former Dutch plantation activity inNorth Sumatra and east of the Barisan Highlandswith their cool climate and more fertile soils,mainland Riau was a sparsely inhabitedbackwater until the beginning of the petroleumindustry in the 1950s (Mubyarto et al. 1992).Until the 1980s very large tracts were forested.Local people practised swidden agriculture forsubsistence, with cash crops of smallholderrubber on the peneplain and coconuts in thecoastal swamps.

Because this report focusses on the effectsof Indonesia’s new decentralisation policies ondistricts where forests and estate crops aredominant, the study sites were two originaldistricts (kabupaten) of mainland Riau: Kamparand Indragiri Hulu. These districts have recentlybeen subdivided. Kampar has become threesmaller kabupaten: Rokan Hulu (Rohul) in thewest, a truncated Kampar in the centre andPelalawan in the east, while Indragiri Hulu(Inhu) has hived off its western half to formKuantan Singingi (Kuansing) (Map 1). Thissubdivision, which has taken place more rapidlyin Riau than in some other provinces, has alsoled to problems with the advent ofdecentralisation. Although these smaller unitswill be both easier to administer and closer tolocal interests, during 2000 the new districtswere just becoming established, and manyaspects of their administration, including stafftransfers and district regulations (PeraturanDaerah or Perda), were still being devolvedfrom the ‘mother’ district, or kabupaten induk.It was thus necessary to study each originaldistrict in totality, though not necessarily at thesame level of detail for each subdivision.

The original Kampar district was selectedbecause it has been the area most affected bythe rapid spread of oil palm, which now occupiesextensive lowland areas in both Kampar indukand Rokan Hulu. Pelalawan has natural swampforest and the expanding industrial zone ofPangkalan Kerinci, which is the headquartersof Riau Andalan Pulp & Paper (RAPP). Riau’sonly national park, which it shares with theneighbouring province of Jambi, is in IndragiriHulu. The Bukit Tigapuluh (Thirty Hills)

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Map 1. Riau Province and study areas

National Park contains one of the few survivingareas of Sumatra’s highly diverse lowland rainforest, with an excellent collection ofrepresentative flora and fauna. It is also hometo a small population of minority Talang Mamakand Kubu people. The multiple stakeholders ofthe park’s buffer zone include loggers andsawmillers (legal and illegal), oil palm interests(large estates and independent smallholders),coal miners, Melayu and Talang Mamakvillagers, transmigrants and spontaneoussettlers. All of these interests threaten the parkin different ways, making its conservation andmanagement a huge challenge to Indragiri Hulu.Kuantan Singingi, farther west, has challengesof its own in forest management, especially inborder areas with West Sumatra. RAPP has anactive programme of plantation establishmentin Kuantan Singingi (which is often abbreviatedas Kuansing) and in neighbouring subdistrictsof Pelalawan and Kampar, using mainly the fast-growing exotic Acacia mangium.

The four rivers that divide mainland Riau(Rokan, Siak, Kampar and Indragiri-Kuantan)have long constituted an important regional focus.Their lower reaches were sites for the capitals ofearly sultanates, whose rulers controlled the rivertrade. Gold, rice and coffee came downriver fromthe Barisan Highlands; rattan, camphor anddamar from the lowland forests (Oki 1986). Theeastward movement of trade was followed by amigration of Minangkabau people (Merantau)beyond their traditional homeland in WestSumatra, into western parts of the province (Kato1982). The position of the present capital,Pekanbaru, situated on the deep Siak River andused as an overland transit centre from theshallower Kampar River, led to its earlyimportance (Oki 1986). Today the Siak River,which can accommodate ocean-going ships asfar inland as Pekanbaru, is the centre of a majorindustrial region, with oil installations in additionto pulp and paper, plywood and other wood-basedindustries.

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Figure 1. Logs in the Siak River

With 4.9 percent of Indonesia’s land areaand only 2 percent of its population (4.3million), Riau has been seen as a land ofpromise, its industries and available landcontinuing to attract immigrants. From 1990to 1995 the annual population growth rate was3.4 percent, more than twice the nationalaverage (BPS 2000). More than 500,000transmigrants, mainly from Java, have arrivedover the past 40 years, while others of Javanesedescent – refugees from Aceh, for example –have recently found a haven in Riau. Batakshave moved spontaneously from NorthSumatra, especially after the completion in 1993of the main eastern highway, which improvedaccessibility. These newcomers have beenadded to the earlier arrivals: Minangkabau fromWest Sumatra; Banjarese from SouthKalimantan;3 and ethnic Chinese, fishers atBagansiapiapi or workers in the panglong,shipping timber, firewood and charcoal toSingapore from the Kampar coast and islandssuch as Bengkalis.4

The province has thus been raciallymixed for a long time. Recent calls for a greater

share of employment to be directed towards localMelayu people come from a perception thatthey have missed out on some opportunities, withnewcomers, especially Javanese, beingpreferred. Major industrial sites, wood-workingcentres and plantations employ a mix of ethnicgroups. However, indigenous minorities, suchas Sakai, Suku Laut and Talang Mamak, aredisproportionately located in more remote areasand are poorer, with low levels of health careand educational attainment. More remoteMelayu people are similarly disadvantaged.Depending on the sources and definitions used,as much as 42 percent or as little as 14 percentof the population may be below the poverty line(BPS 2000).5 The higher percentage relates tothat proportion of households at or below theminimal levels of ‘safety’, using criteriadeveloped by the provincial department of socialwelfare (Sutarman 2000); it has been a figurewidely quoted by provincial officials. Observerssuch as Sutarman hope one of the majorachievements of decentralisation will be animprovement in the social conditions of thepopulation now disadvantaged.

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Table 1. Predicted balancing of funds between the central and provincial and district governments,as of 2000

Fiscal Balance

Source of Funds Centre Province Producer Other Dist/Prov

%b

District District Value% % %

a

PBBc

10 16.2 64.8 4.87BPHTB

d20 16 64 0.16

Petroleum (after tax) 85 3 6 6 53.46Natural Gas 70 6 12 12 2.56IHPH

e20 16 64 1.92

IHH/PSDHf

20 16 32 32Reforestation Fund

g60 40? 4.07

General mining and royalties 20 16 32 32 0.34Fishing 20 80? 0.20General Allocation 80 20 29.21

Notes:a.The final column predicts roughly the proportion of total income from these sources that would be available for distribu-

tion within the province.b. Question marks indicate unknowns in percentage distribution between the province and district levels. In this table the

total has been temporarily allocated to the province.c. PBB stands for Pajak Bumi dan Bangunan (Land and Building Tax). The remaining 9% is used to cover the cost of

collecting the tax, and it is distributed to regions.d. BPHTB stands for Bea Perolehan Hak atas Tanah dan Bangunan (Land and Building Titles Administration Fee).e. IHPH stands for Iuran Hak Pengusahaan Hutan (Forest Concession Licence Fee).f. IHH stands for Iuran Hasil Hutan: since 1998 its name had been changed to PSDH or Provisi Sumber Daya Hutan

(Forest Resource Provision)g. Known in Indonesia as DR (Dana Reboisasi)

Sources: Riau Abad 21 (2000); Butar-Butar (2000)

1.3 RESOURCES: MINERALS ANDFORESTS

1.3.1 MineralsRiau is one of Indonesia’s most resource-richprovinces. Its wealth has come primarily fromminerals, especially oil and gas, which in 1997contributed 58 percent of the national output,or almost 1 million barrels of crude oil per day(BPS Riau 1999; BPS 2000). Most of the oil isproduced through production-sharingagreements with Pertamina, with the US-basedCaltex being overwhelmingly the majorsupplier. Since beginning major production inthe Minas district (now Kabupaten Siak) in1952, Caltex has formed a dominant andcontroversial enclave with its various mining-lease areas. While petroleum producers haveprovided local employment and attractedworkers from outside the province, they haveacquired land at generally low rates ofcompensation from the indigenous Sakai andMelayu populations (Rab 1999). In this way,

the oil and gas industry has vastly transformedthe original forest landscape through its networkof derricks, pipelines, feeder roads and industrialplants.

Because of the central government’sformer policy of retaining much of the revenuefrom oil and gas, provincial interests have feltthat Riau has received little benefit from thepresence of the petroleum industry. It waslargely the wealth of oil and gas that promptedthe call for the province to seek independencefrom the rest of Indonesia in the ‘Free Riau’ or‘Riau Merdeka’ movement, which wassupported by an urban minority. To thesupporters of Free Riau, independence wouldhave been a preferred alternative for theprovince, rather than regional autonomy.However, the regional autonomy law UU No25/1999 (on‘fiscal balancing’) proposed that 15percent of oil and 30 percent of gas revenuesshould be returned to the province and sharedwith the districts (Table 1). These amounts areconsiderable – in 2000 it was predicted that they

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would provide more than 56 percent of the totalrevenue available across the province oncedecentralisation was implemented (Column 5)(Riau Abad 21 2000).6

1.3.2 The forestry sectorForests are the province’s other major resource,now considerably depleted. Much of theremaining natural forest consists of swamp andmangrove stands in the coastal regions ofRokan Hilir, Pelalawan and Indragiri Hilir (seeMap 1). Pelalawan, the new district coveringthe lower Kampar basin, has the biggest shareof the remaining forest resources and the largestnumber of active timber concessions (HakPengusahaan Hutan or HPH). Some formerconcessions have become pulp plantations tofeed the significant demand for fibre on the partof the province’s two pulp and paper companies,Indah Kiat and RAPP, while others have beenconverted to oil palm or other cash crops.

1.3.2.1 Inhutani IV and the forestsMoney available to Riau from the reforestationfund (Dana Reboisasi or DR), drawn from a taxon log production to assist companies to replantlogged-over forest areas, had been largelyabsorbed by the state-owned forestry companyoperating in Riau, Inhutani IV.7 It had been thecompany’s mandate to assume managerialauthority over any logged-over and effectivelyabandoned concessions and undertake theirreforestation. However, both the reforestationactivities and the use of the DR by the fiveInhutani companies was halted by the centralgovernment in April 2000, pending the draftingof regulations on the future of the fund (BisnisIndonesia 14.2.01).8 There were complaints inRiau that Inhutani IV had carried out very littlereforestation. The company was alleged to simplybe holding large areas of forest, which could haveprovided the basis for smallholder cooperativesand improved livelihoods (Riau Pos 28.6.00). Acount of the concessions in Inhutani’s handsrevealed properties of ten companies, some inmultiple locations, totalling at least 600,000 ha.9

After a series of demonstrations in May2000, students burned Inhutani IV offices inPekanbaru, declaring Riau free of the company;

the Governor himself warned its officers to leavequickly (Riau Pos 17.5.00). Riau forestrydepartment staff, at both provincial and districtlevels, regarded Inhutani as underresourced andnot serious about reforestation, its employeesunprofessional in their outlook. However, thecentral government decreed that it was notpossible to break up the group’s holdings, asthere were too many assets and employeesinvolved. Ministry of Forestry policymakerswere reported to have had plans to turn the fiveInhutani companies into public corporations anddevolve to them the responsibility for managingthe forests: 30 percent of the shares would beowned by the central government, 30 percentby the province and 40 percent by the district(Riau Pos 13.6.00). With the implementation ofregional autonomy on 1 January 2001, someobservers have interpreted that move as anattempt by the Ministry of Forestry to retainpower (Jakarta Post 30.12.00).

Neglected Inhutani concessions, still withstands of valuable natural forest, have beenperceived to be outside any form of control.They have been entered by ‘illegal loggers’,10

or leased to the pulp companies for clearing.11

Even functioning concessions with legitimatecontinuing tenure have suffered incursions,especially for the extraction of prized specialtytimbers, such as the white softwood ramin(Gonystylus sp.).12 Hilly regions designated‘Protected Forest’ (such as Bukit Betabuh inKuansing and Bukit Suligi in Kampar andRohul), and conservation areas, including theBukit Tigapuluh National Park, have equallybeen regarded as ‘available’. Such widespreadentry into previously forbidden forests is partof the new ‘logging boom’, which has eruptedacross Indonesia since the fall of Soeharto.During the recent period of financial crisis andpolitical reformation, many of the laws imposedby the previous regime have been challengedor flouted, often with official connivance (Potterand Badcock 2001). Local people are hungryto obtain some of the spoils from logging deniedto them by the Soeharto government. They wishto earn quick cash from selling timber cut fromlands they consider rightfully theirs. Outsideinterests, with an eye to the profit to be made

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from logging, may provide the necessary heavymachinery.

1.3.2.2 Pulp companies and the demandfor fibre

Demand for timber of all types has put enormouspressures on Riau’s forests. Much of this demandcomes from wood-based industries located withinthe province, which in 1999 included 2 pulp mills,15 plywood mills, 3 chip mills, 27 mouldingfactories and 345 legal sawmills (DinasKehutanan 2001). The province’s pulp mills –Indah Kiat Pulp & Paper (IKPP) and RiauAndalan Pulp & Paper (RAPP) – rank among thelargest standalone pulp production facilities in theworld (Map 2). Collectively, Riau’s wood-basedindustries were capable of consuming some 16million m3 of wood in 1999, with the province’s

two pulp mills then accounting for roughly two-thirds of this. However, Riau’s legal timberproduction from natural forests during that yearamounted to only 6 million m3 (see Table 3). HPHtimber concessions generated 1.5 million m3 ofthis, while nearly 4.3 million m3 were harvestedunder IPK (Ijin Pemanfaatan Kayu) forestconversion permits. Demand for timber inneighboring provinces and countries has putadditional pressures on Riau’s forests. In mid-2000, up to 70,000 m3 of raw logs were reportedlybeing smuggled annually to Malaysia andSingapore, while mangrove chips are reported tobe exported legally to Japan (Riau Pos 23.6.00;27.6.00).

The area licensed for pulp plantations(Hutan Tanaman Industri or HTI pulp) by fourcompanies – Arara Abadi (affiliated with Indah

Map 2. Industrial timber plantations (HTI), including those of RAPP and IKPP

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Table 2. Planned and actual HTI plantings, IKPP and RAPP, to Jan 2000

Company/Yeara

Planned Planting (ha) Actual Planting (ha)

Arara Abadi IKPP83/84-90/91

b25,100 30,959

91/92 11,500 17,11392/93 46,516 13,46893/94 18,500 16,74794/95 25,275 16,17895/96 22,038 15,48996/97 27,269 18,64697/98 30,225 21,61398/99 29,815 14,99399/00 60,045 Up to Jan 15,803

Total 296,283 181,009 (61.1%)

RAPP92/93 20,000 40093/94 7,600 7,01294/95 15,654 5,68495/96 18,000 13,45996/97 30,650 20,82697/98 34,156 16,79598/99 45,378 13,17899/00 27,682 Up to Jan 11,336

Total 204,120 88,690 (43.4%)

Notes:a. Fiscal year 1 April to 31 March;b. One 7-year rotation

Source: Dephutbun (2000a)

Kiat), RAPP (affiliated with APRIL), SatriaPerkasa Agung and Sumatera Sinar – totalled782,959 ha in December 1999, but the fourthcompany was classified as ‘non-active’(Dephutbun 2000a). A request for it to becomeactive was submitted the following August, toprovide raw material for what was thenspeculatively described as a third pulp and papermill with a capacity of 1 million tonnes of pulpper year (Bisnis Indonesia 18.8.00). Thisrequest appears to have reflected RAPP’s effortsto open up a new pulp line, as both the name ofthe parent conglomerate (the Raja Garuda MasGroup) and the location listed on the applicationwere the same as RAPP’s.

The total area planted to pulpwood by thethree active concessions up to January 2000,according to Forestry Department sources, was270,887 ha, only 54 percent of that planned.Two-thirds belonged to Indah Kiat and most ofthe remainder to RAPP (Dephutbun 2000a).However, not all the area is under Acacia. Green

belts of mixed forest bisect the plantations, andother small areas are in experimental plantings.When the research for this study was conductedin mid-2000, RAPP had still not yet begun usingany of its Acacia, although some was certainlymature enough to be cut. The planned and actualplantings of timber for Arara Abadi and RAPPup to January 2000 (Table 2), as recorded bythe Provincial Forestry Office - Dephutbun(2000), reflect the impact of the financial crisisin a decline after 1997 in the case of RAPP, anda year later for Indah Kiat.

RAPP’s own figures suggest 108,000 hasown at the end of 1999. Of these, 2,500 ha camefrom smallholder ‘outgrowers’, two-thirds of therest from plantations owned by RAPP’s parentcompany APRIL (which is controlled by theRaja Garuda Mas Group) and the remainingthird from associated companies (APRIL2000a).13 In 2000 when the data for this studywas collected, the company maintained that itwould no longer need to use ‘bridging supplies’

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of mixed tropical hardwoods from Riau’s naturalforests by 2007, projecting that it would thenfully source its wood from plantations. Sincethese earlier projections were made, however,the company has expanded its pulp processingcapacity to 2.0 million tonnes per annum,effectively requiring 9.8 million m3 of wood torun at capacity. RAPP has correspondinglypushed its ‘sustainability’ target to 2009.

A proportion of the plantations affiliatedwith Indah Kiat were being harvested on aregular basis by 2000 when the research for thisstudy was conducted. Barr (2001) noted that in1999 Indah Kiat met 20 percent of its needs fromthat source. According to the company’sprojections, its consumption of mixed tropicalhardwood timber from the natural forests wasthen scheduled to deceline steadily until 2004,at which point the company planned to obtain‘substantially all’ of its fiber requirements fromplantations. However, in 2000 this target wasrevised to 2007 (Barr 2001).

To meet their ‘sustainability’ targets, theforestry companies affiliated with Indah Kiatand RAPP will need to achieve substantialincreases in their annual planting areas; to raisethe growth rates and yields for the fast-growingtimber species at their plantation sites; and tosecure access to large new areas of land foradditional plantation development. It has alreadybeen noted that the areas planted by bothproducers historically has fallen well short ofthe hectares planned, while the impact of thefinancial crisis brought a further decline, whichwill be reflected by returns in six to eight years’time.14 Despite the successes that bothcompanies have had in increasing yields at theirplantation sites, some analysts have questionedwhether they can achieve the projected averageyields of 35 to 40 m3/ha/yr on a sustained basisover large plantation areas (Barr 2001).

1.3.2.3. Forest product royaltiesOfficial revenues from forest product royalties(IHH/PSDH) during calendar year 1999 werequite low (Table 2). Legal timber productionincluded total production from large diameterlogs for plywood or lumber (a category termed‘LOG’ in government forestry statistics); smalldiameter logs for lumber (Kayu Bulat Kecil or

‘KBK’); and small diameter logs for pulpwoodand chips (Bahan Baku Serpih, or ‘BBS’).Royalties for the period presented were basedon the following classifications and prices:

LOG — Rp 36,000 per m3

KBK – Rp 20,400 per m3

BBS – Rp 2,040 per m3

The districts specialise in different kindsof forest products (Table 3), depending on thecondition of the forest and the demands ofparticular markets. Pelalawan and Rokan Hilir(Rohil) clearly dominate in the production oflogs (usually from still active concessions). Suchtimber brings by far the highest royalties andwill remain a source of income for these twonew districts after decentralisation, at least aslong as the supply lasts. Also clear is theimportance of the two pulp and paper companies,although the fact that Indah Kiat has drawn alarger portion of its needs from plantations thanRAPP is reflected in the larger amounts of rawmaterial described as BBS in the southerndistricts of Pelalawan and Kuansing, areas fromwhich RAPP takes its main supply. Indah Kiat’ssupply area is more concentrated in the districtsof Bengkalis and Siak, which produced only halfas much. BBS is very cheap wood and brings inlittle in the form of royalties. The amounts listedunder ‘small diameter logs’ (KBK) for sawmillsdo not reflect the total demand. Sawmills thatreceive wood primarily from village sources seethe pulp companies as direct competitors. Theexistence of numerous illegal sawmills adds tothe competition.

1.4 LAND-USE CHANGEProvincial land use has changed rapidly overthe past two decades, a rate of change that localplanners have had difficulty in accommodatingon existing maps. The provincial land-useplanning map (Rencana Tata Ruang WilayahPropinsi or RTRWP), compiled in 1994, wasnot accepted as accurate by either the Ministryof Forestry or the Ministry of Agriculture andis now being revised by a Jakarta firm.15 Therehas been an attempt over the past few years toreconcile the agreed forest categories (Tata

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Guna Hutan Kesepakatan or TGHK), drawn bythe Ministry of Forestry in 1986, with theprovincial land-use plan (RTRWP). In Riau,heavily forested until a decade ago, almost allland came under Ministry of Forestry’s control.The forest category maps were often criticisedas not reflecting the situation on the ground. Theprovincial land-use plan attempted to beaccurate, but the plan revealed the reduction offorest lands and hence represented a loss ofMinistry of Forestry power, which wascontested. A mapping project undertaken acrossIndonesia in 1987-8916 , and on which theprovincial planning maps were based, aimed torevise forest categories in order to expand thearea that could be devoted to tree crop-basedagriculture.17 One way to do this was to increasethe amount of forest classified as ‘ConversionForest’ at the expense of ‘Production Forest’,recognising the reduced importance of loggingin many districts. To balance that reduction,the decision was taken to increase the area undersome form of forest protection.

The TGHK forest categories (Table 4)still have legal status, and changing from onecategory to another is not simple. It is relativelyeasy to move from conversion forest to

permanent agriculture or other uses (in factmuch ‘conversion forest’ land has long beenconverted, and the provincial Governor has beenempowered to release such land). The switchfrom production to conversion forest has beenlegally more difficult. While HTI forestplantations were supposed to be located inproduction forest, other plantations andpermanent cropping were banned. In recentyears there has been a blurring of the production/conversion forest boundary. As the number oflogging concessions has declined, there has beenincreased pressure to clear logged-over land foroil palm, once the production of remainingtimber has been certified as below economiclevels. However, only the Ministry of Forestryin Jakarta has the power to authorise suchconversions. A previous study (Potter and Lee1998) noted that the condition of the forest wassometimes falsified by local officials keen toencourage oil palm development in theirdistricts.

When the three major categories (non-protected forest, protected areas and non-forestareas) are compared for TGHK and RTRWP, itis clear that the main area of disagreement isbetween the first two (Table 4). The Ministry

Table 3. Production and royalty income, by district, from different types of forest products, calendaryear 1999

Production (’000 m3) Income (million Rp)

Districta

LOG BBS KBK Total LOG BBS KBK TotalStudy Area

Kampar 75.5 169.8 31.4 276.7 2,717.6 346.4 640.1 3,704.1Pelalawan 356.2 1,191.4 29.0 1,576.6 12,824.2 2,430.6 592.2 15,847.0Rohul 83.7 25.3 —- 109.0 3,012.6 51.7 —- 3,064.3Inhu 79.2 126.3 5.1 210.6 2,851.9 257.6 104.1 3,213.6Kuansing 167.8 1,200.5 6.3 1,374.6 6,040.5 2,449.1 128.6 8,618.2

OtherInhil 160.3 182.8 —- 343.1 5,770.1 372.9 —- 6,143.0Bengkalis 164.9 641.4 96.0 902.3 5,936.4 1,308.5 1,959.2 9,204.1Siak 73.1 467.9 71.0 612.0 2,361.8 954.4 1,448.8 5,035.0Rohil 264.0 50.4 6.7 321.1 9,504.5 102.9 137.8 9,745.1

Total Riaub

1,524.1 4,280.3 249.3 6,063.7 55,226.0 8,731.7 5,086.6 69,044.0

Notes:a. The districts have been divided into our study area and ‘other’. Urban areas and the islands have been omitted, as

have minor specialty products.b. Total (includes districts not mentioned here).

Source: Dinas Kehutanan Propinsi Riau (2000a)

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of Forestry claims more production forest; theprovincial planning authorities wish to placemore land under protection, especially the peatswamps, which are not singled out by theMinistry of Forestry. There is good reason forthis omission as it is the peat swamp areas thathold most of Riau’s remaining forests. The peatswamps are also the most vulnerable toprotracted burning after clearing and are the newfrontier for oil palm plantation development.They form a vital part of the land reserve fornew districts such as Pelalawan.

An important part of the process ofdecentralisation is to transfer this provincialland-use information to the districts so that eachmay produce its own accurate land-use plan.These plans are now being actively constructed,despite inconsistencies in the data. It is vitalthat the decentralised districts have an accuratepicture of their land use in order to secure theirtax base for future development.

A study of the total lands put up for releasefrom production to conversion forest (mainly forconversion to estate crops) revealed that almost1.6 million ha had been released and another 1.1million ha were being processed (Dephutbun

Table 4. Land-use classifications for Riau, TGHK and RTRWP

TGHK RTRWP

Forest Classification Area (ha) Land-use Classification Area (ha)

Production Forest (limited) 1,971,553 Production Forest 2,649,608

Production (ordinary) 1,866,132 Conversion Forest 334,521

Mangroves 252,860

Total production forest 3,837,132 Total non-protected forest 3,236,989Protected Area: Protected Area:Protected Forest 397,150 A: Protected forest 361,867

B: Protected forest (peat) 695,874C: Biosphere/wildlife reserve 439,230

Biosphere/nature reserve/ 451,240 D: National park, ecotourist 121,007

wildlife reserve/tourism & special forestE.: Lake/reservoir 13,100

Total protected area 848,390 Total protected area 1,631,078Conversion forest, other 4,770,085 Non-forest and other uses 4,588,093uses

Total area of province 9,456,160 Total area of province 9,456,160

Source: Gubernur Kepala Daerah Tk I Riau (1998); Dinas Kehutanan Propinsi Riau (2001)

2000b)18 . Large areas proposed had beendisallowed: these either still containedproductive forest, extended into a conservationarea or were claimed by local interests. Amultitude of overlapping claims exists,symptomatic of the demand for forestconversion. Lands legally released lag wellbehind actual conversion levels, reflecting thehigh levels of illegal incursion into conservationareas, legal concessions and even Acaciamangium plantations (Map 3).

The rapidity of change in land use is wellillustrated by the growth of oil palm. Riau isnow the leading province in Indonesia for thearea of land under this crop, outstripping NorthSumatra.19 It is not yet the leader in terms ofproduction, as much of the planted area is stillimmature. Provincial figures also list 500,000ha under rubber, almost all owned bysmallholders, and nearly 600,000 ha in coconutsmallholdings (Map 3). Actually estimating thearea in rubber is difficult, however, as manysmallholders are now converting to oil palm andclearing old rubber holdings.

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Map 3. Major estate crops 1999 (rubber, coconut and oil palm), plus selected conservation areas

MALAYSIA

SINGAPORE

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THE DECENTRALISATION PROCESSAT THE PROVINCIAL LEVEL22222

2.1 THE DECENTRALISATIONFRAMEWORK

Under Law No 22 of 1999, the decentralisationprocess was projected to take place in three phaseswhich would take two years to implement:

• 7 May 1999 to 31 March 2000: Preparingfor autonomy;

• 1 April 2000 to 31 December 2000:organising institutions and setting districtregulations (Perda); and

• From 1 January 2001: the implementationof regional autonomy, with arrangementsbeing evaluated and monitored until thedeadline of 7 May 2001, when everythingwas supposed to be working smoothly(Dephutbun 1999).

According to the implementingregulations for Law No 22/1999, the 11 fieldsor sectors to come under district responsibilityincluded agriculture, forests and fisheries,mining, environment and land use. However,the central government indicated that it wishedto retain control over ‘natural resourceconservation’, which suggested some overlapof function. The province would resume powerover areas that the districts could not manage, apragmatic plan at the beginning of the process,but one that might lead to conflict later on (PPNo 25/2000).

The changed financial arrangements,which were indicated by the accompanying Law25 of 1999, devolve more income to districtsfrom natural resource sales but also expect themto be more active in seeking their own sourcesof revenue (Pendapatan Asli Daerah or PAD).These arrangements were finally spelt out on8 January 2001, in long-awaited implementing

regulations (Jakarta Post 9.01.01). During ourfieldwork in 2000, it was a source of continuingfrustration to provincial and district interests thatthe detailed financial regulations were notavailable. Some general features, however, wereclear, notably the phasing out of the formercentral government grants to the districts (andvillages), on which they had been heavily reliant.

The new arrangements still provide anelement of central government subsidy in theequalisation grants (in the general and specialallocation fund), which continue to includereceipts from the Land and Buildings Tax (PBB)and the Land and Building Titles AdministrationFee (BPHTB). Because the value of theequalisation grants would be based partly on thenumber of people and the size of the area, precisefigures on population and regional boundariesbecame very important. As noted earlier (Table 1),the topping up of income by a share of naturalresource receipts, from oil and gas, other mining,forestry and fisheries, was to be more specificto the province and sometimes the producingdistrict (UU No 25/1999; Booth 1999; Brown1999; Buising 2000). The internal districtgenerated revenues, or PAD, (which consist ofa limited number of other taxes,20 profits fromregional enterprises and borrowings) were seento provide a vehicle for expansion by anenterprising Bupati. The districts in Riau wereconcerned that their capacity for generating PADfunds was limited by the low levels of educationand income of their people, while many of thesanctioned taxes seemed inapplicable. Therewas a demand for the district tax base to beextended, and there was a move in this directionwith the passage in August of a new tax law,Law No 17 of 2000. This extended income andvalue-added tax, including companies, groups,

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Table 5. PAD and percentage of total district income (mid-2000 data)

District Total Income PAD % PAD of Total(million Rp) (million Rp)

Study AreaKampar 98,748.5 3,100.7 3.14Pelalawan 64,234.8 441.5 0.69Rokan Hulu 65,760.8 611.3 0.93Indragiri Hulu 83,853.3 1,650.0 1.97Kuansing 65,136.1 750.0 1.15

Other MainlandSiak 63,170.6 5,325.6 8.43Rokan Hilir 83,695.1 1,997.2 2.39Riau IslandsKarimun 57,135.6 6,057.0 10.60Kepulauan Riau (Kepri) 133,778.8 33,743.8 25.20Batam 79,028.4 10,313.5 13.05

Source: Departemen Keuangan (2000b), based on budget estimates prepared in the districts in May or June 2000.

individuals and employees, was described as the‘prima donna’ tax, a tax to finance developmentin the most isolated districts. Although 80percent of the new tax would be retained by thecentral government, the amount of money to beraised was expected to considerably exceed thePBB and similar imposts (Riau Pos 7.9.00).

The Head of the Provincial Tax Office(Dinas Pendapatan Daerah or Dispenda) statedin July 2000 that up to that time the contributionof companies like Indah Kiat and RAPP to theprovincial government’s revenue base had beenrelatively negligible compared to the flow oftaxes and revenues that the large companies paidto the central government. Both district andprovincial officials bemoaned the lack oftransparency by the central government withregard to the redistribution of Riau’s revenue.Taxation figures based on mid-2000 data wereused to calculate the proportion of total districtincome that might be generated locally (PAD)(Table 5). While not all districts are included inthis calculation, it is clear that the size of districtrevenues, as known at the time, were contingenton the appropriateness of the tax base to eachdistrict’s particular circumstances.

Taxes on hotels, restaurants, markets andthe mining of sand (exported to Singapore)figured much larger in the economies of theislands than the mainland, hence leading togreater district revenues. This does not take into

account the income realisable from bothproperty taxes and natural resources, which werenot included in the PAD figures. Property andnatural resource taxes, from mining and forestry,are higher on the mainland, reflecting thedifferent kinds of economies existing there.

District incomes have been predictedusing information from mid-2000 (Table 6). Inaddition to the PAD, suggested amounts areprovided for block grants and specialdevelopment grants, as well as resource taxes,such as IHH/PSDH, based on forestry royalties.The latter figure is very small, however, exceptfor Pelalawan, and in general income fromforestry appears minimal. The distribution ofadditional funds from Jakarta, in the increasedproportion of oil and gas income to be receivedby the districts, for example, or income fromthe reforestation fund (DR) is not included here,so totals are conservative and incomplete. Grantfunds are largely based on population size,which is the main reason why the kabupateninduk (original districts) have more funds thanthe outlying new districts, which in many waysneed them more.

With the implementation of regionalautonomy, at least some of the major financialarrangements have become clearer. It is nowknown that Riau will receive a total of Rp 2.27trillion from the General Allocation Fund (DanaAlokasi Umum or DAU), which is very much

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Table 6. Budgets for sample districts, Riau Province: PADs, property and resource taxes andgovernment grants, mid-2000 data (million Rupiah)

PAD PBB PBB BPHTB IHH Grants Overall

District Estates Forests Mines Totala

Block Devt. Totalb

Kampar 3,101 3,758 1,128 10,053 15,165 4,852 520 4,028 40,820 65,385

Pelalawan 441 2,042 563 5,101 8,004 6,347 9,980 2,979 24,504 53,814

Rohul 611 3,758 301 3,622 7,907 5,270 140 3,574 25,788 42,679

Inhu 1,650 882 906 5,770 8,246 2,678 1,680 7,691 52,307 72,611

Kuansing 750 635 196 3,415 4,422 51 1,340 5,165 31,684 44,662

Siak 5,326 899 902 12,487 15,015 —- 4,300 2,215 22,298 48,100

Rohil 1,997 1,351 319 11,695 13,761 14,922 1,730 3,107 26,141 63,661

Karimun 6,057 23 2 2,464 2,935 514 0 2,379 20,852 33,680

Kepri 33,744 138 186 5,698 8,474 4,282 100 3,187 32,624 50,667

Batam 10,313 —- —- 2,481 8,879 8,564 0 4,782 30,954 55,179

Notes:

a. PBB totals include generally small amounts paid in property taxes by villages and towns, with the exception of Batamand Kepri, which have more developed urban centres.

b. Final totals include some extra assistance paid to the new districts by the province and occasionally by the induk,together with royalties in the cases of Kepri and Karimun.

Source: Departemen Keuangan (2000a,b). These are budget estimates prepared by district financial personnel in May orJune 2000.

larger than the figures suggested in Table 6 at thedistrict level.21 An extra Rp 3.2 trillion is to bedistributed from the production sharing of oil andgas revenues. The total DAU was described as afairly modest sum compared with that receivedby provinces with no resource income, but it isconsiderably higher than the previous amountreceived by the province from the centralgovernment, which was only Rp 300 to Rp 600billion per year. The comment was made thatthere would be considerable funds available tothe districts for development but that it wasimportant to emphasise social development,especially education. Riau so far has been lax inimproving the quality of education; it wasestimated that it would take around Rp 2 trillionsimply to fix all the below-standard schoolclassrooms in the province (Kompas 6.1.01).

Details of the 2001 budgets are availablefor Pelalawan and Kuantan Singingi and willbe discussed further in Section 3. Despite theincreased money available, little has changedin the importance of the locally raised or PADfunds, or in the relative proportions allocated to

different developmental uses. This is notsurprising, given the newness of thedecentralisation process. Proper planning forreallocation of funds will take some time, as willthe exploration of all possible incomealternatives that might become available underthe new system.

2.2 THE CHANGING PICTURE:JANUARY TO OCTOBER 2000

As our fieldwork was carried out in a numberof short visits over several months (February,April, July and September 2000), we were ableto monitor the changes in local thinking towardsthe concept of decentralisation. In February2000 there was still much discussion of thepossibilities of ‘Riau Merdeka’, or independencefrom Indonesia. A meeting of the Riau People’sCongress on 1 February voted on three optionsfor the province: 270 of the 623 delegates votedfor independence, 146 for a federal structure and199 for regional autonomy. Such a vote was anindication of the factionalisation of the urban

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elite in Pekanbaru, described as both bolder andmore reckless than the elite of Jakarta (Riau Pos2.2.00; 10.2.00).

The announcement from Jakarta thatdetailed government regulations forimplementing decentralisation would be readyby 1 April 2000 prompted a further People’sCongress meeting attended by the Governor,senior civil servants, academics and NonGovernmental Organizations (NGOs). Whilesome denounced the autonomy laws as ‘hot air’and false promises, the District Secretaryproclaimed the civil service to be ready for thechange. This claim was disputed by the Rectorof Riau University, who declared that thedistricts, especially the newer subdivisions, didnot yet have a vision of how they might developon their own. On the same day, the Head of theProvincial Tax Office (Dispenda) acknowledgedthat deciding on the actual amount of naturalresource income to be shared between provinceand districts was not easy, suggesting that itmight be some months before it was known(Riau Pos 20.2.00).

One representative at the People’sCongress was particularly concerned about theprovince’s relative power compared with thatof the central government, especially in thematter of licences for plantations and mines(Riau Pos 20.2.00). The question of the authorityof the province with respect to the managementof forests, estate crops and mining (especiallyoil and gas) was raised by the Governor at theend of March. The authority of the province,including the issue of licences and permits,should not usurp the authority of the particulartown or district (Riau Pos 1.4.00). The Ministerof Regional Autonomy had earlier remarked thatthe five crucial issues and problems forautonomy related to land, transport, forests,estate crops and the seas, because they wereexceedingly complex (Berpolitik 3.3.00).

In April the Ministry of RegionalAutonomy promised that five importantregulations regarding finances anddeconcentration would be issued in May. On 6May Government Regulation (PeraturanPemerintah or PP) No 25 of 2000, was issued,linked to Law No 22 of 1999. It detailed thebreakdown of responsibilities between the

central government and the province in anumber of areas. In general, the centralgovernment’s responsibility with regard toforestry and estate crops was to set criteria andstandards for various aspects of forestadministration, with the province and theregion carrying out the day-to-day functionsof forest management (PP No 25/2000).Government Regulation 25 of 2000 thus readlike a continuation of power at the centre, withthe regions being given responsibility but noreal autonomy. Not surprisingly, this gesturetowards autonomy was described as ‘half-hearted’ by some observers, including theGovernor (Suara Pembaruan 8.6.00; Dispenda2000). The Minister for Mining and Energystated that his section was certainly not readyfor regional autonomy and no districtregulations could be made without manuals,criteria, norms, standards and procedures beingfirst laid down (Riau Pos 7.6.00).

In June 2000, the Head of the RegionalTax Office also addressed the implementationof limited district taxing powers, noting thatunder decentralisation each district wouldnecessarily attempt to maximise its income fromtaxes and charges (Riau Pos 22.6.00). A memberof the legislative assembly (DPRD) of IndragiriHulu had made the same comment, as the districtprepared to work on a number of regulations toraise funds locally. He noted that members ofthe DPRD were anxious to stay within the lawand were beginning by making an audit of allthe private estate crop companies in the district(Riau Pos 27.6.00). Some regionaladministrations had already been reprimandedfor charging companies illegal levies for licences(Jakarta Post 20.6.00). The new arrangementswere flagged at a national seminar of allprovincial tax offices held in Pekanbaru on 24and 25 July 2000, in which it was pointed outthat taxes and charges could be levied on privatecompanies within any district (Dispenda 2000).The new tax law did come into force in August,as promised.

At a meeting of the Southeast Asian PressAlliance at the end of June 2000, Dr AndiMalarangeng, then a member of staff of theMinister of Regional Autonomy, acknowledgedthe potential for corruption because planning and

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budgetary transparency at the district level werestill weak. There was an opportunity for themembers of the provincial or district legislativeassembly (DPRD) to become ‘little kings’,especially as they could theoretically sack theBupati and the Governor and might thereforebe recipients of patronage and political favoursfrom those parties. The shape of the DPRDs ofthe newly formed districts was to be known byOctober 2000. They were seeking independentpeople, among whom might be academics orpopular local figures, not just partisan politicalappointees. Those who were born in the newdistricts and had previously served as DPRDmembers in the kabupaten induk would beautomatically reappointed to their home areas(Riau Pos 24.6.00, 25.6.00).

By mid-September the discussionrevolved around the need for the government torevise Laws No 22 and 25 of 1999, the basesfor decentralisation. The authority given to theregions under Law 22 of 1999 had been partlytaken back by the central government under PPNo 25 of 2000. The most crucial element wasthe perception of retracting regional authorityover the mining, forestry, estate crops andfisheries sectors. People in the regions hadbecome confused over these two pieces oflegislation. The mechanism for sharingresources was still unclear. The laws on forestryand mining were being weakened and neededto fit better with those of decentralisation. Anyoptimism the districts were feeling in theirprospects for independent development wouldsoon begin to fade with the re-centralisation offorestry and mining. The economicopportunities for the districts would recede asthey were being forced into a difficult retreat.In the Riau Pos, Edyanus suggested thatrepresentatives of the regions rich in naturalresources, such as Riau, Irian Jaya, Kalimantanand Aceh, should come together to counter ananticipated extension of the centralgovernment’s grip on the regions (Riau Pos13.9.00).

In the same vein, the Rector of RiauUniversity spoke of regulations in mining andforestry that had been made at the regional leveland which the central government hadunconditionally disallowed. The regulations

had addressed sand mining and aspects of forestmanagement. He suggested that there was agroup at the centre (including Megawati) whowere very opposed to regional autonomy. Headvised the regions to go ahead and print theirregulations. After December 2000, difficultregional regulations would have to be adjustedto fit in with those of the government (RiauPos 4.10.00).

Dr Andi Malarangeng suggested apostponement of the implementation of regionalautonomy until 2003. The districts seemed ill-prepared for autonomy and many feared thedisintegration of the nation. In Riau it was feltthat the districts must make themselves readyso that there could be no further excuses orpostponements. If autonomy did not bringdevelopment to the region and its people, itwould be nothing but a superficial slogan (RiauPos 5.10.00).

Putting forth the central government’spoint of view, the Minister of Home Affairsand Regional Autonomy stated that thedifficulties that continued to affect thedistribution of authority between the levels ofgovernment were basic matters, such as therestoration of law and order, the internalpolitical and security situation and nationaleconomic recovery. However, he noted thatall the government regulations on financialmatters concerning decentralisation were ready(including Balancing Funds, Management andResponsibilities for District Finances andDistrict Borrowings) (Riau Pos 17.10.00).

Over the first 10 months of 2000, thedebate on regional autonomy in Riau had movedfrom antipathy to a more positive feeling withinthe regions as people struggled to take controlof their destinies. Frustration with the centralgovernment— its lack of transparency onfunding, its regional institutions and itsbacktracking on natural resource management—had, however, been growing. While there wasstill uncertainty about some details of theprocess, the regions were nonetheless preparingthemselves for the implementation of autonomyat the beginning of 2001.

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2.3 THE ADMINISTRATION OFFORESTRY AND ESTATE CROPS

As in all provinces of Indonesia, the Ministryof Forestry and Estate Crops, located in Jakarta,was represented at the provincial level by theKantor Wilayah Departemen Kehutanan danPerkebunan (Kanwil Dephutbun). Through themiddle of 2000, the Kanwil (Regional Office ofMinistry of Forestry and Estate Crops) was alarge organisation with six main sectors:administration, development, forest business,reforestation and rehabilitation, conservationand forest land use. The technical arm of thelast three sectors was only represented by sub-offices in Riau, with reforestation andrehabilitation in Indragiri Hulu (main office inPadang, the capital of West Sumatera Province),conservation in Pekanbaru (main office inPadang) and forest inventory and mapping inPekanbaru (main office in Medan, the capitalof North Sumatera Province). The technical armalso included a forestry school and publiceducation unit in Pekanbaru, a honey researchunit in Kampar and the management unit of theBukit Tigapuluh National Park (BTNP) inIndragiri Hulu. The last office answered to theDirector General of Forest Protection andEnvironmental Conservation in Jakarta. By late-2000, the Kanwil Kehutanan had already beenlargely disbanded as a result of thedecentralisation process, its duties and many ofits staff redistributed to the Dinas Kehutanan(Provincial Forestry Service). The Dinas areregional institutions answerable to the Governorand responsible for the day-to-dayadministration of concessions and estatecompanies. The plan is to administer mostforestry activities at the district level.

The work of the forestry Dinas has in factlong been partly decentralised to seven branchoffices (Cabang Dinas Kehutanan/KesatuanPemangkuan Hutan or CDK/KPH). Theeffectiveness of the forestry offices in carryingout their tasks has been limited by the fact thatthe boundaries of their jurisdictions are riverbasins. They do not coincide with the districtgovernment’s administrative boundaries, withoffices often being far from the areas to beadministered, although a number of sub-branches also exist. The district offices of estate

crops do not have this problem as theirboundaries conform to the normal administrativedivisions. Bringing the boundaries into line wasattempted in a limited decentralisation exerciseof 1995, when Kampar was one district chosento trial the new arrangements. Under the‘Autonomous Regions Pilot Project’ (PP No 8of 1995), the CDK in Bangkinang (Kampar)became the district-level trial forestry office.Likewise its conservation arm, which was nearRengat (Inhu) added ‘district-level’ to its nameand served both Inhu and Kampar, at least intheory.22

Now, as part of the decentralisationprocess, forest administration must come intoline with the other government departments andset up an office in each district capital. Forestryofficials in the districts have been generallysupportive of this move, which was felt to belong overdue.23 The process will be complexand will involve closing some offices andredirecting staff to the new locations. A numberof new district regulations (Perda) werescheduled to be drafted on:

1) the authority of the district with regard toforestry matters;

2) the land-use plan of the province anddistrict [used to justify Item1 above];

3) the contents of the manual to be used forinventory and mapping of forest and estatecrops;

4) the issuing of permits between and withindistricts with regard to: harvesting timber,non-timber forest products (NTFPs) andnon-protected flora and fauna; estate cropcultivation and processing of forestproducts; and environmental services inproduction and protection forest;

5) the management of trade in forestproducts;

6) the mechanisms for dividing the incomefrom the forest sector between theprovince and the district; and

7) forest protection (Dinas KehutananPropinsi Riau 2000b).

Some of these regulations have existedfor some time in the original (induk) districts,especially covering the issues in Item 4 and Item

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5. They are now being redrafted for the newdistricts and revised in the kabupaten induk totake account of the new arrangements. Others,especially Item 1 and Item 6, were controversialthroughout 2000, as the boundaries betweenprovincial and district responsibility and revenuesharing were still under discussion. Items 2 and3, relating to the district land-use plan and theway in which forests and estate crops were tobe inventoried, were seen to still requireassistance from outside or from the Ministry ofForestry in Jakarta. Conservation and forestprotection (Item 7) are likely to remain a centralgovernment concern to some extent or at least aprovincial matter, though this is still underdiscussion.

In August 2000 a large conference offorestry staff, other government officials andinvited representatives of organisations, such asNGOs, was held at the Kanwil office to discussfuture developments in the areas of forestry andestate crops. Part of the meeting included anumber of technical commissions: forestprotection and the prevention of burning(including the control of illegal logging); forestand plantation management; institutions; andregional autonomy. The main topic of discussionfor the Regional Autonomy Commission wasthe division of authority between the provinceand the district. PP No 25/2000 sets down thedivision of responsibilities between the centralgovernment and the province, but the district’srole is unclear. The insistence by thecommission leaders that all the responsibilityfor every aspect of forest administration,including conservation, should go to the districtlimited discussion. No satisfactory answercould be found about the problem ofoverlapping boundaries (where a concessionor protected area, for example, extended acrossmore than one jurisdiction). The entireconsultation was very rushed, and it wasimpossible to tell whether this ‘all or nothing’approach was deliberate in order to prevent aneasy solution being reached, or whether thosepresent were genuine in their statements. Thepublished proceedings of the meeting reported(predictably) that no agreement had beenreached about the breakdown of responsibility.The Regional Autonomy Commission

proposed that the first step was for the centralgovernment to promptly prepare the manualsand other materials for setting the requiredstandards 24 . At the same time, the commissionrecommended that the province and thedistricts make an inventory of the kinds ofregulations needed to support regionalautonomy, most importantly regulationscovering the division of authority between theprovince and the district and the types oforganisation to exist at each level. Thecommission also suggested Perda regardingfire prevention and the reclassification offorests and forest plantations for other land uses(Dephutbun 2000d).

The ‘institutional’ commission proposeda number of scenarios. After allocating to theprovince the responsibility for forestry researchand joint research projects with foreigncountries, the commission planned to make theoriginal branch or sub-branch forestry office(CDK/KPH) the founding organisation for a newdistrict-level forestry office. The new forestryoffice would be closely connected to the existingOffice of Estate Crops. If a branch of theKanwil’s conservation arm (Perhutanan danKonservasi Tanah or PKT) existed in the districtcapital, then it would become the base for thenew district forestry office, and other forestryoffices elsewhere in the district would be closed.In Indragiri Hulu, there was both a forestry officein Rengat and a branch of the PKT a fewkilometres away on the main highway atPematang Reba, the site of most governmentdepartments.25 Pematang Reba was also the newlocation for the office of the Bukit TigapuluhNational Park,26 which had been run fromJakarta but was instructed to work towards aclearer coordination with the district (Dephutbun2000d). One worrying feature of thesediscussions was that few district officials,especially the Bupatis, attended this meeting.It appeared that the districts still did not takeseriously the need to work with the provincial-level forestry authorities to ensure a smoothtransition to decentralisation of forests and estatecrops in 2001.

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DECENTRALISATION AT THE DISTRICT LEVEL33333

3.1 THE ORIGINAL KABUPATENKAMPAR

3.1.1 Kampar: the truncated indukBefore subdivision in 1999, Kampar covered30,569 square kilometres (km2), making it oneof the largest districts in Indonesia, as large asthe province of Bengkulu. Now only one-thirdremains as the kabupaten induk, with nearly400,000 people (Map 4). It was believed thatthe new district might languish after the excisionof its two arms, Pelalawan and Rokan Hulu,especially after the disappearance of the‘locomotive of development’, the rapidlyexpanding centre of Pangkalan Kerinci,headquarters of RAPP and now part ofPelalawan. The Bupati complained that not onlyhad the major industrial sites gone to Pelalawan,but the more productive plantations were inRokan Hulu. A member of the district’s DPRDlamented that subdivision had cost Kampar halfof its PAD (Riau Pos 3.5.00). The Bupati notedwryly that he was left with the undeveloped andstill partly forested Kampar Kiri subdistrict, siteof frequent floods from the Kampar Kiri River,and with the subdistrict of XIII Koto, site of alarge reservoir development necessitatingresettlement of several villages, with manyunresolved cultural and social problems (RiauAbad 21 2000). Despite his complaints,however, more than half of the population ofthe original district remains in KabupatenKampar, together with much of the existinginfrastructure. The capital, Bangkinang, has afully developed suite of government offices,including the district forestry office. The Bupati

has said that the biggest challenge is thedevelopment of human resources, which is aproblem common to most of Riau province.

Kampar had been involved in thedecentralisation experiment in 1995-96. Civilservants who remain part of the currentadministration were highly critical of that trialand are therefore sceptical about the success ofthe new system.27 In February 2000, the Bupaticompared the 1995 case with his understandingof the new arrangements. He considered the mostimportant regulation for decentralisation to berelated to the transfer of personnel, equipmentand funding.28 He argued that none of these threewas really transferred under the 1995arrangements, though the workload increased.In particular, district-level discretion overexpenditure was not permitted. He believed thatthe size of the PAD should be the test of whetherany district was really able to exercise autonomy.In the budget for 1999-2000, the PAD forKampar was only 3 percent of the total income,an insignificant amount (Table 6).

About 10 percent of Kampar’s staff hasbeen transferred to Rokan Hulu or Pelalawan.Many more are needed, however, as existingsubdistricts (kecamatan) are being subdividedin order to encourage development. Whileoffices need to be built and facilities established,there is now more money for development atthe lower levels. The district officers expectstaff to be also transferred from Pekanbaru asthe Kanwils are closed or ‘de-concentrated’,although such urban dwellers are not alwayswelcome in the districts, especially if they areof different ethnic origin or religion.

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Map 4. District and subdistrict boundaries of Rokan Hulu, Kampar and Pelalawan

3.1.1.1 Forestry in Kampar and RokanHulu: conservation and sawmills

The districts of Kampar and Rokan Hulu arediscussed together, as forestry has become lessimportant in both areas with the remarkablegrowth of oil palm. There are, however,significant conservation issues that affect bothdistricts and questions regarding the rawmaterials supplied to sawmills. While a fewlogging concessions continue to operate (threein Kampar and seven in Rohul), almost all areshared with other districts. The newer districtshave complained that companies used to payingtaxes to the kabupaten induk continue to do so.29

Before subdivision, the original Kampar districthad 2.8 million ha of forest, now reduced to842,000 ha in the kabupaten induk, of which283,000 ha remain as production forest (Dapan2001). These areas of mainly limited productionforest include a large block of quite steep landin Kampar Kiri, bordering on the extensivewildlife reserve of Rimbang Baling, and morescattered blocks around the borders of RokanHulu. Most of the flatter land in the centre ofboth districts has either already been convertedto oil palm or is in the process of being converted.

Bukit Suligi (on the border betweenKampar and Rohul) and Bukit Mahato (on theRohul/North Sumatra border) are forested areasthat have been subject to encroachment by illegalloggers. As these protected forests are stillcontrolled by the provincial government, districtofficials can only file a report when a problemoccurs. It seems contrary to the philosophy ofdecentralisation that responsibility should notmore directly accrue to the nearer authority. InJuly 2000, a large group from the DinasKehutanan in Pekanbaru was in Bukit Mahatotrying to pinpoint the source of theencroachment. Forestry Department employeesattached to the small new forestry office in PasirPengarayan, Rohul’s capital, could only observe.It is vitally important for the district to be ableto monitor the situation in the field and to beresponsible for dealing with problems when theyarise. Bukit Suligi is in a particularly vulnerableposition, lying between two developed oil palmareas with easy road access. The area is sharedbetween Kampar and Rokan Hulu, with most ofthe protected forest lying in the latter district.The overlap complicates the situation, as borderissues between different districts are intended

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to be resolved or managed by the provincialauthorities. Despite decentralisation, thejurisdiction for most protected areas willprobably remain with the province. The DistrictSecretary for Kampar believed that all largeforest projects would continue to be run at theprovincial level and that officials from that levelwould continue to exercise considerablecontrol.30

During the 1995-96 decentralisationexercise, the only commodities to be broughtunder local control in Kampar were minorproducts, such as honey and silk. Theadministration does not believe that realresponsibility for forests will be transferred. Itis therefore focussing on specialties, such asnilam (pachouli oil) for perfume and gambierfor tanning. While these products can perhapsfill a niche, they are hardly a substitute for oilpalm, which, in the minds of the people, has agreater economic potential. To create space foroil palm, villagers believe they must clear theirforests. The Head of the Forestry Office inKampar is working on alternatives to oil palmbut is progressing slowly. One programme withsome chance of success is the Forest VillageCommunity Development (PembinaanMasyarakat Desa Hutan or PMDH), jointlyimplemented by the provincial government andthe forestry companies. The programme aimsto increase income levels using high-value treessuch as teak. People living near Bukit Suligihave been selected to test this initiative.

Official records show there are 58 legalsmall sawmills in Kampar district (the largestnumber in the province) and a further 21 inRokan Hulu (Dephutbun 2000c). Illegalsawmills are thought to be at least equal to thatnumber. Half of the legal sawmills in Kamparoperate in the subdistrict of Kampar Kiri, whereat least 10 line the river bank near the main townof Lipatkain. To complete the picture of forestryactivities within the district, interviews wereconducted with four of those sawmill operatorsto ascertain the sources of their raw materialsand the destination of the finished products.

The manager of the oldest sawmill(present since 1979) believed that the numberof establishments had doubled since reformasiand that it had become more difficult to secure

an adequate supply of timber. However, his millhad nevertheless tripled its output! The managerstated that the reformasi period brought aboutimproved relationships with local officials, whowere now less likely to obstruct operations.Forestry Department employees continued todemand petrol money, however, while army andpolice officers still expected to be ‘helped’, eventhough the mill was a legal operation with acurrent Upstream Wood Processing Industries(Industri Pengolahan Kayu Hulu or IPKH)licence. In any week the company might spendas much as Rp 100,000 in payoffs of this sort,while every unofficial police and military roadblock cost the truck operators Rp 2,000. Themanager believed that the illegal mills createdtoo much competition, affecting prices andsupply conditions. However, closing them downwould be too difficult because the officials stillneeded the revenue. Whereas in the past Chinesebusinessmen only provided indirect support oracted as middlemen, now they were activelyopening their own illegal mills (they had become‘brave’ enough to enter the market directly).

This particular company processed onlymeranti (Shorea sp.), which was sent tomiddlemen in Medan for further treatment. Theowners, who lived in Pekanbaru, operated othermills in both Kampar and Rohul. Localcommunities from Kampar Kiri and KuantanSingingi supplied most of the timber, with noHPH or HTI timber being sold to the mill. Asmuch as 15 percent of the total supply of rawmaterial was met by simply hailing passingtimber trucks and offering a price. Once theprice was agreed upon, the local sellers wouldoffload the wood directly to the mill. Each ‘table’(this mill had three) would need roughly 15 m3

per day, or the contents of two trucks. Underideal conditions they would produce 11.5 m3 pertable per day of raw timber. Wastage wassignificant, however, with often only about 5m3 being eventually useable. The waste timberwas generally sold to people from Pekanbarufor Rp 400,000-500,000 per truckload.

Other mills also specialised in particularspecies of timber – seminai (Madhuca utilis),kempas (Koompassia malaccensis) or meranti(Shorea sp.) – for destinations outside theprovince, such as Semarang (capital of Central

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Java province), Medan or Singapore. Althoughmost of the wood came from the local area, itwas also supplied from distances of up to 60km. Mill workers said that much of the rawtimber in the district had already been taken bythe RAPP pulp mill. Wood was bought for Rp400,000 per m3, mainly from local people whoworked in gangs and were paid collectively bytheir daily cut. Sawmill profits could be as lowas Rp 50,000 to 60,000 per m3, once all the extrafees had been collected.

It was interesting to observe the variationamong these operations and the distant marketssupplied by their products. Given the directcompetition with RAPP for timber from localsources, their future appears very doubtful. Yetthey obviously provide employment to manyworkers (Javanese and Bataks as well as localpeople) and pocket money to officials. All werekeen to participate in the present bonanza offorest felling, no doubt aware that this wouldnot last long. District administrations mustidentify alternative income sources for many ofthose who presently gain their living from suchmills and find ways to allow the most efficientmills to remain open, while controlling thespread of illegal mills. Eliminating thecorruption that appears endemic to thesawmilling industry is a more intransigentproblem, but must lie at the heart of any seriousattempts at control.

3.1.1.2 Oil palm in Kampar and Rohul:troubles of the golden crop

While this report concentrates primarily onforest-related issues, oil palm production isarguably very relevant. In Riau the main sourceof land for oil palm plantings has been eitherconversion or production forest, although therehas also been considerable conversion ofvillage land, often under smallholder rubber.The reformasi period has seen a strong pushby villagers both to reclaim land previouslyappropriated by oil palm estate companies andto cut village forests for independent oil palmplantings. Under regional autonomy thedistrict authorities, especially in the largestproducing districts of Kampar and Rokan Hulu,must attempt to moderate and control theseactivities.

In 2000, the Estate Crops Office (DinasPerkebunan) in Kampar strongly complained ofits mitigated authority. The office was onlyallowed to issue a first-stage permit to plant oilpalm, limited to 25 ha. It wanted the authorityto issue permits up to 5,000 ha, the usualminimum for a factory and a viable plantation(Dinas Perkebunan Kabupaten Kampar 2000).The permit system was slow and complicated,encouraging companies to bypass some stages.Officials occasionally allowed planting tocommence before papers had been finalised, butsuch leniency was at times abused, withcompanies planting out more than their permitallowed and trespassing on to village lands (e.g.,Ciliandra Perkasa in Kampar).31 The delays inexcising land from forest also led companies toseek other solutions. Less reputable firms trieddevious means, including intimidation, to obtainvillage land. The people have subsequently beentrying to reclaim land wrongfully taken. Inexceptional cases they are demanding that thecompanies leave the district (e.g., the case ofTor Ganda and Torus Ganda in Tambusai, asubdistrict of Rohul).32

Feelings are running high in somecommunities against both logging and oil palmcompanies because of disputes over land. Thehead of a group representing traditional culture(adat) in Kampar Kiri has demanded that allcompanies in the district be surveyed to checkwhether they are operating within theirboundaries and has requested that licences foroffending companies not be extended when theyexpire (Drs Yulizar, Riau Pos 15.8.00). Districtofficials are concerned with the frequency ofdisputes which continue to erupt. They say thatevery day they are asked to solve disputesdirectly attributable to the licensing policies andthe decisions administered at the national level(Dinas Perkebunan Kabupaten Kampar 2000).Staff of the Estate Crops Office remarked thatthe previous government was too oriented tolarge corrupt conglomerates. The staff wereeager to change that orientation and to assistlocal communities to develop economicallythrough smallholder cooperatives.

The demand for smallholder oil palm landhas been especially marked since 1994 and haspartially been met by the formation of

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cooperatives and independent farmer groups,from 100-200 ha up to several thousand,depending on the number of participants. Suchgroups do not yet have factories, as theirplantings are young and limited in extent. Theymust rely on the facilities provided by one ofthe large companies, which has disadvantagesas companies are not always happy to acceptfruit grown outside their supervision and theyalways control the price. The head of the DistrictInvestment Office (Badan Penanaman ModalDaerah or BPMD) in Rohul suggested that atleast five ‘mini-factories’ should be built in thatdistrict to cater solely to the needs ofindependent smallholders. He assured would-be investors that there was a plentiful supply ofraw material to support such factories (Riau Pos11.5.00). The urgency of this situation isillustrated by subsequent happenings. By late2000, the prices for oil palm products droppedvery low, to as little as Rp 100 per fresh fruitbunch (Tandan Buah Segar or TBS). With thelow prices prevailing, it no longer paid thecompanies to pick up smallholders’ fruit and thebunches were simply being left to rot (Riau Pos17.10.00). Such an outcome, which sentwarning signals to local officials, affected 300small farmers in Rohul with 1000 ha of oil palm.

The original base for the oil palm industrywas a group of government estate properties(Perseroan Terbatas Perkebunan or PTPs)established between 1981 and 1985, which nowoperate as one large company (PTP V). Underthe Smallholders Nucleus Plantation(Perkebunan Inti Rakyat or PIR) scheme, PTPV has small producers (plasma) take their fruitto the company mill. Most settlers are Javanesetransmigrants who have already paid off theirtwo ha. A proportion of the oil palm plantingsare beginning to approach senility. Soon theywill have to be replanted on a large scale. Whilethe management of one company gave assurancethat there would be credit available to seefarmers through the replanting period of threeto four years, some farmers were already seekingto plant new areas away from the estate. Thefuture of the government estates and peoples’rights to the land remain matters of concern.33

In other provinces government companies are

to be privatised;34 and, with regional autonomy,the eventual fate of all such state-ownedcompanies (Badan Usaha Milik Negara orBUMN) may be privatisation. Estates belongingto bankrupt conglomerates (such as the SalimGroup) have also left their smallholders in muchuncertainty.

After transmigrants received good returnsfrom oil palm in the early 1990s, local farmersjoined the schemes. As more private oil palmproperties became established, demand arosefrom local communities for plasma land.However, the villagers were given a different(and, as they believed, inferior) businessarrangement. They had to go through thepartnership (kemitraan) system. These PIR-Kemitraan, which operate through localcooperatives, are more variable in the proportionof the total company land given to smallholders.The people are trained to grow oil palm byworking on the estate but do not receive theirlands for several years. In Kampar the landsallocated to Kemitraan estates are invariably stillclassified as ‘forest’, which legally limitssmallholder activities. Officials suggested thatthe district land-use plan (Rencana Tata RuangWilayah Kabupaten or RTRWK) should berevised to excise the estates from the forest area(Disbun Kampar 2000). Smallholders from allPIR estates receive credit to purchase inputs,such as fertiliser, and eventually have to payback the cost of their land, which with interestcan add up to several million Rupiah.

A breakdown of the PBB taxes levied ona large sample of oil palm properties in the threesections of the original Kampar district (Table 7)clearly shows the differences between thosesubdistricts with large numbers of smallproducers and those with a few large firms. It isclear that one or two subdistricts dominate in eacharea and contribute a considerable portion of thetotal taxes. These taxes have the potential to beincreased considerably, especially as they are nowtargeting private smallholders of oil palm. It hasbeen reported that almost none of the PIRsmallholders on the estates have been asked topay tax, although many are now property holdersin their own right and so should contribute.

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Table 7. Taxes levied on oil palm properties per subdistrict, districts of Kampar, Rokan Hulu andPelalawan, 1999 (million Rupiah)

Subdistrict/District Total Tax No. of properties Average Tax

Tapung 2,494 27 92Kampar 54 3 18Kampar Kiri 434 11 39XIII Koto Kampar 325 1 325Siak Hulu 1,236 18 69Bangkinang 128 5 26

Kampar District 4,671 65 72

Kunto Darussalam 883 17 52Rokan IV Koto 344 11 31Tambusai 601 18 33Rambah 381 2 191Kepenuhan 76 3 25Tandun 3,103 27 115

Rohul District 5,388 78 69

Bunut 645 3 215Pangkalan Kuras 1,230 9 137Kuala Kampar 82 1 82Langgam 965 43 22

Pelalawan District 2,922 56 52

Total Districts 12,981 199 65

Source: Departemen Keuangan (PBB office) October 1999

3.1.2 Pelalawan: district of futurepromise, but what of thepresent?

Pelalawan, a sprawling district incorporating thelower Kampar basin, is a region of contrasts.One approaches the capital, Pangkalan Kerinci,by the overcrowded eastern main road fromPekanbaru to Rengat and beyond. The road hasbeen so destabilised by the constant daily trafficof hundreds of logging trucks that it resemblesa series of waves of broken bitumen. Kerinciitself, a mere village 10 years ago, has beenrapidly transformed, thanks to Riau AndalanPulp & Paper. It is now a bustling centre cateringto thousands of RAPP employees. Farther east,the river becomes the highway through theswamp forests, and populations are sparse, withgreat distances between isolated settlements.The main road is a convenient means ofseparating Pelalawan into two regions. To thewest, the subdistricts of Langgam and PangkalanKuras resemble Kampar, with oil palm estatesnear the river and along the main road, then

forests or HTI in the large central blockbordering Kampar Kiri. RAPP is prominent inthat forested block, which is the source of muchof its fibre needs; Indah Kiat also has a presence,but a more contested one (see Map 2). East ofthe main road, the two subdistricts of Bunutand Kuala Kampar are dominated by the naturereserve of Kerumutan (shared with Inhu) andby logging activities based on the swampforests, which still occupy much of the region.

3.1.2.1 Administration, budgets andprospects

The Bupati’s office was set up in April 2000and is only gradually taking shape, primarilybecause of lack of staff. The interim Bupatiestimated in mid-October 2000 that he neededa staff of 900 but had only 145 (Riau Pos16.10.00). In March 2001 the new Bupati,Tengku Jaafar, stated that it would take a furtherone and a half years before the infrastructurefor administration was adequately developed.At that time, Pelalawan had only recently

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formed its final DPRD legislative assembly andwas in the midst of drafting legislation oninstitutions and structures. Many of its otherregulations were still derived from the ‘mother’district. Fifteen district offices, or Dinas, willbe formed, together with four larger bodies, orbadan, including Regional DevelopmentPlanning Agency (Badan PerencanaanPembangunan Daerah or Bappeda) andRegional Environmental Protection Agency(Badan Pengendalian Dampak LingkunganDaerah or Bapedalda). The intention is to retainthe separation between the Offices of Forestryand Estate Crops.

In order to bring government servicesto the remote areas the administration made ita priority to subdivide the existing subdistricts.The plan was to create extra six subdistricts,but budgets only allowed two during 2000 andthree more in 2001.35 Such subdivisions aresensible and necessary considering thechallenge of future development in this region.Although it is predicted to become a ‘primadonna’ district in the future (Riau Abad 212000), Pelalawan is currently one of the poorestin social terms. Of its 87 villages, 45 qualifyfor ‘backward’ status; there are presently only67 primary schools (less than one per village)and 4 secondary schools. Creating newsubdistricts will necessitate devoting moremoney to educational needs so that each capitalwill have at least one secondary school.

The proposed new subdistrict of KualaKampar at the river mouth merits specialattention. Consisting mainly of the islands ofMendol36 and Serapung, the area – with its focuson rice, coconuts and fish – more closelyresembles the Riau Islands than the mainland.Its connection with places upstream is restrictedby a 3 m tidal surge of the shallow KamparRiver, with only small boats able to pass.Improved transportation is essential for this newsubdistrict. One major plan is to build a 140 kmroad east through the swamp forests to the coastopposite Serapung island and to establish a portat Tugau, a small island next to the mainland(Map 4). Such a port would provide easy accessto Batam (only two hours by speedboat), andthe road would open up the entire lower basin,connecting Pangkalan Kerinci to the sea and

making it possible to avoid the difficult riverjourney. This plan is featured in a booklet toattract investors who want regional andinternational connections (Azwar 2000). It isa seductive but expensive proposition.Development proposals for Pelalawan ignorethe forests and focus instead on tourism, miningand industry (especially oil and coal mining),fish and coconut-based industries along thecoast and secondary manufacturing atPangkalan Kerinci. Agriculture is also beingtargeted, with a push to increase wet riceproduction towards self-sufficiency and toencourage further oil palm development underkemitraan, or local cooperative arrangements.

Detailed budget information is availablefor both 2000 and 2001, enabling somecomparisons to be made between the pre- andpost-decentralisation positions. Pelalawan hadthe lowest district PAD revenues for 2000(Tables 6 and 7). While district income hasalmost quadrupled with decentralisation, PADestimates are still very low, constituting slightlyless of the total than before in percentage terms(Table 8). General income from taxes is also amuch smaller proportion of the total. Clearlyno direct benefit accrues to Pelalawan from anytaxes levied on RAPP, the major companywithin its jurisdiction. Taxes from othercompanies are also minimal, which may reflecttheir continued payments to the ‘mother’district, Kampar.

There have been some interestingchanges in estimated expenditures. Moremoney is available for development, thoughsome of the routine funds must now go into‘district establishment’ and a lower proportionto salaries. Expenditure for many areas ofdevelopment has not changed in percentageterms, especially for transportation and housing,which reflects both the present low levels ofthese facilities and the need for housing,especially in the rapidly growing urban area ofPangkalan Kerinci. District development andsettlement, education and health have allreceived a slightly greater share of spending in2001, but continued improvement in allocationswill be needed. Local income sources (PADs),which remain minimal, need to be expanded.

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Table 8. Pelalawan district, estimated income and expenditure, 2000 and 2001 (billion Rp)

2000 % 2001 %

A: Total income 64.23 100.0 248.95 100.0PAD 0.44 0.7 PAD 1.54 0.6Government grant 63.63 DAU 109.95 44.2

Routine 21.50 33.5 Resource share 116.47 46.8Development 30.88 48.1Taxes 9.25 14.4 Taxes 7.06 2.8Other 2.00 3.1 Other 2.00 0.8

Carried forward (from 2000) 11.93 4.8

B: Total expenditure 64.23 100.0 248.95 100.0Routine 28.35 44.1 Routine 100.19 40.2

Salaries 21.49 33.5 Salaries 44.14 17.7District est’ment 29.14 11.7

Development 35.88 55.9 Development 148.77 59.8Transportation 15.48 24.1 Transportation 57.66 23.2Housing 8.28 12.9 Housing 30.98 12.4Governance 4.14 6.4 Governance 15.90 6.4District devt, settlement 2.33 3.6 District devt, settle’t 15.73 6.3Farming, forest 1.39 2.2 Education, sport 7.10 2.8Education, sport 1.12 1.7 Health, social devt 5.00 2.0Water, irrigation 0.64 1.0 Trade, finance, coops 4.31 1.7Environment, land use 0.62 1.0 Farming, forest 4.07 1.6Health, social 0.60 0.9 Environment, land use 1.86 0.7Trade, finance, coops 0.59 0.9 Water, irrigation 1.64 0.7Science, technology 0.35 0.5 Science, technology 1.10 0.4Other 0.34 0.5 Other 3.42 1.4

Notes: PAD: Pendapatan Asli Daerah - district tax revenue; DAU: Dana Alokasi Umum or General Allocation Fund

Source:Dispenda (2000b); Pelalawan District Revenue Office (2001)

3.1.2.2 Population and adatThe population of Pelalawan is predominantlyMelayu. Apart from recent transmigrantinfluxes and the heterogeneous mix of Kerinci,many villages have been quite free of outsideinfluences. Among the Melayu, a distinctionis made between those living along the coastand islands (Melayu pesisir) and the forestpeople (Melayu petalangan). The latter inparticular are very anxious to maintain theiradat, especially in their cultural heartland nearSorek Satu in Pangkalan Kuras.37 The newDPRD legislative assembly has been recruited,but the district also has a district council (DewanPertimbangan Daerah or DPD), consisting ofboth adat and government officials. ThePetalangan cultural group (Lembaga AdatPetalangan or LAP), a strong political force inits own right, dominates the DPD. It wantsPelalawan to be a special district when it comesto selecting both the elected Bupati and the

DPRD. The DPD has objected to the selectionof several members of the temporary DPRD onthe grounds that they had only come to thedistrict for their own political motives. LAPwould like to insist that all incumbents of suchpositions be locally born and have a goodknowledge of adat law and custom. In a similarvein, it reiterated that the permanent Bupati mustbe born in Pelalawan and be versed in the adat,adding that he must also be young and energetic(Riau Pos 3.10.00; 4.10.00). Eventually thehead of the local Bappeda office was selected.The interposition of LAP into the politicalprocess will inevitably complicate the issue ofdecentralisation for Pelalawan. While it isimportant to protect and enhance local interestsas the districts evolve, there are at timesultraconservative demands, which seem moreapparent here than in other districts.

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3.1.2.3 The forests and the KerumutanReserve

With 760,000 ha classified as ‘forest estate’,divided into two-sevenths protected area andfive-sevenths forest for development, Pelalawanhas considerable resources in this sector. In 2000the forests were still managed by three separateoffices – Bengkalis, Rengat and Kampar –reflecting the anomalies of the former system.Although a new forestry office has since beenestablished at Pangkalan Kerinci, it hasinsufficient personnel for effective managementof the region. The largest area of existing forestlies on the north side of the river in the lowerKampar basin, currently being worked by fourmajor concessions with 218,000 ha (Dephutbun1999). It is scheduled to remain as a loggingconcession area, according to the new districtland-use plan (RTRWK). However, this is theregion to be crossed by the road to the coast,which the district hoped to have constructed in2001. The head of Pelalawan’s planning office(now the new Bupati) has offered to compensateany firm bold enough to construct the ‘body’ ofthe road with all the timber that lies along itspath (Riau Pos 19.9.00). The area is swampforest, producing 125,400 m3 of logs annuallyfor the present concessionaires. While officialsare perhaps hoping that RAPP will be temptedby the offer of timber, through late 2000 whenthe research for this study was conducted, therehad been no indication of any takers for theproject, which undoubtedly would have seriousrepercussions for the forests.

The problems the forestry administrationfaces in Pelalawan are exemplified atKerumutan, the wildlife reserve shared byPelalawan and Indragiri Hulu, formerly in thecare of the Kanwil in Pekanbaru. The 120,000ha reserve, declared in 1976, extends betweenthe Indragiri and Kampar Rivers, due north ofRengat. It is bordered on all sides by formerlogging concessions, some of which have beenunder the dubious care of Inhutani IV andsuffered much from incursions. Runningthrough the reserve are the upper tributaries ofthe Sungai Gaung, which flows east into theIndragiri River in the district of Indragiri Hilir(and thus is technically under Inhil’s forestry

office), and the Sungai Kerumutan, a tributaryof the Kampar (within the jurisdiction ofPelalawan). Entry into the reserve is along boththese streams, together with road access fromthe main highway to a Kerumutan tributary, theMerbau.38 There are hundreds of sawmills alongthe Gaung and its tributaries on the eastern side,generally just outside the reserve where theupper reaches of the streams become verynarrow (Silalahi and Osmantri 2000). Campsof timber fellers were also in the buffer zone,with some workers from as far afield asPalembang and Sambas in West Kalimantan.Near the western side of the reserve isKerumutan village, with 2,800 people, aprojected new subdistrict centre for Pelalawan.In mid-2000 the village had many chainsawsand young men looking for timber to sell bothto the sawmills at Sorek on the highway and aslogs to RAPP. Fifty families kept bagan (fishingplatforms) inside the reserve. Special aquariumfish are sometimes found, which bring big pricesin Singapore, and other fish are caught forsmoking, bringing up to Rp 45,000 per kg. Somefamilies extracted rattan or turtles from thereserve area, but mainly on a part-time basis asmost were rubber growers. Also in the westernbuffer zone were a pulp plantation belonging toArara Abadi (IKPP) and a large oil palm estate.

Down the Kerumutan River at TelukMeranti, the village near the Kerumutan/Kamparjunction (also a projected subdistrict capital with2,200 people), activities similarly revolvedaround rubber growing, fishing, and forest work,the latter being entirely in former concessionareas. Several sawmills had been set up in thevillage. The comment was made that once theavailable timber had disappeared from theabandoned logging concessions, the reservemight be open to attack, as it was veryaccessible. However, people there still had someresidual fear of stealing from reserve forests, asthey remembered that others had been jailed forsuch offences in the past. Researchers found 22fishing platforms inside this section of thereserve.39 An area of oil palm had been openedright next to the boundary. Local Melayu peopleinvited the Javanese to share-crop the oil palm,as they were unfamiliar with the correct

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techniques of cultivation. It is not clear howthis crop will eventually be marketed (Silalahiand Osmantri 2000).

With the administration of Pelalawanmoving to create two new subdistrict officesclose to the boundary of the Kerumutan WildlifeReserve, the management of at least its westernand southern parts should fall within thatdistrict’s jurisdiction. From Silalahi’sdescription it appears that it is mainly peoplefrom Pelalawan who are presently encroachingon the reserve to fish and collect other products.Following decentralisation, the jurisdiction ofthe Rengat Forestry Office will eventually beconfined to that district alone. However, withboundaries of three districts meeting in thereserve, some joint agreements will have to bereached. Like the other reserves withoverlapping boundaries in Kampar/Rohul, atpresent Kerumutan remains technically aprovincial-level responsibility. However, it isonly people near the reserve who are in aposition to really monitor its management. Aclear reiteration of the rules regarding accessmight be enough to control populations in thereserve buffer zones, where the position doesnot yet appear to approach that of the BukitTigapuluh National Park (to be discussed indetail under Indragiri Hulu).

3.1.2.4 RAPP and the districtadministration

The presence of RAPP in the district is oneimportant focus for Pelalawan, though relationsare at times uneasy. The Bapedalda(environmental) office keeps checks on factoryemissions, especially into the Kampar River.Occasionally there is direct conflict, as whenRAPP’s plantation operations closed canalsused by village loggers. However, the companyhas helped with construction of the districtoffices. Its programme of communitydevelopment, though in its early stages, islooked upon with favour. Local peopleinterviewed during the course of this studyindicated that they generally prefer RAPP toIndah Kiat, as they accused the latter’splantation company, Arara Abadi, of destroyingrubber and honey trees and of using villagers’

land without adequate compensation.40 At thesame time, the administration is aware of thetensions created by the dominating presence ofthis large firm in the capital of such aconservative region. The biggest challenge fordecentralisation will be to bring together all theisolated parties of this extensive district so thatall feel they are participants in the developmentprocess. However, the administration’sresources are limited, so while trying to remainas independent as possible, it is often gratefulfor the presence of ‘big brother’ RAPP.

3.2 THE ORIGINAL KABUPATENINDRAGIRI HULU

3.2.1 IntroductionThe original district of Indragiri Hulu, consistingof the upper reaches of the Indragiri River andits major tributary, the Kuantan, lies athwart thesouthern boundary of Riau, inland from theswampy region of the river mouth (IndragiriHilir). All of the western and southern boundaryregions of Riau are hilly and Indragiri Hulu isno exception. Although it does not rise above1000 m it provides a contrast to the much flatterlands to the north. Indragiri Hulu was recentlysubdivided with its western section forming thenew district of Kuantan Singingi (see Map 5).Like many other new districts, Kuantan Singingistruggled to meet the deadline of 1 January 2001to implement the decentralisation reforms. Inlate-2000, when research for this study wasconducted, residents were only then putting inplace their new legislative body and taking stepsto secure adequate infrastructure and humanresources, although obtaining funds for each ofthese was still a problem. Prior to subdivision,Indragiri Hulu covered a land area of 15,854km2, representing 16.8 percent of the total areaof Riau (BPS, Indragiri Hulu 1998) and abouthalf the size of the original Kampar. The formerdistrict is now divided into two roughly equalsections, making its size more manageable forboth administrations and preserving the distinctcultural integrity (Melayu-Minangkabau) ofKuantan Singingi.

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Map 5. District and subdistrict boundaries of Kuantan Singingi and Indragiri Hulu

3.2.2 An overview of forests inIndragiri Hulu and KuantanSingingi

Much of the former Indragiri Hulu district wascomparatively isolated until the 1970s and1980s, when timber companies began to openconcessions in the region. The expansion of thetimber concessions was rapid, and the districtbecame accessible at the same time as forestreserves were depleted. The expansion wasfollowed by a general decline in loggingactivities due to shortages of commercial timber.Prior to the subdivision of Indragiri Hulu, theRengat Forestry Office was responsible formanaging almost 2 million ha of forest, with thearea of operations extending well beyond theadministrative boundaries of the district.41

Boundaries for the forestry administrations weredetermined largely by physical parameters,unlike administrative boundaries that dependedon a combination of social characteristics andhistorical antecedents.

In 1999, 16 timber companies wereoperating in the Indragiri Hulu district, but eight

of the licences were due to expire in that year(Dephutbun 1999). Nearly all of the formerconcessions in Kuantan Singingi havecompleted their operations and much of the landis now under oil palm or pulp plantations. InKuantan Singingi (as elsewhere in Riau) wholelog production has declined in recent years.According to Rengat Forestry Office statistics,the region produced 123,000 m3 of logs in fiscalyear 1998/1999. With much of the larger timberalready cut, that remaining is of smallerdiameter, primarily satisfying sawmills and pulpplants (see Table 3). Plywood companies in thedistrict have had limited success because ofproblems with raw material supply.42 It wasnot until the mid-1990s that the activities ofsawmills began to significantly affect timberreserves. There are presently 14 oil palmcompanies operating in Indragiri Hulu, withlicences covering 135,795 ha. However, only58,725 ha (or 43 percent) has actually beenplanted by the various companies (DinasKehutanan Kabupaten Indragiri Hulu 2001).

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Table 9. PT RAPP’s timber plantation concessions in Kuantan Singingi

Plantation Name Subdistrict Size of Plantation (ha)

Cerenti Kuantan Tengah 34,400a

Logas Selatan Singingi 21,085a

Teso Barat Singingi 18,000a

Logas Utara Singingi and Kampar Kiri 14,615a

Baserah Kuantan Hilir and Pangkalang Kuras 20,200a

Total area within Kuantan Singingi 73,485a

Revised Estimatea

90,893a

Notes:a. Allocating 50% of area to Kuangsing where boundaries overlap with other districts.

Source: APRIL (2000b)

3.2.2.1 Pulp plantations in KuantanSingingi

The recently formed district of Kuantan Singingiis very important as a future fibre supply areafor Riau Andalan Pulp & Paper. The industrialtimber plantations of Cerenti, Logas Selatan andTeso Barat fall exclusively within theadministrative area of the district, covering73,485 ha, or 26 percent of PT RAPP’s totalconcession area (Table 9).43 Two new locations,Logas Utara and Baserah, will increase theoverall amount of land dedicated to PT RAPP’splantation activities in Kuantan Singingi to about90,893 ha, or 32 percent of the total.

Such a large area of timber plantation ina new district like Kuantan Singingi will meanthat district administrators will be faced withresolving a range of issues, including disputeswith local communities . Companies like PTRAPP face significant challenges in managingtimber concessions amid a host of competinginterests.

The Logas North plantation providesexamples of the types of problems facing thecompany.44 Planting of Acacia began in 1994and is now largely complete. However, of thetotal concession area of 14,615 ha, it has onlybeen possible to plant 7,550 ha of Acaciamangium. A sizeable portion of the concession(2,800 ha) has been lost to an oil palm estatewith a stronger legal title.45 In addition, existingcommunity rubber holdings (516 ha) and furtherdemands for 612 ha of oil palm and 20 ha ofrubber garden have reduced the amount of landactually available for planting. The companymust compulsorily allocate 20 percent of thearea as a green belt of natural forest (2,224 ha),

and because of its proximity to the RimbangBaling Wildlife Reserve, a buffer zone of 722ha is required. Finally, 170 ha is dedicated toroads, settlement and other infrastructure. Thusonly 52 percent of the original Logas Northconcession area can actually be planted withAcacia. Recently, groups identifying with localinterests entered the green belt and beganremoving timber. A request by RAPP staff tostop logging brought a threat to burn thecompany’s Acacia stands. The role of the greenbelt as an effective habitat corridor has thus beencompromised.

The conditions at the Logas Northconcession site highlight the difficulties RAPPfaces in securing even those areas that have beenlicensed for plantation activities, in the face ofcompeting land use claims arising sincereformasi. It is still too early to speculate aboutthe ramifications of decentralisation forcompanies like PT RAPP and the relationshipthat they may have with new districts likeKuantan Singingi and Pelalawan.46

Undoubtedly, district administrators will attemptto monitor the company’s timber plantationactivities, but it is likely that they will be underconsiderable pressure to support RAPP’sagenda.

3.2.2.2 Attitudes of officials andpolicymakers during 2000 toforestry and decentralisation

The approach to decentralisation by the RengatForestry Office during 2000 was largely to ‘waitand see’. In an interview in July 2000, the Headstated that he did not perceive any problems,but he conceded that he was not in a position ‘to

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know the full implications of decentralisation’.He saw no problem in a devolution ofresponsibility at the provincial level from theKanwil to the Dinas, suggesting that futuredistrict forestry reports would simply be sent tothe Dinas. That was a reasonable suppositionat the time; however, the decentralisationprocess has since moved beyond the provinciallevel, as was its intention. A Ministerial Decreeissued in January 2001 transferred the formerauthority of the Kanwil to the Bupati, or headof each district.

In a recent district forestry report fromIndragiri Hulu, a number of problems wereidentified. The report claimed that villagecooperatives and adat institutions had beeninfiltrated by outsiders, who were contributingto the degradation of local livelihoods. Most ofthe legal timber concession holders (HPH) andtimber plantation (HPHTI) were never endorsedor supported by local communities, who nowuse reformasi as an excuse to exploit naturalresources and who are becoming moreanarchistic when their right to access forestresources is challenged. Illegal logging isincreasingly facilitated by middlemen, whoequip local communities with the necessarymachinery. The law has failed to adequatelyaddress the exploitation of forest resources byoutsiders and by locals, and the relevantgovernment agencies are not adequately funded,trained or equipped to respond (DinasKehutanan Kabupaten Indragiri Hulu 2001).

In an attempt to resolve forestry-relatedissues, the Provincial Forestry Office agreed inOctober 2000 to transfer dedicated forest policeto Indragiri Hulu, with the primary function ofcollecting information on illegal activities andassisting in the prosecution of those caughtundertaking such activities (Riau Pos 18.10.00).Despite this directive, members of the IndragiriHulu district legislature lacked confidence in theexisting forestry management. One memberclaimed that many of the district’s problemscould be attributed to the forestry sector. Headded that forestry personnel needed to be moreprofessional, with a greater sense ofresponsibility and concern for the future of thedistrict (Riau Pos 15.9.00).

When this report was researched, muchof the legislation on the implementation ofdecentralisation, at both the district andprovincial levels, was either unavailable or hadsimply not been produced. While some districtlegislative members were active in raising localissues, it is difficult to know whether particularactions resulted from an understanding ofdecentralisation or were more symptomatic ofreformasi. Many district officials appeareduncertain and suspicious of the nature and extentof the decentralisation reforms. This was notsurprising as their access to detailed sector-basedinformation regarding the reforms has beenlimited and was at times confusing.

When asked about the likelihood of futureforestry regulations being developed by districtagencies, the Bupati of Indragiri Hulu indicatedin July 2000 that he was ‘reluctant to draftlegislation that would conflict with centralgovernment policies’. Such a stance may wellbe different from that of other districts acrossIndonesia. It is reasonable to expect that as thedecentralisation reforms unfold, policylegislation produced at lower administrativelevels will vary between districts and provinces,in response to varying local conditions. Thiswill inevitably reflect the different districtagendas as well as the personalities of leaders.The uneven rates of development between newand older district administrations will furthercomplicate the effects of and responses todecentralisation. Despite the separation ofKuantan Singingi as a new district, forestadministration and management were stillcontrolled by the Rengat Forestry Office.Officials from Kuantan Singingi, as inPelalawan, were grappling to build infrastructureand implement administrative reforms.

3.2.3 Bukit Tigapuluh National ParkBukit Tigapuluh National Park (BTNP) wasestablished in 1995, with an area of 127,698 haspanning two provinces, Riau and Jambi.47 Itcombined two former protected forests as wellas a parcel of land (57,488 ha) reclassified fromlimited production forest. This was the firstnational park of this type in Indonesia. Becauseof the circumstances of its origin, the park can

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be divided into separate zones based on typesof forest cover. The two former protected forestsof Siberida and Jambi represent core zoneswhere disturbance by timber concessions orother activities has been relatively limited todate.48

The biodiversity value of the BTNP isconsidered one of the highest in Sumatra.Schumacher (1993) found that over 700 plantswere used, including 79 fruit trees and 246medicinal plants, indicating the significance ofthe region for local communities. The diversityof animal species is also impressive, with 59mammal species recorded (five of which areconsidered globally threatened) and 192 birdspecies (Danielsen and Heegaard 1994). Atpresent small communities of indigenous TalangMamak and Kubu people,49 who are stillcomparatively isolated and homogeneous, livewithin the National Park. The buffer zone ismore heterogeneous, with Melayu and TalangMamak coming into contact with a range ofmigrant groups, including Javanese, Batak andrefugees from Aceh, who have settled along theEast Sumatran Highway. In total 19 villages liein close proximity to the park (see Map 6).

One threat to the integrity of BTNP hasbeen ‘illegal’ logging, which has escalateddramatically during the reformasi period in boththe buffer zone and parts of the park itself.50

Thousands of cubic metres of timber have beenremoved from the western and north-westernsections of the buffer zone, with three timbercompanies primarily being responsible (Susanto2000).51 Former logging roads bisecting thepark have facilitated access by illegal loggersto more isolated areas. A proposal by the park’sadministration unit to block these roads was onlyauthorised by the Provincial Forestry Officeafter a year’s delay (Genta 10.7.99).52

As another policy directive to reducepressure on forests in the buffer zone, theAdministrative Head appealed to the Bupati ofIndragiri Hulu, urging the retraction of thelicences of timber and oil palm companiesoperating in the area. The Administrative Headjustified the revocation of licences by noting thatthe general topography of the buffer zone wasnot suitable for oil palm plantations, as many ofthe slopes were greater than 25°.53 Park

management added that timber reserves wouldnot support current levels of exploitation; furtherconversion would seriously compromise theregion’s value as a conservation area.Compounding the problems, the administrativeboundaries of the areas did not support quickintervention. The subdistrict of Keritang,spanning the length of the East SumatranHighway from Siberida to the Jambi border, fellunder the jurisdiction of the distant TembilahanForestry Office in Indragiri Hilir, thus creatingmanagement problems, particularly with regardto illegal logging. Rengat-based forestryofficials were not authorised to intervene inmatters concerning Keritang, despite its closeproximity to their office (see Map 6). Theplacement of administrative boundaries hasmade it more difficult to effectively manage thesituation in areas close to Bukit Tigapuluh, asthe responsibility lies with forestry officials inTembilahan.

The response of government officials andagencies to the Bukit Tigapuluh dilemma hasbeen varied. In what seemed a strange claim,the Head of the Rengat Forestry Office, afterflying over the park, stated that the ‘forests wereintact’. His statement angered some membersof the new district legislature. The Head of thedevelopment and the environment commissionasked how the forests could be intact ‘given thatillegal logging was continuing everydayunabated’ (Suara Kita 5.4.00). As a response torenewed interest in the park, the Bupati ofIndragiri Hulu recently stated that the districtgovernment maintained its commitment to thearea, agreeing to formalise a request to theMinister of Forestry and Estate Crops to freezeall active timber concessions in and near thebuffer zone. While this is a positive step, it failsto take action against the numerous illegalsawmills operating in the region.

The interest of district legislativemembers in Bukit Tigapuluh is a comparativelyrecent phenomenon, most likely the result ofchanges to the political environment.Workshops providing legislative members withinformation about their roles and responsibilitiesas decision-makers have provided some with areasonable foundation to push for reforms. Inaddition, the press has recently taken a more

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Map 6. Bukit Tigapuluh National Park and surrounding villages

active role. The formation of districtcommissions to investigate social, economic andenvironmental issues has also led to a closerexamination of the park, particularly in mattersrelating to land use. Finally, the nature andbackground of the members now sitting indistrict parliaments has changed. However,despite significant differences in personnel fromthe former New Order government, there are stillfamiliar faces. It remains to be seen whetherthere are enough new members to provide thenecessary dynamism for political reform. One

legislative member expressed concern about theability to carry out real reforms becauseresistance to change by ‘influential stakeholders’remained significant. Although there is a newlevel of debate and interest in the need forconservation action as well as forestry reform,the ability of well-intentioned members ofdistrict legislative bodies to sustain long-termpressure for possibly unpopular reforms may belimited.

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3.2.3.1 Traditional communities: TalangMamak livelihood strategies

The Talang Mamak community was selected asa case study because most members live eitherinside the national park or in its buffer zone.54

In 1998 the population of the group was 7,656(Riau Abad 21: 2000).55 When asked aboutdevelopment priorities for the region, adults(almost all of whom were illiterate) most desirededucation for their children. However, for the345 households who live inside the park, thecosts associated with providing and retainingteachers have been too great. The need for betterhealth facilities was also a high priority. Malaria,diarrhoea, dysentery and typhoid are common,together with periodic cholera when rivers arelow.

The agricultural activities of TalangMamak villages mainly consist of subsistenceswiddens with a long forest fallow rotation. Theprimary crop is rice, supplemented by maize,cassava and keladi (Colocasia sp.). Land isusually only cropped for a year before it isallowed to revert to secondary forest. Peopleare generally not self-sufficient in rice and mustfind other sources of income in order to purchasefood. Rubber is planted in fallows and nearhouses, as are fruit trees such as durian andbananas. Over the past decade the attitudes andactivities of many Talang Mamak people havealtered significantly. Silalahi (1998) found acorrelation between the rapid changes in TalangMamak livelihoods and the opening of the EastSumatran Highway in 1992-93, whichstimulated a proliferation of new opportunitiesand influences.56 Additionally, the numerousroads constructed to facilitate logging operationshave enabled access to isolated areas, both insidethe park and in its buffer zone.

Communities are now supplying timberand non-timber forest products (NTFPs) fromBukit Tigapuluh and the buffer zone to tradersand markets along the major access roads.57

Improved access to markets has led to a generalincrease in the size of rubber gardens. Mosthouseholds now have between 1 and 2 ha,though some of the more isolated communitieshave only recently adopted the crop.58 Rubberprices have, however, been volatile. Thoughincreasing somewhat when the Rupiah was at

its lowest in 1998, prices soon began trendingdownwards, reaching a low in 1999, beforeincreasing again in mid-2000. Even with higherprices, however, rubber is not a highly profitablecrop.59

The low returns on rubber have promptedsome people to look for more profitable sourcesof income, such as selling timber. This type ofwork has quick, short-term returns and does notrequire much capital, making it attractive toindividuals in isolated communities. Manycommunities are presently polarised betweenthose that support increased logging (usuallythose owning chainsaws) and those who seek toretain areas of forest. In June 2000, the villageof Talang Lakat had 15 chainsaws, 8 owned byTalang Mamak and the remainder by individualsfrom other ethnic groups. On average a singlechainsaw was able to fell 15 trees per month, or15-20 m3. Between 225 and 300 m3 could thusbe harvested from the village each month, sellingfor Rp 200,000-250,000 per m3 , depending onthe timber species. More individuals withinTalang Mamak communities are purchasingchainsaws, which effectively links them to thecycle of timber exploitation. Many local peoplewho have participated in illegal logging havealready cleared their traditional village forests,and the pressure to access other areas is high. Afew leaders are holding out as staunch defendersof both adat and village forests. Increasingly,however, attractive short-term income hasseduced many into believing that they will bebetter off without the forest.

The changing perceptions of the villagersare not limited to their changing views of timber.The manner in which forest products areharvested has changed dramatically in the pastthree years. In 1997, the people were selling arange of NTFPs including rattan, jelutung anddamar to nearby markets, such as Siberida. In1998, local middlemen started visiting villagesand hamlets and taking over the marketing ofrattan and other commodities. By 1999, TalangMamak communities began to invite others toharvest forest products for an extraction fee.People from Tanah Datar allowed vehicles toenter the region via access roads, charging a feeof Rp 40,000 per vehicle. Prices were thennegotiated with the communities owning the

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forests where the products were beingcollected.60 The increasing level of contact withmigrants has changed local perceptionspertaining to the value of land, as well as rightsof access to and the use of forest areas.61

More serious has been the divisioncreated by timber operators ‘helping’ villagecommunities clear forest areas and promisingthem capital to plant oil palm. Such venturesare seldom realised. While the government hasencouraged the formation of cooperatives forsmallholder oil palm, under this system thebenefit to local people from their forests isnegligible, as they are paid only Rp 15,000 perm3 of timber (Susanto 2000).

3.2.3.2 The Talang Mamak anddecentralisation

Several Talang Mamak villagers wereinterviewed on the subject of regional autonomyin April 2000.62 The most common request wasfor more information, though people did havegenerally favourable reactions. One view wasthat the reforms would be good for the villages‘because the district would have to focus onlocal-level concerns and the governmentadministration could be held accountable forits actions and programmes’. A cynical note wassounded, however, by one prominent adatleader who likened government promises to‘hot air’. Local people wanted to see evidenceof promises kept before making furthercomments on the decentralisation process.

For the majority of the Talang Mamakcommunities, decentralisation reforms per sehad not yet begun to have a noticeable impact,at least through late 2000 when the researchfor this study was conducted. Nonetheless, thepost-New Order period has seen rapid changein the dynamic of many indigenouscommunities in the Bukit Tigapuluh region.Communities are straining to respond to theexploitation of resources in areas close tovillage lands. The devolution of increaseddecision-making responsibility to districtgovernments does not provide automaticpromise of a brighter future for small,indigenous communities in areas like BukitTigapuluh National Park. Whetherdecentralisation in Indragiri Hulu will benefit

or disadvantage indigenous communities andtheir access rights to forest resources remainsto be seen.

3.2.4 Illegal logging and sawmillsThe increase in the number of illegal sawmills,in Riau and many other provinces, has assumeda new importance in influencing rates ofdeforestation. As decentralisation continues,district administrators will face the challengeof stemming illegal logging. One source haslikened the proliferation of illegal sawmills inKuantan Singingi to ‘fungi growing in the wetseason’, with many operators not only owningsawmills but also buying the timber directlyfrom local communities (Pekanbaru Pos14.6.00). The situation is especially intensearound BTNP, where 32 sawmills are positionedon the borders in Siberida (Indragiri Hulu) andKeritang (Indragiri Hilir) subdistricts.63 Thedemand for timber is so great that timberreserves in the buffer zone are expected to onlylast for another year, after which the logicalplace to extract the timber would be from withinthe park itself.64

The situation in the subdistrict ofKeritang is dire, with every river entering BTNPused to transport illegal timber. Selensen, BatuAmpar and Sungai Akar, all close to BukitTigapuluh, have become locations for illegallogging operations.65 The Head of BTNP statedthat the number of mills had increased everyyear for the past four years, from 22 in 1997 to51 in 2000. Much of the timber used by thesawmills is harvested locally, the location ofeach mill creating a further incentive for localcommunities to sell timber. Along the EastSumatran Highway are a further 21 smallsawmills, suppliers of which use bulldozers tocreate access roads into the buffer zone. Usingthese machines, they are able to clear 4 km in asingle day (see Map 6).

The majority of the mills operating in thewestern section of the buffer zone have twocutting tables and are comparatively newoperations, set up between 1997 and 1999, withworkers generally form West Sumatra, NorthSumatra and Java. The bulk of this timber issent to either Medan or Jakarta, with theDipterocarps meranti, balau and keruing being

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the favoured species (similar to the situation inKampar Kiri). The range of people connectedto these operations included governmentofficials, Korean businessmen, a youth groupand local village officials.

The level of illegal logging around BukitTigapuluh National Park and its buffer zoneshas increased significantly in the years followingreformasi. The tactics employed by PT STUD(a Jambi-based timber company) to involve localcommunities in illegal logging have been welldocumented.66 Representatives of anindependent subcontractor or a subsidiarycompany (in this instance PT SWS) organiselocal communities to clear timber from bothinside and outside the timber company’sconcession area. In addition to informationcollected by World Wide Fund for Nature(WWF) and the Head of the BTNP, furtherevidence of such a system was found by a teamof newspaper reporters. It was discovered that‘tens of Colt Diesel trucks were transportinghundreds of cubic metres of timber’ from theSWS concession near the border of BukitTigapuluh National Park. When the trucks werefollowed, only a fraction of them actuallytravelled to the parent company’s factory inJambi. Most patronised the tens of sawmillslocated along the highway near Siberida, withtimber supplied to the Jambi factory beinglargely illegal!67 Companies using thisarrangement are no longer concerned abouthaving to adhere to government yearly workplans (Rencana Kerja Tahunan or RKT).Because the timber is largely illegal, forestrytaxes such as the Forest Product Royalty (IHH/PSDH) or Reforestation Fee (Dana Reboisasi)are not paid.

3.2.4.1 Government responses to illegallogging and sawmills

The response of the Indragiri Hulu governmentto illegal logging has been slow, with some ofits initiatives failing to adequately address theproblem. A team charged by the Indragiri HuluDPRD (legislative assembly) to investigatetimber collected illegally by a communitycooperative from Siberida was disappointed tofind that the community had been issued withthe necessary documentation the day before!

When asked about the incident, forestry staffbased in Rengat stated that they had indeedissued the licence to the community but that itstiming was a coincidence (Riau Pos 29.9.00).There seemed to be surprisingly littlecoordination between the government team andWWF or BTNP staff who already have a goodknowledge of illegal logging in the area. Giventhe primary goal of differentiating between legaland illegal mills, the strategy of ‘legitimising’all mills within a 10-day period seemed to be ameasure to reduce loss of district revenue ratherthan to curb forest exploitation.

Resolving the issue of illegal sawmills isa difficult challenge, and the present decision-making inertia is indicative of the political ‘state-of-play’ within many districts. As in Kampar,the ability and desire of leaders to implementthe difficult reforms necessary to affect the‘shadowy actors’, or oknum, supporting suchactivities is still some way from being achieved.It seems overly optimistic to expect thatdecentralisation reforms will significantlypenetrate and break down entrenched patronagesystems that are operating at district andsubdistrict levels. The growing acceptance bydistrict leaders of greater accountability for theiractions does not mean that district policy andlegislation will see the promotion of strategiesthat address illegal logging, particularly whenso many people are involved and dependent onthis activity.

3.2.5 The clearance of Bukit BetabuhThe clearance of Bukit Betabuh Protected Forest(BBPF) in the subdistrict of Kuantan Mudik,Kuantan Singingi, highlights the level ofpressure that many smaller protected areas arenow experiencing throughout Riau (see Map 3).The clearance of the forest further demonstrateswhat was at the time a comparatively new levelof involvement of both officials and localcommunities in forest exploitation. Thedevastation resulting from the collusiongraphically illustrates the difficulties facingforestry personnel in controlling exploitationduring reformasi and decentralisation. BukitBetabuh, on the border between Riau and WestSumatra, was part of a corridor of protectedforest running along the border hills, linking

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the Rimbang Baling Wildlife Reserve withBukit Tigapuluh National Park. The clearanceof the forest by people from surroundingcommunities stems from historic circumstancesand the post-reformasi reaction to the policiesof the Soeharto government.

The Dutch established the area as a‘Protected Forest’ in 1919, with the nearbyvillage of Lubuk Jambi allowed access.Between 1919 and 1946, village people wantingto use forest resources had to pay a fee to adatleaders. At Indonesian independence the areawas designated as hutan ulayat (communityforest), with 51 villages in the district havingsome degree of access. This status lasted untilthe 1970s, when, under the Soeharto regime, itbecame increasingly difficult for localcommunities to maintain and secure forestresources. According to a village adat leader,the government reached an agreement with thevillage head and the leader of the subdistrict,or Camat, and declared Bukit Betabuh a‘Protected Forest’ in 1984. However, there waslittle effective communication or consultationwith either the wider community or itstraditional leaders about the declaration of thisprotected area.

The initial catalyst for the clearance ofBukit Betabuh forest by local communities wasan interprovincial boundary dispute with WestSumatra. The area of land abutting BukitBetabuh in West Sumatra is classified as‘Production’ and ‘Conversion’ forest.According to residents from the Riau side,timber from Bukit Betabuh Protected Forestwas being cut by people from West Sumatra.The fact that local Riau forestry officials didlittle to arrest these illegal activities heightenedlocal community resentment and frustration.Anxious to increase the size of theirlandholdings, people from the Lubuk Jambiarea gradually began ‘reclaiming’ the forest,family by family, until 652 families wereestablished, clearing and burning patches toopen land and plant rubber and cassava. Thelocal adat leader denies that these people weredirectly involved in the clearance of forests,arguing that there were negotiations over theland with the Forestry Department that took toolong to settle, allowing outsiders to take

advantage of the situation and remove thetimber.68 Whoever was initially responsible,there seems little doubt that many local peoplebecame involved. By April 1999 logging wasin full swing with 150 chainsaws and 100 waterbuffalo operating in the forest, with the noiseof chainsaws replacing the ‘sounds of the forest’(Nursamsu and Susanto 1999).69

Illegal logging became an extremelyimportant source of local employment andincome. By early October 1998, the localforestry post had been burnt to the ground byan angry mob protesting the fact that officialshad seized a number of chainsaws. In the spaceof six months in 1999, nearly 80 percent of the25,000 ha protected area was destroyed. Thetimber was said to be satisfying the demandsof wood industries at numerous locations,including the Indah Kiat mill at Perawang, theRAPP mill at Kerinci, and the large numbersof plywood and sawmills located aroundPekanbaru, as well as processing facilitiesoutside the province (Riau Pos 29.12.99).Local officials have proved to be largelyineffective in addressing the problem of forestexploitation in Bukit Betabuh Protected Forest.One daily newspaper, Suara Kita (23.6.00),stated that ‘there appears to be little likelihoodof the local Kuantan Singingi governmentintervening to resolve the situation...those nowstealing the timber from the protected areainclude local communities and variouscompanies who have support from shadowyfigures or oknum’. In July 2000, the Head ofthe Rengat Forestry Office described thepeople’s original clearance of Bukit Betabuhas just the ‘euphoria of reformasi’ and refutedthe claim that Bukit Betabuh was a traditionalcommunity forest. Nevertheless, he suggestedthat the status of the area should be revised to‘community forestry’ (hutan kemasyarakatan)– an indirect admission that officials had beenunable to control the situation, or restore the‘Forest’ to its original status.

The exploitation of Bukit Betabuhillustrates the difficulties facing both protectedarea managers and forestry officials duringreformasi and at the beginning of thedecentralisation period. The decentralisationreforms will significantly change the role of

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district governments in managing such areas.However, the ability and desire of newlyformed districts like Kuantan Singingi tomanage a myriad of administrative,infrastructural, financial and legislativechallenges, let alone resolve the issue ofcontinued degradation in smaller protectedareas, will be severely tested. The interimBupati of Kuantan Singingi (since deceased)expressed concern during 2000 regarding theforests in the district. There was littleinformation available on their current status;much of the control of forest resources was stilleffectively centred in Rengat, making it difficultfor him to comprehend the issues pertinent tothe forestry sector and to find ways to addressthem.70

The involvement of both local andexternal communities in the effective clearanceof Bukit Betabuh signifies the changingdynamic in the field, where it is becomingincreasingly difficult to guarantee the integrityof smaller, more marginal protected areas.What conclusions can we draw from thisunfolding scenario? It would appear thatreformasi has irrevocably changed localcommunity perceptions towards the formerNew Order-endorsed protected areas. At thevery least, the smaller, less glamorous protectedareas appear to have a gloomy future. Thefailure to preserve protected areas has nothappened as a result of decentralisation per se,but rather because the legal basis for protectingsuch areas now appears to be of little relevanceto the communities involved. The reformasiperiod has simply intensified an effective lossof control over forest resources by the centralauthorities, a loss which had started some yearsearlier. As a result of the new reforms, a largeshare of the responsibility for regaining controlof forest resources now lies squarely withprovincial and district forestry agencies. Thequestion arises as to whether these authoritiesare prepared or willing to reduce illegal loggingin these smaller protected areas, even with thegreater powers accorded to them bydecentralisation.

3.2.6 The economic implications ofdecentralisation

3.2.6.1 Development prospectsThe Indragiri Hulu government has been lookingat alternative sources of revenue, other than theforestry sector, to broaden the futuredevelopment base in the region. The Bupatiacknowledged that social welfare improvementshad not been remarkable but indicated that hewas relying on the district’s natural resourcesto secure future development. Such a policyfails to acknowledge that much of theinfrastructure is already in poor condition andconsiderable environmental damage hasoccurred. Despite large proportions of thedistrict development budget being allocatedspecifically to transportation in earlier years,there is little to show for it, as many of the roadsremain in an extremely poor state.71

District budgetary allocations havetended to provide only limited funding to themost productive sectors of the economy. In thefiscal year 1997-98, 70 percent of the IndragiriHulu district budget was allocated to transport,but only 6.4 percent was given to the primarysector of forestry, fishery, livestock andplantation. Traditionally the latter has been thestrongest contributor to the district’s economy.72

It was not possible to access district budgetallocations for 2000-01 to determine whetherfunds had been reallocated to other sectors.However, the development problems of the pastwill only continue if district administrationscontinue to invest large percentages of funds intransportation infrastructure that predominantlybenefits logging, sawmills, and pulp and papercompanies.

The Bupati of Indragiri Hulu stated thathe was anxious to extend mining activities,hoping to increase the level of oil productionfrom 10,000 barrels a day. A proposed coalmine, running parallel to the highway near BukitTigapuluh National Park, was also perceived asa significant future source of revenue. PT RiauBara Harum has been attempting to establishan open-cut coal mine near the park boundary;however, progress had slowed because ofproblems and uncertainties associated with

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decentralisation. The manager expressedconcern that changes to the licensingarrangements might affect the company’schances of getting approval from the provinceor district. He was worried that officials mighttry to access more of the firm’s profit even beforethey commenced operations. While he believedthat corruption was more widespread in Jakarta,he was afraid that decentralisation mightincrease corruption in the provinces and districts– a ‘one-off’ payment could be made to thecentral government, but he feared thatdecentralisation might see a proliferation of suchpayments to various local officials.73

Kuantan Singingi is also targeting miningand energy as future areas of growth, with thenext strategic land-use plan highlighting thedistrict’s oil, coal and gold reserves. In theagricultural sector, the interim Bupati showed apreference for seeing rubber growers combinetheir activities with livestock or fruitproduction.74 He was concerned about theamount of land already dedicated to oil palm,citing social and environmental problems aspotentially negative aspects of that crop. Thestrategic land-use plan (Rencana Tata RuangWilayah Kabupaten or RTRWK) for KuantanSingingi was being produced by an externalconsultant from Bandung. It was hoped that thisplan would provide district administrators withan accurate understanding of both current land-use issues and the developmental potential ofthe district. However, there were a number ofproblems with the preliminary report. Staff fromthe district planning office indicated that, whilethey were happy with the quality and accuracyof the information, they were critical of the lackof a ‘clear and concise’ strategy for land-usedevelopment in the district. Planning officialsemphasised that they ‘did not need districtdevelopment plans like the old ones’, insteadpreferring ‘a systematic presentation andevaluation of the potentials and options for landuse’.75 A key aspect of the decentralisationreforms should be to support and strengthen bothdistrict and provincial planning agencies withthe capacity to coordinate and produce strategicland-use plans that reflect the needs of eachdistrict. Contracting this work to externallybased consultants does not advance this process.

If future planning initiatives are not coordinatedby the responsible government agencies, thenhow will the decentralisation reforms addresspast inadequacies of development?

3.2.6.2 Administrative reformAn interesting possibility canvassed by theleaders of both districts is the potential fortraditional cultural and adat systems to berestored to a greater degree of legitimacy as afoil for contemporary government structures.76

It is uncertain whether this trend is the result ofreformasi, or more closely linked todecentralisation and a growing sense of localempowerment and pride. The Bupati ofIndragiri Hulu stated that he wanted to see thetraditional adat leaders and the former Sultanof Rengat resume some role in the district. Healso indicated that a key objective would be toimprove the quality of human resources,particularly with respect to the legislature,focussing on education and professionalism.77

In his opinion, members of the district legislatureneed to be aware of the ‘implications of thedecentralisation process and how they canimplement the subsequent reforms, meaning thatthey are required to learn about their differentfunctions, responsibilities and roles’.78

When asked about the relationshipbetween the legislature and the executive, theBupati stated that the system in operation in Inhuseemed to him to be ideal, with his childhoodfriend now the head of the legislature. In hisview, this allowed ‘considerable capacity foreffective and fluid governance with littlepotential for conflict’. While it is necessary forthere to be a close and effective workingrelationship between the legislature andexecutive, it is also prudent for a degree of‘political distance’ to be retained to enable thenecessary checks and balances to beimplemented.

The decentralisation reforms havebrought about a new dynamic in the relationshipbetween district leaders and the legislature.There has been significant change to both powerand management arrangements, changes thathave recast the mould of district-level politics –on the surface at least.79 When all the permanentdistrict leaders and legislative members have

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Figure 2. An example of the pressures on forests in one part of Bukit Betabuh

been elected, the nature of the relationshipbetween these two bodies should becomeclearer. However, what appears certain is thata diverse range of outcomes and issues are setto emerge as a consequence of theheterogeneous political landscape in Riau’sdistricts.

Decentralisation has improved therelations between district leaders and theGovernor. The new arrangements haveprovided many Bupatis with a much greaterdegree of independence, enabling them toconsult directly with central and provincialgovernment officials, the private sector andother district leaders.80

Kuantan Singingi and Indragiri Hulu areat different stages in the implementation ofdecentralisation reforms. For Kuantan Singingi,the new district, the priority has been to mobiliseas many government agencies and activities aspossible.81 The exact number of seats forKuantan Singingi in the parliament had not beenresolved as late as 23 October 2000.82 Theadministrative problems associated with the

establishment of a new district have partly beenresponsible for slowing the rate of progressregarding the implementation ofdecentralisation. Furthermore, KuantanSingingi is still closely associated with IndragiriHulu, with support in forest administration, taxmatters and personnel still being provided to thenew district.

By July 2000, seven district regulations(Peraturan Daerah or Perda) were released inIndragiri Hulu. They addressed administrativereforms and ways of increasing district taxrevenues. Even though Indragiri Hulu is notnew, staff and leaders have still been largelypreoccupied with reshuffling and reorganisingthe district administrative apparatus. Accordingto the decentralisation reforms, the number ofdepartments in any given district is decidedlocally. At present, 13 district offices have beenagreed to by the Indragiri Hulu legislature (thelowest number for Riau). One sanctionedchange to district administration has been thefusion of the former district Forestry and EstateCrops Offices to a single agency. The merging

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of the two offices was apparently based on anidea of efficiency rather than any certainty ofeffectiveness.83 From an operationalperspective, budgeting and funding will becomesimpler with a single office, but forest and estatecrop management may become much moredifficult. One official indicated that thisamalgamation would cause problems, giventhat the two areas of administration wereformerly antagonistic. So in Indragiri Hulu,despite a significant increase in the districtbudget (Anggaran Pendapatran dan BelanjaDaerah or APBD) to Rp 282 billion in 2001,84

there has been considerable rationalisation ofthe government administration. WhereasIndragiri Hulu is comparatively more advancedin implementing the decentralisation reformsthan Kuantan Singingi, both governments arestill experimenting with the potential reformsavailable to them.

3.2.6.3 Financial reforms: budgets andtaxes

The district budget for Kuantan Singingi in2000 was Rp 64 billion. For 2001, it wasincreased dramatically to Rp 230 billion, afigure that district revenue officials expectedto continue to rise over time.85 It was estimatedby Kuantan Singingi tax officials that theywould be able to generate approximately Rp1.35 billion in PAD funds from local districttaxes in 2001.86 As in the case of Pelalawan,this is a very low proportion of the total income.

The main source of district revenue isthe general allocation fund (Dana AlokasiUmum or DAU), of which Kuantan Singingireceived Rp 118 billion during 2001. This poolof revenue is allocated directly from the centralto the district governments and representsalmost half of the total. The second largestrevenue component comes from naturalresource redistributions, also allocated directlyfrom the central to the district governments. Ofthe total natural resource revenues redistributedto Kuantan Singingi in 2001, most of the Rp103 billion was derived from the redistributionof oil and gas revenues (accounting for Rp 101billion).87 The Head of the Finance Office inKuantan Singingi noted at the time that therehad been no Presidential or Ministerial Decree

legitimating this distribution of resourcerevenues to the district. However, officials inKuantan Singingi expected the necessarydecrees to be released in April 2001.

The third component of district revenues,development and building taxes (Pajak Bumidan Bangunan or PBB) are collected directlyby the districts, which are then responsible forredistributing revenues back to highergovernment levels.88 The fourth maincomponent of district revenue is specificallocated funds (Dana Alokasi Khusus or DAK),which include an entitlement to a portion of 40percent of the reforestation funds to bedistributed to regions (the decentralization lawsdefine regions as provinces, districts[kabupaten] and municipalities [kota]).However, to access the reforestation funds eachdistrict must submit proposals to be examinedand subsequently accepted or rejected byprovincial agencies. District administratorshave not yet been informed of the amount offunding available for such projects. This was akey aspect of the financial reforms that districtofficials in Kuantan Singingi believed shouldbe reviewed to avoid possible problems ofcorruption. The Kuantan Singingi governmentsubmitted a brochure for regreening andreforestation during 2001, recommending abudget of Rp 6.66 billion from those funds.

Provincial tax office officials felt that itwould be extremely difficult for districts tosurvive on their own, based on their experienceswith district revenue-generating capacity.89

Additionally, the variation in development andgrowth between new and old districts willlargely depend on the remaining natural assetsand on the ‘innovative ability’ of district taxofficials to identify new tax potentials. Taxreform in both the new and old districts wasslow during 2000, given the level of uncertaintysurrounding the decentralisation process. Therehas been a steady decline in the importance ofthe contribution of locally generated taxes tothe revenues of Indragiri Hulu, from 2.95percent in 1994-95 to 1.30 percent in 1998-99(Table 10).

In many Indonesian provinces, increasedresource exploitation will become a by-productof a consolidated push by district leaders to

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increase revenues by means of new districttaxes. In Riau, a potential paradox is emerging,where the pressure to generate and expanddistrict tax revenues should theoretically beoffset by substantial increases to district budgetsfrom the redistribution of oil and gas revenues.Whether district leaders in Indragiri Hulu andKuantan Singingi decide to assume greaterresponsibility for the control of resourceexploitation, particularly with regard to illegallogging and land clearance, remains to be seen.

3.2.7. Forestry reforms emerging fromdecentralisation

3.2.7.1 District leaders’ comments Until July 2000, the forestry office in KuantanSingingi had a limited role in forestry reform;itcould only provide documentation andcorrespond with the Rengat office.90 Similarly,the Bapedalda office in Kuantan Singingi thatundertakes environmental monitoring had no‘teeth’ to penalise polluters. The interim Bupatithought it important that such an office shouldbe able to control the activities of the largecompanies, adding that there would be little orno tangible change felt by those at the districtlevel as long as the ‘process of decentralisationwas half-hearted’.91

3.2.7.2 Attitudes to illegal loggingThe level of illegal logging in the district hasmade it difficult to manage forest assetssustainably, with so many ‘shadowy figures’actively involved in forest exploitation. Incontrast to the New Order period, there is a

growing boldness associated with resourceexploitation. A senior forestry official inKuantan Singingi observed that ‘people werescared then, now they are not…It is increasinglycommon to see oknum actively involve localcommunities in forest exploitation, whereas inthe past this was not possible’.92 Because ofthe level and extent of vested interestscoordinating illegal logging, any attempt tocontrol it will require a dedicated and wide-ranging commitment by more than just a singlegovernment agency. Legislative members fromIndragiri Hulu suggested that existing legislationmight need to be rewritten or totally scrappedbefore reforms could occur.93 However, newlegislation will not guarantee that districtauthorities will be successful in addressing thecomplex and politically loaded issues associatedwith current resource exploitation. Evencoordinating a discussion of illegal loggingbetween government agencies is a challenge.94

Forestry officials and district leaders indicatedthat the proliferation of district tax legislationis an attempt to reduce revenue ‘leakage’ fromthe district and not, as it might seem, an attemptto increase levels of forest exploitation.

3.2.7.3 Emerging attitudes towardsprotected areas

The responsibility for the future managementof protected areas will depend on theclassification of the area. For example, RimbangBaling, classified as a ‘Wildlife Reserve’ (SuakaMargasatwa), will be managed by a provincial-level forest concervation agency (BalaiKonservasi Sumber Daya Alam or BKSDA). On

Table 10. Contribution of locally generated tax revenues (PADs) to district revenues of IndragiriHulu 1994-95 to 1998-99

Financial Total Funding Contribution of PAD toYear (APBD) (Rp) revenues (%)

1994-95 45,799,858,000 2.95

1995-96 53,157,574,000 1.95

1996-97 61,452,492,000 1.78

1997-98 78,781,888,000 1.67

1998-99 64,014,506,000 1.30

Source: CV Trace Engineering (2000)

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the other hand, if Bukit Betabuh remains a‘Protected Forest’, the responsibility for its day-to-day management lies with the district. Theprovince, however, is responsible formaintaining the integrity of the protected areathrough the provincial forest police agency.District leaders will be able to seek assistancefrom provincial agencies where necessary. Theresponsibility for managing issues insidenational parks is retained by central governmentagencies, with district authorities responsible forareas outside the buffer zones.

The Bupati of Indragiri Hulu believedthat the Siberida and Sungai Akar areas wouldbe better served if they were managed by ahigher agency (most likely the province)because of disagreements between therespective Indragiri Hulu and Indragiri Hilirgovernments regarding management andcontrol. Both areas are close to Bukit TigapuluhNational Park and have experienced significantproblems with illegal logging. The apparentreluctance of leaders to confront these issuesmay be attributed either to the difficulty and costassociated with reducing illegal logging or tothe problems associated with protected areamanagement. One Kuantan Singingi plannerstated that the district had a maximum of 20percent of its forest resources intact. However,he added that much of this ‘forest’ area couldbe reclassified as ‘fallow gardens’, making thelikelihood of future community claims and thepotential conflict much greater. This will be arecurring issue for district planners, leaders,legislators and forestry officials. Despite thebest intentions of some district leaders toinvolve aspects of adat in district affairs, theextent to which these institutions can assist inthe management of forest resources is at presentlargely untested.

3.2.7.4 District forestry legislationemerging in Kuantan Singingiand Indragiri Hulu

Recently, in both Kuantan Singingi and IndragiriHulu, a number of pieces of district legislationrelating to forestry have been either passed orproposed. In essence, these new legislationsaddress the licensing arrangements for small-

scale utilisation of timber and non-timber forestproducts (NTFPs).95 As with other aspects ofdecentralisation, Indragiri Hulu is at a moreadvanced stage, with two new pieces oflegislation passed, while in Kuantan Singingiproposed legislation is still being reviewed bythe district legislature. The proposed protocolsfor licences in both districts are complex andcostly, with the applicants required to pay forthe process with no guarantee of success.Applications should generally first be sent tovarious government authorities, then, if thelicence application is accepted, the Bupati willrequest the Head of District Forestry Office toauthorise a technical evaluation of the proposedactivities.96 The supporting documentationrequired varies for each of the districts and therespective licences. What is noteworthy is thatsuccessful applicants will be required to pay anatural resource tax on both timber and NTFPscollected from the concession area.97

A number of potential problems emergein the types of legislation presently beingproposed by the two district governments. Theclaims, made by some officials, that districtlegislators do not aim to increase forestexploitation or to increase district revenues seemto have little basis. The legislation being draftedand passed by district authorities specificallytargets the kind of resource exploitation presentlybeing undertaken throughout many districts bysmallholders. In addition, these regulations tendto legitimate what were formerly ‘illegal’, small-scale activities, operating through unofficialchannels, making them formalisedarrangements. Little or no explicit mention ismade in the legislation of the role of traditionalcommunity, or adat, institutions in managing andreducing community conflict over resource use.If anything, new district legislation seems toperpetuate the past difficulties associated withoverly bureaucratic licensing procedures.98

As the licences are of a short-term nature(the longest is for one year), there will be addedincentive for operators to simply exploitresources rather than implement sustainableharvesting practices. Community elites oroutside businessmen might coordinate with localcommunity members (the only community

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stakeholders mentioned in all of theseregulations are subdistrict or village leaders) toextract the resources, with only a few from thecommunity sharing in the profits. As with illegallogging, there may be some ‘benefits’ oftemporary employment for communitymembers. However, it is likely that manycommunity members will be passive bystanders,as the remaining forest resources are extracted.

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CONCLUSION44444

In this report, we have sought to understand thedynamics of the decentralisation process inRiau, as it occurred through 2000 and into 2001.The changes have been considerable over thisperiod, and a variety of people, from seniorgovernment officials through representatives ofprivate firms, members of NGOs and ordinaryvillagers, have endeavoured to come to termswith the meaning of the process. Its‘socialisation’ has not been easy, largely becauseof the uncertainties prevailing in the centralgovernment and the preoccupation of thatgovernment with issues as fundamental as thevery survival of the Indonesian state. There isno doubt that a more speedy translation of Laws22 and 25, especially the latter, into workablelegislation would have made the way clearerfor provincial and district leaders who wereattempting to plan for the changes. It has beena messy, muddling-through process, whichcontinues in all districts.99

Our brief was to examine the potentialeffects of decentralisation on forests and estatecrops, focussing on both the provincial anddistrict levels. The former provided a contextinto which the more detailed, location-specificstudies could be fitted. To understand Riau, itwas also especially necessary to look at theoverall picture of forest use, because of theunique presence of the Indah Kiat and RAPPpulp mills, which provide a huge market forwood fibre and are dominant beyond any onedistrict. Whether Riau’s forests have a futuredepends to no small extent on the activities ofthose companies, activities over which aregional administration, especially one that isnew and inexperienced, has little control.

At the provincial level, land-use change,especially the rapid conversion from forestry andsmallholder rubber to oil palm, needs furtheranalysis. Difficulties with inaccurateinformation, overlapping boundaries betweenforests and estate crops, and power strugglesbetween the forestry and planning departments,together with a lack of technical expertise, haveleft a legacy of uncertainty now inherited by thedistricts. As legislators are discovering,planning for future development is impossiblewithout an accurate record of land use, landcover and boundaries of all kinds.

During the subdivision process, 6 districtsin Riau became 15 new districts. The two formerlarge districts of Kampar and Indragiri Huluwere selected for detailed study. These twodistricts have become five new kabupaten, andall were examined, as relationships between theoriginal centres and the new entities haveremained a critical part of the picture. Despitetheir initial lack of physical structures, moneyand personnel, the newer districts areapproaching the challenges of regionalautonomy with a freshness and enthusiasmsomewhat lacking in the old cores. Nonetheless,they were still preoccupied with theestablishment of an administration, includingnew forestry infrastructure. The large anddifficult questions, such as the state of the forestsand the control of illegal logging andsawmilling, had barely begun to be addressed.Kampar and Rokan Hulu districts are moreagricultural, but share some common forestconcerns with Pelalawan, Indragiri Hulu andKuantan Singingi, as well as experiencing theirown problems with oil palm. The present

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depressed state of that industry and theaccompanying social unrest, including themultitude of land claims against plantationcompanies, are providing severe challenges.

In response to district forestry initiativesthat have emerged from the decentralisationprocess, prominent stakeholders appear to bevying for control over management andregulatory rights for productive assets. Whetherthese are state-owned assets or privatecompanies, increasing control over the activitiesof such enterprises is an important issue fordistrict and provincial administrators. Bothdistrict and provincial governments have foundit nearly impossible to reduce illegal logging orto manage protected areas during reformasi andthe early stages of the decentralisation process.In Riau, the network of operators exploiting theforest sector is so entrenched that it is onlythrough serious legal reform and enforcementthat improvements to resource management canand will be achieved. Now that we are seeingthe active involvement of local communities inthe exploitation of forest resources, it is likelythat there will soon be few if any significant

areas of forest remaining in Riau, for there islittle institutional capacity or willpower tocontrol these activities. In the future,increasingly frustrated provincial and districtgovernments, burdened with responsibility butunable to control what is happening in the field,might give up on the attempt to regulate theexploitation of forest resources.

Riau has been called the ‘lucky province’because of its resource wealth. While the realityof resource sharing under regional autonomy,especially in relation to oil and gas, has nowmeant that districts are ‘awash with money’, thecrucial question of how the increased incomewill be distributed does not yet have a clearanswer. Whether this extra money willeventually provide some reprieve for the forestsis a tantalising possibility on which one may asyet only speculate. However, events are movingvery rapidly, as all types of forests becomedepleted. The most valuable, such as in BukitTigapuluh, are now isolated and virtuallyunprotected. Whatever may happen with theredistribution of funds may be too late for mostof Riau’s forests.

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ENDNOTES55555

1 A term coined by the Head of the districtforestry office, Indragiri Hulu.2 Forty-six percent of the province’s 9.4 millionha consists of peat swamp, a difficult andexpensive area over which to build roads andbridges (Governor’s speech reported in Riau Pos20 February 2000).3 The Banjarese began to settle in the LowerIndragiri, in what is now the district of IndragiriHilir (Inhil), from the 1880s, draining coastalswamps and planting rice and coconuts.Tembilahan, capital of Inhil, is a largelyBanjarese town.4 Panglong, using mainly Chinese labour, werelumber camps that flourished in the islands andalong the coast of Riau between about 1860 and1930. Workers were permitted to take timberfrom a distance of 50 km up the Kampar Riverand 10 km inland through the rest of the coastalstrip. Supplying primarily the Singapore market,they produced successively sawn timber, beams,mangrove firewood and charcoal (Colombijn1997: 325-8).5 The BPS standard poverty line is the value ofexpenditure needed to satisfy a minimumrequirement, which includes food, clothing,transportation and other basic needs. A personwho cannot meet this minimum is classified as‘poor’. Just what criteria are used by theprovince to reach its figure of 42 percent povertyis unclear, but there is no doubt that thedistribution of wealth is highly skewed towardsenclave areas, sites of the operations of largecompanies.6 The calculation excluded income raisedlocally.

7 There are five Inhutani companies, operatingmainly in Sumatra and Kalimantan.8 On 24 May 2001, the Minister of ForestryMarzuki Usman was reported as stating that thereforestation funds raised in any one provincewere to be channelled 70 percent to the districtsand 20 percent to the province, with just 10percent going to the central government. Themain purpose was to improve land managementand forest rehabilitation at the district level(Sawitwatch 26 May 2001).9 Inhutani stated that it controlled 200,000 ha;others have put the total as high as 1.4 millionha, a figure denied by the company (Riau Pos 4March 2000; 17 April 2000). A senior RAPPofficial suggested 1 million ha (PersonalCommunication, 2 October 2000).10 Entry into former logging concessions for thepurpose of removing timber is strictly illegal.Local people would argue, however, that they aresimply reclaiming their traditional lands, takenover by the concessionaire without compensation.11 Such leasing may also be of dubious legality,given Inhutani’s mandate to rehabilitate the land.12 One Malaysian manager of a concession inIndragiri Hilir complained of the frequent theftof ramin from the land, so that the companycould barely make a profit, and he planned togive up and return home (Interview, 18 April2000).13 A further statement from the company inMarch 2001 substantially increased theseamounts, giving the total planted by December2000 as 143,851 ha, which consisted of 82,064ha from RAPP plantations, 59,157 ha from jointventure plantations and 2,630 ha from

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community tree farms (Munoz, EnvironmentManager, RAPP to CIFOR 8 March 2001). Thedifference came mainly from the ‘jointventures’, which appear to have almost trebled(from 21,741 ha to 59,157 ha) within one year.14 The sudden increases in annual plantingprojected by RAPP through its joint venturecompanies (see endnote 13) are difficult toreconcile with the areas the company hassucceeded in planting in the past, and certainlyrepresent a shift of ground from the company’sprevious statements (APRIL 2000a). Ourobservations on one of RAPP’s plantations inKuansing do not lead us to any sanguineconclusions as to whether the company will beable to meet the ambitious plantationdevelopment targets it has set, in a climateincreasingly hostile to such enterprises.15 The fact that the activity was contracted outis partly an admission by the local planningoffice (Bappeda) that they do not have thetechnical capacity to undertake it but may alsoreflect difficulties in the relationship betweenBappeda and the provincial branch of theMinistry of Forestry and Estate Crops (KanwilKehutanan dan Perkebunan, Dephutbun).16 The Regional Physical Planning Project forTransmigration (RePPProT).17 Such agriculture was originally designed forsettlement of transmigrants but rapidly movedbeyond that specific purpose to be applied moregenerally, especially to accommodate oil palmplantations.18 The Draft Report on the new Provincial Land-Use Plan (BAPPEDA 2000) suggested that therewere already 2.3 million ha under estate cropsout of a maximum agreed area of 3.1 million ha.However, with many more properties in thepipeline, the total area would eventually reach4.1 million ha. It was suggested that these newallocations would be accommodated through‘overlap’ with protected areas, especially peatswamp.19 There are conflicting figures available for theamount of land under oil palm, ranging from1,002,401 ha (Dinas Perkebunan 2000b) to658,139 ha (Direktorat Jenderal Perkebunan2000). The locally collected data show a muchlarger area under smallholder planting and anincreased area also owned by private estates. The

differences may be those of definition; perhapsareas without a final licence (HGU) are includedin the provincial totals. Riau is the province withthe greatest emphasis on both smallholder andprivate estate production, including independentsmallholders, while North Sumatra leads theway in government estates.20 These taxes had previously been limited tohotels and restaurants, entertainment,advertising, street lighting, mining for sand andstone, and the supply of underground and surfacewater. Taxing vehicles in transit through adistrict was later approved (Dinas PendapatanDaerah 2000).21 Pelalawan, Kuantan Singingi and IndragiriHulu have all received over Rp 200 billion.22 Interview with the District Secretary ofKampar 17 February 2000 . See also Perda 16,1995, Kabupaten Kampar.23 Interview with the Head of Rengat ForestryOffice.24 Such criteria and standards became availablein November 2000.25 What has actually happened is that the Officesof Forests and Estate Crops in Indragiri Huluhave been merged, which is an unexpectedoutcome.26 This office was recently burned down,presumably by interests connected with theillegal logging and collecting activities centredon the national park. Its present status and thatof its staff, some of whom have been threatened,was uncertain at the time of writing. As theWWF office near the park has recently alsoclosed, Bukit Tigapuluh is now particularlyvulnerable.27 Interview with the Kampar district secretaryDrs Hamid Syawir, 17 February 2000.28 Sabli (2000) and interview 16 August 2000.29 One list available for the old Kampar districtfrom the PBB office (Dispenda) in Pekanbaru forOctober 1999 made some attempt to classify theforestry companies by subdistrict and managedthis for half the companies, but the rest were thensimply lumped together under ‘Kampar district’.So if taxes were paid, they would presumably goto the central office in Bangkinang. The list itselfwas seriously flawed, with inclusion ofcompanies no longer operating and omission ofsome still active (Dispenda 1999).

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30 Interview conducted with Drs Hamid Syawir17 February 2000.31 Ciliandra Perkasa is part of the Surya Dumaigroup of plantations. The company’s prospectuslists this plantation as having considerably moreland than is legally listed on local records.32 The dispute between the people of Tambusaiand those two companies goes back some time.In December 1999 the Camat’s office wasburned because of frustration with the slowresponse to villagers’ complaints. The provincewished to revoke the owner’s permit to conductbusiness (PT), which was being challenged inthe courts. The antipathy between villagers andthe company resurfaced in 2001with the burningof a Tor Ganda truck loaded with crude palmoil (CPO). Villagers had complained of thecompany’s refusal to pay a ‘village tax’ of Rp 5million per month for the use of their roads bycompany vehicles; the director of Tor Gandaclaimed that such a tax was ‘pure extortion’(Antara 20 May 2001). It is also an example ofvillage initiatives in raising local income, similarto district PADs.33 Fieldwork, Kec. Tandun, Rohul, July 2000.34 In North Sumatra, for example, the plan is toprivatise PTP VI in 2004 (Tempo 18 May 2001).35 Interview with the late interim Bupati ofPelalawan (who was elected Bupati in 2001 butdied 10 days later) , 19 August 2000.36 Called ‘Penyalai’ after a village there and itsfamous technique of smoking fish, ‘salai’.37 Betung village is the Petalangan centre of art,music and culture.38 We are indebted to Mangara Silalahi fromWWF, BTNP, who with Osmantri carried out asurvey of Kerumutan in June 2000 and wasgenerous with his information on the area.39 The total number of fishing platforms insidethe reserve is thus 72. 40 Residents of one site of conflict, Batam Merahvillage near Sorek, have accused Arara Abadiof taking 260 ha of village land withoutcompensation. The company in turn accused thevillage of stealing wood from its HTI (Interview,official from Estate Crops Office, Pelalawan, 21March 2001; Suara Pembaruan 22 May 2001)41 The Rengat Forestry Office was responsiblefor managing forests in parts of Kampar,Pelalawan, and Kuantan Singingi as well as in

numerous subdistricts within Indragiri Huluitself.42 Interview with the Head of the RengatForestry Office, 13 July 2000.43 According to a company report the formallylicensed concession area was 280,500 ha withthis figure subsequently revised upward (APRIL2000b).44 Potter and Badcock visited the Logas Northplantation in August 2000.45 The oil palm estate has a Hak Guna Usaha(HGU) licence, compared with RAPP’s weakerHak Pakai permit.46 It is difficult to predict how officials inKuantan Singingi will deal with the polishedRAPP organisation, particularly as the Bupatihad only just been elected in March 2001, thenunfortunately died. No substitute had yet beenfound by September 2001.47 Of this total almost 70 percent lies in Riauand the rest in Jambi.48 The forests of Bukit Tigapuluh National Parkare characterised by tree species from theDipterocarpaceae and Euphorbiaceae families.49 Hidayah (1994) states that the Talang Mamak,who mostly live along rivers, are closely linkedto the Melayu. The Kubu are still largelynomadic and reside on the Jambi side, so theywere not included in the study.50 The extent of the problem is so great that localnewspapers have suggested that ‘if illegallogging is not stopped, then it will be only amatter of time before the name of the park is allthat remains’ (Suara Kita 10 October 2000).51 In 1999, it was estimated that as much as 1,120m3 of timber were being taken from BukitTigapuluh every day, an average of 10 truckson each of 28 corridor roads (Suara Kita 10October 1999).52 Trenches were excavated blocking three roadsleading into the national park. It wascomparatively easy for illegal loggers to fillthese with rocks and trees, reestablishing accesswithin a few hours (Riau Pos 15 July 1999).53 Two oil palm estates, Arvena Sepakat (AS)and Sumatera Makmur Lestari (SML), wereparticular offenders, with some plantings onslopes of 40°. Local people had also experiencedloss of land with disputes between thecompanies and as many as 11 affected villages

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(fieldwork conducted between February andApril 2000 by Potter and Badcock).54 The communities which provided the basisfor the information collected during fieldwork(September 1999 and April 2000) are locatedalong the East Sumatran Highway, within andto the north of the park (see Map 6).55 This figure is small when compared with theIndragiri Hulu population of 250,320 (RiauAbad 21 2000).56 The highway also facilitated access to areasthat had traditionally been inaccessible. SomeTalang Mamak villages now have a diverseethnic and religious mix, with Javanese, Batak,Minangkabau and Chinese buying village landand sometimes marrying into thesecommunities.57 Information based on fieldwork anddiscussion with WWF staff as well as interviewswith the Head of Bukit Tigapuluh National ParkUnit in September 1999, April and July 2000.58 Some individuals reputedly had as much as50 ha under rubber (PKA 1999).59 In July 1999 rubber prices reached a recordlow of Rp 600-700 per kg. They subsequentlyincreased to between Rp 1,300-1,600 in April2000, but this value was still only half the costof a kilogram of rice (Source: fieldwork).60 Interviews with the Head of Bukit TigapuluhNational Park, 15 April 2000, 21 April 2000 and10 October 2000.61 Land that is sold to migrants will vary in pricedepending on the category of forest. Primary rainforest brings a lower price, anywhere betweenRp 350,000 and Rp 500,000 per ha, whilesecondary forest may cost between Rp 1 and1.5 million (Silalahi 1998: 19)62 Fieldwork by Potter and Badcock in Pejangki,Belangan, Aur Cina and Durian Cacar villages.63 WWF conducted surveys in 1999 and 2000that identified the level of illegal logging in areasclose to Bukit Tigapuluh National Park.64 Interview with the Head of Bukit TigapuluhNational Park, 10 July 2000.65 Potter and Badcock visited an illegal loggingsite with national park staff (10 July 2000) wherepeople from the camp claiming to be‘representatives’ from Sungai Akar were usingheavy machinery supplied by unidentifiedparties to clear forests near Bukit Tigapuluh.

66 WWF field reports on illegal logging (1999),newspaper articles, fieldwork and interviewswith WWF and national park staff provide thebasis for this description of illegal loggingstrategies used by some timber companies.67 The article documenting this investigation wasreported in Riau Pos 17 July 1999.68 Interview conducted with a community leaderfrom Teluk Jambi, 9 July 2000.69 Twenty-two local Melayu middlemen,supported by Chinese capital, channelled thetimber from Bukit Betabuh to other regions. Thetimber harvested from the area effectivelysupported the operation of 12 sawmills(Nursamsu and Susanto 1999).70 The recently appointed Head of Forestry inKuantan Singingi indicated that the districtgovernment planned to reforest the BukitBetabuh area with rubber, pinang and other hardtimber tree species. Kuantan Singingi authoritiesare considering changing the status of the areafrom ‘Protected Forest’ to some type of estatecrop classification (Interview with Head ofForestry in Kuantan Singingi, 19 March 2001).71 The high volume of heavy logging truckstransporting timber to pulp and paper factories,plywood companies and sawmills has had asignificant impact on the region’s roads.72 Between 1996 and 1998, growth in theprimary sector rose from 31.35 percent to 47.26percent, making it the most significantcontributor to the district’s economy. During thesame period, contraction in industry, from 22.45percent to 16.81 percent, highlighted a generalslowdown in other sectors of the districteconomy (CV Trace Engineering 2000).73 Interview conducted with a company official,15 February 2000.74 Interview with the interim Bupati of KuantanSingingi, 3 October 2000.75 Interview conducted with the planning stafffrom Kuantan Singingi, 19 March 2001.76 The interim Bupati of Kuantan Singingi statedthat he is ‘pushing the alliance of government,adat and religion, which he sees as three strings,which together are more powerful than one’(Interview, 3 October 2000).77 The Indragiri Hulu legislature is made up ofan eclectic array of members, the majorityhaving lower high school education and more

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than half being previously involved in the privatesector.78 Interview conducted with the Bupati ofIndragiri Hulu, 15 August 2000.79 When asked whether or not the old elites couldbe kept from retaining power another (unnamed)Bupati responded frankly that it wasn’t easy:‘How do you find 30 good people? If you startwith the most educated, you may well find thatat least some of the top three are villains and bythe time you get to number four, he’s not muchgood’.80 Interview with the Bupati of Indragiri Hulu,15 August 2000.81 Administrative responsibilities were onlybeginning to function in April 2000, withidentification cards, family cards, and birth anddeath certificates to be issued in Taluk Kuantanfrom May 2000.82 In an unusual development, only 25 seats hadbeen allocated for the Kuantan Singingi districtparliament, despite the population of the districtentitling them to 30 (Riau Pos 3 October 2000).83 On a recent ‘update’ visit by Badcock toIndragiri Hulu, he found government officialssceptical that merging the formerly separateForestry and Estate Crops Offices would benefitthe district. Because so many problems in thepast had been associated with both of theseoffices, they failed to see how a smaller, lessstaffed single office would be able to manageall of the complex issues that would emerge(Interview, 20 March 2001).84 In 2000, Indragiri Hulu was allocated Rp 86billion, with Rp 40 billion dedicated to routinespending (Interview with staff from the Bupati’soffice, 20 March 2001).85 All statistics relating to budgets and taxes inKuantan Singingi were supplied by the Head ofthe District Finance Office, 19 March 2001. Onemight also compare the figures for Pelalawan,increased from Rp 64 billion to Rp 249 billion(Table 8).86 The new taxes levied in Kuantan Singingi arebased on Law 34 of 2000, a revised version of aformer tax, Law 18 of 1997. A range of districtgovernment agencies in Kuantan Singingi havecollaborated and proposed a suite of new taxesrecently submitted to the district legislature forreview.

87 There are four central components to revenuesnow accruing from the redistribution ofresources to districts. These are from oil and gas(Rp 101 billion), 6 percent and 12 percent share;forestry, primarily from the forest taxes (ProvisiSumbur Daya Hutan) (Rp 850 million), 32percent share; fisheries revenue (Rp 546million), 80 percent share; and general revenues(Pertambahan Umum) (Rp 405 million) (seeTable 1).88 There are three types of PBB that cover estatecrops, forestry and mining; oil and gas; andvillage and city development activities with 64.8percent of the tax revenue collected beingretained by district authorities. Table 6 illustratesthe contribution of PBB to study districts acrossRiau in 2000.89 Interviews conducted with provincial taxofficials regarding tax reform in Riau (13 July2000 and 21 July 2000).90 Most new forestry offices are waiting for aGovernor’s Decree severing the official ties withthe induk agency. The Head of Forestry inKuantan Singingi expects that this decree willbe issued in the third week of March 2001(Interview, 19 March 2001).91 Interview conducted with the interim Bupatiof Kuantan Singingi, 3 October 2000.92 Interview conducted with Kuantan Singingiforestry official, 19 March 2001.93 Comments made by legislative members fromIndragiri Hulu, 12 July 2000.94 Comments made by officials duringinterviews from both Kuantan Singingi, 19March 2001 and Indragiri Hulu, 20 March 2001.95 In both districts the new licences are for areasof not more than 100 ha. Licences relating toNTFPs cover a range of harvestablecommodities, including rattan, various resinsand latexes, oils, sago, nipah, bark by-products,bamboo, fruit and seed from firewood, birds’nests, gaharu and honey from the Sialang tree.96A team of forestry staff will be responsiblefor completing a technical evaluation, as wellas a consultation with subdistrict officials,including the Camat. The completed inventorywill then be evaluated by the Head of Forestrywith a recommendation to the Bupati regardingthe viability of the licence.

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97 For example, those harvesting timber plantedby communities (Kayu Tanaman Rakyat, KTR)in Indragiri Hulu will incur a tax equivalent to50 percent of the natural resource provision(PSDH) paid by industrial timber plantations(HTI). Those harvesting timber fromcommunity forest areas (Kayu Tumbuh Alam,KTA) must pay a similar tax, as will thoseclearing remaining timber in plantation areas.(These levies are designed to offset the cost tothe government of organising the licensingprocess).98 Those wishing to apply for such licences willneed to have time, access to finances, contactswithin relevant government agencies andknowledge of administrative procedures. As inthe past this will preclude isolated, marginalcommunities who are seeking to maintain orutilise timber and NTFPs. The licensingprotocols that are emerging tend to favourentrepreneurs or other actors who are able tomobilise the resources necessary to succeed.99 A DPRD member from Inhu remarked ofdecentralisation in mid-2000, ‘People have onlygot their hands on the tail of the beast…Nowthey must tease the rest of the body away fromthe central government before it will be possibleto implement the necessary reforms’ . There wasa general impression that the decentralisationprocess was not a transparent or fluid transition,but one that required a degree of perseveranceby lower political levels to ensure that they fullybenefited.

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Dispenda (Dinas Pendapatan Daerah). 2000.Hasil rapat kerja nasional DinasPendapatan Propinsi Se-Indonesia.Pekanbaru, Indonesia, 24-25 Juli, Riau.

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Sabli, B. 2000. Pelaksanaan otonomi daerahdi Kabupaten Kampar. Bappeda TingkatII Kampar, Bangkinang, February.(Unpublished Report).Schumacher, O.1993. The useful plants of the TigapuluhHills, Riau, Sumatra and their local andregional significance. Paper presented atthe NORINDRA seminar at IndonesianInstitute of Sciences, Jakarta 25-26th May.

Silalahi, M. 1998. Laporan Penelitian:Dinamika kebudayaan, ancaman dan

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kebertahanan pola pengelolaansumberdaya alam yang berkelanjutan-Studi kasus suku Talang Mamak diIndragiri Hulu, Riau. Kerjasama PuskapFisip Usu Medan dengan WWF ProjectBukit Tigapuluh, Pematang Reba, RengatRiau.

Silalahi, M. and Osmantri. 2000. Laporansementara: Survey keberadaan danancaman terhadap ekosistem SuakaMargasatwa Kerumutan (SMK). WWFProject Rengat, Riau, Unpublished InterimField Report.

Supriyatna, H. 2000 Peranan BEHPHH dalamrangka perlindungan hutan danpenerimaan DR dan PSDH era otonomi.Paper presented at Musyawarahpembangunan kehutanan dan perkebunandan Rapat Kerja Daerah DepartemenKehutanan dan Perkebunan Propinsi Riautahun 2000, Pekanbaru tanggal 15-16Agustus 2000 (Unpublished WorkshopPaper).

Susanto, P. 2000. Natural forest in the westernand northwest part of the Bukit TigapuluhNational Park being rapidly logged: Thebiological forest corridor is threatened toextinction. WWF Project Rengat, Riau.(Unpublished Field Report.)

Sutarman, K. 2000. Kebijaksanaan pemerintahdaerah Propinsi Riau menyambut otonomiDaerah. Disampaikan pada MusyawarahPembangunan Kehutanan dan Perkebunandan Rapat Kerja Daerah DepartemenKehutanan dan Perkebunan Propinsi Riautahun 2000, Pekanbaru Tanggal 15-16Agustus 2000 (unpublished seminarpaper).

UU (Undang-Undang) No 22, 1999.UU (Undang-Undang) No 25, 1999.WWF . 1999. Investigasi pembabatan hutan

alam di daerah penyangga dan kawasanTaman Nasional Bukit Tigapuluh PropinsiRiau dan Jambi. WWF Rengat, Riau,Indonesia.

WWF. 2000. Laporan survey: Pembabatanhutan dan keberadaan sawmill di wilayahbarat penyangga TNBT. Yayasan WWFIndonesia Project, Survei Tanggal 12-19Mei 2000, WWF, Pematang Reba, Riau,Indonesia.

*Other newspapers and magazines consulted(for specific topics only) included the following:Antara, Berpolitik, Bisnis Indonesia, Genta,Jakarta Post, Kompas, Pekanbaru Pos, SuaraKita, Suara Pembaruan, Koran Tempo, Utusan,Waspada. The computer list, Sawitwatch, wasalso consulted for material relevant to Riau.

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case studies

6 & 7


The Effects of Indonesia's Decentralisation

on Forests and Estate Crops in Riau

Province: Case Studies of the Original

Districts of Kampar and Indragiri Hulu

Case Studies on Decentralisation and Forests in Indonesia

AUSTRALIAN CENTRE FOR INTERNATIONALAGRICULTURAL RESEARCH

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The effects of Indonesia's decentralisation on forests and estate

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