Dozens of truckloads of rough sawn timber pass through Sarawk customs at Entikong, West Kalimantan each day. Photo: WWF-Taman Nasional Betung Kerihun

As Indonesia's timber industry continues its awkward shift from the centralized control of the Suharto regime to local autonomy, illegal logging and inter-village strife is on the rise. With increasing demand for illegal logs, fueled in large part by Malaysian investors, nowhere is the struggle for control over logging concessions more contentious than in Kalimantan.

The "Gold Rush" for Kalimantan Timber

With the fall of Suharto in 1998, regional autonomy measures were introduced throughout Indonesia. One result has been that local governments in Indonesia are now able to issue their own logging permits. Previously, timber concessions were tightly controlled by the central government. Ironically, this shift to self-determination and local decision-making has given rise to increased illegal logging--estimated to account for 70% of Indonesian timber production.

With the implementation of regional autonomy reforms, local politicians from provincial governors down to village headmen throughout Kalimantan began to jockey for control of the formerly centralized timber industry. As a result, an opportunistic rush for Indonesian timber has arisen in the past five years, with hundreds of mini-concessions springing up all across Kalimantan. The ensuing uncertainty over who controls what has commonly resulted in instances of overlapping concessions. Some regional officials, fast running out of commercial timber stands outside of protected areas, have even gone so far as to re-designate parts of national parks as production forests. Moreover, foreign investment, especially from Malaysian timber companies, has exacerbated the problem.

In the midst of this frenzy, illegal logging has become a tempting activity for cash poor, rural communities in Kalimantan. While regional income depends heavily on natural resource extraction--timber products, rubber, palm oil, crude oil, coal, gold and other minerals--most indigenous communities in Kalimantan depend on subsistence farming. For supplemental cash incomes, these communities cultivate and sell rubber, black pepper, rattan and other forest produce. When the economic crisis swept through Asia in 1997, Indonesia was one of the hardest hit. Almost overnight, its currency plunged in value from 2,500 rupiah to over 17,000 rupiah per dollar. Prices of basic goods such as fuel, oil and rice skyrocketed, while prices received for cash crops plummeted. Kalimantan's farmers found themselves with little government support and dwindling revenues.

Not surprisingly, amidst this political chaos and economic hardship, local communities have turned to illegal logging. The torrent of money pouring in from outside investors has also provided villagers with new and unparalleled incentives to harvest their forests. While past legal concessions provided limited local employment with few benefits, new investors tempt communities with promises of roads, electricity, cash for longhouse renovations and other funds, per-volume fees, daily wages and employment. Especially in the remote interior of Kalimantan, where the government has been slow to provide public infrastructure, many communities opt to exchange their forests for access to the outside.

Considering the premium price paid for tropical hardwood in the international market, communities are paid a miniscule amount in compensation for illegally harvested logs--often as little as $1 to $5 a cubic meter. Nevertheless, the small payments for timber add up to significant sums for cash-poor villages. The result has been a drastic transformation in village-based economies. Conspicuous consumption is quickly replacing the traditional mode of subsistence living. Motorcycles, speedboats, video CD players and satellite dishes are becoming common features of this forest terrain. Although on the surface a sign of increased prosperity, the reality is that villagers' restricted access to banks and limited experience in cash management means that the money generally goes as easily as it comes.

Commercial timber in a village is typically depleted within a year or two of intensive logging and, unless villagers start logging elsewhere, the economic boom is a short-lived bonanza. The aftermath leaves a forest-dependent community without the natural resource-base that once sustained the population and without wise investment of the cash it received for those natural resources.

Another common side effect of illegal logging is increased conflict between villages. Since traditional land claims are rarely documented, villages are now fighting over areas that were never before contested. Investors in the illegal logging trade prey on these internal disagreements by offering only one community compensation for land claimed by another group. More often than not, tribal chiefs and other leaders are bribed, and are the only ones to see gains.

Sarawak's State-Sanctioned Timber Laundering

While communities in Kalimantan are often willing to log their forests for compensation, it is a network of Malaysian investors and companies who provide much of the direct investment and demand for illegal logs. Shrinking timber stocks in East Malaysia and a favorable exchange rate, have increased Malaysian dependence on Kalimantan timber from both legal and illegal sources. The Sarawak Development Institute estimates 70% of the raw timber supply to Sarawak comes from West Kalimantan. While it is unclear how much of this wood originated from illegal sources and became "legal" at the Sarawak boarder, it is clear that a high volume of undeclared, illegal timber is moving into Sarawak by both land and sea.

Illegal logging in Kalimantan involves a complex network of businessmen, politicians, government officials, and law enforcement personnel on both sides of the border. The typical arrangement involves a Malaysian cukong (timber broker) who provides money, trucks, chainsaws, generators and sawmill equipment to the local communities applying for concessions on small parcels of land adjacent to protected forests and national parks. Logging operations then typically extend well into the protected areas. When logging sites or extracted timber volumes do not match the accompanying permits, Indonesian forestry department officials turn a blind eye.

Once logged, illegally obtained timber exits West Kalimantan from several points. The primary method is through Malaysia, where papers are obtained to make the timber appear legal, in a process similar to money laundering. Although there is only one official immigration gateway between Sarawak and West Kalimantan, traffic flows back and forth all along the border. Since Sarawak does not allow the import of raw logs, countless small-scale sawmills can be found near the border to process the logs into sawn wood before they leave Kalimantan.

On the other side of the border, Sarawak's state-owned Hardwood Timber Company has at least three checkpoints where it collects fees on incoming illegal timber and "legalizes" them. At the unofficial interior crossing of Badau-Lubuk Antu, 40 to 80 trucks carrying timber cross the border every day. In addition, hundreds of ships carry logs each month from the Sambas district in Kalimantan to the port of Samatan in Sarawak. In other Kalimantan provinces, the process of timber smuggling is similar.

The high level of collusion amongst various players makes law enforcement extremely difficult, and in the rare case that arrests are made, it is usually the community loggers who get caught. Meanwhile, investors and other political players remain untouchable. There are many reports of sawmill owners being given prior warning before "unannounced" timber raids or of confiscated equipment being returned without penalty.

Hope for the Future?

Despite the grim picture, there are communities that are choosing more thoughtful paths towards development, and various grassroots organizations are helping to find alternative solutions, such as agroforestry and the marketing of non-timber forest products. As it has been difficult to control illegal logging from the top, local organizations are working at the community level to raise awareness and tackle problems of income generation. In the face of weak national laws regulating forest use, numerous communities have reinforced their own adat (customary) laws to prevent extensive forest destruction. Diversification of cash crops and establishment of credit unions are some options being explored to provide long-term, sustainable income.

Some researchers are also looking at the latent potential of secondary forests. Wil de Jong at the Center for International Forestry Research reports that secondary forests actually contain many useful species such as rubber and fruits, and that some wild animals prefer or can adapt to the more open canopy of a secondary forest. Although this does not diminish the importance of conserving primary forests, it does suggest that logged over forests and forests regenerated from past swidden cultivation or fires can become fruitful again.

In the last few months, there has also been some promising progress in the policy sector. The Indonesian government made permanent its log export ban, and other nations have responded in support. In addition to the Indonesian and UK governments signing an agreement to halt the trade of illegal logs between the two countries, the government of Malaysia announced a ban on the import of all Indonesian logs--legal or illegal.

However, weak law enforcement, a corrupt judiciary system in Indonesia, and the difficulty of tracing the origin of wood products from exporting to importing countries stand to challenge the success of policy measures. A multi-pronged approach to limit consumption, and find alternative and sustainable economic uses for secondary forests will be crucial in ensuring the survival of forests and communities in Kalimantan.