Media Interview: The Wall Street Journal

You can read the full article here.

What do you think allows these patronage networks to flourish and persist?

Patronage and clientelism is deeply embedded in the business culture of Indonesia, and much of Malaysia and Singapore as well. I argue in my work that this has enabled Malaysian and Singaporean plantation firms, who are already familiar with patronage practices at home, to easily adapt and insert themselves into existing local patronage networks in Indonesia.

A strong motivator for patronage is the rigid regulation and inefficient bureaucracy in Indonesia, both at the central and local level. Often times, political connections may actually increase bureaucratic efficiency by speeding up the process of decision-making at early stages of business. This is especially pertinent in the land licensing stage. Peatland is attractive for the planting of oil palm for their high potential yield, and also because there are often not many communities living in the peatlands, hence less potential community land conflicts. However, peatland is of course highly fire-prone and also releases thick sooty smoke haze when burned, and Indonesia has laws against the use of peatland. Despite this, companies often use their patronage connections to obtain licenses to open up these areas of peatland for oil palm. Figures in 2010 indicate that about 27% of all oil palm plantations in Indonesia is situated on peatland (these figures should be higher now).In the process of opening up the land, both accidental and intentional fires occur. When these fires occur, these companies of course continue to use their connections to evade punishment.

The country’s decentralization policies have only exacerbated the problem. Now, local governments are responsible for generating a large part of their own budgets. Therefore, these local agencies are even more motivated to do whatever it takes to attract investment to their region, including colluding with these plantation firms to evade laws and also evade punishment for breaking these laws.

Is there any foreseeable future in which the breaking up of these relationships could take place?

I am not optimistic of a breaking up of this relationships. Alongside local Indonesian firms, Malaysian and Singaporean firms control a large majority of this sector. So, with almost all of the major players engaging in such behaviour, the patronage culture is bound to get increasingly embedded within the sector with time.

The only foreseeable means to break this patronage culture would be market forces. If NGOs and consumers (especially in Europe and Australia/New Zealand) who are against non-sustainable palm oil (including those planted on peat/burned land) are able to make a serious impact on the sales of palm oil from this region, this might force the companies to at least take anti-burning laws more seriously.

Singaporean officials have been especially vocal this year in their criticisms against Indonesia on haze pollution – the environment minister has repeatedly pressed for greater Indonesian action and insinuated that commercial interests have been allowed to override social interests. Do you sense a shift in Singapore’s stance, and if so, what do you think motivated this? Is it purely because of the severity of the haze this time round?

This behaviour is not new. Singapore has actually quite vocally made this connection between commercial and social interests in the past. In fact, during the bad haze in 1998, Singapore had called upon Indonesia to release the names of companies involved in fires in Indonesia, vowing that the Singaporean government will not protect any Singaporean company that is found guilty. However, when Indonesia obliged with the names of two companies, no action was taken by the Singaporean government. The given reason was due to lack of evidence, however the abrupt about-turn would indicate the lack of political will of Singapore to really take responsibility over their companies.

The haze this year has indeed been terribly severe for Singapore. Singapore has to react vocally as this is the responsibility of the government towards it public. However, I think history may repeat itself if Indonesia really begins taking serious action against (Singaporean) firms.

Does the potential involvement of Singapore-based companies in these fires complicate matters for Singapore in any way?

Indeed, the involvement of Singapore-based companies in fires would not be good for Singapore. Firstly, Singapore would not legitimately be able to play the role of the ‘victim’ state in any bilateral or regional efforts on the haze.

This would also be potentially embarrassing on an international level for Singapore, especially seeing as Singapore is supposed to be the only first-world country in the region, with a supposedly higher environmental awareness compared to the rest of the region. For example, it couldn’t have been good for the ‘clean and green’ image of Singapore when the World Bank froze funding of a prominent Singaporean firm’s palm oil-related development projects in 2009, after allegations by environment NGOs that it ignored laws on land clearing. Furthermore, it does not help that the board of directors of prominent plantation companies are often populated by former prominent government figures.

Companies like Wilmar, Golden Agri, IOI, Cargill and Sime Darby have told the WSJ that they impose strict no-burning policies for their plantations in Indonesia. From your research, can their denials be taken at face value?

Often times these denials cannot be taken at face value. Top leadership may be genuinely interested in implementing zero-burning, but the implementation of these policies sometimes do not trickle down to the many individual units all over the country. These companies are huge, with hundreds of hectares of plantation, and so this should not be surprising. And likewise, the bosses at the top may not be fully aware of what is happening at the plantation level.

Simply put, it is much cheaper for these companies to burn to clear land, compared to mechanical methods (about US$5 as compared to around US$250). There have been compelling evidence arising, for example very low budget reports for land clearing which did not match the expenses required for mechanical clearing, and remnants of oil in jerrycans on site.

Could these big players also be involved in indirect ways, as suggested in your papers?

Big players are automatically putting their concessions at risk of fires by opening up in peat areas. Even if they do not intentionally use fire to clear land, these areas are very prone to accidental fires, especially in the dry season.

Some companies also hire subcontractors or locals to clear land. When these subcontractors or locals are subsequently caught for burning, these companies can easily avoid blame by claiming (either truthfully or not) that the company did not explicitly instruct them to use fire.

What could be done to force them to step up compliance?

Tying in with my discussion on market pressure above, if a strong market for sustainable palm oil can be created, companies may see that it is more profitable to spend a little more to comply with all regulations, if this means higher sales.

How important are these larger players in creating the haze pollution? Do they account for much of the fires (including subcontractors that they work with)?

There has been studies done showing that large commercial plantations directly and indirectly account for up to 80% of the haze in the region.

Or can we also point to other smaller players that are genuinely separate from these big-names?

Slash-and-burn farmers have been found to contribute 20% of these fires. However, when these villagers use fire to clear land, it is because they often cannot afford other means of clearing land. The same cannot be said for commercial plantations.

ASEAN, as you’ve comprehensively explained, is ill-equipped to tackle the issue. Would you be able to share what you think are key reasons behind the bloc’s ineffectiveness, and whether this means we are condemned for the foreseeable future to such annual haze pollution?

ASEAN as a bloc is ineffective because the nature of ASEAN, the so-called ASEAN way, is such that each country is able to pursue its own national interest with minimal resistance, while ensuring that the regional atmosphere is healthy and supportive.

The main problem is that this severe environmental problem is tied in very closely with a major regional agribusiness sector. Indonesia and Malaysia are the world’s two biggest oil palm producers, and Singapore is the home base of several of the world’s major oil palm companies. And powerful business entities from all three of these countries operate in Indonesia. So, when the issue of haze is brought to the ASEAN level, we have Indonesia, Malaysia and Singapore, which to a different degree are both victims and culprits, trying to protect their economic interests. So it is very hard for ASEAN to find much consensus on what has to be done on the haze.

This is why we see that Malaysia and Singapore have generally been (or eventually become) quite tame with their responses to Indonesia over the haze. For example, despite Indonesia’s continued decade-long delay of ratifying the ASEAN Agreement on Transboundary Haze Pollution, other member countries have not put any real strong and consistent pressure on Indonesia to do so. Besides, even if Indonesia ratifies, there may not be much improvement to the present situation since the agreement (in classic ASEAN fashion), despite being legally binding, was very vague and lacking in real hard-law instruments like a dispute-resolution and enforcement mechanism.

This protection of economic interests can be easily seen in ASEAN initiatives. For example, one of the latest regional initiatives is the Adopt-A-District plans, where Singapore and Malaysia were invited by Indonesia to ‘adopt’ certain fire and haze prone areas in Indonesia. The idea was that these ‘richer’ countries could help these ‘poorer’ districts, both in cash and in kind, to better manage fire issues. But, it was very telling to see that most of the projects under the Adopt-A-District plans have been targeted at changing the practices of slash-and-burn farmers, with almost zero involvement or even interest from commercial plantations. As mentioned above, these villagers only contribute to a minimal amount of the fires haze, and this is often out of necessity. There seems to be a deliberate lack of willingness to engage with the commercial plantations who are actually the major cause of the haze. This clearly demonstrates the tensions that exist between economic interests and environmental security at the ASEAN level.

Another major problem in effective haze mitigation is the nature of the haze which is seasonal. Countries in the region may get a little vocal during the haze season, but when the skies clear, often nothing more is said or done about the issue. Tensions will dissipate, Malaysia, Indonesia and Singapore will return to cordial diplomatic relations, and plantation companies are once again free to conduct land clearing as they please with very little scrutiny.

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