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Forest Protection

Volume 463: debated on Wednesday 18 July 2007

Earlier this year, the Governments of Brunei Darussalam, Malaysia and Indonesia signed an important declaration on the “Heart of Borneo” initiative. Those three countries have one conservation vision, recognising the importance of their island, as they refer to it, as “a life support system”. The initiative involves voluntary trans-boundary co-operation that is based, as they declare, “on local wisdom” and “on sustainable development principles”. As such, the declaration brings together two agendas that have for far too long been kept apart. It may have been convenient for non-governmental organisations and Governments to separate developmental issues from environmental ones, but in truth they represent one agenda. Environmental sustainability will not happen if in order to achieve it we ask the world’s poor to sacrifice economic growth and development. Equally, development that is not environmentally sustainable undermines its own foundations, as the Stern report recently highlighted.

I know that my hon. Friend the Minister recognises that point, and I welcome the fact that his previous boss as Secretary of State for International Development, our right hon. Friend the Member for Leeds, Central (Hilary Benn), has now taken over as Secretary of State for Environment, Food and Rural Affairs, strengthening further the links between the two Departments. Our right hon. Friend worked tirelessly on the issue of combating illegal logging in Indonesia. The “Heart of Borneo” declaration expresses that common environmental and developmental agenda in the following way:

“With one conservation vision and with a view to promote people’s welfare, we will cooperate in ensuring the effective management of forest resources and conservation of a network of protected areas, productive forests and other sustainable land-uses within an area which the three respective countries will designate as the ‘Heart of Borneo (HoB)’, thereby maintaining Bornean natural heritage for the benefit of present and future generations”.

I have worked closely with two of the three Ministers who signed that declaration—Minister bin Khalid from Malaysia and Minister Kaban from Indonesia—and in relation to Indonesia I want to put on the record today my admiration for just how far that country has moved since 1998 and the days of corruption under the Suharto regime, when the country was a kleptocracy. Today, it is a country putting in place protections under the law for its people and its quite extraordinary biota.

The island of Borneo is the third largest in the world, after Greenland and New Guinea, covering an area twice the size of Germany. Whereas Germany might boast approximately 2,700 different higher plant species, however, one mountain alone in Borneo, Mount Kinabaloo, has almost double that figure. The island as a whole registers more than 15,000—diversity as great as that in the whole of Africa.

Over the past 10 years, entirely new species to science have been discovered at a rate averaging three every month. That is true riches. It is based upon the rainforest, but it is worth immeasurably more as the basis for new drugs against cancer. There is the shrub that produces CBL316, a powerful new anti-cancer agent, and the compounds, calanolides A and B from the bintangor tree, which are effective against various strains of HIV. The forest also performs more mundane services for the local population, stabilising the climate, controlling soil erosion and regulating the supply of clean water. Those eco-system services are simply the essentials of life for 20 million people living on the island.

For the past decade the world has become progressively more aware of the importance of such services, of forests as carbon sinks and of their role in combating climate change. Deforestation is known to contribute approximately 20 per cent. of global greenhouse gas emissions every year, and for that reason illegal logging and oil palm plantations have recently been a focus of concern for the international community.

My hon. Friend the Minister well knows of my concerns in that area, but today I shall raise with him an equally serious threat to the Indonesian forest—that of open-cast coal mining. He will know from the work that his Department is doing with Indonesia in concluding a forest law enforcement, governance and trade voluntary partnership agreement, that the new, democratic Indonesian Government took commendably swift action to protect their remaining forests following the overthrow of the Suharto regime. On 30 September 1999, the Government enacted laws giving protected forest status to many of the remaining highland and key watershed areas. Included in that protected forest status were five out of seven concessions that the giant Anglo-Australian company BHP Billiton had, shall we say, secured under the Suharto regime.

Forestry law No. 41 of the statute book of the Republic of Indonesia in the year 1999 No. 167, addition to the national statute book No. 3888, clause 38, sub-clause 4 strictly states that open-cast coal mining is prohibited in protected forest areas. Having already invested approximately $40 million in exploring the potential of those concessions, BHP Billiton was not going to see them rendered effectively worthless without a fight. Along with a number of other companies, BHP Billiton lobbied to have the concessions reinstated. It did more than lobby: it threatened to bankrupt the fledgling democratic Government by launching legal proceedings to demand compensation. The new Parliament first refused to buckle, but that group of foreign companies applied significant international political pressure.

Questions to the Australian Senate have revealed a series of meetings at Australia’s Jakarta embassy, where BHP Billiton’s Andrew Wilson took a leading role. Those strategy meetings led directly to meetings between the Australian ambassador and a number of key Indonesian Ministries to press the companies’ financial interests over the communities’ national laws to protect their unique ecosystem. Eventually, Indonesia’s new President, Megawati Sukarnoputri, submitted a perpu overruling Parliament. The Indonesian constitution is quite clear that it is for Parliament to enact the laws. The President, under clause 22(1) of the constitution, has the power to issue a decree or Government regulation in lieu of a law, only when the country is in the grip of a national crisis. The national crisis in that case was the threat that BHP Billiton and other companies would bankrupt the new democracy by suing at international arbitration for $22 billion.

Whether that threat was real or not, it was effective. The perpu specified that the 13 companies’ forest area mining permits, which predated forestry law 41 of 1999, should remain effective for their originally intended span. The constitutional court considered a challenge to the perpu, and it found that under Indonesian law a concession or contract of work is granted to a mining company to exclude others from mining in a certain area, and that it does not comprise a permit for exploitation. A company holding a contract of work may carry out exploration, but it gains a licence for exploitation only when its mining plan and environment impact assessment of a particular site have received Government approval.

Ultimately, the constitutional court ruled that when six companies that are still at the stage of exploration or of feasibility studies enter the exploitation stage, they must comply with the requirements in clause 38(4) of forestry law 41 of 1999, which prohibits open-cast mining in protected areas. Hence, six of the 13 companies listed in the presidential decree are prohibited from open-pit mining in protected forest.

None of the five BHP Billiton concessions in the heart of Borneo benefited from the 2004 perpu. To safeguard its investment in those coalfields, BHP Billiton required another way to secure the right to exploit them. The Maruwai coalfield is today represented on the BHP Billiton website as a contract of work for a deposit area measuring

“120 km by 60 km in a remote and isolated area that lies largely within the province of Central Kalimantan. The mining of the resource will see the development of infrastructure over a much wider area.”

The website says that the coal deposits contain a

“mid-volume hard coking coal resource which in stage 1 of the development will support the production of at least 1 million tonnes per annum (mpta) of coal. In stage 2, up to 5 mpta will be produced, potentially for up to a 20-year period. The Maruwai project is currently in a feasibility study phase which is aiming to bring online the stage 1 mining of the Lampunut deposit by the second half of 2008…This was due to its ability to be mined by open cut methods, its proximity to navigable rivers and its coal quality.”

It is no surprise that at the end of last year, new guidelines were issued for temporary use of forested areas. Under chapter 1 of Forest Regulations 14/mehut ii/2006, any forest

“which is considered ‘unsuitable’ for logging use can be considered for a change of status”

under a land swap or financial compensation deal. The acquired forest can be used for strategic purposes that include mining.

However, as far as the Maruwai coalfield and BHP Billiton are concerned, those convenient regulations contain a potentially fatal provision. Chapter 2(4)(2) of the regulations states that

“in protected forest, open cast mining is not permitted.”

Despite a presidential decree, a constitutional court case and a change in the regulations, BHP Billiton was left with the unfortunate result that the Maruwai coalfield could not be open-cast mined because it was inside a designated protected forest area in the heart of Borneo—thwarted by lines on a map, it seemed, until the maps themselves changed.

I have copies of documents, which I will happily make available to the Minister, showing BHP Billiton’s success in making approximately 20,000 hectares of protected forest disappear from official maps. So proud were the company’s staff of their two revisions of the maps that they boasted in a memo:

“Judge our success by the lines on the maps.”

What tools they used to bring about the changes I do not know—I can guess that it was more than an ink eraser. However, block Lampunut, the first stage of the exploitation, comprises 7,721 hectares, almost all of which used to lie within protected forest areas. Now, not a single hectare is shown to lie within such areas. The forest has simply disappeared from the maps.

Will the Minister give me a simple reassurance that he will ask his officials to raise the issue with their counterparts during their discussions about the forest law enforcement, governance and trade voluntary partnership agreement? In concluding a VPA under which UK and European taxpayers’ money will be used to improve forest governance, it is of the utmost importance to obtain clarity and stability in relation to the protected forest areas being discussed. It cannot be right that FLEGT agreements should be based on shifting sands.

I have laid substantial charges at the door of BHP Billiton, but I wish before closing also to lay an olive branch. The company acquired another licence in 1999—not in Indonesia, but from the inspector of mines in Sweden, in accordance with that country’s Minerals Act, to exploit the Manek area. The area is only 4 km from the Sarek national park, part of the Laponia world heritage site. The eastern part of the area is important to the Sami people, and the issuing of the permit resulted in three separate appeals. In that instance, BHP Billiton engaged in intensive consultation and ultimately decided to relinquish its exploration licence.

That was the right decision, not only for the Sami people but for BHP Billiton, which enhanced its reputation with the Sami and has now secured alternative drilling programmes in Sweden as a consequence. I cite that case in the belief that it could be a precedent for the heart of Borneo. I recognise that Sweden is a developed nation with a much longer legal tradition of land and property rights, but BHP Billiton professes to care not just about having a green image but about the environment.

Later this year, the world’s spotlight will fall on the Indonesian island of Bali as world leaders meet at the United Nations framework convention on climate change conference of the parties to discuss climate change issues and how to create financial mechanisms to avoid deforestation. They will meet in the same hotel that hosted the Coaltrans Asia conference last month, where BHP Billiton representatives gathered to be told that Indonesian coal production would steam ahead unfettered. The two conferences could not represent two more different futures for the heart of Borneo or for our planet.

I congratulate my hon. Friend the Member for Brent, North (Barry Gardiner) on securing this debate. It is entirely appropriate for me to acknowledge his considerable record of interest and activity in this policy area during the past 10 years. I look forward to continuing to work with him in his new role as the Prime Minister’s special envoy for forests.

My hon. Friend explained eloquently why forests in general, and the forests of Borneo in particular, are so important. He described changes in Borneo, many of which are recent and the result of considerable external influences, and many of which have occurred in the past 25 years.

The first major influence was the transmigration scheme, which brought people from Indonesia’s overcrowded islands to make a better living in Borneo. That created the infrastructure that opened up the island to logging on a grand scale to feed international markets. The rewards were considerable although, as my hon. Friend knows only too well, not everyone shared in them.

Anyone travelling up the Melawi river in west Borneo a generation ago would have marvelled at a landscape that had changed little in centuries. I am told that a traveller making the same journey today will find a very different world. There are still a few patches of good forest, but much of the more accessible land has been cleared of trees. Since the big logging companies arrived, the area has suffered a large reduction in game, wild fruit and many of the plants that local people have traditionally harvested from the forests. If one asked the villagers whether they were financially better off as a result of logging, there would be a mixed response. Some have earned a wage working for logging companies, but for many people logging has brought few lasting benefits.

There are similar stories in West Papua province, to the east of Borneo, where the Knasaimos people of Seremuk first felt the impact of illegal logging in 2002. It destroyed the livelihoods of many in the area and the social structure of many villages. However, illegal logging was stopped as a result of a crackdown by the Government in 2005, which helped local people take back control of their forests. They were able to map their land, measure their trees and work out a strict harvesting quota that would keep the forest healthy and productive. Unlike the logging company, they knew how to leave unharmed the sago palms and other plants on which they depend.

My hon. Friend rightly described the costs of logging and associated land clearing, which have led to an almost irretrievable loss of biodiversity in many parts of the world; to the loss of future livelihood opportunities that sustainable management of forests, rather than their liquidation, might have brought; to the release of enormous quantities of greenhouse gases that put Indonesia in the first division of the world’s emitters; and to air pollution that has damaged health and disrupted daily life and business in Borneo and neighbouring countries.

I join my hon. Friend in saying that the “Heart of Borneo” is a bold initiative. We in the Government welcome it, and congratulate the Governments of Indonesia, Malaysia and Brunei on their vision. It is only right that we should also congratulate the WWF and the other non-governmental organisations that are helping turn the vision of the “Heart of Borneo” idea into practical action. As my hon. Friend said, the initiative comes at a time when pressures on the remaining forests of Borneo are growing and when there is a greater awareness than ever of the benefits of conserving forests in respect of mitigating climate change. We have the campaigning work of my hon. Friend and others and the Stern review to thank for that.

That awareness brings closer the prospect of payments for reduced emissions from deforestation. That could help tip the balance of incentives in favour of keeping forests standing, rather than cutting them down. To help realise that potential, the British Government will build on the momentum created by the Stern review and the announcement made by my right hon. Friend the Prime Minister, when Chancellor in October 2006, on mobilising international resources for sustainable forest management.

So far, we have committed £50 million to protect forests and people in the Congo basin as part of the £800 million environment transformation fund, and we will play our part in the arrangements that follow the United Nations climate negotiations in Bali in December. The Department for International Development, the International Finance Corporation, the Hong Kong and Shanghai Banking Corporation and others have joined efforts to develop financing instruments, such as eco-securitisation, that will channel private investment into the sustainable management and conservation of forests such as those of Borneo.

As my hon. Friend said, the meeting in Bali will be an important event for forests. Our aim is to reach international agreement on the use of the carbon market for the second commitment period under the Kyoto protocol, after 2012, to give positive incentives to reduce emissions from deforestation. At the Heiligendamm summit, the G8 invited the World Bank to use the forest carbon partnership facility to develop the capacity of developing countries and to pilot approaches to reduced emissions from deforestation.

Indonesia is already moving in that direction, and the UK is providing help. For example, we are providing money and expertise to help the country develop the technical and institutional requirements to participate in payments for reduced emissions from deforestation, to conduct market analyses of prospective buyers of emissions reductions and to develop a portfolio of reduced emissions projects. We are also helping to establish an international framework that can help reduce deforestation. That is just one of the many ways in which we contribute to the aims of the “Heart of Borneo” initiative.

My hon. Friend will be aware that the Darwin initiative has funded considerable scientific research and capacity building in Indonesia and Malaysia. Some 16 projects, with a total value of £2.75 million, are under way at the moment. With others across Whitehall and the European Union, the Department for Environment, Food and Rural Affairs is working to develop social and environmental standards for biofuels. Right hon. and hon. Friends at the Foreign and Commonwealth Office are funding the “Heart of Borneo” implementation plan that will engage key stakeholders in planning future activities and identifying long-term roles and responsibilities.

As my hon. Friend said, DFID has been supporting forestry in Indonesia for the past 15 years. In recent years, our focus has been on helping improve conditions for forest reform. We have worked with civil society and Government organisations, through small grants and facilitation, to broker new relationships between citizens and the state. That has begun to transform forest policy making in Indonesia. As my hon. Friend said, marginalised groups now have a stronger voice and the state is responding with new policies and programmes. In turn, that is resulting in more livelihood opportunities and better environmental management.

As my hon. Friend will know, the Stern review recognises that clear property rights and better governance are fundamental to the avoidance of undesirable deforestation. Clear property rights are a precondition for investment in the management and conservation of forests. Where governance is weak and tenure unclear, powerful interests can capture forest resources and prejudice the interests of others. We need to accelerate the tenure and governance reforms that will deliver better outcomes for forests and people.

Evidence from around the world suggests that the time for that is now right. In 2006, Brazil, China, Indonesia, India, Russia and other countries announced reforms, and we will do more, across Government, to help those reform processes.

I am grateful to my hon. Friend for his response. In the few minutes that remain, will he simply give an assurance that his officials will raise two issues with officials from Indonesia? The first is the provision for land-swap arrangements that were introduced at the end of last year and the lack of clarity that they entail in the areas of protected forest. The second is the basis on which revisions to maps are agreed and publicised.

I was coming on to say to my hon. Friend that as he rightly described, the European Union is currently negotiating forest law enforcement, governance and trade partnership agreements with Malaysia and Indonesia. They will provide the future framework for our collaboration with those countries on matters of forest governance.

I shall take up the issues raised by my hon. Friend with the European Union so that it can be part of EU discussions with Indonesia. My hon. Friend is right to describe the expansion of open-cast mining in Borneo as a significant threat, which comes not only from the removal of the forest to get at coal, but from the infrastructure of settlements and roads associated with large-scale open-cast mining. I have no doubt that that subject will be very much in the minds of representatives of all three Governments when they meet tomorrow in Brunei Darussalam to agree on the boundary of the “Heart of Borneo” and, more generally, the timetable for tri-country plans.

As my hon. Friend knows, the UK has been working with Indonesia since 2002 to help improve governance and tackle illegal logging. As he will know only too well, it has not been easy, although we have seen a lot of progress, particularly in the past two years, and illegal logging has been greatly reduced. There is still considerable smuggling of logs across the border between Indonesia and Malaysia and that, too, threatens the forests of the heart of Borneo.

We will continue to work on the issues as I have described, and in the way that my hon. Friend knows—through the EU and the FLEGT partnerships that are under way. Through that process, we shall take up the concerns that my hon. Friend has raised today.

Sitting suspended until half-past Two o’clock.