Indonesia’s Moratorium: An Opportunity for Forests and Industry

A highly anticipated two-year moratorium on new forest conversion permits could bring fundamental improvements to forest and land management in Indonesia.

In mid-2011, Indonesian President Susilo Bambang Yudhoyono is expected to sign a Presidential Decree for the implementation of a two-year moratorium on issuing new permits for conversion of natural forest and peatland. This planned moratorium was announced in May 2010 as part of a $1 billion Indonesia-Norway partnership agreement on reducing emissions from deforestation and degradation (known as REDD+).

An effective moratorium will allow time for the government—with participation from industry and civil society—to develop improved processes for land use planning and permitting, create information systems and build institutions that can achieve Indonesia’s ambitious low carbon and agricultural development goals. These goals include both reducing greenhouse gas emissions by 26 percent and doubling palm oil production by 2020.

Implementing an effective moratorium will require a well-deliberated, clear Presidential Decree that is consistent with Indonesia’s development goals, results in cooperation between government agencies and provides public access to relevant information. A several month delay has allowed time for the government to address concerns raised by industry and to reconcile several draft decrees submitted by multiple national government agencies. The drafts contain different interpretations of how the moratorium should be implemented, with different implications for forests and people.

The following analysis of the content of the publicly available draft presidential decrees identifies key elements of the expected decree and recommends priority actions for the two-year moratorium period that can produce lasting benefits to Indonesia’s forests and the people and businesses that depend on them.

What can an effective moratorium accomplish?

An effective moratorium would produce improved land use planning and permitting processes that achieve Indonesia’s development goals and respect local rights, continuing beyond the two-year suspension period.

A common misperception reflected in the media is that the moratorium is designed to immediately halt all deforestation and prevent the expansion of industries such as palm oil, timber, and mining. However, according to the text of the Indonesia-Norway agreement, the moratorium is a two-year suspension of new permits for the conversion of natural forest and peatland.

Revoking existing permits—many of which may be illegal—appears to be outside the scope of the proposed moratorium. In addition, since the moratorium would only apply to new permits that result in conversion of natural forest or peatland it will likely not include selective logging permits or permits for oil palm cultivation in other areas.

The two-year period in which no new forest conversion permits are issued would provide the time for the Indonesian government to begin putting in place REDD+ policies such as improved land use planning and permitting processes, reviewing or revoking illegal permits, encouraging sustainable palm oil expansion on degraded land, and developing incentives for voluntary land swaps.

What are main elements of the anticipated Presidential Decree?

As of February 2011, at least three publicly available drafts had been submitted to the Indonesian president by different national government agencies.

All of the drafts contain the following:

• Two-year suspension of new permits related to forest conversion.
• Instructions to specific government agencies to suspend activities on issuing new permits related to natural forest and peatland conversion.
• Exemptions for existing legal permits and activities in the national interest (e.g. energy generation).
• Reference to a map that will guide implementation and be updated on a regular basis. These maps are not available for analysis, and may not yet exist.

However the draft decrees also differ substantially. The impact of the forthcoming Presidential Decree will depend on how it addresses the following key elements:

• Objectives – Does the preamble clarify the objectives of a temporary suspension of new permits to achieve long term improvements in land use planning and permitting processes?

• Definitions – Are terms clear and consistent with achieving the stated objectives? Key terms which have not yet been defined include: conversion, natural forest, primary forest, secondary forest and peatland.

• Data – Are the data and maps that will be used or created to determine the areas impacted by the moratorium accurate and appropriate? Appropriate data will depend on definitions, but at a minimum would include information on land cover and forest type, land use, legal status, and land rights—including but not limited to permits.

• Permits – Which permits are included and excluded from the moratorium? This will determine the project development options of companies, communities, and local governments, each with different economic, environmental, and social costs and benefits. If the moratorium exempts existing “legal” permits there will need to be a clear definition or process for reviewing legality.

• Agencies – Which government agencies are given instructions, and which government agency is responsible for producing the relevant maps associated with the moratorium? Cooperation, coordination, and commitment to transparency by all relevant agencies will be critical to the success of the moratorium.

• Process – What processes will be put in place regarding reviewing permits, cooperation and coordination of government agencies, increasing transparency and participation, making maps and spatial data publicly available, and settling disputes? The current lack of easily accessible public data on the appropriate national and sub-national scales is a major barrier to transparent and participatory policy-making.

What do the differences between the draft decrees mean?

Recent media reports reflect ongoing confusion regarding the objectives, content, and implications of the various draft decrees. Much of the public debate regarding the options has focused on how much and what type of land will be affected by the moratorium. Questions include: Will it apply to secondary or “degraded” forest and shallow peat (peat less than three meters deep)? Will forested land outside the “Forest Estate” (Kawasan Hutan) be included?¹

These options have significant implications for forests, people, and climate change. According to government statistics:

• 58 percent of forests (58 million hectares) in Indonesia are secondary forests.²
• 80 percent of peatlands (17 million hectares) in Sumatra, Kalimantan, and Papua are shallow peat.³
• 8 percent of Indonesia’s forests (8 million hectares) are located outside of the “Forest Estate.”⁴

Since none of the drafts contain definitions or provide the maps and data that the government will use during implementation, it is unclear how much and what type of land will be affected by the moratorium. The government has suggested that the moratorium could apply to 64 million hectares, although this estimate likely includes forested areas that are already under some form of protection.

An important factor that has received much less media attention is which permits will be included in the moratorium. Since the moratorium is only a suspension of new permits for conversion, the area that will be affected is not the total amount of natural forest and peatland, but rather the amount of natural forest and peatland that is not already under some form of legal protection and is not already covered by existing permits.

All of the drafts exempt existing legal permits from the moratorium, which is consistent with the text of the Indonesia-Norway agreement. Some drafts refer to legal permits for specific activities including timber, plantations, and mining, while others refer only to new permits related to forest conversion. None of the drafts refer to community timber plantations or other community rights.

None of the drafts clarify the definition of a “legal” permit or provide a review process for determining legality. Likewise, none of the drafts include procedures for revoking permits or refer to existing procedures such as those which have been recently implemented by the Ministry of Forestry.

Ambiguity regarding permits—combined with a lack of accurate public data on the extent, status, and location of all existing permits issued by different agencies, levels and geographical jurisdictions of government—makes it impossible to quantitatively assess the options presented by the various drafts. However the area affected by the moratorium is significantly reduced when available data on existing permits is considered.

What are priority actions for the two-year moratorium period?

Whether the moratorium is ultimately a success depends not only on the text of the Presidential Decree, but on what the Indonesian government—with the participation of industry and civil society—accomplishes within the two-year period.

In order to achieve its ambitious low carbon development goals, the Indonesian government can use the two-year moratorium period to begin to implement the following priority actions:

• Produce comprehensive, accurate, and regularly updated spatial data and maps on land cover and forest type, land use, land status, and land rights—including permits—made publicly available through easily accessible websites.

• Revise land use plans (zoning) such that appropriate natural forest and peatlands are classified for conservation or sustainable management and appropriate degraded lands are classified for agricultural or other uses, through a process that incorporates best practices in participatory spatial planning.

• Develop transparent and participatory processes for reviewing, revoking, reissuing, or relocating permits that are illegal or are in areas that are inappropriate for development, incorporating best practice stakeholder engagement and including the free prior and informed consent of relevant communities.

A clear, well-deliberated Presidential Decree that results in an effective moratorium on new forest conversion permits can help Indonesia “buy time” in which to implement fundamental policy changes, ensuring that there is no return to ‘business as usual’ at the end of two years. If done effectively, this will bring long-term benefits for forests and industry.