According to Earth.org, a monitoring exercise by Indigenous peoples and local communities in Indonesia has revealed widespread fraud and forgery in the country's “certified legal” timber industry. The Indonesian Independent Forest Monitoring Network (JPIK) and PPLH Mangkubumi found numerous cases of illegal logging, record manipulation, forged export certificates, and bribery. Illegal practices were discovered throughout the supply chain, from logging companies to woodworking shops and exporters. Firstly, it was found that logging companies were cutting down trees outside their legally permitted concessions. These trees were tagged with legality certificates to falsely declare that the wood came from within the permitted areas. In North Maluku's Central Halmahera district, logging companies used legal documents from local landowners to cover illegally logged timber. Some companies even paid locals to perform illegal logging on their behalf, thereby distancing themselves from direct involvement. In terms of exports, several exporting companies in Central Java sold forged legal documents, known as v-legal certificates, to furniture companies lacking required certificates. This fraud enabled the export of uncertified wood products. These forged certificates were sold for 2 million to 8 million rupiah ($140 to $560) per container, making it a lucrative illegal business.
Keywords: South East Asia & Pacific, Indonesia, timber, primary production, Indigenous rights, illegal logging, fraudulent documentation
Sources: https://earth.org/indonesias-legal-timber-industry/
According to Mongabay, two major Indonesian pulp and paper producers allegedly engaged in fraudulent activities to evade taxes. The companies, PT Toba Pulp Lestari (TPL) and Asia Pacific Resources International Holdings (APRIL), are accused of mislabeling exports to China, falsely declaring high-value dissolving pulp as lower-value paper-grade pulp. This misclassification enabled them to report lower revenues and reduce their tax liabilities in Indonesia. Mongabay details how, from 2016 to 2018, APRIL produced 830,000 tons of dissolving pulp and exported 90% of it to China. However, none of these exports were recorded in Indonesian customs as dissolving pulp. This alleged misclassification may have reduced APRIL’s revenue by up to $242 million and avoided $60 million in taxes. Ultimately, the fraudulent activities contributed to significant tax revenue losses for Indonesia, amounting to $168 million between 2007 and 2018.
Keywords: South East Asia & Pacific, Indonesia, timber, trade and transport, tax evasion, trade misinvoicing
Sources: https://news.mongabay.com/2020/12/pulp-paper-toba-pulp-lestari-april-tax-export-report/#:~:text=TPL%20and%20APRIL%2C%20two%20major,China%2C%20a%20new%20investigation%20alleges
In Kabaena, an island off the coast of Sulawesi, Indonesia, the lives of the Bajau people are threatened by the rapid expansion of nickel mining. The Bajau Indigenous community is the last nomadic sea tribe in the world. Yet, it has been revealed that nickel mining companies have been illegally clearing protected forests in surrounding areas. In doing so, they fail to employ the FPIC (Free, Prior and Informed Consent) process to consult with local communities. The scale of this deforestation, driven by nickel miners, has been immense, violating the rights of this Indigenous community and threatening their livelihoods. Indonesia’s nickel mines have cleared at least 80,000 hectares of forest to extract nickel. Additionally, more than half a million hectares of Indonesian forest are within nickel concessions, putting them at risk of deforestation. This severely impedes the Bajau people’s way of life, as their traditional stilted homes are exposed to increased flooding, and three children drowned between 2021 and 2023. Water contamination also causes illness, and the community, which relies on subsistence fishing, now has to sustain itself by venturing further into the sea.
Keywords: South East Asia & Pacific, Indonesia, minerals, nickel, primary production, illegal mining, Indigenous rights
Sources: https://mightyearth.org/article/from-forests-to-electric-vehicles/
According to The Diplomat, the Indonesian government has charged Harvey Moeis, a prominent businessman in the mining sector, with corruption related to illegal tin mining operations. Moeis is accused of colluding with officials from PT Timah, a state-owned mining company, to establish unpermitted mining operations on PT Timah's concessions. While some have held that the environmental damage caused by these operations can be estimated at $26 billion, others argue this is likely exaggerated and used to draw public attention to the case. PT Timah holds numerous mining permits and extensive land rights, mainly on Bangka Belitung island. The illegal mining activities took place there, with PT Timah allegedly allowing private firms to operate on its concessions and even leasing smelting equipment to them. This case emerged after increased scrutiny following PT Timah and other mining companies consolidation under MIND ID, a state-owned holding company. PT Timah's financial struggles, including a $28 million loss in 2023, prompted closer examination of its activities, revealing the illegal mining scheme.
Keywords: South East Asia & Pacific, Indonesia, minerals, tin, primary production, illegal mining, corruption and bribery
Sources: https://thediplomat.com/2024/05/did-illegal-tin-mines-really-steal-26-billion-from-the-indonesian-state/
Mongabay reports that Indonesian prosecutors have charged three major palm oil companies, Permata Hijau Group, Wilmar Nabati Indonesia, and Musim Mas, with corruption related to a cooking oil shortage in 2022. It was revealed that executives from these companies had bribed a trade ministry official to secure export permits for their crude palm oil. These permits allowed the companies to bypass the government-imposed domestic market obligation (DMO) and domestic price obligation (DPO). The DMO required companies to allocate a certain quota of palm oil for the domestic market to ensure supply during the shortage. The DPO capped the selling price of palm oil domestically to keep it affordable for consumers. Overall, the company’s fraudulent behaviour allowed them to sell palm oil abroad at higher prices rather than adhering to domestic price caps and quotas intended to address the shortage. This corruption caused state losses estimated at 6.47 trillion rupiah ($432 million). The executives and the official have already been convicted and jailed, with sentences recently extended.
Keywords: South East Asia & Pacific, Indonesia, palm oil, primary production, trade and transport, corruption and bribery
Sources: https://news.mongabay.com/2023/06/palm-oil-giants-face-corruption-charges-as-indonesia-probe-widens/
Indonesian palm oil is a significant import for the US (with 2022 imports of palm oil being valued at $1.9 billion) and is used in various U.S industries from food production to cosmetics. Indonesia has been identified as the largest source of deforestation exposure for US imports for the period October 2021 to November 2023, with oil palm accounting for 96.7% of this exposure. This exposure is linked to the fact that the expansion of palm oil plantations in Indonesia to meet global demand has led to massive forest loss, as forest areas are cleared to make way for production.
US palm oil imports are inextricably linked to the palm oil industry in Indonesia, which is characterised by widespread corruption and bribery, and there is a general lack of transparency in palm oil companies’ political activities and how they can interfere with government policies. Notably, high-profile cases such as that of palm oil tycoon Darmadi highlight how corruption facilitates illegal land conversion and deforestation. Damardi was sentenced to 15 years in prison for bribing officials to convert protected forests into palm oil plantations, resulting in substantial environmental damage.
The production of palm oil in Indonesia is also associated with exploitative labour conditions and human rights abuses. Workers on plantations often endure poor working conditions, low wages, and lack of job security. Indigenous communities, such as the Ibans and Orang Rimbas, face land dispossession and livelihood disruptions due to the expansion of palm oil plantations.
Keywords: South East Asia & Pacific, Indonesia, palm oil, trade and transport, corruption and bribery, illegal deforestation
Sources: https://www.dol.gov/sites/dolgov/files/ILAB/images/storyboards/palm-oil/Palm-Oil.pdf
https://www.aljazeera.com/economy/2023/2/24/indonesias-palm-oil-tycoon-darmadi-gets-15-years-for-corruption
https://news.mongabay.com/2024/02/palm-oil-deforestation-makes-comeback-in-indonesia-after-decade-long-slump/