Natural resource licensing and Indonesia's economic resilience
The world is shrinking, to the extent that it is now compressed into a mere global village. Conversely the world's population is growing. We passed seven billion in 2012, a figure that still continues to expand and is estimated to reach 14 billion by 2050. In this interconnected global village, how countries manage natural resources will play a pivotal role in determining the quality of life for future generations. Natural resource governance will also shape the resilience profile of nations, in terms of their ability to face economic shock due to the ever increasing intensity of various risks, including the challenges of global warming and climate change.
Furthermore, natural resource governance is also key in maintaining social integrity and civil trust in the government; both are important factors in determining economic resilience. Resource rich countries such as Indonesia, must continuously improve their ability to govern natural resources.
When properly managed, natural resources can form a strong foundation for economic and social development. Resource rich countries such as Chile, Botswana and Norway are good examples of natural resource dependent countries that have managed to grow economically with varying degrees of minimum negative impacts that often result from plunder.
A closer look at these countries reveals the important role of good governance in determining such positive outcomes. Important elements of this include strong public institutions and law enforcement, environmental planning, transparency measures and equitable distribution of wealth.
All of this creates a virtuous cycle of natural resource-based economic development which over time can become more ecologically sustainable. Here, extractive natural resource wealth is transformed into renewable resources such as strong human capital, which in turn functions as a firm building block for the paving of a sustainable and green economic development pathway.
Unlike the three examples above, many resource-rich countries have remained trapped in a downward spiral of poor governance which contributes to and is exacerbated by social unrest, corruption, graft, environmental degradation, with severe poverty where the gap between the rich and the poor is ever increasing.
Recent research by the United Nations shows an important correlation between natural resource exploitation and violent civil conflict. The UN estimates that 40percent of intra-state conflicts in the world today are related to or fueled by natural resources. If not careful, Indonesia could fall into such a trap. HuMA, a civil society organization that focuses on monitoring natural resource conflicts in Indonesia, documented 232 natural resource-based conflicts in Indonesia, spread throughout 98 districts and 22 provinces between 2006 and 2012. Most of these conflicts involved plantations (119) and 17 others involved the mining sector.
A common factor underlying all these conflicts is a lack of clarity and legal certainty in relation to the control over a given parcel of land, or land tenure. When conflict over land tenure in the natural resource sectors exists, everybody loses. Investors lose funds, corporations lose potential profits and can end up saddled with serious reputation risks, governments forego important revenues that could be used to pave the way to better and greener development, while communities are left worse than before.
Furthermore, when tenure and property rights in the natural resource sectors are unclear, law enforcement in the event of recurring disasters such as forest fires, and the ability to prevent them from happening in the first place, is very difficult to achieve. Roles and responsibilities especially in addressing various environmental problems become blurred. This exacerbates the resulting negative environmental, human health and ultimately economic impacts that can traverse national borders, such as those created by the forests fires in Sumatra in the past few days.
Clarifying land tenure thus becomes a fundamental pre-requisite for the achievement of poverty reduction and sustainable economic development. In a shrinking world where the co-dependency between economic development, environmental protection and social resilience is becoming stronger than ever, Indonesia has no option but to urgently address the serious land tenure issues it is facing.
Within this context, the Indonesian government, through the Presidential Delivery Unit for Development Monitoring and Oversight (UKP4) and the REDD+ Task Force, using the opportunity created by the two-year moratorium on new licenses, which has recently been renewed, have continued to focus specifically on improving the governance of land tenure in the forestry, plantation and mining sectors.
Two important elements of work are the Legal Audit/Legal Compliance (LALC) work pertaining to licenses that have been issued in these sectors. REDD+ pilot province Central Kalimantan has led the way with a focus on three pilot districts, namely South Barito, Kota Waringin East and Kapuas. The aim of the LALC is to clearly identify weaknesses in the licensing process that must be addressed in developing a licensing management system which is robust, coherent, easy to execute in an efficient and effective way, with built-in corruption prevention mechanisms.
A pervasive problem in all the reviewed districts is the existence of complex overlapping land claims over the same parcels of land. It became clear this was due to poor document archival systems, a lack of coordination and transfer of knowledge between the relevant government agencies. This manifested in an opaque and cumbersome land-titling and licensing bureaucratic system, which in many instances was not aware of prior licenses that had been issued within its own purview.
To address these problems, UKP4 is coordinating the development of an Information Management System (IMS) for Land Concessions. This will form the basis for an integrated on-line land concession licensing system enabling strong coordination among government institutions at all levels from local to national. Transparency and accountability will be a major feature of this IMS for land concessions. Furthermore, clear recommendations for improvements in land tenure policies and recommendations on a process to address overlapping land claims, are also being developed.
Scaling up of this initiative is being implemented gradually with attention to various key aspects. A clear set of criteria has been developed to select following provinces and districts which are interested in implementing these activities to improve land tenure governance in their regions. These include: the size of gazetted forest lands which is also reflected in the IMM (Indonesian Moratorium Map), the existence of mining and plantation activities, the level of readiness among provincial and district government officials, and the accessibility of data. Based on these criteria, two new provinces, East Kalimantan and Jambi, have been selected as the next candidates to carry out comprehensive LALC processes and to begin developing their Information Management Systems for Land Concessions. East Kalimantan will carry out these processes in Berau, KutaiKertanegara, WestKutai and Paser districts. Jambi will be carrying it out in Tebo, Muaro Jambi and Merangin districts.
The mission is to eventually put in place a nationally coordinated transparent and accountable On-Line Comprehensive Land Licensing System for all land-based sectors. This system will also include a comprehensive multi-sector reporting and supervision system to enable effective law enforcement. Given Indonesia's more than 500 districts, the challenges can seem overwhelming. However, determination to accomplish this mission is strong. There is no room for failure.
An inability to create a good governance regime for land tenure as the basis for a sustainable and just green economic development pathway will render us all losers in the face of establishing a brighter future for our children. This is something that we must not allow ourselves to contemplate. All stakeholders will need to come to the table, with an awareness that the process will not be easy and sacrifice will need to come from all directions.
For the sake of a robust and a just green economy, this process needs to be seen as a bitter yet necessary national remedy.
Chandra Kirana wrote this piece a few months before joining Daemeter Consulting as its Director of Green Economy Initiatives. This article first appeared in Tempo.co 10 July 2013.