CHAPTER TWO LITERATURE REVIEW

Transcription

1 CHAPTER TWO LITERATURE REVIEW 2.1. Sustainable Development Concept and Dimensions Sustainable development is defined by the World Commission on Environment and Development (the Brundtland Commission) as development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs (WCED, 1987), or as development that ensures the standard of living or economic welfare of future generations is not less than that of present generations (Tisdell and Dragun, 1999). Economists have different opinions about what extent natural resources can be used in order to achieve sustainable development. Tisdell (2000) states that some economists consider weak restrictions on the use of natural resources already suffice to maintain sustainable development. Conversely, extreme or dark green conservationists argue that strong restrictions on the substitution of human-made capital for natural capital have to be imposed, even though it will reduce to some extent the welfare of present or future generations of human beings. More recently, broad-based sustainable development (BBSD) has been advocated, particularly for developing countries. This is a more complex concept that accommodates not only economic but the social, political, and environmental dimensions of development. According to Weaver et al. (1997), there are four sub-goals that have to be pursued in order to achieve BBSD: 1. A healthy, growing economy undergoing structural transformation; 2. An economy in which the benefits are widely distributed; 3. A political system that provides for human rights and freedoms, and effective governance; CHAPTER TWO: LITERATURE REVIEW 5

2 4. A political economy that is consistent with preservation of the environment The economic dimension of BBSD includes not only growth in income per capita, or economic growth, but also relatively full employment of labour and capital, stable prices, and external equilibrium or a sustainable balance of payments. It also requires structural transformation, i.e., the process of moving resources from lower to higher productivity sectors in order to sustain a higher standard of living for the population. It is realized that some components are difficult to measure, such as unemployment in developing countries where the indicators are often available only in urban areas, or when it involves underemployment in the agricultural sector. One way to identify the structural transformation is by looking at whether there is a great increase in agricultural productivity, or a shift from an agriculture-based economy to an economy based on industry and services, or from an economy characterized by uneducated and low-productivity workers to one with educated and high productivity workers. There are several ways to measure structural transformation; one is by using time series data on the percentage of the labour force engaged in agriculture as opposed to industry and services. The distributional or equity dimension of sustainable development can be measured by such indicators as the poverty ratio and the percentage of people living below the absolute poverty line (Weaver et al., 1997). The social dimension of BBSD includes an effective system of governance since this will ensure the implementation of sustainable development itself. Even though many countries see effective governance as essential for implementation of BBSD, some see the other factors in this dimension, i.e., freedom and democracy, as optional. Yet WCED (1987) sees that environmental and economic problems are linked to many social and political factors such as the increased social tension caused by uneven development, or the rapid population growth related to the position of women in society. Hence, the Brundtland Commission argued for an approach to CHAPTER TWO: LITERATURE REVIEW 6

3 development that accommodates women and vulnerable groups and that promotes local participation in decision-making. In practice, it is difficult to measure the environmental dimension of BBSD due to the scarcity of environmental baseline and time series data that would help in identifying trends (Weaver et al., 1997). In addition, the State of the Environment Advisory Council (1996) suggests that environmental impact statements have a very poor record of predicting in advance the environmental effects of human activity. Whether or not the BBSD framework is accepted, the integration of economic, environmental and social factors is believed by most people to be the key aspect of the sustainable development concept. The shift in thinking about the relative emphasis given to these three factors can be seen in Figure 2.1. In Figure 2.1a, the sphere of sustainable development is seen as the intersection between social, economic, and environmental factors. In Figure 2.1b, it is recognised that social and economic factors are put within a larger circle of ecological concern. Hence, these first two factors are constrained by ecological conditions. In Figure 2.1c, economic activity is seen as a sub-set of social activity, and they are both located within the ecological reality. Thus, the domain of sustainability is the overlap of all three sectors within the economic sphere. Harding quotes Ian Lowe who says that this is a visual way of stating the Brundtland Commission s codicil to its definition of sustainable development, that unless our economic and social decisions are ecologically rational, we will be unable to maintain living standards, let alone improve them (Harding, 1998, p.38). CHAPTER TWO: LITERATURE REVIEW 7

4 Source: Harding (1998) CHAPTER TWO: LITERATURE REVIEW 8

5 Implementing Sustainable Development The Brundtland Commission did not provide a blueprint of how to implement the sustainable development concept in government programs. Each nation has to work out how to integrate the economic, social and environmental considerations into sustainable development principles and guidelines. Mitchell (2002) states that to arrive at the same perception of sustainable development requires a long negotiation among all elements of a society. The absence of a blueprint about the way to implement sustainable development could be an advantage because every country is allowed to develop their own path depending on their economic, social and environmental circumstances. Harding (1998) also claims that there is no fixed interpretation of the sustainable development concept. In Australia, the national strategy for sustainable development that contains the core objectives and the guiding principles has been criticised by environmentalists as it allows economic expansion to continue and assumes regulatory mechanisms could work to protect the environment. Nevertheless, in developed countries such as Australia, integrating economic, social and ecological considerations into development decisions could be relatively easier to do because their high level of prosperity enables them to incorporate social and environmental issues without jeopardizing their economic competitiveness. However, in developing countries such as Indonesia, that are still struggling to meet their basic needs, environmental issues and the welfare of the next generation may not be a dominant concern. Doubts exist not only about restrictions on using natural resources; critics in developing countries also claim that the sustainable development concept only accommodates the western capitalist system, a reason why it faces difficulties when attempts are made to implement in their country (Mitchell, 2002; and Harding, 1998). CHAPTER TWO: LITERATURE REVIEW 9

6 Decentralisation and Sustainable Development A major global strategy for implementing sustainable development in both developed and developing countries is decentralisation. Decentralisation refers to the transfer of state assets or power to local or regional decision making bodies. It includes non-government organisations, because NGOs are also actors in the complex, multi-jurisdictional domain of environmental management. The transfer of authority is expected to promote both democratic and development objectives (Lane et al., 2004). Administrative decentralisation, which may be in the form of transfers of the administrative apparatus of the central government to the regional or local offices of central government (deconcentration) or to sub-ordinate governments or non-state associations (devolution), and democratic decentralisation, that transfers resources and power to lower levels of authority or non-state associations, are means of locating governance closer to the people. This is thought to reduce the high transaction cost when implementing government policy (Lane et al., 2004). Decentralisation of environmental governance is expected to enhance fairness and equality and create more effective strategies for management. However, its complexity has not got sufficient attention. Mitchell (2002) argues that a need to increase participation and roles of local people in environmental and resource management has to be followed by the creation of a common purpose, interest, or vision so the people can work to achieve sustainable development. According to Lane et al. (2004), the aspects of decentralised environmental management that need to get more examination are: (1) accurate, empirical evaluation of the outcomes of decentralised environmental management, which has proven very difficult; (2) experiences in developing countries that environmental management in the decentralised mode has caused the domination of local elites, deep authoritarianism in governance, and sometimes increased intolerance toward minorities; (3) the importance of CHAPTER TWO: LITERATURE REVIEW 10

7 central government as a mediating force, especially in the rush to decentralise governance; and (4) the risks from participatory processes of policy deliberation Sustainable Development in Indonesia The Framework for Environmental Policy Indonesian development has focused on economic growth and maintaining political stability, resulting in the exploitation of natural resources and on-going environmental destruction. Indonesian Governments have recognized the need for sustainable development in principle even though the implementation is still questionable. The Broad Outlines of the Nation s Direction (Garis-garis Besar Haluan Negara, GBHN) states that, in development implementation, natural resources should be utilized rationally. Extraction of the natural resource should be managed without damage to the human environment, implemented with integrated policy and allowing for needs of the next generation (Soentoro, 1997, p.6). One point in the Constitution of the Republic of Indonesia states that land, water and their natural resources are controlled by the state for the prosperity of all Indonesians. This is regarded as the legal framework for environmental protection and sustainable development. There are further regulations that could support the implementation of sustainable development in Indonesia (Soentoro, 1997). However, environmental policy in Indonesia is not integrated into the political and economical structure (Soentoro, 1997). One example is the national program of transmigration. It was clearly an environmental policy since it was intended to reduce pressure on the environment in the highly populated areas. However, it subsequently introduced new pressure and even worse destruction of the natural resources in these resettled areas. This occurred CHAPTER TWO: LITERATURE REVIEW 11

8 because the program was aimed to fulfil a political need rather than considering the capacity of the new environment. Discussion about sustainable development has been held in a limited circle that mainly involves government and NGOs and rarely involves widespread public participation. Discussions are focused more on individual sectors and not within a framework of sustainable development. In 1997, there were two discussions relating to sustainable development at the national level. However, these seminars were more oriented to evaluate the implementation of the Rio Conference s agenda than to develop a sustainable development framework (Soentoro, 1997). An environmental NGO, Wahana Lingkungan Hidup Indonesia (WALHI), points out that the lack of experts in environmental matters means that many decisions made by the Government are often detrimental to the environment (WALHI, 2001) Regional Autonomy and Environmental Governance The policy of regional autonomy has had an impact on environmental governance in Indonesia, including oil palm development and deforestation (Casson, 2000). This policy has been expressed in two laws. Law No. 22/1999 is about the share of authority between national and provincial or district government levels and Law No. 25/1999 is about the share of income between national and provincial government. These provide the bases of regional autonomy, decentralizing authority to the government in the provinces or districts to raise income for themselves. These laws have been long awaited, but the provincial and district governments seem not ready to implement them, since for many years all aspects of government were centrally controlled. The situation is worse due to the economic crisis. All regions face difficulties in overcoming their problems such as unemployment and the increased number of people living in poverty, while the development budget (Dana Alokasi Umum, DAU) from central government is not sufficient to support provincial and district programs. With CHAPTER TWO: LITERATURE REVIEW 12

9 more power now in their hands, the local governments are now tempted to release permits to investors to manage natural resources. There are two benefits gained: (1) the government can collect taxes and fees from each permit issued, and (2) it will generate extra jobs (Brodjonegoro, 2001). WALHI (2001) has made a list of negative impacts of the implementation the regional autonomy laws. 1. The transfer of authority and responsibility for environmental matters to the district and provincial governments is not followed by allocating sufficient funds and adequate numbers of experts. Hence, the decisions made are often detrimental to the environment. 2. Since the basis of regional autonomy is more at the district level of government, decisions made relating to the management of natural resources never consider the other districts that have the same ecosystem. Hence, the negative impacts of these decisions spread to the neighbouring districts. 3. The head of district is elected by the local legislative members (Dewan Perwakilan Rakyat Daerah, DPRD), and he/she only has responsibility to report his/her work to these DPRDs. The aspirations of local people are often ignored. 4. The local government unselectively issues permits relating to the management of natural resources such as wood utilisation permit (WUP) in order to raise income. This leads to the overexploitation of natural resources in the region. One recommendation given by WALHI is to broaden the territory of a province or district so that the boundaries correspond to ecosystems rather than administrative boundaries as currently applied. However, this idea has not received a positive response. The tendency now is more to the creation of new provinces and districts since it is believed this brings development to the people more rapidly. CHAPTER TWO: LITERATURE REVIEW 13

10 The controversy about the implementation of regional autonomy in Indonesia continues. Local governments are not only criticised by environmental NGOs, but also by entrepreneurs who complain about too many taxes and fees. Arguments to revise some points in these laws are viewed suspiciously by local government as an effort to take back the powers it has recently acquired Oil Palm Plantations in Indonesia History of Oil Palm Development Tropical forests where rainfall is plentiful and temperature and humidity are high are the ideal area for oil palm plantations. All of Indonesia is suited to oil palm cultivation, excluding East Java, the Lesser Sunda Islands and part of Sulawesi (Okamoto, n.d.) Large scale oil palm cultivation in Indonesia started in During Dutch colonization, Indonesia surpassed West Africa to become the world s top exporter. However, most of the profit went to the Netherlands. Even worse, many local community lands were taken in order to extend the area of plantations. The Javanese were forced to be workers in plantation areas, which were mainly located in Sumatra. The sector experienced a slow-down in growth during and after the Japanese occupation ( ). In 1957, the Indonesian Government seized and nationalized agricultural estates owned by foreigners. Military leaders then acted as estate operators to monitor as well as to control labour movement and performance (Okamoto, n.d.). The steady growth of demand for crude palm oil (CPO) is one reason why this crop has become more attractive lately (Okamoto, n.d). Unlike most estates in Indonesia that have experienced stagnant growth, the number of large-scale estates producing oil palm, the area planted, and total production have all increased steadily. The number of large-scale oil palm estates increased from 678 estates in 1998 to 710 estates in 2002, the planted area increased by 43%, and oil palm production by 25% (Table 2.1). Smallholder oil palm also CHAPTER TWO: LITERATURE REVIEW 14

11 showed an increase of total planted area and production even though the increase was not as high as shown by the large estates. Table 2.1 shows that the smallholder s planted area and oil palm production increased by 37% and 65% respectively from 1998 to Table 2.1 Oil Palm Area and Production, 1998 to Large Estates - Number of large estates Planted area (000 ha) 1,878 2,398 2,441 2,616 2,690 - Production (000 tonnes) 4,013 4,455 4,575 4,757 5,029 Smallholders - Planted Area (000 ha) 891 1,038 1,190 1,206 1,222 - Production (000 tonnes) 1,348 1,544 1,978 2,181 2,227 Source: Statistical Year Book of Indonesia (2002) Policies Supporting Oil Palm Plantation The International Monetary Fund (IMF) has had a role in the expansion of oil palm plantations especially by large private companies. In point number 39 of the letter of intent between IMF and the Indonesian Government signed in 1998, the IMF forced the Indonesian Government to open up to foreign investment in oil palm plantation development (Adhiati and Bobsien, 2001; Down to Earth, 1999). Another set of regulations that have had a great impact on the development of oil palm plantations are those released by the Minister of Forestry and Plantations. Okamoto (n.d.) outlines some decrees relating to oil palm plantations. First is Decree No. 376/1998 dealing with criteria to convert forest to oil palm plantations. The forest areas which can be released to be an oil palm plantation area have to be classified as non-forest land in the provincial land use plans (PLUPs) or Rencana Tata Ruang Propinsi (RTRP), be vacant or cleared land as seen in a recent Landsat image, and be at least 100,000 hectares. CHAPTER TWO: LITERATURE REVIEW 15

12 However, in practice, the provincial land use plan and the forest classification in the forest use plan set by the central government do not always match. Once the provincial government has decided the PLUP, the forest use plan by the central government is no longer utilized. This may explain why some areas of conservation forest change their function into oil palm plantation areas. The next is Decree No. 728/1998 about restrictions on the area of logging concession rights and plantations. Each plantation company was limited to have a maximum area of 20,000 ha at the provincial level and 100,000 ha in total nationwide. In practice, a company can have more than that by using another name to get another permit. Decree No. 107/1999 contains guidelines for issuing permits for plantation projects. The only institution that issues the permit is the Minister of Forestry and Plantations, except for small plantation projects (25 to 200 hectares). This decree also aims to give a wide opportunity for local people to be involved in oil palm plantations but the only operator recognized is in the form of a rural cooperative (Koperasi Unit Desa, KUD). This means that the government does not recognise other forms of local community organizations that have existed longer and that have their own way to protect the forest and environment. The next is Decree No. 614/1999 that contains guidelines for mixed forest plantations. An agricultural estate crop on forestland can obtain approval, that is, forestland can be used for plantation development but the classification continues as forestland. According to Okamoto (n.d), this decree changes the thinking toward the forest. Even though the vegetation in a forest has changed as consequence of the presence of plantations, its status remains regardless of the change of vegetation and forest function Schemes for Smallholders The Nucleus Estate and Smallholder (NES) or Pola Inti Rakyat (PIR) System was adopted in the 1970s. Under this system, the private company CHAPTER TWO: LITERATURE REVIEW 16

13 became the nucleus estate and each smallholder or farm household received two hectares for cultivation and one more hectare for housing and subsistence gardening. The company provided cultivation technology and agricultural supplies as well as purchased the harvest. In return, the farm household had to pay back loans in the form of credit units for what they had received, including the land (Okamoto, n.d.). Even though the NES system conceptually aimed to provide employment, especially to those involved in the transmigration program, there are many critics of this scheme. Along with industrial forest plantations (Hutan Tanaman Industri, HTI), NES schemes had successfully distributed customary lands to the wealthy, had a record of poor wages (Carrere and Lohman, n.d.), made the farmers very dependent on the nucleus company, and bore high risks (Okamoto, n.d.). Supported by the national transmigration program, NES schemes enabled investors to penetrate new areas of Indonesia s rainforests (Adhiati and Bobsien, 2001). Despite the serious problems emerging from implementation of NES schemes, the Asian Development Bank (ADB) considered NES projects especially oil palm plantations, as successful in terms of changing industry policies and structure, increasing crop production, and contributing positive economic impacts (Adhiati and Bobsien, 2001). The Prime Credit for Rural Cooperative Members (Kredit Primer untuk Pengembangan Anggota or KPPA) scheme is conceptually the same as the NES scheme except that the cooperation between companies and households is built through rural cooperatives. According to Florus and Petebang (1999), KPPA schemes are used as one way for large estate companies to get credit. The companies took advantage of the government policy to give credit to rural cooperatives and small-scale entrepreneurs. In order to get that credit, the companies encouraged establishment of cooperatives in rural areas. In order to establish a rural cooperative, it is necessary to have 750 members without strict CHAPTER TWO: LITERATURE REVIEW 17

14 requirements about the membership. It is not unusual in practice to have members who are newborn babies or employees of the estate companies Some Issues Relating to the Expansion of Oil Palm Deforestation and Other Environmental Problems The expansion of agriculture is blamed as a cause of the current rapid deforestation in the tropics. It accounts for up to 20 million ha of lost forest annually (Barraclough and Ghimire, 2000). It has been identified as a main cause of deforestation in Indonesia (Casson, 2000). Forestland becomes the target since an oil palm plantation must be at least 3000 hectares in order to be economically viable (Okamoto, n.d.). Despite the presence of 50 million hectares of critical land (i.e. land in which there are insufficient trees to protect the land from erosion) and abandoned land, the government has still allowed the conversion of natural forests for oil palm plantations. The investors prefer to develop oil palm plantations in conversion forest because of the large profits coming from the use of Wood Utilization Permits (WUPs) or Izin Pemanfaatan Kayu (IPK). The permit-holders are allowed to sell forest products such as varieties of wood and rattan. Some of them get benefit from re-selling the WUP to other companies (Jakarta Post, 2002). The Jakarta Post (2002) reported the continuing plan to convert Indonesian forests. Apart from around four million ha that has been approved to convert, including limited forest production area, permanent production forest area, and convertible production forest area, another 8,204,524 hectares of forest area were in process to get approval. Other environmental problems that have been related to the expansion of oil palm plantations are forest fires and haze, loss of biodiversity, soil erosion, and health problems. According to Suyanto et al. (2000), the use of fire in land clearing for oil palm plantations was the most common cause of forest fires, smoke, and haze problems. The companies prefer that method since it is CHAPTER TWO: LITERATURE REVIEW 18

15 cheap and effective. In addition, fire is also an effective method to drive off local communities from their land. Later on, these threats led to acts of revenge by the locals by burning the oil palm trees owned by the private companies. Loss of biodiversity and increased soil erosion risks are further damage caused by the implementation of oil palm plantations. This especially applies to Nucleus Estate and Smallholder (NES) schemes since the investors can more readily penetrate the forestland with government backing and financial support from the Asian Development Bank (ADB) and the World Bank (Adhiati and Bobsien, 2001). Compared to oil palm plantations, rubber agro-forests are more sustainable because of a long production cycle and relatively high biodiversity. According to Suyanto et al. (2000), jungle rubber contains plant biodiversity from one third to one half that of natural forest. One adverse impact of oil palm development that has not received attention in Indonesia is the use of chemicals. This is very likely damaging the health of workers such as has been reported in Malaysia (Okamoto, n.d.) Land Tenure Analyses of land tenure systems are important to understand the nature of the deforestation process. Land tenure relationships are a good indicator of social relationships in the broader society since they reflect the relative power of different social classes and diverse ethnic groups (Barraclough and Ghimire, 2000). The Basic Agrarian law (BAL) of 1960 aimed to end the dualism between western systems and the traditional unwritten land laws, to redistribute land to small farmers, and to limit too much land being held in few hands, or landlordism (Contextual Information for Indonesia, n.d.; Down to Earth, 1999). However, in reality the land was not equally distributed. An example is the practice of issuing Location Permits (LPs), which give the exclusive right to acquire land within the permit area. In practice, this right has been going to a small number of conglomerates (Contextual Information for Indonesia, n.d.). CHAPTER TWO: LITERATURE REVIEW 19

16 Land disputes between locals and the large oil palm plantation companies emerged when the industry extended to areas outside Java (Okammoto, n.d.). This has happened because the national land law does not accommodate all customary land rights of local people. For example, the concession right given to the companies is used to exploit the forest and ban the local people from harvesting the forest-products, even though for generations they have been occupying the land and using the forest-products for their livelihood. Government Regulation No. 24/1997 states that the transfer of land involving both registered and unregistered land parcels should be carried out in front of a land deeds official (Pejabat Pembuat Akta Tanah, PPAT). However, in remote areas, transactions in land still follow customary principles, so evidence of ownership is virtually impossible to obtain (Contextual Information for Indonesia, n.d). This later leads to conflicts with companies that claim to be the owners of the land and indeed hold a certificate to prove ownership. Land conflicts cannot be dismissed since they will be a source of risk and uncertainty for investment in oil palm plantations. One way to resolve the conflicts between local communities and companies that obtain permits to use forest-land is to activate a public consultancy mechanism (Jakarta Post, 2002) Employment In 2002, the unemployment rate in Indonesia was 9%, up around 1% from 2001 (BPS Statistics Indonesia, 2003). Hence, creating jobs is a high priority. Oil palm plantations are considered to be a labour-intensive industry since from the early stages a plantation needs many workers. Under the Labour Recruitment from District Scheme (Antar Kerja Antar Daerah or AKAD), the oil palm companies have to recruit seventy per cent of workers from those CHAPTER TWO: LITERATURE REVIEW 20

17 resident within the area of the plantation and the remaining thirty per cent from surrounding villages (Sargeant, 2001). Cheap labour and availability of land encouraged Malaysia s entrepreneurs to invest in oil palm plantations in Indonesia (Casson, 2000). Meanwhile the oil palm companies enjoyed abundant workers provided by the transmigration program (Adhiati and Bobsien, 2001; Okamoto, n.d.; Carrere and Lohman, n.d.). Besides the cheap labour, the investors got further benefit from subsidies given by government to overcome the risks and uncertainty in involving the smallholders (Adhiati and Bobsien, 2001). However, NGOs such as WALHI and Down to Earth argue that the employment offered by the oil palm companies in fact has not improved the standard of living of villagers. They were forced to be labourers in oil palm development while actually they can earn more money from small rubber plantations and other activities they have done before (Sargeant, 2001). The transmigrants found their conditions under the NES schemes worse than before (Adhiati and Bobsien, 2001) Oil Palm Development in Malaysia and Papua New Guinea Malaysia In Peninsular Malaysia, the development of large plantations to produce rubber and oil palm was one government program to reduce rural poverty in the early years of independence and was responsible for much of the deforestation that occured. Deforestation went on rapidly during the 1950s and 1960s. Between 1973 and 1992, the forested area declined more slowly from 22,940 million hectares to 19,352 million hectares. About one-third of this area went to agriculture (Barraclough and Ghimire, 2000). The contribution of palm oil to GDP increased from 4.3 per cent in 1980 to 8.4 per cent in This industry became a source of livelihood for about 200,000 rural families in government land schemes and individual smallholdings, and gave field jobs to some 120,000 workers on estates, apart CHAPTER TWO: LITERATURE REVIEW 21

18 from a substantial number of people employed in ancillary supporting industries (ESCAP, 2002). Despite the great contribution of the oil palm plantation sector to total GDP, the expansion in Sarawak was considered to benefit only a few large companies that had links to the local elites, at the expense of the local people and the environment. It has nearly resulted in human rights violations. Many of these plantations are being implemented in indigenous traditional territories, which mean that those local people have lost their livelihood and vital resources such as forest products that were traditionally used by local communities. In turn, they gave their land up to be labourers with low pay and working under unfavourable conditions (World Rainforest Movement Bulletin, 2001) The oil palm expansion has now reached other countries as the Malaysian Government and those companies actively promoting oil palm have expanded to Indonesia, the Philippines, India, Papua New Guinea, Solomon Islands, Nigeria, Guyana, Honduras and others. It is very likely they will repeat the same behaviour pattern in these countries (World Rainforest Movement Bulletin, 2001) Papua New Guinea Oil palm has been cultivated in Papua New Guinea for the past 31 years. An approximate area of 31,000 hectares is presently under oil palm plantations. PNG is the world s seventh largest palm oil producer and the third largest exporter of palm oil. During recent years, the oil palm industry has been expanding throughout PNG, mainly in West New Britain Province, which is now well known as the oil palm province (World Rainforest Movement, 2001). There is concern that PNG, which possesses one of the planet's largest remaining areas of tropical rainforest, will lose its richness due to the expansion of oil palm plantations. Environmentalists argue that the loss of forest in this CHAPTER TWO: LITERATURE REVIEW 22

19 country means the loss of unique biodiversity (Barcelona Field Study Centre, 2004) Government policy reinforced the development of oil palm by giving some incentives such as offering tax credits to oil palm estates and reducing import duty on agricultural imports. It seems that corporate profits and macroeconomic benefits are more important than local people s livelihoods and environmental conservation (World Rainforest Movement, 2001). PNG has a unique land tenure system, which was recognized by PNG s constitution. Over 95 per cent of lands are under customary ownership. For the local people, land means everything such as a source of livelihood, power, authority, and status through ownership, and above all a source of security and identity. Such oil palm plantation projects have adverse impacts on these attributes of customary ownership (Tan, 2003). Unlike in Indonesia, where disputes between local people and oil palm companies have never ended in favour of the locals, there is at least one case in PNG involving a dispute between the Maisin (indigenous people) and a Malaysian oil palm company that ended in a decision to suspend the project (World Rainforest Movement, 2001). The government then excluded the Maisin customary land from any plan for timber and large-scale agricultural development (Barcelona Field Study Centre, 2004). Besides land disputes, there emerged other social problems that were previously unknown by rural people, such as the increase of crime and domestic violence. This has resulted since the money from the sale of oil palm mostly goes to the men who spend it to buy alcohol (Tan, 2003) Conclusion Integration of economic, environmental and social factors is believed to be the key aspect of the sustainable development concept. However, both developed and developing countries still face some obstacles to implement it. CHAPTER TWO: LITERATURE REVIEW 23

20 While the developed countries are able to include the equity of future generations, this may not be a dominant concern for the developing countries. Decentralisation is a strategy to implement sustainable development that aims to promote democratic and development objectives. Its complexity needs to get more attention in order to enhance management of environment. Even though Indonesia has adopted the sustainable development concept, the implementation is still questionable. Implementation of regional autonomy has led to concern due to the bad management of the environment and natural resources. This is caused by lack of supervision and resources from the central government, and incentives at the local level for rapid development. Oil palm development in Indonesia has shown a substantial increase, encouraged by some government policies such as some decrees issued by the Minister of Forestry and Plantations and various schemes for smallholders and transmigrants. IMF also supports the expansion of oil palm, especially by large private companies. However, the expansion is related to some environmental and social problems, which are considered to dilute the benefits given. If it is compared to other countries such as Malaysia and Papua New Guinea, the expansion of oil palm in Indonesia has followed a similar pattern, including the emergence of quite similar problems. CHAPTER TWO: LITERATURE REVIEW 24