The rain had started to fall in early November. Indonesian citizens rejoice, especially tens of thousands who live in areas affected by forest and land fires. At least the rain could reduce the impact of haze in their environment.
In the midst of the fires of forest and land fire news in recent months, the government in this case the Ministry of Environment & Forestry actually announced that its area in Indonesia continues to decline. Until September 2019, the area of forest and land fires decreased by 87.41% compared to 2015.
The Executive Director of the Indonesian Forest Concession Association (APHI), Purwadi Soeprihanto, said that in 2015 the forest and land fires area reached 2,611,411 hectares, in 2016 covering 438,363 hectares, 165,484 hectares (2017), 510,564 hectares (2018). This year, it will drop again to only 328,724 hectares.
The Ministry of Environment and Forestry also recorded that 328,724 hectares of fire consisted of 239,161 hectares or around 72.8% located on dry land. The remaining 89,563 hectares or 27.2% are in peat lands. “That is based on data from the Ministry of Forestry and Environment until September 2019,” he said in a written statement in Jakarta, Monday (10/14/2019).
In addition, said Mr Soeprihanto, the area of Indonesian forest and land fire this year is also smaller than the forest and land fire that occurred in the world. This year, forest and land fires also occur in South America such as Brazil and Bolivia, especially in the tropical forests of the Amazon, Canada and Russia. Based on the data, the area of forest and land fires in Russia reaches 10 million hectares, Brazil 4.5 million hectares, Bolivia 1.8 million hectares, Canada 1,828,352 hectares, United States 1,737,163 hectares, and Australia 808,511 hectares.
More interesting to the public’s attention, when the claim to reduce the area exposed to forest and land fires was announced, The Star, media from Malaysia actually mentioned three Indonesian companies with offices in Singapore related to forest and land fire. Ketapang Industrial Forest was closed by Indonesian authorities after a fire was discovered on its land, linked to Sampoerna Agri Resources which based in Singapore. The other two, pulp giant Asia Pulp and Paper (APP) and APRIL, were also linked to the fire.
The problem is that the three companies are the backbone of the national production forestry sector, which also supports the non-oil and gas sector. The disruption to the performance of the three companies will result in non-oil and gas export operations, especially as Indonesia is experiencing a slowdown in the manufacturing sector. As revealed by the Head of Statistics Indonesia (BPS), Suhariyanto, the large and medium manufacturing industry recorded that in the third quarter of 2019 it only grew 4.35%. This achievement slowed compared to the same period last year (YoY) of 5.04%.
BPS data is not a mere figment. See, the value of exports of national panel/plywood products in the first semester of 2019 decreased 16.32% compared to the first semester of the previous year. At present there are tens of thousands of m3 of stock of panel/plywood products that cannot be marketed. “Sluggish world demand and falling world prices of plywood from an average of US$ 800 to US$ 500 due to the impact of the US-China trade war,” said Mr Soeprihanto, through his written statement in Jakarta, Monday (07/08/2019).
He added, the decline in the value of panel/plywood exports had a major impact on the reduced demand for domestic natural logs, which led to a fall in the price of the wood.
Taxes Come Down
The confirmation certainly turns on the danger alarm. The decline in the performance of the industrial sector will result in a decline in state revenues, in this case taxes. It is common knowledge, the potential of Indonesia’s tax shortfall by the end of 2019 could reach more than IDR 200 trillion, indicated from revenues until October 7, 2019 only reaching IDR 912 trillion. This figure only increased by around IDR 110 trillion from the realization of January-August 2019 valued at IDR 801.16 trillion.
If sources of income weaken, both the private sector and the government must look for sources of liquidity at a more expensive cost in the future. Not surprisingly, with the information shown by NGOs and environmentalists of the three companies, both Indonesian and Singaporean governments chose to be cautious. It is because the performance of the three companies brought tax benefits and job creation in Indonesia while increasing the quantity of financial business for Singapore as a service provider country.
The stance of the Singapore National Environment Agency (NEA) is not so surprising when asked for a firmer response to the haze phenomenon and the potential involvement of the three companies. The NEA chose to answer diplomatically, that they were monitoring the situation closely, even though they had not yet taken action against companies under the Law on Cross-Country Smoke Pollution.
The law targets those who cause or allow fires if combustion produces an unhealthy level of haze in Singapore — defined as a 24-hour Pollutant Standard Index (PSI) of 101 or greater for 24 hours or more — can be fined up to US $ 100,000 a day, a maximum of US$ 2 million. However, no fines have been handed down since the law was passed in 2014.
Furthermore, news about the three companies was also written by the Indonesian forestry news site, Foresthints. They published an article saying that fires had been detected in the APP and APRIL areas. Citing satellite information from the Indonesian government, the article said that forest and land fire was detected in APP’s concession areas in Sumatra and Kalimantan.
In Jambi Province, Sumatra, a fire was detected in Wira Karya Sakti (WKS), APP’s pulpwood concession area. The article also mentioned that the Indonesian Ministry of Environment and Forestry had sealed the concession area in West Kalimantan. The article mentioned that the company claimed the incident occurred near their concession area. Not only APP Sinar Mas Group company, Foresthints’s article also stated that one of the concession areas owned by APRIL and one of the main suppliers in Riau Province, Sumatra, was also sealed by the Indonesian government in August because of a fire.
In response, APRIL said in the article that they reported all fires in the concession. They continue to work with the local police in reporting and investigating any fire incidents. “This includes supporting investigations carried out by the Ministry of Environment and Forestry,” an APRIL spokesman said, adding that work was carried out to protect the burned area in the concession area from further damage after police investigations.
The third company with a link to the smog, and the Singapore office, is Sampoerna Agri Resources. In September, Minister of Forestry and Environment Siti Nurbaya Bakar appointed Ketapang Forest Industry as a Singapore-affiliated company that was between companies and plantations closed by the Indonesian government after a fire was detected in their concession. Ketapang Industrial Forest is a subsidiary of the Sampoerna rubber plantation in West Kalimantan.
