The biggest international story around Indonesia over the past week has been the passing of President Jokowi’s Omnibus Law.
The Bill was in train for more than a year; it amends 79 laws and more than 1244 clauses in existing legislation covering labor law, taxation, business registration and more. Domestic supporters see it as a much-needed reform process for Indonesia’s labyrinthine legislative and regulatory systems. Domestic detractors see it as a means of stripping worker protections, which has been on display this week in numerous protests in Jakarta.
This domestic debate is the most important aspect of the Bill. However, in international press, the coverage took on a distinctly environmental and anti-palm oil flavour. The specific points at issue were the streamlining of the environmental impact assessment rules – known as AMDAL – in Indonesia.
Mighty Earth, which recently was forced to reveal their secret funding by the Norwegian Government to undertake anti-palm oil activity, has been leading the international campaign against the Bill. It has aligned with a small set of investor groups and religious activists that appear to be connected.
Over the past six weeks, Mighty Earth, has issued no less than three statements against the Bill, calling on the President to halt the Bill, arguing that the palm industry and major international corporations should be publicly opposing the Bill, and that the Bill will undermine the President’s moratorium.
Further, Mighty Earth, which is connected to an offshoot of a lobbying firm established by former US Congressman Henry Waxman, has been actively spruiking opposition to the Bill in US media outlets such as the NYT, as well as international outlets BBC and DW.
Mighty Earth is entitled to its own opinions, but it is not entitled to its own facts.
Here’s the question: why is the Norwegian Government paying several US organizations to oppose Indonesian lawmaking processes under the guise of an anti-palm oil campaign? Critically, it’s also attempting to goad international companies such as Unilever and Jardine Mathieson into Indonesia’s political affairs, and appears to be organizing international investors to do the same.
The new, arguably more aggressive, element to Mighty Earth’s campaigning has come as the organisation’s campaigns manager – who has been making many of the new press statements — has registered as a foreign agent under the US Foreign Agent Registration Act. And the body paying for Mighty Earth’s anti-Jokowi activity? The Norwegian Agency for Development Cooperation.
Norway’s Ambassador to Indonesia Vegard Kaale may have some explaining to do. Perhaps it’s time for him to be called into the Ministry of Foreign Affairs.
Norway’s Ongoing ‘Interference’ in Domestic Indonesian Affairs Questioned
Norway’s bilateral cooperation with Indonesia has been well documented. Their support for the Presidential moratorium is endorsed by the Indonesian government and has been progressing well. Norway’s financial incentives for reducing deforestation in Indonesia has resulted in a payment to Indonesia.
However, this cooperation was undermined early this year when the Norwegian Government-backed Rainforest Foundation wrote a report attacking Indonesian biofuels and the free trade agreement between the two countries.
In a letter seen by POM, Norwegian Ambassador to Indonesia wrote to Indonesian palm oil stakeholders, “During our partnership, Indonesia has implemented a number of policy reforms to improve its forest and land use practices. Indonesia has now delivered results in reducing deforestation… Our partnership appears to be on the right track … The fact that the report has received Norwegian financial support does not mean we agree with or take any responsibility for its conclusions.”
In light of the ongoing attacks from the NORAD-funded Mighty Earth these words ring hollow. In other words, Norway is incredulously arguing they don’t endorse the message, but are prepared to endorse it financially. This prompts bigger questions.
- First: why is Norway continuing to pay a former U.S. Congressman turned lobbyist millions of dollars to interfere with domestic Indonesian political affairs and policy reforms during the largest economic and health crisis in recent memory?
- Second: The Omnibus Law is unlikely to impact existing rules around the moratorium and is a major reform personally backed by the President. Will Norway disavow further attacks on the President’s policy reforms?
- Third: Is Norway serious about maintaining a cooperative partnership with Indonesia?
It’s up to Norway to decide, but the ongoing attacks from Mighty Earth call into question Norway’s commitment.
FELDA and the U.S. Border Ban
The detention order on FGV palm oil that was issued by US Customs and Border Protection (CBP) made big headlines across the U.S. and throughout the world. It has to some extent been brushed off by Kuala Lumpur, stating that FGV’s US shipments only make up around 4-5 per cent of its production. Former Plantations Minister Teresa Kok, stated that it is ‘old issues’.
That misses the point entirely, and highlights the bigger problem palm oil is facing in the US. There are different aspects to this problem that need to be considered: the historical background to the labor complaints; the new supply problems of the CBP complaint; and the parties behind the complaint – and its possible relationship to Norway.
First, some background.
Labor issues first emerged around palm oil in 2012, when two new US laws were introduced to create greater supply chain transparency. This prompted some business-backed NGOs in the US to undertake public reporting on goods, particularly from countries that were to be part of the US-backed Trans Pacific Partnership Agreement – including palm oil. Rainforest Action Network, for example, received USD150,000 to undertake labor campaigns in relation to palm oil.
This advocacy activity prompted the US State Department to elevate Malaysia to a ‘Tier 3’ level on the US Trafficking in Persons watchlist, and the US Department of Labor added Malaysian palm oil to its list of international goods that are ‘likely’ to be made with forced or child labor.
In 2015, the labor issue reared its head again, as the Wall Street Journal ran an article accusing Malaysia’s FELDA of labor rights violations. A lengthy complaints process via RSPO has been in train since then, including time-bound action plans from FELDA.
Second, the CBP complaint.
The CBP complaint is different in that rather than this being about voluntary sustainability under RSPO, this is about compliance with US Federal law, and whether the CBP considers it ‘reasonable’ that a product might be made with forced labor. Petitions can be submitted by any interested party.
This is of acute commercial significance as it disrupts a supply chain. To its credit, FELDA has attempted to engage with other bodies such as the Fair Labor Association in an attempt to resolve the situation via action plans and other measures.
Third is the NGO connection.
As we reported in June last year, the US petition was submitted by US law firm Grant and Eisenhofer. It was supported by three US-based NGOs, Rainforest Action Network, SumofUs and the International Labor Rights Forum.
All three organizations coordinate extensively with the work of Mighty Earth and the Norwegian Government. So, why have these NGOs gone after FELDA, rather than any other small companies that are likely to have much lower levels of compliance on the labor front?
FELDA and US consumer goods giant Procter and Gamble (P&G) have had a joint venture for some time, which has been criticized by SumofUs and RAN since at least 2016. In other words, it’s not just about hitting FELDA, it’s about hitting P&G’s supply chain.
As part of this action, this week, Green Century Capital opened an activist shareholder resolution for the P&G annual general meeting, calling on the company to make bigger commitments on palm oil sourcing. Green Century Capital is, unsurprisingly, a close ally of RAN and SumofUs. More importantly, Green Century coordinates with Mighty Earth on Norwegian-funded campaigns against commodities in Southeast Asia and Brazil.
With the FELDA move, it is more than possible that the NGOs were not actually expecting the Trump Administration to enforce the labor standards under CBP. More often than not they simply use complaints processes as a means of drawing attention to an issue. The complainants against other Malaysian products that were subject to CBP orders – namely rubber gloves – have not been publicly named.
But there’s another element. Both have been working with the support of Norwegian-government backed NGOs for years. Given the ties between the Norwegian Government, Mighty Earth, Green Century and SumofUs, this begs a question: is Norway also backing Procter and Gamble’s palm supply disruptions in the US?
Labor Round Two?
The bigger problem for palm oil going forward is that the US Department of Labor has palm oil from both Malaysia – and as of this year Indonesia – on its list of goods produced by forced labor. This is supported by reports from the US State Department and USAID funded groups like Liberty Shared. These reports rely on – more often than not – reports produced by NGOs themselves.
When CBP makes an assessment of ‘forced labor’, the evidence needs to be “reasonable” but not necessarily conclusive. With the success of the new complaint – and the disruption to FELDA’s supply chain – we can expect that more US-based anti-palm NGOs will use this as a channel for disruption.
When it comes to the US, policymakers – and the general public – are less interested in deforestation than they are in labor rights. And this will hit home if Vice President Biden takes the White House next month.
By that time, four years under a Republican Trump Administration to address the issues will have been lost if the Democrats take over. It will be a rocky ride ahead, expect more attacks from the Mighty Earths of this world and it will require deft maneuvering from Jakarta and KL.