Indonesia. This past week in Jakarta was as politically dramatic as the world stage of Donald J. Trump – only with less tweeting and prime-time TV talking heads drama. But it was significant still for the global economy. If anyone thinks Indonesian politics are boring then they have failed to comprehend the fundamental shifts and threats that have now emerged for investors in Indonesia.
The week started off with an earthquake of Indonesian government actions beginning with the suspension of operations in the concessions of PT RAPP, a business unit of the Indonesian APRIL group, the world’s second-largest producer of paper. The government action was followed by a company announcement of layoffs, which impacted between 48,000-100,000 employees, families, contractors, and suppliers in Riau. Community leaders estimate the impact on the communities as high as 100,000 families impacting the small micro-economy of local vendors and suppliers.
For some time public voices calling for a ministerial shake-up surface in the public domain. In a poison pen response, the minister fired back accusing APRIL of dishonest management. The trust in the minister capability preventing the crisis is broken. APRIL officals and others warned the minister of the impact on the local economy will destabilize the region to a breaking point. APRIL, APP, and Caltex are the main employer in the province.
With a demonstration of 10,000-15,000 community members planned to march to the Governor’s office on 23 October 2017, the police mobilized about 2,000 police and army personnel to keep the increasingly tense situation calm. Officials admitted an outbreak of widespread violence would be difficult to contain.
#yangmemberimakankeluargasayajoko? (are you feeding my family, jokowi?) are surfacing in communities affected by the policies by the minister. Widespread anger against the Jokowi administration and foreign NGOs who agitated the situation with the government for years are increasingly surfacing on Facebook and Twitter.
In response officials of the Ministry of Forestry tried to calm the fast out of control spinning crisis and tried to correct the revoking of permits claiming only the work plans were revoked. As so often in Indonesian politics corrections made too late.
The layoffs are sure to negatively impact the ecology, economy, and domestic stability in the already radicalized Riau society. Situated near Singapore, the Riau province on the island of Sumatra now faces an uncertain future.
The RAPP shut-down announcement was followed by the announcement of the Indonesian Economic Affairs Coordinating Ministry on Thursday (19/10) appointing the conservation group World Wildlife Fund (WWF) to be the project management office in charge of setting up a joint secretariat to push through with the government’s agrarian reform. The public outcry on social media was equally one of shock and horror.
WWF, under Nazir Foaed, now Head of the peatland agency, was responsible and unable to prevent the destruction of the Tesso Nilo National Park. Interestingly, it was APRIL who donated the forest to create the national park. The WWF appointment is being viewed with great apprehension by the investment community. What economic or agrarian credibility WWF brings to the table remains a mystery.
The illusionary 1 billion fund from Norway remains as elusive. The Norway fund’s bankrolling the blackmail of countries like Brazil and Indonesia to chase the illusion of free-money in return for saving the planet is unlikely to solve the poor economic performance under Jokowi. Observers argue Norway is deflecting from its own “dirty” oil history, commonly referred to as the “Norwegian oil guilt.” Furthermore, Norway can’t escape the taint caused by the previous Norwegian ambassador being recalled over dubious dealings with local NGOs and solicitation of sexual favors.
This is a dangerous social experiment is in the making, particularly if we consider local, WWF-funded groups like Jikalahari, for example. Stacked with pro-Marxist activists who have no agrarian experience whatsoever who are now tinkering with complex social policies, Jikalahari is funded by foreign donors, primarily from WWF, as well as an NGO from Finland. These activists are the foot soldiers of its illusion to resurrect Indonesian socialism acting under the guise of environmentalism. One of the activists who is now Deputy “coordinator” of the WWF-funded local NGO, is known to be a member of the PRD, a local Indonesian leftist party and a Marxist clone of the banned PKI.
Before turning to pose as an environmentalist, the WWF-funded group’s leader was the campaign director associated with a left-wing political faction that executed suicide attempts in front of the palace in Jakarta and was involved in the premeditated murder of a blue collar worker in 2011.
The investment community has reacted to the RAPP suspension news with, “What the h….?” As the investment community nervously giggles and shakes its collective head in disbelief, the policy experiments have raised eyebrows throughout the region of a collective tilting to the left. But the greenies and foreign competitors are rejoicing at the news of Jokowi killing the powerhouse of the Indonesian economic machine.
APP and APRIL executives still struggle with the significance of the populist-socialist government direction of Jokowi destroying the paper & pulp industry, while many long-term observers are quietly looking for an exit from Indonesia along with their capital. Hushed behind cupped hands, many in the Indonesian-Chinese business community are asking, “Who is next?” Quietly, many are starting to support the opposition headed by former army general Prawobo Subianto, who is building up a Trump-esque movement that is gradually, but surely, shifting support away from Jokowi. At this juncture, it safe to predict that assets parked in Singapore are unlikely to return to the domestic Indonesian economy.
The investment community, which was already suspicious of the lackluster performance of the Indonesian economy under the current regime, is with this latest announcement expected to further depress the commodity market by 2-3 percent GDP. The foreign activists are celebrating, as Indonesia repeats the same mistakes made by Brazil. In the name of the illusionary “green vision,” the economy and the people will suffer.
But Jokowi and his NGO-stacked cabinet are pressing ahead with populist-ideologically driven agrarian reform and implementing a populist agenda of wealth redistribution, and land seizures using Article 28 of the 1945 Indonesian constitution under the guise of environmental protection.
“Using Article 33 of the 1945 constitution was too politically sensitive since the Indonesian left is using the article as its battle cry for nationalization of state assets,” said a Ministry of Trade official. “The use of Article 28 allows a less political problematic approach,” she added. Many view both articles as veiled nationalization efforts by the current regime.
The Jakarta Post wrote, “President Joko ‘Jokowi’ Widodo announced his administration’s agrarian reform plans earlier this year, aimed at closing economic gaps in the country by redistributing land to landless farmers and victims of natural disasters. The reforms’ ultimate goal, according to the government, was increasing productivity of low-income earners.”
Whereas the statement being well-intentioned is debatable, analysts expect the economy and wealth of communities will suffer. Forcing agrarian reforms at the expense of private investment will not replace income but will instead create a tremendous economic risk and income gap. The BRG restoration program is deeply troubled and officials stated in public that if the administration is unable to repossess land it will be unable to fund the BRG policies.
“With large unemployment, illegal logging will return, forcing communities to feed their families,” argues a Regent (Bupati) in Meranti, a district in the province of Riau affected by the ban against RAPP. Both APRIL and APP expect the widespread outbreak of unrest in protest of the government’s decision and an increase in returning to illegal logging.
The APRIL group, along with its competitor Sinar Mas Forestry/APP, has been long in the crosshairs of government intervention. Known for its non-conformist but technologically advanced production facility, APRIL, owned by the self-made billionaire Sukanto Tanoto, has since 1986 been targeted by sophisticated foreign-inspired NGO “black campaigns.”
This includes the shady Rainforest Action Network (which was recently named as a defendant in a US federal “mafia law” case), the Dutch Aidenvironment (which operates an NGO that targets APRIL and other commodity firms financial markets in Singapore), and a gaggle of foreign NGOs, including Mongabay.com, the Climate Land Use Alliance (CLUA), Greenpeace, Friends of the Earth, the Forest Peoples Programme, and their national agents, named by State Intelligence Agency as “agents threatening the unity of Indonesia.” This is a claim similar to the Indian government’s position vis-à-vis Greenpeace in particular.
Documents viewed show a constant economic targeting of Indonesian paper and pulp companies by foreign NGOs. The Ministry of Forestry and the Indonesian State Intelligence Agency (BIN) on 28 September 2017 held a closed-door meeting with the state forestry companies in Kalimantan, and named foreign NGOs and national NGOs acting as “agents” bent on disrupting the “unity of Indonesia.” Officials recognize the targeting of its state-owned companies is next and complaint about Greenpeace creating fake news. Activism does not differentiate in its targets. It is expected the successful campaigns to kill off APP and APRIL will turn against state-owned forestry and palm oil companies deepening the looming crisis for Jokowi administration.
WWF is linked through myriad NGO relationships to militant NGOs. Since the BIN meeting was organized by the Ministry of Forestry, questions have been raised by the public as to whether the minister knows about the threat to the unity of Indonesia.
“It raises the question why the ministry does not protect the domestic industry which is a world leader? But adopts a foreign NGO who has neither the expertise and as seen in Tesso Nilo, was almost dismissed for a lack of performance by the previous minister,” lamented a senior executive of Sinar Mas.
WWF, which only just recently faced a US criminal racketeering charge (which it denies), falls in the pattern of an increasing number of members of the public who are suing foreign NGOs like WWF and Greenpeace in criminal court. Greenpeace, the Rainforest Action Network, CLUA, and Aidenvironment (which has offices in Bogor), were all named in a second US federal RICO complaint.
Although the Greenpeace case against the Canadian Resolute was recently denied by a US federal judge, the court documents show concerning patterns of questionable criminal actions the federal judge avoided tackling. It is noteworthy that CLUA was named by Indonesian intelligence officials. Nasir Foaed, was in the pay of CLUA, before being recruited by Jokowi to head the Peat Restoration Agency. Also named in the briefing notes was CIFOR. The former Director General of CIFOR Frances Seymour was a consultant with one of its US industrial donors in CLUA. Seymour’s husband is a major donor to the former Obama administration.
The Jokowi administration is unlikely to support the paper and pulp industry. Despite statements by the minister that she is not “against the industry,” the actions against APRIL will spur mass unemployment and social unrest. And now a foreign NGO with a long history of failures while engaging in agrarian reforms does not provide much comfort.
Studies conducted by the World Bank and a just-released study by the economic faculty of the University of Indonesia highlight the 1-3 percent loss of GDP the government will suffer, a fact that is of great concern to the investment community.
Many political observers point out that wrong optics are triggering more concerning shadows of the past for the Indonesian-Chinese business community. “If the world’s second largest paper company, APRIL, can be suspended, take a guess who will be next?”, asked one Canadian executive in the paper industry. Sinar Mas, despite playing to the tune of the Jokowi administration, is certainly an equally lucrative target of opportunity.
“The Project Management Office (PMO) will become a facilitator between stakeholders in agrarian reform, a machine to propel the program,” Lukita Dinarsyah Tuwo, the secretary of the Office of the Coordinating Economic Minister, said in a press briefing.
According to Lukita, the PMO will keep communication going between the Environment and Forestry Ministries, Agrarian Affairs and Spatial Planning Ministries, Agriculture Ministry, State-Owned Enterprises Ministry, and Disadvantaged Regions and Transmigration Ministry to monitor progress on agrarian reform, including land certification and idle land redistribution. The industry, which is the largest economic engine and largest taxpayer to Indonesian coffers, is absent from the debate.
“This cooperation is important to improve governance and make social forestry a reality,” Rizal Malik, WWF Indonesia chief executive, said. Indonesia’s social forestry scheme, known as IPHPS in an Environment and Forestry Ministry decree, allows landless farmers to gain profit from degraded forests. The government has targeted nine million hectares of land throughout the archipelago to be managed under agrarian reform programs.
The contract between WWF Indonesia and the Economic Affairs Coordinating Ministry will last two years but Rizal said the contract could be either renewed or ended earlier if the reforms are completed before the deadline. One can hope that more mature political leadership soon wakes up and cancels this folly.
The underlying concern of these social forest concepts is problematic. Despite the warm and fuzzy self-image of feel-good policies, the recent announcement of suspending PT RAPP triggered a flood of anger, fear, and uncertainty within Riau. Replacing an industrial economy with half-baked, academic trial-and-error experiment has the potential of 90% with no scalable success.
The pro-WWF activists are jubilating and celebrating, but the now unemployed and their families are posing the relevant question on the heated social media platforms: “President Jokowi & Minister Siti, will you feed my family?”