President Joko Widodo must immediately resolve the dispute between Environment and Forestry Minister Siti Nurbaya and Industry Minister Airlangga Hartarto.
Peatlands restoration the bone of contention between the two ministers is linked to two major conflicting interests: environmental protection including prevention of forest fires and an economic interest worth hundreds of trillions of rupiah.
The problem started with Presidential Regulation No. 57/2016 on the regulation and management of peatland ecosystems and an implementing regulation issued by the Environment Ministry. Based on these two regulations, the government will restore 6.2 million hectares of peatlands in Sumatra and Kalimantan. The first stage will cover 870,000 hectares.
These regulations state that permit holders cultivating land can manage it until their permit expires. Those who have not begun cultivation are asked by the government to provide a peatland management plan. If they do not implement this plan, they will lose their license after two years.
A number of permit holders to operate commercial forestry industry and oil palm plantations have already complied with these regulations.
Actually, the dispute was triggered by the government itself. Industry Minister Airlangga Hartarto and West Kalimantan Governor Cornelius sent letters to President Joko Widodo objecting to the program of restoring peatlands.
They argued that production of timber and palm oil would be disrupted. Exports of these products, government revenues and income for individuals worth hundreds of trillions of rupiah would plunge.
The letter from Industry Minister Airlangga Hartarto even claimed that non-performing loans would blight the banking sector, Indonesia’s investment grade would suffer and unemployment would rise.
Perhaps the fears expressed by Minister Airlangga and Governor Cornelius will come to pass. The land covered by the restoration program is large. In his letter, Airlangga stated that the area of commercial forest affected by the program totaled 780,000 hectares, with oil palm plantations covering 1.02 million hectares, equivalent to 17 percent of the land cultivated by private companies.
The adverse effects of the restoration program will appear in a short time, while the development of new plantations will not bring immediate results. Like it or not, the government must ensure that exports of palm oil and its derivatives remain sustainable.
However, this does not mean that the government should abandon the program to restore peatlands that have long been exploited by commercial forestry and oil palm plantation companies.
The impact of land clearing by burning carried out by companies starting new business operations is no less alarming. The effects of these fires spread to other economic sectors and can have a serious impact on health.
Airports have to be closed, public transport is restricted, the number of respiratory tract infections increases drastically and relations with neighboring countries suffer.
All the government really needs to do is calculate the benefits and losses of the peatland restoration program. This should not be too difficult. The potential benefits and losses of peatland restoration could then be compared.
Essentially, the restoration program must go ahead with the minimum possible negative impact on timber and palm oil production.
Therefore, it is important that President Joko Widodo reaches a decision soon because there is a deadline for the restoration program. It must be completed by 2020. This means that the government has only three and a half years left to implement it.
In the implementation, the government could delegate the problem solving to the coordinating minister for the economy. Several options could be studied, and the decision can be taken at the level of the economic minister together with cabinet members.
The final choice is entirely in the hands of the President. However, there is every likelihood that whatever decision is reached, will not make everyone happy.
What must not happen is a complete standstill because of the government taking its own good time. The Masela gas field fiasco in Maluku must not be repeated in the peatland case.
This involved a long dispute between Coordinating Minister for Maritime Affairs Rizal Ramli, who supported the construction of a gas processing plant onshore and Energy Minister Sudirman Said, who wanted it to be built offshore.
President Jokowi eventually decided on the land-based option, but the project has yet to start because the investors have asked for a seven-year contract extension, because of the protracted absence of a clear policy.(*)