SHADOWS IN THE FOREST: JAPAN AND THE POLITICS OF TIMBER IN SOUTHEAST ASIA by PETER DAUVERGNE B.A., Carleton University, 1987 M.A., Carleton University, 1991 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY in THE FACULTY OF GRADUATE STUDIES (Department of Political Science) We accept this thesis as conforming to t required st ndar THE UNIVEROIT July 1995 © Peter Dauvergne, 1995 ______________________ In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives, It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. (Signature) Department of Political Science The University of British Columbia Vancouver, Canada Date July 26, 1995 DE-6 (2/88) SHADOWS IN THE FOREST: JAPAN AND THE POLITICS OF TIMBER IN SOUTHEAST ASIA ABSTRACT This dissertation creates two new theoretical tools to analyze connections between politics and environmental change. The first section develops the concept of Northern ‘shadow ecologies’ to understand the environmental impact of a Northern state on Southern resource management. A Northern shadow ecology is the aggregate environmental impact of government aid and loans; corporate investment and technology transfers; and trade, including purchasing practices, consumption, export and consumer prices, and import tariffs. After outlining Japan’s shadow ecology, the next part constructs an analytical lens to uncover salient Southern political causes of timber mismanagement. This spotlights modern patron-client links between Southern officials and private operators that debilitate state capacity to implement resource policies. Using these analytical tools, and building on extensive primary sources and more than 100 in-depth interviews, the remainder of the thesis examines the two most important factors driving commercial timber mismanagement in Indonesia, Borneo Malaysia, and the Philippines: pervasive patron-client ties between Southeast Asian officials and timber operators; and the residual and immediate environmental impact of Japan. In a continual ii struggle to retain power in societies with fragmented social control, Southeast Asian state leaders build potent patron-client networks that syphon state funds, distort policies, and undermine supervision of state implementors. In this setting, the state is often unable to enforce timber management rules as implementors -- in exchange for gifts, money, or security - - ignore or assist destructive and illegal loggers, smugglers, and tax evaders. Japan’s shadow ecology has expedited timber mismanagement, and left deep environmental scars that impede current efforts to improve timber management. Post-1990 Japanese government and corporate policy changes to integrate environmental concerns have marginally improved forestry ODA, and contributed to token corporate conservation projects. As well, there is now less Japanese investment, technology, and credit linked to logging. But massive timber purchases from unsustainable sources, wasteful consumption, timber prices that ignore environmental and social costs, import barriers that deplete Southern revenues, and the residual impact of past Japanese practices continue to accelerate destructive logging in Southeast Asia. Sustainable tropical timber management will require fundamental changes to Japan’s shadow ecology. It is also imperative to confront Southern political forces driving deforestation. While reforms will certainly face formidable -- perhaps insurmountable -- political and economic barriers, unless the world community tackles these issues, the remaining primary forests of Southeast Asia will soon perish. iii TABLE OF CONTENTS ABSTRACT ii TABLE OF CONTENTS iv LIST OF FIGURES viii ACKNOWLEDGEMENTS ix Chapter One NORTHERN SHADOW ECOLOGIES INTRODUCTION 1 RATIONALE FOR THE EMPIRICAL CASE STUDIES 4 RESEARCH PARAMETERS 6 POLITICAL ECOLOGY STUDIES OF SOUTH-NORTH RELATIONS 10 NORTHERN SHADOW ECOLOGIES 11 ODA, GOVERNMENT LOANS, TECHNOLOGY AND THE ENVIRONMENT 15 MUlTINATIONAL CORPORATIONS AND THE ENVIRONMENT 18 TRADE AND THE ENVIRONMENT 19 A. Consumption 21 B. Price 22 C. Southern Export Restrictions 25 D. Northern Tariffs and Import Restrictions 26 CONCLUSION 28 Chapter Two JAPAN’S SHADOW ECOLOGY INTRODUCTION 30 ENVIRONMENTAL IMPACT OF JAPANESE ODA AND GOVERNMENT LOANS 32 ENVIRONMENTAL AID 40 BATTLES OVER ENVIRONMENTAL AID 42 THE OECF, THE EXIM BANK, JICA, AND THE ENVIRONMENT 46 ENVIRONMENTAL IMPACT OF JAPANESE CORPORATIONS 52 GREENING CORPORATE JAPAN 56 CONCLUSION 62 Chapter Three A MODEL OF RESOURCE MANAGEMENT IN CLIENTELIST STATES INTRODUCTION 65 PATRON-CLIENT MODEL OF ASSOCIATION 66 ADVANTAGES OF PATRON-CLIENT ANALYSIS 69 MODERN PATRON-CLIENT RELATIONS IN SOUTHEAST ASIA 75 NEO-PATRIMONIAL STUDIES 79 STRONG SOCIETIES AND WEAK STATES 82 CLIENTELIST STATES AND POLICY 89 PATRON-CLIENT RELATIONS AND SYSTEMIC ‘CORRUPTION’ 92 LEADERS AND LOW STATE CAPACITY 93 PATRON-CLIENT TIES AND STATE IMPLEMENTORS 95 CONCLUSION 97 iv Chapter Four JAPAN, PATRON-CLIENT POLITICS, AND THE MISMANAGEMENT OF INDONESIAN TIMBER INTRODUCTION 100 TRADITIONAL AND MODERN PATRON-CLIENT RELATIONS IN INDONESIA 103 PATRON-CLIENT TIES AND THE INDONESIAN STATE 107 CHINESE BUSINESS CLIENTS 115 MILITARY 117 BUREAUCRACY 120 JAPAN AND PATRON-CLIENT RELATIONS 122 SOCIETAL STRUCTURE AND POLICY IMPLEMENTATION 123 PATRON-CLIENT POLITICS AND TIMBER MANAGEMENT IN INDONESIA 125 Background 125 POLITICIANS, PATRONAGE, AND CHINESE TIMBER CLIENTS . 128 MILITARY LEADERS AND TIMBER 131 FORESTRY POLICIES AND PATRON-CLIENT POLITICS 133 A. Logging Rules and Concession Distribution . 133 B. Licence Fees, Royalty Policies, and Timber Taxes 140 C. Foreign Investment Policies 143 D. Processing Policies 145 E. Conservation, Reforestation, and Timber Plantations 151 F. Plantations and the Pulp and Paper Industry . 153 STATE ATTEMPTS TO IMPROVE TIMBER MANAGEMENT 156 JAPANESE INVESTMENT AND TECHNOLOGY TRANSFERS 160 JAPANESE ODA AND TIMBER MANAGEMENT 169 TRADE: APKINDO, NIPPINDO, AND THE BATTLE FOR JAPAN’S PLYWOOD MARKET 171 JAPANESE TARIFF BARRIERS 177 CONCLUSION 178 Chapter Five JAPAN, CLIENTELISM AND DEFORESTATION IN BORNEO MALAYSIA INTRODUCTION 185 PATRON-CLIENT RELATIONS IN BORNEO MALAYSIA 187 PATRON-CLIENT POLITICS AND TIMBER IN BORNEO MALAYSIA . 195 Background 195 STATE PATRONAGE AND TIMBER IN SABAH 201 POLITICAL LEADERS, PATRONAGE, AND TIMBER IN SARAWAK . 206 PUBLIC OPPOSITION AND PATRON-CLIENT POLITICS IN BORNEO MALAYSIA 212 ROLE OF FORMAL INSTITUTIONS, REGULATIONS, AND POLICIES . 215 A. Background 215 B. Logging Guidelines in Borneo Malaysia 217 C. Tax and Royalty Policies 220 D. Political Concessionaires, Chinese Clients, and Sub-contracting 223 V E. Log Export Restrictions and Processing Policies 227 F. Conservation, Reforestation, and Timber Plantations 233 G. Recent Attempts To Improve Timber Management . 235 JAPANESE ODA IN BORNEO MALAYSIA 242 JAPANESE CORPORATE INVESTMENT IN BORNEO MALAYSIA’ S TIMBER INDUSTRY 245 JAPANESE COMPANIES AND CONSERVATION IN BORNEO MALAYSIA . 249 JAPANESE TIMBER PURCHASES FROM BORNEO MALAYSIA 252 JAPAN, TARIFF BARRIERS, LOG PRICES, AND SUSTAINABLE MANAGEMENT 256 CONCLUSION 257 Chapter Six JAPAN, PATRON-CLIENT POLITICS, AND THE COLLAPSE OF THE PHILIPPINE TIMBER INDUSTRY INTRODUCTION • . 263 TRADITIONAL AND MODERN PATRON-CLIENT RELATIONS • . • . 267 PATRON-CLIENT RELATIONS (1898-1972) • . 271 MARCOS AS SUPREME PATRON (1972-19 86) • . 273 PATRON-CLIENTELISM AND THE FALL OF MARCOS 278 PATRON-CLIENT NETWORKS AND PATRONAGE SINCE 1986 • . 279 PATRONS AND TIMBER 284 FORESTRY POLICIES AND PATRON-CLIENT POLITICS 290 A. Background • . 290 B. Timber Concessionaires and Legal Logging • . • 293 C. Illegal Logging 298 D. Smuggling 305 E. Tax and Royalty Evasion 307 F. Log Export Restrictions, Logging Bans, and Processing Policies 309 G. Local Power and Forest Management . 311 H. Conservation, Reforestation, and Timber Plantations 312 THE PHILIPPINES AND JAPAN’S SHADOW ECOLOGY 315 A. Japanese Investment and Technology 316 B. Japanese Trade 319 C. Japanese Forestry and ‘Environmental Aid’ 322 CONCLUSION: A LOOK TO THE YEAR 2000 327 Conclusion JAPAN’S ECOLOGICAL SHADOW OF TIMBER IN SOUTHEAST ASIA INTRODUCTION 333 JAPANESE TECHNICAL ASSISTANCE, GRANTS, LOANS AND TROPICAL FORESTS 335 JAPANESE ENVIRONMENTAL AID AND TROPICAL FORESTS . 341 JAPANESE CORPORATE INVESTMENT AND TECHNOLOGY TRANSFERS 342 JAPAN’S TIMBER TRADE IN SOUTHEAST ASIA 344 A. Japanese Corporate Purchasing Practices . 344 vi B. Export and Consumer Prices, Consumption, and Low State Revenue 350 C. Indonesian Plywood Exports and Japanese Import Barriers 351 JAPANESE ENVIRONMENTAL GUIDELINES AND THE TIMBER TRADE . 353 JAPAN AND SOUTHEAST ASIAN TIMBER MANAGEMENT: RECOMMENDATIONS 358 A. Reform Japanese Aid 358 B. Trade: Corporate Purchasing Practices 360 C. Trade: Import Restrictions 362 D. Trade: Purchases, Import Volumes, Prices, and Consumption 364 LESSONS FOR NORTH-SOUTH INTERACTION AND ENVIRONMENTAL MANAGEMENT 367 ACRONYMS ND INDIGENOUS TERMS 371 BIBLIOGRAPHY 374 NEWSPAPERS ND MAGAZINES CONSULTED 411 INTERVIEWS 413 A. INDONESIA 413 B. JAPAN 414 C. PENINSULAR MALAYSIA 415 D. PHILIPPINES 415 E. SABAH, MALAYS IA . 416 F. SARAWAK, MALAYSIA 422 vii LIST OF FIGURES