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)
Malaysia,
and
Southeast
driving
primary
policies.
patron-client
remainder political
operators
part
purchasing
understand
import
environmental
investment
resource
section
connections
immediate
Using
This
constructs
tariffs.
JAPAN
develops
commercial
sources
management.
and
Asian dissertation
causes
of
that
practices,
the
these
between
and
the
the
AND
environmental
environmental
impact
links
debilitate
officials
an
After
Philippines:
of
thesis
and
THE
technology
the
analytical
timber
politics
analytical
timber
POLITICS SHADOWS
consumption,
between
concept
A
more
creates
of
outlining
Northern
examines
and
government
mismanagement.
state
mismanagement
than
impact
ABSTRACT
and
impact
pervasive
IN
transfers;
tools,
timber
two
of
OF
ii
Southern
lens
THE
Japan’s
environmental
shadow
TIMBER
capacity
Northern
the
new
100
export
of
FOREST:
to
of
operators;
and
theoretical
a
two
aid
in-depth
patron-client
Northern
uncover
Japan.
IN
ecology
shadow
and
officials
and
most
building
This
to
in and
‘shadow SOUTHEAST
consumer
implement
Indonesia,
change.
important trade,
spotlights
ecology,
loans;
state
and
salient
is
interviews,
tools
In
ecologies’
the
on
the
and
ties
a
ASIA
prices,
on
to
continual
extensive
aggregate
The
including corporate
residual
resource
Southern
the
Southern
between
private
factors
analyze
Borneo
modern
first
next
the
and to
perhaps
the deforestation.
forests
destructive massive
fundamental
imperative residual marginally
Japanese
costs,
consumption,
destructive
corporate corporate
left
improve
networks
often
in supervision
control,
struggle
exchange
world
Sustainable
Japan’s
deep
unable
import
of
insurmountable
timber
timber
investment,
impact
Southeast
that
to
policy
community
conservation
Southeast
environmental
logging
and
improved
of
to
changes
shadow
to
for
timber
retain
syphon
barriers
state
enforce
of
management.
While illegal
purchases
confront
changes
gifts,
tropical
past
Asian
ecology
in
prices
tackles
technology,
Asia
power
implementors.
state
to
forestry
reforms Southeast
--
timber
Japanese
projects.
that
loggers,
money,
to
Japan’s
state
will
political
scars
from
has
funds,
Southern
in
that
integrate
these
deplete
timber
Post-1990
management
will
iii
soon
expedited
leaders
societies
ODA,
or
and
unsustainable
that
Asia.
practices
smugglers,
ignore
shadow
distort
issues,
security
perish.
and
certainly
As
credit
In
political
Southern
and
environmental
management
impede
build
this
well,
economic
environmental
timber
Japanese
rules
ecology.
with
policies,
linked
continue
contributed
the
and setting,
-
potent current
-
there
face
revenues,
mismanagement,
sources, as
remaining
fragmented
tax
ignore
barriers,
forces
to
implementors
government
will
formidable
to
concerns
patron-client
and
evaders.
logging.
is
the
It
efforts
and
accelerate
or
to
undermine
now
wasteful
state
is
and
primary
driving
require
unless
social
assist
social
token
also
have
less
But
the
and and
--
to is -- 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
ROLE
Background
STATE
PUBLIC POLITICAL PATRON-CLIENT JAPAN,
PATRON-CLIENT JAPANESE JAPANESE
TRADE:
CONCLUSION JAPANESE
STATE MILITARY
INTRODUCTION
MILITARY
Background
BUREAUCRACY
JAPAN
POLITICIANS, SOCIETAL
FORESTRY
PATRON-CLIENT
CHINESE TRADITIONAL
PATRON-CLIENT
INTRODUCTION
A.
D.
B. MALAYSIA
C. OF
D.
A.
PLYWOOD
E.
F. B.
C.
INDONESIA
INDONESIA
ATTEMPTS
PATRONAGE
AND
AND
CLIENTELISM
OPPOSITION
APKINDO,
Background
Tax
Logging
Political
FORMAL
Conservation, Licence
Plantations Logging
Processing
Foreign BUSINESS
TARIFF
ODA
INVESTMENT
LEADERS
POLICIES
STRUCTURE
Sub-contracting
LEADERS,
Taxes
Plantations
PATRON-CLIENT
THE
and
JAPAN,
MARKET
AND
PATRONAGE,
AND
RELATIONS
POLITICS
TIES
MISMANAGEMENT
INSTITUTIONS,
TO
POLITICS
Guidelines
Royalty AND
BARRIERS
Rules
Investment
NIPPINDO,
TIMBER
AND
Fees,
CLIENTS
Concessionaires,
AND
IMPROVE
AND
MODERN
AND
PATRONAGE,
AND
Policies AND
PATRON-CLIENT
TIMBER
AND
and
TIMBER
Chapter
Chapter
and
PATRON-CLIENT
PATRON-CLIENT
AND
DEFORESTATION
THE
POLICY
Policies MANAGEMENT
TECHNOLOGY
IN AND
Royalty
the
RELATIONS
Reforestation,
TIMBER
Concession AND
V
PATRON-CLIENT
TIMBER
BORNEO
in
IN
Policies
INDONESIAN
AND
Pulp
CHINESE
OF
REGULATIONS,
Five
Four
Borneo
AND
SABAH
IMPLEMENTATION
THE
INDONESIAN
TIMBER
MANAGEMENT
and
Policies,
POLITICS,
MALAYSIA
TIMBER
IN
Chinese
TRANSFERS
TIMBER
BATTLE
POLITICS
POLITICS
Malaysia
BORNEO
Distribution
IN
Paper
STATE
BORNEO
MANAGEMENT
IN
AND
RELATIONS
and
TIMBER
Clients,
CLIENTS
Industry
FOR
MALAYSIA
SARAWAK
and
IN
POLICIES
MALAYSIA
JAPAN’S
BORNEO
Timber Timber .
.
and IN .
. IN ......
. .
220 217
223 215
215 212
206
201
195 195
187
185
178
177 160
171 156
169 153
145
151 143 140
131
133
133 125
128 123
125 122
120 107 103
117 115 100 JAPAN’S JAPANESE JAPANESE JAPANESE THE INTRODUCTION CONCLUSION: MARCOS TRADITIONAL PATRONS PATRON-CLIENT PATRON-CLIENTELISM FORESTRY PATRON-CLIENT JAPAN, JAPANESE CONCLUSION INTRODUCTION JAPANESE JAPANESE JAPANESE JAPAN’S AND PHILIPPINES A. TROPICAL A. B. C. H. G. D. A. B. E. F. C. MANAGEMENT TIMBER G. E. F. THE AS TARIFF Japanese TIMBER Japanese Japanese Japanese Tax AND Timber Conservation, Local Background Smuggling Illegal Recent Conservation, Log Log CORPORATE ENVIRONMENTAL ECOLOGICAL POLICIES TIMBER ODA COMPANIES Plantations Processing SUPREME CORPORATE Plantations TECHNICAL Policies COLLAPSE A AND and TIMBER INDUSTRY JAPAN, IN Export FORESTS LOOK NETWORKS Power RELATIONS Export TRADE Concessionaires Attempts BARRIERS, AND MODERN Royalty Logging BORNEO PURCHASES Corporate Trade Forestry Investment AND PATRON TO INVESTMENT AND AND OF PATRON-CLIENT SHADOW JAPAN’S and IN Policies INVESTMENT Restrictions, ASSISTANCE, THE PATRON-CLIENT Chapter Conclusion THE AID AND THE MALAYSIA PATRON-CLIENT CONSERVATION Restrictions SOUTHEAST Evasion Forest To (1898-1972) Reforestation, Reforestation, (1972-19 YEAR and LOG FROM vi PHILIPPINE AND Purchasing OF PATRONAGE FALL Improve and SHADOW AND TIMBER Six ‘Environmental PRICES, TROPICAL Management 2000 and BORNEO Technology OF 86) IN POLITICS, ASIA TECHNOLOGY ECOLOGY MARCOS Legal GRANTS, Timber POLITICS IN Logging IN RELATIONS SINCE BORNEO TIMBER Practices MALAYSIA and BORNEO AND FORESTS SOUTHEAST Logging Management and and 1986 . SUSTAINABLE LOANS INDUSTRY TRANSFERS Aid’ MALAYSIA’ Bans, Processing MALAYSIA Timber Timber . . • • • • ASIA . . • . • . • . . AND and . . • . . . . S • ...... 344 344 341 335 342 333 327 315 322 319 316 312 298 293 311 290 290 309 279 307 278 305 284 273 271 267 263 257 256 252 242 235 249 245 233 227 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
Figure 1. Japanese Log Imports From SE Asia 349
viii ACKNOWLEDGEMENTS This dissertation was supported by generous funds from an Alcan Fellowship in Japanese Studies (1991-92) and an Eco-Research Doctoral Fellowship (1992-95), a cross-disciplinary award from the Social Sciences and Humanities Research Council of Canada, the Natural Sciences and Engineering Research Council of Canada, and the Medical Research Council of Canada. A 1994 Canada-ASEAN Centre Travel Grant supplied crucial financial assistance for research in Southeast Asia, and the Institute of Social Science, University of Tokyo, provided subsidized housing and institutional support for research in Tokyo. I am deeply indebted to my dissertation supervisor, Professor Ivan L. Head. Considering the interdisciplinary range of my research, I was exceedingly fortunate to find any advisor -- let alone one with his breadth of knowledge. His careful edits and thoughtful suggestions were invaluable. Using kindness and tact, he somehow managed to push me to revise and revise and revise. . .yet remarkably I never felt despondent. I am also indebted to Professor Diane K. Mauzy for her kind and skilled guidance through the diverse Southeast Asian political systems and dense literature on patron-client theory. She has been - - in only the best sense of the word -- my patron, defending my interests and promoting my career. In return, she received only the thankless task of ploughing through lengthy chapters. I am also grateful to Professor Brian Job for his generous support and expert advice. As well, I want to thank my external examiners, Professor John R. Wood, Professor han Vert±nsky, and Dr. Arthur Hanson for their valuable input. Finally, I am indebted to numerous people throughout Southeast Asia and Japan whose ideas and data are the backbone of this thesis. This project would have been impossible without the intellectual and emotional support of my entire family. My wife, Cayte, was indefatigably patient and loving, even on the days I wanted to quit, the days I was too distracted to listen, the days I was too tired to drag myself out of bed and soothe our crying son. Through all this she was my toughest editor and my best friend. My son Duncan -- although he denies responsibility for any errors -- had perhaps the greatest influence on my work. Before he could even walk, he volunteered to be my research assistant in Tokyo. After he learned to walk, his help became indispensable as he strategically shuffled and hid key documents, and studiously shredded any irrelevant or misleading information. He was, however, far more than an able researcher -- every day he demonstrated that life is much more than one myopic dissertation. Without this perspective, I would still be at my computer, mesmerized by the vision that I would write a great work, instead of mired in the humbling world of diapers and messy drafts.
ix Association, Timber the Science tropical and accelerates Northern complete implementation. Southern force Southern as indirect There crucial Despite contributing a target forests key ever. 2 Global 2 Little This ‘Food Annual the cause behind is Organization the Teachers continue incremental factors Northern loss timber money, state decisions, dissertation almost year central and of has the tropical Environment There to logging 1992), of deforestation Agriculture 2000 managers apparently process is rapid, consumption, to I Association, the no supporting forces argue managed are be estimated improvements, NORTHERN Southern for provides hope original deforestation mismanagement p.118. cut concentrates careless, both sustainable of that cast and (Washington: and of changed at deforestation. Chapter Organization in timber SHADOW and in current direct an technology, World reaching sustainable sustainable forest incentives factor Deforestation Southeast 1 1989 oppressive short-sighted illegal driving since is One in on management Resources ECOLOGIES operators eco-system. that agents and around the National Southeast -- this the past Asia. and and yields less for yields. (FAO) most mismanagement. politics shadow International goal. and 17 legal is trade 1992-93. Japanese quick play than of extraction. important million data Asian Science remain Asia tropical defined indirect that logging one direct practices profits, Primary in and -- governments A government constrains percent as hectares.’ Japan Tropical Guide National Teachers Northern elusive timber. as policy roles, forces remain While These rain the and are of to -- policies, corporate practices, and trade combine to act as a catalyst driving commercial timber mismanagement in Indonesia, the Borneo Malaysian states of Sabah and Sarawak, and the Philippines. These policies and practices limit state decisions, 3 provide incentives for destructive extraction, and support unsustainable timber export rates. In recent years, the Japanese government and major corporations claim that significant moves have been made to integrate overseas environmental concerns. I examine the new Environment Law, and policy changes at key ministries, the aid and loan agencies, and general trading companies. I show that these policies -- while providing marginal contributions to conservation and reforestation -- have conspicuous flaws: wording is vague, there are few enforcement mechanisms, and sanctions are unclear. Seen in light of the consequences of Japan’s historical practices, and of contemporary problems, these efforts are essentially cosmetic. More disturbingly, they create a smokescreen that obscures the more important consequences of wasteful Japanese consumption, export and consumer prices that ignore environmental costs, import tariffs that syphon Southern revenues, log purchases from unsustainable sources, and the residual environmental effects of past practices. Japan’s impact on Southeast Asian timber management can easily be exaggerated or oversimplified and must be understood in the context of Southeast Asian politics. To uncover the salient 3For simplicity, the term Southeast Asia refers primarily to my case studies. Notably, I do not examine Thailand since Japan has had a smaller role in driving extensive deforestation in Thailand.
2 domestic causes of timber mismanagement, I develop an analytical lens that focuses on the links between patron-client relations and policy implementation. I argue that Southeast Asian leaders -- in a constant struggle to retain power in societies with fragmented social control -- build powerful patron-client networks and allow material-based patron-client ties to flourish at all levels of the state and society. These pervasive clientelist ties -- often sustained by timber profits -- distort policies, deplete state revenues, obscure responsibility, channel profits to an unaccountable elite, and undermine supervision of state implementors. In this context, the state is too weak to respond to the environmental crisis in forestry, and to control destructive timber operators, illegal loggers, smugglers, and tax evaders. Understanding Japan’s impact on timber management in this setting leads to some important conclusions. Higher international prices for tropical timber, greater Southern timber revenues, revised Overseas Development Assistance (ODA), compensation for past practices, and increased environmental investment, while in theory essential for sustainable logging, will not automatically improve timber management. Increased Southern revenue may simply add to the wealth of a small elite, or to investments outside of the forestry sector, and do little to improve management. In the context of Southeast Asian politics, higher prices could even increase incentives to mine the forests and make quick money. Sustainable management will require the world community to confront Southern political forces that disable state policy implementation,
3
Biological
management.
Germany,
Laura
Spain,
Japanese
environmental
world
hardwood
remained
consuming
log
these
several
RATIONALE
Indonesia, halt
powerful
it undercut
client tracts
thrive
there
is
imports
4 japan
Focusing
Comparing
the
Tangley, exports;
hardly
are
three
of
and
networks
in
reasons.
Greece,
exporters
government
ensuing
the
business,
state
remarkably
FOR few
the
nearly
Wealth
Borneo
the
consumes
areas
from
surprising
world’s
and
optimistic
THE
political
on
the
meanwhile,
Trees
revenue,
United
Ireland,
fuelled
destruction,
Southeast
economic
one-third
CASE
(Boston:
areas
supplied
From
impact
Malaysia,
of
military,
and
cheap
of more
largest
Southeast
Kingdom
STUDIES
the
to
setting
by
corporate
Life: and
signs.
Italy,
with
of
since
timber
consequences
Beacon
find
than
around
timber,
Asia.
1950s
Japan
of
drive
and
bureaucratic,
importer
and
similar
Saving
put
Luxembourg,
the
4
Asia,
the
rampant
of
Japanese
Belgium,
from
the
Press,
on
Japan
to
practices
90
mismanagement.
They
Southeast
together.
states
1960s,
world
tropical
the
percent
unsustainable
accounting
Philippines
Tropical
of
for
cultural
deforestation.
accelerating
have
1991),
beginning
corporations
Denmark,
tropical
total. 4
unable
Japan
Netherlands,
Southeast
and
have
Asia,
also
timber
of
Kenton
Forests
p.30.
political
Japan’s
has
for
backgrounds
had
or
is
been
Unfortunately,
importing
sources.
of
timber,
As
France, management
unwilling
Asian
over
consistently
the
logical
significant
continue
Miller
the
a
and
Portugal, the
tropical process,
half
result,
patron-
timber
1990s,
Their
major
today
West
With
vast
and
and
for
of
in
to to
Japanese
taking environmental Canada,
reactions
Japanese
collapse plywood
governments
substitute simply
pattern
Islands.
consistent. Southern quality
commercial
Japanese
techniques;
logging
conservation
the
similar
improvements therefore
These
number
advantage
moved
and
log
historical,
processors
investments
is
companies
companies
of
Japanese
practices
revenues
of
making
softwood
consistent:
support
imports
the
sever
cases forests
tropical
of
projects.
At to
to
Southeast
and
United
of
new
Japanese
present,
divergent
it
supply
are
companies
greedy
unsustainable
economic
that
purchased
at
also essential
political,
from
and
are
sources.
easier
inevitably
timber
the
moving
States.
Asian
to
technology
feed
places
As
changing.
elites
lines,
reveal
as
forestry
lowest
facilitate
variables
well,
are
to
impact
imports
supplies,
massive
on
to
governments.
for
and
This
5
like
generalize
and
also
Papua
timber
Japanese
cheap
possible
disappear,
notable
economic
there
sustainable
aid
transfers.
inadequate
of
pattern
Russia,
preparing
from
volumes
There
rapid,
New
surrounding
tropical
production;
and
developing
Japan
are
price;
trading
Guinea
Borneo
differences
and
ties
some
In
have
has
New
destructive
now
or
of
state
depending
But
for
management.
the logs; evaluate
protect
to
been
token
Zealand,
and
logs
Malaysia
when
fewer
companies
been
maximize
techniques
Japan’s
my
the
Japan
supervision,
Philippines,
the
and
remarkably
to
worldwide
analysis,
corporate
marginal
Japanese
Southern
tropical
in
Solomon
whether
cutting
reduces
on
supply
China,
syphon
drop,
basic
high-
have
the
the
As to domestic plywood processors. By the time the Philippine government banned log exports in 1986, the commercial timber industry had collapsed. In sharp contrast, as multinational companies financed and accelerated destructive logging in Indonesia, the Indonesian government gradually banned log exports in the first half of the 1980s, severed most foreign timber investments, and provided strong incentives to process logs locally. As a result, Indonesia became the world’s dominant tropical plywood producer. Japan now imports a significant quantity of Indonesian plywood, forcing many Japanese plywood processors out of business. In Sabah and Sarawak, Japanese traders again funded and supported log export operations similar to those that devastated the Philippines. In 1993, after the near exhaustion of valuable commercial timber, the Sabah government banned log exports, attempting to establish a processing industry similar to Indonesia’s. Sarawak is now the main source for Japanese tropical logs. Sarawak has also imposed some restrictions on log exports, but unlike Indonesia, the Philippines, or Sabah, government leaders perceive Japanese log purchases as beneficial and there are no plans to ban exports.
RESEARCH PARAMETERS The boggling array of factors that influence Southeast Asian timber management and the potential for endless diversions has forced me to focus my research. I concentrate on commercial logging in primary and secondary forests, and to a lesser extent on
6 the management of plantations. Reaching sustainable timber production, reducing 5 destructive logging, and protecting primary forests are my main environmental concerns; my primary economic concern is maximizing the amount of 6 money invested in sustainable Southern timber management. Without denying their importance for sustainable tropical forestry, only passing references are made to land use rights, indigenous rights, swidden farming, and social and community forestry. Addressing these issues would make my project too unwieldy and divert attention from my central concern, the impact of Japan and Southern politics on commercial timber management. I also do not address Japanese contributions to multilateral institutions. Although these are undoubtedly important -- Japan is the biggest contributor to the Asian Development Bank (ADB), the
Logging in Southeast Asia is a critical agent behind deforestation.5 Logging of primary forests -- which creates secondary forests -- routinely causes degradation. (Degradation is defined as a partial change to a forest eco-system that reduces its economic, biological, or environmental value.) In some cases, loggers clear-cut forests, although this is generally limited to areas designated for agriculture or large-scale development projects (e.g. hydroelectric dams). Logging is usually the first step in a process that leads to deforestation: by establishing roads that provide access to slash-and-burn farmers; by leaving debris and creating open spaces that make secondary forests susceptible to fires; and by decreasing the economic value of the forest, providing incentives to convert logged areas to other land uses. Sustainable timber production is defined as doing nothing that will “irreversibly reduce the potential of the forest to produce marketable6 timber.” Duncan Poore, “The Sustainable Management of Tropical Forest: the Issues,” in Duncan Poore, ed., No Timber Without Trees: Sustainability in the Tropical Forest. A Study for ITTO. (London: Earthscan Publications Ltd., 1989), p.5. Poore explains this concept in detail.
7 Third were policy; Earthscan official, Yet official, bureaucratic corruption, and intellectually analyzed, While management, interests. important. difficult analyze
industrialized forestry one resources diluting and created Bank, Tropical to second determine resource. world practices made it 8 See 7 The World and foreign largest by is Japan’s Timber rather, for ADB policies, an Manila, Canada, about Tokyo, to to is pressure strongly Southern Debt and I But simplistic According understanding the determine example, meet is the also hierarchy, on Also of countries, to Japan’s Organization debts the directly sometimes extent Harms 6 contribution 31 1991); the importance payments, 8 the April do the these low lingering Third January to debt, backs policies not Patricia Us the to undeniably International to Japanese influence ‘develop’. to status and 1994. tackling organizations. 7 delve All which a portrayed World’s international role as of though organizations equate and Susan Bank it of (ITTO) Japan’s in (London: Adams, of well to of this into is Japanese S 4 population the the government February official, over this George, them environmental these quite environmental create Bank -- as the then These background, Monetary Bank. Odious as bilateral it Pluto the being hovers would role money financial difficult policies debts. has is the like The 1994. Reluctantly, ITTO. factors incentives growth, Japan Debts: Interview, exceedingly Press, under on of push has Debt Fund shapes in impact the related the impact legacy but Similar concerns the Interview, does my It Boomerang: Japan’s organizations, to with loose ‘piggy-backed’ are and poverty, 1992). management International not the work background. isolate is Senior to not of on the pressures certainly difficult (Toronto: to Japanese lending, comments policies directly equally in toward thumb. export timber shape other World avoid non- ITTO ADB How the and of - maintain political environmental timber the driving empirical attention the and Chapters Northern Indonesia, domestic Japanese resource demanding bilateral sometimes resource ground Southern -- the the policy conclusion conclusion largely Other patron-client management already timber management. Four resource. focus management corporate politics policies. studies, South-North to extensive glib, factors, Borneo implementation authors unexplored Japan. to impact mismanagement well throughout assesses and connections. Six Malaysia, and and and and background sketches point contributing model covered in outline of The Chapter relations Chapter in explores the Japanese resource government terrain the Philippine the modified this -- to South; by in and the impact context the Three to A the Two on on Southeast other project, 9 possible precise politics the of analyze aid, key management to Southern the power to builds yet, policies describes of chapter the of Philippines writers the commercial give Southern investment, Japan recent assessment most environmental I Asia. the of reforms of a emerging more political concentrate comparative begins timber that the in connections and on resort recent Japanese political focus Building management Southeast Southeast with North deflect to and shape the management is sub-field settings on reshape to changes trade. particular difficult, mainly impact ascent policies, framework the to Southern general, on me between factors of Asian Asia. these state shape from the and one To on of to in to of political 9ecology.
POLITICAL ECOLOGY STUDIES OF SOUTH-WORTH RELATIONS Academics concerned with natural resource management increasingly see political forces as critical factors driving environmental degradation. Political ecology studies broadly examine connections between politics and environmental change. These studies are diverse, addressing a range of issues, dealing with local, national, and international politics, and reaching a variety of conclusions. Specific political features examined include: local -- often indigenous -- conflict over access to land and water; Southern policies, practices, and elite corruption; Northern ODA, multinational corporations (MNC5) and trade; interstate war; Southern debt and pressures by multilateral financial and technical organizations; capitalism and its accompanying world system; and complex combinations of these variables 10 A neglected area of political ecology studies is the peaceful
9This helps fill a gap in the literature on forestry management. Until recently, scholars have focused on technical or economic factors behind logging mismanagement with relatively little attention to political fdrces. Furthermore, international forums and publications have avoided sensitive discussions of political connections. ‘°Raymond L. Bryant, Political Ecology: An emerging research agenda in Third-World studies,” Political Geography 11 (January 1992), pp.12-36 reviews this literature. For a specific example of a political ecology framework, see Nancy Lee Peluso, “The Political Ecology of Extraction and Extractive Reserves in East Kalimantan, Indonesia,” Development and Change 23, no. 4 (October, 1992), pp.49-74. 10 interaction between states.” One reason is the difficulty of isolating and clarifying important Northern factors that shape resource management in the South. There is a danger of exaggerating or oversimplifying the impact of the North as variables are removed from the context of the world capitalist system and Southern political settings. There is also a risk of including too many aspects, diluting or diverting attention from more important factors. To spotlight the most important elements of bilateral Northern influence on Southern resource management, I develop the concept of Northern shadow ecologies.
NORTHERN SHADOW ECOLOGIES The genesis of the term ‘shadow ecology’ comes from the argument that economically powerful industrialized countries draw upon the ecological capital of all other nations to provide food for their populations, energy and materials for their economies, and even land, air, and water to assimilate their waste by-products. This ecological capital, which may be found thousands of miles from the regions in which it is used, forms the ‘shadow ecology’ of an economy. ... In essence, the ecological shadow of a country is the environmental resources it draws from other countries and the global 2commons.’ “See Ibid., p.16. 12Jim MacNeill, Peiter Winsemius, and Taizo Yakushiji, Beyond Interdependence: The Meshing of the World’s Economy and the Earth’s Ecology (Oxford: Oxford University Press, 1991), pp.58-59. The authors argue that “oceans, the atmosphere (climate), and other ‘commons’ also form part of this shadow ecology.” Ibid., p.58. However, because of the complexity of this topic, and since my empirical data relates to forestry, I will not examine aspects connected to the global commons but will limit my discussion to factors that directly relate to interstate relations. 11
resource
the
corporate Accepting
source support.
shadow areas
knowledge,
paid
consuming enormous
from
timber a
and
power
counting of and
delineate As
in resource
rapid
Northern
water
the
aggregate
detail.
minerals
air.
and
Environmental
sustainable
draws
of
industrial
of
ecology
authors to
--
management.
the base,
quantities
and
the
the
investment,
the
the
Yet
facilitate
clear
this
many
shadow
can
far
impact
air
consumed,
term
amount
environmental
The
resource,
same
shadow
has
embraces
more
note,
be
assumption,
environmental
growth.
polluted.
definitional
sources,
shadow
goal
developed
ecology,
resources
amount,
on
without
managed
consumed
environmental
better
ecologies
In
technology
a
resource
the
in
and
the
other
country
ecology.
Unfortunately,
and
amount
the
impact
yet
paying it
management.
To
an
amount
the
include
as
a
or
words,
boundaries
providing
resources
extensive
is
fully
12
management.
are
paying
following
Northern
effect
like
transfers,
destroyed
a
of
imperative
on
and
resources
consumed,
more
sustainable
water,
understand
soil
a
the
Japan,
without
Northern
high
of
this
For
than
shadow
management technical
--
to
removed,
country
section
ODA,
and
trees,
and
Given
prices
this
certainly
than
boost
which
to
idea
the
the
restoring
ecology
examine
government
trade
shadow
the
go
economic
reason,
price
number
another
minerals,
time,
is
and is
that
and
has
beyond the
for
of
importance
not
policies
simple:
a
ecology
conimercial
the
to
paid,
the
a
resources
money
financial
heuristic
Southern
degraded
of
consumes
the
examined
country
support
limited
loans,
asset. merely
extent
price
trees
soil,
term
the
and
on
is
of to A Northern and Limited, pyramid.” 13 developing unintended actions. consequences. pressures a Second, the is barriers. is in First, timber ODA is trade, consumer resource balanced country especially the the fragmented and Politics world ‘ 3 See Third, Some aggregate actions management. context loans; including an of 1989) shadow prices, Karel It can like caveats capitalist Japan’s consequences perspective, countries three ecological the is in relevant It aggravate of of Japan corporate Public van - not term ecology environmental a sets Southern is, Southern amount and what ‘ecological corporate Stateless Wolferen, a shadow relies system result of can and boundaries however, for shadow of on or it Karl factors: investment and private Japan governments, Northern significantly resource politics, alleviate is ecology on of in The Nation purchasing imperative van ‘type’ shadow is impact 13 Southern a shaping where still Enigma government further guided a policies Wolferen government, management implies and result and shadow (New of of of the possible or technology of these timber’ attitudes raw or keep to consumption, alter refine practices, York: decision international Japanese in of a view conscious ecologies. assistance, materials, calls two in factors both in both corporate the in Macmillan mind this a to way the and making shadow transfers; Southeast developed Power: a intended impact control dependence. plan. South. definition. the export on and practices. “truncated while To financial including tropical and process ecology role London People create import of bank This Asia and the and the and and of a South relies on Northern markets, technology, aid and investment. This moves “beyond interdependence” in its limited economic sense, and suggests a “meshing of the world’s economy and the earth’s ecology.” The relationship, however, is asymmetrical since environmental4 change more immediately affects the South. Economic and ecological interdependence suggests an inevitable impact of economic activity in the North on the environment of the South and, furthermore, an inevitable impact of environmental change in the South on the economies of the 5North.’ Accepting this assumption, it makes sense to conceive of shadow ecologies on a continuum where sustainable activity falls on one end and environmental destruction falls on the other end. The logical task for policy makers, then, is not to eliminate shadow ecologies but to minimize and counteract any negative consequences. Ideally, sustainable activity would involve South-North interaction that encourages mutual and equitable development, while environmental change is sustainable. Fourth, shadow ecologies change intensity and composition. The relative importance of various components depends on the states involved, environmental attitudes and values, the resource sector, and the historical period. For example, the relative importance of factors (such as ODA/loans, consumption, corporate investment, or trade practices) and the cumulative impact of Japan’s shadow
Maurice Strong, Introduction to MacNeill, Winsemius, and Yakushiji,‘4 Beyond Interdependence, p.v. See Ivan L. Head, On A Hinge Of History: The Mutual Vulnerability‘5 of South and North (Toronto: University of Toronto Press, 1991) 14 ecology in the Philippines in 1975 is different from Indonesia in 1993. Finally, economic growth entails environmental costs. Historically, shadow ecologies have transferred environmental costs to the South of economic growth in the North. Yet, it is important not to oversimplify and exaggerate. Northern ODA, investment, technology, and trade are certainly important factors shaping environmental management in the South. But these are only part of the explanation, their importance varies depending on the context, and they can simultaneously have both negative and positive implications for management. Although South-North interaction has had many destructive consequences in the past, a complete break would not assure sustainable practices. Northern money, information, technology and training -- modified to fit Southern knowledge, experience, and conditions -- is the only practical route to sustainable management.’ For background and further clarity, the next section 6 examines some of the theoretical debates regarding the environmental impact of ODA, Northern technology, corporate investment, and trade on Southern resource management.
ODA, GOVERNMENT LOANS, TECHNOLOGY AND TIlE ENVIRONMENT
The environmental impact of ODA (grants, technical assistance, and concessional loans) and government loans not qualifying as ODA,
6This is generally accepted by the South. Northern assistance -- especially‘ technology transfers on noncommercial terms -- has been a priority for developing countries during international environmental negotiations. Gareth Porter and Janet Welsh Brown, Global Environmental Politics (Boulder: Westview Press, 1991), p.129. 15
Miles
provide
quoted
University
policies
and Moreover,
Sustainability
in
Environment
According
donors promote
on
open
about Northern
aid
bilateral
of
the
nongovernmental
Popular
corruption, have
scrutinized
the
aboriginal
Practice
the
and
links
20 Bryant,
question.
‘ 9 Wjlliam
18 For ‘ 7 Much
Litvinoff,
been
the
nature
in
is
Environment
interest
loan
Northern
as
thirty-four
aid
Bryant,
to
often
example,
it
between
connections
of
aid
Press,
extensively
mega-development
environmental
connections
and
William
is
priorities
and
(London:
this agencies,
.
cultures.
“Political
in M.
.
which
as
exaggerated,
important
eds.,
organizations
Development,
in
course
the
p.16.
business. 18
1987)
environmental
to
research
Adams,
Teresa
such
(London:
Adams,
Third
how
The
made
Earthscan, create
cases
examined
of
to
and
and
Academic
much
schemes
Ecology,”
Greening
awareness
Hayter,
not
World
development
Northern
Green
was
between
while
projects,
projects
Earthscan
and
strategic
influence
of
Our
sensational
to
(NGOs),
Some
16
sparked
destruction
(London:
of
is
in
discount clearly
work
1988).
Development:
aid Exploited
of
Common
ODA
p.16.
grows,
course
corporations,
further
scholars,
recent
Aid:
financed
badly
projects. and
Publications,
has
by
use
aid
and
projects
Routledge,
a
Sustainable
Future
the
ongoing
varies
and
environmentalists
also
environmental
factor,
agencies
Conroy
See
environmental
of
aroused
years.’ 7
Earth:
and
designed
World
by
aid
however,
aid
Czech
looked
Environment
poorly
multilateral
The
(Oxford:
a
and
with
changes
is
and
“it
Britain’s
great
Commission
and by
1990),
actually
1989).
power
Livelihoods
and
destruction
‘greened’
Conroy
The
closely stories
remains
Litvinoff
conceived
are
loans
positive
deal.” 9 managed
change.
change.
p.16 6 ,
to
Oxford
media,
of
have wary
have
Aid
and
and
aid
aid
and
on
an
at
to of 20 Assessing the environmental impact of ODA and nonconcessional lending is clearly difficult, and its importance debatable. There is a tendency -- especially in government publications -- to assume all reforestation or environmental technologies are beneficial.
There is an equally dubious tendency among NGOs and environmentalists to label all Northern aid as a capitalist ploy to exploit the natural resources of the South. Since Northern money has the potential for both negative impacts -- as when funding ill- conceived dams, roads, and equipment purchases -- and positive impacts -- as when funding conservation and environmental education -- it is necessary to weigh each situation carefully, avoid simplistic condemnations, and consider its importance relative to the overall environmental problems.
Technological transfers -- by Northern governments through ODA or loans, or by MNCs as part of investment -- can potentially alleviate environmental problems by, for example, replacing inefficient processing facilities and reducing pressure on a 21resource. But technology can also create havoc by accelerating extraction and production before effective plans and policies are
environmental consequences. 21Numerous influential studies argue that the diffusion of environmentally sound technology is critical for Southern sustainable development. For example, see World Commission on Environment and Development, Our Common Future, p.87; and Linda Starke, Signs of Hope: Working Towards Our Common Future (Oxford: Oxford University Press, 1990), p.165. 17 in 22place. Martin Khor Kok Peng, director of the Third World Network, argues that “the importation of inappropriate Northern technologies has progressively destroyed the more ecological indigenous production systems in the south, besides simply destroying natural 23resources.” As with aid and loans, technology is a double-edged sword and the environmental consequences Iust be weighed carefully.
MULTINATIONAL CORPORATIONS AND THE ENVIRONMENT According to Nazli ChOucri, all theories of multinational corporations, including international relations studies in political science, “ignore the impacts of corporate activities on the natural environment and on ecological balances.” These theories seem to assume “private investments and actions crossing borders are neutral relative to environmental, ecological, or atmospheric impacts.” Of course, many less ‘theoretical’ studies
22For a general discussion of the relationship between technology and the environment, see Amitav Rath and Brent Herbert Copley, Green Technologies for Development: Transfer, Trade and Cooperation (Ottawa: International Development Research Centre [IDRCI , 1993) 23Martin Khor Kok Peng, “North-south relations revisited in light of UNCED,” Briefing Paper for UNCED, no. 8, 1991, p.6. For a critique of the environmental impact of Northern technology transfers, see Ecologist, “Mainstream Solutions,” Ecologist 22, no. 4 (July/August 1992), pp.187-192. 24Nazl± Choucri, “Multinational Corporations and the Global Environment,” in Global Accord: Environmental Challenges and International Responses (Cambridge: MIT Press, 1993), p.220. 18 have examined the links between MLTCs and environmental 25change. Yet this gap in the MNC literature is indicative of a superficial understanding of the connections between environmental change and corporate investment and practices. MC investors often create incentives and the means for rapid exploitation of Southern resources. These firms also invest little in environmental projects such as reforestation, which have low profit margins, long-term returns, and high risks. As well, multinational companies purchase enormous quantities of remarkably cheap natural resources from unsustainable sources. Driven by these investment and purchasing practices, Southern partners ignore long-term management principles and quickly deplete resource stocks. In the 1980s, MNCs became more conscious of environmental issues. There is, however, little evidence of concrete changes to multinational behaviour in the 26South.
TRADE AND THE ENVIRONMENT World trade swamps the financial flows of debt and aid. Annual world trade in goods is US$3.5 trillion; including commercial services it reaches US$4.3 trillion. In comparison, total annual ODA is only US$55 billion, while Southern debt service
25For example, see the articles in Charles S. Pearson, ed., Multinational Corporations, Environment, and the Third World: Business Matters (Durham: Duke University Press, 1987). 26Roger D. Stone and Eve Hamilton, Global Economics and the Environment (New York: Council on Foreign Relations Press, 1991), pp.42-43. 19 p.xiv. p.58. Orbuch, Literature,” Low, the Environment Environment,” in Reform Environment: 14 Zaelke, Conference 1993), Southern the management. 28 resource products requires irreparable change this itself, the “there then stands Zaelke, and Environment arguments 30 Zaelke, 29 Ha1 28 For 27 Charles “International a way, 1990s p. 72 . lull Judith at are itself to and and Paul management made Kane, change. background, resource US$130 Orbuch, on trade Support in change. Housman, few Nexus: pp.15-28, sending on Law Orbuch, Orbuch, by Environment Arden-Clarke, Dean, Hal the linking pp.3-22 “Managing is absolutes.” 3 ° (New using Economics the billion. 27 inevitably 1980s, Kane not and What Trade What -- This management Sustainable “Trade it York: eds., and and see in whether links trade the Housman, a off argues and Through is Housman, discussion Patrick there is and Robert problem; and Tom World Trade environment, and and to New After crucial “An creates Charles to the between Development it Wathen, Four has 20 other that Policy the eds., Since -- Prices, the Bank, and Low, Action Environment: Development: F. contributes eds., an been must even Environment: key trade Housman, consumption, the environment is countries.” 29 ed., environmental initial Trade Pearson, 1992). (Washington: “A ‘72?” trade Trade an or Managing be Agenda trade Environment, the sustainable Guide International explosion Follow-up,” is taking approached and pp.23-32 and to impact spurt essentially An eds. and A issues for sustainability to the “The Overview,” Despite the A are United the price, Trade Trade Survey Understood Island in change. environmental Trade of Environment, Environment, of complex and development cautiously: environment in that Trade in the writing Trade trade Prices,” and and Nations Durwood Patrick Zaelke, “taking of Press, Policy export 1970s, pp.1- shape and and the the the and Yet or on in in view, which biodiversity. education, consumption differentiate and more consumed. economic contributes three dumps A. Southern saturated forests continues lead element increasingly restrictions, ‘environmental Consumption to For resources food, shifting are can car greater for survivors. classical indicators disappearing. to with full be and more ‘Wasteful’ economic families, to to grow and transferred being the improved between economists’ of ‘Conscientious’ waste prosperity are televisions, mounds ‘conscientious’ import pattern economists, between old and Cities challenged, growth. finite; and appliances; consumption resource analysis. or quality barriers of of to and chemicals; rich are As have disposable world garbage, food, more rising now happiness. This 21 it consumption environmental Northern management begun consumption -- consumption They especially consumption polluted luxurious rivers, such is housing, assumes are consumption deserts argue pollution, to particularly therefore tropical as consumers This lakes, in question by can excessive consumption that homes medical the swarms from and as is are problems ingrained ‘save’ (demand) economic South. and wood necessary the one expanding and essential and and the conventional contentious. of facilities, oceans packaging, of cars, resources vehicles; disparity destitute loss products is quantity is view spread, In ‘blind’ growth good: a this for are and all key of to is equitable and sustainable 3development. B. Price ’ Consumption and price are inseparable: lower prices encourage higher consumption while higher prices tend to lower consumption. Conventional economists argue that free markets create a natural equilibrium between supply and demand that generates a ‘fair’ price. Yet, according to environmental economists, free markets fail “to properly value the services that the environment 32provides.” Prices paid by Northern consumers do not reflect environmental or social costs. Primary rain forest timber is particularly 33underpriced. By treating the commons as a free good, the market “‘externalizes,’ or transfers to the broader community, the costs of resource depletion. . .in the form of damages to ecosystems.” As a result, “today’s trade patterns contain a massive transfer of the environmental costs of world GNP to the
31For a discussion of the links between Northern consumption of luxury goods and Southern environmental degradation and human suffering, see Martin Khor Kok Peng, “The global environment crisis: a Third World perspective,” Briefing Paper for UNCED, no. 5, 1991; Jyoti Parikh and Kirit Parikh, “Consumption patterns: the driving force of environmental stress,” Bombay, Indira Gandhi Institute of Development Research, 1991, in NGONET 0795, computer database of the Alternative Conference at UNCED, Rio de Janerio, 1992; and Bunker Roy, “Population or Over-Consumption: Which is Destroying the World?” India, SWRC, 1992, in NGONET 1251. 32Kane, “Managing Through Prices,” p.60. 33While perhaps extreme, the Center for Science and Environment in New Delhi estimates a mature tree in India is worth US$50,000. Alan Them Durning, “Let’s Put a Proper Price on Trees,” International Herald Tribune, 3 February 1994. 22 resource-based economies of developing 34countries.” Low resource prices, along with poor revenue capture and subsidies by Southern 35governments, encourage even greater extraction to earn foreign exchange, and preclude investment in sustainable production. Furthermore, “underpricing. . .natural resources encourages wasteful and environmentally destructive patterns of consumption throughout the 36world.” For a realistic chance of sustainable management, it is necessary to maintain stable world commodity 37prices, and ‘internalize’ the cost of traded resources -- that is, generate a price, perhaps through trade measures, sufficient to support the added expense of careful, long-term management and account for losses connected to inevitable ecological changes .
MacNeill, Winsemius, and Yakushiji, Beyond Interdependence, 34and more p.37 p.21. For detail, see Stewart Hudson, “Trade, Environment and the Pursuit of Sustainable Development,” in Low, ed., International Trade, pp.55-64. 35For a discussion of the links between Southern subsidies and resource depletion, see Edward B. Barbier, Joanne C. Burgess, and Anil Markandya, “The Economics of Tropical Deforestation,” Arnbio 20, no.2 (April, 1991), p.55. 36Charles Arden-Clarke, “South-North Terms of Trade: Environmental Protection and Sustainable Development,” International Environmental Affairs 4, no. 2 (Spring 1992), p.124. 37See chapter three, “The Role of the International Economy,” World Commission on Environment and Development, Our Common Future. 38See Arden-Clarke, “South-North Terms of Trade,” pp.122-137. For a strong critique of ‘environmental economics’ -- especially the disregard for values and rights -- see Ecologist, “Mainstream Solutions,” pp.173-179. In my view, pointing to the need for prices to internalize environmental costs is not a monstrous vision reducing people and culture to money -- rather, it accepts the fact that money is necessary to implement policies to protect the environment. 23 The Progress: Summary Institute, 1991), outside costs economic degradation. economic policies innovative growth.” 4 ° competence improve natural -- accounts production consumption, they explore “failing for Philippine 40 Robert 39 Phil±ppine To are of p.1. example, the combat management (Manila: environmental the statistics to resource in depleted that indicators. What 1990) and By attempts country allow order -- overstates possibility Repetto, Presumably, expressing economic waste ideological Natural when , the Department Department can p.3. for that or degradation. but as - North - to resources natural depreciation degraded degradation be touted Promoting governments related income they growth, revise Resources While of environmental this blinders corrected Can of of may modifying by resources and Environment Environment are disguises 24 will to technically there economic many Do better Environmentally and capital consumption of Accounting imported behind strive (Washington: Robert provide governments natural is resource to the losses reflect a in accounting the formation, policies “world-wide reflect and and to conventional the “at difficult, Repetto strong resource sacrifice within maximize depletion Project: Natural Natural in a environmental name as World monetary price Sound of proof incentives environmental and include the argues of effort. ever-higher stocks Resources, Resources, these Resources Executive below of occurring justifies the Economic country” economic economic of terms, future their most when that “the . new the and .to to
WWF
processed
overseas
diversifies
break
dependent argue
for
setbacks
growth
costs unprocessed
the exploitation
entrench exports.
restrictions aside
exports
‘environmental
ties, C.
overseas
increases costs
Southern
other
the
41 Roefie
International,
The
that
there
and
the
and
this
of
is
Calculation
resource
environmental
domestic
may
on
environmental
extreme,
products.
in
provides
free
confusing
possibility
contribute
their Free
Export
are
the
dependency,
Northern
of
exports,
Hueting,
reduce
gross
occur,
burden’
markets
natural
three
economy,
market
depletion
sustainable
many
political Restrictions
domestic
sufficient
competition
of
and
1992),
markets
While
to
Peter
basic
and
processing
impact
of
do
Sustainable
resources.
to
advocates
the
costs
advocates
it
the
not
and
a
measure
partial
and
empirical
temporary
product.
Bosch,
scenarios:
p.5.
complete
is
and
of
account
interests
South
income
creates
exploitation.” 4 ’
25 inflates
environmental
and
Southern
essential
manufacturing.
of
generates
A
and
the
National
argue
foreign
remaining
restrictions
The
free
for
a
for
evidence
break
economic
incentives
ban
Bart
no
impact
and
effective
the
environmental
restrictions
market
authors
that
restrictions,
on
to
demand,
in
de
Income
contribute
estimate
change.
unprocessed
jobs,
ambiguous.
underdeveloped
of
promote
and
South-North
Boer,
bans
leads
To
to
Ignoring
on
management.
consumption
use
environmental
lower
add
(Switzerland:
adds
sustain
Methodology
unprocessed
on
to
or
and
of
the
value
trade
to
a
economic
resource
partial
prices,
exports
Putting
value,
ban
social
annual
over-
trade
these
term
the and
and
At
on
in on resource in the long term. Recognizing the management problems of a free market and of export bans, some analysts see partial restrictions on unprocessed exports as the best of both worlds -- keep some foreign demand and competition to maintain higher prices, yet still promote processing for economic development, more employment, and long-term management incentives. This theoretical debate seems unresolvable. There are management benefits and drawbacks of free markets, export restrictions, and processing. It is common for environmentalists to call for export bans on unprocessed resources to enhance environmental protection. Undeniably, countries with unrestricted resource exports have serious management problems. Yet, setting aside long-term economic considerations, it is also clear that either full or partial Southern restrictions on unprocessed natural resource exports and incentives to promote finished exports do not immediately improve management. In short, whether processed, semi- processed or unprocessed resources are exported does not have a decisive impact on management. The quantity of exports, the export and consumer prices, the source of the resource, and enforcement of state regulations are far more important.
D. Northern Tariffs and Import Restrictions Northern tariffs can reduce timber consumption and raise Northern consumer prices. In theory, if Northern governments transferred tariff revenues to the South, or if special tariffs were imposed on timber from unsustainable concessions, then import
26 charges could promote sustainable management. But this has never occurred in practice. Instead, Northern tariffs -- which commonly escalate with the degree of finishing -- have syphoned Southern revenues, undermined local processors, and prevented Southern economies from diversifying. Instead of protecting Southern environments, Northern tariffs have contributed to over- exploitation and mismanagement. Unilateral Northern import bans and quotas can protect endangered species and quickly reduce consumption. In theory, import restrictions on resources produced from unsustainable sources and open markets for resources produced from sustainable areas could enhance management. But in practice, Northern importers do not distinguish between the source of resources. For this reason, import barriers are crude instruments that easily misfire. Without compensation, Northern import restrictions can create economic hardship in the South. These can lower Southern resource prices and decrease the economic value of resource stocks. As well, Northern import restrictions may only reduce consumption temporarily as new markets absorb the slack. In the case of tropical timber, a study for the ITTO concludes that there is a need to “improve rather than restrict access to import markets for tropical timber products.” The report argues that “by adding value to forestry operations, the trade in tropical timber products could act as an incentive to sustainable production forest management -- provided that the appropriate domestic forest management policies
27 Management eventually International consumption, environmental consumer transfers, sustainable by complete Southern bilateral ecological Instead, export ignore the ecologies CONCLUS environmental the and resources (XI)/4, Northern management regulations 42 Edward historical In or ION environmental 19 sum, careful resources break and investment prices drawn March of and interdependence South-North limit resource policies B. and a the impact Tropical problems. Trade Barbier of Northern is corporate are from manipulation 1993, sufficient period. relative must a resource not from also of restrictions), management. Southern the and in and p.iv et. Forests,” a aid, unsustainable rise ecological implemented interaction, viable global Even Tropical practices, impact social investment al., and revenue To technology, has purchases of resource. high more 28 p.v. “The date, shadow eco-system. political of supported Final Northern costs. the different must Timber shadow essential, Economic by enough Southern must sources South-North value ecologies Report. corporations, to producer it be The ODA, This takes or massive and focus returned sustainable is Linkages of to components intensity More responses and economic ITTO corporations loans, the must The countries.” 42 is the the slash on at precisely, economic essential resource, purchases Activity to and form prices Sustainable alleviating change. Between technology cumulative of the solution. is wasteful sources, (such trade of shadow shaped South must that The PCM and and for the for of as on A South-North shadow theoretical to support ecology. debate interaction, sustainable over the management. I now environmental turn 29 to look Having implications specifically outlined of at the bilateral Japan’s broad Chapter Two
JAPAN’S SHADOW ECOLOGY
To provide a foundation for understanding the impact of Japan’s shadow ecology on timber management in Southeast Asia, I outline major features and criticisms of Japanese government economic assistance, corporate practices, and trade. Since shadow ecologies can be moulded by policy, I highlight recent moves by the government and trading companies to integrate environmental concerns. I argue that the 1993 Environment Law, the new environmental guidelines at the aid agencies, and the ‘environmental aid’ program -- while contributing to incremental increases in funding, research, and technical assistance for environmental projects -- have conspicuous problems. The Environment Law and ODA guidelines are vague, the procedures for environmental reviews are unclear and convoluted, and there are no enforcement mechanisms or penalties. Environmental aid is partially a reclassification of traditional aid projects, such as water and sewage systems, and does not increase environmental funding as much as it appears at first glance. Moreover, this aid is primarily inthe form of loans. Bureaucratic turf battles have also undermined the effectiveness of environmental aid. The Ministry of International Trade and Industry (MITI) has partially hijacked this aid program to justify and support corporate environmental technology exports. Meanwhile, the Environment Agency has minimal input into the management and distribution of
30 this aid while the Forestry Agency has shown little interest. In this setting, only a small amount of environmental aid supports forest conservation, reforestation, and improving tropical logging techniques. While government policies to improve the environmental management of overseas projects have clear defects, and though there is a tendency to exaggerate accomplishments, the discrepancy between public bluster and policy substance is even greater in the business world. Intense criticism of overseas environmental practices ignited a public relations counter-attack by Japanese corporations in the 1990s. This has translated into a few showcase projects and a flood of grandiose claims of a new environmental awareness. Yet there is a wide gap between these claims and concrete procedures, mechanisms, and flow of money. More perturbingly, government and corporate efforts to improve overseas environmental policies focus on peripheral effects of Japan’s shadow ecology. There are few genuine efforts to tackle the key issues of ‘wasteful’ consumption, low purchase and consumer prices, or import barriers that deplete Southern state revenue essential for sustainable management. Although there are scattered statements that trade has significant environmental consequences, there are no comprehensive policies, or even consistent positions. These public statements appear designed to appease world and domestic critics of overseas environmental practices. In private, most Japanese government and business leaders downplay the impact of trade, invariably diverting the conversation to the efforts to
31 improve ODA or the showcase projects of the major trading companies. This chapter begins with essential background on Japanese aid and loans. It outlines basic problems with ODA, particularly administrative barriers to integrating environmental concerns. I then evaluate recent efforts to improve ODA and loans, including the environmental aid program, environmental guidelines and assessments, and the new Environment Law. I examine the roles of MITI, the Foreign Ministry, the Finance Ministry, the Environment
Agency, the Forestry Agency and the ODA implementing agencies. The second half provides background on corporate Japan and evaluates post-1990 efforts to develop environmental guidelines.
ENVIRONMENTAL IMPACT OF JAPANESE ODA AND GOVERNMENT LOANS Japan’s aid program began in the l950s as reparation payments to Southeast Asia. During the 1960s, it was designed to promote Japanese exports; in the 1970s, particularly after the 1973 cii shock, aid became part of efforts to secure natural resources; in the l980s, in addition to its economic role, aid emerged more as a tool of foreign policy, as part of ‘comprehensive security.’ Today, in terms of quantity, Japan is an aid superpower,1
Robert M. Orr, Jr. and Bruce M. Koppel, “A Donor of Consequence:1 Japan as a Foreign Aid Power,” pp.2-3, in Bruce Koppel and Robert M. Orr Jr., eds., Japan’s Foreign Aid: Power and Policy in a New Era (Boulder: Westview Press, 1993). On changes to Japanese aid in the late l980s, see “Beware the helping hand,” The Economist, 15 July 1989, -14.pp.1 For a succinct summary of the evolution of Japanese aid, see William L. Brooks and Robert M. Orr, “Japan’s Foreign Economic2 Jr., Assistance,” Asian Survey 25, no. 3 (March 1985), pp.322-340. 32 H = H, 0 Cr 0 ‘—‘- Hi Mi Ct H- r’ c-I Hi 000 o t- Hi CD H- P Pi CD 5 11) CtHi ii Il (Q p. II < II H ‘d H- CD II (DJ CDCDii CD :ii i Ixj H- CD L P3 0 P3 Cr II H PJ ii H- H- CD H U) CD ‘< H H 1:1 H- Cr U) Cr 0 H H N P) H Ii ii H- CD ii CD H- P) CD H O p Cl) P3 p3 ii H 0L Cr Mi Cr pi Mi H-H •. CD qP) 0 N - o W Cr H t:;1rt:u H Ii H H- H H- 0d H- -C/2 H rt J H HP’ ii H ():ipJ ‘t5 H ii iiU) CD H- ii H U) CD çt ii P rt U) I U) CI- CD HI H Cr ‘d 0 o <1 k- P3 U) O CD .!—I CD CD CD HiP’ H CD H i Li H W Cr Cr pJ 0 H ç1 U) Hi I- CD H o H- Q 0 Hr-g H- H 10 CDCDii o DP’ HCD U) q j Ii o 0 H- < H CD Cr - II H- 0 orr 1L1i H (Cl II CD H- ii ii ii ii uj H U) (2 U) ( CD Hi I-hQ Q CD H- q 0 ii P)H- ‘ o U) H- 0 a-, CD 0 H-H1CD o H r-t b Ui ci U) :pj Cl) H 0 j H o CD Mi CD U)Or-r ii Ii r-4 ‘-< II Li w ‘-< Cl) Lxi or-I H- CD 0 r ii 0 0 •. CD w0ii U) U) o Cr CD Li HPh CD U) 0 • H- (D d CD Mi < CD i rr H H- i 0 Q 0 l3 (flI CD o CD Cr CD 0 H U)CI) p.) 0 ii H-tfl l1J H- Li Cr H 0 r (Q Cr P3 coP’ ::y ii cr H CD 0 I—, CD CD H- j H- 1 0 H H H- H- Hi pCD H 0 H- H o 0 ii U) H- CD w rI-tn Cri- çi 0 Cr H H- 0 - CDCDO CD U) Mi ii CD H- H pi CD Mi H- p. Ii P.) (I) - pi CD H-CD CDCr 1xj Li Cr Cr H Cl) H. ci) H- (D ci P.) H- U) P3 Cl) °tI) H- H- H H- P3 ,rt H Ii HLQ U) H Hi H H Huii H ‘H- CD Cr 1xj CD H U) Cr II U) U) H 00 CD 0 • oii 0 CD CD U) a-, Hi Hi’• ii P H 0 H q CD H H ‘< Cr c-txi q CD i- H q H H- CD H- 0 P’ IP’ I- d 0 CD ii I- CD pj CD H H J Lxiii H- CD H CD CDPJPJ ii fl rt U) ii H- Cr H H P ii ii H CD Fj H- 0 c-I- P.) P3 0 0 P3 0 0 o LJ U) —ii II II < h Li Ii U) Cr ii Hi t1) U) CD • CD k< CD CD U) > ci Cr 0 International Cooperation Agency (JICA), which started in 1962 as the Overseas Technical Cooperation Agency to administer grants and technical assistance. The OECF is officially attached to the EPA, although it6 is strongly influenced by the Finance Ministry. In FY1992 OECF loans comprised around half of total Japanese ODA, (around 10 percent of world ODA); approximately 51.5 percent of this sum went to Southeast Asian countries. Annual OECF development financing is equivalent to 7 “the lending of the Asian Development Bank, the Inter-American Development Bank, and the African Development Bank combined.” These loans have relatively high interest rates and 8 tend to fund large infrastructure projects. JICA is controlled mainly by the Ministry of Foreign Affairs.9 However, MITI, or any ministry channelling its aid funds through JICA, including the Ministry of Agriculture, Fisheries, and Forestry, has influence over JICA projects.’°
6For a description of JICA, see Robert M. Orr Jr., The Emergence of Japan’s Foreign Aid Power (New York: Columbia University Press, 1990), pp.47-SO, for the OECF, pp.45-47. OECF, OECF Annual Report 1993 (Tokyo, OECF, 1993), p.3 and p.37. 7 From 1961 to the end of March 1993, Indonesia, Thailand, the Philippines, and Malaysia absorbed 40.9 percent of OECF loans. Ibid., p.37. Richard Forrest and Yuta Harago, Japan’s Official Development Assistance8 (ODA) and Tropical Forests (Gland, Switzerland: WWF International, 1990), p.8. Although officially in FY1990 31.5 percent of bilateral aid funded infrastructure projects, Hiroshi Kanda claims it is actually 9 “A around half. Hiroshi Kanda, Big Lie: Japan’s ODA and Environmental Policy,” AMPO Japan-Asia quarterly Review 23, no. 3 (1992), p.42. 10For background on JICA activities, see JICA, For The Future Of The Earth (Tokyo: JICA, 1992). 34 The Export-Import (EXIM) Bank of Japan provides project loans, and export, import, and investment credits to foreign governments and corporations and to Japanese businesses and trading companies that do not qualify for ODA loans.” It is officially under the control of the Finance Ministry, although MITI has significant input. In FY1992 the Bank made US$16.5 billion worth of commitments; at the end of the fiscal year, outstanding loans reached US$71.4 billion, the highest in the history of the 2Bank.’ The EXIM Bank is designed to “facilitate Japan’s economic interchange with foreign countries through the provision of a wide range of financial services to supplement and encourage financing by commercial banks and other financial institutions in Japan.” A central priority is the “development and import into Japan of natural resources. 13 Like other donors, Japan’s lending policies and decision making process have general problems that contribute to difficulties in evaluating and incorporating environmental
11The distinction between OECF aid loans and EXIM loans is in many ways purely definitional -- a small change in OECD Development Assistance Committee (DAC) guidelines could easily eliminate a large percentage of OECF ‘aid’ and swell EXIM ‘loans’. For this reason EXIM loans -- though not officially part of ODA -- can logically be considered alongside a discussion of government overseas economic assistance. For a description of DAC guidelines for economic assistance qualifying as ODA, see Orr and Koppel, “A Donor of Consequence,” p.16, footnote 3. EXIM Bank of Japan, The Export-Import Bank of Japan: Annual Report 2 1993 (Tokyo: EXIM Bank, ‘ 1993), .8p. EXIM Bank of Japan, Guide To The Export-Import Bank of Japan (Tokyo:‘3 EXIM Bank of Japan, February 1994), p.1.
35 V p.50. Aid,” an by Donor Consultants neutral in bureaucrats administration, Challenge: weakened Center with omnipresent and Japanese 1993); with administrative large and the solutions.’ 6 administrative over for concerns.’ 4 average Toru any business OECF.’ 7 Foreign Curtis ‘ 9 ”In ‘ 8 Quoted JICA.” 8 ‘ 7 interview, ‘ 6 The ‘ 5 During USAID ‘ 4 it clear of in aid for for other Yanagihara or by Consequence,” Islam, development should 1990 budgets. 19 weakest of aid Global Policy [U.S. sides goals already Association Moore, One at Affairs interests), administrative in There Efforts US$6.35 nation.” The each interviews policy, fragmentation the paralysis, ed., see OECF Orr, Agency be Forestry with and Change, reform and central Japan ODA OECF over-worked chapter is greatest Yen (promoting emphasized official The program There to million policies.’ 5 Anne p.6. see also the administrator for Finance (JOFCA) tackle Richard and For Emergence and And University chapter actor in Finance dilute consultant, are three Emig, The International little and obstacles. Development, JICA faces in aid claimed: obstacles The 36 environmental staff also foreign 1994, and role (stressing an that funds Forrest, in - “An expressed Battles leadership Global four. emphasis policies, of coordination are Ministry. USAID, the Alan few of of responsible in Overview Japan’s “few -- “We environment-oriented unique.” policy Maryland, these Japan Japan For EPA staff Rix, to pp.53-58. far Development] Environment fiscal between “Japanese 3 get on of frustration February - concerns a improving more actors and Orr was (London: Japan’s increasing Foreign with of better objectives) Overseas generally the critique between responsibility), for Alan Japan’s responsible 1991), and foster MITI than environmental problems Aid is increasingly 1994. cooperation Foreign are Koppel, Aid Routledge, S. than (Maryland: aid discussed (fighting with JICA ODA Forestry p.20. quantity and Miller, Foreign remains further of ad Power, create staff we Aid the for ODA aid the and the hoc are do “A hJLzJ PJJLxlLxi Lxi d C J ui ‘ ‘ti Cl) H ft (I) C) I- CL) CD(D M C C C) I- Pi C C C CD CD C C < cl 30Rix, Japan’s Foreign Aid, p.190 and p.8. He examines these changes throughout his book. 31While funding for NGOs has increased slightly, compared to the overall aid budget, it is still “minuscule”. David Potter, “Assessing Japan’s Environmental Aid Policy,” Pacific Affairs 67 (Summer 1994), p.203. 32Although officially much of Japanese aid has been untied, informal ties to business are still widespread, especially to yen loans. Orr and Koppel, “A Donor of Consequence,” p.10; and Koichi, “Problems in the Aid Program,” p.14. 33lnterview, Senior JICA official, Tokyo, 12 April 1994. 39 p.13. p.175. at more 11-22, development” aid was in represents years. Environment Southeast OECF, protection pollution environmental problems” as forestry environmental ENVIRONMENTAL (including the Ibid., “assistance has defined 36 Japanese 35 Forrest 34 Japanese than Among p.180. 1989 Foreign Japan’s To been pp.l 76 -19l. 100 Asia. 35 conservation including control, ‘new’ encourage of Paris Agency the ODA or as and partially assistance. billion AID aid Ministry the Ministry environmental Affairs, “irrigation funds conservation donors, conducive environmental Harago, Summit went target This ozone the “the requests yen. for on of environmental derived and and conservation of Japan’s there of layer.” 34 environmental MITI, environmental improvement Foreign The to For and the Foreign 300 afforestation, aid Japanese of for 40 the FY1992, aid. 36 is by 1991 flood billion the Official Affairs, policy biological this reclassifying no resolution In Affairs, London of aid Forestry of control” Foreign protection. aid, missions, consistent 1989, 16.9 Not -- yen the the Development target Japan’s based Summit teams percent disaster over all diversity) natural living Japan Ministry Japan’s to Agency, of was including on “infrastructure ODA of the from -- ‘environmental definition Environmental environmental announced declarations of environment, Assistance, exceeded is environment 1993, this next reduction, ODA defines JICA, total outlined and and one Table 1993, total three ODA the the the by an to of it Affairs Japan’s,” Countries p.39. p.178. The November labelled environmental would yen of any An on development projects’ conservation. 40 about called first improvements Environment the Economic Japan country. 42 of 43 Asahi 42 Shigeaki 40 ”ODA 41 OECF, 39 Japanese 38 Louise 37 Potter, Environmental 70 expand Principle Earth, environmental 7, for percent 1993, ‘environmental p.201. Times, and Considering no. should OECF should Council do Shimbun, better to So problems, Tokyo, “Assessing environmental In the and 1 the Ministry Rosario, Fujisaki, urban Annual far 27 In of (Winter declares early be Development, concerns Role be Japanese May this June, advisory around 25 aid used ODA pursued 17 water 1993, the it Report May aid’. 1992, “Green Japan’s,” of 1993) over aid of January to guidelines is Cabinet “Environmental that 1994. half gained ODA,” Diet Foreign links aid has and the guard debatable p.7. the , subcommittee in 1993, at 41 Japan p.75. “environmental been Japanese of passed tandem. sewage to the next p.206. Japan momentum approved 1993, the between environmental p.18. Affairs, the promised edges,” in to five whether environment, the ,,41 systems. 38 Review the Also, ASEAN in government promote Issues to years, in New At an form Southern FEER, Potter, 900 the Japan’s Japan Interview, any the ODA conservation of Basic countries. 43 of to aid Prime in the loan 12 UN International environmental As Charter; panel during announced loans. 39 1000 March Law Developing has largest “Assessing Conference ODA debt a should Minister billion Friends result, on says,” funded 1993, 1992, 1992. and and the the be by In it Environment. The law explicitly addresses environmental links to ODA. Section one, article 35, reads: The State, in implementing international cooperation, shall make efforts to consider global environmental conservation etc. in the areas where its international cooperation is implemented. BATTLES OVER ENVIRONMENTAL AID Typical of Japan’s ODA administration, as funding and interest have risen, “‘green’ aid has become the subject of intense competition among various ministries involved in foreign 45assistance.” In a struggle over environmental turf, Foreign Affairs and MITI have become strong supporters of environmental aid. The Foreign Ministry allocated 4 billion yen in FY1992 to finance international organizations involved in environmental programs. As noted earlier, however, the bulk of the Ministry’s influence is through JICA. MITI has aggressively staked out an environmental mandate. MITI’s Environmental Policy Division emphasizes technological solutions and corporate technology exports to tackle global warming, and promote energy conservation and alternative energy Government of Japan, The Basic Environment Law, Law No. 91, 1993, effective 19 November 1993. For an overview of the new law, see Hidefumi Imura, “Japan’s Environmental Balancing Act: Accommodating Sustained Development,” Asian Survey 34, no. 4 (April 1994), pp.355-368. p.39 45Louise do Rosario, “Green at the edges,” FEER, 12 March 1992, . 42 46sources. ‘New Earth 21’, a MITI backed proposal to the international community, calls for the development and “world-wide diffusion of environmentally sound 47technologies.” Specific MITI projects all aim at a technological fix for global environmental problems. The International Centre For Environmental Technology Transfer (ICETT) -- a non-profit organization under MITI jurisdiction and with local government, academic and industry participation -- was established in 1991 to transfer Japanese pollution technology to developing 48countries. In the same year, MITI announced its Green Aid Plan. In FY1992, Green Aid provided around 2.7 billion yen to support technological efforts to reduce water and air pollution, and improve waste treatment, recycling, and energy conservation in the 49South. The Research Institute of Innovative Technology for the Earth (RITE) -- a foundation administered by MITI - - supports a joint industry, academic, and government research facility completed in 1993 to study environmental technologies, particularly for energy conservation and global 50warming. In 1993, MITI and the Agency of Industrial lnterview, MITI official, Environmental Policy Division, Tokyo, 46 27 April 1994. 47M1T1, “The New Earth 21,” internal document, supplied by a MITI official, April 1994. ICETT (Yokkaichi, Japan: International Centre For Environmental48 Technology Transfer, June 1993). M1T1, “Green Aid Plan,” internal document, supplied by a MITI official, 49 April 1994. 50For background, see RITE (Tokyo: Research Institute of Innovative Technology for the Earth, March 1992). 43 publicity, New Earth, Environment decisions, Headquarters, to and. activities be trying Environment reevaluate some to 1990. overseas ongoing little Science the create issues. consider make changing. 52 . New Sunshine 53 lnterview, 52 These 51 MrrI, The JICA . the This Tokyo, input sustainable 1151 to and bureaucratic environmental Sunshine it Environment projects. 53 impacts economic it measure perhaps division Technology Agency, environmental on and signs Agency look into is 25 1993), Program foreign the sometimes May Despite Office overseas must Program like of growth even accounting, established in Tokyo, tries Agency p.4. 1994. struggles, amalgamated Agency guidelines In global monetary be (Tokyo: the countries at of having factors; addition, to useful while 5 examined issues. “to of the Overseas encourage April Environment -- Industrial environmental 44 Environment develop a New helm. solving terms especially or no for historically three Global it 1994. and control There as warily official Sunshine the is Environmental overseas Interview, part the existing innovative the also energy more Environment Science Agency are Agency since, environmental effects of over global directly change powerful some mandate Program a Japanese global and projects, is and weak ODA researchers Friends for signs technology environmental of Cooperation, environment, on involved division Technology. involved -- ministries efforts favourable player to Promotion companies “economic domestic this aid, has forming of impose the may are had the in to in to in in economic 54activity.” Another possible sign of growing influence is the 36 percent increase in the Environment Agency’s aid budget in 55FY1991, though it is still one of the smallest. Perhaps more significantly, Environment Agency officials claim that, despite being quite critical of ODA environmental reviews, informal influence is beginning to develop. There is also a possibility the New Basic Environment Law will reinforce, perhaps even promote, Environment Agency 56input. Not all trends, however, solidify the growing influence of the Environment Agency. As the environmental spark ignited by the 1992 UNCED Conference fades, momentum has been lost in the Japanese Diet to make the Environment Agency a full ministry. More importantly, funding and personnel are still too limited for consistent 57influence. The Forestry Agency is quite conservative and has been less eager to dive into the fray for environmental 58aid. In 1990 the Tsuneyuki Morita, “Environmental and Natural Resource Accounting54 CIDIE in Japan,” Workshop on Environmental and Natural Resource Accounting, UNEP Headquarters, Nairobi, 1992, p.2. The Economic Planning Agency and the Ministry of Agriculture, Forestry and Fisheries are also studying resource accounting. Ibid., p.1. 55Rix, Japan’s Foreign Aid, p.125. lnterview with one of the drafters of the New Basic Environment56 Law, Environment Agency, Global Environment Department, Tokyo, 9 June 1994. Also see ICunitoshi Sakurai, “Japan’s New Government and Official Development Assistance,” INTEP Newsletter, no. 3 (October, 1993), p.1 57Based on several interviews, Global Environment Department, Environment Agency, Tokyo, 9 June 1994. 58According to one source, it is a defensive, inflexible Agency linked closely to the major trading companies. Interview, Friends of the Earth, Tokyo, 25 May 1994. 45 Agency published a position paper on tropical forests calling for large-scale tree plantations, more cooperation with NGOs, and timber purchases from sustainable 59sources. Strangely, considering these kinds of reports tend to be full of fluff, it does not emphasize protecting biodiversity and primary forests or seriously consider the implications of tropical timber consumption. Instead, it advocates exporting Japanese forestry expertise, stimulating consumption, and expanding trade in °6timber. THE OECF, THE EXIM B2NK, JICA, AND THE ENVIRONMENT The OECF, JICA, and the EXIM Bank have all developed environmental departments and guidelines since the late 1980s. The OECF now has “an environment advisor, an Environment Committee and a senior manager in charge of environmental 61problems.” In 1989, the OECF established environmental guidelines to encourage environmentally sound Southern loan requests, and provide the OECF with criteria to evaluate 62applications. Generally, before an official request is made, a Japanese fact finding mission is sent to evaluate the feasibility of Southern proposals. At this stage, 59While these are all positive proposals (although plantations must be managed with great care), as we will see in later chapters, the Forestry Agency has not actively pursued these goals. 60My summary is based on Forrest and Harago, Japan’s Official Development Assistance, pp.10-11. 61Rix, Japan’s Foreign Aid, p.125. lnterview, OECF Environment and Social Development Division, Tokyo, 62 11 April 1994. Also see OECF, OECF Environmental Guidelines (Tokyo: OECF, 1989). For a review of OECF environmental projects, see OECF, OECF and The Environment (Tokyo: OECF, 1993). 46 based on a check list, OECF officials apparently encourage prospective borrowers to consider environmental factors. According to an OECF official, as a result of this process, actual loan applications are rarely rejected for environmental 63reasons. OECF environmental guidelines could certainly be strengthened. Forrest argues that these guidelines “seem to be no more than a vague menu of items which should be considered, rather than conditions required to ensure environmental damage will not result before OECF provides TMfunding.” Rix notes that the “environment is just one aspect of OECF appraisal of projects, and no strict impact statement is 65required.” Indicative of the weak environmental review process is one of the six main items for assessing applications, the lame question: “Is there sufficient environmental consideration in the 66project?” Also indicative is the lack of any revision to the original guidelines, despite the mollifying, and now somewhat embarrassing note in the preface of the 1989 OECF Environmental Guidelines: “This is a first version, lnterview, OECF official, Tokyo, 11 April 1994. There are cases 63of the OECF suspending a project severe by after criticism environmentalists and NGOs, although these suspensions were not based on violations of OECF environmental guidelines. Examples include the Sardar Sardovar dam project in India (1990), the Mindanao geo-thermal power project in the Philippines (1991), and the US$80 million loan for the Calaca II power plant in Luzon (1992). Potter, “Assessing Japan’s,” p.202. 64Forrest and Harago, Japan’s Official Development Assistance, P.S. 65Rix, Japan’s Foreign Aid, pp.1 Evaluated from Operational Guidance on OECF Loans, March,26.25 1991, Tokyo, p.19. Quoted in Rix, Japan’s Foreign - Aid, p.126. 66 47 ministries, public EXIM the environmentally turned Tokyo, of officials 1994. Section interest application assessment obvious view to environmental department Bank environmental even Little importing and 1989; the applications applicant we 69 Revealingly, 68 lnterview, 67 As From the The to as official these Environmental relations. plan 11 is down making a reviewed Ministry of environmental EXIM in are April April known whole aircraft there April has there since to were then since, environmental aspects. implications. “arrogant claimed Bank them make unsound, unclear rejected about 1994. reviews Senior 1993 is is of updated 1994, Interview, about I formally the more first was not such a Finance Affairs technology if to these senior The that environmental no official, However, problems proposal unable even the and a environmental comprehensive at improvements Bank April and developed revisions Ministry dozen withdraws loan has authoritarian” loan this issues. Section. guidelines. Friends a Though official made 48 superficial to officials 1994, not for -- is Environment applications, stage. obtain applications it is more quietly, seen of had many rare, there environmental of implications, According the not is as the and guidelines. responsible Finance the been stringent statistics Though a prove request applications They rejected. 69 consider effective.” 67 attempt if copy. 68 Environmental deemed is and Earth, informally published. Section, an are are necessary, no has unlike unverifiable, one to application to to In it in guidelines Tokyo, to for environmental confidential; on almost shown In save the one relating bother theory, is late EXIM the -- the each have rejected; assessing When referred project Affairs face. source, such 25 number with little never Bank, other 1991. with loan May has any the an an to as in a project Section, Tokyo, Committee with the scrutiny with penalties, Bank’s management. of occurred largely Bank of an the Bank intuitive, Environment impossible future conditions logging applications the informal review loan 70 lnterview, 7 ’One avoiding While genuine can claims 11 Planning loans. 70 environmental cosmetic, in at in EXIM given force April recommendations, indication proposal. process, vague precursory to OECF JICA. were Sarawak. that Section, understanding Sarawak. But reviews assess environmental Bank, early to rejected Department. 1994. without Besides lines Senior and it set. more In logging or Tokyo, now comprehensively repayment of 1989, is assessment EXIM if the of A record Interview, concrete, None official, loan lends access these for the these accountability, According central environmental in JICA that 11 Bank in scandals environmental Based applications. 7 ’ rationale Sarawak, of April more 1990 apparent of to conditions 49 has established it is environmental these though the confidential Environment concern money on would Senior that JICA 1994. to and the serious loan. OECD not for environmental a loans. was the public environmental incremental introduced and to be are was reasons Bank specific Development official, an reviewing Bank improve In difficult few, rejected. shortcomings. Section, Environment violated, Bank the embarrassment addition, guidelines Secret official is if all more publicity records, problems environmental environmental any, changes the Environment checks, guidelines, suggest rules, to Assistance EXIM concerned then examples Instead, there logging Section receive in appear Bank, it with have weak than and the the the the An is is guidelines for development initiatives including dams, agricultural estates, and forestry projects. Since then JICA has tried to incorporate more environmental factors into grants and technical assistance; conserving primary tropical forests and rehabilitating secondary forests have apparently been a major focus of these 72efforts. In FY1992, 17.4 billion yen, or 13.5 percent of total JICA expenditures, went to the environmental sector, up from 8.1 billion yen in 1988. These funds trained 722 people in Japan, sent 129 experts overseas, and supported 67 development studies and 47 technical cooperation projects. In the same year, environmental specialists reviewed 108 73projects. Despite more support for environmental projects, and plausible attempts to incorporate environmental factors into decision making, there are serious problems with implementing environmental guidelines. The Environment Section, along with a regional division of the Planning Department, determine whether a project requires an environmental Impact Assessment (EIA). If necessary, one of JICA’s sector-based departments -- such as forestry -- then identifies the scope of the assessment. The actual EIA is handled by a team of private consultants and JICA officials who often have little experience with environmental or tropical forestry management. The environmental guidelines are “non-binding reference materials,” and are optional at all stages of the 72lnterview, Senior JICA official, Tokyo, 12 April 1994. 73Hiroshi Enomoto, JICA, Division of the Environment, “Environmental Cooperation and The Japan International Cooperation Agency,” INTEP Newsletter, no. 4 (February 1994), pp.6-7. 50 process. Details on specific projects are confidential and there is no post-project evaluation of environmental changes. Furthermore, environmental reviews do not consider alternatives to the proposed project and give little consideration to indirect social and environmental 74implications. Specific problems with JICA’s environmental guidelines and procedures are exacerbated by the fragmented ODA administration. The OECF and JICA have not consolidated environmental guidelines and do not coordinate environmental reviews. As a result, standards may change as a project 75progresses. This problem is unlikely to be resolved soon. Environmental guidelines and aid plans vary across ministries, and despite the new Environmental Law, there is little chance of developing a unified environmental aid policy. Problems with environmental planning at JICA and superficial changes at the OECF and EXIM Bank lead Hiroshi Kanda to pan environmental aid. He argues “there is no remarkable difference between ‘Environment ODA’ and ‘regular ODA.’ They both tend to support Japanese industry and Japanese economic 76aims.” This seems too harsh. It would be naive to assume the new rhetoric equals improved practices; but it is equally facile to assume these new policies have no practical effects. Environmental aid, policy changes at MITI and Foreign Affairs, and decisions by JICA, the summary of Forrest and Harago, Japan’s Official Development Assistance, pp.6-7. 75Potter, “Assessing Japan’s,” p.2O8. 76ICanda, “A Big Lie,” p.45. 51 OECF, and the EXIM Bank to create environmental committees and sections, and to revise guidelines, indicate, at a minimum, a recognition of a need to be more sensitive to environmental concerns, at least in public statements. Evaluating the extent of concrete changes -- rather than paper ones -- is far from easy. As will be seen in later chapters, there have been marginal improvements to Japanese forestry aid and loan projects in Southeast Asia, although these changes are certainly far behind the policy rhetoric. The gap between glossy policy declarations and substantive procedural changes is even greater f or Japanese corporations. ENVIRONMENTAL IMPACT OF JAPANESE CORPORATIONS Together Japanese government and corporate financial flows to the South are the largest in the world. In 1987, Japanese private investment, commercial loans, and official aid amounted to US$22.5 billion, a quarter of all Northern financing in the 77South. The distinction between the environmental impact of government and private economic activity is rather artificial, especially in Japan where there are close personal links between bureaucratic, political and business elites. Like other Northern donors, Japanese aid is tied closely to corporate investment and 78trade. One structural reason is the custom of senior aid officials 77Forrest, “Japanese Aid and the Environment,” p.24. 78This is a key theme of the articles in Koppel and Orr, eds. Japan’s Foreign Aid. 52 Windo, p.103. Asia Daily p.50. Jameson, p.67. trading multinational Strategies misleading. economic trading industrial Sumitomo, their trading host Southeast corporate to retiring “the Indonesia gain 82 Max 79 Forrest, 81 1n 80 Wendy The economies.” 8 ° in Yomiuri criteria activities. 8 ’ and company companies. For corporations 1993. terms “to web. ODA “Trading Mitsubishi, Eli, label Asia and investment Charles group. (Singapore: Dobson, lead recent . (Los contracts.” 79 For .are or Malaysia, translation “The of “Japanese being set is ‘trading aid Angeles sales, transnational the Foot, Companies These Strategically the intermediaries Asiaweek by These background Japan consulting and a “by (London: Institute ‘core’ international crucial ‘big Japan Aid ODA “spiders these Nissho Times providing are by company’ in and or Power six’ has 1000,” In Michael Inc.: East complex McGraw-Hill were 53 World associations the of zone on Iwai the concerns.” 82 allocated the at “lowered Southeast -- for Asia: Tokyo’s these ‘command Global essential the Asiaweek, Environment,” the of -- (sogo Report), Capone, cases specialist conglomerates Itochu, about trade investment, six centre Trading corporations, ODA strategies the Book shosha) Economic Asian centre’ and of largest Tristam is half 11 infrastructure has In 23 Mitsui, cost” of companies the only June Company, Studies, literature November and many p.26. Japan’s contributed the of led and companies is Philippines, a of Carrington Expansion,” of 1994, Investment a portion Marubeni, country’s cases, by Japanese all powerful Japanese somewhat see working 1990), global 1993), p.8A. 1994, giant meet Sam for for in of to a exports and two-thirds of its 83imports.” These companies have impressive con-irnunication and information systems at their disposal. They have sales and procurement networks in virtually every country in the world and they organize third-country trade. [They] also play an important role in exploiting raw material resources in other countries. They control large segments of national distribution, operate banks and lending institutions, develop new technologies and create new industrial 84sectors. Trading companies perform vital functions. They purchase and distribute almost every imaginable good, provide information (in some cases ‘better than the CIA’), act as ‘quasi banks’, invest in joint ventures, and transport and market raw 85materials. For Japanese business empires, trading companies provide stable resource stocks, and sometimes take short-term losses to help absorb fluctuations in currency exchanges and resource supplies. This does not translate, however, into stable Southern prices since trading companies “themselves provoke speculative moves in international commodity markets, which they later smooth down in 86Japan.” According to L. B. Krause and S. Sekiguchi, trading companies “follow-the-leader.” “If one company, thinking a product is in short supply, makes anticipatory purchases, the others will follow suit, causing an excess of quantity requirements, rapid escalation in prices, and market instability; ultimately, the ”Japanese trading companies: the web rips,” The Economist, 8 August 83 1992, p.68. Max, Japan Inc., p.103. 85Ibid., pp.107-113. 86Francois Nectoux, and Yoichi Kuroda, Timber From The South Seas: An Analysis of Japan’s Tropical Environmental Impact (Gland, Switzerland: World Wildlife Fund International, 1990), p.64. 54 excess must be sold back into the market, causing a collapse in price. “ Trading companies and their subsidiaries extract, transport, import, distribute, process, and market Southern natural resources. They provide money and technology to start projects, and a stable buyer to support rapid extraction. As part of a wider corporate strategy, these companies emphasize a steady flow of huge quantities at low profit margins. According to Francois Nectoux and Yoichi Kuroda, as a result, “rather than concentrating on long- term -- or even short-term -- returns of high value products, [trading companies] are often prepared to use the ‘grab it and run’ strategy. ,,88 Understandably, these economic powerhouses create deep environmental reverberations. Besides a few showcase projects, multinational corporations around the world have shown little practical interest in supporting or funding environmental 89conservation. Japanese companies are no exception, focusing instead on exporting environmental technology developed to tackle pervasive pollution in the early °91970s. MITI L.87 B. Krause and S. Sekiguchi, “Japan in the World Economy,” in H. Patrick and H. Rosovsky, eds., Asia New Giant; How the Japanese Economy Works (Washington: The Brookings Institute, 1976), quoted in Nectoux and Kuroda, Timber From The South, p.64. 88Nectoux and Kuroda, Timber, p.64. 89Choucri, “Multinational Corporations,” p.212. 90For a discussion of Japanese government policies and business efforts to tackle industrial pollution in the 1970s, see Peter Dauvergne, “Japanese Domestic Environmental Policy Making: An Examination of the Role of the Liberal Democratic Party.” M.A. Research Essay, Ottawa, Carleton University, Department of Political Science, 1991. 55 Review Quarterly beneficial projects, Environmental to organized 70 GREENING creating Japanese l990s, Keidanren, of Japan’s to “A business predicts the the there is percent Step donate strong ‘green’ corporate most environmental 91 Yoichi As MITI, is 23, Forward? Keidanren environmental powerful corporate companies and little, CORPORATE overseas new government and Review a “one of and no. activities.” 9 ’ corporate Keidanren ‘1% vigorously Nakamura, companies public Charter. environmental environmental the percent 3 Club’, Debt-for-Nature 23, if (1992), companies environmental effects trading as and JAPAN image any, relations support no. Japan. ‘eco-outlaws.’ (Federation criticism and of A “had backs key “The pressure pp.48. 3 year their of companies as In requested (1992), have already trading practices, for Ecobusiness general these sections, 1991, environmentalists later, brochures. 56 protection annual Swaps,” become environmental mounted on of p.56. corporate Keidanren used have Japanese Economic a To member technology companies Keidanren income increasingly counter ANPO the guidelines, the launched Logic,” in Also In will firms charter Japanese efforts. the Japan-Asia late companies proclaimed Organizations), to technology see mounting become counter-attacked, transfers. poii and support 1980s a MPO and 1990, Tomoya major worried to conservation claimed NGOs government, individuals While a Japan-Asia strengthen to and Quarterly Keidanren criticism lucrative a socially campaign exports, monitor Inyaku, Global depict early about there that and Tokyo, government Keidanren January has ploy. 96 Keidanren, October without 7 Tentative mandatory, Internal protect environment.” vague observers While 1994, responsibility. environmental weaknesses, guidelines enforcement its their this April also environmental 96 Many 94 lnterview, 95 Keidanren, 92 Keidanren, 93 See p.2. ability optimistic and it April any 1992, 1994), 1994. encouraged document. also the contains Keidanren, Translation see insiders are irresolute. 93 April and means Japanese making mechanism. to internal to the factors; designed established p.3. leeway July global MITI, Global 1991). Towards tackle to stance, “Keidanren Charter claim its businesses commendable are monitor 1994. Tentative Keidanren However, academics, is document, “Voluntary (Tokyo: ability quite while to Environment environmental environment” provided. 94 According More Preservation calling is encourage as the Besides and critical compliance little accepted, Policy Keidanren, to Nature to importantly, Translation Global despite 57 principles, enforce supplied “formulate on NGO Plans ‘strengthen’ developing to companies Department, Japanese In more Conservation and of Environment issues.” 92 representatives, of as a 1994, regulations, for these the is the by 27 Keidanren the than Activities part voluntary a May (Tokyo: ‘expected’, the there the Charter. companies Keidanren MITI the to Global Charter anything a lofty Keidanren, 1992), wording consider Environment,” public However, Charter Charter Fund official, of is official, many Keidanren, Environment, plans no principles, Interviews, for “to p.1. has to debatable. reiterated “corporate it and relations is Japanese overseas specific in finance even work (Tokyo: Tokyo, 1994,” is on April 1992, often clear MITI even not the the 12 to if 4 Since the early 1990s, Japan’s six largest trading companies have established environmental sections. These are remarkably similar and cooperate closely, perhaps to increase communication and maximize resources, perhaps, more cynically, to minimize competition and avoid a costly race to be the most ‘environmentally friendly’. Mitsubishi’s Environmental Affairs Department is typical. According to a spokesman, it has three aims: to raise the environmental consciousness of employees; to contribute to environmental projects in developing countries; and to share Japanese knowledge and experience of environmental protection while being careful to sell appropriate 97technology. All of the environmental departments have developed environmental guidelines, though like the Keidanren Charter there is far more flowery language than concrete 98procedures. Besides these guidelines, the largest trading companies have modestly increased funding for environmental projects in the South and for research in Japanese universities. Some trading companies have also instituted environmental reviews. For example, at Itochu the Global Environment Department evaluates a proposal when there is concern nature conservation projects, particularly in tropical rain forests. Though commendable, the amount distributed is still relatively small. In its first year, the Fund supplied 100 million yen to projects in Palau, Sulawesi, Tanzania, Ecuador and Vietnam. Keidanren, “Keidanren Nature Conservation Fund Makes First Pledge to Conservation Projects,” internal document (Tokyo: Keidanren, undated, acquired by the author April 1994). This Department was created in 1990. Interview, Mitsubishi Corporation, Environmental Affairs Department, Tokyo, 5 April 1994. 98For example, see Marubeni, “Guidelines on Global Environmental Issues,” internal document (Tokyo: Marubeni, 1991) 58 it may harm the environment. However, the process and criteria are vague and there is no reliable evidence that proposals are ever rejected on environmental 99grounds. Starting in FY1994, Marubeni plans to conduct an annual review of the environmental impact of its business 100activities, although like Itochu, the criteria and process are opaque. A vital function of the new environment departments is to improve corporate images. According to corporate representatives, Japan’s wealth, powerful public relations sections of Western M[\TCs, the tendency among the international community to avoid criticizing developing states, and a Japanese cultural proclivity to accept criticism have all contributed to an unbalanced, simplistic, even inaccurate picture of the environmental record of Japanese corporations) One example is a 1993 New York Times advertisement0 by the Rainforest Action Network that claims Mitsubishi’ is destroying tropical forests and calls for a boycott of their products.’° Through a worldwide publicity campaign, meetings 2with NGOs, distributing information packages, and A99 spokesman was unable to provide a single example of a project rejected for environmental reasons. Interview, Department of Global Environment, Itochu Corporation, Tokyo, 12 April 1994. For details on Itochu’s environmental guidelines and the environmental management and assessment system, see Itochu. “Global Environment Problem and Itochu Corporation,” internal document (Tokyo: Department of Global Environment, 30 November 1993). ‘°°Marubeni, Marubeni Corporation: Annual Report 1993 (Tokyo: Marubeni, 1993), p.35. ‘°‘This point was most cogently made by an official at Keidanren, Tokyo, 7 April 1994. 102New York Times, Monday, 10 May 1993. 59 National April-June, Mitsubishi, Nissho-Iwai, a knowledge scale RETROF Reforestation Iwai corporate from Forestry planning, enterprises, some for few to reforestation allegations immediate research counteract responding MITI improve small research the ‘° 5 lnterv±ews, ‘° 4 There ‘° 3 Based government Corp,” Japanese reforestation official receives government. Action and in and reforestation and projects.’° 5 Japan’s 1O3 and 1994. Marubeni, to are internal what 12 on reforestation Fisheries, in of in profits is companies technology Plan February letters, government financial half (Tokyo: Tropical interviews tropical conjunction abundant Senior expensive, Also they corporate for It in document its are Nissho Government coordinates, see established degraded Agenda projects.’° 4 1991). officials, Forest It funding unpredictable. consider have the and reforestation. plans to Nissho-Iwai, since high-quality at is environmental with Iwal, demands technical trading (Tokyo: tropical 60 generally 21, (RETROF) the to designed from primary areas. of the increase internal unjustified Sumitomo, RETROF, the reviews, Environment Japan, There private Environmental long-term companies Ministry support with Research “Environment reforestation Nevertheless, avoided tropical forests In to Government image Tokyo, assistance is January document and a and 1991, companies transfer five-year also -- advises of commitments and Association -- Departments are Itochu, has 27 investment have nine 21 some 1994), Agriculture, coupled logs April supplied 21: produced outrageous for the of trying Division, projects, and mandate. Japanese specific provided Nissho private support Japan, Tokyo, large effort p.62 1994. while half with and for by of or to a At Forest,” 1993, Article monitoring has The corporations signal information The Japanese even desire driven limited. reforestation, token especially a impact new 107 Government ‘° 6 RETROF, providing The corporations The conservation corporations no encouraging, Government corporate maximum, more to to 35, Environment internal State Japanese enforcement corporate corporations support the of for by section to this “Research a impact shall to corporations” as developing it desire information of conservation of document conduct government destructive sustainable etc. we article can Japan, research 2 Japan, follow could Law make on will states: clause, to to properly in Association the addresses pay efforts their a generate effective is mixed The (Tokyo: see provide the environment has and stricter is attention not projects to commercial corporate Basic 61 and in businesses.’ 07 areas weak. been species investment yet consider to RETROF, later corporations, the favourable For a the 19 take Environment clear. criticized outside role future and November At to Reforestation of overseas environmental chapters, timber example plantations. 106 necessary October environmental overseas a global research of minimum, in The publicity Japan means the reforestation operations 1993. Law, for Environment so of 1991). the government measures environmental environmental corporations. ignoring, where on of Law to it practices. “providing that impact than Tropical factors. tropical sends No. require Despite these -- e.g. by 91, Law the of or in is -- a a regulations.’° But this seems unlikely. Moreover, even if the Japanese8 government starts to monitor and regulate corporations, it would still leave untouched the critical impact of wasteful consumption, low consumer and export prices, import barriers, and the residual consequences of past 9practices.’° CONCLUS ION In sum, the new Environment Law, the creation of environmental guidelines and departments for loan and aid agencies, and environmental aid demonstrate that the Japanese government recognizes the need to address overseas environmental problems. Yet there is more rhetoric than substance. The new law, and OECF, EXIM Bank, and JICA guidelines are vague and non-binding. Environmental reviews are poorly coordinated, and there are no enforcement mechanisms, transparent procedures, or concrete penalties. As well, environmental aid is not clearly defined. A portion is merely a reclassification of convntional projects rather than a substantial reallocation of funds. As a result, so far the bulk has been in yen loans and primarily funded water and sewage systems. Overseas environmental assistance is further undermined by a fractured administration dominated by economic lnterview with one of the drafters of the New Basic Environment‘° Law, Environment Agency, Global Environment Department, Tokyo, 8 9 June 1994. 9‘°The Japanese government and trading companies have sporadically mentioned the importance of these factors for tropical timber management. But, as the final chapter demonstrates, these are superficial gestures with little practical impact on Southeast Asia’s forests. 62 interests. Despite marginal increases in input, the Environment Agency, while an earnest supporter of better overseas environmental guidelines, still has relatively little influence. The Forestry Agency has not aggressively tackled environmental issues, and instead cautiously promotes tree plantations, a transfer of silvicultural expertise, and expanded trade and consumption. Meanwhile, MITI has staked out environmental turf to promote technology transfers and business initiatives. Given this context, it is not surprising that even though Japan relies heavily on natural resource imports, conservation, reforestation, and resource management are peripheral to government overseas environmental policies. Beginning in the early 1990s, the private sector, led by Keidanren and the major trading companies, counter-attacked domestic and world environmental critics, producing a deluge of flowery policy statements, corporate brochures, and public advertisements. Although a tiny amount of money has shifted to environmental research and showcase projects, these cosmetic policies contain few concrete mechanisms or sanctions to control overseas environmental impacts. Finally, while new government and corporate environmental policies only provide marginal benefits for Southern resource management, they serve an inauspicious function, creating a diversionary smokescreen that obscures the far more important consequences of Japanese wasteful consumption, low prices for raw materials, unsustainable purchasing practices, import barriers, and the residual effects of past practices. During 1994 63 understand and Before shadow diluted, shadow shifted the away discussions, consistently, environment ‘influential’ ‘extensive’ Borneo rhetoric from ecology ecology, turning in inconsistent, these the the Malaysia, law, government enveloping Japan’s investments on politics early to environmental and crucial the timber a only ‘comprehensive’ l990s; specific the and ‘impressive’ of and factors management minor, Japanese marginal next resource but business in analysis departments, 64 peripheral and the chapter environmental overseas to in environmental management accompanying toward environmental leaders alter the of outlines Philippines, changes the the activities the pushed and in content nucleus impact policies aid. projects, Southeast a guidelines, have perhaps conversations framework of undeniably Indonesia, of of In occurred. Japan’s Japan’s are the short, Asia. most new too the the to Until political Malaysian Redclift, analysis a mismanagement, Department between taken Small environmental the key 1992. client attention warming. in technical the impact received decade linked Forestry developing (London: key the factor. 2 Third role 2 Environmentalists ‘As The portions recently, the factor A Politics to South, as of noted MODEL management on particular Methuen, multilateral siltation, States conditions has allocation Most or of form Sustainable worldwide poverty World: of countries environmental economic in international been even impact Political OF in of of explanations there politics and resource of RESOURCE chapter this accusations, A given though 1987); and Natural Sabah and scarcity erosion, or attention Case of has and has factors, Development: chapter sometimes societal population the peaceful Science, financial has to one, mismanagement. gained and in Chapter MANAGEMENT change. Study management and been Resource the causes organizations of been many and flooding, Sarawak,” while are as without 65 the forestry Adams, role arrangements little point increased of University interaction environmental ignored situations Three loss from of growth. content This Exploring institutions the scholars Allocation of IN tropical of to and any Green Unpublished Peter domestic of CLIENTELIST problems attention Timber is in political But and natural most attention reference these of discussed of much this Surprisingly between Dauvergne, have in Development. the this specific deforestation finance,’ British and catastrophe ominously, Industry these political have of appears trees Contradictions analyzed and given has Management Course corruption resources STATES the in to two by countries. focused generally Columbia, policies, has academic the concrete forestry “Patron and Michael states. to to In Paper, global forces little links loom. be been have last One The the the as in on in a By paying more attention to the nature of the state and to policy implementation, this chapter builds on the patron-client model to understand links between Southern politics and resource management. I argue that ‘modern’ patron-client networks interact with political executives, bureaucracies, courts, and militaries to lower Southeast Asian state capacity to enforce resource regulations. The first part of this chapter sketches the main features and analytical advantages of a patron-client framework. Then, after outlining the evolution of patron-client ties in Southeast Asia, I borrow ideas from Joel Migdal’s work on state society relations to explain how these modern relations undermine state capacity. This creates a model of resource management in clientelist states. PATRON-CLIENT MODEL OF ASSOCIATION The patron-client model was initially developed by anthropologists to explain traditional village-level, dyadic power relations. The anthropological patron-client model is a personal exchange relationship between two persons with unequal status, power or resources. The higher ranked person provides protection and benefits (often material) to a lower ranked person in exchange for loyalty and assistance, including personal services. Although the client usually benefits less than the patron, this reciprocity distinguishes patron-client relations from relations of pure exception is Piers Blaikie, The Political Economy of Soil Erosion in Developing Countries (New York: Longrnan, 1985). 66 _ PLIJ HH —:‘tIrt U I- C) I- ci U H Cl) d Q C) Wct CDO HQPJO CD CD H- -Q CD CD Cl) H- 0 ‘DHrtQ 1 Cl) C) CD Cl) H (Q C 1 ci frh CD H- i —J Ci) H-t-’ CD H- h Cl) Cl) CD H- Fd Cl) (I OC) ‘.D(DQ I- H- - Cl) ci CD c-F H 0 CD C) QC) H-HCD Hj pj 0 H- C) II C) H- H- CD h H O H H-SC) Cl 0 ci ciHCl) H- CDHJ 0I. 2For a discussion of the trend toward, and merits of, middle- range ‘ theory, see Howard J. Wiarda, “Toward the Future: Old and New Directions in Comparative Politics,” in Howard J. Wiarda, ed. New Directions in Comrarative Politics, revised ed. (Boulder: Westview Press, 1991), pp.221-250. 3The eminent scholar of world system theory is Inimanuel Wallerstein.‘ See Irnmanuel Wallerstein, The Modern World System (New York: Academic Press, 1976). For an overview of the dependency approach, see Tony Smith, “The Dependency Approach,” in Wiarda, ed., New Directions, revised ed., pp.118-130. Christopher Clapham, “Clientelism and the state,” in Christopher Clapham, ed., Private Patronage and Public Power: Political 4 Clientelism in the Modern State (London: Frances Pinter, 1982), ‘ p.30. 5Landé, “The Dyadic Basis of Clientelism,” p.xix. ‘ 70 bureaucrat’s power can be based more on personal connections than on a formal position or why a political party may resemble an uncoordinated gathering of powerful leaders and their loyal followers.’ Many political models are constrained by their focus on6 formal, institutional arrangements, and are unable to explain processes that occur outside this 17framework. This can be a serious limitation since, as James Scott notes, “bureaucratic political parties in Southeast Asia are often thoroughly penetrated by informal patron-client networks that underlie the formal structure of authority.” By focusing on informal rather than formal relations,8 important insights can be gained into distribution patterns, including appointments to bureaucratic positions, awarding of government contracts, and allocation of state revenues. Formal structures, however, cannot be ignored when examining patron-client relations. At the very least, “formal structures are relevant to patron-client systems, if only because they provide the critical resources necessary to build and sustain such a system.” Patron-client9 accounts analysis for the importance of traditional relations of power and concepts of legitimacy and authority. It provides continuity with the past and considers indigenous values and beliefs as well as contemporary variations. ‘6J. Scott, ItpatronCljent Politics,” p.92. Structural-functionalism is especially prone to this problem. ‘8J. Scott, “Patron-Client Politics,” p.92. 9Kaufman, “The Patron-Client Concept,” p.301. ‘7 71 merican Tropical and cooperation ties class not authority duties religious to tradition politics patterns client entails arrangements community corruption, attention client across Rene either “heuristic rural necessarily is 20 Rene Patron-client among Lemarchand groups specific exchange may links, a both ‘modern’ Political of which Africa: areas legal mean to differences. than and value Lemarchand, followers. even behaviour, between processes with have and ‘traditional’ which thus that violating might violation any to may which argues contribute generally concepts or a difficulty Competing each analysis Science loss even contributes sometimes would segments certain otherwise ‘traditional’ cut of expectations, link; Models Membership that “Political when of formal adjustment which across Review in of authority. missing accounts to and it since Solidarities explaining it violate degree many of authority go is that 72 a to is laws. is different ‘modern’ greater perceived 66, unnoticed.” 2 ° class, labelled a is from not countries Clientelism the between isolate polities, and for of loss formal no. based In based patron-client the vertical normative provide intra-group legitimacy. ethnicity, fact, 1 loss of referents”, in as traditional ‘corruption’, groups. on conceptual (March law, ethnic, on be authority. illegitimate Nation ties ignoring of [and] and shared Traditional viewed ‘modern’ but links orientations legitimacy 1972), to Ethnicity language politics religious its For model it Building,” horizontal the Corruption arsenal from and it as patronage roots there p.68. natural patron- directs Patron- modern leader simple by has urban power “cuts and and and the in or is in to of a but whose have understanding in explains of dominant particularly since behaviour relations “Political exist situation, central-regional workers. class, on redistribution ownership the resource ‘buy’ peace Schmidt, patron-client where 22 Lemarchand generally 21 Anthony Finally, important membership alongside rural these religion, and force the issues As will are Clientelism,” and people and et stability. well, votes. 2 ’ emergence, useful have Hall, cooperation reducible the been al., of shaping vary. control, cross-cutting specific such is patron-client relations politics natural in rightly patron-client historically language, are not limited “Patron-Client eds., for countries as However, Of timber based (In transformation linked to timber, pp.68-90. understanding resource and between Friends, directs course, context, are to patron-client contrast, stresses on allocation nationalism, analyzing local just with ties links. 73 focusing vertically, shared been, patron-client model profits individuals attention Relations: not Followers some competitive the between contractors, class this all horizontal logging and and is Depending conflict.) of impact on and relations. 22 as especially patterns or the continuance patron-client continue party to central and management. point, sharing Concepts and ethnic-based central analysis a other in elections, of Factions, partial groups characteristics on Southeast ideology, It managers, patron-client party of factors to the Lemarchand, effectively and few useful Ethnicity, financing, of points political vertical in be, Terms,” ties members timing, a models p.512. groups common times focus Asia that for the and and is to World Africa: Clientelism articles and Plural 1990), International Clientelism in 1991); Fox, ed., dissipate 1994), relations. 25 The example, narrowly at understanding l990s, conflict “Political of knowing leader. characteristics, “patron-client Contemporary power times concept Clientelism 25 There 24 Jean-Francois 23 Kaufman, Despite Private “The Politics Robert pp.1-18; pp.648-666; Societies Political relatively each The and an in based, between suggests) Difficult -- Clientelism and in ethnic are emphasis Luis resources, of many Patronage, Gay, other these Journal As Sierra of exchange “The Brazil: 46 Carlene Civil factions a shifting in often patron-client patron-client clientelism Roniger comparative “Community conflict. few 20 group. (January since Eliphas advantages, Medard, Patron-Client little the Transition Jamaica on Leone of Society recent in A (September of the J. p.168. cooperation, is possibility Urban Case the is Japan,” patron-client and different Edie, premised concept Mukonoweshuro, Politics: has 1994), “The Organization particularly (London: common Study or politics studies. (Boulder: Ayse and Robert 74 From for units, ties Democracy underdeveloped neo-patr±monialism?” been pp.471-483. Concept,” Regional 1990), pp.151-184; simultaneously from on Gunes-Ayata, much status, Clientelism link however, of A evolve Lynne Kaufman written hierarchical specialists For Methodological Lynne intense clusters Suburban or and of is valuable pp.65-91; by “Ethnicity, example, Research p.286. conflict and personal the Clientelist Rienner does Default: Rienner -- the notes state on conflict To perhaps Rio 1980s eds. and and allows not have for collection patron-client Citizenship,” distributions see 14 de within, and ties Publishers, pyramids.” 23 Publishers, in in preclude that some Dependency Democracy. Critique,” Class and Janeiro,” analyzing turned (December not Jonathan Clapham, Politics tropical for between Cheng, to argue while early even (and and for the of an to other analytic tools. Yet, these relations are still a key feature of many Southern states. Luis Roniger writes: “While it would be absurd to predict that certain types of relationships -- friendship, for instance -- would disappear following development, this has been the main argument regarding clientelism (in both cases, it would seem more reasonable to expect changes in structure rather than their natural demise) In Southeast Asia, patron- client ties remain extensive, though there are important structural differences between ‘traditional’ and ‘modern’ relations. MODERN PATRON-CLIENT RELATIONS IN SOUTHEAST ASIA Traditional patron-client relations in Southeast Asia have been altered by evolving economic, social and political circumstances, especially during the shift from colonialism to independence. Traditional relations were generally characterized by highly affective ties based on kinship, village, or neighbourhood bonds. A patron typically relied on personal skills, wealth (largely through private control of local resources), and sometimes connections to more powerful patrons. Loyalty, obligation, honour and non-material rewards supplemented material exchanges. These ties involved face-to-face contact and multiple kinds of exchange. Colonialism, the spread of market capitalism in the twentieth century, urbanization, and the growth of the state over the last 26Lu±s Roniger, Hierarchy and Trust in Modern Mexico and Brazil (New York: Praeger, 1990), p.xiii 75 Mahathir, extensive Asia. Tropical State: it context has framework other officials immediate source including the peasants ignoring has of the countries followers. client fifty (Singapore: (April “access patronage. included fostered economic a creation 29 Gordon 28 Paul 27 James particularistic years As long 1991), relations. of The to of Asia and Gordon state like the circle for material D. and have the funds, Colonialism Politics tradition Malaysia, or Oxford Rush, controlled larger P. power many of Hutchcroft, patronage p.423. the (New the state so institutional After rules Means, Means also wealth.” 28 of have extension Philippines, The Exploiting licences, York: intermediate and incentives University and individual machinery of independence notes, in concession. in been Means contributed Last scope Malaysian and larger commerce, system Patrimonial The insular exchange “Oligarchs global absorbed As Tree: of Asia the of claims political and patron-client system became to had loyalties Press, as 76 patron-client a the layers state using Southeast Politics: bind result, economic Society, the career to states for Reclaiming not This state, and Plunder,” that: more important by size of 1991), “provides modern only presents, these power extensive of Cronies and patron-client continued the rewarding opportunities. important links of making 1991), Asia. The “By middlemen grown networks funds friendships.” 29 to the networks pp.298-99. patron-client the state World changes Second the accumulate the in greatly bribes, state pp.30-32. enormously, state it Environment to Monarchs the to institutional than became time a loyalty in reward Politics expand. in beyond Generation Philippine key increased, to patronage networks, Southeast increased ever or patron- a of In wealth source a State ties, taxed loyal more some but Dr. and the key the for 42 in In patron-client political however, patron-client thrive.” upward.” 3 ’ political including comparatively government core encouraged linked legitimacy. favours domestic a large and Instead, relations Patrons ‘loyal’ (at ‘political more least 32 Ibid., 30 Foreign 3 ’Scott, following, Patron-client numbers to are flowing followers patronage Ibid. likely migration that the support.” are the temporarily). further patrons less jobs p.107. These “Patron-Client corporations national In large exchange also contribution.’ ties: Japanese, “in of and to down areas likely to people is as exchange using based exchange the to ‘fairweather’ a often trends money Ibid., a patron-client less the build relations. [or large crucial with midst to are less material who network, often This state] need maintain ‘constant’ is -- p.305. tangible Politics,” competitive contributed generally cities power As of on now are means but 77 is supply to loyalty, this a periphery, level more incentives. reinforced most relations and foreign result, regular and and of provide goods, patron change, specific a with building p.105. not votes key efficiently elections towns maintain by obligation such contact directly a business jobs, modern ingredient as have money, comparatively by or the old that and well.” 32 Scott ‘loyal’ as For support immigration become cash, less this style 1970s prestige patron-client with a has and turned this involved executives, gifts, licence does for personal. and followers has produced honour. 3 ° a “closely patrons flowing to modern reason client note, petty small been into and and and for in “a monumental Eisenstadt key traditional Philippines of and Interpersonal patron-client 127, specify of continually societies essential dominant different expectations of opportunities changes, as has other their client instability the (Cambridge: formal-legal modern modern the power resources. decreased, size and 34 mis 33 Means, Patron-client more pursuit network number the the the of characteristic on patron-client of from to ties is favoured is dissolve task and Cambridge is patron-client patron-client membership personal the Malaysian Philippines, Southern a make structures understand relations provided with natural of as market of broad contracts become makes state. Luis even clients immediate connections ‘fairweather’ modern a and clients) and generalization. University it states exchange. 34 since Roniger, alienated new Politics, in in of Neo-patrimonial relations of realign evolve, and asymmetrical or virtually have the pp.127-130. networks chapters relations different patron-client winning ideal the institutional but “those over the and consequences have lost 78 societies as meagre and p.317. Press, Patrons, and followers structure in circumstances their the These become has four on patrons their impossible coalition.” 33 with in Indonesia, patron-client are nature the A last grown, studies to 1984), benefits more Southeast aspirations exchange The sense the periphery ties, cross-pressured increasingly of exchange six. clients die 50 has of of of detailed inherent Southeast increase as years Indonesia, or of to these and exchange, are Malaysia, trust increased. For personal -- (in relations obligation, lose Asia, categorize the Despite one networks of and background significantly or for since relation description instability clientelist the in unstable in reciprocal control attempt Asia. so, see friends: improved the the pp.12 2 - and patron- society between contact are it these these -- S.N. This size lack and the and As on of to to as is a a give more attention to the links between the state, patronage, and patron- client networks. NEO- PATRIMONIAL STUDIES Neo-patrimonial studies are rooted in Max Weber’s analysis of traditional authority where the distinction between public and private is obscured -- there is neither one objective law for all nor a principle of bureaucratic impartiality. Instead, decisions are based on “personal connections, favours, promises, and 35privileges.” Jean-Francois Medard bluntly declares, in a patrimonial state, “politics becomes a kind of business with two modes of exchange: connections and money. The state is a pie that every one wants to 36eat.” Although focusing more on a single ruler, neo-patrimonialism points to many of the same features as patron-clientelism -- including informal relations, particularism, and instrumental 37exchange. For example, Paul Hutchcroft’s neo patrimonial analysis of natural resource exploitation in the Philippines focuses on changes to patron-client relations as access 35Max Weber, Economy and Society, ed. Guenther Roth and Claus Wittich (New York: Bedminster Press, 1968), vol. 3, p.1041, quoted in Hutchcroft, “Oligarchs and Cronies,” p.415. 36Medard, “The underdeveloped state,” p.170. 37See Harold Crouch, “Patrimonialism and Military Rule in Indonesia,” World Politics 31 (July 1979), pp.571-87. Neo patrimonialism is similar to the model of a bureaucratic polity. For example, see F.W. Riggs, Thailand: The Modernization of a Bureaucratic Polity (Honolulu: East-West Center Press, 1966); and J.L.S. Girling, The Bureaucratic Polity in Modernizing Societies, Occasional Paper No. 64 (Singapore: The Institute of Southeast Asian Studies, 1981) 79 pervasive mismanagement. management examine office. Lumpur: laws. clients patrimonial important dominance elites, between to determining particularly of strengthened largely distributing factional resources state to (especially nec-patrimonial state the 40 Neo-patrimonial 39 Bruce 38 See Yet where state how Eastern a and the as But management. 4 ° despite links of Hutchcroft, means matter in for Gale, competition these framework the a patron-client often the there Ferdinand by valuable has patronage. key Southeast key between distribution Universities personal the state Actors for become of Politics links bureaucratic the have point studies. feature empirical emphasis, 39 societal has and “Oligarchs in studies similarity Marcos political been Nec-patrimonial further Asia. shape increasingly to over pointing certain neglect In gain. 3 and model of no a of Press the state Public findings and groups The ‘super-patron’ major 80 Southeast natural have and substantive down o:fficials and and and Philippines, drawbacks significant model to to Sdn. family) patron-client capacity Nec—patrimonial military Enterprise the Cronies,” the nec-patrimonial important accurately the patron-clientelism, to and resources. studies Bhd., tends neo-patrimonial causal share dominance Asian and conceptual plundered for to policy societal patrons as 1981), to this pp.414-450. analyzing for political in in emphasize enforce chain politics a overestimate pointed analysis Malaysia the The collecting key has of pp.4-10. studies analysis and debates the constraints conclusions -- difference intrastate spoils source rules created model business resource such central natural to leaders and a can (ICuala that neo and the the and an of as of be is in is a Anderson Authoritarian pp.414-417. Thirteen patronage many Publication See patronage, the relations East-West patrimonial responsible of absence policies itself, 43 the difficulty close exchange societal are “patrimonial “Marketing spotlights studies responsibility contractors, pervasive main often focus Dwight 43 1t 42 To 41 Michael actors attention also and of, and I is route Contributions that structure help Center, to in neglected. of the multiple now and explaining No. are Y. for studies, commonly Audrey features.” goals. downplay individuals Southeast sub-contractors, or the Regime: Dove Rainforest: patron-clientelism turn to occurs with 62 King, for dodge the involved to after No. gain patron-client (New the persuasively Kahin, societal levels destruction to and the As however, accepted 13, the What “Indonesia’s On outside York: the this the a Asia state the To a social most See better in and the May result, role eds., ‘Green’ of theoretical resilience The Difference the that fall Cornell problem Hutchcroft, input groups as interaction other do 1994, powerful and in of of 81 understanding actual of Debate. Interpreting model resistance a argues have state the Panacea a urban-rural of, middle-level the on source tropical into New hand, pp.1-8. neo-patrimonial in University, literature Hutchcroft the the more of Does process. work a state, society. elites. 41 patrons that Order otherwise Interim “Oligarchs yet of or ‘super-patron’ the analytical pervasive nature on of rain to It Red patronage. Indonesian elites still patron-client of links, and as Joel the Make? state channel administrators Herring?” 1982), on Michael forests, the Reports This uses Neo-patrimonial a strong the places of role Migdal. and state-society framework must patronage Bureaucratic advantage consequences instrumental in directives, is p.113; the impact Politics: extensive Cronies,” the 42 of Benedict R. 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I try to maintain the spirit of his work, even though my emphasis is somewhat different. 561n my view, this is a congruous addition to Migdal’s work. He argues states can be both strong and weak, depending on the activity -- what he calls the “duality of states.” Migdal, Strong Societies and Weak States, p.9. 86 states while environmental regulations are often quite threatening to nonstate organizations, particularly powerful businesses. As a result, state capacity to enforce environmental regulations is frequently low. On the other hand, state resolution to tackle foreign control over natural resources may be strong while resistance from nonstate organizations may be minimal, or in some instances, these organizations may even support the state. Therefore, a state may appear weak when tackling environmental problems yet seem strong when tackling foreign control. A second useful modification to Migdal’s model is to highlight different societal organizations depending on the specific issue, problem, or state policy. This is logical since nonstate organizations can pick areas of resistance while states have diverse, often contradictory goals, and must tackle a plethora of issues and crises. Undeniably, even in the face of strong resistance from organizations in society, state actions have critical consequences, though often these are unintended. This is hardly surprising. Compared to other social organizations states have huge budgets, complex bureaucracies, and powerful coercive tools. Yet societal organizations, while having far fewer financial and human resources than a state, can concentrate their opposition, or seek alliances, sometimes even dominating sections of the state. For example, for a policy like affirmative action, the business community may be the decisive societal group opposing the state. 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Benedict the conceived Jackson, same 42, across -- policy Comparative to discussing and to the enforcing in Indonesian state the in STATES that implementing For 23 of state no. state’ model clientelist distinguish The analysis the at Business shaping extrapolating state New Anderson, formation. Power (November different other policy “Bureaucratic capacity is, policy New as 3 sharp AND may Order by has only policy state clientelist (May there Order: Historical state and King, state POLICY be policies, In and to formation contrast was become state implementation states. and ‘weak’ “Old 1983), terms clearly refers Communications 1983), control develop policies, Politics, as For is regulations Bureaucratic established capacity. “Indonesia’s Migdal’s the dominating Polity: State, rules. little 89 this of increasingly in pp.1220-1241; states. 59 Perspective,” clientelist impact between to pp.477-496; but between policy over the a reason, New pp.6-21. the or model A For key for sense in Theoretical of and by in resource Society: minimal Pluralism society. New in development state example, management patron-client some General concepts, The policy the this most maintaining of of Indonesia,” centralized Order,” forces the Specific Donald following Journal South. facing power natural cases academic policies, societal work Indonesia’s the in For Suharto formation bureaucratic- Framework may pp.104-117; Indonesia,” I a of to Indonesian formidable a has Emmerson, the state build of Then, networks examples summary, societal resource be in and natural develop studies section input. in Asian it great Karl term less New now may for the and by on is policies and the power to enforce policies has contributed to sharp differences between scholars who see Southern states as irrevocably weak and those who see these states as 6strong. It is also important to distinguish between the content’ and effects of policies. Many comparative studies of Southern policies make direct links between policy substance and the mismanagement of natural resources. These studies show that many Southern policies have serious technical flaws that contribute to environmental degradation. They also demonstrate that the ability of the bureaucracy to develop policies is weakened by organizational difficulties and elite 62attitudes. But even though the content of resource policies is undeniably important, a more immediate factor Jackson and Lucien Pye, eds., Political Power and Communications in Indonesia (Berkeley: University of California Press, 1978). This conventional view has been challenged somewhat by Maclntyre’s 1990 study which shows that, since the mid-1980s, business has gained limited input into developing legislation, regulations, and specific policy measures. He does not, however, look closely at enforcement. As we will see in the next chapter, state domination of the process of forming resource policy does not translate into effective implementation. 6mTheoretical models that concentrate on the process of policy development and decision making -- such as corporatism or bureaucratic authoritarianism -- tend to portray a strong state. For overviews, see Douglas A. Chalmers, “Corporatism and Comparative Politics,” in Wiarda, ed., New Directions, pp.59-81; and John D. Martz, “Bureaucratic-Authoritarianism, Transitions to Democracy, and the Political-Culture Dimension,” in Wiarda, ed., New Directions, pp.199-220. In my view, these studies overestimate the ability of Southern states to control the distribution and management of natural resources. 62For a discussion of how comparative politics theories could strengthen comparative studies of environmental policy making, see Sheldon Kamieniecki and Eliz Sanasarian, “Conducting Comparative Research on Environmental Policy,” Natural Resources Journal 30 (Spring 1990), pp.321-339. 90 driving mismanagement is often the willingness and ability of the state to implement policies. Northern states also have poor records for environmental protection and resource management, partially due to corporate lobbying and partially to the tendency for bureaucracies to be dominated by economic interests. Yet, unlike in the South, in most cases, key battles to improve resource management occur within the state -- battles over legislation, interpretation of policy, and budget allocations. While Northern policies are certainly watered down during implementation, societal compliance to state regulations is much higher than in the South. For this reason, it is logical to dissect, analyze, and debate the nuances of Northern policies. But to do the same for Southern policies may simply divert attention from the more immediate problem: enforcement and compliance. This does not mean that resource management will be better in the North than in the South. But the core of the problem is likely to be different: in the North, policies dominated by economic concerns with weak environmental regulations; in the South, policies that are widely ignored. In the next section, I sketch a model to explain why clientelist states of Southeast Asia are generally unable to enforce natural resource management rules. There are three interrelated reasons: the structure and norms of society support institutionalized ‘corruption’; in order to survive, state leaders -- facing a web of patron-client relations -- sacrifice state capacity to enforce resource regulations; and finally, with minimal 91 supervision, many middle and lower-level bureaucrats become involved in patron-client exchange, ignoring state rules in order to make money, advance their careers, or create small patron-client units. PATRON-CLIENT RELATIONS ND SYSTEMIC ‘CORRUPTION’ Like the patron-client model, Migdal provides a nuanced understanding of corruption. He points to societal structure and state reactions as keys to understanding flagrant violations of state laws. He argues that “much of what is commonly called corruption is. . .behaviour according to dissenting rules, established by organizations other than the 63state.” Furthermore, “nepotism, cronyism, corruption, and arrogance” of state leaders is partially a response to surviving in a setting of fragmented social control. Seen in this light, “corruption and arrogance are mere symptoms of a complex relationship between state leaders and local 64strongmen.” In societies dominated by clientelism, patron-client ties permeate the state and nonstate organizations. Although modern patron-client relations differ from older forms in terms of stability and the nature of exchange, they are nevertheless a legitimate, accepted, even expected, part of the political process. While allegations of corruption, and pejorative labels such as ‘crony’ are part of formal debate and are used to justify 63Migdal, “A Model of State-Society Relations,” pp.54-55. Also see M±gdal, Strong Societies and Weak States, p.31. 64Migdal, Strong Societies and Weak States, both quotes, p.138. 92 Ministers, personal of management Investigative the based is client structures LEADERS politicians and Malaysia, with are cases to dismissed impact. implementation. structures investigations, ‘corruption’ General be Logging: same 65 According In raise ‘corrupt’. token they either on relations. AND time, the Of gain. material and as Orlando and concentrate of are and LOW work revenue, course, Power firings, outside highlights a simple clientelist Journalism, Indonesia Chief leaders simply resource alternative to STATE these diligently Top For From Soriano. one incentives Confronted Some not Ministers, patron-client ‘corruption.’ state fines this CAPACITY even ‘loyal’ power must critic the which prevalent all like a 1993), bureaucrats, states symptom reason, manoeuvre Forest leaders, without to state Marites among and rules timber, have of to by other enforce are 93 pp.108-110. jail the the strong a officials of tried practices of (Manila: often networks rather Focusing campaigns small Danguilan however, than Philippine state. strict including in the Southeast sentences laws, a military to powerful resistance elite timber, societal than game. stamp Philippine or in on supervision. 65 improve flow these in Vitug, belong clientelist often the Presidents, specific state, the have Asia, out patrons. They though officers, web officials from cause from The motivated regulations, Philippines, ‘corruption’ to had Centre an of cannot political nonstate cases Politics networks societal in patron example of But states little Prime some poor tend for and For by at be of organizations, and faced with potential threats from institutions within the state (often the military), state leaders, in order to survive, and to maintain societal stability, follow strategies that undermine state capabilities -- what Migdal calls the ‘politics of survival’ 66 To weaken challenges from sections of the state, top leaders remove and shuffle state agency elites. To maintain or increase power, they appoint loyal followers, close friends, and family. As well, to preserve stability, they make nonmerit appointments to coopt powerful patrons, and ethnic, regional, and business leaders outside the state. They also use nonmerit appointments to hinder independent power centres from developing within the state. These coopted elites are often allowed to get rich through ‘corruption’. This provides a means of control for state leaders. If these ‘corrupt’ officials step out of line, they can be charged and legally dismissed or jailed. These survival strategies by leaders undermine state capacity. Shuffling administrative heads and making nonmerit appointments lower morale and loyalty to the state (as opposed to the leader), and weaken the ability and willingness to oppose local 67strongmen. Surviving as leader involves maintaining an intricate balance between “restraining agencies sufficiently so they pose no threat to rulers while allowing sufficient organization so the agencies A66 second characteristic of the ‘politics of survival’ is ‘dirty tricks’ such as torture or ‘illegal’ imprisonment. See Migdal, Strong Societies and Weak States, pp.223-226. 67Ibid., p.240. 94 can perform the tasks necessary for state and leader 68survival.” This is often a difficult balance. As state capacity declines and the state is unable to provide basic services, leaders lose legitimacy. To maintain control, leaders distribute even more patronage. This dynamic -- state leaders using patronage to maintain loyalty and patronage undermining state capacity to keep citizens loyal -- can eventually spiral into a regime dominated by ‘politics of plunder,’ as in the Philippines under Marcos. While the survival strategies of leaders weaken state agencies at the top, these actions also debilitate state implementation. PATRON-CLIENT TIES AND STATE IMPLEMENTORS Effective state implementors -- middle and lower-level bureaucrats responsible for collecting taxes, monitoring projects, and enforcing rules -- are crucial for “determining whose authority and rules will take hold in region after region, the state’s or the strongmen’s.” Migdal hypothesizes that “the politics of survival lessens backing and threats of sanctions from supervisors, thus making the implementor more attentive to possible career costs involving strongmen and peer officials. The result is a further weakening of the state’s ability to make the rules governing people’s 69behaviour.” In the weakest states there is almost no control of implementors; they will follow rules vastly different from those outlined in laws and policies. With poor supervision of 68Ibid., p.227. 69Ibid., p.238, p.241. 95 p.249. organizations propounded enforcement regulations. the or legislation strong resources and segments friends, and implementors middle officials, severe their and state clientelist shaped courts middle regulations to 71 For 72 Ibid., 70 Migdal party As career perversions rules by implementor.” 72 state and a or of a result -- bargaining according and local family officials, more in generated officers, lower-level clientelist states, at contribute and calls resources have p.256. must lower-levels 71 great State the patron-client of general strongmen, the “in in this poor confront official to bureaucrats risk. and the in potential critical concession implementors being and to These Of the their supervision, states. discussion, the bureaucrats, use deals widespread These of strongmen course, and “Triangle capital used and patron-client patron-client rhetoric, networks, own the state 96 between to party monitors, who distribution patron-client These in military, capture rules, such posts see city violations and for ways actually of officials, implementation outside implementors, patrons patrons Ibid., policy close Accommodation.” or as Migdal, a to rather that permit ties section bureaucracy, those ties ensure customs of attempt ties ties p.245, the thwart sometimes of place statements, state -- usually than issuers, put between state all between allocation of contribute state. 7 ° operating other is and officials, state forth followers, the resources, the to nonstate laws police, putting capture largely p.141. state. Ibid., impose rules state state state ‘look by laws and and in of to In a unstable, patronage outlying expected, stability it Paradoxically, other and networks society. Southeast natural CONCLUSION accommodate, modern Bureaucratic particularly over-exploiting profits advancement. resources. reinforced the has allocation other In powerful patron-client disastrous resources. sum, have for areas, part way’ informal, to by Asia, To by As assist, policies control construct difficult I been extending Combatting of survive of while in a attitudes posit patrons. resources. and building state result, natural exchange a consequences material-based or over distributing ties by key, or a in even large leaders since model the official cutting illegal resources. the state and in and that this for These strengthen, Yet Southeast influence rules maintaining patron-client timber of cash, in 97 rhetoric fragmented place are for in across elite or patronage a some vertical of patron-client reality, state lucrative gifts, state In confronted licences, the Asia. little claims of the cases, the is classes power game battling state practices society, generally capacity. is career clientelist followings links some Weak often a timber the value for in concessions, legitimate, with and ties leaders Southeast state maintenance enforcement the contribute main patron-client oppose that leaders misleading. ideologies. on ‘mining’ management pervasive, throughout and Extensive states glue agencies natural destroy to groups Asia, coopt even use the and for to of or is is nomnerit appointments undermine state morale, lower state efficiency, contribute to a cynical view of state laws, and perhaps most importantly, weaken supervision of state implementors. Implementors become integrated into patron-client units, receiving money or career advancements in exchange for ignoring management, tax, or customs regulations. In some cases, societal patrons manage to capture parts of the state, placing family, friends and followers in strategic positions. This contributes to state assets being used in ways inimical to state goals. It also makes it relatively easy for these patrons to skirt, resist, even ignore state policies. As a result, state resource management is dismal. There is little chance of quickly improving resource management in clientelist states. Pervasive patron-client ties throughout society lead state leaders to undermine state capacity and supervision in order to survive and maintain stability. The alliances and agreements made between iniplementors and regional patrons and politicians then reinforce these patron-client networks. This creates a circle which leaves little hope of breaking the pattern of poor 73implementation. This modified patron-client model of resource management, by paying close attention to the nature of the state, the power of patrons at the state helm, and policy implementation, gains heuristic strength, while maintaining the advantages of focusing on informal-personal exchange relations, traditional concepts of power 73This argument is the same as Migdal, though he is referring generally to social fragmentation rather than to patron-client relations. See Ibid. 98 and legitimacy, cooperation between vertically-linked individuals at all levels of society, and fluid ad hoc groups. Looking through this lens in subsequent chapters reveals salient features of the timber industry in Indonesia, Borneo Malaysia, and the Philippines including: a distribution of timber profits which mainly benefits the state political and business elite; unsustainable patterns of timber extraction and ineffective forestry management; formal policies and institutions weakened by informal practices and unstable ‘rules of the game’; feeble state enforcement of timber regulations; and logging concessions, licences, and profits that link state leaders and implementors to timber-based patron-client networks. Each chapter has the same format. For background, I begin with a sketch of the evolution of patron-client relations. While emphasizing links between patron-client networks and the state, I then examine timber policies, practices, and enforcement of regulations, revealing the key domestic causes of logging mismanagement. This provides a context for a more accurate assessment of the environmental impact of evolving Japanese ODA and loans, corporate investment, technology transfers, and trade on timber management in Southeast Asia. 99 political World Association, p.7, Politics and p.58. recently Indonesia, military year. 3 Indonesia, Indonesia destructive disappearing. driving forests. 4 Sulawesi, dipterocarp around the remarkable (Winter in 4 For 3 FAO 2 Commercial ‘Adam Indonesia entire cited Bank, the half I deforestation, 1993-94), of estimated data argue a officers, Ties and Schwarz, forces Asian are Philippines, the forests Deforestation AND Indonesia: timber Cohn more logging of African World (average common contains Irian at mostly THE that Commercial the Survey trees JAPAN, pp.497-518. general on MacAndrews, the is annual contain MISMANAGEMENT “Banking Resources patron-client remaining and Jaya. 2 bureaucrats on deforestation, commercial Sustainable pinnacle continent.” estimated for from 10 in 34 lauan. PATRON-CLIENT the undermine in deforestation analysis percent Chapter 1982-90), logging (April “more the Indonesia,” outer on the This 1992-93, 100 tropical “Politics Diversity,” of Philippines, at name species OF 1994) Development of family islands Four the links and valuable about state is of INDONESIAN the in see for The POLITICS, state the , the National Pacific p.286. timber at forests world’s p.374. between of one capacity this of dipterocarpaceae. of Peter most bulk 1.1 FEER impact plants distort resource million ICalimantan, the Sabah, (Washington, timber TIMBER million Affairs rain operators important 28 of Science top Dauvergne, The of Environment and to of October Asia. policies politicians, hectares Sarawak forests, is Indonesia’s World manage is Indonesian birds hectares. 66, meranti, Teachers Sumatra, rapidly 1993), factor no. drive These 1993, Bank “The than and per and the and in In 4 benefits. known replacement revealed mismanagement, elites substantial have these companies technology support islands. Many by logging illegal clientelist enforce guidelines, stoking companies, networks, weaken or career timber While accelerated state in logs supervision made rules logs, Japan logging by the in then advancements. ignoring perverting and were interests; To the implementors patron-client state, these or environmental the quick top, Meanwhile, and and as imported Northern funds common supply sustainable used unsustainable regulations. kon reforestation 1960s evade state timber middle, timber of money, pane. for policies to Japanese middle Japanese instead huge shadow corporate and tentacles In join make regulations logging Indonesia’s companies ties losses. Although some and Japan management quantities 1970s, and or plywood 101 logging. duties, ecologies and practice At of lower cases, are plywood operations form lower-level taxes work gained debilitating present, striving are Indonesian in trading Log a extract timber-based panels levels remote state of in exchange costs. and of able With critical -- prices plants, the most the discarding especially royalties. on with bureaus to to Japanese state companies best to enormous of interest state islands Indonesia’s state of for This ignore implement mould were the timber force these logs. patron-client the implementors. money, and are kon capacity is government Japan’s Indonesian amounts far of concrete, selective absorbed business provided economic captured pane starkly Many driving profits trading gifts, timber below outer state of of -- to -- made from Indonesian trees that likely took a century or more to grow -- after being used only one or two times. In the early 1980s, the Indonesian govermtlent, angered by the lack of economic spin-of fs, banned log exports and provided incentives to develop plywood processing. This has changed Japan’s shadow ecology of timber in several key ways. Investment is now much lower as most trading companies sold their shares or simply withdrew in the late 1970s and early 1980s. There are also fewer technology transfers since much of the equipment and infrastructure for logging is in place. As well, ODA is linked less to commercial logging operations, and now focuses on large-scale timber plantations, processing technology transfers, and to a lesser extent conservation and forest regeneration projects. Yet key characteristics of Japan’s shadow ecology -- low consumer prices, wasteful consumption, and import tariffs -- have remained essentially unchanged. Whereas in the 1960s and 1970s Japanese companies purchased huge quantities of cheap logs and turned them into disposable kon pane, today, after imposing onerous import duties, Japan consumes large amounts of cheap Indonesian plywood, again mostly as kon pane. While kon pane are now reused slightly more than in the past, they are still a remarkably wasteful drain on tropical forests. In short, despite a decline in investment and technology transfers, and limited changes to ODA projects, Japan’s shadow ecology continues to expedite unsustainable timber management. This chapter is divided into three parts. First, I outline 102 traditional Indonesian patron-client relations, explaining how these have evolved in the twentieth century, and now shape the New Order government under President Suharto. Second, I analyze how extensive ‘modern’ ties between state patrons and business clients distort state timber policies and undercut state enforcement. I examine selective logging rules, the distribution of timber concessions, tax and royalty regulations, reforestation and conservation policies, foreign investment guidelines, and policies to promote plywood and pulp and paper mills. In the final section, I explore the impact of Japan’s shadow ecology on timber management over the last three decades. I document changes to ODA projects, corporate investment, technology transfers and wood imports since the early 1980s. I then analyze the environmental and economic impact of Indonesia’s log export ban nd the subsequent increase in Japanese plywood imports. TRADITIONAL AND MODERN PATRON-CLIENT RELATIONS IN INDONESIA Traditional Javanese patron-client relations are dyadic, vertical, personal, unequal, and reciprocal. Patrons tend to inherit clients rather than building 5 these ties based on personal achievements. These ties involve more than simply “exchanging rewards for services” and do not “involve calculation of immediate 5Even though most of Indonesia’s commercial timber is on the outer islands, since the Javanese dominate state positions, I focus on Javanese patron-client relations. Due to lack of space and resources, I am forced to assume that patron-client ties are also a key feature of other ethnic groups in Indonesia. 103 Jackson, migration and Culture Relations: the particularly traditional dominance monetary form and increasing to of due.” 7 to through obligations personal labour, serve turn, (such reflexive protect absolutism” Communications, Neighbourhoods stable. 7 Karl 8 Jackson, 6 Karl Traditional ‘modern’ as as the in generations. his Clients the and debts provider, interests from D. follower D. of The and Indonesia,” control ties. vote, are fight Pye, obedience, 8 Jackson, Jackson, in market patron-client “Urbanization,” Changing rural and surrounding support rural feel seldom eds., patron-client for and of protector, specific is over In by p.34. villages exchange, a “The independence Patrons Bandung expected most “Urbanization in areas. the their in Political Quality making explicit strong economic some Jackson Political a follower.” 6 instances, links. requests, traditional clients. to also educator, and p.349. cases 104 to However, these of the sense ties large Power either development, reciprocate Interpersonal and the and feel Although growth and Implications even relations of still and Villages Pye, these the cities and Finally, a and the Patrons colonialism, when patron loyalty his that strong 1965 Communications, of eds., Rise source have exist both have life by incurred the internal can fairly coup of which Communications there are moral of volunteering of Political that reconfigured traditional West although shattered be of state in Patron-Client Structure attempt), “expected the predictable passed values.. contributes is Indonesia, obligation transcends or Java,” upheavals an and gradual p.346. called Power these “aura many down and and and its his .In in to in to modern patron-client relations are known as bapak—anak buah (literally, father-children), there are important distinctions. Karl Jackson documents the difference in patron-client ties between villagers, urbanites born in a village, and urbanites born in a city. He shows that as people migrate from villages, traditional patron-client relations dissolve. After relocating, new relations develop as people struggle to improve their living standard. These modern ties are rooted in traditional relations but are “more limited, instrumental, opportunistic, specialized, achievement- based, and focused on the recent present rather than the distant past. Compared to traditional relations, modern ties tend to have weaker feelings of loyalty and obligation, although there is still a “debt of moral obligation,” or hutang budi, “extending beyond the purely monetary aspect of the debt.” In modern relations, however, “the lengths to which the individual will go to pay back hutang budi are much more limited.” For modern links, a patron’s power is closely related to “his own resources, official position, or his hold over specialized knowledge,” while “noble birth” or “good family,” though still useful, are less important. As well, modern patron-client ties are far more likely°1 to revolve around material exchanges. Clients tend to calculate the costs and lbid., p.344. My terminology differs slightly from Jackson. He calls9 ‘traditional patron-client relations,’ ‘traditional authority relations,’ and ‘modern patron-client relations,’ either ‘patronage’ or simply ‘patron-client relations.’ Our meanings, however, are essentially identical. ‘°Ibid., p.349, and p.350. 105 benefits of their participation. If better opportunities arise a client may well abandon their patron and join another patronage network. In some cases, clients attach themselves to more than one patron, making it easier to change allegiances as political tides shift. Patrons are also more willing to dispose of individual clients, particularly if the behaviour of a client is undermining the power or prestige of the leader or the group as a whole. For this reason, modern ties last for shorter periods than traditional ties, and are unlikely to transfer across generations. Unlike in traditional villages, shifting patron-client networks create an uncertain and unpredictable atmosphere. Patrons can never be assured of a loyal following and clients can never be confident of their patron’s protection. This uncertainty is aggravated by the unwieldy size of many modern patron-client networks, by networks that extend beyond organizational or geographic boundaries, and by people who migrated to cities as adults and are not well integrated into patron-client units.” Despite these contrasts, modern and traditional patron-client relations have important similarities. In both, links are vertical and asymmetrical. A patron fuses together a heterogenous group of individuals with complementary abilities, with divergent ideological beliefs, and with different ethnic and social backgrounds. As Jackson notes, a “truly powerful patron is one who has the capacity to concentrate within his circle clients of “Jackson, “Urbanization,” passim, although see in particular, p.390. 106 varying intellectual, social, official, and financial resources, thus making this person the vital connecting link in the exchange pattern animating the circle.” A patron is clearly more powerful than any individual 2 though client, successful patrons must conscientiously maintain their client base. Modern patron-client ties also remain essentially personal, informal, and noncontractual. Patrons supply clients with licences, jobs, and political protection, or allow clients to ignore laws and regulations, in exchange for immediate or future gifts, money, loyalty, or support. Modern patrons are also expected to perform some traditional duties, including advice “on ideological, personal, religious, and mystical 3matters.” PATRON-CLIENT TIES ND THE INDONESIAN STATE The use of public office to reward clients has strong cultural and historical roots in Indonesia. State patronage was pervasive in the precolonial and colonial 4era.’ After independence from the Dutch, patronage expanded with the growth of the state -- especially under Sukarno’s Guided Democracy (1958-65). As 2Jackson, “Bureaucratic Polity,” p.3. Ibid., p.14. For further details on traditional and modern patron-client‘ relations in Indonesia, see Karl D. 3 Jackson, Traditional‘ Authority. Islam, and Rebellion: A Study of Indonesian Political Behaviour (Berkeley: University of California Press, 1980), especially Chapter 8. ‘i assume that the values and customs of precolonial Indonesia have important implications for current practices. For a supporting view, see Harry J. Benda, “Democracy in Indonesia,” in Anderson and Audrey, eds., Interpreting Indonesian Politics, pp.13- 21. 107 university, Muslim of fail. population Indonesians Progress Indonesia, Indonesian villager Religion definition implications. Traditional can legally today, history” G. the function considered (santri) rampant McGuire behaviour be ‘ 7 This ‘ 6 Theodore ‘ 5 G. Of Of community. traditionally course, corrupt McGuire explained who have as and can course, or is no. legal helps and and - Politics: community an 1987), - village rises Reactionary officially be dispensed syncretistic of especially There 11 cultural B. M. example not behaviour and violations. state an explain as The (April, Hering to p.211. Smith, by all B. are one important accepted values the patrons, ethnic A administrators. Hering, political patronage. the understanding also Muslim, would of university why Reader note, level 1971), Predators?” and “Corruption, (abangan) one’s impact and sharp and anti-corruption behaviour expect have values.” 6 factor. 108 “The of “all the regional pp.25-26. action (North roles district differences status “Indeed had Indonesian deep students of ruling in Muslims of in important and It patron-client any and While cleavage Tradition, in Queensland: ‘corruption’ composition As has Christine and the values or groups diverse inaction Java, - a campaigns - can subdistrict meant Army: within ability 90 personal are result, between implications percent suddenly have in quite where society, Harbingers and that Doran, in of the differ.’ 7 James Indonesia’s to relations. generally the explosive Indonesia Indonesia Change,” critical orthodox orthodox skill.” 5 “for do officer leaders of become legal so some Cook ed., the the for of is Ascendency p.263, p.1. military are Western-educated Press, Political preferences. Indonesian Five rapid decision conservation, content emphasis shape control top different of represents Indonesian-Chinese, is In (Ohio: another islands. a controlled 20 A ‘ 8 For ‘ 9 For political, Year population economic political footnote 1976) Ohio 1989 of much on Culture are ethnic making a example, current Plans And only significant politics, deference University survey discussion of Sixty reforestation by Elite held growth Political 19. the 7 decisions. groups of military, bureaucrats ethnic and (Repelita) percent policies, contribute percent showed who business around around attitudes by Cultural and see at factor and Center comprise Chinese. of Javanese. self-control, all Culture: Donald of that of . 180 75 250 the and and and A world. 2 ° the often Politics costs. that the to also These 109 163 respect percent for languages million, are impact environmental Maclntyre, only bureaucratic land. K. population policies of A shapes have International have instrumental Enimerson, technocrats Study 5 the Leo Certain As and (Ithaca: for percent of of Yet a important there spread a top political decisive a Suryadinata, cultural key Business age of result, the desire that lives 200 cultural management Indonesia’s Indonesia’s positions,’ 9 Cornell are of and positions Javanese across in Indonesian tend Studies, the reflect on ramifications. developing for more policies impact seniority, and interaction.’ 8 cleavages population, Java, to University norms consensual a Politics, than Military plethora dominate are support in Golkar on Elite: 1989), firms while which elite also like the low the the 300 on an priorities 21 Despite the obvious relevance of religion, ethnicity, language, regional diversity, culture, and attitudes for understanding Indonesian politics, focusing on patron-client relations reveals key features of the current Indonesian state. Patron-client relations permeate and tie together the political executive, the legislature, the military, the bureaucracy, the courts, and the business community. At the apex of politics, the battle for power is largely between “circles of high-ranking bureaucrats and military officers. . .held together by an elaborate system of personal ties and mutual obligations.” To some extent these ‘circles’ are reinforced by family connections, friendships, ethnic backgrounds, religious views, and ideological positions. But the crucial glue is “patron-client 22bonds.” The New Order -- established after Sukarno was ousted from power in the mid-l960s -- is dominated by President Suharto (a former General), underpinned by the army, and steered by the 23bureaucracy. The New Order government -- which arose partially as a reaction to the turmoil of the l950s and 1960s -- has emphasized stability and national integration. President Suharto has gradually consolidated and centralized control, by eliminating 21For more detail on the impact of attitudes on forestry management, see Dauvergne, “The Politics of Deforestation in Indonesia,” pp.506-507. 22Jackson, “Bureaucratic Polity,” p.14. 23For a general overview of the New Order, see Michael R.J. Vatikiotis, Indonesian Politics Under Suharto (London: Routledge, 1993) 110 Communist party members, eradicating troublesome factions in the military, purging and streamlining the bureaucracy, placing strict controls on political parties, and sponsoring corporatist structures to organize social and economic groups. Suhart.o’s control is reinforced by his authority to appoint cabinet members and regional governors, to proclaim laws, and to control the armed services. The People’s Consultative Assembly (MPR) -- which under the 1945 Constitution is the highest authority and elects the President and Vice-President -- and the legislative House of Representatives (DPR) provide some legitimacy but no substantive checks on executive and bureaucratic 24decisions. The ruling Golkar party -- under the firm grip of Suharto and the military -- controls the national and regional 25assemblies. The two main opposition political parties -- the Partai Persatuan Pembangunan and the Partai Demokrasi Indonesia -- do not pose a serious challenge. The power of regional governments is limited by lack of revenues and close supervision from 26Jakarta. In the early 1980s, 24See David McKendr±ck, “Indonesia in 1991, Growth, Privilege and Rules,” Asian Survey 32, no. 2 (February 1992), p.10 According to Maclntyre, DPR committees have some influence.8 Maclntyre, Business and Politics, pp.31-35. There are some . signs that the DPR is becoming more important. See John McBeth, “Loyal House: But Parliament is becoming more animated,” FEER, 8 September 1994, pp.32-34. 25For a study of Golkar, see D. Reeve, Golkar of Indonesia: an Alternative to the Party System (Singapore: Oxford University Press, 1985) 26Army personnel have not been placed at the village level. But these officials sometimes receive military training, and their loyalty is monitored. Donald Enimerson, “The Bureaucracy in Political Context: Weakness in Strength,” in Pye and Jackson, eds., Political Power, pp.103-104. 111 many provinces received up to 90 percent of their revenue from central grants. Interest groups, the media, students, NGO5, and the general public also have little input or influence on policy 27formulation. With firm control, in 1993, Suharto was easily elected f or a sixth five-year presidential 28terni. Despite Suharto’s undeniable power, Indonesia is not a one-man state. Suharto needs the support of influential military generals and top bureaucrats. As Dwight King notes, “most observers would agree that Suharto’s leadership style has been deliberate, predictable and, above all, consultative. Key policy decisions seem far more the product of a military-technocrat oligarchy than the discretion of a military 29dictator.” Although coercion has been indisputably important, Suharto has maintained loyalty in part through judicious distribution of patronage. He has built a powerful group of followers, including key political, military, business, bureaucratic, and regional leaders. This patron-client network is the nucleus of power and the bastion for elite stability. Suharto’s family is at the centre of this network. His relatives -- first his wife and half-brothers and now his six 27Measures have been taken to control the political influence of these groups. University student organizations were banned in the late 1970s. The 1985 Law on Social Organizations (Ormas) severely restricts the activities of NGO5. The media is regularly censored and many newspapers and magazines have been closed for being too critical of the government. 28For details, see Henny Sender, “New Boys’ Challenge,” FEER, 1 April 1993, pp.72-75. 29King, “Indonesia’s New Order,” p.108. 112 After p. bureaucratic and Indonesia,” February antagonize patronage opportunities.” percent Crouch struggles: rewarded business, proposals. 31 “Political President’s personal least involved government the fortunes. 3 ° children Yll. Adam 34 Crouch, 33 Steven 32 Adam 31 lnterview, 30 See corridors ‘93,” one notes, Schwarz, of his 1994. in connections, and “In to according of many Schwarz, licences, Control, unnecessarily in major The an key Although children Erlanger, leaders placate Even Suharto’s the “Patrimonialism,” their after Doran, important losers of New supporters Environmental “All children.” 32 government As state power, “All Class to monopolistic York affiliated gaining and to ed., President is not were or well, “For one shadow,” is relative,” establish deal those Times integrate bank by Formation Indonesian friends.” 33 also enabling relative,” handsomely; foreign Suharto, control collateral he projects any 113 An loans who Suharto consultant, International, p.578. compensated companies Economist, contracts, has more academic their FEER, potential businessman: had and them Politics, in His allowed are FEER, but go avoids if or lost Also Suharto the Legitimacy 30 own Heirs you to -- often in persuasive he 9 with April claims: and Bogor 30 mid-1960s, May clientele, see in rivals. have was any build some key don’t 11 pp.221-234. April crucial are appointments the “You 1992, has underpinned 1992, Herbert November careful direct Indonesia, military received in “At form Key bring 1992, inter-group substantial cannot also investment As pp.33-34; Suharto’s pp.54-58. access least “Suharto and to role to Feith, not Harold p.54. in 1990, Life used has and and get key the 24 by to at in to 80 permitted pervasive patron-client exchange at the middle and lower levels of the state. By partially redistributing the benefits of rapid economic development and oil exports, these extensive patron- client networks have enhanced stability, created a powerful group with a vested interest in the status quo, and bolstered Suharto’s legitimacy To some extent, the legitimacy of Indonesian state leaders is not connected to obeying laws and procedures but to using their position to reward followers. As Jackson points out, “social injustice and corruption are felt only if a patron fails to redistribute his bounty among his clients or if the patron in adapting to market pressures abandons [his] diffuse responsibilities.” For this reason, Suharto’s overt use of political36 power to enhance the fortunes of his clients, family and friends has strengthened his grip rather than undermined his 35Rapid economic growth and oil exports have been vital for the stability of the New Order. Crouch argues that with “huge sums available for patronage distribution, the regime was in a position to reward its supporters royally; at the same time it could make dissidence very costly for its critics.” Harold Crouch, The Army and Politics in Indonesia, revised edition (Ithaca: Cornell University Press, 1988), p.355. writing in the early 1970s, W.F. Wertheim argued that under Suharto, patron-client relations were eroding, especially at the lower levels of society. He predicted that insurgency and revolution similar to China’s would occur unless the government implemented radical land reform. In my view, part of the reason for his inaccurate forecast is that patron client links which cut across and weaken class ties have not diminished but have flourished. For a discussion of Wertheim’s work, see Feith, “Political Control,” pp.229-231. 36Jackson, “The Political Implications,” p.36. 114 37legitimacy. This helps explain why Suharto is “undefensive about his position and the activities of his children” and why he “will easily move from a conversation about macroeconomic policy to one about a contract or a regulation affecting” one of his 38followers. This also helps explain why Suharto has not become directly involved in business operations and has avoided lavish displays of personal wealth. As was evident with Sukarno, this kind of behaviour is seen as irresponsible and ‘corrupt’ and contributes to a loss of legitimacy in the eyes of the ruling elite. CHINESE BUSINESS CLIENTS Links between powerful state patrons (mainly Javanese) and Indonesian-Chinese business clients (cukongs) are a dominant feature of the New 39Order. Compared to ties between Javanese, these connections are less likely to have strong bonds of loyalty and honour and more likely to be held together by mutual need and a mutual desire to make money. Political and military patrons supply credit, contracts, licences, access, and protection while Privately, some officials do criticize the extensive business links 37to Suharto’s children. Donald IC. Emmerson, “Indonesia in 1990: A Foreshadow Play,” Asian Survey 31 (February 1991), p.185. As well, orthodox Muslims have been critical of his close ties to Chinese corporations. 38Steven Erlanger, “For Suharto, His Heirs are Key to Life After ‘93,” The New York Times International, 11 November 1990, p.Yll. 39Richard Robison, “Toward A Class Analysis of the Indonesian Military Bureaucratic State,” Indonesia, no. 25 (April 1978), pp.17-39. For even greater detail, see Richard Robison, Indonesia: The Rise of Capital (Australia: Allen and Unwin Pty Ltd., 1986). 115 years, MacAndrews, particularly many middle-class. 42 the a 1994, feelings. Past Tjwan, New most following vulnerable especially prevented strong associates because speak Utrecht business. 40 equal. and Even Chinese [indigenous lower Chinese funds 42r 41 Ernst and 40 As Order, though Indonesian-Chinese p.46. Peranakan Indonesian, prejudice the “today’s often clients explains, Indonesian-Chinese Present,” attitudes class Japanese examples through against Islamic John through even to tjtrecht, Chinese or “Politics,” pogroms both there those strong political non-Chinese] McBeth, provide Indonesian activity, Chinese Due against Jakarta sides and the “the revivalist in change, are: with Chinese Prime the are clients in “Indonesia’s to even anti-Chinese Doran, increasingly front-door Central clearly p.372. cukong the connections vital “Challenges have clear pervasive this shifts Minister [people have generals and are contacts also “a society Indonesian anti-Chinese ed., group. movement been expertise business 116 Indonesian is number signs benefit, in Java and provide Foreign Indonesian a Tanaka’s of of a sentiments racism, in visible is societal of to so-called receiving subordinate in in Despite office Chinese of Indonesia has businesses not of Progress,” the is Singapore 1980. crucial Private and this focus sounding hostility rekindled no fairly and visit attractive according presidential or capital Politics, backlash. the within relationship longer prosperous ‘back-door ancestry Over of home.” 4 ’ Chinese Corporate access for position stability to have and names, FEER, the large the Jakarta; anti-Chinese perceived to society generations, and to Hong enough p.184. 1974 developed, to operate past As 28 Although business family.” born there Go pribumi System, and markets Chinese broker, racism, is of April riots Ernst Kong. Gien have and six the are for not as in is a MILITARY military decisions. Pacific in corporate patron-client role, stability down clients, and reign But reminder also clients client outside leaders subordinate Indonesia) Doran, the there 44 See 43 Go The Since for or and may networks Affairs are is the dies establishment Gien of personal purge this military ed., of posts. military Harold well manifested is Suharto to Suharto wary status the country, the Tjwan, in groups wholeheartedly still Indonesian creates of tenuous 48, be at of New office, Crouch, security. and many is officers pushed the consolidated Yet has sudden no. “The Order. grazing a not vulnerability in maintains the a been top sense nature 4 the of most patron-client Chinese continual Politics, only (Winter “Generals racial aside cornerstone of military his hold careful on become wealthy of of the 117 to state it and followers or in backlashes. these uncertainty. key 1975-76), avoid state should of p.93. sense Indonesia, to eliminated. and centralized a does political, coffers, Chinese Indonesian-Chinese participant appease networks ties. of royalties have Business have not of is the pp.519-540. been unease After channelling The a dominate also especially and Past New central Chinese connected bureaucratic control, fall For in and fairly coopt in and Suharto an Order. despite Indonesia,” members it.” 43 taxes, of political political Present,” important powerful business business patron- profits Chinese Sukarno stable. to steps and The his but the The of military generals. As well, to hinder alternative power centres from coalescing in the military, he has reorganized the armed services, rotated regional commanders, and encouraged early retirements. As Donald Emmerson notes, “the price of outspoken independence, several generals have discovered, is an 45ambassadorship.” Suharto has also prevented the emergence of powerful military successors. Crouch argues that in the 1980s, “like the traditional Javanese sultans who kept rival groups of courtiers in balance, Suharto made sure that no single group of officers gained a position from which they could challenge his rule and that no single, clear-cut candidate for the succession emerged. ,,46 As a result of this prudent management of the military, the New Order government “has become the master rather than the servant of the military 47establishment.” Military links to local business grew in the early l950s as civilian cabinets reduced the military budget. According to Ruth McVey, as the army’s income fell, “regional commanders began to make deals with local business interests which enabled them to 45Emmerson, “The Bureaucracy,” p.104. 46Crouch, The Army and Politics, p.357. 47jackson, “Bureaucratic Polity,” p.13. Also see Ulf Sundhaussen, “The Military: Structure, Procedures, and Effects on Indonesian Society,” in Jackson and Pye, eds., Political Power, pp.45-Si. In the last three years, the number of cabinet members with military background has declined, and now most of the 27 provincial governors are civilians. One study showed that “from a peak of 25,000 in 1967, officers seconded to dwi-fungsi [dual function] positions had dropped to 13,000 in 1986 and to about 9,500 by 1992.” John McBeth, “Challenges of Progress,” FEER, 28 April 1994, p.46 . 118 support their troops and preserve the loyalties of their subordinates. This gave them a financial base independent of the 48centre.” Army interference and participation in business continued to increase during the chaotic years of Guided Democracy. By the time Suharto and the army secured power in the mid-1960s, the weak economy and fragmented administration convinced the new government that “it had little prospect of raising adequate funds for the armed forces through 49taxation.” To maintain a stable and loyal military, and to compensate for budget and personnel cutbacks, the New Order government has allowed, even encouraged, the old practices of military officers raising revenue through business connections and patron-client exchange. Patron-client relations within the military also have °5 important consequences. The army hierarchy is split between managers who occupy key administrative posts or operate trading companies and field officers who are responsible for security. These managers often supply money to field officers for protection, contributing to a need for managers to become involved in ‘illegal’ ’5activities. 48Ruth McVey, “The Post-Revolutionary Transformation of the Indonesian Army Part I, Indonesia 11-12 (1971), pp.152-153, quoted in McGuire and Hering, “The Indonesian Army,” p.209. 49Crouch, “Generals and Business in Indonesia,” p.523. 501b±d., pp.523-524. As a result of this strategy, officers have prospered in the New Order far more than the lower ranks. Ernst Utrecht, The Indonesian Army (Townsv±lle, 1980), pp.100-101. For details on the military’s involvement in business, see Robison, Indonesia: The Rise of Capital, chapter 8. 51Utrecht, The Indonesian Army, p.103. 119 BUREAUCRACY Suharto has purged and pared down the bureaucracy, increased salaries, and made administrators more active. To increase loyalty and control, he has placed military officers in strategic 52positions. By the mid-l980s, about sixty percent of senior bureaucrats in Jakarta had military 53backgrounds. To undermine competing political allegiances, Suharto used to require bureaucrats to join Golkar. Despite Suharto’s moves to ‘backbone’ the bureaucracy with loyal military officers and curtail political activities, civilian bureaucrats have still had significant influence. Jackson claims that “the ideas of the civilian technocrats have probably had more impact on policy in Indonesia than in almost any other country in the Third 54World.” At all levels, the bureaucracy is perforated by patron-client 55ties. At the top, informal networks connect senior bureaucrats to powerful military officers, prominent politicians, and wealthy business leaders. At the middle and lower levels, patron-client networks also operate within departments, between different departments, and between departmental officials and powerful political, military, and business leaders. As a result, a 52Emmerson, “The Bureaucracy,” pp.82-83, pp.90-91, p.100. 53Colin MacAndrews, “The Structure of Government in Indonesia,” in Cohn MacAndrews, ed., Central Government and Local Development in Indonesia (Oxford: Oxford University Press, 1986), p.33. 54jackson, “Bureaucratic Polity,” p.13. 55See Loekman Soetrisno, “Patron-client relationships,” Review Indonesia, no. 98, 26 February 1994, p.18. 120 and BULOG Economic and particularistic, well organizational personal Pertamina, patron-client organizational of the from effectiveness. the patron these position, bureaucrat’s “The clusters of this connections true the [their] Pye, Kahin, failure financial Bureaucracy known 57 jackson, 56 Ruth While reason, the groups strength (Logistics agencies will eds., and Policy interests but directors’ cases see T. eds., position the have and of also networks power successful McVey, collapse Sundhaussen, objectives to Political principal the ties and “Bureaucratic as the and However, from in objectives.. clients Interpreting Board), rent-seeking have connections. and Political tend agency the access an to Its “The the is do closest organizational the status of long officials official Sociopolitical to in Power, to 1970s. see particularly goal also Beamtenstaat the for not his full.” 56 “The override several preserve .faltered.” 57 Context,” chains Bruce Indonesian are national aims contributed rice Polity,” of 121 position confidants.. Military,” pp.147-149. According always In intrabureaucratic use will often ministries both Glassburner, stabilization of of organizational or and “the when pp.11 2 - 116 . in clients patron-client Implications,” oil provides not enhance depend p.15. instances, Politics, prevent policy Indonesia,” pp.53-54; to economic to .prospered resources company related the The McVey, or extending power on “Indonesia’s aims. to For fall armed (BULOG) p.88. organizational “the dominance For objectives Pertamina patron-client possibilities wealth.” his to and groups are “a in and details of in his while units; details Eirimerson, directors Prevalent Anderson Sukarno. powerful downward personal Jackson are wealth, scarce, or over New and the his two her For on on of -- According to Jackson, “in almost all organizations at the close of Guided Democracy there were no slack resources whatever, and the satisfaction of personal or group objectives precluded the accomplishment of almost all organizational 58ends.” While Pertamina and the rice agency are exceptions, since the late 1960s, foreign investment and loans, massive exports of raw materials (especially oil), and manageable rates of inflation have provided the “slack that has allowed less than optimally efficient organizations to perform 59effectively.” Yet the New Order bureaucracy is clearly more effective in some areas than in others. As we will see later, in the case of timber management, close ties between patron-client networks and timber licences, concessions, and profits has debilitated the state’s ability to monitor and enforce management regulations. JAPAN AND PATRON-CLIENT RELATIONS While Japanese corporate executives sometimes bribe state officials, this is not in the context of long-term patron-client exchange relations. According to Utrecht, Japanese investors prefer to °6use Chinese brokers in Hong Kong and Singapore to avoid 58Jackson, “Bureaucratic Polity, p.15. Ibid., p.16. Crouch argues that foreign aid and investment and rising59 oil prices have provided critical funding for massive state patronage and regime stability. Crouch, “Patrimonialism,” pp.178-179. 60For a discussion of Japanese corruption in Indonesia, see Yoko Kitazawa, “Japan-Indonesia Corruption,” AMPO 8, no. 1 (1976), part I and part II. 122 incredibly ‘corrupt’ Indonesian (especially non-Chinese) 61businessmen. Nevertheless, Japanese money has had a significant impact on patron-client ties. Since the late 1960s, aid, investment, and resource purchases have supplied key funds to fuel ubiquitous patron-client exchanges. According to a 1980 AMPO study, “Japanese capital promotes bribery and corruption in Indonesia and encourages the formation of a comprador bourgeoisie that is in collusion with high government officials, the military and overseas 62Chinese.” SOCIETAL STRUCTURE ND POLICY IMPLEMENTATION Modern and traditional patron-client ties in Indonesia disperse power; society is not a pyramid where all power flows to a peak. Instead of a single pyramid, there are separate hierarchies in regions, provinces, and villages. Even at the ‘bottom’ there are “complex pecking orders” and “a little power goes a long 63way.” Society can be conceived in Migdal’s terms as a web of patron-client links or in Jackson’s terms as “an extremely complex molecule in which the different atoms have their separate nuclei and their circling electrons, but the bonds between the atoms can often be very weak and, indeed, many atoms have no bonds 61utrecht, “Indonesia’s Foreign,” p.184. 62MPO: Japan Asia Quarterly Review 12, Special Issue on “Japanese Transnational Enterprises in Indonesia,” no. 4, (1980), p.49. 63Rush, The Last Tree, p.35. 123 p.379, According adequate principles. Environmental and more court Progress suspicion implementation relatively by modifications make the the But effect policies content departments between through implications is the dominated taken bureaucracy. media, high 65 Poor 64 Jackson, In influence, particularistic under state footnote of multiple sum, outlined them legal in are to as policies of status passive students, bureaucracies policy in MacAndrews, There a -- this decisions action. for by implemented, were Management at whole basis.” is Jakarta “The in 16. a layers though policy in all.” 64 required.” Act particular, go Parliament, are, while small isolated, often implementation Political Jakarta. 65 they and with Jackson have concessions and however, to MacAndrews, of implementation. “Without implementation this elite, debilitate bears Act is academics the patron-client This policies and the often often they which Ibid., President political Implications,” is remote argues work 124 little still subsequent societal former these would constrained impressive been to is “Politics contains are in state their p.39. outer no that resemblance the their regulations, have reinforced requires dismissed peripheral. Suharto, rather parties, clusters implementing While structure capacity, New way “as rules islands, An little until an p.35. of clients. by example Order from designing policy than impressive the action, the and must interest pervasive for to overall the by and cases has Environment,” the state are military, networks. Business regulations. the the be moment development a is lack the attention dominated insulated important If plans cultural the original taken filtered latter. groups, patrons impact. set actual of anti these when 1982 has and an to of is As problems businesses. business policy. and regulations since aside regulations introduction are Conservation Background policies. cover policies. 143 PATRON-CLIENT Indonesia between destructive foundation the Chinese community input (e.g., have million political owned 67 Around 66 See Under as into 19 the insurance members sentiments. 66 Protection with leaders attempted He million is Maclntyre, leaders mid-1980s, by the policy for and examines practices Maclntyre about hectares of For 82 areas, enforcement, (e.g., POLITICS the 1945 elite, specific million laws. of forestry have industry). hectares. the have formulation, 190 to state. these Forest, Constitution, such Business how had Yet, convince spinning of million partially in management and AND a focuses hectares measures as profound institutions business forests, greater regulations. the where even undermine mostly TIMBER National The He Another hectares. military, and the 125 on extensive does though businesses industry), 1967 are due leverage all (e.g., MANAGEMENT for legislation impact Politics, of groups mainly state not, rain Parks 30 state primary to soil Basic and timber, the pharmaceutical million Officially, The more in to patron-client on however, have forests. business, on over state and and simple capacity introduce the the p.3. Forestry have IN forests the total - water pribuini fought - Wildlife policy these INDONESIA implementation excludes hectares bureaucracy, on outer look ignore He the resisted land conservation. regional, Indonesia to in argues to legislation formulation Law ties industry), Indonesian closely ties content Reserves, islands. 67 Indonesia implement overturn or societal area are is skirt drive among that the has set and and the at of of of A further 30 million hectares are Conversion Forest, areas designated for conversion to agriculture, settlements, and plantations, often after logging. The remaining 64 million hectares are Production Forest, accounting for about 60 percent of legal commercial timber in Southeast Asia. Production areas are supposed to be managed sustainably, mostly by selective cutting in primary and secondary forests. Numerous observers claim official are 6 A 1990 forestry statistics inaccurate. fine-resolution mapping project estimated total forest cover at 108 million hectares. A 1990 World Bank study estimated total forest area at 100 million 69hectares. The radical Indonesian NGO group SKEPHI (Network for Tropical Forest Conservation) is even more pessimistic, claiming This data was supplied by a Professor at Bogor Agricultural University, Faculty of Forestry, Bogor Indonesia, 25 February 1994. These figures are essentially the same as those used by the Ministry of Forestry. For government forestry data, see Indonesian Ministry of Forestry, Indonesia and the Management of its Forests (Jakarta: Republic of Indonesia, 1992); Indonesian Ministry of Forestry, The Timber Industry in Indonesia (Jakarta: Republic of Indonesia, 1992); Indonesian Ministry of Forestry, The Indonesian Tropical Rain Forest Conservation Areas (Jakarta: Republic of Indonesia, 1990) 69Both these estimates are cited in WALHI (Indonesian Forum for the Environment) and YLBHI (Indonesian Legal Aid Foundation), Mistaking Plantations For The Indonesia’s Tropical Forest, (Jakarta: Wahana Lingkungan Hidup Indonesia [WALHI], 1992), p.11. Also see Sandra Moniaga, “Status of Forest Resources in Indonesia, in JANNI, Reshaping “Development”: Indonesia-Japan Relation from Grassroots’ Perspective, Proceedings of the INGI Kanagawa Symposium (Tokyo: Japan NGO Network on Indonesia [JANNI], 1993), pp.39-42. For a range of estimates, see Jill M. Blockhus, Mark R. Dillenbeck, Jeffrey A. Sayer and Per Wegge, eds., “Conserving Biological Diversity in Managed Tropical Forests,” Proceedings of a Workshop held at the IUCN General Assembly Perth, Australia, 1990. (Gland: IUCN/ITTO, 1992), pp.45-46. 126 only 90 million hectares of forest 70remain. Even a government economist at the National Planning Agency estimated Indonesia’s actual production forest area is only 32 million hectares, half the official 7figure. Numerous’ bureaucratic departments shape the environmental management of timber concessions. The Ministry of Forestry -- with a staff of 50,000 -- is responsible for collecting taxes and royalties, setting annual allowable harvests, enforcing cutting and silvicultural guidelines, and monitoring timber 72regulations. The Ministry of Industry promotes the economic development of forest resources. This ministry has been a key force behind the development of wood processing. In 1978, the government formed the State Ministry for Development Supervision and Environment, later renamed the State Ministry for Population and the Environment, and now called the State Ministry for the Environment. This Ministry coordinates environmental management across departments, advises departments on environmental issues, evaluates the environmental impact of logging proposals, and monitors reforestation sites. Other departments and ministries also influence forest management, including Finance, Trade, Agriculture, Transmigration, Public 70SKEPHI, Forest Management Is Inefficient, Position Paper For Austria Parliament (Jakarta, SKEPHI, 1993), .2p. 71Sunimarized in. Rush, The Last Tree, p.36. 721n 1983, the Directorate-General of Forestry of the Ministry of Agriculture became a ministry and was named the Ministry of Forestry. 127 Asian Malcolm management, Resource the Repetto, Environment, Sector,” 1987), million figure. 76 for Indonesian-Chinese licences, timber conglomerates Concession hectares companies, annual Works, the POLITICIANS, 50 (Cambridge: conglomerates, rainforest,” rest 76 For 74 Raphael 75 WALHI 73 See Approximately ‘flexible’ Wall pp.76-78. businesses and legal Gillis, hectares eds., in of Management of an on Malcolm He Street however, holders Energy and and Charles Production interview Cambridge military Southeast and PATRONAGE, timber Pura, is are Public the YLBHI, “Multinational The the the interpretation had Journal are controlled and Gillis, timber 500 log have tropical “Rapid must S. production Guardian, Third Issues head been Policies officers limited Mines. 73 with Mistaking, concessionaires, Asia around University Pearson, Forests. AND licences rely (hereafter leaders, of Loss logged. 75 “Indonesia: World Hasan, CHINESE forest,” conibined. 74 by in mainly four on 800,000 and 128 19 for was Enterprises of Chinese-Indonesians. ed., the of politicians p.12. October (Durham: Between see to Forest protection, Bob the trade Press, over TIMBER AWSJ), to About management in Indonesian Multinational John log hectares Misuse Hasan public under local Malcolm 30 Already associations, Worries 1990. 1989 Duke more CLIENTS Vidal, 3 1988), and two-thirds million is February the for of companies. policies, and and a University Environmental the Gillis than Forest Tropical control by rules. year, concessions Indonesia,” “High on pp.50-51; most 1994, Corporations, cubic mid-1990, bureaucrats Non-Chinese 1990, 60 of and more Resources stakes including powerful resource of metres. million average Chinese logging Robert Press, Forest p.10. Among about than The and and and in 25 March note FEER, South requests.” desire the encourage Setiakawan, million close Confidential personal 4 generation According P.T. policy.” 77 Apkindo, Forestry of Hasan President department ‘green’, industry. March the paperwork to 81 A 79 This 80 For 78 lnterview, 77 Adam Asia’s Barito Sumatra.” 12 1994. relationship. -- Environment to Harahap leaked hectares 1994. March ties -- the a who the he build to Suharto Indonesian-Chinese official Schwarz, Hasan’s Jonathan critical cooperates One no. the largest Pacific Interview, to Wood and Forestry one has has 1991 1992, on 10, formal forestry According Suharto. 81 his Senior -- the financing the insider, can power have memo Panel claimed the little January-June, timber “Timber Friedland account p.44. ‘empire’, Timber. 8 ° memo Minister In only Minister, rights with size official, from Senior had stems official Association to this that operator Prajogo’s that troubles,” concern challenge Hasan for of of Apkindo, Prajogo FEER, from close and to 129 Barito Switzerland and from “he of memo, Hasan an Indonesian Like Hasjrul Bappenas, 1993, log Adam Kalimantan. aptly Forestry is Suharto should industrial-tree although is ties his to timber for him Hasan, Pacific 2 is that the but Prajogo FEER, Prajogo Schwarz, pp.53-55. Suharto million direct primarily declared: Harahap, to since fulfil environmental de responded -- Apkindo Ministry official, or controls concessions a 6 he Prajogo Timber, and His April facto Pangestu, the limited asked link illustrates “Risks sometimes the all hectares he main to motivated State plantation “The really of by to 1989, of employs Minister late the see “facilitate Suharto Jakarta, has on degree. 79 company Prajogo’s jotting Planning, Suharto. 78 cover Minister a forestry Paper,” SKEPHI, plywood issues. -- p.86. sounds close, second 1950s. their makes more by 5.5 and to in is of a a 3 than 50,000 people. Prajogo is the world’s largest exporter of tropical plywood, with annual sales around US$600 million. The total value of Prajogo’s forest land, logging infrastructure and plywood mills is US$5-6 billion. His Barito Pacific Group of companies is also the largest borrower of state funds, with more than US$1 billion in loans. In 1992, he received “an unusually attractive. . .debt rescheduling that stretched repayment periods on about US$460 million in timber industry borrowings into the next 82century.” He has recently established huge state-subsidized softwood plantations to supply a US$1 billion pulp and paper mill. His partner is Siti Hardijanti Rukmana, Suharto’s eldest child. Not surprisingly, Prajogo has made substantial ‘donations’ to charities and social programs connected to Suharto’s family. Prajogo has also reportedly helped rescue poor investments linked to Suharto and the 83military. Prajogo and his wife also conscientiously “nurture the relationship [with Suharto] with small gestures, such as gifts of home-cooked treats from Mrs. Prajogo’s home province of North Sulawesi.hIM 82Raphael Pura, “Timber Tycoon Confronts His Critics,” AWSJ, 27 August 1993, p.8. Prajogo’s timber holdings are discussed by Raphael Pura, “Timber83 Tycoon AWSJ, Confronts His Critics,” 27 August 1993, p.1 and p.8; Raphael Pura, Stephen Duthi and Richard Borsuk, “Plywood Tycoon May Purchase Malaysian Firm, AWSJ, 3 February 1994, p.1 and p.4; and Adam Schwarz, “Forest Framework,” FEER, 12 March 1992, p.44. 84Raphael Pura, “Timber Tycoon Confronts His Critics,” AWSJ, 27 August 1993, p.8. 130 MILITARY LEADERS AND TIMBER In 1967, Suharto distributed timber concessions to reward loyal generals, appease potential military dissidents, and supplement the military budget. In 1978, the Department of Defense (Hankam) business group P.T. Tn Usaha Bhakti, along with regional military commands, controlled at least fourteen timber 85companies. Today the military is still heavily involved in logging. For example, in East Kalimantan, the International Timber Corporation of Indonesia (ITCI), operates a 600,000 hectare concession, the largest in Indonesia. As well, by the year 2000, ITCI plans to develop 140,000 hectares of timber plantations. Fifty-one percent of this company is controlled by the armed 86forces. Of the remaining shares, P.T. Bimantara Citra -- a conglomerate chaired by Suharto’s second son, Banibang Trihatmodjo -- holds 34 percent while Hasan owns 15 percent. According to Hasan, the military uses its profits to augment its official budget and build houses for so1diers) P.T. Yamaker -- which logs concessions in East 85Robison, “Toward A Class Analysis,” p.28. These companies were backed by Chinese and foreign funds. 861n the early 1970s, ITCI’s major shareholders included the most powerful generals of the New Order. According to Hurst, ITCI’s concession was in effect a “pay-off from Suharto for the loyalty of Indonesia’s military elite.” Philip Hurst, Rainforest Politics: Ecological Destruction in South-East Asia (London: Zed Books, 1990), p.34. Based on ITCI (International Timber Corporation Indonesia), PT. International Timber Corporation Indonesia (Jakarta: ITCI, 1992); Rush, The Last Tree, pp.36-37; Raphael Pura, “Rapid Loss of Forest Worries Indonesia,” AWSJ, 3 February 1990, p.10; and Steven Erlanger, “For Suharto, His Heirs are Key to Life After ‘93,” The New York Times International, 11 November 1990, p.Y1l. 131 paper plywood bribes, 3 avoidance business Despite ties section, have weaken tax state areas. corporate state logs Kalimantan security. timber is March little and have 88 Confidential Patron-client to declared plantations. management implementors state company According processing, royalty 1994. the Sabah. 88 gifts, the clients contributed of practices. Not bureaucratic near rhetoric, result supervision reforestation surprisingly, a and linked evasion, the continue policies. crackdown to Interview, ties continue career foreign is one to border however, to rampant Instead, between inappropriate insider, flagrant supervision of the to stability. duties. investment, on bureaucratic with to In with reap Senior army. the 132 illegal ignore illegal the state strong convoys top violations huge Borneo state last Indonesian As This of leaders state and state As profits logging, military conservation, well, loggers has logging of few implementors we ineffective Malaysia is trucks patrons rules had of will years, deemed and these while official, logging timber and minimal protection, in timber see in smuggle - patron-client necessary state - and these tax middle-level exchange policies and in and is smuggling, rules, operators impact Jakarta, the powerful pulp evaders. distort another leaders illegal remote there next and and for for for on FORESTRY POLICIES ND PATRON-CLIENT POLITICS A. Logging Rules and Concession Distribution Until the late 1980s, Indonesian logging was regulated by the Selective Cutting System (TPI). This system divided concessions into 35 areas which were then logged annually on a 35 year cycle. Loggers were only allowed to cut trees with a diameter of 50 centimetres or more at breast height. As well, if less than 25 trees with a diameter between 25-49 centimetres remained in a logged hectare, companies had to do enrichment 89planting. In 1989, the government established a new cutting policy -- called the Indonesian Selective Cutting and Replanting System (TPTI). Logging guidelines are essentially the same, although now loggers are required to replant commercial species. This current policy has made little difference. According to the NGO WALHI (Forum For the Environment) and the Indonesian Legal Aid Foundation, “it wasn’t application of a faulty management system, but rather the failure to apply any management system which resulted in so much degradation. Although improving management policies is useful, in reality the key to better forest management is better implementation and tighter enforcement.” There are certainly problems with timber management9 rules. For example, while companies are allowed to log° areas on a 35 five year cycle, licences are only granted for 20 years, with no guarantee of 89For details on TPI, see Hurst, Rainforest, pp.lG-17. For a critique of Indonesian selective logging rules, see Gillis, “Indonesia: public policies,” pp.63-65. 90WALHI and YLEHI, Mistaking, pp.59-60. 133 renewal. This obviously makes little 9sense. But in the context of Indonesian politics this discrepancy ’ is not critical. Even if concession licences were granted for 100 years, it would make little difference since it is clear to loggers -- especially ethnic Chinese -- that a shift in political or military power could change the rules overnight. Historical allocation of timber concessions contributes to current management problems. Starting in the mid-l960s, Suharto awarded concessions to numerous loyal military and political clients. In 1970, to quash provincial claims to timber areas Suharto had awarded as ‘presents’, the authority to distribute concessions was centralized under the Directorate-General of Forestry. As a result, small-scale loggers without Jakartan ties lost their concessions; many resorted to illegal logging. Jakarta- based concessionaires often had little forestry knowledge or capital, and turned to Mt\TCs and Indonesian-Chinese companies to handle logging 92operations. This split between control of concessions and management of timber operations continues today, reducing accountability and transparency. According to Mariko Urano, “the increase in these absentee concessionaires has Barbier, Burgess, and Markandya, “The Economics of Tropical Deforestation,”91 p.57. 92Despite needing sub-contractors, concessions were still excellent ‘presents’ since profits were huge and fast. Interview, Bogor Agricultural University, Faculty of Forestry, Bogor Indonesia, 28 February 1994. 134 dcirtLIJ-J iIC!) t- 9) CD 0 C) 3 CD H U) H- Ct 9) 9) • HQQQH- CI(D 0 h 9) Mi 9) 9) Mi 0 H- 3 C) HrtH-Mi i<(vp. C)pIC) H- i-i CD Mi rt Mi ‘d U) Mi Cl H C) C(DMiMi H-H- Irt CD 0 CD H- 9) H- 0 CD H H 0 CD HCD(DU)CDH jIo Mi U) II hI C) O- C) I-I Cl) hI H- H • 0rt0 DIh Q rt 9) C) H- CD H 0 9) CD < CD 0 H CD IH-ct () I = H- CD 9) hI Cl) Cr C) U) H- CD 9) C) ii CDH- Summarized in Adam Schwarz, “Timber is the test,” FEER, 23 July ‘°1992, p.36. A World Bank study estimated that Indonesia’s annual 9 sustainable yield is only 22 million cubic metres. Summarized in Gareth Porter, “The Environmental Hazards of Asia 138 quotas. Loggers over-harvest their concessions and cut trees in National Parks and conservation areas. Smuggling rings involving top military, political and business leaders, as well as local forestry officials, security officers and foreign business executives (particularly Malaysians) transport many of these logs outside the country.”° There are strong signs that Japanese companies are purchasing illegal logs from Kalimantan, and moving them through Borneo Malaysia.’ In 1992, timber smuggling reportedly cost the state ’1135 billion rupiah.” Domestic who 2 processors -- face a chronic shortage of supply -- are also deeply involved in illegal logging.” This is hardly surprising since annual capacity of plywood3 plants and sawmills is 60 million cubic metres, about twice as high as the Forestry Department’s estimate of sustainable production.” As a result, Pacific Development: The 4 Southeast Asian Rainforests,” Current History (December 1994), p.431. “°According to local Forestry service data, loggers smuggle between 50,000 to 100,000 cubic metres of illegal timber every year from West Kalimantan to Borneo Malaysia. SKEPHI, Setiakawan, no. 11, July-September 1993, pp.31-33. “Interview, Environmental consultant, Bogor Indonesia, 24 February 1994; and Nectoux and Kuroda, Timber, p.73. “2As±an Timber, January 1993, p.9. Debra J. Callister, Illegal Tropical Timber Trade: Asia Pacific “3 (Cambridge, United Kingdom: Traffic International, 1992), p.30. This incongruity is partially a result of poor coordination between “4 the Ministry of Forestry and the Ministry of Industry. The Ministry of Industry set the capacity of plywood mills, stressing intense production to maintain rapid economic growth. Interview, Bogor Agricultural University, Faculty of Forestry, Bogor Indonesia, 28 February 1994. 139 wood uncertainties public and private excess billion” valuable et., percentage investment. Institute, mismanagement export 1982, B. stocks processing Instead, the by processors a reported concession Licence hiring the al., 117 Robert ‘ 16 Gillis, “ 5 lnterview, Poorly Concession volume products, “only and policies,” of taxes Misuse prof was species, loggers ‘stolen’ the “The have 1988), local mill Fees, are of designed it.” 7 $1.6 Repetto, director, That collected of since total about “Indonesia: timber have Economics,” constantly h15 no of holders Royalty people Indonesian including p. 43 . billion pp.85-98. often concentrate logs incentives cost Forest and loggers In costs contributed future and The rents. one by 1992, may then creating must For extracted. to insufficient Policies, Forest public Resources scrambling of of the pp.56-57. way face include concessionaire, cut market more the to According bought bringing pay a “Rent, the government on 140 concessionaires potential cut For logs few policies,” irreparable details, cost uniform to World removing and and defective The a penalties by (Washington: back for Indonesia illegally. licence risk trees Timber This definition, Trees? of to political Bank more ad -- aggregate see to Repetto, pp.59-60; premium the Jakarta, attracting to the valorem ecological or aggravates Gillis, Taxes feed estimated fees, Government logs. for increase market largest capturing low remainder World damaging These conditions, the is that royalties grade from rent 3 royalties According and March “Indonesia: as a necessary Resources harm.” 6 company’s supply and that value logs reflects Policies Barbier, of 1979 logs timber. logging became timber a 1994. most $4.4 the and low are so or in to on to is Utilization by Seminar of July Jakarta, timber studies, Indonesia, studies windfalls Public rents.” there According one quickly the treatments, Loggers more the a that rent increase Indonesian mere WALHI Forestry, study, concessionaires government “ 9 WALHI the “ 8 Sunimarized 1992, alarming, Low from are rent Policies, 8 fall and -- on see government to Robert in 3 government inevitably are to logging, percent the p. 36 . “when government March a captured to reforestation reforestation and recklessly Dudung the in Jakarta, a in high perceived Association WALHI a maximize now Repetto, a Indonesia,” YLBHI, rent study p.18. Economic in 1994. range of of compared captures Darusman, still and/or Adam by doubts representative rent capture 83 October timber by collected Mistaking, extract the as between percent profits “Overview,” captured and WALHI There Schwarz, of collection fees short-term their Aspect government, about with around A Forest “The sustainable is rents 6-7, 141 and Paper found logs low, is by 20 logging before only 85 the Economic pp.20-21; only of “Timber 1992, timber 15 a a to little Concessioners percent in while it in government exact gains, has that wide percent Presented 30 30 the 17 1989. from allows Gillis rules contractors. management. p.17. percent percent. percent important taxes, the has Rent is range ignoring magnitude Forestry for and and a the of government low windfall changed suddenly and In of petroleum.” 8 Interview, consultant. the at WALHI timber of and of of test,” Tropical of 1990, Repetto, For beneficiaries silvicultural implications. the timber estimates the Business 8-15 of the According Inevitably, since profits calculated change a available rents.” 9 after Ministry National FEER, economic captured percent list WALHI, Forest rents. eds., then; Most Even of of 23 in to to an -- will maximize them, as long as they 2last.” Low rent capture also creates a de facto subsidy that ° supports inefficient wood processing. As well, it allows exporters to sell high-grade timber at exceptionally low prices. The state needs to collect economic rents since private companies cannot be relied on to plough profits back into forest regeneration. Since reforestation and sustainable management involve long-term returns and high financial risks, and require political stability, corporations have a strong inclination to invest timber profits into other ventures, especially real estate which does not involve production, reinvestment, government licences, or 121concessions. Even though low Indonesian forest charges allow companies to make substantial legal profits, loggers routinely forge export documents, falsify harvest yields, illegally log inside and outside concessions, and ignore reforestation fees. According to one corporation, 19 out of 21 timber companies in South Sumatra manipulate their export documents to evade 22taxes.’ Companies also elude royalties and distort figures on volume extracted by reusing timber transportation documents, sometimes as many as 5 times 123 lndonesian Ministry of Forestry and FAQ, Indonesian Tropical Forestry 20 Action Programme: Executive Summary (Jakarta, Government of Indonesia and the United Nations, 1991), p.44. ‘Robison, “Toward A Class Analysis,” p.33. 21 Suirimarized in SKEPHI, Setiakawan, no. 11 (July-September 1993), 22‘ p.31. 23SKEPHI,‘ Setiakawan, no. 8 (July-September 1992), p.3. ‘ 142 C. Foreign Investment Policies Prior to the mid-1960s, logging on the outer islands was limited. After 1967, government incentives under the new Foreign Capital Investment Law opened a door to large Northern and smaller Southern MNC5, triggering a logging boom in the primary 24forests.’ From 1968 to 1980, the volume of logs extracted increased on average 22.5 percent every year. By 1979, 89 percent of production forest was divided into 25concessions.’ During the late 1960s and early 1970s, foreign timber technology and management advice accelerated the rate of 26extraction.’ Mt\TC5 made enormous profits by paying little for timber rights, ‘mining’ concessions of the most valuable trees, ignoring reforestation, refusing to invest profits in processing or rehabilitation, and avoiding taxes and 241n the 1970s, major foreign investors in the Indonesian timber ‘ sector were from the Hong Kong, Philippines, Malaysia, the United States, South Korea, and Japan. Before 1980, Southern firms accounted for two-thirds of foreign investment in the Indonesian timber sector. From 1978 to 1981 Japanese investment expanded. But even in 1981 Southern firms still comprised over half of foreign timber investment. Gillis, “Multinational Enterprises,” p.73. The significant impact of Southern investment -- and increasingly trade -- on Indonesian timber management suggests an important area for future research: contrasting the impact of Southern and Northern MNCs on resource management. For a preliminary comparison of the environmental impact of Northern and Southern MNCs on Indonesian timber management, see Ibid., pp.84-86. 25Gillis, “Multinational Enterprises,” p.70. 26See‘ Economic and Social Commission For Asia and the Pacific, Transnat±onal‘ Corporations and the Tropical Hardwood Industry of Indonesia, United Nations, Joint CTC/ESCAP Unit on Transnational Corporations, Working Paper no. 16, Bangkok, 1981, pp.1-2. While Southern investors accounted for over half of Indonesian timber investment, many of these companies used equipment and techniques absorbed from earlier contact with Northern companies. 143 Gulls, ventures uncooperative timber were in government paying 1975, importantly, doubling Indonesian foreign produced in around tax in timber log operations royalties Ibid., 1983, Sabah.’ 3 ° exports holidays only ‘ 30 Gillis, ‘ 29 Th±s ‘ 28 Hurst, ‘ 27 A.J. During the concession concessions any 11 “Indonesia: exchange foreign came in after-tax 10 p.5. through government was million government were Leslie, income were the greatly percent logging, the Rainforest, -- As from foreign “Multinational angry 1960s which timber lightly in reluctance a contracts” earnings transfer •128 tax.’ 29 Kalimantan; hectares public result, “The Kalimantan. of investment over reduced and forbid began and firms, in export investors taxed. government-TNC p.2, low practice 1970s, only policies,” pricing. 127 As from of companies to (Unpublished of Enterprises,” rates further Indonesian evasion value, well, and 144 75 MNCs restrict allowed returns. Kalimantan timber, From multinational received percent By p.10. of sometimes to until compared 1967 1971, pp.67-69. foreign of Many reforestation, made invest relationship equity foreign in paper, timber state was until four 1978 of p.68. Despite had 65 the huge to exempted exported. these ownership in timber percent to been shares major 1980), timber around early log taxes, investment. profits, processing. six giant increases export ‘unfair’ carved in profits year tax 1970s, firms summarized 20 in of and, revenues. or tropical By percent reforms logging timber nearly timber income joint taxes 1974, most from into and The and the In in ban. undervaluing astronomical and exports.’ 34 began logs companies Indonesia regulations Foreign size government During “Multinational the D. construction concessionaires emphasized processing. 13 ’ Processing income Indonesian ‘ 34 1n ‘ 33 Potter, ‘ 32 Gillis, 131 1bid., 133 From of The to Repelita their firms 1992, mined accounted first withdraw 1980 taxes collected log The and taxes of timber pp.74-76. concessions Policies “Indonesia: that “Environmental Enterprises,” the to exports World restrictions. their to processing government II Five both build 1985, on ‘ban’ (1974/5-1978/9), refused for in exports, a Bank concessions. national log Year mandatory and anticipation 41 processing the on public reduced. exports. percent and plants. doubled increasing log to Plan, p.68. government and Before including all and 145 participate exports deposit policies,” Social of major foreign plants. Repelita Partially At To the log This leaving, of the foreign the encourage was central implemented Aspects,” on those even export industrialized world in firms end lifted in log p.69. Beginning effect I as however, greater processing exchange of to market exports government a (1969/70-1973/4) taxes were more the and result, To p.18 6 . Japan. maintains a evade in involved processing, replaced 1970s, many in ban government in to countries earnings. 1977, tropical had Gillis, finance in 1978.132 on export pushed timber MNCs 1979 the log the the by in -- including Japan, the U.S., and Canada -- opposed this decision, based primarily on free-market arguments. Indonesia ignored this pressure, concluding it was essential to control the market and develop a timber processing industry. There were three key reasons for this decision. One, to add value and diversify the economy away from a heavy emphasis on oil exports. Indonesian planners believed this would not occur in a free market. Two, to create jobs. Three, to provide incentives for long-term forestry 35investments.’ While the government had ‘rational’ reasons for imposing a ban, state capacity to implement this policy was greatly increased by close cooperation and support from powerful domestic business leaders who wanted to concentrate and consolidate control. Hasan has played a crucial role in forming the state-business alliance that has strictly imposed this 36ban.’ With government support, Indonesia’s plywood industry grew quickly -- from 29 plywood mills in 1980 to 111 mills in 1988, with Senior official, Bappenas, Ministry of Planning, Jakarta, 4 March 1994. According to this government spokesman, more companies now replant to ensure future supplies for their mills. 136Part of the reason the government has been able to enforce a ban on log exports is that it has increased, rather than undermined, financial opportunities for the most powerful timber companies. On the other hand, the Indonesian state has not been able to control over-exploitation and environmental mismanagement. Environmental concerns, as a low profile, low priority issue aligned against strong patron-client networks and business interests do not create the internal support necessary to generate strong state action. 146 a tenfold rise in 137production. Now there are over 130 plywood mills. In 1991 Indonesia controlled 85 percent of world trade in tropical 138plywood. In 1992, Indonesia exported 9.2 million cubic metres of plywood. By 1993, forest exports earned US$4.5 billion; plywood accounted for nearly 75 percent of these 139exports. Plywood manufacturing also generates significant employment and foreign exchange.’ Indonesia’s plywood export strategy has been simple: °4 flood the market with cheap plywood and destroy competitors; once this is accomplished, gradually raise prices and government taxes. In some ways, this strategy has been successful. While the ban led to a temporary loss in foreign exchange earnings, by 1988 -- using equipment supplied by Taiwan, South Korea, and Japan -- Indonesia had regained its foreign exchange earnings. With control over the world market in tropical plywood, Indonesia can 37William B Wood, “Tropical Deforestation: Balancing Regional development demands and global environmental concerns,” Global Environmental‘ Change 1, no. 1 (December 1990), p.34 ‘38M. Bob Hasan, Keynote Address, “Prospects . for Plywood into the 21st Century,” Proceedings of the World Conference on Tropical Plywood (Jakarta, ITTO, December 1991), p.21. ”Indones±a to reduce tree cutting to help preserve rainforests,”39 The Japan Times, 27 July 1994, p.18. Around 2.5 million people work directly in the timber industry ‘40 and 1.2 million work in related industries such as glue manufacturing.‘ In 1990, plywood exports accounted for 14 percent of total foreign exchange earnings. Hasan, “Prospects for Plywood,” p.24. It is, however, important to note that government and corporate statistics exaggerate the economic benefits of timber processing since “primary forest assets are established without cost. Harvesting depreciates what is a valuable stock but the economic accounting of timber operations does not include this depreciation as a cost.” Zerner, Legal Options, p.5. 147 processing processors partly Tokyo, better Jakarta, between substantive often more Policy: 1994. Interview, mills.’ 42 International efficiency. ban Indonesian in study costs subsidies drawbacks achievements, low potentially inefficiency Indonesia as have ‘ 43 Carlos ‘ 42 1n ‘ 41 lnterview, Dated use calculated -- pressure 30 8 Japanese due 1981 April 4 The have Japan, contributed percent Even for of processors, Senior logs technology, March mills import to evidence, be and building and processing Alberto it Trade Cases contributed Interview, there though 1994. differences processing from a technology, 1986 1994. on have over-capacity, is Senior Official, that -- high ‘price and between these have of the forest the to many a become protective Primo while as a quality processing the official, -- large Indonesia government government a surrounding Japan been leader.” 4 ’ mills to efficiency Bappenas, operate including result Environment, this in expertise, Braga, 40 more enormous 148 numbers logs major the waste the to Plywood discrepancy state Bappenas, efficient industry. of far 50 ban lost and while quality “Tropical Ministry spokesman But labour, is economic area, valuable the state policies percent. below of and between on US$1.9 p.190. Inspection Brazil,” despite phased local inefficient log Ministry policies, naturally since revenue is of electricity, capacity of Besides Forests wood, partly and and claims exports to Planning, 55 logs. Indonesian While log In these the US$3.1 to the in environmental losses. Corporation, of putting fairness export 70 a it mid-l980s. decreasing -- processing log that and I Low and Planning, fostering result percent; Japanese apparent have is billion some and 4 export March mills Trade state many also ed., ban, even One log no of as to million 25, Forestry domestic point Foregone percent.’ 46 million 1992, respite. environmental processing 24.6 log this This environmental has improving forestry Indonesian in export no. depressed export ‘ 47 This ‘ 46 WALHI 145 Quoted ‘Holly million Besides climbed has p.36. to cubic 2, cubic Export and fees processors, By contributed ban rent revenues.’ 44 this capacity. (August data government Indonesian Lindsay, and FAQ, 1988 cubic in dramatically metres. financial every Indonesian problems. benefits was metres.’ 47 Earnings,” Adam YLBHI, collection, on decrease Indonesian log gradually 1989), metres year. log “ Schwarz, there “The production Pushed government to Mistaking, production losses, could of By log pp.111-1 2 3. According Indonesian in In Bulletin in Today, in “over-cutting the is eliminating prices imposed, by Tropical, the 1978. 1960, the “Timber collect even 149 logging foreign ban. the was World late and p.17. driven is to of more to log log Between even Export log from around is Indonesian business p.4. this But 1960s another investment rates Bank export production export the pressure production and higher, by Indonesian this report, Ban: half 1981 test,” and strong estimates over-investment as restrictions, leaders ban US$2 was An Economic the and 1970s, estimated and on proof the Estimation FEER, was dropped has world demand a Ministry the 1985 technology, billion export sometimes temporary that only added reaching 23 Studies of forests as level. at by July from ban the the and the 1.4 of of 32 35 to in in than at the height of log exports in the 481970s.’ Many wood processors operate logging concessions. This is supposed to provide strong incentives for sustainable management since processors need steady future supplies. According to Hasan, “when you log, you don’t care if there are any trees left at the end. But if you invested in a factory, then you must be sure of a supply of raw 49material.”’ In theory, Hasan may be right. But in practice, processors -- to maximize immediate profits -- mine their concessions and use illegal logs to feed their mills. Furthermore, allowing processors to own concessions distorts free market signals which would raise the price of logs as plywood prices increase. Partially as a result, log prices are far too low to support sustainable 15management. To compensate for low log prices, Indonesia has considered° forming a timber cartel to raise plywood prices. So far there has been little progress. The major tropical timber producers -- in particular Malaysia, Brazil, Nigeria, and the Ivory Coast -- have diverse interests and different markets: Brazil to the U.S.; Africa to Europe; and Malaysia and Indonesia to Asia. Countries like Malaysia are also Potter, “Environmental and Social Aspects,” p.180. Also see Braga, t48 “Tropical Forests and Trade Policy,” p.190. 49Quoted in “Shades of green,” Economist, 18 April 1992, p.38. ‘lnterview, Bogor Agricultural University, Faculty of Forestry,50 Bogor Indonesia, 28 February 1994. Also see WALHI and YLBHI, Mistaking, pp.18-19. ‘ 150 nervous that Apkindo and Hasan would dominate a plywood 5cartel.’ In addition, unlike oil, a tropical plywood cartel would still’ face competition from substitute products, such as temperate plywood, plastics, and metals. For these reasons, an alliance to drive up plywood prices is unlikely. E. Conservation, Reforestation, and Tiniber Plantations There is an important distinction -- often blurred by government policies and statistics -- between reforestation that regenerates natural rain forests or replants vital watersheds, and reforestation that builds huge, fast-growing, single-species timber plantations. Most reforestation in Indonesia -- and throughout Southeast Asia -- focuses on single-species plantations. While these plantations can create employment, squeeze profits from degraded land, provide valuable timber stocks for pulp and paper producers, and perhaps even alleviate pressure to extract logs from natural forests, these cannot replace primary dipterocarp forests. Plantations cannot restore the bio-diversity, environmental benefits, or economic rewards of primary forests. Most plantation logs are also not an adequate substitute to make plywood. Reforestation -- especially to protect watersheds and revive natural forests -- has a poor record in Indonesia. Even according to official figures, Indonesia only replanted 1.35 million hectares lnterview, Senior Official, Bappenas, Ministry of Planning, 4 March51 1994; and Interview, Foreign News Correspondent, Kuala Lumpur, 9 March 1994. ‘ 151 HH 0 IIHHIQ I-] CD Cl) l- PJ 0 H ft ‘tI Li 0 0 (Q b I-h (D.IH H Z Cl) U) Cl) CD 0 H i Cl) CD 0 M 0 (1) ‘ZjMQIH [‘ H- ft ft CD I-ti ft Cl) II Q < ft WQ ft H 01H- CD U) P.) Pi H çn P 0 0 ‘d H CD H- P)0 ft II )) D U) CD H Pi I- CD ftCD H-CDIH- 1 H (1) ‘-3 ft Cl) H cX 0 CD b ftHU)IPJ ‘< p., H- U) 0 Cl) H D P.) ft H C!) CDHH.IHH H-ft CD II U) CD ft < - H H CD CD Li H-P’I H CD ft H- - CD CD H • xjH P.) H H- H- 2 P H 0 (C H CD ft () co CD q I- 0 H- :i 0 CD Q I- Q H- P-’ ft CD 0 I-ti 0 N :i 0H- pj P.) H ‘g ft CD 3 0 0 H (I) CD L OP.) k< CD ftPJCD CD H- CD 0 ‘I < ft CD CD I- II Cl) CD 0 U) H CD ‘dP-H- H- Li U) CD ft U) ‘- Hp) 13 CD CD ft U) H H0 • 0 P.) 13l)).CD ) - ft CD 9) M ‘d ‘rj H ft I-h P.) CX) Li -H ft P.) CD k< LQ H- Ii!) 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Plantations and the Pulp and Paper Industry Like the previous Minister of Forestry, the new minister is committed to developing huge plantations for pulp and paper. The government promotes pulp and paper plantations as an environmental and economic solution to depleting timber reserves. In 1991, Indonesia produced 1.1 million tons of pulp and 1.7 million tons of paper. Compared to other producers, Indonesia’s output is still 57WALHI and YLEHI, Mistaking, p.23. ‘58Pulp±ng The Rainforest: The Rise of Indonesia’s paper and pulp industry, Down To Earth, The International Campaign for Ecological‘ Justice in Indonesia, Special Report No. 1, July 1991, p.6. 159lnterview, Indonesian concessionaire, Jakarta, 3 March 1994. 153 low. But with government support, Indonesia plans to be one of the world’s top ten pulp and paper producers by the year 2000.160 There are also plans to build or expand more than 50 pulp and paper mills by 2010. These mills will be supplied by plantations that will cover 10 percent of total land 61area.’ The government is hoping foreign investment and aid will support these huge 162plantations. Since private companies are wary of the risks, the expense, and the long-term commitment, the government -- using the Reforestation Fund -- generally takes 49 percent equity and provides soft 63loans.’ Many of the new pulp and paper mills are connected to military and political elite, particularly Suharto’s patron-client network. Five of Indonesia’s largest conglomerates -- Sinar Mas, Raja Garuda Mas, Astra, Barito Pacific, and the Kalimanis Group -- are already involved in pulp and paper 64operations.’ The Sinar Mas Group, with annual revenues of US$1.2 to US$1.3 billion, has close links 60Jonathan Friedland, “Aiming for a market,” FEER, 18 April 1991, p.50. ‘Pulping the Rainforest, p.2; and WALHI and YLBHI, Mistaking, 161 p.3, p.24 .1n162 1990, former Forestry Minister announced: “We’re opening our country. If you want to invest in these man-made forests, you are welcome.” Quoted in Raphael Pura, “Indonesia Sees Tree Estates as a Cure-All,” AWSJ, 6 February 1990, .8p. lnterview, Bogor Agricultural University, Faculty of Forestry,63 Bogor Indonesia, 25 February 1994; and Pulping the Rainforest, p.9. The low rate of private investment in plantations is aggravated by a legitimate fear that a sudden political change could ‘ licences. nullify state 64Jonathan Friedland, “Aiming for a market,” FEER, 18 April 1991, p.50. ‘ 154 to the children and followers of Suharto. This conglomerate, under the control of the Chinese-Indonesian Eka Tjipta Widjaja, is the largest producer of pulp and paper, and a key force pushing further development. Prajogo’s Barito Group is also deeply involved in pulp and paper operations. Prajogo, Suharto’s daughter, Rukmana, and the state forestry company P.T. Inhutani II are now developing a new pulp and paper mill in South Sumatra, called P.T. Tanjung Enim Pulp & Kertas. The Reforestation Fund is providing generous subsidies. Eventually, around US$2.66 billion will be invested in this project. This mill is expected to produce one million tons of pulp and 500,000 tons of paper. To maintain log supplies, between 300,000 to 500,000 hectares have been set aside for timber plantations. Another key force driving pulp and paper development is Hasan and his Kalimanis Group. Along with Suharto’s son, Sigit Harjojudanto, Hasan is a major shareholder in Kertas Kraft Aceh, which operates a pulp and paper plant in Sumatra. As well, he controls P.T. Aspex Paper, a joint venture with a South Korean company. Even more important than these current operations, Hasan has ambitious plans to expand his control over the pulp and paper industry. 165 ‘65See Pulping The Rainforest, pp.22-25, pp.29-32. 155 STATE ATTEMPTS TO IMPROVE TIMBER MANAGEMENT Since Jamaluddin was appointed Minister of Forestry, the enforcement of logging guidelines has improved 66marginally.’ As of December 1993, the government had rescinded 60 timber licences. Many concession holders have reacted by simply abandoning their site. Instead of fining or forcing these companies to replant, the government appointed the state forestry companies -- P.T. Inhutani I, P.T. Inhutani III, and P.T. Inhutani V -- to rehabilitate these degraded 67areas.’ In some cases, the government has taken over shares of timber companies with poor management records and then appointed a state official to the board of directors. By early 1994, the state had assumed control of 20 percent of the shares of 12 concession holders and 100 percent of the shares of another 68dozen.’ As well, the Forestry Ministry has announced an “intelligence operation” to catch illegal loggers “in the 69act.” 66Based on numerous interviews: Environmental Research Centre, Bogor Agricultural University, Bogor Indonesia, 25 February 1994; Environmental‘ consultant, Bogor Indonesia, 24 February 1994; Sumitomo Forestry Co., Ltd., Tokyo, 20 April 1994. According to one optimistic source, he is open-minded, clean, powerful, an effective manager, and knowledgeable about forestry issues. Interview, Bogor Agricultural University, Faculty of Forestry, Bogor Indonesia, 28 February 1994. Another source claimed that he is honest and independent, and unlike almost everyone else, he has not been ‘bought’ by Hasan. Interview, Senior Official, Bappenas, Ministry of Planning, 4 March 1994. He also appears more willing to work with NGO5. Interview, WALHI, Jakarta, 3 March 1994. 67Her Suharyanto, “HPH [Concession] Holders Take Money and Run,” ‘ Indonesian Business Weekly 1, no. 51, 3 December 1993, p.16. 168”The price of non-Compliance,” Review Indonesia: Economic and Business, no. 98, 26 February 1994, p.8. 169”Indonesia will send spies to hunt down illegal loggers,” Japan Times, 18 November 1992, p.21. 156 As a result, the government fined several major companies for breaching logging rules. However, while these efforts are laudable, this campaign has done little to slow the rate of destructive extraction. So far the state ‘crackdown’ has produced stern rhetoric but few concrete moves against major timber operators. This is hardly surprising. With powerful political and military ties, and with cooperation from key forestry officials, these companies are largely immune to pressure from the Forestry Department. For example, in 1991 Barito Pacific Timber was fined 11.1 billion rupiah (US$5.4 million) for cutting nearly 100,000 cubic metres of logs outside their concession. The company, however, refused to comply and it appears the fine will never be °7paid.’ Besides these attempts to improve enforcement and compliance, the government is also developing a timber certification program to boost state control of the timber industry. Indonesia’s timber certification program will create an environmental label for timber from sustainable sources. The labelling criteria are still being hammered out. Apparently, the labelling process will work on a cradle-to-grave principle, accounting for all stages of production, including cutting techniques, concession management, and processing. Ideally, at each stage there will be guarantees that the product is produced in a sustainable ’17way. The program will ‘70Adam Schwarz, “Forest Framework,” FEER, 12 March 1992, p.45. lnterview, Environmental consultant, Bogor, Indonesia, 24 February71 1994. ‘ 157 create local criteria for sustainable management -- a practical check-list for loggers, processors, and government managers. Eco labels for wood products will start from the year 2000,172 then hopefully spread to all products. According to an NGO representative, developing an eco-labelling program has provided a window of opportunity to discuss with the Ministry of Forestry and concessionaires the criteria for sustainable forestry management. This program also intrigues concession holders and Apkindo who see eco-labelling as a possible marketing 73tool.’ There has been little foreign pressure for eco-labelling. Proponents of eco labelling are aware that Indonesia’s major wood markets -- Japan, Taiwan, South Korea, and China -- are indifferent to eco-labels. Advocates hope, however, that countries like Japan can be pressured or embarrassed into only importing wood with 74eco-labels.’ The main force behind eco-labelling is the former State Minister of the Environment, Emil Salim. He has a direct connection to the President, and is quite influential, although Hasan, who has a strained relationship with Salim, is more powerful. Fortunately for the program, Salim has a close relationship with the new Minister of Forestry, and has a 72This promise was made by Forestry Minister Jamaluddin. “Indonesia‘ to reduce tree cutting to help preserve rainforests,” The Japan Times, 27 July 1994, p.18. lnterview, WALHI, Jakarta, 3 March 1994. For a critique of eco-labelling,73 see SKEPHI, Setiakawan, no. 11, July-September, 1993, pp.44-46. lnterview,‘ WALHI, Jakarta, 3 March 1994; and Interview, Eco Labelling74 Program, Jakarta, 4 March 1994. ‘ 158 ‘gentleman’s agreement’ with the President to establish the 175program. However, despite Salim’s influence and the optimism of the NGO5 involved, it is unlikely this program will succeed in the context of extensive military and political ties to timber operations. Furthermore, there is no reason to believe state implementation of certification guidelines will suddenly be better than the supervision and enforcement of current logging rules. Instead, it is more likely this program will be captured by business interests and used to expand markets and divert attention from unsustainable management. Hasan is already rumoured to be excited by the potential benefits of timber certification, and he is eager to start stamping plywood with an attractive logo that declares, ‘from a sustainable source.’ Keeping in mind the importance of patron-client relations, distorted management policies, low state capacity, and efforts to tackle omnipresent problems, I now turn to assess the impact of Japan’s shadow ecology on timber management. I argue that in the late 1960s and l970s, Japanese investment, technology, and trade, often supported by ODA, accelerated unsustainable timber management. Despite important changes to Japan’s shadow ecology since the mid-1980s -- including a decrease in investment and technology transfers, an end to log purchases, a rise in plywood imports, and marginal improvements to ODA -- three key elements continue to drive destructive logging in Indonesia: low consumer and export prices for tropical wood, wasteful consumption, and high 75Ibid. ‘ 159 Asia pp.3-54. Centre Economic of had Publishers, a percent in total Indonesia: Indonesia companies.’ 77 credit President Forestry cooperated timber Corporation. credit. established JAPANESE Indonesia’s import wave Japanese Gustav invested Quarterly ‘ 76 Urano, The ‘ 77 For The investment For of 176 tariffs. company of 1967 first INVESTMENT and Japanese in Agency In F. Strategic of Ownership, general closely MNCs its this outer the 1980), in From exchange, Papanek, Business “Commercial Indonesian the Review, Japanese Perhutani Indonesia; l970s, production in in Japanese company while 1967 company investment. islands with background Indonesia AND Indonesia. pp.295-323; and Technology The Special Relations see to TECHNOLOGY Perhutani link International the the Foreign with Exploitation,” in 1989, Yoshi was by was Indonesian trading to Forest 1963 to OECF during the equipment 160 Issue the on In the Japan. Transfer, The large-scale Japan Tsurumi, and Capital with late to 1968, agreed Japanese TRANSFERS provided Kalimantan Development second former on this and supply J. Studies, accounted Economy ASEAN 1970s, “Japanese only pp. and The Investment Panglaykim, and “Japanese period, to wood-based largest head 67-69. commercial economic the technical and 9 Political 80 Japanese export there 1977). Forest (New Japanese Corporation. for Indonesian of percent Japan Transnational,” see investor, Investments York: were Law 24 the at PO: Development Indonesia’s For links percent support Conflict,” government logging industries triggered companies (Jakarta: least Japanese over Praeger a of Japan study state with Hong The 200 all in of on on 70 Kong, was far behind at almost 9 percent of the 178total. Although to a lesser extent than in other sectors, almost all major Japanese trading companies -- including Mitsubishi, Marubeni, Itochu, Nissho-Iwai, Mitsui, and Sumitomo -- invested in timber ventures in 79Indonesia.’ For joint timber ventures, the majority of Japanese corporations chose Indonesian partners based on their political, military, or bureaucratic connections, not their expertise or financial resources. For this reason, the Japanese company often supplied the equity of local partners.’ As well, Japanese ventures tended to be smaller than°8 1merican and British logging Hiroyoshi Kano, “The Structure of Japan-Indonesia Relations and the78 Relations of NGOs of Both Countries,” in Reshaping “Development”,‘ p. 13. ‘At79 the end of 1978, total Japanese investment in the Indonesian timber sector was US$46.2 million, compared to US$48.7 million from the United States, US$49.1 million from Malaysia, US$53.0 million from Hong Kong, and US$72.6 million from the Philippines. Directorat Jenderal Kehutanan, Kehutanan Indonesia 1978 (Bogor: October 1979), cited in Gillis, “Multinational Enterprises,” p.73. Some of the Philippine companies were apparently backed by Japanese interests. Interview, Senior Professor, University of the Philippines at Los Banos, 1 February 1994. Yoshi Tsurumi, A Report Submitted to the Harvard Advisory Group 80 (Jakarta: Bappenas, October 1973), pp.13-14, in Robison, “Toward‘ A Class Analysis,” p.29. For a of Japanese list investments prior to the log export ban, see Urano, “Coirercial Exploitation,” see Table 5, pp.72-73. The following are a few examples of Japanese timber investments: until 1986, Mitsubishi controlled 80 percent of P.T. Balikpapan Forest Industries Ltd; until 1978, Tomen owned 49 percent of P.T. East Kalimantan Timber Industries; until their licence was cancelled in 1978, Mitsui held 45.5 percent of P.T. Kalimantan Forest and controlled P.T. Palembang Timber Development Co. Ltd. until 1985. 161 operations . 181 Along with other MNCs, Japanese corporations provided technology that expedited rapid and destructive extraction of huge quantities of dipterocarp logs. For example, in East Kalimantan during the 1960s, many companies had limited equipment and tracts were often logged by hand. This frustrated Japanese buyers who wanted faster, more efficient extraction. To increase supply in East Kalimantan, Japanese buyers provided “credit for mechanization” and “by 1971 refused to accept hand-logged 82timber.” During this period, it was also common for Japanese trading companies to provide equipment in exchange for dipterocarp 83logs.’ In addition, in the 1970s Japanese companies supported large-scale logging of fragile mangrove forests in Kalimantan and Sumatra. By the mid-l980s, around 4 percent of mangrove trees had been converted to wood chips, shipped mostly to Japan and Taiwan and manufactured into high-quality 84paper.’ Today, Indonesia’s mangrove forests are facing 185extinction. 181Malcolm Gillis, “The Logging Industry In Tropical Asia,” in Julie Sloan Denslow and Christine Padoch, eds., People of the Tropical Rain Forest (Berkeley: University of California Press, 1988), p.179. 82Potter, “Environmental and Social Aspects,” p.182. ‘83Urano, “Commercial Exploitation,” see Table 5, pp.72-73. 84M.D.‘ Fortes, “Mangroves and Seagrass Beds in East Asia: Habitats ‘ Under Stress,” I.xnbio 17, no.3 (1988), pp.207-213, summarized in Nectoux and Kuroda, Timber, p.81. 851n 1990, then Forestry Minister Harahap announced that, without ‘ strong conservation measures, of the remaining 4.3 million hectares of Indonesian mangrove forests, 1 million hectares would soon disappear. “One million ha of RI’s mangrove forests 162 The Japanese government encouraged and supported corporate timber ventures in Indonesia. Both ODA and other official flows financed preliminary logging surveys and risky timber 86investments.’ According to Nectoux and ICuroda, in the case of Kalimantan, the logging boom, “which appeared to be. . .provoked by market conditions, was in fact carefully engineered from Japan by public and private interests. The feasibility study and much of the necessary survey work were undertaken by.. .JICA’s 87predecessor.” The OECF also supported commercial logging in Indonesia. Although since 1975 the OECF has mainly provided intergovernmental loans, initially it granted loans to Japanese firms involved in development projects in the South. From 1963 to 1981, more than 70 percent of OECF general forestry project loans went to Indonesia (41 of 55 projects), most at the height of the logging boom, 1969 to 1974. While loan information is confidential, most trading companies likely received OECF loans during this period, including Mitsui, Sumitomo Forestry and Nissho threatened with extinction,” Jakarta Post, 8 October 1990. As with all Forestry Department statistics, environmentalists consider the estimate of 4.3 million hectares of mangrove forests highly exaggerated. Hurst claims that only 1 million hectares of mangrove forests remain. Hurst, Rainforest, p.3. 86Urano, “Commercial Exploitation,” footnote 30, p.74. 87Nectoux‘ and Kuroda, Timber, p.79. Of course, other M[\TCs also accelerated logging in East Kalimantan. For a general discussion of the role of multinational corporations in East Kalimantan’s timber ‘ William B. Wood, “Two Boom industry, see Cities In The Resource Frontier: An Indonesian Case Study,” Asian Geographer 5, no. 1 (1986), pp.25-41. 163 quoted predecessor development development development project] 1970 for and OECF operate Samarinda lauan invest Urano, loans confidential, trade.” 89 little such Indonesian Iwai prove forestry MITI ‘ 91 For ‘ 90 OECF’, 189 1bid., to ‘ 88 Mitsui Besides 188 as report and timber in in “although doubt 1974. locally. electric will immensely also road Ibid., timber timber a government Since in in (i.e., list development “Report loans “conducted on exported p.83. that directly received it provided South Central declares: tJrano, ,,190 loans p.83. these the operations extraction. of is power to much harbours, profitable Kalimantan. MITI difficult of content Japanese also “Commercial to Kalimantan were and money for loans plants the of feasibility in “This projects, Japan, expedited indirectly mainly it East the and Indonesian roads, to of to trading A of area was 164 to or encourage import and construction Kalimantan and few Sumitomo Japan and Exploitation,” document 193 transport loans granted see is and the rationale there leaks studies 510 promote companies, famous through million logs. 19 ’ Project Ibid., bridges) timber to million Japanese received have is develop to in links facilities, for no of the a for Table promote Japanese boom. for Mission yen Meanwhile, occurred. series OECF’ doubt pp.82-83. that yen growing the between timber corporations 1.3 OECF infrastructure infrastructure for 6, for According loans were Balikpapan billion the that loans firms pp.76. of loans there forestry forestry tropical industry general A deemed JICA’s 1970,” timber to [this from that 1970 yen are the to is to project Bank p.44; Tropical Although official, projects EXIM Mitsubishi, and granted JICA assistance Cooperation for in not necessary the the timber extraction. topographical improve important experimental timber all 1980 1975 timber ‘ 93 JICA, ‘ 95 yoichi ‘ 92 Ibid., ‘ 94 Ibid., Bank is does and resources in prepared of harbour most loans in Forests Urano, Banjarmasin the to EXIM spokesman, and operations not the these for Mitsui, Indonesia, JICA Japan’s industry.”’ 93 But p.75. Fund, pp.75-78. of Bank maps, Kuroda, low Bank Philippines, to forestry disclose into this facilities timber “Commercial for Annual projects to by interest Japanese loaned of and timber make and established many Japan,” the a information Harbour in Japan, Malaysia, production “Commercial Sumitomo Report, projects forest operations Indonesia.’ 94 Bank loan loans this were almost loans trade Besides in Malaysia, Exploitation,” logging in Environment is Project, was 165 information, order designed in stock 1976, and to and JANNI, Forestry is and not and in 17 a this Japanese also surveys, surveys Exploitation key Papua facility to distribution billion (i.e. funding enterprises 1974, quoted estimates) or Finally, JICA’s area. Reshaping solely develop concern. restricted, Indonesia, Section, have New p.85. timber to aerial according in provided any upgrades. JICA’s for Guinea. 195 all gather objective Interview, to the Ibid., •u 192 an current According site timber of support 11 received In “Development”, in firms EXIM area although photographs, between April Development the information Of Indonesian Indonesia. mainly p.75. to technical Although Bank involved was rich logging related case course, Urano, Senior timber 1994. loans to 1974 the has for “to an of in Like other MNC5, Japanese trading companies largely pulled out of Indonesia after the log export 96ban.’ According to the Japan Indonesian Entrepreneurs’ Association, in 1988 only 9 timber and woodworking joint ventures 97remained.’ Prajogo, Indonesia’s largest timber operator, assumed control of several Japanese concessions, including ones held by Marubeni and Mitsubishi. Even though these companies no longer participate directly in operations, close ties have remained. As Raphael Pura notes, “the Japanese, in effect, left the job of operating their remote concessions to Mr. Prajogo, while continuing to market his timber and help finance 98expansions.” In 1989, Indonesia removed many restrictions on foreign 99investment.’ This has led to increases in overall investment, but only a small amount has gone to timber enterprises. Today, there is little foreign investment in Indonesia’s plywood mills -- only five are joint ventures and all are controlled by Indonesians. Of these five, two are Japanese -- one in East Java, and one in 96Sumitomo was one of the few Japanese trading companies to remain in Indonesia after the log export ban, although on a much smaller scale than in the 1970s when it controlled over 20 firms connected‘ to the timber industry. Nectoux and Kuroda, Timber, p.79. For a list of remaining Japanese timber investments, see Ibid., Appendix C, pp.120-121. Sunirnarized in SKEPHI, Setiakawan, A Special Edition on Japan’s 97 Role in the Timber Industry, no. 3, November-December 1989, p.18. ‘Raphael Pura, “Timber Tycoon Confronts HIS Critics,” AWSJ, 198 27 August 1993, p.8. 99”Suharto and the reins of power,” The Economist, 17 November 1990, p.38. In June 1994, the government lifted even more restrictions.‘ 166 Southern Sulawesi -- and three are 20Korean. There is more foreign participation in the pulp and °paper industry. In 1990, foreign investment in pulp and paper was US$730 million out of a total of US$8.75 billion. In 1991, there were five major pulp and paper joint ventures, accounting for 24 percent of production (42 percent of pulp and 17 percent of paper) •201 While Japanese companies have only invested limited amounts in pulp and paper operations, these have been linked to environmental problems. For example, Marubeni invested US$3 million in a mangrove chipping mill in Irian Jaya operated by P.T. Bintuni Utama Murni. In return, Marubeni has a ten year contract to buy 300,000 tons of wood chips annually. Environmentalists have strongly attacked this project, situated in an area that was once a National Park. Even the Indonesian government has criticized P.T. Bintuni for poor management. In 1990, the government fined P.T. Bintuni US$590,000 and temporarily suspended their licence for illegal logging. Apparently, however, this fine has not yet been 202paid. In recent years, Japanese corporations have made minor contributions to conservation projects in Indonesia. For example, the Keidanren Nature Conservation Fund provided 110 million to the 200lnterview, Asosiasi, Panel Kayu Indonesia, Apkindo, Jakarta, 1 March 1994. 201WALHI and YLBHI, Mistaking, p.27, and p.6. 202Pulping The Rainforest, p.35. Five Japanese companies have also invested in Chipdeco, a mangrove chipping plant in East Kal imantan. 167 University Greengraph: Tokyo, of scale While Forest Forest: practices, people, While efforts conditions, of about with to reaching East first techniques of Sulawesi (Republic Environment, Forestry, 70-80 light 205 Japanese 204 lnterviews, 203 Keidanren, RETROF, Kalimantan. Ministry year, 150 this commendable, 20 are Regeneration 1992, cutting create Nature percent. rainfall. of April of and million. for and Sumitomo inconsequential. 205 the decreases established the Indonesia), Tokyo, of July corporations better the planting Jakarta, survival Conservation maturity employment University 1994; Environment “Keidanren Senior In This 1993; current compared Forestry Research In Project the planting The survival Sumitomo project 3 an the rate indigenous officials, in and first March PT. 100 have experimental of perhaps Nature rates and project. 203 programs. second Newsletter was to Sumitomo Report 168 Tokyo, Gets Kutai techniques, hectare rates, provided five 1994. is Forestry, reduce the only of Conservation as also dipterocarp Sumitomo year, Under and Timber years, on destructive lingering little 30 trees Interview, Forestry, In site 1 reforestation the trying no shifting percent, the with (March the Ministry 1991, assistance Way Sumitomo Sebulu Indonesia, Forestry as Indonesian is grow survival Fund.” improved to 30 in impact in 1992), Sumitomo, developing logging, “Tropical partly State years. cultivation. 204 include much open Experimental of Indonesia,” will Co., program for rate Ministry pp.1-2. Ministry Forestry and of weather because spaces. faster, large In Ltd., these along local spend Rain past rose the new the in JAPANESE ODA AND TIMBER MANAGEMENT Japan is the largest bilateral ODA donor to Indonesia, accounting for over 60 percent of aid received in 1991. In 1992, Indonesia received nearly 16 percent of Japanese bilateral ODA, the biggest share of any 206country. Almost 38 percent of Indonesia’s foreign loans are owed to Japan, compared to nearly 32 percent to multilateral institutions and a little more than 6 percent to the United 207States. Unlike in the 1960s and 19705, today there is little evidence Japanese ODA is tied to commercial logging operations or securing timber supplies. Japanese aid now primarily supports commercial timber plantations and transferring processing technology and expertise. Though limited, JICA has also provided technical and financial support for natural forest regeneration, harvesting of less utilized species, and prevention of forest fires. As of early 1994, there are nine on-going Japanese ODA projects in Indonesia -- most are linked to 208plantations. 206Japanese Ministry of Foreign Affairs, Japan’s ODA 1993, pp.45-46. For a study of Japanese ODA in Indonesia, see Hadi Soesastro, Japan’s ODA and Indonesia: Resource Security Aid? (Jakarta: Centre for Strategic and International Studies, 1991). 207Arief Budiman, “Human Rights, Foreign Aid and People to People Cooperation,” in JANNI, Reshaping Development, p.28. 208Sevën are grants for a total of approximately US$15 million. Two are loans for a total of about US$22 million. For a list, see Indonesian Ministry of Forestry, “Daf tar Proyek Bantuan Luar Negeri (On-going Projects), Departemen Kehutanan (Tahun Anggaran 1993/1994), and the Evaluation of CGIF Questionnaire Proyek of On Going Forestry Foreign Cooperation Project as of October 1993,” supplied by an official at the Indonesian Ministry of Forestry, Jakarta, 1 March 1994. For more details on JICA forestry projects in Indonesia, see JICA, Environment (Jakarta: Indonesia Office, 1993), pp.12-19. 169 Compared to the severe problems facing Indonesia’s timber industry, Japanese aid has had little impact on environmental protection or improving forestry 209management. Even though Japan is the largest contributor to Indonesian forestry ODA, accounting for around 35-40 percent of technical assistance, the total is still quite small. If timber prices incorporated environmental costs, it would far surpass the financial contribution of °21ODA. Besides inadequate forestry aid, general Japanese loan and technical cooperation projects in Indonesia do not adequately incorporate environmental objectives. Japanese aid still supports high-tech equipment purchases, with little regard for environmental implications and with little institutional support. As well, Japanese aid officials in Indonesia have little environmental expertise or ground-level knowledge and are reluctant to work with foreign environmental 21consultants. Aid staff also apparently hesitate to work far away from amenities, and avoid places like Irian 212Jaya. Many of ’ these aid officials insulate themselves, course, there have been some positive contributions -- for example, a 1991 OECF loan to upgrade 18 environmental research facilities. The money was used to improve facilities, buy books and equipment, and educate staff. Interview, Environmental Research Centre, Bogor Agricultural University, Bogor Indonesia, 25 February 1994. 210lnterview, Centre For International Forestry Research (CIFOR), Bogor Indonesia, 2 March 1994. 211lnterviews, Environmental consultants, Bogor Indonesia, 24 February 1994. 212lnterview, Indonesian Ministry of Forestry, Bureau of International Cooperation and Investment, Jakarta, March 1, 1994. In contrast, a Japanese official claimed that JICA has difficulty convincing senior Indonesians to study in the field. Interview, 170 stay a short time, and learn little about Indonesia. R. Forrest notes that even though “Japan is the leading provider of ODA to Indonesia, providing 12 times as much aid as the US, Japan has only 20 field staff there, less than one-fifth the total USAID staff; in-country Japanese staff are responsible for 70 times as much aid money per person as USAID 213staff.” These problems are compounded by senior Tokyo administrators who dictate key decisions with minimal understanding of Indonesia’s diverse cultures and eco 214systems. One NGO activist claims that JICA -- in terms of environmental awareness -- is one of the worst aid agencies in Indonesia 215 TRADE: APKINDO, NIPPINDO, AND THE BATTLE FOR JAPAN’S PLYWOOD MARKET Japan and Indonesia have extensive trade links. Throughout the 1970s and 1980s, between 40 to 50 percent of Indonesian exports went to Japan while generally 20 to 30 percent of Indonesia’s imports came from Japan. Indonesia primarily imports manufactured Coordinator of JICA Indonesia, Jakarta, 1 March 1994. 213Forrest, “Japanese Aid,” p.29. 214lnterviews, Environmental consultants, Bogor Indonesia, 24 February 1994. 215lnterview, Asian Wetlands Bureau, Bogor, Indonesia, 2 March 1994. A Indonesian Ministry of Environment official is less harsh, claiming some improvements have been made to JICA projects in recent years. Interview, State Ministry of Environment, Jakarta, 3 March 1994. 171 products from Japan and exports natural resources to 216Japan. In the 1960s and 1970s, Indonesia was a crucial source of logs for Japanese plywood processors. In 1971, Indonesia replaced the Philippines as the main source of Japanese log imports. In 1974, Indonesian log exports to Japan peaked at almost 11.5 million cubic metres, accounting for 47 percent of total Japanese imports. In the early 1980s, as the Indonesian government implemented the log export ban, Japanese log imports from Indonesia fell sharply until ending in 1986.217 Since then Indonesian plywood exports to Japan have steadily increased. In 1993, Indonesia exported 9.6 million cubic metres of plywood -- 3.7 million cubic metres went to Japan, by far Indonesia’s largest 218market. Apkindo has flooded the Japanese market with cheap plywood. To expand market shares, Indonesian processors produce plywood from high quality logs. A Japanese trading company official claims that “[for plywood] Indonesia is stripping vast amounts of logs [of such high quality] that we in Japan can only dream of laying our hands on 219nowadays.” According to a representative from the Japan 216Kano, “The Structure of Japan-Indonesia Relations,” see Table 2 and Table 4, pp.6-8 (This data is from various issues of the Statistical Yearbook of Indonesia). 217Nectoux and Kuroda, Timber, p.36. For data on the quantity of Indonesian logs imported by specific Japanese companies, see Urano, “Commercial Exploitation,” Table 4, p.71. 1n218 1989, Indonesia exported about 3.2 million cubic metres of plywood to Japan. From 1990 to 1992 this dropped to just below 3 million cubic metres before surging in 1993. This data was supplied by an official at Apkindo, Jakarta, 1 March 1994. 219Quoted in Urano, “Commercial Exploitation,” p.92. 172 maintains plywood Economist, Jakarta, Association, revoking using confirmed Forestry, established controls refusing percent export If low unwritten immediate undemocratic export competitors. 22 ’ labour international strategy Plywood the prices 223 lnterview, 222 Numerous 221 lnterview, 220 lnterview, Besides Indonesian quota to 40 and competitors of Manufacturers’ by to 4 a Bogor term, to that markets discipline, percent 18 which rules to March allow Apkindo, Nippindo to log company’s 8 quotas destroy April organization market undercut Apkindo April Japan Under it knowledgeable Indonesia, ships, must Senior costs Senior future other would of to 1994. Bogor and 1992, to 1994. Nippindo is to their prices. Apkindo, Japan’s be force Hasan is keep Japanese export capture and Association, ignored, be are official, than market exports. 223 official, as p.34, Agricultural suppressing In 28 more total ruled in prices kon much remarked: Japan. private response February sells sources plywood 173 Indonesian conjunction This profitable and licence.” this Indonesian pane. Apkindo processors. 222 plywood Bappenas, by lower low p.38. Japan is high-quality lucrative Ap]cindo Yet prices Hasan, companies 1994. in to possible “I and industry. 220 This University, can than production there plywood Plywood for and sign a with plywood quality Ministry decimate is to “Shades question which is individual market. outside for Obviously, bankrupt is sold strict the since a plywood to processors Manufacturers’ little in high, monopolistic, international approval has to of at Apkindo a Faculty of sell Japan. on quotas Indonesian company Planning, Japan, Indonesia extremely Japanese firms a at green,” Apkindo choice. how in below clear very must for and the has he of By by to 20 low prices. So far, Nippindo has been remarkably successful. In 1993, total Japanese plywood consumption was 9.2 million cubic metres -- 4 million from imports, and the remainder from domestic 224production. Indonesian plywood accounts for over 40 percent of total Japanese consumption, and around 70 percent of kon 225pane. Part of the reason for Nippindo’s remarkable success is the general Japanese perception that Indonesia is not an economic threat (unlike the U.S.) and the tendency of the Japanese government to stress protecting high-tech 226industries. Apkindo’ s and Nippindo’ s tactics demonstrate the vulnerability of Japanese processors who rely on overseas logs. As Apkindo undercuts plywood prices, as log prices rise, and as supplies fluctuate, many Japanese plywood processors have been driven out of business. Between 1987 and 1992, domestic plywood production dropped 20 227percent. On average 5 plywood factories have been closing every year in Japan. As of April 1994, there were only 100 members of the Japan Plywood Manufacturers’ Association (JPMAj. By Interv±ew, Senior official, Japan Lumber Importer’s Association,2 Tokyo, 4 April 1994. 225lnterview, Asosiasi, Panel Icayu Indonesia, Apk±ndo, Jakarta, 1 March 1994; and Interview, Senior official, Japan Plywood Manufacturers’ Association, 8 April 1994. In 1993, even though Indonesian plywood exports to Japan increased, as a percentage of total plywood imports, Indonesia’s portion declined as more softwood plywood was imported. See the Japan Plywood Manufacturers’ Association, Plywood Industry in Japan (Tokyo: Japan Plywood Manufacturers’ Association, April 1994), p.6, Table 7. 226lnterview, Senior official at Bappenas, Ministry of Planning, Jakarta, 4 March 1994. Japanese Lumber Journal, 31 December 1993, p.4. 2 174 the year 2000, the JPMA predicts that only 60 factories will 228remain. Spurred by the success of Apkindo and Nippindo, there are signs Indonesia will use similar tactics to dominate the world pulp and paper industry. For now, pulp and paper projects are expanding quickly with few controls. However, once economic momentum develops, there are plans to establish an over-arching organization to control and guide the industry (perhaps modelled after Apkindo, perhaps even headed by Hasan) •229 Japanese officials argue that Apkindo practices unfair trade. In the late l980s, the JPMA persuaded the Japanese government to hold a bilateral conference to discuss Apkindo’s export strategy. This conference produced no results. The JPMA has also appealed to the Fair Trade Commission of GATT but Apkindo is technically a non governmental organization and GATT has no 230jurisdiction. Despite the growing power of Apkindo and Nippindo, the financial crisis of many Japanese processors, and the inability of the processing industry to push back the assault, Japanese plywood officials remain optimistic. According to several spokesmen, Apkindo’s strategy of flooding Japan with cheap imports cannot continue, especially It Indonesia keeps the recent promise by Forestry Minister Jamaluddin to slash annual timber production from over 30 228Senior Executive, Japan Plywood Manufacturers’ Association, Tokyo, 8 April 1994. 229lnterview, Senior official, Bappenas, Ministry of Planning, 4 March 1994. 230lnterview, Senior official, Japan Plywood Manufacturers’ Association, 8 April 1994. 175 million cubic metres to 22 million cubic 23metres. Despite the rapid loss of valuable commercial timber, Apkindo’ remains equally optimistic. According to a spokesman, high labour and tropical log costs and the inability of temperate plywood to satisfy consumers will eventually lead to the collapse of Japan’s plywood industry. Apkindo can then increase profit margins in Japan, which are now fairly low, especially for kon 232pane. While it is uncertain who will be victorious in this plywood war, it seems clear that Indonesia’s forest will sustain heavy casualties. In the late 1970s, Taiwan and Korea, realising that plywood processing was a sunset industry, dismantled plywood mills, and exported used equipment to Indonesia) But Japanese processors have stubbornly persevered. 3 To protect and prolong the industry, the Japanese government and the private sector have tried to thwart Indonesia’s plywood industry. For example, after the log export ban was announced, the Japanese Ambassador, Japanese companies, JICA, and the QECF all lobbied to lift the ban. While these tactics failed, the Japanese government has also maintained stiff tariff and non-tariff barriers to block plywood imports. 231lnterviews, Japan Lumber Importer’s Association, Tokyo, 4 April 1994; Japan Plywood Manufacturers’ Association, Tokyo, 8 April 1994; Japan Plywood Inspection Corporation, Tokyo, 8 April 1994. 232lnterview, Asosiasi, Panel Kayu Indonesia, Apkindo, Jakarta, 1 March 1994. Interview, Centre For International Forestry Research (CIFOR),3 Bogor Indonesia, 2 March 1994. 176 JAPANESE TARIFF BARRIERS Japan imposes a 15 percent tariff on plywood 234imports. The Japanese government calculates the tariff based on a price that includes shipping and insurance costs. This makes Japan’s import tariff higher than the more usual calculation based on a FOB (free on board) price (such as in the U.S. which has an 8 percent FOB tariff on plywood imports). Northern tariffs on plywood reduce the profits of Indonesian exporters and the revenues of the Indonesian government. An official at the Indonesian Ministry of Planning claims that Apkindo exports high-quality plywood to Japan at prices 5 to 10 percent lower than to other countries to overcome tariff and non-tariff 235barriers. According to Hasan, “in many cases, the consuming country’s tax revenue on a sheet of plywood is greater than the total growth of value in producing 236countries.” In 1991, Indonesia paid Japan US$125 million in import duties on processed timber. These import charges deplete Indonesian revenue essential for sustainable management. In theory, as former Forestry Minister Harahap argued, “if the import duties are lowered, the deductions from paying import duties can be allocated Logs are not charged any import duties. Adam Schwarz, “Trade for trees,”4 FEER, 4 June 1992, p.60. The 15 percent tariff is for plywood that is less than 6 millimetres thick. If the thickness is more than 6 millimetres then the import duty is 10 percent. Asian Timber, October 1994, p.9. 235lnterview, Senior official, Bappenas, Ministry of Planning, Jakarta, 4 March 1994. 236Hasan, “Prospects for Plywood,” p.16. 177 for the conservation of our tropical 237forests.” Besides the 15 percent tariff, Japan also has non-tariff import barriers. The most important is the regulation that government projects must use Japanese Agricultural Standard (JAS) certified timber. The Japan Plywood Inspectors Corporation issues these certificates based on quality. Indonesia has largely managed to overcome this non-tariff barrier: 50 plywood mills now qualify for JAS 238certificates. CONCLUS ION Modern patron-client relations are a dominant feature of the New Order Government. Like traditional ties, these are vertical, asymmetrical, reciprocal, personal, instrumental, and non- contractual; but modern links tend to be more opportunistic, fluid, and materialistic, and have weaker feelings of loyalty. These patron-client ties bind together powerful political, military, bureaucratic, and corporate elites. Links between pribumi (indigenous or non-Chinese) state patrons and ethnic Chinese business clients are particularly important. Societal prejudice and regular backlashes against Chinese businesses create even weaker feelings of loyalty between ethnic Chinese and state elite than among pribumi Indonesians. While these ties have been quite stable during the New Order, there is a sense of apprehension and 237Quoted in “Jakarta receives US$1.9 b in new loans from Japan for development,” Star, 15 September 1992, p.16. 238lnterview, Asosiasi, Panel Kayu Indonesia, Apkindo, Jakarta, 1 March 1994; and Interview, Senior official, Japan Plywood Inspection Corporation, Tokyo, 8 April 1994. 178 uncertainty which encourages ethnic Chinese business leaders to channel profits overseas. President Suharto leads the largest and most powerful patron- client network with his family, friends, and key followers at the core. He provides protection, state funds, licences, concessions, and access to the corridors of power in exchange for political loyalty, financial support, legitimacy, and stability. He has been especially careful to coopt or appease influential military generals, appointing officers to key state positions, awarding lucrative concessions and licences, and supporting the business interests of military patron-client networks. Many of Suharto’s clients also function as political, military, or bureaucratic patrons, building a base of power using their state position, wealth, and connections to Suharto. This process of clients acting as patrons contributes to patron-client ties pervading all levels ‘of the state and society. This does not, however, translate into power flowing upward to a single summit; power is more diffuse, resting in pockets of patron-client clusters, pyramids, and networks -- creating what Migdal calls a weblike society. For this reason, while Suharto is clearly the most powerful state patron, he must judiciously cultivate and maintain support from key military, political, and bureaucratic leaders. While all political interaction cannot be explained by patron client relations, these ties at the state helm impair state policies and dilute control of state implementors. With little supervision, many state implementors are absorbed by patron-client 179 and basis political, eco-label portion signs is areas knowledge, 1980s, especially 1990s, same management. log reward professional the policies 1960s regeneration sustainable timber clusters, tremendous government these price The time, At of or and were have and regulations political least improvement ban to of and for 1970s, concessions. ethnic almost and the to ignoring done must regenerate level. mined on and timber two the support. Japan. pressure sustainable moves bureaucratic moves log little management; conditions concessions Chinese and be no inability and drive exports despite Indonesia effort state to to revenues, high, While military devastated to on logs develop improve With destructive and For improve the timber, was and rules elite a the are of reflecting multinational and were were more logging, almost has commercial 180 elites made the the essential pulp Indonesian MNCs logging log timber made areas. met granted assertive in exported increase push state to and extraction extraction no exchange neither and -- quick, log distorted to the management. management, state paper forests. for with to as companies state process areas Indonesian Minister collection in sustainable long-term monitor gifts easy condition. supervision, plantations little must and huge for received on state money. plywood There to unsustainable a were establish be material Today, of and quantities, sustainable capital appease of military, kept Forestry, costs logging: forestry hired are a enforce At timber In in in there small these at the the the few the an or to or of or a most as the Kalimanis regardless Suharto production planting As logging 30 remarkably smuggling logging a timber pressuring In rights, dipterocarp establish an this smuggling. taxes sudden percent addition, state expanding a state policy Concession optimistic result, and operators is syphons have protect implementors political is and Group) plantations. of low at likely of will royalties, companies contributes stands, pulp there limited, timber schemes The around few the and legal operators estimates state and invest be and timber equivalent incentives the content government is upheaval but rents. Prajogo 70 too paper concessions little to follow to state and timber and to to million in evade clients replant; -- weak of build of illegal ‘deforestation’ real industry. As is crack state the and to especially (Barito sustainable for actual revenues. timber is long now 181 legal cubic to huge estate rules new are long-term also control like estimated down logging not as improve Pacific policies taxes timber leaders metres, logging, Instead powerful badly of and to ethnic providing Hasan on Forest production. patron-client over as and regenerate is stash plantations management; illegal to Timber), logging managed, areas revoking well of or placing Chinese royalties, timber rampant. state capture (APKINDO charges ‘reforestation,’ the money above subsidies are patrons logging rhetoric management, and operations. Along annual enrichment concession commercial cleared -- only networks, overseas. to are even and instead, as wary illegal Illegal supply 15 also with long like the and log and the of to of to state leaders. While domestic political forces distort policies, undermine state revenue and drive unsustainable extraction, the North, especially Japan, has bolstered and accelerated this process. In the l960s and 1970s, Japanese ODA, technology, investment and log purchases had a catalytic impact on unsustainable logging. ODA funds supported commercial timber surveys, feasibility studies, logging infrastructure projects, and corporate timber investments. Although Japan was not the largest investor in the Indonesian timber sector in the l970s, Japanese corporate credit, joint ventures, logging equipment and technical advice were key forces that drove reckless logging. Huge amounts of logs were then shipped to Japan to feed domestic plywood processors, often leaving behind widespread damage. As well as expediting destructive logging, Japanese money -- which deluged Indonesia after the 1967 Foreign Capital Investment Law -- also provided critical financial slack to allow extensive patronage. After log exports were banned in the mid-1980s, the key features of Japan’s shadow ecology changed. Most Japanese trading companies withdrew or sold their shares in joint timber ventures. Today, there are few investments in Indonesian plywood or pulp and paper operations. Logging equipment is no longer shipped in substantial amounts, although there has been some technological support for processing. ODA has also changed. Since the early 1980s, few JICA forestry projects or OECF loans have been connected to corporate logging ventures. Instead, ODA tends to emphasize 182 commercial timber plantations. While these are positive trends, Japanese ODA projects in Indonesia still have serious environmental problems. There are few environmental experts, staff members have little field experience, and funds often support inappropriate technology purchases. These problems are aggravated by decisions made in Tokyo with little understanding of Indonesia’s delicate outer island eco-systems. In fairness, there is limited Japanese government and corporate support for forestry conservation and regeneration, but not nearly enough to dent deforestation rates. Finally, since 1985, Japanese log imports have ceased while plywood imports have soared. For both logs and plywood, prices have been far below the cost of sustainable management, feeding voracious Japanese consumption habits. During the era of log exports, Japanese trading companies played a pivotal role in depressing prices and promoting rapid, destructive logging. Today, these companies have been usurped by Apkindo. Under Hasan, and with Suharto’s support, Apkindo has flooded the Japanese market with cheap, high-quality plywood. This strategy -- designed to destroy Japanese competitors -- has been successful in bankrupting many Japanese processors. But it has also lowered prices, encouraged wasteful consumption, and fostered unsustainable timber management. At the same time, Japanese plywood tariffs have undercut Indonesian state and corporate revenue, further reducing potential funds for forestry management and regeneration. In short, while some aspects of Japan’s shadow ecology have changed over the last 30 years, three critical components -- low prices, 183 wasteful to turn remained provoke fuels consumption, constant. pervasive and support As patron-client and a unsustainable result, import 184 tariffs Japan’s relations. timber on shadow processed extraction. ecology wood continues This -- have in Chapter Five JAPAN, CLIENTELISM AND DEFORESTATION IN BORNEO MALAYSIA Over the last three decades -- as in Indonesia -- unsustainable logging has been a key cause of deforestation in Borneo Malaysia. Wide areas are degraded and commercial timber stocks are now perilously low. The environmental group Sahabat Alam Malaysia maintains that: “Nowhere in the world are the forests being chopped with such ferocity and speed as in Sarawak.” Sabah has extracted timber with equal intensity. A 19901 ITTO report on Sarawak’s timber industry claimed that if the “frenetic pace of logging continues at [the rate] of recent years, all primary forests will have been harvested in 11 2years.” Even more dire predictions have been made for Sabah. Links between top state patrons and timber operators in Borneo Malaysia -- similar to those in Indonesia -- distort state policies, weaken state enforcement, and drive unsustainable logging. Top political patrons, to maintain loyalty and support in fragmented societies, grant timber concessions to key political and business clients. Many concession holders then hire contractors to manage logging operations; contractors often use subcontractors to ‘Quoted in Hurst, Rainforest, p.102. Parts of this chapter are from Dauvergne, “Patron-client Politics,” unpublished, 1992. Summarized by Anthony Rowley, “Logged Out,” FEER, 13 December 1990, p.72. For the ITTO report, see ITTO, “The Promotion of Sustainable2 Forest Management: A Case Study in Sarawak, Malaysia,” Report Submitted to the International Tropical Timber Council, ITTC (VIII)/7 7 May 1990. 185 extract or process the timber. These multiple layers of responsibility reduce accountability and transparency, increasing the difficulty of enforcement and effective management. Timber profits fuel powerful patron-client networks. These networks are highly unstable, rupturing as political parties vie for power in Borneo Malaysia’s ethnically diverse landscape. As a result, concessions are frequently annulled as competing patron-client networks rise and fall. In this setting, there are no incentives for long-term management or conservation. Instead, concessionaires and timber companies race to extract as much timber as possible before tenuous political alliances and patron-client networks crumble. Timber mismanagement is further aggravated by poor supervision of middle and lower level state implementors. Enforcement officers -- in exchange for money, gifts, and career opportunities -- disregard concession rules, forge customs declarations, and ignore illegal logging and smuggling. Unlike in Indonesia, Japanese aid and investment have not had a major impact on timber management in Borneo Malaysia. Japanese ODA has been limited to a few infrastructure projects and minor technical assistance projects to support plantations (Sabah) and processing (Sarawak). There have been few major investments in logging or timber processing. Yet despite limited investment and aid, Japan’s shadow ecology has accelerated logging rates and bolstered unsustainable timber management. Japanese trading companies have purchased huge quantities of logs, shipped them to Japan, and as in Indonesia, manufactured plywood, especially kon 186 pane. Purchase and consumer prices have been far below replacement or sustainable management costs. So far, unlike in Indonesia, Japanese tariffs on processed wood imports have not significantly reduced state revenues necessary for effective timber management - - although, as Sabah and Sarawak reduce log exports and increase processed wood exports, import barriers have become relatively more important. The first section of this chapter sketches the evolution from traditional to ‘modern’ patron-client relations in Borneo Malaysia. The second section documents the extensive ties between political patrons and timber clients in Sabah and Sarawak. The third part analyzes how pervasive patron-client ties thwart logging rules; foster illegal cutting, smuggling, and corporate tax and royalty evasion; and distort the allocation of concessions, policies to encourage processing, and efforts to promote reforestation, conservation and sustainable timber management. The final part assesses the impact of Japan’s shadow ecology on timber management in Borneo Malaysia. PATRON-CLIENT RELATIONS IN BORNEO MALAYSIA It is quite difficult to ascertain the nature of patron-client relations in Sarawak and Sabah before 1963, when the two states joined Malaya, forming Malaysia. R. S. Mime claims that “Native chiefs and headmen, who existed in Sarawak and Sabah before the British came and who were institutionalized by them, sometimes functioned as patrons.” In addition, he reasons that “where 187 patron-client administrative personal to British, developed paternalistic, indigenous opportunities notes unmobilized, administrators rule where 1946-1963, of Chinese their and common.” 3 communications ‘aristocratic’ form Sarawak well-organized 5 Ibid., 4 lbid., 3 Milne, Near in society further the with Sarawak, on security in the and people probably a Patron-client the p.896. pp.898-899. “Patrons, wealthy degree the end state the was that and positions, within relations were Sarawak flourished in populations and latter particularly of relatively increasingly functions benefits (as “life rather good had businessmen North throughout of the the Clients among Kenyahs, less part hierarchy and thus was restricted by relationships Borneo field than due than egalitarian. 4 of pervasive the of the not and appointing encouraging tenuous.” 5 of 188 entered direct in local more government Company population both patronage coastal their particularly Ethnicity,” a efficient the was scope need scale. role British to patron-client states business, colonial also rule great, Patron-client new Malays indigenous of for a of was was quite patron-client operations.” p.898. in and patrons. desire existed colonial At protection. unpredictable were relatively Sabah probably in as rule, the especially limited, helpful, Sarawak), links “relatively among people same to and among relations rule The reshaped obtain Brooke fairly Milne links time, dense since Ibans from The the nor and the the to if or Ratnam, for and with 1974) Sabah clientele, elections. Large became extended, rural while 1967 patron-client strong changes the patron-client client administrators timber a Datuk resources 9 See 7 Means, 8 Milne, 6 These Ethnicity instrumental , When in discussion areas. and many pp. 3 16-318. even ‘peripheral’ networks industry, Malaysia friendships. 7 with Sabah Milne Amar the in Sabah buying included old larger, Malaysian “Patrons, chain Mime Paying the 1969-1970 clusters to James and were and (often links clientelist also of - and later start votes, rewards sustain New 1969-1970 Ratnam, claims fashion, these vertically replaced Fuad Wong client headmen expanded Sarawak distinguished were Clients Politics, States Patron-client becoming of and election and Stephens Kim were practices. that large directly Malaysia networks ties again right swaying followings by in Mm in joined to as and all 189 “dyadic linking prominent groups state pp.298- 2 99. a Sarawak. in government reshaped influence in New and to Ethnicity,” evident altered elected by Sarawak. 9 - Sarawak. the Malaya relations the formed New Nation Tun and patron-client religion) urban without allegiance became top Mustapha States by federal state or Patron-client state the as institutions in around areas the of (London: dissolved. R.S. p.899. 1963, deep underwent British politicians. 6 important state voting and in 1967 legislatures officials. Milne Harun to of a state relations patron loyalties New patterns politicians more Frank election politics.” 8 of and in networks provided colonial Nation, further leaders Patron- during remote Cass, Sabah their K.J. now New in or in of client relations are closely linked in Sabah and Sarawak. Ethnic groups are generally divided into three categories: indigenous Muslims, indigenous non-Muslims, and non-indigenous. In Sarawak, indigenous Muslims (Malays and Melanaus) constitute 26 percent of the population; about 44 percent are indigenous non-Muslims (including Iban, Bidayuh, Orang Ulu, Kenyahs, and Kayans) ;‘° and 30 percent are non-indigenous (mostly Chinese) Around 49 percent of Sabah’s population are indigenous Muslims (Bajaus, Malays, and immigrants), 34 percent are indigenous non-Muslims (Kadazans and Muruts), and 16 percent are non-indigenous (primarily Chinese). The Kadazans are the largest ethnic group in Sabah, comprising 30 percent of the population. In total, just over half of the people in Sabah and a little more than a quarter in Sarawak are Muslims. Although some ethnic Chinese have converted to Islam in Sabah, most Chinese in Borneo Malaysia follow a mixture of Confucianism, Christianity, and Buddhism. Indigenous non-Muslims are generally Christians or animists.’ Today, Sarawak2 and Sabah are ruled by multi-ethnic coalitions with some ethnically mixed political parties. In Sarawak, Malay ‘°The Bidayuh and Orang Ulu are sometimes grouped with the Iban and called Dayaks. 1The role of Sarawak’s ethnic groups in politics is discussed in Jayum‘ A. Jawan, The Ethnic Factor in Modern Politics: The Case of Sarawak, East Malaysia, Occasional Paper, no. 20 (University of Hull: Centre For South-East Asian Studies, 1991). For a specific discussion of the Sarawak Chinese, see John M. Chin, The Sarawak Chinese (Oxford: Oxford University Press, 1981). Diane K. Mauzy and R.S. Milne, Malaysia: Tradition, Modernity and Islam‘2 (Boulder: Westv±ew Press, 1986), p.68. 190 and Melanau Muslims are the most powerful political and bureaucratic force. In Sabah, Christian Kadazans dominated from 1985 until early 1994. In the new coalition government, Malays and Muslims are pivotal forces. Since no single ethnic or religious group can dominate politics in Borneo Malaysia, patron-client networks that integrate elites from different ethnic groups and different religious backgrounds, and which often cross-cut official party lines, are crucial for maintaining power. This is particularly relevant in Sarawak since many of the ethnic groups have regional divisions. Michael Leigh notes that the “peculiar ethnic complex, with three major groups, not one of which approaches a majority of the population, has facilitated accommodation in Sarawak.” Political divisions within ethnic groups have encouraged compromise, “forcing the factions to seek allies outside their group in the quest for political 13power.” The situation in Sabah is quite similar. Bruce Gale argues that “questions of race, religion and class, relevant to the study of West Malaysian politics, are less important in Sabah than the existence of strong clientelist networks.” Some of the most important 4 patron-client links are between powerful indigenous politicians and Chinese business leaders. After Sarawak and Sabah joined Malaya, the general mainland pattern 13Michael B. Leigh, The Rising Moon: Political Change in Sarawak (Sydney: Sydney University Press, 1974), p.162, p.161. Bruce Gale, “Politics at the Periphery: A Study of the 1981 and 19824 Election Campaigns in Sabah,” in Bruce Gale, ed., Readings in Malaysian‘ Malaysia: Politics (Selangor Pelanduk Publications, 1986), p.25. 191 of Malay political power and Chinese economic influence was encouraged in the two new states. In most instances, indigenous political leaders assumed the role of patrons and the Chinese assumed the role of clients. Indigenous political patrons provided political protection and access to resources, licences, or contracts in exchange for financial and electoral support from Chinese clients. Patron-client ties in Borneo Malaysia have been highly unstable since the first elections. One sign of this instability is frequent crossovers from one political party to another. For example, less than a year after the 1987 state election in Sarawak, six members of the Parti Bangsa Dayak Sarawak (PBDS), which lost the election, were ‘bought over’ by the ruling Barisan Nasional (BN) Changing alliances and party cross-overs were such a problem in Sabah in the mid-l980s that an ‘anti-hop’ law was passed which forbid politicians from switching parties without losing their 6seats.’ This law was later struck down by a High Court, and shifting party allegiances dominated the 1994 election.’ The Parti Bersatu Sabah under incumbent Chief Minister 7 Pairin won this election by a slim margin. But defections -- including his brother, Jeffrey Kitingan -- toppled the government. According to Marcus Colchester, Pirates, Squatters and Poachers: The Political 5 Ecology of Dispossession of the Native People of Sarawak (London:‘ Survival International, INSAN, 1989), p.32. Michael Vatikiotis, “Disarray in the ranks,” FEER, 10 September16 1992, pp.4-26. “PBS wins2 17See by two seats, Borneo Post, 20 February 1994, p.’. t’ 192 some sources, “many of the defectors”.. .were. . .“enticed to change sides with money and promises of position.” Chinese business- clients are particularly prone to 8change alliances. One author noted that the Chinese in Sarawak “go with whoever is the stronger, demanding more timber concessions in return for their support.” Relations between the federal and state governments9 have further contributed to unstable and fluid patron-client clusters in Borneo Malaysia. Francois Loh and Kok Wah write, “it is clear. . . that whoever wishes to govern in Sarawak must receive the blessings of Kuala Lumpur.” In both states, federal pressure has contributed to political2 realignment. One example ° occurred in 1976 when the federal government engineered the downfall of Tun Mustapha’s government in Sabah and helped establish a new multi ethnic coalition. In ’2 sum, compared to traditional ties, modern patron-client networks in Sabah and Sarawak are more unstable, particularly since the start of competitive elections. With the influx of immigrants, especially into Sabah, unstable ‘peripheries’ have grown M±chael Vatikiotis, “Dominant Front,” FEER, 31 March 1994, 18. Also8 see Michael Vatikiotis, “Settling Scores,” FEER, 24 March 1994, ‘ p.23. Suhaini Aznam, “Murmurs in the forest,” FEER, 27 July 1989, p.30. ‘9 20Francis Loh and Kok Wah, “Early Elections In Sarawak?: Understanding Electoral Politics in Sarawak,” Aliran 11, no 7 (1990), p.5. 21Mauzy and Milne, Malaysia, p.117. 193 considerably in recent 22years. Political relations with Kuala Lumpur have also contributed to fluid patron-client clusters -- federal pressure can cause clusters to rupture and realign in an attempt to placate or gain support from Kuala Lumpur. Patron- client ties are now based less on loyalty, obligation and honour and more on material benefits. A common feature of elections in Borneo Malaysia is the downward flow of jobs and cash from patrons and the upward flow of votes from clientele. As Michael Vatikiotis notes, “winning votes in Sabah is an expensive exercise; state politics is notoriously unpredictable and plagued by shifting loyalties and an appetite for 23cash.” Finally, a key characteristic of patron-client links in Borneo Malaysia is the exchange of political favours by indigenous elite for financial and electoral support from Chinese business clients. Political power, patronage and timber are inseparable in Borneo Malaysia. Timber is more important to the economies of Sabah and Sarawak than to Indonesia or the Philippines. For this reason, virtually all political leaders have had extensive ties to timber operators, and profits from illegal and legal logging fund 22Many of these immigrants, both legal and illegal, manage to get on the electoral rolls, often assisted by political parties trying to expand their support base. From 1986 to 1989, the number of new voters in Sabah increased by more than 25 percent, many of whom appear to be illegal immigrants. Michael Vatikiotis, “Floating Voters,” FEER, 18 June 1992, p.30 23Michael Vatikiotis, “Disarray. in the ranks,” FEER, 10 September 1992, p.26. For example, during the Usukan by-election in Sabah on May 11, 1991, all parties reputedly used money to influence voters. Suhaini Aznam, “Double Blow: Sabah party loses by-election and a leader,” FEER, 23 May 1991, pp.11-12. 194 political parties and powerful patron-client networks. The next section provides background on the timber industries of Sabah and Sarawak. I then document links between key political patrons and timber clients, before briefly examining domestic and international opposition to elite control over Borneo Malaysian timber resources. PATRON-CLIENT POLITICS ND TIMBER IN BORNEO MALAYSIA Background From 1919 to 1952, the timber industry in Sabah was monopolized by the British North Borneo Timber Company. During this period, the Company logged limited quantities of high quality hardwoods. In 1952, logging rates increased after three large foreign firms and eight local companies began operations) Log extraction accelerated in the 1970s and early l980s.4 From 1971 to 1989, Sabah exported on average 11.7 million cubic metres of timber every 25year. In 1973, primary forests covered 55 percent of Sabah; by 1983 this had dropped to 25 26percent. Large-scale 24Malcolm Gillis, “Malaysia: public policies and tropical forest,” in Gillis and Repetto, eds., Public Policies, p.123. For historical background on forestry management in Sabah, see A.J. Fyfe, “Forestry in Sabah,” Malayan Forester 27 (1964), pp.82-95. For a description of timber extraction methods in Borneo Malaysia in the first decade after WWII, see G.S. Brown, “Timber Extraction Methods in N. Borneo,” The Malayan Forester 18 (July 1955), pp.121- 132; and Kadir Mohd. Nastan, “A Note on Logging Methods Used By A Large Timber Company On The East Coast of Sabah,” Malayan Forester 29, no. 4 (1966), pp.303-306. Michael Vatikiotis, “Malaysia’s war,” FEER, 4 June 1992, p.65. 25 26Repetto, The Forest For The Trees?, p.56; and Gillis, “Malaysia: public policies” p.141. 195 H -flI.J z c-i- U) 0) 9) I-fl c-i- ‘-ci 0 9) U) ‘-d 0 H H U) 0 J Cu,. 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In 1993, Sabah set log production at 7.9 million cubic metres; Sarawak established a target of 16.5 million cubic metres (9.5 million cubic metres from the Permanent Forest Estate and the rest from State Land Forest) •40 In 1993, Sabah’s Chief Minister announced that annual log production would be reduced to 6 million cubic metres over the next few 41years. While the Sabah government considers 6 million cubic metres sustainable, according to the 38James Clad, “Boom and bust leave Sabah’s vault empty,” FEER, 6 February 1986, p.64. More recently, Sabah’s economy has fared poorly. In 1992-93, GDP only grew by 3 percent, compared with a 9 percent national average. Michael Vatikiotis, “Slap On The Wrist,” FEER, 27 January 1994, p.14. Sarawak’s GDP growth slipped from over 8 percent at the start of 39 1990s, 5 1992, and 1993. Doug the to percent in 3.7 percent in Tsuruoka, “Awakening Giant,” FEER, 21 July 1994, p.68. 40For Sabah, see “Sabah slaps immediate ban on log exports,” The Straits Times, 30 April 1993, p.23. For Sarawak, see “Loggers turn to copters as prices rise,” The Borneo Post, 19 November 1993; Syed Abu Bakar and Pang Hin Yue, “Taib: Pay attention to these areas,” New Straits Times, 13 May 1993, p.5; Fadzil Ghazali, “Transparency in forest policy urged,” The Borneo Post, 13 May 1993; and “CM: We’ll fully practise sustainable devt by 1995,” The Borneo Post, 28 January 1993. 41”Logging in Sabah reduced substantially, Chief Minister,” Asian Timber, January 1993, p.4. 199 The benefitted Reserves, February logging Forestry environmental political, support amounts production loggers between redistribute Malaysian the production client resource yield environmentalists. cubic Sarawak the New state 1993 Stan 43 Sarawak 42 The While may metres networks Yorker, seep sometimes Forest and provided 5 Department 1993. in just level. Primary be Minister’s Stateland Sesser, and logging in is bureaucratic, from an a to as and Sarawak, Forest degradation. tiny the before now Department 6 outlying mobilize 27 informal low million logging. put decrease by Industries May “A From Permanent portion and is sustainable, as forests, Department, Reporter Sabah figures local elections the 1991, assume 3 timber 1995 areas, peripheral agreement million cubic plans and economic of extraction leaders Forest p.56. Minister, For Forest to production and timber are At Few 200 corporate mostly profits and metres. 43 to a Forestry 2000, Large: cubic example, primary based native maintain claim Dept: to backbone on straightforward supporters. Estate wealth during from a Sabah’s suppress metres. 42 the Logging mainly from retainer on elite. emphatically in Lim,” people, forests. Sarawak even in at State Department data timber Sarawak, elections of the Sabah. annual about the benefit Sabah, complaints Borneo Cash Permanent though Until in from Land Only however, maintains production Rain ‘vote-buying’ exchange 9.5 “Figures p.37. payments sustainable In as denied the will and Forest 1995, Post, marginal Sarawak, Forest,” a much patron- million Forest a about Sabah small have hold key for log the 28 by on by of at to Oxford anthropologist Politics residents. the the logged patron-client found assembly politics. transformed rule Foundation. 1966 STATE historically Sabah, patron-client prospered. to of that Sarawak’s (USNO), (Iban date Iban longhouse longhouse 45 james Some From Ibans, in to that PATRONAGE and communal University may under these an households and support in 1967 logging Ibans eventually for Bidayuh) autocratic Based According who Clad, Under to V.H. the Sarawak egalitarian the headman, leader network clusters aspirations every V.H. forests, are to become AND do bureaucracy. firm education mainly Press, “Slow Sutlive’s his is 1974, receive fall 95 TIMBER Sutlive 10 consciousness, and bring 1970-76: to that leadership, on grip percent way. or and a dollars, the money Malaysian below the 1983), society. on the networks, prime traditional have the superseded IN a of the hill and work timber, reported rest small He United SABAH was Tun Mustapha rural, 201 Ibans been the The Dayak p.11 0 . vehicle controlled 6 rises,” social paid was the is Mustapha went government portion Although poverty perhaps Iban unsuccessful. 46 similar Mustapha living Sabah are into discussed Foundation divided that all Iban out to was projects FEER, for not Perspective others, the the to of when Harun, also partially line. 45 National the land, in an to well the figures, administering timber among patron-client district built the 30 awakening state in head a Kadazan-Dusun -- district May allowing dominated Ibans integrated --“was timber longhouse. established Peter One the profits. an Organization of due 1985, legislative almost (Singapore: head, reason longhouse extensive the have of to Searle, leader, company rapidly him p.36. Dayak state Sabah Sabah their fold, half 2 into The not He to in to in is exploitation and development of timber resources, with the benefits being distributed on a patronage basis to political 47supporters.” To help win the 1974 election, Mustapha used his control over the Foundation’s timber profits to award all adult Sabah citizens M$60. He also used timber profits and concession licences to appease and mute potential adversaries. According to Means, “patronage and the ‘irregular’ rewards of office were so great that the visible opposition to Mustapha’s policies had been reduced to 48insignificance.” During this period, Mustapha’s hold on Sabah was so tight, he was able to spend 9 or 10 months a year abroad, ruling through key clients such as Syed Kechik, Director of the Sabah Foundation. The dominance of Mustapha’s patron-client network allowed him to funnel a major portion of timber profits to his own pocket, supporting extravagant personal comforts and opulent homes in Australia and England. State funds also provided a luxurious official residence, a Boeing 707, and two executive jets .‘ After the 1974 election, Mustapha’s control began to erode, in part due to an escalating dispute with the federal government over oil revenues. In 1975, under federal pressure, Mustapha ‘retired’ and was replaced by his loyal follower, Said Keruak. From behind 47Means, Malaysian Politics, p.42. For background on the Sabah Foundation (Yayasan Sabah), see Yayasan Sabab, Yayasan Sabah: 1966- 1991 (Kota Kinabalu: Yayasan Sabah, 1992). For more details on Mustapha’s early years in power, see Milne and Ratnam, Malaysia - New States in a New Nation. 48Means, Malaysian Politics, pp.42. 49Ib±d. 202 the scenes, Mustapha maintained power until April 1976, when USNO lost the election to Fuad Stephens’ Bersatu Rakyat Jelata Sabah (Berjaya) party. In June, Fuad Stephens’ reign ended abruptly when he died in a plane crash. He was replaced by Harris Salleh who ruled a multi-ethnic coalition until 1985. Compared to the Mustapha years, Harris Salleh’s government reduced extravagant waste and flagrant displays of personal wealth. Yet, patron-client networks and state patronage were still central features of Harris Salleh’s reign. Timber concessions and profits were at the core of many patron-client networks. By the early l980s, Berjaya “perfected its techniques of retaining power through an emphasis on development projects, which tended to be distributed by political patriarchs and through patronage systems linked to the government.” Berjaya easily won the 1981 election, in part “by a judicious distribution of projects and other benefits just prior to the election.” Foreign assistance provided crucial support for this °5extensive state patronage; by 1985 Sabah’s foreign debt was M$2.7 billion. 5 The Sabah Foundation has dominated Sabah’s logging ’ industry. In 1970, the Foundation was granted a hundred year licence to 855,000 hectares of forest, “to be developed on behalf of all citizens of the state.” The Foundation gained even more control in the late 1970s when it became “a statutory body of the state 50Both quotes are from Ibid., p.154. 51Ibid., p.155. 203 52government.” In 1984, the Foundation was awarded another large concession and now controls close to 1 million hectares of forest, one seventh of Sabah’s land 53area. The Sabah Foundation has had close ties to Japanese trading companies. In 1986, the Foundation extracted 1.2 million cubic metres of logs; 72 percent went to 54Japan. Besides the Sabah Foundation, there are also some powerful private timber companies. Aokam Perdana Bhd, under the control of Teh Soon Seng, operates Sabah’s largest timber processing plant. Aokam Perdama receives logs at preferential prices from Idris Hydraulic Bhd which controls a 190,000 hectare concession in Sabah. Idris Hydraulic has close connections to the United Malays National 55Organization. Not. surprisingly, top politicians have maintained tight control of the Sabah Foundation. From 1985 until March 1994, Sabah was ruled by the Parti Bersatu Sabah (PBS), a multi-ethnic party led by Datuk Sen Joseph Pairin Kitingan, and dominated by Catholic 56Kadazans. Even though Chief Minister Pairin was chairman of the Both quotes are from Gillis, “Malaysia: public policies,” p.123. 52 53Yayasan Sabah, Yayasan Sabah and Innoprise Corporation Sdn Bhd (Kota Kinabalu: Yayasan Sabah, 1993), p.1. 54Sabah Forestry Department, Forestry in Sabah, p.85. 55Raphael Pura, “Timber Companies Blossom On Malaysian Stock Market,” AWSJ, 30 November 1993, p.12. 56The new Chief Minister of Sabah is Tan Sri Sakaran Dandai, leader of the Sabah wing of the United Malays National Organization (UMNO), a key party in the Barisan Nasional (BN) coalition which is affiliated with the federal government. For background on the BN coalition and the lead up to the February 1994 election, see “Pairin: I’m not ashamed,” Sabah Times, 3 February 1994, p.1; “Why 204 CD 1xj C) U) ti [-h’ti ‘-<‘zI = = U) CF CD O Cl) W pi U) CD CF U) CF ij pi 0 JQ C)WWOHO• tiCD CD Mi ) CD C) p. 0 0 CD H CD Mi CF ‘ti II H- Cl) ‘d i p.t-. H-p.H-.p CD CD ‘—‘- 0 C) p 0 p. U)O C) C) P) Pi pi H p) p. H- p. rt uJ HOCD(HNH. CF rt (I) ‘< HP) CF H-G P P) )Lij CDHj U) CFH HU)iJ) CD U) H- • H- Pi I-I H- U) 3 0 c-F Cr c-F CF H-i - HrF p. U) C) (1) 0 ‘tS t H- H C) H U)J Ort U)H-- H CD p) 0 - 0 0 CD O U)H- H 0 P H- CD H- k A60 statement by Lim Guan Sing, “Allegations substantiated,” Sabah Times, 11 July 1990, .2p. Colchester, Pirates, p.35. For a summary of Sarawak politics from 611983 to 1987, see Means, Malaysian Politics, pp.165-172. There have been five Forestry Ministers: Hj Abdul Taib Mahmud (1966-67); Datuk Tajang Laing (1967-70); Chief Minister Datuk Abdul Rahman Yaakub (1970-81); Datuk Haji Noor Tahir (1981-85); Chief Minister Datuk Abdul Taib Mahmud (1985-to present). 62Colchester, Pirates, p.36. 206 penchant for extravagant purchases, and owns a vintage Rolls-Royce, a mansion in Kuching, and the late Liberace’s grand 63piano. Timber underpins Taib’s personal wealth and political power. The 1987 election in Sarawak provided a rare glimpse into his links to logging. During this campaign, former Chief Minister Tun Abdul Rabman Yakub and his nephew, incumbent Chief Minister Taib, openly accused each other of using timber concessions and money to strengthen their political TMpositions. Their dispute was largely personal and factional -- Rahman Yakub was angry with Taib for not following his ‘advice’ even though Rahman Yakub had personally supported Taib’s ascent to the Chief Ministership in 1981. Chief Minister Taib, in an attempt to weaken the political position of his increasingly critical uncle, froze 25 timber concessions worth about M$22.5 billion (US$9 billion) which were linked to Rahman Yakub’s clientele. This sparked a public war to expose each others’ links to timber 65money. Taib’s group provided documents indicating that Rabman Yakub, during his tenure as Chief Minister, had “set up a very complex web using nominees and shell companies to cover up ownership of large tracts of the best timber in 63Raphael Pura and Stephen Duthie, “How Ekran Bhd. Outfoxed Rival For Power Deal,” AWSJ, 2 February 1994, p.12. TMChief Minister Taib and the Barisan Nasional coalition government has ruled Sarawak since 1981. For a pro-government account of Taib’s reign, see James Ritchie, A Political Saga: Sarawak 1981-1993 (Singapore: Summer Times, 1993) 65Zainon Ahmad, “Timber freeze sparks ‘war’,” New Straits Times, 10 April 1987, in Yu Loon Ching, Sarawak: The Plot That Failed 10 march 87 - 17 april 87 [A collection of newspaper articles] (Singapore: Summer Times, 1987), p.66. 207 66Sarawak.” It was divulged that all eight of Rahman Yakub’s daughters, many other family members, friends, associates and his office staff had large timber holdings. Documents were also released that showed Chief Minister Taib had distributed similar amounts of timber concessions to his close family, friends and 67clients. In total, it was revealed that Taib and his clients controlled approximately 1.6 million hectares of timber while Rahman Yakub and his clients controlled around 1.25 million hectares, which together comprise over 30 percent of the total forest area of 68Sarawak. Chief Minister Taib’s repeal of timber concessions held by Rabman Yakub’s group was an important reason behind Taib’s subsequent landslide election victory. Rahman Yakub’s patron- client network lost its main source of patronage and many members defected, especially Chinese ones. Chief Minister Taib reportedly gained the support of many Chinese politicians by offering timber concessions to leaders of the Chinese-based Sarawak United People’s 69Party. Other influential ministers in Sarawak also have direct links to timber concessions. For example, Datuk mar James Wong Kim Mm, 66”More of timber licences ‘kept’ in Rahman’s circle exposed,” People’s Mirror, 13 April 1987, in Ching, Sarawak, p.69. 67For a list of political connections to timber companies, see Logging in Sarawak (Selangor, Malaysia: INSAN, 1989), pp.73-74. Nick Seaward, “At loggerheads with power,” FEER, 2 June 1987, p.32. 68 695ee Suhaini Aznam, “Wood for the trees,” FEER, 5 December 1991, pp.55-57. 208 who is President of the Sarawak National Party (SNAP) -- a key member of the Barisan Nasional government -- and Minister of the Environment and Tourism, is head of Limbang Trading. This company controls about 300,000 hectares of timber concessions in Sarawak. As Minister of the Environment, Datuk Wong has a well—known reputation for supporting logging and dismissing environmental degradation. In 1988, he explained that five years after logging primary forests, “all the animals are back. .with more fruits and nuts than before.. .logging is good for the forest.” In the same interview, when the President of Survival International7 asked he ° if was concerned with the effect of deforestation on weather patterns, he relied: “We get too much rain in Sarawak; it stops me playing 7golf.” Limbang Trading has reportedly sold timber on the government’s’ protected species list; a list established by the Select Committee on Fauna and Flora, chaired by Datuk 72Wong. In Sarawak, around half a dozen Malaysian-Chinese companies control timber 73extraction. These corporations are linked to top 70Quoted in “International experts say Sarawak natives badly affected by logging,” Utusan Konsumer, (March 1988), in World Rainforest Movement and Sahabat Alam Malaysia, The Battle For Sarawak’s Forests, second edition, (Penang, Malaysia: World Rainforest Movement and Sahabat Alam Malaysia, 1990), p.54. 71Robin Hanbury-Tenison, [President of Survival International], “No Surrender in Sarawak,” New Scientist, 1 December 1990, p.29. ”International Experts,” Utusan Konsumer, in World Rainforest Movement72 and Sahabat Alam Malaysia, The Battle, p.54. 73Doug Tsuruoka, “Awakening Giant,” FEER, 21 July 1994, According to the Star, 90 percent of Sarawak’s timber industry p.70 is controlled by Foo Chow Chinese. “The pioneers of timber industry,”. The Star, 19 September 1991, p.11. 209 state leaders, supplying financial and electoral support in exchange for concession licences and contracts, political protection and bureaucratic exemptions. Malaysia’s largest timber operator is Datuk Tiong Hiew King. He heads the Rimbunan Hijau Group of companies which controls 800,000 hectares of timber concessions and logging contracts in Sarawak. Rimbunan Hijau also operates huge logging ventures in Papua New Guinea, accounting for 60 to 80 percent of timber exports. The 1993 Chinese edition of Forbes magazine estimated his net worth at M$2 74billion. Datuk Tiong has powerful political ties. He is an appointed federal Senator. He is also a key figure in the Sarawak United People’s Party, and a close friend of Sarawak Deputy Chief Minister Wong Soon Kai. He strongly backs Chief Minister Taib and the Barisan Nasional coalition government, and has secure links to local politicians. Taib’s sister, Aisah Zainab Mahrnud, and the Sarawak government are partners in one of his logging and plywood operations. In another logging venture, Datuk James Wong and Datuk Tiong are partners in a 180,000 hectare site near 75Limbang. Datuk Tiong has also worked closely with Japanese companies. Japanese technical advisors have influenced the management of his plywood mills; through a Hong Kong affiliate, two of these advisors are Summarized in Raphael Pura, “Timber Baron Emerges From the Woods,”74 AWSJ, 15 February 1994, p.1. 75Raphael Pura, “Deal Moves Berjaya Into Timber,” AWSJ, 7 December 1993, p.1, p.4; Raphael Pura, “In Sarawak, a Clash Over Land and Power,” AWSJ, 7 February 1990, p.1; and Raphael Pura, “Timber Baron Emerges From the Woods,” AWSJ, 15 February 1994, p.1, p.4. 210 minority shareholders in Tiong’s timber empire. According to one source, Datuk Tiong’s companies are “almost Japanese in their operations. ,,76 Datuk Ting Pek Khiing is another powerful ethnic Chinese businessman in Sarawak. He is Chairman of the Ekran Company which controls 600,000 hectares of timber concessions in Sarawak. In early 1994, this company was awarded a contract to build the huge Bakun hydroelectric dam. This is the most expensive infrastructure project in Malaysian history. The dam will create a lake about the size of Singapore. Before flooding the area, Ekran will clear 80,000 hectares of forest which should produce three to six million tons of timber. Ekran officials estimate that timber profits from log exports and a planned wood chip plant could exceed M$2 billion. Moreover, according to Datuk Ting, due to the “pioneer status” of the project, “there will be tax exemptions for quite some 77time.” Datuk Ting has close ties to Chief Minister Taib and Prime Minister Datuk Sen Mahathir Mohamad. Taib’s Sons are minority shareholders in Ekran and in Pacific Chemicals Bhd, another Ting 78company. These political ties were a critical factor behind the choice of Ekran to build the Bakun Dam. According to the Asian Wall Street Journal, the deal was “negotiated privately in just a few weeks by 76Raphael Pura, “Timber Baron Emerges From the Woods,” AWSJ, 15 February 1994, p.4. 77Quoted in Raphael Pura, “Ekran Is Tapped To Construct Malaysian Dam,” AWSJ, 31 January 1994, p.4. Pura provides details on the Bakun Dam, Ibid., p.1, p.4. 78Raphael Pura and Stephen Duthie, “How Ekran Bhd. Outfoxed Rival For Power Deal,” AWSJ, 2 February 1994, p.12. 211 Datuk Ting and powerful Sarawak Chief Minister Tan Sri Abdul Taib Mahmud, then approved by Dr. Mahathir and awarded without competitive 79bidding.” Prime Minister Mahathir confirmed this deal “a day after he attended a wedding dinner for Chairman Ting’s son. 8O PUBLIC OPPOSITION AND PATRON-CLIENT POLITICS IN BORNEO MALAYSIA The link between politics and timber profits is widely known among the people of Sabah and Sarawak, yet there is little public opposition to political control over this valuable 81resource. While discussing the allegations and counter-allegations of ‘corrupt’ timber management during the 1987 election in Sarawak, Marcus Colchester ponders: For the foreign visitor, the most extraordinary aspect of this affair was that these revelations went undisputed and were accepted by the general public. Neither were 79Raphael Pura, “Ekran Is Tapped To Construct Malaysian Dam,” AWSJ, 31 January 1994, p.4. Two other major timber operators in Sarawak are Hiew Teck Seng and Wong Tuong Kwang. Wong’s son, Wong Kie Yik, is a federal senator. Raphael Pura, “In Sarawak, a Clash Over Land and Power,” AWSJ, 7 February 1990, p.1. 8O5 Jayasankaran, “Onward March,” FEER, 24 November 1994, p.140. 81One notable exception is the Penans of Sarawak who actively oppose logging. But they constitute a small percentage of the population and are divided on the issue since many work for timber companies. I. Rajeswary, “Profits vs. Preservation,” in Dwindling Forests: Diminishing Returns (New York: UNOP, 1991), p.17. It is possible that local and tribal people privately dislike state management of timber since ‘acquiescence’ does not necessarily mean ‘acceptance’. See James C. Scott, Weapons of the Weak: Everyday Forms of Peasant Resistance (New Haven: Yale University Press, 1985). To confidently determine whether local and tribal people in Borneo Malaysia ‘accept’ state management and allocation of timber resources would necessitate direct and extensive field research. 212 there calls for a public enquiry into the issuing of logging licences, nor attempts to impeach the politicians on charges of 82corruption. Although this lack of open opposition may partially be a result of the difficulty of collective action in multi-ethnic and religious states, and partially due to the political and economic dominance of a small elite, its roots in traditional power relations and patron-client exchange help mute public opposition. While domestic criticism is muffled, there has been strong international condemnation of ‘corrupt’ Borneo Malaysian politicians and timber tycoons. For this reason, state leaders -- especially Sarawak’s Chief Minister Taib -- are sensitive to any international or domestic probes of Malaysian forestry management. The Sarawak government closely supervises NGOs (including tapping phones), and monitors foreign visitors, especially journalists and researchers. For the last 20 years, Sarawak has blacklisted journalists, academics, and NGO leaders, using the power over immigration to bar unwanted 83visitors. Despite these measures, criticism of Borneo Malaysian forestry management mounted in the late 1980s and early 1990s. In 1992, the federal and state governments launched a campaign to suppress domestic environmental critics -- in particular the Penan of Sarawak -- and flood the world media with positive images of Malaysia environmental Colchester, Pirates, p.31. Revealingly, the environmental candidates82 all lost in the 1987 Sarawak election, even though they had won several seats in the federal election the previous year. Suhaini Aznam, “The Quiet Drums,” FEER, 10 October 1991, p.19. lnterview, Foreign correspondent, Kuala Lumpur, 10 March 1994. 83 213 management. When announcing the campaign, the federal Primary Industries Minister declared: “If the reputation of Malaysia is not protected by giving the right information and counter arguing against eco-colonialistic attitude Es], such misinformation will in the end affect the country’s 84economy.” The next section analyzes timber policies in Borneo Malaysia. Pervasive clientelist ties between top state patrons and timber operators weaken supervision of state implementors, distort, formal policies, and undermine state capacity to enforce regulations. This does not mean that formal institutions and policies can be ignored. Despite dismal enforcement, public policies have important consequences, often providing incentives to mine the 85forests. But they must be seen as existing alongside informal, unstable, instrumental arrangements that drive destructive logging, protect illegal loggers and smugglers, undercut tax and royalty collection, place concessions in the hands of a small, unaccountable elite, and distort policies to encourage processing, reforestation, plantations, and concession management. 84Toh Lye Huat, “Plan to counter anti-tropical timber campaign,” New Straits Times, 11 March 1992, p.10. This campaign has further clouded the line between propaganda and reality. It has also increased the difficulty of conducting primary research in Malaysia. For further details on the campaign, see “Govt to counter foreign ‘green’ smear campaigns,” The Straits Times, 11 March 1992, p.15; and “Help sought to monitor group,” New Straits Times, 11 March 1992, p.10. 85For an excellent set of articles on the links between poorly designed public policies and tropical deforestation, see Gillis and Repetto, eds., Public Policies. These findings are summarized in “Conclusions: findings and policy implications,” in Ibid., pp.385- 410. 214 ROLE OF FORMAL INSTITUTIONS, REGULATIONS, ND POLICIES A. Background Sabah and Sarawak both have exclusive jurisdiction over forestry management. The federal government is restricted to financing research and development, providing technical assistance and training, issuing export 86licences, and approving large foreign 87investments. As well, under the federal Environment Quality Act, state logging companies are required to conduct environmental impact assessments. State governments are responsible for compliance, however, and so far no logging company has ever bothered to submit a 88report. Under the 1957 Land Code and the 1954 Forest Ordinance, all forested areas in Sarawak are owned by the 89state. Responsibility for forestry policy and enforcement, and issuing and cancelling timber concessions, rests primarily with the Sarawak Forest Department, while timber tax and royalty policies are formulated by the Chief Minister’s Off °9ice. The Sarawak Timber Industry 86Rajeswary, “Profits vs. Preservation,” p.15. 87The federal government also has some indirect influence through its control of areas like the national budget and manpower. Interviews, Universiti Pertanian Malaysia (UPM), Faculty of Forestry, Malaysia, 8 March 1994. 88M±chael Vatikiotis, “Clearcut Mandate,” FEER, 28 October 1993, p.54. 89Sarawak Forest Department, Forestry in Sarawak, p.7, p.13. 90Gillis, “Malaysia: public policies,” pp.149-153. For background on forest legislation and policy in Sarawak, see Malaysian Forester, “Forest Resource Base, Policy and Legislation of Sarawak,” The Malaysian Forester 42, no.4 (1979), pp.311-327. 215 Development Corporation (STIDC) negotiates with foreign investors. Harwood, a subsidiary of STIDC, monitors log export quotas and timber concessions. Since the beginning of 1993, STIDC has taken charge of approving timber export licences from the Ministry of International Trade and Industry. In Sabah, responsibility ’9 for timber management is divided between the Sabah Foundation (through Innoprise), the Forestry Department, and the Chief Minister’s Office. The exact duties of each institution are unclear, although generally both the Sabah Foundation and the Chief Minister’s Office grant and revoke concessions, the Chief Minister’s Office determines royalty policy, and the Forestry Department controls and enforces harvest regulations outlined in specific licences, the 1968 Forest Enactment (and 1984 and 1992 mendments), and the 1969 Forest 92Rules. The Forestry Department is only involved in minor reforestation projects, primarily for 93research. 91”Timber exporters must register with STIDC,” The Borneo Post, 1 January 1993. 92Gillis, “Malaysia: public policies,” 8.pp.l27-1 lnterview, Sabah Forestry Department 2 (Jabatan Perhutanan Sabah), 93 Kota Kinabalu Branch, 16 February 1994. For background on the basic goals and policies of the Sabah Forestry Department, see Sabah Forestry Department, Goals (Sandakan: Sabah State Government, undated); and Malaysian Forester, “The Forest Resource Base, Policy and Legislation of Sabah,” The Malaysian Forester 42, no. 4 (1979), pp. 286 -310. 216 February efforts. two timber 23 indigenous organised Scenario 1989), Incentives were facilitate between logging the commercial renewed in concession -- Foundation B. concessions, concessions. 94 1989. 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June February, of by on in -- Royalty The From percent have Sarawak’s. policies it Sabah, the through 2 log 50 refused 23 two with 1993, Bangkua±, Borneo (December logs. of Mohamed for 1980 was April possibility logs export percent. generated protection exports.’° 9 Policies Sabah’s decades, 1994. of Special a more aggressive royalties Indonesia. to in to Japanese before Post, oil 1992, Small taxes, disclose Borneo 1989, “Illegal 1991), than and revenue; revenues James timber Reference 8 p.1. substantial policies. exporting of signs 220 June half In corporate the and Malaysia Ti a on royalties p.127. the sawmill the export Wong, It Confidential licence forestry key 95 1993. charges do of allotted Teow is source percent early to Sabah’s emerge. this State tree difficult have executive “New of revenues doing East and fees, Chuan, timber --- of sector timber to 1990s, governments species been export came revenue rates the especially Malaysia,” minor Malaysian During Interview, a to more telephoned logs, to sharp from in exposed,” accounted “Effects the document taxes alterations Japan. for in and Sabah one royalties effective although forestry contrast keep Sarawak states. on Borneo timber around -- of Kota The and the has and all for log my of New Straits p.131, volume-based as have practice damage seizes differentiated on Sabah’s prices remarkably encouraged export residual valorem companies these Importers executives irregularities the species collusion operators falsify revenues. captured informal 40 the Straits one reportedly “ 2 Openg “ 1 Sabah “°See percent. forged undervalued pp.149-151. and track,” less timber Times, taxes types, royalties agreed stands. high-grade the agreements a with -- sometimes Gillis, have little simply To quantities.” 2 loggers Times, significant timber residual Onn, generally declarations, (which lower degree charges customs as 15 are under-declare by Borneo Openg on under-declared syphoned timber May long report Ibid., “Malaysia: on 15 “Sabah species with sawn exporters to value-based. mining. forest between dodge are May Onn, logs 1993, stocks have of as Post, officials Japanese mine timber,” the portion rent, to p.130. 1993, substantial reduced “their losing processing.” “Sabah Besides customs, generated customs charges, and -- customs p.6. importer. concessions politicians, 1 the public -- For in lower have the 221 February p.6; export trading including of and supplies Borneo Sarawak value In losing millions this for value these officials a provided While forest timber Sarawak, and policies,” logging “Putting enforcement substantial price amounts lower reason, taxes and In Post, millions companies covertly 1993; of and In ‘sophisticated’ than reach bureaucrats, the fees exchange Sarawak volume in fl5•W log or companies many grade timber receive on Sabah’s disregard fewer 19 Sabah of quantity and timber in loggers pp.139-143. exports them -- officers sawn state August in deliver potential of Sabah. -- especially “Forestry cases, species), incentives has for royalties timber Foundation Nevertheless, at logging exports, ignore ‘kickbacks.’ timber revenue, -- scam,” apparently and by the lower damage 1993. accepting captured schemes, often -- logs as scam,” Ibid., agreed timber timber While these state forge much Dept back have ones than New and are and ad to to to -- in offshore 13ships.’ As a result of these practices, one Sabah ‘insider’ claims that “two out of every five ships leaving here have not paid 4duty.” According to some sources, 30 to 40 percent of Sabah log exports were improperly documented in the early 1990s, contributing to substantial losses of royalties for the state government. In 1991, one Sabah logging group alone was alleged to be slipping out the equivalent of 10 to 15 vessels a month during busy periods, with an annual market value estimated by the Far Eastern Economic Review at US$100 million. The same article estimated that in Sarawak these practices may be even more widespread. 115 Under Malaysian law, federal timber revenue -- collected by the Inland Revenue Department -- is limited to corporate and personal income tax on timber profits. Borneo Malaysian companies routinely practice transfer pricing to evade these taxes. Ethnic Chinese corporations in both Sarawak and Sabah sell logs to ‘home’ companies, usually in Hong Kong. These logs are priced at the cost of extraction. As a result, the local company’s books show no profits, and the company pays no taxes. The Hong Kong company then sells the logs at market prices, in most cases to a Japanese trading company (the logs generally ‘leave’ Borneo Malaysia only on paper). Profits appear in the Hong Kong books, where taxes are Doug Tsuruoka, “Cutting down to size,” FEER, 4 July 1991, p.45. “3 “4Quoted in Hurst, Rainforest, p.109. Doug Tsuruoka, “Cutting down to size,” FEER, 4 July 1991, p.46. “5 222 low. These profits are placed in a Hong Kong bank; the Borneo Malaysian company then borrows an equivalent amount with interest payments equal to the interest earned in Hong Kong. Since the money ‘returns’ as a loan, it is tax 6exempt.” D. Political Concessionaires, Chinese Clients, and Sub-contracting In Sarawak, all uncultivated land -- except designated Forest Reserves, Communal Forests and National Parks -- can be licensed by the state government as logging concessions.” Control over concession licences is a critical source7 of power for patron-client networks. According to Philip Hurst, “it is an open secret that timber concessions are handed out in East Malaysia as a means of strengthening political allegiances or as rewards for 18favours.” One study declared that in Sarawak, “political elites’ control over awarding [logging] licences gives them the means to maintain and tighten their grip on state power -- by alternately rewarding their cronies and followers, and buying off their political rivals and opponents.” Powerful political concession holders rely on 9ethnic Chinese contractors with the equipment and expertise to lnterview, Foreign correspondent, Kuala Lumpur, 9 March 1994. “6Sarawak Study Group, “Logging in Sarawak: The Belaga Experience,”7 in Logging Against the Natives of Sarawak (Selangor, Malaysia:“ INSAN, 1989), p.5. “8Hurst, Rainforest, p.103. 9Sarawak Study Group, “Logging in Sarawak,” p.3. “ 223 but Sabah, percent nothing.” 1991, controls of financial arrangements. patron-client treatment prescriptions local Borneo leaders to especially Sarawak, manage political patron-client client huge 60 “on [timber] local percent the revenues a ‘ 22 The ‘ 21 Anthony ‘ 20 Concessionaires profits. The p.44-45. scale opposition clusters see the Malaysia of and profits leaders, timber central of and risk.” resources the use Hurst, Chinese of Doug when timber even which many build electoral Rowley, on all value. Sub-contractors, links of clusters. has companies. from Tsuruoka, communities native provide role the that to Rainforest, Besides, concessions has land nominees up site.’ 2 ° contributed contractors destructive contribute and and number Hurst the “Logged no of receive support has reduce loggers, employees involve relation concessions contractor with “the “Cutting been makes notes These For Political being and p.105. Out,” either are 224 while many accountability to concession granted a to “there little size the logging that it over-exploitation. to paid ties and discussion often granted of FEER, down Chinese contracting concessionaires a difficult in the -- of whom some “this patrons fixed is off are binding as regard to trees practices generally sustainable 13 evidence holder make are equipment. timber for business-clients may at to December size,” sum of and directly making cut.” 121 the to seem nominees.’ 22 gain together arrangements this or for frequently sub-contracting concessions of determine transparency, and FEER, between core a in a 1990, capacity some In problem percentage deals management low To financial, almost connected the As Sarawak, of appease patron- 4 return native p. 74 . well, July does with poor 5-10 many reap who no in In of in -- Azam Times, again,” policies,” Malaysia Against University Northeast Malaysia Jeyakumar description tries is uncertainty, People shift. quickly. payment much higher revenues no eliminate These stop responsibility timber fragmented logging ‘ 26 Azam ‘ 25 ”Don’t ‘The ‘ 23 K.S. Unstable awarding harder.’ 24 to Aris, of 1 concessionaires For Borneo complex efficiency... the of maximise argues: February for to Sarawak,” Devaraj, Director Business unnecessary It of Regional expertise.’ 25 under-counter Aris, example, Jomo, Natives providing of revoke the “State and give British timber is Post, and patron-client In the “What profit state contracting “‘Overhaul “Logging, 1993. this fairly make 1993, Paper timber Times, of General when concessions “Logging 20 govts concessions harsh Consortium [and] Columbia, happens strong does Sarawak governments.” 26 [s]. and the September sub-contracting, According Kuala Datuk presented money, common concessions 10 enforcement Politics, urged in not especially conditions of The timber incentives Accidents February is ties Harris 225 Lumpur arrangements (Selangor, the the lead October responsibility and control that for to for 1993. to to at concession Forest companies contribute long licences to powerful Salleh at Business the pushed foresters, Southeast change 1993. with to of for good to in 16-18, each illegal 5th Malaysia: reduce term, timber mine middlemen, Research Sarawak,” became native logging forestry state Annual stage obscure or as and system’,” timber leaders and timber 1992, to this logging. generate individuals management political Asian corruption accountability the governments the Chief INSAN, Conference loggers, operators.”’ 23 Institute a p.6. practices.” would concessions state in concession individual Indigenous lines in sense Business Minister Studies, . Logging .ensure Borneo 1989). higher For winds rules “help told with see and of of of to of a of Sabah in 1976, he “cancelled concessions granted by his predecessor, covering 12 percent of the total forest area under 27licence.” After Pairin’s PBS party ousted the ruling Berjaya party under Harris Salleh in the 1985 Sabah election, timber patronage was again redistributed. The constant threat for concessionaires and contractors of being labelled ‘corrupt’ further increases uncertainty. The overlap of ‘modern’ legal institutions and ‘traditional’ relations of power has created a situation where timber patronage is an ‘open secret’, yet the threat of being labelled ‘corrupt’ constantly exists. Charges of corruption clearly do not undermine authority in Borneo Malaysia in the same way as in many ‘Western’ democracies. For example, even after Chief Minister Taib was linked to widespread corruption and nepotism during the 1987 election in Sarawak, he still won easily. Nevertheless, corruption charges can undermine the stability of patron-client clusters and networks, especially when used as a tactic by the federal government to undermine state leaders or when used as a strategy by state politicians to ‘embarrass’ their opponents. 128 Unpredictable political settings and unstable patron-client networks contribute to a serious problem of ‘capital flight’. 127Gillis, “Malaysia: public policies,” p.127. To128 undermine the PBS, the federal government charged Chief Minister Pairin, and his brother Jeffrey Icitingan with corruption. For details, see Michael Vatikiotis, “Glacial Justice,” FEER, 27 May 1993, p.27. In early 1994, Pairin was found guilty. His fine, however, was low enough that he still qualified for office. Although this verdict eroded some of his legitimacy and authority, he still managed to win the ensuing election. 226 Chinese timber clients -- concerned about future economic trends, the fall of their patron, and racial backlashes -- stash a significant portion of timber proceeds overseas, especially in Hong Kong. In addition, while there is some investment in wood processing, there is almost no Chinese investment in long-term timber management. Loggers perceive the industry as too volatile, perhaps even 29doomed.’ E. Log Export Restrictions and Processing Policies In 1979, to reduce log exports and encourage domestic processing of sawn timber and plywood, Sabah imposed export quotas and increased taxes. But compared to Indonesia these were lenient and not well enforced.’ This changed suddenly at the start of 1993 when Kuala°3 Lumpur used its power over export licences to prevent logs from leaving 3Sabah.’ Officially, the federal government claimed that the’ ban was necessary to enhance lnterview, Foreign correspondent, Kuala Lumpur, 10 March 1994. 29 30Repetto, The Forest For The Trees?, p.54; and Kenji Takeuchi, “Market‘ Prospects for Tropical Hardwoods from Southeast in Asia,” James S. Bethel, World Trade in Forest Products (Seattle: University‘ of Washington Press, 1983), p.437 31’rhe Malaysian Timber Industry Board. issues export licences to Sabah.‘ However in Sarawak, the state government issues these licences. Interview, Malaysian Timber Industry Board, Ministry of Primary Industries, Kuala Lumpur, 9 March 1994. Although the Malaysian constitution clearly gives the federal government control over exports and imports, Sabah argued that the log export ban was unconstitutional -- that precedents had been set after Sabah joined the federation for state control of timber exports. Interview, Senior official, Ministry of Primary Industries, Kuala Lumpur, 8 March 1994. 227 June Michael riles constitutional February Kinabalu,” 1993, over Malaysia, export stalls,” as processing 1994, the export government, facing Industry their Minister Japanese escalating crisis.’ 34 appears, imported cooperative source environmental to World Sabah’s ‘ 36 Michael ‘ 35 lnterview, ‘ 34 P.K. ‘ 33 JATAN, ‘ 32 Prime Kuala p.1 p.2. 1993, Peninsular own charges charges of a Vatikiotis, Mahathir’s FEER, 1994; Representative, 70 serious however, plywood patronage, and Rainforest log ban The Lumpur,” industry Kuala however, Katharason, percent ban p.8. Minister state “Asia-Pacific protection Vatikiotis, prices to 27 after and to Star, power on on places Malaysia. Timber May shortage the Lumpur processors, log “Log log desire to government.’ 32 FEER, Although of then and “Local began 9 topple complaints Movement 1993, Mahathir Peninsular. to have exports,” May exports.’ 36 Sabah ban like and Association “Logs Kota the struck 3 lifted to “Tables control to of Forests,” June 1993, pp.26-27. to Hero: his promote At Japan, undermine been hamper Japanese log 228 Kinabalu, the logs Meeting, remain was spinning meant the power 1993, back and Straits the p.7; turned: exports.’ 33 primarily Drive exports, Confidential Taiwan federal also Before The time, -- domestic wood of pressure November at pp.66-67; ban - base, for Chief and wanted government.’ 35 CM,” New Sabah, Japanese Kuala February, Times, many processing to angry Sabah mainland and in Japan “Tokyo the Minister and government topple the Delhi, wood motivated Sabah Korea The April 1993, Lumpur from Sabah into timber-export that Kota and 8 Interview, establish ban, Sabah May processing. stuck government protests move 1994; Times, processors Asian were in Sabah Japan’s India, Presented a Pairin’s 1993, Kinabalu, Sabah’s to and 1993, Peninsular Japan The surprised financial by has Forestry decrease in the and Timber, imposed 21 a leader to p. 22 . April Sabah Sabah after Prime Kota wood more same May ban the and see had log key KL at -- It 8 Kinabalu, gain,” 1994; 1994; February February Department February veneer ban, been absorbing 17 effect were firms which Before have log exports. increased Pairin corporations November exports ‘ 40 John ‘ 41 lnterviews, ‘ 39 Official, Despite functioning ‘ 38 Official, little also Sabah Sabah Institute and get doubled Asian mills creating the government 1994. 1994. 1994; Ministry 15 go-ahead logs benefitted local To state ban, simply plywood, Lim, has 1993, change Timber, were February tried offset Angkie, stable in once for Innoprise provided only a processing at revenues Timber “Temporary Timber the also pp.1-2. refused stood log Timber of on Development in half destined to veneer, December lost 105 from first Tourism 1994. “Japanese exports,” government total export operating convince firm.’ 37 of Association Association a out have Association Corporation, an export to crucial their four fees.’ 38 log log for and of increase assess ban. and 1992, remained 229 Studies, sceptical Business production. export 164 months well production Sabah export.’ 4 ’ saw charges Environmental revenues boost Fadzil p.3. sawmills The royalties of of mills below of in Kota ban stable to Kota of Sabah, to Sabah, government Times, on the Sabah, on lift Ghazali, the As Sabah in all Sabah,” capacity. capiy 4 O and Kinabalu, Kinabalu, logs, were price since a Sabah: on ban.’ 39 Development, Kota increased Kota 19 this result, Kota an wood log operating; May the of Daily the and “Sabah increase ban Kinabalu, Kinabalu, no Kinabalu, exports, processors. 12 sawn Plywood 9 The 1993. government ban After there companies pain, February February Express, but output, ban timber timber on Kota many has and the log the no in in on 8 8 8 processing output, Sabah’s ban on log exports has had few economic or environmental benefits. Log production is still tar above sustainable levels, and there has been little improvement in the management of concessions. The total capacity of Sabah’s plywood and veneer mills is 11.4 million cubic metres. With production set at 8 million cubic metres there is a chronic shortage of 142logs, creating strong incentives to process illegal logs. As well, in the absence of international competitors, the Sabah Sawmillers Industries Association (SSIA) appears to be suppressing log 43prices.’ In addition, as in Indonesia, the ban will likely protect and foster inefficient processors, putting even more pressure on commercial timber stocks.’ Finally, much of Sabah’s sawn timber is little more than logs with their corners shaved, providing almost no value-added economic benefits. This ‘sawn’ timber is then exported overseas and processed 45again.’ In many ways, Sarawak has been the main beneficiary of Sabah’s log export ban. In 1993 and the first quarter of 1994, Sarawak’s logging 142”Log ban to remain - CM,” Sabah Times, 21 May 1993, p.1 43The SSIA denies these charges. Interview, Sabah Sawmillers Industries‘ Association, Kota Kinabalu, 16 February 1994. To stabilize log prices, in mid-1994 the government was contemplating setting a minimum and maximum price on logs. ‘Senior Researcher, Institute for Development Studies, Kota Kinabalu, 12 February 1994. lnterview, Ministry of Tourism and Environmental Development, Kota 45Kinabalu, 15 February 1994. ‘ 230 industry thrived as log prices 46increased.’ Unlike in Indonesia since 1985 and Sabah since 1993, Sarawak has tried to balance log exports with incentives and restrictions to promote wood processing. Beginning in 1988, the government set aside 10 percent of logs for processing; in 1992, this was increased to 17 percent. Despite higher prices for log exports, since the beginning of 1993, Sarawak has made even more aggressive moves to promote 47processing.’ To guarantee logs and stable prices for local processors, in early 1994 the state-controlled Harwood Company was made the sole distributor of local 48logs.’ As well, in 1993 the government gave generous royalty rebates on logs manufactured in Sarawak,” and reserved around 36 percent of logs for local processors.’ By the year 2000, the government intends to set aside°5 50 percent of logs for local 15processors. There lnterview, Sabah timber executive, Kota Kinabalu, 9 February 1994. 46Although Sarawak log exporters made substantial’ profits, the rapid rise in prices hurt local processors as log prices climbed much ‘faster than processed wood prices. 47”S’wak aggressive in going downstream,” The Borneo Post, 16 September‘ 1993. 48”Harwood takes charge from February 1,” Sarawak Tribune, 26 January 1994, p.1. Sarawak‘ Forest Department, Forestry in Sarawak, p.33; “Enough 149 Supply of Logs, Says STA Chairman, Peoples Mirror, 9 February 1993; and James Wong, “Cheaper logs for local processing, The Borneo Post, 9 February 1993. °Interview, Sarawak Timber Industry Development Corporation, Kuching, 17 February 1994. In 1993, the government planned to set aside 56.0 million cubic metres for local plywood and saw mills. “6 Mu cu m Of Logs reserved For Local Industry,” Peoples Mirror, 17 January ‘ 1993. 51Sarawak Forest Department, Forestry in Sarawak, p.33. ‘ 231 February Kuching, February trade production production rise For Indonesia, now total lobbied So percent local Sarawak creating exports government are, far, example, has ‘ 56 Jack ‘ 55 Asian ‘ 54 lnterview, ‘ 53 interview, ‘ 52 Tan With to however, policy,” capacity loggers generate 15 to government 1.5 workers 1993. 17 1994. more unlike the Chin plywood however, in spokesman, Wong, reduce February is Timber, in million 1992 help processing New -- no early Siang, steadily of in critical “Plywood Sarawak Senior who export perhaps was mills, plans of Straits many 7 to Sabah, February 1994. cubic 1993, government foreign million manufacture one reduce “Taib: processing official, jobs restrictions.’ 54 Timber to foreign 10 prices rising. million backed Times, plywood metres Japan veneer ban 1993, demand would log Sarawak cubic 232 Industry subsidies revised exchange. log cubic 19 has by export Forest mills in wood p.5. plants mills, not keeps For October metres.’ 55 exports.’ 52 Japanese 1993.156 will not metres boost upwards,” were are Development example, restrictions. Department, log and operate and overtly adopt Furthermore, 1993, already functioning Sarawak’s prices protection, 213 and Like companies Processed flexible below According Borneo sawmills was p. 10 . total pressured in high, Corporation, Kuching, expected Indonesian; economy.’ 53 Sabah capacity. around Post, However, at -- plywood Sarawak and timber with timber 60 to have and the log 10 17 to to 60 a a ‘.iJt!) 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CD ‘-< CD CD ‘< producers protect Star, see 12 plantations licensing example, 21 about Authority.’ 62 Permanent 8 aspect.” 6 ’ concession Sabah both the timber commitments. concessions forest reforestation forests, “want February September February “Four state ‘ 63 lnterview, ‘ 62 lnterview, Unlike ‘ 61 Quoted In 17 10,000 domestic to Softwoods will regeneration its Sabah, September TAS be illegal Forest and fast (in government sites 1994. be Indonesia in For rights 1994. members sure hectares 1991, advises in As the projects. royalty There Sabah, theirs. growing there “The and this Estate, a Timber Institute or Sdn logging past that timber pp.8-9. 1991, are TAS For or develop private from foreign and are -- reason, mostly of and fees. Bhd) is exporters). after linked timber background species is Association There mainly especially pp.8-9. degraded negotiates exporter little now Sabah, in detrimental for a and sector commercial fast-growing private investing. conservation It most plantations. is to investors Development 300,000 234 for in is the corporate Sarawak unstable still land succinctly Sabah on and conservation. reforestation the the of with Sabah Sabah’s organization. Sabah reafforestation,” government much have hectares . main timber Sabah .huge forest has are the acacia patron-client Studies, areas, investment been uncertainty Since Forestry organization (TAS), no explained, state forest Foundation wary sums plantations. plantations,” plans of mangium. 163 replanted According is and timber policies. Kota Kota of government of state conducted plantations, It Development to ineffective money, in Kinabalu, Kinabalu, networks, over companies long-term The works reforest land (through for natural in timber to Star, Only this The log For the the and the on by to government, slash-and-burn farmers destroyed most of these areas*M In the Forest Department’s view, plantations or reforestation are inherently unnecessary since areas are logged selectively. Instead, it is more important to improve silvicultural techniques 165 G. Recent Attempts To Improve Tiitiber Management Over the last couple of years, the federal and state governments have introduced policies to tackle illegal logging and smuggling, destructive timber extraction, and tax and royalty evasion. In 1993 the federal government amended its National Forestry Act to improve enforcement of timber management rules and curb illegal logging. The revised law increases fines for logging violations, stipulates mandatory jail sentences of up to 20 years for illegal loggers, and permits the armed forces to be deployed in the forests. However, although this law provides important signals to Borneo Malaysia, as one opposition member of Sarawak’s legislature noted: “No federal forestry ordinance is strictly enforceable in 66Sarawak.” ‘64See Forestry Department Sarawak, Forestry in Sarawak, passim. lnterview, Senior researcher, Forest Department, Kuching, 21 February65 1994; Interview, Senior official, Forest Department, Kuching, 17 February 1994; “Reforestation does not cover logged areas,” The Borneo Post, 20 November 1993; and “Reforestation Only In Deforested‘ Permanent Estates,” Peoyles Mirror, 20 November 1993. 66Quoted in Michael Vatikiotis, “Clearcut Mandate,” FEER, 28 October 1993, p.55. For background on the federal initiatives to combat ‘ illegal logging, see Abu Yamin Salam, “Army can nab illegal loggers,” New Straits Times, 25 April 1993, p.2; “Copters to combat illegal logging,” The Star, 25 April 1993, p.3; and “New law to 235 Iw HI IC/)IJ ‘dPi 0 f-I- H CI- p1 U) Q C) U) H ci Cr ‘d nb CD HIH- IPJfl) H Mi H- ZY Hi Cl) H- 0 Cr P1 CD 0 CD Cr111 H1 Ibb PH Mi ‘ZI CD Cr U) ii ii (1) (.C 1< H-Ii Ii (DICD Iiii H- CD 0 CD CD < CD CF c). H- Cl) Cr pJ OICD • Il)2 I C) - Ii Ii Ii CD C) J Cl) P1 U) P1 p I0 1) ; pi- I p) Cl) Cr pi Cl) ‘-< CF CI- ff2 CI- H Ii CD Cr H Cr < 4I]11 Ii Cl) CD i Cr CD p1 U) 0 0 P1 U) H- ‘1 =Ci < Hpj IH< U) p1 Ii pi P ‘1 Ii - Ii Cr “i CD 0 . U) CD p1 H p1 k< iwCt H I P1 0 U) Cr 0 1 - p1 Hi 0 Ii Ii H gi 0 CD H CD CD Cr CD U) 11 H P1 CD U) Cr Q Cr Cr Hi c-F H- P1 H H COIC) (l)CD jH, 0 U) 0 CD H Cl) P1 < Ci) 0 U) b U) Lxi CD C) CD 3 rI I(!) 5CI) C) CD P1 Cl) (l)U) Cr , 1 H Ii Cr çu CD CDH- piCD ‘i 0 H CD H- 0 0hpi U) 0 H- 0 H CD II U) p 0 rr Hi C) Cr CDL H (1) H- CD Cr CD p Hi H- p( Hi I H- Cr H 0< U) b. c CD H- 0 i H 0 Cr Cr p1 C) II H O° CD CD -C’ ° CD tY CD C) CF Cr CD O(DH CD H 0 H — LQ ) ‘.OU)P) .Q H- U)0 rr H- U) (1• 0 pj P H Wçt p ‘ U) ‘1 U) C) H- H c3.1 -= .11 0 H- H 0 I ‘ H k 175Quoted in Seman Endawie, “Cash-for-logs scheme soon,” Sarawak Tribune, 2 February 1993. The Sarawak Forest Department also claims that efforts to capture illegal loggers are frustrated by local residents who work for loggers and refuse to provide information on illegal activities. “Locals collude with illegal loggers,” The Borneo Post, 10 June 1994; and “Soon Kai Warns Accomplices,” Peoples Mirror, 14 June 1993. The village singled out by the Forest Department in the above articles denied these charges. “We have nothing to do with illegal logging,” The Borneo Post, 23 June 1993. 76Doug Tsuruoka, “Cutting down to size,” FEER, 4 July 1991, p.44. ‘ 238 export and import documents. Inside Sabah, Inchcape would replace forestry and customs officials who verify volumes, tree diameters, species type, and tax and royalty assessments. Inchcape would also place inspectors in key importing countries, including Japan. According to Sabah forestry director Miller Munang, “the global approach -- checking shipments at both ends -- is the best way to plug the leak in the state 77coffers.” If, as Munang hopes, Inchcape inspections begin at the end of 1994, this could significantly increase state capacity to control illegal logging and tax evasion. Since foreigners are not linked to patron-client networks and are not involved in political struggles, in theory Inchcape inspectors could be far more effective than current state officials. But state leaders and implementors who feed on timber profits are unlikely to allow this to occur. It is more likely that Inchcape’s proposal will be scuttled or that Inchcape inspectors will become pawns of the ruling elite to legitimize current practices. In the early 1990s, the federal Inland Revenue Department began a campaign to stop transfer pricing by Borneo Malaysian timber firms. According to federal Primary Industries Minister Datuk Lim Keng Yaik, even though transfer pricing is exceedingly difficult to prove, in 1992 Inland Revenue forced numerous Sarawak timber companies to pay outstanding taxes, including one large 77Th1s quote is a summary of Munang’s comments by Doug Tsuruoka,‘ “Tree Cover: Malaysian state may hire Inchcape unit to track timber,” FEER, 20 January 1994, p.54. This article describes Inchcape’ s proposal. 239 Woods,” management. marginal But response difficult changes major to greater international only corporate state minimum.” 78 revenues authorities Tiong) company suspicious investigation claims conglomerate state Borneo ‘ 79 1b±d. ‘ 78 Quoted paid In company initiatives, for AWSJ, impact made that to to the leaders. improvements, of links M$20 to Malaysia of declining evidence searched timber M$3.2 Harvesting In midst a which Tiong. have 15 in wade -- on criticism transfer million mere to late February large Rimbunan Raphael billion. federal not management. the had through is of after-tax Sarawak’s According of 1993, timber been still companies, especially in rates Malaysia’s Inland to tax pricing of 1994, Pura, federal Hijau authorities the pay disclosed, stocks the its As evasion. far are 240 profit Rimbunan to Revenue federal M$100 p.4. a Sdn “Timber from rhetoric environmental falling perhaps the Overall, has corporate result, in rather vigorous Bhd hindering financial reaching million. of are there dropped While police Department Hijau -- Baron but M$9.68 because than often Rimbunan and there from taxes.’ 79 is this campaign Group the and better sustainable document ample records Emerges practices, transfer weaker million to 1976 As Borneo do appears results has Inland Hijau a (led a reason seem management. to Compared result, than of to had Malaysian “bearable From on pricing. by concrete 1991 Sdn Tiong’s Revenue to of timber reduce to it a Datuk those total to be the Bhd the far the be be he to is a October barriers plywood. Japanese below slightly factors export been policies management: logs trading ecological based With investment, Kwang -- reduced succinctly tend customs ‘crackdown.’ have 180 Quoted -- powerful Keeping swamped to the networks, Yang, restrictions rapidly companies 1993, shaping and logging stoked be consumption more to costs in Since shadow summarized ODA, small-time “On forestry manufactured When an by in in Borneo p.54. political processed extracted paper, of Borneo Japanese under the Michael mind the large and opposition have of regeneration illegal log of conservation timber. impact enforcement in Malaysia, domestic international bought there Malaysian timber sawn operators the patrons wood export Vatikiotis, Sarawak, mills using timber loggers of timber, current is member huge from I companies 241 patron-client a Japanese Northern ban and argue protecting that I timber sluggish officers projects or quantities are Japanese Borneo or sustainable now in plywood pressure.” 8 ° of “Clearcut local campaign churn that smugglers Sabah, relatively parliament management. bulldozers have turn log Malaysia. move integrated the major in swidden out and companies purchases. of Borneo politics and largely effects to Mandate,” in to management. veneer, logs cheap, loggers, are the the assess more improve and from farmers. Malaysia at As nabbed, However, into direction gradual escaped of now and disposable and chain prices a important FEER, Japanese Japanese Sarawak, and result, Japan’s timber- import import timber timber These saws have with they the log far Sim the 28 of residue of Japan’s past log consumption, and lingering log purchases in Sarawak, have left the deepest scars on Borneo Malaysia’s forests. JAPANESE ODA IN BORNEO MALAYSIA JICA and the OECF have only channelled a small amount of technical assistance and loans to Sabah forestry 181projects. The OECF has not provided any concessional loans to help finance plantation 82schemes.’ JICA currently has no projects in Sabah and there are no plans for future 83assistance.’ JICA’s last major forestry aid project in Sabah -- the Re-afforestation Technical Development and Training Project -- began in 1987 and expired in March 1994. This project was operated jointly by JICA and the state-controlled Sabah Forestry Development Authority (SAFODA). The state government provided funding, while JICA supplied experts on reforestation, equipment (such as bulldozers, front-end loaders, and fire-fighting equipment), and training in Japan. The main purpose of the project was to enhance planting techniques and train forestry personnel in silvicultural methods for timber plantations. The research concentrated on acacia mangium -- a fast-growing lnterviews, Timber Association of Sabah, Kota Kinabalu, 8 February81 1994; Institute for Development Studies, Kota Kinabalu, 12 February 1994; and Ministry of Tourism and Environmental Development,‘ Kota Kinabalu, 15 February 1994. lnterview, Institute for Development Studies, Kota Kinabalu, 12 February82 1994. lnterview, Senior JICA official, Sabah Re-afforestation Technical83‘ Development and Training Project, Kinarut, Sabah, 14 February 1994. ‘ 242 Australian hardwood imported to Sabah in the 1960s -- although there was some preliminary research on dipterocarp. Today, SAFODA controls this project, training new recruits using the knowledge and equipment supplied by JICA.’’ According to SAFODA and JICA officials, the SAFODA-JICA project was a resounding 85success.’ SAFODA -- created in 1976 -- had made minimal headway in replanting in its first decade. But with JICA’s advice and equipment, by 1993 SAFODA had planted 25,000 hectares of acacia mangium, and 8,000 hectares of 186rattan. SAFODA has no ambitious plans to expand and only expects to plant around 2000 hectares every 87year.’ To date, only a few thousand hectares of acacia mangium have been harvested. Most plantation logs have been sold to South 188Korea. Interview, Consulate of Japan, Kota Kinabalu, 9 February 1994; Interview, Senior manager, SAFODA, Kota Kinabalu, 12 February 1994; and Interviews, Senior officials, Sabah Re-af forestation Technical Development and Training Project, from JICA and SAFODA, Kinarut, Sabah, 14 February 1994. For background, see “Japan helping in development of the forest plantations,” The Star, 20 September 1991, pp.8-9; and JICA and SAFODA, Official Opening of the SAFODA-JICA Reafforestation Technical Development and Training Centre (Kota Kinabalu, Sabah: JICA-SAFODA, 1989). lnterview, Senior manager, SAFODA, Kota Kinabalu, 12 February 1994; 85and Interviews, Senior officials, Sabah Re-afforestation Technical Development and Training Project, from JICA and SAFODA, Kinarut, ‘ Sabah, 14 February 1994. lnterview, Senior manager, SAFODA, Kota Kinabalu, 12 February 1994. 86 lnterview, SAFODA official, Sabah Re-af forestation Technical Development87‘ and Training Project, Kinarut, Sabah, 14 February 1994. 188Plantations in Sabah are classified as agricultural enterprises‘ and are exempt from the log ban. export Interview, Institute for Development Studies, Kota Kinabalu, 12 February 1994; and Interview, Senior manager, SAFODA, 12 February 1994. 243 JICA-SAFODA research on cross-breeding and silvicultural techniques improved the quality of acacia mangium plantations in Sabah. Trees are taller, straighter, grow faster, and have fewer blemishes. But compared to the problems confronting Sabah forestry managers, these efforts are minor. The project itself was quite small; only four, and sometimes five, JICA researchers worked at the project. Moreover, even if acacia mangium becomes an important ‘agricultural commodity’ able to thrive in degraded areas, it cannot replace the biodiversity and environmental benefits of natural forests or sufficiently substitute for the commercial value of dipterocarp logs. It is also unclear whether these plantations will actually reduce pressure on natural forests. In theory, plantations can create employment and provide an alternative wood source in severely degraded areas. But in practice, as in Indonesia, timber companies often maximize profits by clearing natural forests before establishing 189plantations. Japan has provided no major loans or grants for Sarawak forestry projects.’ There is now one major technical assistance project. °9 In April 1993, JICA launched the Effective Wood Utilization Research Project and Timber Research and Technical Training Centre. There are four long-term Japanese experts 189This evaluation of the JICA-SAFODA project is not a criticism of individual researchers. I was impressed by the competence and enthusiasm of JICA-SAFODA staff in Sabah, and within their mandate, these scientists made notable strides. But these were narrow, technical solutions with little impact on the sweeping environmental and management problems facing Sabah foresters. lnterview, Senior researcher, Forest Department, Kuching, 21 February90 1994. ‘ 244 and Utilization Training February Research 21 February amounts 1998,” JAPANESE Sabah, overall burn provide Better less inconsequential the encourage year. of advising for two specialists February domestic Interviews, 1994-95 natural or ‘ 92 lnterview, 193 lnterviews, ‘ 91 lnterview, wood 40 In wood JICA In three compared equipment, to in Sabah, 1994; Project CORPORATE Centre, and loggers financial 1994; its S 50 logging utilization processing. and Research visit 1994; is forests.’ 9 ’ Sarawak percent researchers presumably first Institute just Japanese WWF the 192 and Foreign Senior to and Sarawak to also for Timber technology, INVESTMENT and over Malaysia, Sarawak year, Timber extract the Project of one and counterparts. Ministry see coupled processing.’ 93 for JICA While At 167 logs. correspondent, trading reduce problems Association Forest or from JICA JICA Research present, Development Forest technical million. lesser two in official, IN Petaling and these 245 with Sarawak spent JICA’s and Sarawak, pressure BORNEO months. Department, of companies advice Department, of quality, improved Timber and Sarawak 1150 efforts Tourism of As project This timber Jaya, Effective MALAYSIA’ will Kuala Studies, As contribution Training to From on Sabah, As of million. Research project have improve well, commercial processors part lesser efficiency study December Lumpur, 10 are “The April management, is and July March S Kota Kota invested Wood Centre, also of laudable, TIMBER Effective in some known the is Environmental and 1993. 1993 JICA’s this 7 Kinabalu, Kinabalu, Utilization Japan 1993, 1994. March designed supposed has species efficiency discard will Technical Kuching, to project, INDUSTRY species. Japanese minimal JICA’s budget as March 1994; waste there every Wood been 12 in or in to to 8 were 11 wood processing companies in Sabah with Japanese equity. These mills include veneer, plywood, sawn timber, and 194moulding. Japanese investment is not likely to increase in the near future. Since the log export ban and the reduction in log output to 8 million cubic metres, Japanese investors have become even more reluctant to invest in Sabah forestry 95projects.’ Furthermore, Sabah timber operators have become disillusioned with joint ventures. According to a Sabah business executive, local companies are wary of joint ventures with Japan since many lost money in the past. He argues there are two key reasons for this poor track record. First, some Japanese partners manipulated timber prices and undercut profit margins of joint ventures. In these cases, the Japanese joint venture partner, after consulting with their ‘home’ company, sold logs below the international market price to enhance the profits and economic stability of the company as a whole. Second, joint ventures often have lower production efficiency. Japanese (as well as U.S. companies) have a tendency to manage workers within their own cultural prism. As a result, Sabah Development, Kota Kinabalu, 15 February 1994. 194From the data bank of the Department of Industrial Development and Research, Sabah, Malaysia, supplied February 1994. Small foreign investments only require state approval while large ones necessitate federal permission. Of the 11 Japanese projects in Sabah, 7 were large enough to require federal endorsement. 95joehann Angkie, “Japanese sceptical on Sabah,” Daily Exress, 17 November 1993, pp.1-2; and Joehann Angkie, “Come, talk to us: TAS,” Daily Express, 19 November 1993, p.1. The political struggle between ‘ Prime Minister Mahathir and Chief Minister Pairin further increased the reluctance of investors. See “No trade zone under PBS: KL,” Daily Express, 15 February 1994. 246 workers -- who may, for example, respond poorly to anger -- are less 96productive.’ Sabah’s dominant timber operator -- the Sabah Foundation -- has moved away from joint ventures. For example, Sinoru Sdn Bhd -- a wood processing plant in Sandakan -- was originally a joint venture with Japan’s Yuasa Trading Company. However, in 1989 after 15 years as a joint venture, the Foundation gained full 97control.’ Most Japanese trading companies have avoided direct investments in logging in Sarawak. The few Japanese-Sarawak logging joint ventures have not been particularly successful. For example, Itochu’s joint logging venture with Limbang Trading Company (owned by James Wong) was a public relations fiasco. A scandal erupted after it was disclosed that the company’s logging roads had been funded by JICA and the EXIM 98bank.’ Itochu withdrew in 1987 after intense public criticism, including a debate in the Japanese Diet. There have also been few Japanese wood lnterview, Sabah timber executive, Kota Kinabalu, 9 February 1994. 96 97The Foundation’s only remaining joint venture is Sabah Softwoods,‘ an agro-forest plantation with the company, ‘ British North Borneo Timber (which holds a 40 percent share). The Foundation offered to buy these shares but North Borneo Timber refused. Interview, Senior executive, Yayasan Sabah [Sabah Foundation], Kota Kinabalu, 14 February 1994. For background on Sabah Softwoods, see Raymund G.S. Tan, “Tree Plantation -- The Sabah Softwoods Sdn Bhd Experience,” in Ti Teow Chuan, ed. Opportunities and Incentives, pp.37-50. 198Yo±chi Kuroda, “Historical Overview of the Timber Trade and Forestry Development in East and Tropical Asia and the Pacific Nations,” A Paper Presented at the International Workshop for Forest and Environmental Preservation in Asia-Pacific, Seoul, South Korea, February 1994, .3p. 247 with Hong, houses Development wood hill years,” Association as Sarawak Implications timber February 1987) Kuching, In official, logging market.’ 99 Timber processing little about credit, companies companies Sarawak 1987, Sue forests 202 Japanese 201 Taiwan 200 James ‘ 99 lnterview, Natives manufacturing. half is for Industry Timber and interest. 20 ’ New equipment, Stolton, 1994. Datuk 20 still Forest to prefer their Sarawak’s timber a joint timber Straits and Brochure, during Ritchie, February dozen, (Surrey, invest is of Industry very Leo funds Development intricate Research, the Sarawak Department, The ventures companies to Senior processing and Moggie the Times, much all Ministry in most East and Rather purchase UK: “Sarawak 1994; Kuching, Development l980s. technical processing. 20 ° with controlled Interviews, equipment (Penang, Asian official, WWF line important claimed in 30 Kota are Corporation Kuching, guarantees companies than [STA of Sarawak. March UK, Kuroda, 248 of logs, largely to Timber Resource Kinabalu, undated); advice Malaysia: credit.” 1994), represents that participate Corporation, cut helped by 1992, investor Sarawak and 17 Department Trade But the “Historical in log dependent In “the to of have February Planning p.9, Sarawak. p.3. when companies Japanese these 16 total, and access facilitate production Quoted Institute and marketing Timber in both nearly February first directly, STIDC, Interview, necessary Its Borneo firms on there 1994. Overview,” to and in of urged trading Sarawak Environmental log these quoted Association, Nigel the 500 Masyarakat, logging. 202 Kuching, the within of have Industrial 1994; Malaysian Sarawak’s have Japanese Japanese Sarawak trading private provide Sarawak trading Dudley houses Timber Senior in shown p.2. been and two E. 17 JAPANESE COMPANIES AND CONSERVATION IN BORNEO MALAYSIA Japanese companies have not participated in conservation, or improving forestry management in 203Sabah. In the last few years, Sabah officials have tried to prompt major log buyers from Japan -- companies like Sumitomo, Itochu, and Marubeni -- to provide assistance for forestry management and conservation. But so far there has been no 204response. The Sabah Foundation -- which is now developing techniques and training personnel for enrichment planting in logged areas -- has received some support from two utility companies, the New England Power Service and the Dutch Electricity Generating Board, but nothing from 205Japan. According to a Sabah forestry official, Japanese companies seem far more concerned with developing new techniques to make temperate plywood than with ensuring a sustainable yield of tropical 206timber. Japanese trading companies have also not invested in timber 203lnterview, World Wildlife Fund Malaysia, Kota Kinabalu, 15 February 1994. 204lnterviews, Senior manager, Innoprise Corporation, 9 February 1994; and Sabah Forestry Department (Jabatan Perhutanan Sabah), Kota Kinabalu Branch, 16 February 1994. 205lnterviews, Institute for Development Studies, Kota Kinabalu, 12 February 1994; and Senior executive, Yayasan Sabah [Sabah Foundation], Kota Kinabalu, 14 February 1994. Utility companies fund tropical forest plantations and rehabilitation to ‘off-set’ carbon dioxide emissions (utility companies discharge carbon dioxide while forests absorb it). This will presumably improve corporate image and perhaps reduce future ‘carbon-taxes.’ For details on the merican and Dutch projects, see Michael Vatikiotis, “For Profit’s Sake,” FEER, 14 April 1994, p.68; “A Better Way to Cut Trees,” Asiaweek, 28 April 1993, p.50; and M. Hamzah, “Down the beautiful green Danum, Sabah Times, 2 February 1994, p.4. 206lnterview, Sabah Forestry Department (Jabatan Perhutanan Sabah), Kota Kinabalu Branch, 16 February 1994. 249 plantations in Sabah. In 1993, Sumitomo -- acting as a broker for two paper companies in Japan -- began negotiations for a large, joint venture plantation project. These companies, however, eventually lost 207interest. Japanese corporate executives are wary of the long-term commitments, financial risks, unclear land tenure, sudden political or policy changes, and world fluctuations in pulp and paper S20prices. Poor harvesting techniques and inefficient processors waste valuable wood and increase the pressure on commercial timber stocks. Although Japanese corporations have provided some equipment and technical advice for Sabah loggers and processors, there has been no systematic effort to enhance processing efficiency, recover timber waste, or improve cutting 209methods. Instead, Japanese trading companies have sent technicians to Sabah to guarantee that logs and sawn timber meet Japan’s rigid cutting and manufacturing stipulations. These technicians ensure that the best timber reaches the Japanese market; they are not concerned 207lnterview, Senior manager, SAFODA, Kota Kinabalu, 12 February 1994. To208 offset some of these concerns, in mid-1994 the Sabah government started drafting comprehensive investment guidelines. Interview, Institute for Development Studies, Kota Kinabalu, 12 February 1994. 209lnterview, Institute for Development Studies, Kota Kinabalu, 12 February 1994. Some Sabah students have gone to Japan to train on high-tech forestry equipment. Quite naturally, these students become more comfortable with Japanese machines, and are more likely to purchase Japanese equipment in the future. Interview, Timber Association of Sabah, ICota Icinabalu, 8 February 1994. 250 with the process, only the end 21result. In Sarawak, -- where processors waste as much as 50° percent of logs -- Japanese companies have also done little to improve efficiency. One exception is a Japan-Sarawak joint venture to produce Sarawak’s first Medium Density Fibreboard (MDF) plant. Construction began in 1994 and production is expected to begin in 1996. There are five partners: Dai]cen Corporation of Japan holds 50 percent equity, Itochu (20 percent), the Sarawak Timber Industry Development Corporation (15 percent), the Sarawak company Proexcel (10 percent), and Datuk Wong’s Limbang Trading Company (5 percent). The joint venture company -- Daiken Sarawak Sdn Bhd -- received a US$50 million loan from the EXIM Bank of Japan. To make F, this plant will use wood scraps from plywood and saw mills. The company hopes by the end of this century to export 80,000 to 100,000 cubic metres of ’21NDF. Sarawak has been attacked by environmentalists around the world for its forestry management and treatment of aboriginal peoples. Japanese companies have also been strongly criticized. Some of the harshest criticism has been levelled at Mitsubishi, even though, in terms of log purchases, other Japanese companies have a greater impact. To counteract these critics, Japanese companies have increased funding for public relations and made 210lnterview, Senior Sabah timber executive, ICota Kinabalu, 9 February 1994. 211Aden Nagrace Timor, “S’wak’s first MDF plant to start construction April,” The Borneo Post, 20 February 1994, p.6; Interview, Sarawak Timber Industry Development Corporation, Kuching, 17 February 1994; and Asian Timber, June 1994, p.7. 251 April Sabah 1994. Forest Iwai, Species make 1994. Forestry, Kuching, Project,” has February out imports, that Philippines, professor JAPANESE have experiment for example, token ‘conservation’ been of “show. 214 Confidential 215 The 212 lnterviews, 213 5ee Japan’s been cheap in Sawmillers 1992, Sumitomo, contributions a Plantations, Sarawak, Japan Mitsubishi total as To 20 TIMBER 1994; in Universiti at few ,,214 major Yusuf plywood. to a pp.36-44. February Ahmad Rehabilitate Japanese primary the buyer serious imported recreate of projects, and PURCHASES Industries and Japanese University Hadi after 20.2 Said Senior Senior Interview, partially of Proceedings to to Pertanian 1994. Since impact efforts companies million logs. and Sajap 4.0 commercial forestry a a the official, companies FROM natural executive, lesser Degraded Association, the million Abas of on et. Bintulu Most funds to cubic University Malaysia, 252 quality BORNEO Tokyo, Borneo turned of management Said, al., improve extent rain of timber a cubic the Forest metres in national Forest project these eds., Sarawak MALAYSIA of Malaysia’s Bintulu first of “Planting Sabah forest. 213 Kota metres timber Serdang, all Mitsubishi. of stocks wood Department, of logs Indigenous in Kinabalu, Tokyo, to Lands: the is are Timber seminar, Southeast project, Sarawak, in management. 212 from Sabah. 215 designed have collapsed recent Indigenous Mitsui, Malaysia, timber Sabah According Tokyo, Sabah Association, The been Kuching, Species 16 Interview, Faculty a but Asian is corporate February the research industry In Bintulu Itochu, used and 17 in higher 23-24 1970, there to Tree most May for the log 1.9 For of 17 to a Defeats Association. Straits Japanese STIDC, Statistics and million Corporation Jbout logs exports. 218 this metres, from imports 9 tropical million for imports from came 21.8 l980s, cubic million Nectoux, 7.0 217 Raphael Sabah 218 ”Tokyo 216 All From Sarawak from still million from 80 metres and 1993), Rivals,” Times, had cubic from cubic million together percent log Plywood 1979 figures cubic had Sabah. after Sarawak. of accounted dropped (Perbadanan In Sabah imports. 216 increased Timber, came protests metres p.3. cubic metres Timber dropped Pura to 8 1992, Also metres Indonesia’s cubic May AWSJ, was Manufacturers’ 1988, representing are steadily from In and to metres of exported 1993, from and Japan As Figure see to for rounded 1993, 13.7 metres, 14 substantially. to Kemajuan Sabah Sabah of Sabah, Steven Sabah around Timber Sarawak. March KL over p.22. Sarawak logs, of million declined. imported log as B7, exported logs. to over to Southeast 253 and and Jones, logs over 2.6 1989. Perusahaan export 70 a Association Products. Japan. 217 worth p.118. the result Sarawak percent Sabah’s only million cubic In Timber By became 2.1 90 first an In 1978, “Sabah ban, By more 1991, percent 1.5 Asian million annual metres. 1988, of Based After 1987, Kayu Sarawak decimal cubic for Japanese ban of Industry less Japan and million than the Japanese Log-Shipping Japan Sabah’s Sarawak), logs; 5.5 Japan’s on on 1987 average the metres, of abundant log cubic US$5.5 Sabah imported 1993 point. data log million log all Japan cubic Japanese imported export 9.2 Development log total metres exports,” accounted purchases total of (Kuching: from although billion. Japanese (STIDC), million imports in Cartel Tariff Kuroda around metres around cubic ban, the log 5.4 log log the of Japanese log imports from Sabah plummeted to less than 300,000 cubic 219metres. From 1987 to 1993, there were only marginal increases to Japanese plywood, sawn timber, and veneer imports from Sabah. In 1988, Japan imported 213,700 cubic metres of sawn timber, 200 cubic metres of plywood, and 80,200 cubic metres of veneer. In 1992, Japan imported 444,496 cubic metres of sawn timber, 14,965 cubic metres of plywood, and 201,616 cubic metres of veneer. After the log export ban, sawn timber and veneer imports did not change significantly, although plywood imports increased to over 120,000 cubic 22metres. As a result of these changes, total Japanese timber imports° from Sabah (in roundwood equivalent), fell from nearly 7.5 million cubic metres in 1987, to 2.9 million cubic metres in 1992, to well below 1 million cubic metres in 1993.221 As Sabah’s log exports decreased from 9.4 million cubic metres in 1987 to 3.4 million cubic metres in 1991, Sarawak increased log 219These figures are from the Japan Plywood Manufacturers’ Association, Plywood Industry in Japan (Tokyo: Japan Plywood Manufacturers’ Association, 1993), pp.24-25; the Japan Plywood Manufacturers’ Association, Plywood Industry in Japan (April 1994), p.8; and data from the Japan Lumber Importers’ Association, received by the author, 4 April 1994. 220From January to July 1993, China was the main market of Sabah plywood, accounting for 35 percent of total exports (Japan imported 20 percent). Korea was the major market for sawn timber, accounting for 34 percent of total exports (Japan imported 16 percent). Japan is the largest market for Sabah veneer, accounting for 42 percent of total veneer exports. This data was supplied by the Sabah Sawmilling Industries Association, February 1994. 221This data was supplied by the Malaysian Timber Industry Board, Kuala Lumpur, March 9, 1994, and is based on data from the Statistics Department of Sabah. Except where noted, the figures for 1993 are based on data from January to October and extrapolated for the entire year. 254 exports, from 12.6 million cubic metres in 1987 to 15.9 million cubic metres in 1990 and 15.8 million cubic metres in 1991.222 As logs became less accessible in Sabah, Japanese corporate purchases were a key force behind faster extraction in Sarawak. In 1988, Japan imported 5.3 million cubic metres of logs from Sarawak. Japanese log imports from Sarawak climbed to 6.7 million cubic metres in 1990 and then dropped slightly in 1991 and 1992 to around 6.5 million cubic metres. In 1993, after Sarawak increased its restrictions on log exports, Japanese log imports decreased to 4.9 million cubic 223metres. Over the same period, Japan imported more sawn timber and plywood, although veneer imports declined. In 1987, Japan imported 10,723 cubic metres of sawn timber, 2 cubic metres of plywood and 47,848 cubic metres of veneer. In 1992, Japan imported 54,668 cubic metres of sawn timber, 45,300 cubic metres of plywood and 18,449 cubic metres of 224veneer. As a result of these changes, total Japanese timber imports from Sarawak (in roundwood equivalent) increased from almost 6 million cubic 222Sarawak Timber Industry Development Corporation, Statistics of Timber and Timber Products. Sarawak 1993, p.3. Also see “Loggers’ Lament,” Asiaweek, 28 April 1993, p.49. 223These figures are from the Japan Plywood Manufacturers’ Association, Plywood Industry in Japan (1993), pp.24-25; the Japan Plywood Manufacturers’ Association, Plywood Industry in Japan (April 1994), p.8; and data from the Japan Lumber Importers’ Association, received by the author, 4 April 1994. 1n224 1992, Sarawak exported 10.5 million cubic metres of timber. Japan purchased 45 percent of this total; Taiwan, the second largest consumer of Sarawak timber bought 20 percent. In 1992, log exports provided the key source of forest revenue, earning M$3.1 billion, compared to M$385 million for sawn timber, and M$255 million for veneer and plywood. Sarawak Forest Department, Forestry in Sarawak, p.34. 255 Malaysia, unimpeded allow Konsumer, prices sufficient are 1993, Corporation, entire years because 1993, from only processed Industry One prices for revenues support metres JAPAN, increase, 1993, imports based junk angry 227 Halinah 226 At 225 These 20 the p.3. As Chief to however, Sarawak that TARIFF in year. years Japanese they to Board, sustainable furniture and, Statistics grow an Malaysian markets,” on The Borneo (May timber Japanese 1987 around funds reflect Minister International data are statistics Statistics to Battle, BARRIERS, in is 1989), Todd, to export Kuala to Also grow. dirt are theory, cheaper companies from Malaysian for 5.5 reduce and import around environmental columnist Sarawak Department far in “Japan management. 226 Taib Lumpur, p.502. cheap. million sustainable January see restrictions throw-away That’s World LOG below were of as in tariffs timber Tropical 6.5 called Sarawak Tribune, Timber PRICES, in pay Japan Rubbishes processed March A writes: Rainforest cubic why supplied to the million 256 Indonesia, of jungle for October costs, construction production for on Japan Sarawak. cost than management. 9, and Timber reduced AND metres. 225 Timber 13 processed Also “Japan Borneo unimpeded tree 1994, Malaysian cubic of timber a May by Timber SUSTAINABLE is Movement there and softwood syphon sustainable Council as using which the 1993. total Industry and is The extrapolated metres Malaysian yet is frames.” 227 in wood gobbling Products. imports are Malaysian market figures Malaysian money “Taib little took and Timber,” Japanese still Indonesia, Meeting pine MANAGEMENT based reduce in Sahabat Development management. hundreds that calls access 1992. that chance our to logs maintain for Sarawak Without on for Utusan in Timber timber timber timber trees Japan could Alam data 1993 took May for the and the to of of In more unstable modern Borneo asymmetrical. these CONCLUS fluid unsustainable resource money intricately rules automatic Japan’s value, give incentives seeking Timber environment. sustainable 228 Quoted 229 The on us Patron-client peripheries, links where and Post, ties Association, ION it patron-client self-interested a extensive ties distribution allows better final solution. distort to are together. management. your connected 19 which in We extract timber Modern November vertical, chapter us price have “Loggers mouth log state frequently and politics to argues: management. patron-client networks purchases logs all In harvest and for -- are Like material is. discusses 1993. policies, a Barney instrumental, along turn management timber.” 228 patron-client recklessly based setting “If traditional and If rupture it undermine 257 to been have you you exchange, in Chan, timber less But this networks, copters higher a give where want played saying as fashion while and increasing In on point spokesman informal, political state patron-client tropical theory, in to relations make loyalty particularistic, contributing prices as a to timber save Borneo however, further. more key capacity quick prices the prices Chan for reciprocal, the parties role timber may and friendly West: binds Malaysia shape money. 229 the have rainforest, is rise,” honour simply relations, in to to is put a correct. many contest driving enforce Sarawak highly large, timber not higher to rent- your The and and are add the of an elections and jockey for control. This creates an unpredictable atmosphere that encourages fast, destructive logging. Political leaders have used timber concessions and profits to build and hold together multi-ethnic patron-client networks, and appease and coopt potential adversaries. As a result, patron-client ties strongly influence the allocation of concessions, licences and contracts, determining who primarily benefits from logging profits, and contributing to a complex distribution system that decreases transparency and accountability necessary for environmental management. Patron-client ties to timber operators at the top of the state also dilute political will and weaken state supervision of forestry and enforcement officers. In this context, timber- based patron-client networks are able to capture or coopt bureaus of the state. This contributes to many state implementors ignoring customs and management regulations in exchange for gifts, money, and career opportunities. In short, informal, particularistic relations are a critical force shaping formal timber institutions, policies and regulations in the clientelist states of Borneo Malaysia. Sabah, which began large-scale logging before Sarawak, now has grave forestry problems. Poor management, weak enforcement, political links to logging concessions, unstable patron-client ties, and constant disputes with the federal government have contributed to over-logging and forest degradation. The dominance of the state-controlled Sabah Foundation -- rather than enabling the state to tackle unsustainable logging -- has contributed to 258 mismanagement as timber profits have been channelled to powerful political patrons such as Chief Ministers Mustapha, Harris Salleh, and Pairin. The 1993 ban on log exports, and the moves to tackle poor harvesting practices and illegal logging have done little to improve timber management. Annual log production has dropped; but this is more a result of declining stocks of commercial timber than better forestry management. Sarawak has similar problems, but with a later start and more forest resources, there are still considerable areas of valuable commercial timber. Based on timber concessions and profits, top politicians such as Chief Minister Taib and Environment and Tourism Minister James Wong have built personal fortunes and powerful patron-client networks. These networks have distorted state policies and undermined state capacity to enforce timber regulations. Private-sector timber companies -- such as the Rimbunan Hijau Group (Datuk Tiong) and the Ekran Company (Datuk Ting) -- are protected by political patrons and assisted by forestry and enforcement officers. As a result, these corporations continue to extract unsustainable timber yields, ignore logging rules, conduct illegal logging and smuggling, elude state royalties and federal income taxes, and disregard conservation and silvicultural treatments. In the short-term, since Sabah’s log export ban, Sarawak has benefitted from higher log prices. But these prices still fall far short of the costs of sustainable management. In addition, as in Indonesia and Sabah, government moves to build a domestic processing industry are unlikely to 259 promote sustainable logging. With similar political forces driving mismanagement, and Japanese corporate purchases expediting over cutting, Sarawak appears headed down the same trail as Sabah, with Indonesia not far behind. Unlike in Indonesia, Japanese ODA and investment have had minor implications for Borneo Malaysian timber management. Japanese tariff barriers have also had little impact on state and corporate revenues, although since 1993 this has become relatively more important. Nevertheless, Japan’s shadow ecology has expedited the process of Borneo Malaysian deforestation. Japanese log purchases have provided incentives for destructive logging and crucial funds for patron-client networks. In many cases, Japanese equipment and advice also facilitated unsustainable logging. As Japanese imports of logs from Sabah increased in the 1970s and early 1980s, Sabah’s primary forest cover fell sharply, from 55 percent of the total land area in 1973 to 25 percent in 1983. Today, only 413,000 hectares of Sabah’s Commercial Forests are undisturbed. While Japan now has less impact on timber management in Sabah, massive log purchases in the 1970s and 1980s -- at prices far below the costs of sustainable management -- have left Sabah scrambling to find the funds and timber resources to save what remains of their commercial timber industry. After exhausting much of Sabah’s valuable commercial timber, Japanese corporations turned to Sarawak. Log imports from Sarawak grew from about 1.5 million cubic metres in 1978 to 2.3 million cubic metres in 1980 to 5.6 million cubic metres in 1988. By 1990, 260 will groups. and perhaps will the by lines, Patron-client possible the relations inseparable and preparation for companies stocks Today, Predictably, from remarkably sustainable 5 Japanese million timber collapse other. means are timber dissolve, Having force Papua especially even fade importing more log If profits, impact cubic since of are consistent: Since with patron-client timber -- management, New analyzed or of for timber imports cooperation these ominously, developing links quite a the after metres in change Guinea restrictions of patron-client the more since at Sabah management, companies timber revenues now declining possibly from the the governments collapse of simply softwood in and an and provide it could between very new logs Sarawak implications industry. one clusters economic Sarawak is are the techniques evaporate, realigning move on least, will from Japanese timber 261 clusters destabilize of interesting from an now log the surpassed Solomon impose tropical to certainly Sarawak. essential these to purchasing exports, depletion crisis Another diverse around a resources of trading new reshape are to along many log two patron-client Islands. 7 make area the largely will the log to Rather million result result ethnic export Japan issues patron-client source religious of companies more political and speculate world. temperate as on stocks, likely timber bound commercial imports than of in and patron-client restrictions. are tropical cubic realign, of As the a accompany virtually stability religious resources or relations encourage change have well, together Japanese plywood system. metres. loss on ethnic around links been logs and the log of in in timber revenue could be increased calls from Sabah and Sarawak for greater autonomy from the federal government in Kuala Lumpur, especially control over oil revenues. ICuala Lumpur is, however, unlikely to concede control over this key resource and serious disputes could 230arise. For230 a discussion of the tense relations between Kuala Lumpur and Sabah, see Audrey R. Kahin, “Crisis on the Periphery: The Rift Between Kuala Lumpur and Sabah,” Pacific Affairs 65 (Spring 1992), pp. 30-49. 262 CID-JP) ti: H I.< P.) U) Q p-’ U) i IJ Oçt Cr ‘I ‘HM-ICD CD CD II CD <1 Cr CD CD C) P.) CD CD U)o ‘I OH-U) HiHi C) H- II P.) CD ‘I ( < C) <1 H CD rtH-- I:-’ P.) P tJ’F-’O C) 0 CF H- ‘I II H- II P.) CD CD CD w H PH- IlIl pj p.) - P.) It P.) U) U) C) H- C) CD’t H-CDCD - II 1 ( (-Q Fd Cr U) C) Cr P.) j C) °U) U) CD k< c-F CD CD CD P.) H- H H It U) H- Cr Cr CD < Wrr P.) CD CF C Cl. Cr o It CD P Pi Hi i- M H- H P.) CD H- H H- 0Crct CD CD PJCD o CD CD i CD ‘I CD C) U) H-H Mi U’ CD C) H ‘I CD P.) w CD H U)H U) U) Hi Cr Cr Hi (V H-CD CF d -) CF H- 0 P.) 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Nevertheless, the residue of Japan’s ecological shadow of timber compounds the problems facing Filipino managers. Filipinos are now absorbing the costs of substantial profits reaped by Japanese companies in the past. State managers must cope with and pay for the consequences of extensive deforestation, including soil erosion, river siltation, flash floods, climatic instability, and inadequate timber 5stocks. Burdened by past environmental abuse by Filipino elites and their Northern allies, it is hardly surprising that current managers are struggling to find the funds and means to preserve the scattered primary forests, and reforest the swaths of degraded areas. One obvious place to look is Japan. But current Japanese ODA does not compensate for past practices. At present, there are no JICA technical cooperation projects or grants. Instead, the Japanese government has emphasized ‘environmental loans’. But these have major flaws. In the case of the Forestry Sector Program Loan (US$120 million from 1988-1992), rather than reviving the environment, this loan will eventually add even more pressure to extract and export natural resources to acquire foreign exchange The Philippines has one of the world’s highest rates of soil erosion. 5 Debora MacKenzie, “Uphill battle to save Filipino trees,” New Scientist, 30 June 1988, p.42. One study estimated that soil erosion -- which reduces agricultural productivity and potential hydro-electric power, and disrupts irrigation and fisheries -- costs the Philippines over half a billion U.S. dollars every year. Summarized in Frances F. Korten, “Environmental Loans: More Harm Than Good?” Paper Presented at the Fifth Annual Conference of the Northwest Consortium for Southeast Asian Studies, Vancouver, British Columbia, October 1992, p.5. For more details on the environmental, economic, and social costs of deforestation in the Philippines, see Hurst, Rainforest, pp.165-171. 266 and repay the national debt. This chapter is divided into four parts. I begin by explaining key changes to Filipino patron-client relations. I concentrate on shifts prior to 1972, changes after Marcos declared martial law in 1972, and realignments after Corazon Aquino became president in 1986. In the second section, I document links between state patrons and timber operations, emphasizing the continuity of patron-client ties across the regimes of Marcos, Aquino, and Fidel Ramos. In the third part, I examine the impact of pervasive patron-clientelism on Philippine timber management, including the effect on the Department of Environment and Natural Resources (DENR), legal concessionaires, illegal loggers and smugglers, log export bans and restrictions, processing policies, local forest management, and conservation and reforestation. In the final section, I outline the historical impact of Japanese investment, trade, and development assistance on Philippine timber management. I then discuss the residual effect of Japan’s shadow ecology of timber, and the current influence of environmental loans. ‘TRADITIONAL’ AND ‘MODERN’ PATRON-CLIENT RELATIONS Traditional patron-client relations in the Philippines are multifarious, asymmetrical, personal, non-contractual, and grounded in a strong cultural norm of reciprocal obligation (utang na bob). As in most of rural Southeast Asia, these ties initially developed between land owners and tenant farmers. Land owners provided agricultural fields, credit, security, and prestige in exchange for 267 Western Mojares, and pp.105-142; McCoy, Ateneo Province,” Political patron-client a Perspectives Kerkvliet other patron-client Philippines ICerkvliet, patrons of family and “Perspectives bureaucracy informal, upheavals, In Shopkeepers, occupational complex. persisted larger and onslaught loyalty, description this state Resil local 6 Benedict client local wealth, de “The increasingly Visayan new middle-class, eds., B. politicians obedience, and resources Transition and of for Manila pp.82-104. The changes Mojares, (Berkeley: setting, Cristina areas, families. Restoration rice These -- On ‘modernization’ Resil of asymmetrical networks relations backgrounds on decades, and From Kerkvliet Huk Political Municipality,” patron-client changes Legitimacy dealers, University feelings B. to Rebellion: see Marcos and networks relied in labour, “Political became patron-client Blanc-Szanton, Moj University agricultural are more often a the in to less After of ares, Palawan documents Transition employers, -- more To Central traditional and of on patrons. collection Planter in -- Press, became and educational crossing on Aguino, shame. the 268 integrated A networks eds., the pp.82-104; Change unstable urbanization, Ilocos from loyalty, Study of Farming collective state Luzon ties production, Second based California the 1991), Power From labour in As “Change These pp.26G-285; in generations all patron-client Norte,” of of as the the -- became than decline a in Community,” Marcos more reciprocal opportunities, essays Peasant people Fernando Rural a in while World large, especially levels bureaucracy leaders, the Philippines source power. traditional a and La on Press, market in and larger 1950s. To District still direct of in Carlota James War, Politics material-based of Revolt Kerkvliet with Aguino: of of N. an bureaucrats, relations Benedict pp.143-165; both traditional obligation, 1977) These patronage. economy, Alfred Zialcita, personal, expanded, expanding and with society. 6 F. Benedict exchange (Manila: ties in diverse in City,” patron social . Eder, Local in Cebu more ties and For the the W. J. as in a a patrons and clients switch allegiances to maximize opportunities. Modern networks often dissolve when a patron dies or loses political or economic clout. Today, modern networks are pervasive, although some traditional ties still remain, mostly in outlying areas. Alliances between these modern patron-client networks create factions, often generating strong cleavages among Filipino elite . Political and corporate activities are often organized around families. Some families even maintain their own bank. In the 1960s, about 400 families dominated the Philippines. By the end of the 1970s, this had dropped to around 60 families. Filipino families are built on both real and ritual8 kinship ties. Compadrazgo, or ritual kinship, joins families of similar socio economic rank as well as poor families to wealthier ones. These ties are often cemented by a member of an influential family acting 7For a discussion of traditional and modern patron-client networks in the Philippines, see K.G. Machado, “Continuity and Change in Philippine Factionalism,” in Frank P. Belloni and Dennis C. Beller, eds. Faction Politics: Political Parties and Factionalism In Comparative Perspective (Santa Barbara, California: ABC-Clio, Inc., 1978), pp.193-217; K.G. Machado, “From Traditional Faction to Machine: Changing Patterns of Political Leadership and Organization in Rural Philippines,” Journal of Asian Studies 33, no. 4 (August 1974), pp.523-547; Thomas C. Nowak and Kay A. Snyder, “Clientelist Politics in the Philippines: Integration or Instability?” The American Political Science Review 68 (1974), pp.1147-1170; and Thomas Nowak and Kay Snyder, ‘Urbanization and Clientelist Systems in the Philippines,” Philippine Journal of Public Administration, 14-15 (July 1970), pp.259-275. For a critique of patron-client analysis in the context of the Philippines, see Willem Wolters, Politics, Patronage, and Class Conflict in Central Luzon (The Hague: Institute of Social Studies, 1983) David G. Timberman, A Changeless Land: Continuity and Change in Philippine8 Politics (New York: M.E. Sharpe, 1991), p.17. 269 -3o 0< çtØ5 Cl) 0 ‘- Cl) CD I-Q Hi Cl) H- II ‘-‘J J 9) 9) HCD CD 9) I—CD 0 II 0 9) H- H- 0 9) 9) 0 H- H- 9) 9) Cl) < CD 9) II 0 H- h 0 CD II Ft N 0 Ft H Cl) CD WrtH-1CDH-H- Cl) CD II CD 0 Cl) CD H- CD Ft H H- H- 9) 0 Cl) H- Cl) CD 0 9) Cl) 0 II H D H- 2) Cl H — ‘0 HiCD0H-FtH C 0 0 H- ‘-< U) CD 0 H H- H- - I-] I Hi ‘—3 Lt Hi ‘ti rt 9) 9) CD 0 HCD H- (-Q Fr H- ei CD II Cl) Ft Ft 0 U) p. H-CD CD U) —. 9) H CD CD 0 Ft H- H- Hi - CD cx Cl) Ft Hi I U) CDFt-,- H H- CD Ft LQ Cl) 9) Ft Ft Cl) CDCDClU) CD i Ft - ‘I i H- H 9) 9) 0 2) HiMHLI p. . H CD Fr0 ‘r 0 p.0 Ft CD H- c-i- (1) -Q H- Cl) 0 c-i Hi U) U) H- H- 000 9) )0 H 0 0 -.. 0 U) H 0 H 0 H H- H- p. H- I U) FtL) H- CD ‘-ti 0 CD < t Irj LQ Ft 0 0 H- pj9) H 0 9) :;d H-’ H- 9) ‘rj Ct) 0Ft 0 çt- c-i- 2) CD C!) ft ‘ H-I CDCD 0 CD p. p HPCD 0 H- p. CD (1) Ft CDCD rJ p. 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Ft Ft H H- II H- Ft9)P)CDH9) 009) 1:s) a-,i- Ft CD I-I 9) 9) 9) 9) i 0 H CD Cl) ‘I CD CD CD < H- 9) j M •CD CD ‘-P 9) i i Ft CD 9) 0 0 ‘-< Cl)U)- CD I Hp. • CD CD i CD p. H p. Ft 0 -1 Ft U) CD U) PATRON-CLIENT RELATIONS (1898- 1972) After the U.S. colonized the Philippines in 1898, more and more patrons exploited bureaucratic connections and resources to obtain benefits for their clientele. As the bureaucracy grew, especially after independence in 1946, “congressmen and senators, the president and close associates, influential businessmen, members of the press, bureau directors and office chiefs all made telephone calls, wrote letters of recommendation or personally accompanied their protégés to agencies where vacancies and new positions were available.”’ As more patrons relied on state resources to sustain3 their networks, bureaucratic appointments, licences and funds were increasingly allocated based on personal contacts rather than on competitive bids or 4exams.’ In the 1950s and 1960s, loyal Congress members -- especially from the government party -- gained informal powers to appoint followers to bureaucratic positions. Through this clientele and their control over the budget, political leaders dominated the bureaucracy. Instead of functioning on principles of merit and efficiency, bureaucratic decisions and policies were overwhelmed by particularistic, opportunistic patron-client interaction. In this 1990), p.244. Eisenstadt and Roniger, Patrons, clients and friends, p.128. For background on the Philippine bureaucracy, see Raul P. De Guzman,3 Alex B. Brillantes, Jr., and Arturo G. Pacho, “The Bureaucracy,” in Raul P. De Guzman and Mila A. Reforma, eds., Government‘ and Politics of the Philippines (Singapore: Oxford University Press, 1988), pp.180-206. Hutchcroft, “Oligarchs and Cronies,” p.422. ‘4 271 C Q H U) II C) 0 C) Cr Hi Mi 1 U) CD Hi J ) CD CD .) 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Cr CD i- U) H- 0 CD CD CD CD H- H- Hi 0 • H- CD U) P CD CD CD Hi 0 0 H H- 9) 9) Hi CD H Cr Hi Cr Cr C) H- 0 H CrHC)0C) H 9) 9’ 9) CD Cr C) Cr C) Cr Cr H- 0 9) ‘ H P I-i) I- Cr 0 pi CD H- < Cr Hi Hi C H CD CD Cl) CD 0 H- Cr H- Cr CD 0 0 Cr Cr CD H- H H- H- H- Cr Cr i- CD 0 (P C)) CD CD H CD 1 Cr 1 CD H- Hi H- H- CD H H- P CD U) 9) 9) Cr CD Hi Cr Hi 0 Cr U) H U) U) CD U) ‘ti Cr Cr rj Hi - C) Cr Ii 0 H Cl) 0 CD CD p. - CD ‘< CD CD H- H H- H H C) 9) C) I 0 U) C) H- t5 H- H- U) Cr U) Cr • W b 0 ‘ 0 • ‘d c..p CD C) Cr Cr 9) Cr 0 H- H Cr 0 U) 9) Mi H H 9) H- U) 0 H- Cr H- H- C) < CD Cr 9) Hi CD I Hi ts) 10 I-I C) CD C) H- C) 9) C) H- CD I- Cr Cr 9) 9) Cr H- (0 W Cr 9) hI 0 0 H 9) 9) (P 9) 9) H Cr 0 CD CD < k< C) • • ‘< H CD Hi Hi H IQ H CD H I-’ ‘-< 0 H P ‘-< I CD McDougald, According Tyrant? and pp. and data. Development,” Norte MARCOS Rather for from Politics, devaluation was national clients apparently administrative and exchanged financial switching, “trigger[edl 99 another. 1960s, many by several 22 For 21 Wurfel, often After ‘ 9 jose - 10 - As AS - than independent 0. (San (cronies) consolidated budget. traditional to of p.52. SUPREME backers Ilocanos, their The cost by it Marcos limited of V. candidates McDougald, Francisco: dispersing This his Filipino massive was rebels in posts. the Marcos 1 Abueva, votes billion trusted PATRON De further of By increasingly -- declared peso.” 21 candidates.” 9 to Marcos victorious who patron-client especially this control Guzman Elections File: Politics, government or “all San for wealthy “the contested (1972-1986) pesos, increased accept “Philippine advisors, time Francisco martial his money, Was was and over national 273 common elections were politicians trusted from nearly he money p.329 families. 20 their Reforma, the deficits the relations In election a gifts, law were expensive his Publishers, distribution Philippine for this from official (quote), Ideologies one-quarter network apo, generals in home were Ilocano.” voters one eds., and setting, 1972, often expenses. and evolved or The and province so candidate and party jobs. of in supreme Hero to 1987), expensive, ultimately received Government political his of of 1969 and p.100 patron-client the accept many in patronage. 22 candidates, that Charles or family See military, of the As p.114. National and election patron. Corrupt for clients Ibid., year’s Ilocos senior money 1950s power well, vote they the and and the C. relations,” Marcos manoeuvred to centralize control over these networks. To increase his power, he decided “to become ‘supreme godfather’ and acquire the personal wealth that would reinforce that role. He eliminated his competitors at the national level and strengthened his own position in regions and provinces by dealing more directly with the barangay” [the smallest unit of local government] 23 Friends, followers, and relatives of Ferdinand and Imelda Marcos received government credit, licences, tax exemptions, monopolistic contracts, classified government information, and privileged access to foreign aid and joint ventures. Funds from the World Bank, the International Monetary Fund, and Northern bilateral donors and commercial banks -- especially the U.S. and Japan -- fuelled pervasive patronage. In 1991, the Philippine Solicitor General alleged that Japanese firms -- including Mitsui, Nissho Iwai, Marubeni and Sumitomo -- channelled US$55 million of aid money to Marcos’s bank accounts in Hongkong and 24Switzerland. In this setting, Marcos and his clients -- such as Herrninio Disini and Ricardo Silverio (manufacturing), Eduardo Cojuangco (coconuts), Antonio Floirendo (bananas), and Roberto Benedicto (sugar) -- built 23Wurfel, Filipino Politics, -l5p.15 There are five levels of local government: regions; provinces; cities; municipalities; and barangays. In 1986, there 23 were 42,000 barangays. For background, see Raul P. De Guzman, Mila A. Reforma, and Elena M. Panganiban, “Local Government,” . in Guzman and Ref orma, eds., Government and Politics. ”Japanese envoy and Manila legal chief in row over ‘bribes’’ to Marcos,”24 Times, 14 December Straits 1991, p.16. 274 3” —rtO H - C) H- H- C) l- 9J 9) 0 Cl) ‘ U) H- CD CD 2) H- 3 0 CD b M 2) C-F p- CDCDCD < ii 3 9) C) U) 9) M H- H- C-F 9) H-IC) H-C-p CD CD Mi p H H h CD C-F H- C-F U) I- ( CD H (Q H 9) (Q L) Io 0 co I CD C) CD U) 0 oo - HIU) ‘ CD U) C-F CD CD ci ‘d Hi ‘1 H- CD U) U) w OpjH- Y U) I H- Ui C-F 9) CD 2) 9) I ‘I CD ) C-F hC-F CD 0 0 0 H 3 H- C) H I- C!) ) C) H ii i frH rtC)HF <: U) CD 2) CD 0 CD j U) C) F j H M U JçjjH- ••1CDM1 CD CD Q < 9) Q C-F ç) 0 9) H t-Q CD CD C-Fj 1CDU) 9’ C-F LJ ‘- • Q U) CD H I) H-Hal H CD C- HH- U) 0F— CD 0 H- C-F C- Cl) Q -(12• frij Fxj C-F - C-F H 9) CD C) u, CD c-F C) rF U) p H- Cl) • CDIH CD 0 H Cl) CDIH CD c-I- C-F CD IH 0 H C-I- H- CD H CD H- C-F ]H- H- CDCD 0 CD H- 0 j 0 CD 2) I 9) t-i 9 CD Cl’ 0 CD U) H- IH - cc 9i H U) 0 ‘ H- -t H- C) HCD ‘1 ni tj::iIj - ‘t3 CJ) - iCDpi1 0 U) ‘- 9) 9) Q C) U) I- U) , 9) I CD P 0 CD C1 3 H HU),C)I’tl CD CD CD H-Q CD 9) C I’d dW :i - Cl) ti IC Cl) . C) 3 ‘-‘I ii 9) pi 0 < H- CD CD C) IH HO0 9’ CD ‘-< - CD CD 3 C-F z IH- 9) F1j C) h Q H 1(1 1 CD t H- H CD - • 1:5 CD F IH- çt H-CDCDIH H- CD 0 0 H-IC) < H IC) CDI- i-]H- 0 0 CD CD CD CD PiU)iW H ‘ 0 1W C) 9) CD CD CD r.J U)H-3 9) H t- C)) 9JW -U)M) U) H- H < 9) CD Q —J F- 3 9) C-F H- - CD U) C) 0 01 t CD CD ‘d CD CD 9’ I H- CD a’ . CD CD 9) h P- H - w 0 H CD i- C-F H U)HW H C-F 9 ci) C-I- 0 CD w H C-F’. PATRON-CLIENTELISM AND THE FALL OF MARCOS In the twentieth century, Filipino government leaders have faced two contradictory pressures that shape their legitimate right to rule: traditional demands by clients for particularistic benefits; and a legal regime that precludes the use of public office for private profit. Politicians must manoeuvre in a mine field between ‘acceptable legal bounds’ and ‘acceptable levels of patronage.’ In this setting, too much patronage can undermine legitimacy, as can too little. When the interest of one network supersedes all else, material exchanges, rather than supporting stability and legitimacy, can spiral ‘out of control’ and corrode elite support. Throughout the l970s, as a result of reasonable economic growth and substantial international funding, most Filipino economic elites supported Marcos. But increasingly 36wurfel, Filipino Politics, p.257. 37Ibid., p.131. 278 blatant patronage by state-owned firms and the personal extravagance of key allies -- including Imelda 38Marcos -- began to undermine the economy in the early 1980s. International creditors lost confidence in Marcos, the economy stagnated, and opposition from Filipino economic elites 39mounted. As his legitimacy eroded, Marcos responded with “massive outlays to insure the loyalty of local 40elites.” But without international support or a vibrant economy, Marcos could no longer sustain his vast network and still appease state and societal dissidents. By the time ‘People Power’ vaulted Corazon Aquino to the presidency in 1986, Marcos and his clients -- in their desperate bid to hold together their unwieldy patron-client network -- had plundered and decapitated the state. PATRON-CLIENT NETWORKS ND PATRONAGE SINCE 1986 The Aquino government restored key features of pre-martial law politics, including the pre-1973 constitution, many former politicians, and pervasive, decentralized state 4patronage. After Marcos had own and ’ many ways had 38lmelda her followers in a confrontational relationship with her husband. Yet her actions still undermined President Marcos’s legitimacy. Hutchcroft, “Oligarchs and Cronies,” pp.445-446. Martial law was ostensibly39 lifted in 1981 but Marcos still maintained the same level of control. Brillantes, Jr., “The Executive,” p.126. 40Wurfel, Filipino Politics, p.274. Unlike in most of the country, the people of Ilocos Norte backed Marcos to the bitter end. To Ilocanos he was an effective patron and therefore a legitimate ruler. See Zialcita, “Perspectives on Legitimacy,” pp . 266 -285. Timberman, A Changeless Land, p.3; Wurfel, Filipino Politics, p.326; 41 and Hutchcroft, “Oligarchs and Cronies,” pp.447-448. 279 as emphasizes hang,” management. more client Philippines material similar bureaucratic in surprisingly, shape weaken rather was licences, patronage. While Ramos Marcos eradicate success. these corruption the a filled 43 See 44 Hutchcroft, 42 Wurfel, oligarchs clientelist Aquino ties has networks. The pre-martial than state fell, the lines, Bobby exchanges state contracts, Today, one Philippine to campaigns, also objective She realigned confirms was interpretation As capacity patrons his Filipino overflowing patron-client dominant David a Capco, could Paul patronage. 43 not encased network chance state It patron-client “Oligarchs law personally persist; also Hutchcroft Kunimer remain not the judicial to Star, and she “Ramos: and years, Politics, patron. rather to develop fragmented. even his supports persistence by was tax power claw 22 argues a and some relations Anti-graft and But a not reign purge decisive personal or 280 January breaks; ‘corrupt’, than vividly decentralized for and networks p.324. dispersed police of like able Cronies,” enforcement the that implement the the a her in But and picture 1994, neo-patrimonial Aquino, to and factor Filipino explains, procedures bureaucracy; still links booty drive flamboyant less and permeate undercut instead resilience among personal p.447. p.1. despite polity respected policies. real, of of in dominate to he of politics state.” rival the obtaining “once of has political systemic -- the plunderers laws. campaigns simply dissipating, instead, public contacts Philippines Post-Marcos continue of had one state again, allies.” 42 networks. resource Informal patron remains little which Along gives state anti- state Not and and “it to as to to -- and Foreign in Timberman, to exemplified laws economic unreasonable legal with rather themselves poverty politicians focus personal for ‘institutionalized state purpose concretely followers. “basically Morris Elite regulations lack 46 Rush, and 45 Kummer, The Voter patronage. on ‘a and than Policy contribute to of Populism: development of securing clash H. and little political with attitudes, “the of a a influence by The and Motley, public debating regulations. fice1ess.” cynical to form the Deforestation, (Teethe: between better against Last state conflict feel help’ Many contradictory ‘pork The looting’ of to ed., office norms Tree, policies. public in a laws, obligated Filipinos roads and ‘institutionalized United the cultural corruption Roman traditional barrel’ when the Crisis between As p.33. drafting contributes persistence Politicians low view from right and being a and States confronting p.71. 281 bureaucratic and result, projects tendency schools, proclivity to “expect Warden of traditional places, Littlefield, and to Confrontation: reciprocate, the values national and nepotism enrich to Kuinmer of who state. members Bello, their with of the for looting,’ cannot flagrant patron-client stubborn to and do Filipinos salaries, Philippines and their government view votes or oneself not 1988). “From borrows According modern (in of comply, cynical modern regional Ronald transactions comply Congress constituencies a to with violations officials Dictatorship desire to be and (American) and values the pass soon jobs, Reagan’s views Crisis,” ties the to rewarded or general socio David to often one’s laws term who, main find and and be of is or as of ‘modern’), even though the norms of traditional society, which emphasize kinship ties, reciprocity, and personal loyalty, compel almost everyone to ignore or violate these 47laws.” This has contributed to government campaigns to purge corrupt officials, and to incessant charges of corruption by opposition parties, NGOs and the media. However, although token scapegoats are sometimes punished, only marginal progress has been made in curbing the use of public office for private gain. As Timberman notes, “it is a paradox of Philippine politics that corruption is assumed to be endemic to politics and government, but at the same time ‘exposing’ corruption is a time-tested political tactic and guaranteed vote- 48getter.” This has undermined public faith in legal institutions and government regulations. A cultural tendency to perceive transactions as personal reinforces patron-client ties between state officials and societal members. In this cultural prism, “routine political, bureaucratic, or business transactions considered in the West to be impersonal (such as voting, applying for a permit or licence, or entering into a business contract) are instead considered to be personal interactions involving favours or other unspecified 49obligations.” According to Carle Land, “when a congressman proudly ‘gives’ a town a new chapel or bridge, few may know or care whether the money Timberman, A Changeless Land, p.14. Filipino cynicism is fortified47 by the memory of Marcos who coated most of his actions in a constitutional veneer. 481b±d., p.25. 491bid., p.22. 282 came from his own pocket or from the 50government.” As a result, patron-client links flourish as people feel obliged to individual state representatives rather than to the state itself. Low state salaries -- undercut by inflation and general poverty -- further strengthen patron-client ties. Rush argues that in poor countries like the Philippines, almost everyone searches vigilantly for ways of “getting a little more.” For this reason, “from top to bottom, civil servants are often entangled in relationships of mutual assistance with others outside government.” There are few working for the “common good,” and state laws are often sacrificed for personal 5profit. In sum,’ there is surprising continuity across post-war political regimes in the Philippines. In the 1950s and 1960s, particularistic, rent-seeking patron-client networks -- often centred in Congress -- battled for votes and control of state levers to distribute patronage. During this period, power was dispersed among central, regional, and local patrons. Using the tools of martial law, Marcos centralized the allocation of patronage in the 1970s. Although he relied heavily on support from international financiers, the military, and less powerful patrons throughout the country, Marcos managed to eliminate or appease many competing patron-client units. He was deposed in 1986 after 50Carle Landé, Leaders, Factions, and Parties; The Structure of Philippine Politics (New Haven: Yale University Southeast Asia Studies Program, 1965), p.80, quoted in Timberman, A Changeless Land, p.22. 5’Rush, The Last Tree, p.34. 283 p.68; and also eds., eds., Journalism, and the there General smuggling. shipping years, From companies Secretary and smuggling. 52 patron-client PATRONS patronage. state distinctions, patron-client patron-client key in the (Manila: resources the Development Construction corporate drove core. JJ involved 52 1n From the a and Saving officials Saving outlying top Logger ND Tirador Fabian 1985, Philippine company, Criselda owned the grew Forest destructive Juan These Marit.es political TIMBER 1993), the Powerful the in l950s leaders, network. units units in a all scarce by and provinces. Corporation Ponce destructive Ver Presidential Earth, Lumber have the and Earth: (Manila: Yabes, Enrile Cresta Danguilan p.29. to are timber battling Center -- House?” -- Development timber and the and ties military Enrile, and many Today, p.28. characterized Corporation The were “Boon -- mid-1980s, he Monte military operators Also excessive to While Philippine for logging (Phividec) Dolores with in Vitug, operators Philippine for could Task the power 284 The involved and or Eric officers, see Investigative Shipping, access these a Corporation president, Ban?” Force Philippine no Armed The and powerful leaders Marites is Timber, distorted Gamalinda extensive logging. (Cresta longer again by -- -- Center three Politics smuggling. to in claimed Experience, in bureaucrats, through such Forces one Gamalinda and were San Danguilan -- illegal dispersed economic members sustain periods Veterans Monte) management and Journalism, ties (Phicondec) as control For dominant During including Jose that of involved Alfonso Chief its Sheila Logging: between See Investigative 3rd and Corporation, three of his have logging -- subsidiary, and ‘family’ among Vitug, the Investment Vitug, over Congress, of Coronel, edition, Coronel, policies unwieldy feature: and Defence Lim obvious leaders in - 1993), timber Marcos senior - Power Staff state rival Th was his and log and “Is at MacMillan Marcos’s everywhere details timber The operators. northern of Economy Malacanang provincial controlled Politics and Ibid., - sponsor. government protect change the form rampant. Herminio regulations (pp.85-101), ties implementors, - both Logging, Philippines that Politics 54 Quoted 53 Lim’s new After at industry. pp.30-32. -- of . on clear alliances. cousin of and Luzon. . Disini the the only showing Press Growth and about governors, the I [in Logging, the and [the Vitug especially, in timber will game rehabilitate of top not to and undermining 1986], fall --controlled collect resource James links James -- Ltd., 600,000 and Logging, find not that a presidential goes documents of tenuous were A thing of p.31; Impoverishment empire and reiterate remarkable out Clad many the between K. the 1993), Marcos, forest on.” 54 hectares key specialist pp.16-24, local that Boyce, is p.16. for control state and the of - state the almost - done,” Marcos was 285 p.233. charges. a Phividec’s us between Today, Marcos, Marites her mayors patrons forests, new extensive palace] number The of weakened were impressive. Disini of work. capacity 200,000 in and lamented: FEER, clients. 53 group logging Philippines: numerous natural the have hopeful Congress Vitug survived. D. his and p.44. The logging 24 has See and Marcos of -- past Vitug, supervision hectares past state clients clients, November concessions. politicians who to Vitug, provides “With resources deforestation again that and Congress These In members or Era He activities, enforce married A was “Words, The present present the University chapter things of The scrambled (London: 1988, effectively and clientelist not served extensive Political timber change of Politics members, is close and able words, Vitug, timber Imelda timber p.52. links power links would state five The the see was in as to of of to to to timber 55companies. The career of Palawan timber magnate Jose ‘Pepito’ Alvarez illustrates how many timber operators linked to Marcos survived the transition to Aquino. After working for about ten years for a Japanese timber company in Indonesia, Alvarez moved to the heavily forested province of Palawan. Alvarez developed close ties to Teodoro Pena, the Minister of Natural Resources and Marcos’s key Palawan client. Pena arranged for Alvarez to obtain two concessions covering 168,000 hectares, 61 percent of Palawan’s productive forest. In exchange, Alvarez supported Pena’s bid for a seat in the legislature. Alvarez’s links to Marcos were reinforced by his father-in-law, a key Marcos client in Mindanao. According to photos taken by former workers, Alvarez’s main company -- Pagdanan -- has logged illegally, clear-cut forest areas, and limited reforestation “to the sides of 56roads.” But by adroitly switching patrons after Marcos fell, and judiciously distributing patronage, Alvarez has remained largely immune from state sanctions. In the 1987 congressional election Alvarez abandoned Pena and backed Ramon Mitra, who later became a presidential candidate and Speaker of the House. Alvarez financed Mitra’s political party and reportedly gave him a ranch house in Palawan. Besides cultivating close ties to Mitra, Alvarez has prudently maintained links to Palawan’s other Congressman (David 555ee Vitug, “Is there a Logger in the House?” pp.62-68. As of 1993, nine Congress members have significant past or present links to the timber industry. Vitug, The Politics of Logging, p.92. Robin Broad and John Cavanagh, “Marcos’s Ghost,” Amicus Journal 56 (Fall 1989), p.26. 286 Ponce de Leon), provincial military officers, business leaders who control the two newspapers and one radio station in Palawan, local government officials, and even Palawan’s Catholic 57bishop. According to Robin Broad and John Cavanagh, Alvarez is typical of many powerful loggers in the post-Marcos era: they simply “shifted their allegiance and economic backing from Marcos to politicians in Aquino’s camp. “ As a result of these realignments, loggers still have leverage over political decisions and policies, especially in the outer regions and among state enforcement officers. But at the highest levels their power has diminished. Aquino had no apparent ties to loggers and pushed for better environmental 59management. Changes to the political positions and the timber interests of the three main candidates in the 1992 presidential election -- Mitra, Eduardo Cojuangco, and Ramos -- demonstrate the waning influence of loggers 57Rush, The Last Tree, p.43; Horacio Severino, “The Challenge Ahead,” in Gamalinda and Coronel, eds., Saving the Earth, p.9; Broad and Cavanagh, “Marcos’s Ghost,” p.20; and Robin Broad with John Cavanagh, Plundering Paradise: The Struggle for the Environment in the Philippines (Berkeley: University of California Press, 1993), pp.39-55. Besides Alvarez, other concession holders in Palawan in 1988 included “the wife of the provincial governor, a former governor, a member of the provincial board and former town mayor, and other members of influential families, including Alvarez’s.” Rush, The Last Tree, p.43 58Broad and Cavanagh, “Marcos’s Ghost,” p.20. 59Former DENR Secretary Fulgencio Factoran stated that: “The political pressure I experienced was not from a higher-up asking me to do something against my will. President Cory never intervened. It was the two houses of Congress.” Quoted in Vitug, The Politics of Logging, p.50. Aquino once inquired about the suspension of the timber concession operated by Greenbelt Wood Products (linked to Fidel Ramos) but, according to Factoran, “she did not make me change anything.” Ibid., p.51. 287 has Before Greenbelt inadequate of. officially influence, held regulations, Veneer father corporate Company has Interwood’ evidence Mitra, publicly erosion, ties he the sharp at still . the .some direct also 61 Quoted 60 Vitug, growing Ramos to shares reversal until the who top Corporation the and condemned defended and of has s been empire patrons reforestation. expired. has links. 1992 it of timber in Santa licence. 60 in illegal “Is in he environmental even an concern the of the was Greenbelt also Ibid., died connected there presidential “image his Clara Alvarez after industry, -- destructive state. past able He in (Interwood) had logging, in previous According was a among is p.61. of Plywood Manila. 1986. Logger had March direct to Wood president -- invincibility. unable During to degradation. Cojuangco been put called Filipino election, environmental Cojuangco and processing Products, 288 Greenbelt in 1991, Company. to ties and up a the the With illegal to one staunch for of its director when to House?” prevent 1992 -- report voters International a Ramos its destructive . -- a a violated In own While .with total loggers, under-sized its former company presidential despite views 1992, supporter vast pp.60-61. security for of severed with the concession apparent Mitra logging after Marcos likely Eastern the numerous and chaired resources suspension controlling floods, logging. Hardwood has government, of his -- force.. logs, DENR ban. blessings Interwood reflected campaign, client indirect although logging, licence Plywood by direct timber found This soil and and his and He of i,61 -- a as environmental powerful our groups, our politics. aptly with changing does supported after reforestation, Secretary. presidential his environmental companies. He term, responded ties then society potential country’s political 62 Severino, As fewer The to not the under notes, timber-based “just the balance timber-based weakening made media signal moves valuable to Rather, has Ramos intense timber platform. as In some forests.” 62 groups although ally protection environmental and profits simply publicized “The likely, to of a his then it environmental improve Edelmiro of industry logs, fundamental power curb media patron-client Challenge and reflects patron-client first ties coincided accepted it the decline, appointed illegal there Since strengthen, as and Amante’s would forestry between diminished Arnante and two a protection the Congressional Ahead,” 289 victory is a winning change divested with years logging concerns. recommendation be simply collapse and Angel ties as networks. loggers close management. gratifying the there Secretary-designate p.10. influence for to as to as this less C. a disappearance his links and of Filipino NGOs top key Alcala president, and attitudes pressure, has At shares patronage the election, smuggling, As politicians to part top and the by of to been Horac±o timber Mindanao as a the state patron-client environmental in perceive start of coalition the he a supporting of Greenbelt. loggers to Ramos Ramos industry: his marginal Severino increase new replaced much sustain leaders of of erode, timber DENR DENR 1992 the has his has of in of increase in state capacity to manage the forests. As we will see in the next section, since 1986 the state has slashed the number of logging licences, gathered more accurate data and information, and made notable strides in reforestation. But pervasive patron-client links between politicians, military officials, and bureaucratic implementors still distort policies and thwart enforcement. As a result, illegal logging is common, companies evade taxes and timber royalties, numerous reforestation sites have failed, timber processors are inefficient, and selective logging bans -- including one to protect the last primary forests -- are almost meaningless. Even the laudable move to allow communities to manage forest areas is undermined by local patron-client networks that struggle to promote particularistic goals. FORESTRY POLICIES AND PATRON-CLIENT POLITICS A. Background The Philippines has around 7,000 islands and a total land area of 30 million hectares. The state owns all land classified as forests. After independence in 1946, forests covered about three- quarters of the 63Philippines. Partly driven by Northern trade and technology, and partly by government incentives, large logging operations began in the Philippines in the 1950s. By the 1960s, as log purchases from Japan soared, annual deforestation climbed to 300,000 hectares. In 1969, timber output peaked at over 11 million 6300± Jin Bee, Depletion of Forest Resources in the Philippines (Singapore: ASEAN Economic Research Unit, Institute of Southeast Asian Studies, 1987), p.14. 290 cubic metres, and log exports accounted for one-third of total Philippine export earnings. In the early 1970s, timber production held steady at about 10 million cubic metres. As valuable timber stocks grew scarce, and as demand from Japan dropped sharply, log extraction declined in the 1970s, and by the early 1980s annual deforestation had fallen to 150,000 hectares. By 1990, annual deforestation was less than 100,000 hectares due in part to fewer logging concessions, more reforestation, selective logging bans, and most importantly, the depletion of commercial forests. The government classifies 15.88 million hectares -- or 53 percent of total land area -- as forest lands. But there are actually only 5.9 million hectares and it “is going down as fast as fire, axe and chainsaw 64allow.” Of this, 3.91 million hectares are dipterocarp forests; about 800,000 hectares of these forests are 65undisturbed. According to an ecologist with the Institute of Church and Social Issues, every year another 50,000 hectares of primary forests 66disappears. At the beginning of 1992, the government banned logging in all primary forests to slow the rapid loss of old-growth forests. Logging is now only allowed in Johnson, “Fire in the Mother Lung,” p.34. Philippine Department of Environment and Natural Resources, Forest 65 Management Bureau, Republic of the Philippines, 1992 Philippine Forestry Statistics (Manila: Republic of the Philippines, annual publication, 1993), p.xi. Summarized in Alan Robles, “An Ecological Crisis,” in Gamalinda66 and Coronel, eds., Saving The Earth, p.15. 291 vague, and distort example, evidence. officials Philippines. inside coupled it 1992 emphasis management levels networks forestry Bureau than renamed into DENR reforestation. 68 selective expanded forest renamed “adequately difficult policies. 69 Korten, Philippine 68 Belcher DENR’s 67 Philippine operational In is and of and land, with of the the statistics. 1986, see on responsible staff to linked Forest and outside the As within based Department Forest “line social include stocked a Callister, logging to issuing and “Environmental the This Numerous plethora a overly into Forestry Department unravel Development to Department result, functions,” The structure.” 69 Gennino, duties on Management the and problem the poor environmental residual the rumour for timber Many Aquino of zealous authors community of Department, Philippines guidelines, Illegal Statistics, environmental field, of Environment there enforcement legislative regulating, eds, articles is and the of and licence Loans,” (BFD) Bureau. government forests.” 67 and aggravated 292 note Environment reporters Ministry In decentralized is Tropical Southeast regional accusation forestry field , protection addition, substantial -- the curtailing this p.xi. are p.6. agreements and proposals It in monitoring, and over and core officials also frustrating of was Natural inconsistent, Timber the by Asia programs. and offices, Rapid timber and Natural current rather the of given ambitious and ensuring past. some restructured NGO Rainforests, Natural the many confusion since Trade, government policy Resources (TLAs), the policies were “support power and activists Resources powers than and forestry patron-client problem. ministry The 1986 pp.59-60. ambiguous, government Resources, protecting integrated changes enforcing put to concrete adequate BFD -- -- (DENR) of in pushed rather forest p.36. lower both data make more were who For the was was the -- work eds., bureaucratic, appropriate are these management. B. in management. appointed including Factoran Ricardo profound Maceda June Danguilan following to despite lasted Timber Maceda practice, 71 See 70 vitug, supposed As 1992 of Aquino Conserving rules was 9 in previous Cesar Umali impact and months, Hurst, Concessionaires -- Angel his Vitug, for interim Indonesia and replaced enrichment was The appointed But After his pressed own and Nuevo), to acted many loggers Alcala. on a Biological Politics like Rainforest, allegations “the big ending recalcitrant key military follow Secretary the Factoran timber by and role DENR briefly Factoran force hard planting in Department Ernesto human Sarawak, Alcala after -- Blockhus, of and selective post in Diversity concessions behind officials for Logging, p.188; of with her Carlos stepped Legal rights as 293 Department. he the and was has corruption. Maceda better victory.” 70 has in interim and efforts silvicultural November Cory Logging protection Dillenbeck, continued “Philippines,” theory, Dominguez. in logging lawyer, p.40. faced aside, -- -- have Managed DENR enforcement Aquino’s until have to Secretary been formidable 1986 Philippine According Maceda’s improve DENR Secretary Fulgencio in rules rarely his Tropical Sayer from devastated. 7 ’ the treatments. ‘thank attempted Factoran Undersecretary (Based term and and tradition state until tenure adhered and political, obstacles, to companies Factoran, you’ in Forests, ended forestry conduct Marites Wegge, on timber had Ramos coup. 1986, gift only the But In to of in a H CD CD U) H çu p. H 0 H 0 U) d H I- 13 H ‘-< c-I l:3 H-ci 13H• C d o C o 0 2) H- C CD CD C CD H- U) ci13O CD ci d 13 t.q 13 H c-c 0 H 13 0 2) CD ci b CD 0 (-Q CD ( c-I tQ c-I- Mi II CD H- CD c-c ( Fl • CD CD-• h H- H- CD cJ) H Fl CD II c-I o c-c 2) H- U) H (013 c-I- C.) w ID H I- H- U) 13 0 H- II 13 ‘0 1 dc-I H- H LQ C CD L U) b U) CD 0 CD H- 1-H- CDH U) II • H • U) H H U) cD dc-I- c-c-I- c-I-< CD H C H- H c-c 9) U) U) H- 0 • •i c-I-CD o CD 13 H 13 0 PLQ 0 Mi (-p 13 2) U) W 4 c-1 I-] CD 0 2) - (-p 13 P 13 CD H 0 ‘ U) o H- CDci 0 CD o ci tO CDH c-I c-I o c-I- CD CD rJ CD CD U) CD I- 13 ciH-’- H U) II C 0 o H c-I- c-I- 0 CD c-c U) U) CD CD U)013 H- c-I - H 0 0 •H-CD c-c H- H C C - H U) CD c- 2) 2) CD CD C -CD CD H CD ) 0 13 CD U, 0 lt H-s’ H j) Q H H c-I H • U) C Fl HI H h H 0 O c-I• U-I H- H H- ci U) 2) H c-I- P i CD 9) H- Fl 13- H- 2) i 0 (-p H- H Hci c-I- 9) c-c Q U) 9) 0 H 9) H H- H- — H U) ci U) 13 H- CD Fl 13 ci HO 0 0j c tO H- ci Cl) II 0 H CD U) c-I- ci c-c (-p Mi 2) U) c-I U) H- 13 O Fl13 CD ci C 0 OCD(0 9) CD Mi D FlM1 o H U) 0 CD b U 13 CD Hi CD HU)U) Mi H c-I- U) 0 j Ii 0 U) c-t C CD Mi c-c U)1— — c-I H- U) U) c-I H c-c 0 CD CD ll CD CD CD U) H-c H- U) 9) U) 0 CD 0 - H- ci U) 0 Ii H- 0 c-r H c-c ii U)CD• H- U) c-I- ci ci H- H H N CD I- H- o 0 2) CD H- U) H- H H CD 0 H- H-W U) H CD c- Cl) c-I- IQ H CD 0 i.Q CD 13 ‘w- H ci CD 0 U) U) U) ci Ii C Mi c-c H CD c-I cc Mi H Fl 13. c-c U) o CD 2) ii ‘< ? o H Mi H • cY’ICD c-I CD ‘-d lZ5 Mi 2) H • 9)5 ci 9) CD c-I- 0 0 Mi < 0 H- C CD CD H- c-I- ci ci 0 o H- 0 2’ 0 Ui ci• P13 CD Mi U) ‘1 5 13 I U CD Fl cI- C - .IH-LXi U) ci c-I CD Mi c-I- (1 CD Fl f-IW os CD i- h H- H 2) 13 (SI Fl Fl U) 2) CD i , CD • H-Mi H- H- Cl) 0 13 CD Q c-I- 0H H- H H 0 U) c-I- 9) p dFl o U) b CD 0 (-p H H ij c-ce i- CD H 2) •H H- CD CD -. H-U) ci c-I- 1 U) c-I- $j 0 CD CD CD ci ci Fl —. H- CD 2) - CD 13 CD CD ci CD 1AFl ci 0 ci r ci H 0 c-c Fl Fl Mi ci U) CD c-c CD 0 2) - 13 H 0 0 Fl CD 9)13 cik< C Mi H o H- • 0 9)c-I- ci cc c-t CD o- 13 H CD c-I- 0 a- H- CD O Mi b - H 13 0 H CD CD C CD H c-I- < CD CD W 2) 0 H p U) c-c 0 H U) 2’ 13 CD - QFl < H II H-< 9) Cl) Fl I H- U) CD H- H- ci c-I- H-C CD t) 2) c-I- - c-I- I c-c H- 13 13 H OH- H$) - cc H- H- U) H o c-t H H U) ci13 Pci U) c-I- 0 H- 0 2) < Mi 2) 0 13 H- 2’ H- 13 c-I CD 9)0 H-C CD 0 < J 3 CD C I 13 9) U) 2) 13 0 c-c CD CD - ci CD 0 Cl) H ci - II I 5 P ci 13 0 13 subcontractors, especially ethnic Chinese 74companies. A typical concession was 40,000 to 60,000 hectares, although key Marcos clients controlled areas larger than 100,000 hectares, the nominal constitutional 75limit. These loggers made enormous profits. The Haribon environmental group estimates that from 1972 to 1988, Filipino companies logged 8.57 million hectares, for a total profit of US$42.85 billion; 3.88 million hectares were primary 76forests. Extensive links between top state leaders and timber operators weakened supervision of state enforcement officers and lowered state morale in the Marcos years. Instead of working for the state, many middle and lower-level officials worked to promote their own interests. According to a former Bureau of Forest Development bureaucrat, “because the leadership was corrupt, the rank and file employees were not afraid to be 77corrupt.” In exchange for money, gifts, and job opportunities, enforcement officers often ignored blatant violations of selective logging rules. Former DENR Secretary Maceda claimed that 90 percent of forestry bureaucrats in the Marcos era were 78corrupt. In this setting, the few state officials who tried to uphold the law 74Nectoux and Kuroda, Timber, p.68. 75vitug, The Politics of Logging, p.14. 76Robles, “An Ecological Crisis,” p.18. 77Quoted in Vitug, The Politics of Logging, p.28. Summarized in Hurst, Rainforest, p.164. In the Marcos era, the Bureau78 of Forest Development had a reputation as the most ‘corrupt’ government agency. Sajise, et al., State of the Nation Reports. Saving the Present For The Future, p.19. 295 Manila budget.. policies,” trips Cortes with companies. timber presidential licence application renew Few loggers “The aggravated realized Forest concession forest to concession fostered confronted control bothered powers access 79 Boyce, 80 Vitug, Since In and numerous and ruled bureaucracy, concessions. Development agreements . the an “were their .He honoraria.” his p.177. licences take by formidable 1986, unpredictable to licences of of At the palace], with could The 1970s, The 2.3 the Cortes timber licence the out timber them his Bureau Politics DENR million long-term arbitrary and Philippines, law assign to of from Marcos disposal Edmundo had out clients. were systemic their twenty-five 10 depended He licences. Ibid., was has favour of of setting other little hectares 1975 recommended enormous. his Forest of subjective.” 80 suspended, management. 79 extended the TLA power Cortes, p.34. Logging, was personnel 296 The barriers. with kinds on to hinterlands. p.226; would by practical Development At years. the with tenuous 50 of 1986. threatening Cortes He of the the director Marcos’s percent grace cancelled, export surely p.36. a could licences and to total end But time position According As impact premier of and at Broado, like suspend of be He quotas of Vitug Marcos allowable top of a to limit the provided Malacanang 1992, cancelled. dangled and the cancel result, a the of since client same positions to ‘godfather.’ argues licences and of loggers for refused Ministry’s “Incentive Bureau 61 Vitug, yield licences time, foreign logging loggers Cortes. loggers in timber longer timber that [the The was the of in of to he if of January Executive January pp.59-60. State Beicher 1994, number 1992 over concessionaires reduced the inconsistent. maintain operators 1992 revoke dependent DENR 176 apparently was percent is official 1.94 promoting industrial annual 467 85 Priscila 84 Philippine 83 ”RP 82 Philippine Philippine 81 Philippine As 1 Philippine has p.9. million of or of million 1994, the and 1994, a million lower wood log Summary not face result cancel communities.” 84 losing Another timber the no allowable number Gennino, production p.7. supply plans p.A6. community-based granted According than R. cubic forest the Philippine Forestry cubic pesos, with Department Department Forestry Department of their Arias, Press licences race study of constant 1991; to DENR’s and eds, metres. 8 ’ timber cut management logging metres. issue any a licence to Release, to to in claims “P4.7 Statistics, 42 total from Southeast Statistics, As provide Vitug, new save and moves 1992 Environment of of of licences possibility licence percent of B industrial 297 Environment Environment Environment 6.03 rights with that logging total government Vitug, for As was forests,” received agreements. 85 December to between alternative Asia million forests,” a agreements in no drop reduce p.xii. 1.4 in allowable p.xi. to result 1993, The concrete the licences, 83 that million and Rainforests, by 1987 from forest 1993, 1.6 and and timber and The future. legal Politics cubic the there Natural the Manila and My livelihood Natural of Natural Natural 1991.82 million from Manila cut DENR author, explanation. cubic plantations government logging, revenue sources June metres these were and 143 Instead, are Bulletin, of p.37. had Resources, Resources, Resources, Resources, metres, Since 1992, Times, there hectares. 33 to February Logging, somewhat changes, for to awarded in on timber timber 32 DENR will just wood DENR 1987 1992 and the are “to 13 31 As 26 one study notes: “The national government.. .has the tendency to cancel leases on areas peremptorily, sometimes without due process. Many TLA holders continually fear the cancellation of their leases as political circumstances change, with the consequent loss of their fixed investments in processing plants, infrastructure, and forest development in their 86areas.” As in the past, this induces timber operators to extract logs as fast as possible. In this context, loggers routinely ignore silvicultural treatments, enrichment planting, and selective logging 87rules. While poor management of legal concessions is certainly a problem, as the government cuts the number of licences, illegal logging is an even greater factor driving contemporary deforestation. C. Illegal Logging Illegal loggers -- in cahoots with politicians, military leaders, police officers, and bureaucrats -- are chopping down the few remaining primary forests and destroying the National Parks and wildlife 88sanctuaries. Although illegal logging is often blamed 86Garrity, ICummer, and Guiang, “The Philippines,” p. 608. Cancelling concession licences does not automatically improve timber 87 management. It is also crucial for the state to protect abandoned concessions. A recent study found that many cancelled concessions in the Philippines were destroyed by small-scale illegal loggers and slash-and-burn farmers. Rudy A. Fernandez, “Total log ban cannot stop forest denudation,” The Philippine Star, 10 January 1994, p.1, p.5. lnterview, College of Forestry, University of the Philippines at Los88 Banos, 1 February 1994; Interview, Program Director, DENR, Quezon City, 3 February 1994; and Belcher and Gennino, eds, Southeast Asia Rainforests, p.36. In some cases -- such as in Quezon -- the military simply extracts logs. See Rita Villadiego, 298 on destitute villagers, in many cases influential officials and timber company executives -- who skim most of the profits on lucrative illegal log sales -- protect and encourage these 89people. In Samar, even though logging was banned in 1989, timber companies extract logs “through a web of allies ranging from politicians to local officials and even communist rebels.” In 1989, a World Bank report estimated logging9 may be that illegal ° roughly equivalent to legal logging. In the same year, a Senate committee claimed 9 and that destructive’ illegal logging cost the Philippines US$5 million every 92day. In 1991, the Economist Intelligence Unit estimated that the Filipino illegal timber trade was worth US$800 million a 93year. More recently, Congressman Renato Yap claimed that illegal logs account for about half of annual Philippine timber consumption -- estimated at 2.5 million “Last Days of the Sierra Madre,” in Gamalinda and Coronel, eds., Saving the Earth, pp.41-47. lnterview, Program Director, DENR, Quezon City, 3 February 1994. 89 Yabes, “Boon or Ban?” p.28. For more examples of government and military90 involvement in illegal logging, see Callister, Illegal Tropical Timber Trade, pp.62-64. Sunimarized in Boyce, The Philippines, p.234. Also see Rhona Mahony,9t “Debt-for-Nature Swaps: Who Really Benefits?” Ecologist 22 (May/June 1992), p.101. 92Summarized in Callister, Illegal Tropical Timber Trade, p.58. Summarized in Dudley with Stolton, The East Asian Timber Trade, 93 p.29. 299 I-SI CDH-HCD rtrq H H H Li Q ) C- H ‘d () 1xj H 0 H CDHO<9J OCD2) U) 0 0 2) 0 3 0 I- H- 0 0 çt <‘t5H9)U) cu LQ (Q U) - U) (Q 0 U) <1 [1 CD H-HCDC 2)o (.Q t-Q H- (.1 Ct (-Q < H- H- 0 L H- U) II P) H-ed b HHPJ CD H- CD H H- 3 - CD C) CD H- H CD H- C) 00 OP)HQ H I- 9) U) j 0 C) ‘1 CD H-U) C CtH(-QCDCFH U) HH-< 9) 1 U) 9) t- CD U) C) U) 9) (.Q H- H- CD CD - - H- U) h • H- U) Q H CD HO CD - - H- CD U)H HI 2) U) CD H-Ct rt IiH0 Hi ci j 9) H CD 0 Ct 0 Ct 0Ct0 HoH 0 H-CD ç-t - C 9) CD H H 3 ii II U) l(CDHH Ct H-0 Li I—I 0CDH-rt Ct CD d HLQU)CDH. H Ct 0 0 0 Ct < Z H ci 0 CDQ - LC) H- PJ•U)CD’ Q H- 0 CD CD Hi 0 CD H CD C) H Hi H- 0 o 0 i- 9) H H < U) Hi Hz rt H - 0 CD H- 2) CD 0 U) Hi 0 0< CD 9) 0 < CD 0 H H- H C H- h 3 JI-jCD Cr 1 H- Ct IH-HiH- 0 ‘1 çt U) U) H - c CD H IHOH H-CD -< Ct IP)hH-LH- H- zCt U) Ct CDO H Ct CD 0 9) 0 I CDCt2)c-t 0tI)°. IU)p)CDU)Ct ‘U) CD H- H- I I Ct 0 IH-0 CD Ct CD < I CD CD pi U) H H- H- H- IH <- 9) H < Hi IH O0CD Ct 0 CD 0 U) 9) 0 rt I(p) [1Hi 0 H- II H H- H 9) CD Hi j CD J CD 9) tj IrtCD CD IHIHCDCD C Ct 0 U) o 9 U) L 3 tS p CD o IH-CDCDU)çtHi0 IH.HCt H- CD i U) Hi - Ct LC U) H b z 0 I(Q Li H- :i H CD - U)CDU)CDCD k< Ct CD 0 0 .11 0’ ICDPJ’ 8‘°Vitug, The Politics of Logging, pp.117-118. 9‘°”RP losing race to save forests,” The Manila Times, 31 January 1994, p.A6. According to these charges, Alcala appointed his daughter, a son-in-law,10 and a brother-in-law to DENR Bobby positions. Timonera, “Alcala, DENR exec face graft charges,” The Philippine Inquirer,‘ 23 October 1993, p.1, p.11. “DENR men seek ouster of Alcala,” The Manila Bulletin, 5 February 1994, p.12. 303 areas naval usually 3 patrols out military no officials forest,” problems it Cagayan, connive time hampers coastline. logging remaining forest remote links resistance, February is boats, of “ 6 Yabes, 115 Quoted “ 4 lnterv±ew, “ 3 The 112 Vitug, Besides unclear the base in between concessions this guards.” 2 with DENR’s with terrorized is the New DENR have bases.” 3 confessed and navy primary 10,000 in 1994. exceedingly Even Alcala Philippines. forest. and Straits ties loggers.” 5 whether The in “Boon Subic only timber has ability increased reaches when Robles, soldiers Consultant Politics between hectare forests has “neither 250 by and or Palawan Bay, in The Times, the surveillance operators “Manila Ban?” armed to 1989: made guards difficult. a Luzon, “Logging the Philippine who curb navy lack In forestry But even primary of -- only 26 the -- p.29. men to Samar, “We are site Logging, since to fears illegal has of April 304 and has is DENR which more helicopters are incremental or supposed roam and units institutional officials forest just it unable DENR been The the DENR state rebels.” it unable and 1992, Political since logging. the contains p.67. is withdrawal cannot pinpoint Philippines 135 staff. one World has can to at jungles, often p.14. to to the of progress nor and guards. enforce “no keep the control protect patrol Bank, the Monitoring Power,” In one-third resources timber smugglers, boats too closure guns, former illegal of Bukidnon, best where has the Quezon U.S. in the Enforcement the rich to no operators, p.24. protected only weakening law American they of loggers forces, illegal radios, conduct further illegal of jagged by City, Subic often DENR U.S. 4000 are the the In loggers. i,117 DENR is also unable to trace the volume of logs extracted and compare this with allowable cuts. To monitor harvests, DENR issues a Certificate of Timber Origin. There are two serious problems with these Certificates. One, companies bribe officials to ignore or alter certificates. Two, companies duplicate certificates which are then stamped by local DENR officials. Without a computerized system, DENR cannot trace these documents.” An additional problem is DENR’s reliance on timber8 companies to provide transportation, and accommodation, and in some cases, protection from surprise attacks by the communist New People’s Army (NPA) h19 These close ties to timber companies subvert the independence and objectivity of DENR inspectors. D. Smuggling Under Marcos, domestic companies -- often with the participation or knowledge of customs officials and foreign firms -- smuggled huge quantities of logs to the North. Former DENR Secretary Maceda “estimated that between 1974 and 1980, US$960 117Quoted in Joy Hofer, “Up in ArmS in Bukidnon,” in Gamalinda and Coronel, eds., Saving the Earth, p.34. lnterview, Consultant to DENR and World Bank, Quezon City, 3 February 1994. In Isabela, to increase profits and evade forest royalties,“8 “loggers use fake.. .invoices.” Batario, “The Pillage of Isabela,” p.37. This is a serious problem in Isabela. Batario, “The Pillage of Isabela,”“9 pp.36-37. In most cases, the NPA does not directly participate in illegal logging, but some units do protect or tax illegal operations. See Vitug, The Politics of Logging, p.134. 305 million worth of timber was smuggled out of the country by friends and associates of President Marcos.”’ Many illegal logs landed in Japan. Official Japanese °2 customs records show that in 1981 Japan imported 1.4 million cubic metres of Filipino logs; but for the same period, according to Philippine records, only 365,441 million cubic metres were shipped to 121Japan. In 1984, Japanese companies imported 938,000 cubic metres of Philippine logs, over 400,000 cubic metres higher than the official export quota. In 1985, 257,000 cubic metres of undocumented Filipino logs were imported into Japan. In 1986, under the new government, the discrepancy between Japanese import and Filipino export figures dropped to 85,000 cubic metres. But even in 1987, after the total ban on log exports, “35,000 cubic metres of ‘unexplained’ logs left the Philippines for export to 22Japan.” Although it is difficult to prove, Japanese companies likely colluded with Filipino loggers to smuggle logs and falsify export 23documents.’ Through these practices timber operators exceeded their allowable cut, evaded export and corporate taxes, and stashed foreign exchange earnings 20Summar±zed in Boyce, The Philippines, p.234. 121Norman Myers, The Primary Source: Tropical Forests & Our Future [Updated for the l990s] (New York: W.W. Norton & Company, 1992), ‘ p.109. 22Nectoux and Kuroda, Timber, p.72. Telephone Interview, Centre For Investigative Journalism, Manila, 23‘ 31 January 1994; and Interview, College of Forestry, University‘ of the Philippines at Los Banos, 1 February 1994. 306 overseas. Today, most illegal logs are consumed in the 124country. Although some timber is smuggled overseas, especially to Taiwan, there do not appear to be substantial shipments. It is unlikely that Japanese trading companies are still involved in smuggling syndicates. Potential profits are now too low to risk sabotaging newly crafted corporate 25images.’ E. Tax and Royalty Evasion Marcos provided timber licences to key clients for a paltry fee of one peso. For a long time, the main source of government logging revenue from forest exploitation was based on remarkably low royalties based on the volume extracted. In 1983, this was only 20 pesos per cubic 26metre.’ Between 1979 and 1982, the government only collected US$170 million in export taxes and timber royalties, a mere 11.4 percent of potential timber 127rents. The excess profits flowed to a small elite, often linked to Marcos. In the late 1980s, Haribon president Junie Kalaw vividly explained: In the past 15 years we have had only 470 logging concessionaires. . .The average profit on logging is 100,000 pesos per hectare after you’ve paid all expenses. When you total this, it would amount to about US$42 billion, more than our foreign debt, that came from the forest and this money went to 470 people. The process created poverty for 17 million people around the forest lnterview, Program Director, DENR, Quezon City, 3 February 1994. 24 Telephone Interviews, Centre For Investigative Journalism, Manila, 25‘ 31 January 1994. ‘26Nectoux and Kuroda, Timber, pp.68-69. 27Broado,‘ “Incentive Policies, p.184. ‘ 307 areas 128 Despite negligible forest charges, during the heyday of log exports, Filipino companies used elaborate schemes to conceal over- cutting and evade royalties and taxes. With the help of forestry and customs officials, companies forged export documents, preparing one for the foreign port (often in Japan) which stated the true volume of timber, and one for Filipino authorities which underdeclared the volume (often the allowable cut). The foreign company paid a front company in Hong Kong the full value of the timber. The Hong Kong company then paid the Filipino company the value of the underdeclared shipment. The difference was generally diverted to a foreign bank or used to finance overseas operations •129 A 1989 World Bank report estimated that the Philippine government -- through royalties and taxes -- collected only 9 to 14 percent of potential timber rent in the late i98O.’° In 1991, forest fees were increased substantially and are now 25 percent of market price (this includes an environmental fee of 500 pesos per cubic metre of logs extracted, first imposed in 1990) 131 But without better collection these higher charges will make little 28Quoted in Broad with Cavanagh, Plundering Paradise, p.46. 29Nectoux‘ and Kuroda, Timber, p.72. Summarized in Rigoberto D. Tiglao, “Forest Fires,” FEER, 23 March ‘301989, p.13. Ph±lippine Department of Environment and Natural Resources, State 31‘ of the Philippine Environment and Natural Resources, Executive Summary Press Release, p.6. ‘ 308 p.35. p.15. government export This smuggling export enforced domestic delayed log strong inconsistent cooperation F. problem. Lucio economic 1993 Fortune activist difference. Log export ‘ 33 Hurst, ‘ 32 Rigoberto In Unlike 132 selective Tan profits. Export societal quotas policies Tobacco 1986, and development processing. as in -- announced ban According created in in companies Rainforest, avoided direction Since the Restrictions, and Indonesia, log to ban 1975 under Tiglao, resistance, to It be Ramos 1986, deny exports a restrict enabled also Marcos and paying it phased stringent to the In skirted from would “Crusader driving p.l’75; smaller government, tax 1973, fostered Antonio where control proclaimed were Logging Marcos 7 weak top in log evasion billion not 309 these log and over the strong the exports, state and finally state or of Carpio, issue widespread Vitug, export Marcos to Bans, deficit. Crook?” three new beer has recalcitrant tax pesos a political leaders award capacity, selective any regulations.’ 33 continued ban ban, The banned. and and years. evaders government a in FEER, new logging, timber Politics key One illegal Processing tobacco in have taxes will timber the company and anti-corruption log 12 This to are companies distorted In clients August Philippines, and from logging announced diluted export billionaire and be of 1987, was licences. disabling Logging, business Policies an alone promote 1986 1993, never acute with ban. and the log and and to -- a In 1989, sawn timber exports were banned; in the same year, logging was banned in provinces with less than 40 percent tree cover, in theory, stopping logging in 65 of 73 provinces. But as one report bluntly stated: “None of these bans have been 34enforced.” In 1992, the government banned logging in all remaining primary forests. But like so many government initiatives, the state has been unable to enforce this law. Since 1986, there have also been numerous unsuccessful Congressional attempts to pass a total ban on logging. Yet even if a total ban is eventually passed -- if previous selective bans are any indication -- this will have little impact on the rate of destructive logging. The Marcos administration provided incentives to process logs. Although processed wood production increased, these policies protected small, inefficient plywood, veneer, and saw 35mills.’ The value of processed wood exports (mainly sawn timber and plywood) reached $317 million in 1979. However, by 1982 exports had dropped and the number of plants had decreased -- sawmills from 325 to 190, plywood mills from 209 to 35, and veneer mills from 23 to 11.136 At the end of the Marcos era, processed wood exports were still quite low. In 1986, the Philippines exported 495,000 cubic metres of sawn timber, 256,000 cubic metres of plywood, and 34Belcher and Gennino, eds, Southeast Asia Rainforests, p.37. Plywood and veneer mills were particularly inefficient. Broado, ‘135 “Incentive policies,” p.195. 36Repetto, The Forest For the Trees?, p.64. ‘ 310 50,000 cubic metres of 37veneer.’ Today, the Philippines does not have a major wood processing industry. In 1992, total sawn timber production was 647,000 cubic metres, an 11 percent decrease from 1991. Of this, companies exported around 56,000 cubic meters, worth US$14.5 million. In the same year, 42 plywood mills produced 331,000 cubic metres and 13 veneer plants manufactured 79,700 cubic metres 138 G. Local Power and Forest Management In 1992, local governments were allocated more powers, including powers to manage forests. Since forest degradation directly affects villagers, decentralized control could potentially improve management. The author of the new Local Government Code, Aquilino Pimentel, argues that “resistance from local environmental groups will make local officials think twice. This will affect their votes.. .It is easier to monitor corruption on a local level. In the national office, the official hides in the bowels of the 39bureaucracy.” But Pimentel may be overly optimistic. Already there are signs that local leaders are using their new powers to distribute patronage. Vitug claims that “among some NGO5, especially those that work with community-managed forests, there is a downcast feeling. They are apprehensive that some politicians ‘37FA0 data, in Nectoux and Kuroda, Timber, p.115. Phil±ppine Department of Environment and Natural Resources, 1992 38Philippine Forestry Statistics, p.xii. 39vitug,‘ The Politics of Logging, p.189. ‘ 311 p.1. November Management DENR, Formulation Forestation Program of 1988), Sector September hectares Development reforested; H. replant Initial is will 1986, largely But Community self-interested trees Conservation, to it Government ‘ 42 Tolentino, ‘ 41 Philippine ‘ 40 Ibid. Until recklessly the 190,000 to summarized Program is reforest 1.4 ineffective. Steering 26 progress favoured -- Philippines 1988, equally involvement Bureau, million of 1986, in 1992, Program: only -- hectares Action 1987, Loan DENR local which Reforestation an issue Reforestation, German apparent in supporters. Dionisio Committee Department successfully conservation (revised was hectares and began 40,000 annual Korten, Plans,” began A A patrons is were stewardship claimed 1988 reforestation Forest slow: review clearly implementing that a hectares; to ref S. study average by National Chairman, of “Environmental PENRO/CENRO and include orested Resources 312 The the in Jr., effective Environment replanted Proiects and that and of vital showed clients. field end 1986, contracts Lessons Tiniber reforestation in of Philippine accelerated. 142 Forestation it data in the of Presented, 1988, for Inventory about that is 1990, Convention, had checks the 70,000 ADB-OECF (Quezon 33,000 Plantations and as wide Loans,” effective and year 64,000 the and reforested of Natural dropping 100,000 must open National Experiences Bureau Program hectares) 4 ’ December Project, permits 2000. hectares First policies “The City: pp.8-9. hectares. According Quezon be to management. Resources, hectares. to placed of abuse.lh 4 O National Forestry The (NFP) 272,000 to Forest Survey 1992), Forest around Forest City, were goal were and cut to In to In on Development Quezon Philippines As make abuse.’ 45 1992 take his funds Even problems dwellers clientelism. been, little as private future. The the concessionaires 93,000 1992, well, managers term, local ‘ 45 lnterviews, ‘Quoted Philippine ‘ 43 Philippine more a advantage Since government to in however, political hectares long-term City, sector congressional NGOs As -- persuading total level former DENR troublesome, the at Office, as well, to in While and 3 Los late organizations officials well of participate -- Forestry just in Vitug, serious DENR accounted February money Department decision. Department reforested ‘community to Banos, leases the 1991, discussing 1980s, Quezon as local over encourage Secretary districts reforestation funding; The to to Statistics, and difficulties. 2 and have DENR 1,350,000 maintain monitor City, 1994; February people Politics for since of We of about groups’ planted local almost DENR’s 313 been communities has Environment Forest Factoran chose just there to 3 and ‘results’ and 40,000 promoted February -- make and politicians 1994; too of hectares Table have has the reforestation over to Resources, DENR especially 950,000 has enforce Logging, protect admitted short congressmen distribute been rest.’ 43 The hectares formed Program and 1.07, been and 310,000 forestry 1994. National are had government undercut NGOs and Natural rules. hectares, reforested wide p.61. who University often p.26. spontaneously that: marginal Director, been in there efforts to hectares, reforestation management cooperate.” syphon 1992. evidence Forestation participate far Resources, by There replanted. “We has has patron in during areas. had forest of timber DENR, funds As been have the had the and of to to at of have also undermined reforestation. DENR officials have been linked to ‘ghost’ reforestation sites, accepting bribes and gifts from contractors, and demanding a percentage of profits from reforestation 46contractors.’ During Factoran’s term as DENR Secretary (1986-1992), “about 15 percent of the funds spent [on reforestation] may have gone to the pockets of some DENR officials, politicians and parties contracted to 47reforest.” DENR is now trying to improve reforestation. The most important initiative is the Second Forestry Sector Program (1993- 1995) which attempts to build on the lessons and successes of the First Forestry Sector Program (1988-1992) 148 The Second Forestry Sector Program is funded by an ADB US$100 million project loan and US$29 million from the Philippine government. Since this is a project loan, the ADB approves all 49sub-projects.’ By 1995, this program aims to develop 93,000 hectares of community forests, 55,000 hectares of integrated reforestation sites, and 22,000 hectares of critical watershed restoration. Under this program, DENR only grants reforestation contracts to local residents. These 46Priscila R. Arias, “DENR officials suspended,” Manila Bulletin, 21 January 1994, p.1, p.8. ‘147Vitug, The Politics of Logging, pp.60-61. 48For details on the new policy guidelines, see Tolentino, “The National‘ Forestation Program, pp.7-12. 49Rosario N. Banzon, “Loan II For The Forestry Sector,” NE Bulletin: The Official Newsletter of the National Program Coordinating Office 3, no. 2 (November 1992), p.7. The ADB’s other major ‘ -- Program reforestation initiative the First Forestry Sector Loan -- was policy based, dispersing funds when the government met certain policy conditions. Interview, Senior officer, Asian Development Bank, Manila, 4 February 1994. 314 are long-term agreements designed to encourage villagers to plant various indigenous species. To discourage fraudulent NGOs from taking advantage of reforestation contracts, NGO5 are compensated for services to local contractors. The fund is also designed to protect 800,000 hectares of primary °5forests.’ THE PHILIPPINES AND JAPAN’S SHADOW ECOLOGY The North has expedited large-scale logging in the Philippines since the Spanish colonial period. During the 17th and 18th centuries, Cebu was logged extensively to build Spanish galleons. During the 2merican colonial period log extraction increased, driven in part by mer±can technology, advice, financing and market demand. After WWII, Northern investment, technology, and trade further facilitated and accelerated destructive 15logging. Japanese log purchases were a particularly virulent force, ’ although 50Besides improving community reforestation and protection for primary forests, DENR is also working on a new forestry code, better NGO participation, incentives for private forest managers, implementing‘ For the Master Plan Forestry Development, improving watershed management, increasing interagency coordination, and enhancing information flows and forestry education. See Ito N. Banzon, “What Loan II holds in store,” NFP Bulletin: The Official Newsletter of the National Program Coordinating Office 3, no. 2 (November 1992), p.11; and Philippine Department of Environment and Natural Resources, National Forestation Office, A Primer On The Community-Based Forest Management Proiect (Manila: DENR, undated). (Somewhat confusingly, the Community-Based Forest Management Project is a second name for the Forestry Sector Program). For details on the Master Plan For Forestry Development, see Philippine Department of Environment and Natural Resources, Asian Development Bank and Finnish International Development Agency, Caring for the Forest to Safeguard the Future: Master Plan For Forestry Development (Pasay City: RIVELISA Publishing House, August 1992). 51Broado, “Incentive policies,” p.174. ‘ 315 pp.24-27. Yokoyama, Villegas, on Renato a Philippines,” corporate Japanese US$25.9 IBON supplies, compared Japanese by less investors appreciation A. increases, 1985 Commerce investments Japanese 1973, (Quezon critical the Japanese 1978 ‘ 54 Reg±nald ‘ 53 villegas, Philippines, ‘ 52 Wurfel, Japanese than to Japan sidelines,” Constantino, million City: and money to 1990 investment companies environmental inadequate Japan Japanese are study “Not in 1 US$1.19 Investment approved Navigation. of and percent the AMPO investment Karrel, Japanese Chua, wary and Filipino to of Japanese in the accounted early Databank the Straits Japan’s Japan-Asia US$256.7 technology Economic The invested billion Our soared “Philippine of infrastructure, yen of by Philippines Inc., and 1990s, Second practices political investment Politics, Economic Backyard: surged following total From the Times, and economic Technology worldwide. for million.’ 53 in Presence US$203 1989). were Quarterly the Central almost 316 Research Invasion: Indonesia, uncertainties Japanese during 21 18 in Presence, Philippines instability, also signed p.200; impact the Exporting increased million October and percent the no in For Bank.’ 52 martial Despite Center, Plaza important. Review In investment Japan rampant Southeast investment. 154 Philippines, US$925 in a the also the pp.61-62. 1992, critique in the keep of still Agreement 891 in Pollution 23, Treaty law. Philippines, 1993), these unreliable the After crime. Philippines, see million the all Tokyo p.5. prior percent, Asia no. accounted Philippines, Philippines substantial In Edberto of see p.59. Philippine of the 3 investors in Japanese In December to (Manila: Japan’s in to (1992), Masaki Amity, power 1991, rapid 1972, 1985, Hong from from the see For for M. Kong, US$880 million in Malaysia, and US$807 million in 55Thailand.’ Direct Japanese investment was less important in triggering the Filipino logging boom in the 1960s than the Indonesian boom in the 1970s. In the case of the Philippines, American companies -- such as Weyerhauser and Georgia-Pacific -- provided much of the advice and equipment necessary for large-scale logging during the 561950s.’ Nevertheless, Japanese companies were still a key force driving extraction. To guarantee log supplies -- yet minimize risks and maintain a low profile -- many Japanese companies provided credit in exchange for logs or held minority shares in local Philippine 57companies.’ These arrangements accelerated destructive logging. According to Suzuki, In cases where the Philippine side could not supply enough capital to make up 60 percent, the Japanese side would provide the difference through the back-door... These back-door funds often accounting for as much as 30 percent of the total, could not be insured. As a result the Japanese side endeavoured to recover the uninsured amount as quickly as possible, contributing to the 155Meriain 0. Dacara, “Hiked Japanese aid to Manila seen,” Times Journal, 17 December 1993, p.1. ‘R.56 Ludwig, “Cable Crane Yarding, An Economical and Ecologically Suitable System For Commercial Timber Harvesting In Logged-Over Rainforests of the Philippines,” Philippine-German Integrated Rainforest Management Project, PN 88.2047.4-01.100, Technical Report no. 2, 1992, p.1; Eduardo Tadem. “Conflict overt Land-based Natural Resources in the ASEAN Countries,” in Lim Teck Ghee and Mark J. Valencia, eds., Conflict over Natural Resources in South-East Asia and the Pacific (Singapore: United Nations University Press, 1990), p.15; and Gillis, “The Logging Industry In Tropical Asia,” p.179. 57Nectoux and Kuroda, Timber, p.62, p.79, p.86. Also see chapters three and four. ‘ 317 and management Timber, Report,” company do and Japanese Japanese rattan and inaccessible silvicultural Philippines note, logged -- export operation, obtained influence when not Marcos’s often were ‘ 61 Ibid., ‘ 60 For ‘ 59 Nectoux ‘ 58 M. Through extremely in have furniture, operations.” 59 Japanese which p.68. areas Tokyo, many protected Suzuki, trading destructive investors not over example, of supplying a prior client p.86. minority stands major was and the through cases, and the rapid illegally, 1986, trading part “Notes reforestation companies timber and Kuroda, to sale by impact Herminio see with of exploitation logging “Japanese equipment, 1986, unpublished, owned chopstick shares, powerful As corporate commercial and for the companies industry. minority with Timber, on Tropical price have by companies history forged Disini. in the Japanese 318 almost Mitsubishi duties, control primary political mills. 16 ’ purchasing ownership, overall little of of p.86. facilitated timber. shares quoted of Rainforest export logs. concession Ibid., all with evaded of forests investors Cellophil interest structure timber elites.’ 60 Rayon logging But in in Japanese As There logs but pp.84-85. Nectoux documents, royalties rapid, lumber unlike Nectoux -- Log areas. 158 (6%), companies by and had these interests in are (1972-1986), or Export financing Today, large-scale, shareholders the and in Daicel processing, sustainable controlling significant some and and investors the Kuroda, sparse, ignored System taxes, in Kuroda major small [was] past (3%) the an a B. Japanese Trade Japan’s greatest impact on Filipino timber management has been massive purchases of logs far below replacement or sustainable management costs. In the 1950s and 1960s, the Philippines was the primary source of Japanese tropical log imports. Over this period -- as Japan used more and more dipterocarp logs to make cheap plywood and kon pane -- wasteful Japanese consumption propelled destructive, rapid 162harvests. In 1950, the Philippines accounted for 93.3 percent of Japanese timber imports from Southeast Asia, although the total volume was only 119,000 cubic metres. In 1961, Japan imported 3.8 million cubic metres of Philippine timber, accounting for 68.7 percent of all Southeast Asian timber imports. In 1965, Japan imported 5.62 million cubic metres of Philippine timber. By 1969, Japanese timber imports from the Philippines had soared to 8.32 million cubic metres, although this now only comprised 46.7 percent of total timber imported from Southeast Asia. In that year, Filipino timber exports peaked at more than 11 million cubic metres. In the early 1970s, as accessible, high-quality Filipino logs became increasingly scarce, Japanese companies shifted to Sabah and Indonesia. Many Filipino loggers -- in some cases financed by Japanese companies -- also moved to 63Indonesia.’ In 1971, Starting in 1966, Philippine mangroves -- especially from Mindanao162 and Palawan -- were also chipped and exported to Japan. Ibid., p.80. 163lnterview, Professor, University of the Philippines at Los Banos, 1 February 1994. From 1970 to 1990, 17 Filipino logging companies invested US$279.5 million in Indonesia. For a 319 Indonesia surpassed the Philippines as Japan’s key source of tropical timber. By 1973, Indonesia and Sabah supplied almost 70 percent of Japanese timber imports from Southeast Asia. In that year, Japan imported 6.24 million cubic metres of Philippine timber. In 1976, Japan only imported 1.95 million cubic metres of Philippine timber, a mere 8.7 percent of total Southeast Asian imports. Over the next ten years, Japanese companies -- including Nissho Iwai, Sumitomo, Marubeni, Mitsui, Mitsubishi, and Itochu -- continued to purchase Philippine timber, although far less then during the logging boom in the 1641960s. In 1983, Japan only imported around 900,000 cubic metres of Philippine timber. After the log export ban in 1986, Japanese legal imports were reduced to small amounts of processed 65wood.’ From the l950s to the mid-1980s, processed wood accounted for a minor portion of total Japanese timber imports from Southeast Asia. For example, in 1984 Japan only imported 151 cubic metres of plywood from the 66Philippines.’ Even after the ban on log description of Philippine investments in Indonesia’s timber industry, see Vitug, The Politics of Logging, 8.pp.26- 164 the l960s, about 60 of 2 In percent Philippine timber exports went to Japan; by the early 1980s, Japan only accounted for around 30 percent. Boyce, The Philippines, footnote 4, p.241 65unless otherwise noted, the Japan-Philippine . trade data for this section is from Isamu Nomura, “Japan: The timber trade and its problems,”‘ in Andras Nagy, ed., International Trade in Forest Products (IIASA, AB Academic Publishers, 1988), cited in Dudley with Stolton, The East Asian Timber Trade, p.8. These figures include sawnwood and logs, although the bulk of Philippine timber exports were in the form of logs. 66Hurst, Rainforest, p.191. ‘ 320 in development absorb and secondary below environmental regenerate deep buys environmental and plywood timber plywood tariff cubic inconsequential: exports, Japan, rural hardwood) ‘ 67 Japan Even a the scars metres all barriers management. small imports imports. costs in Table though poverty. forests. these swaths assistance. Plywood 1990 amount disasters, that of •167 costs. of 7, on of costs Japan plywood, 2,842 regeneration Filipino By p..6. plywood just of As entail Manufacturers’ of Filipino One 1993, and degraded a no cubic processed over including The result, longer still a logical have plywood Japan significant 4 negligible metres, Philippines managers million 321 or not protect forests, imports wood, sustainable floods, unlike imported source Association, had exports 0.1 cubic a past cannot portion the percent Philippine major economic, soil and in is of even remaining metres timber to management Indonesia, now erosion, tackle funds find impact Japan of less, Plywood of struggling (both Japan’s purchases logs Japan’s the social, is primary concomitant on were a siltation, have funds Industry Japanese mere and Japanese Filipino softwood total total still only left and and far 723 to to C. Japanese Forestry and ‘Environmental Aid’ Japanese aid to the Philippines increased substantially in the 1970s, providing an important financial pillar for Marcos’s patronage network. From 1970 to 1976, Japanese development loans swelled from 7 percent to 19 percent of total Philippine loan assistance, rising in absolute terms from US$23.5 million to US$308.4 million. Japan is now the largest aid donor to the Philippines, accounting for 53.5 percent of total Philippine aid in 1991. In 1992, around 12 percent of bilateral Japanese ODA went to the 68Philippines.’ In the early 1990s, annual Japanese aid to the Philippines was around US$1 69billion.’ Until recent OECF loans for reforestation, Japan had made only modest contributions to the forestry sector. From 1976 to 1992, a JICA technical cooperation project -- the Forestry Development Project Watershed Management in the Pantabangan area -- provided assistance with Philippine reforestation techniques. As well, from 1985 to 1988, JICA conducted a development study of the Cagayan River watershed to help formulate a forest management plan. JICA also provided one grant in 1978 (11.05 billion) and two in 1984 (11.07 billion and 1103 million) to construct forestry buildings and fight forest °7fires.’ Today, there are no JICA technical cooperation forestry 68Japanese Ministry of Foreign Affairs, Japan’s ODA 1993, pp.45-46. ‘169Meriam 0. Dacara, “Hiked Japanese aid to Manila seen,” Th Times Journal, 17 December 1993, p.1. JICA, For Our Green Earth: Outline of JICA’s Cooperation in Forestry 70 (Tokyo: JICA, Forestry and Fisheries Development Cooperation‘ Department, July pp.21-26. 1993), 322 projects in the Philippines, although a coordinator is examining possibilities. 171 During the Aquino administration, international donors loaned substantial sums for DENR projects to protect the environment and rehabilitate and reforest degraded areas. Between 1979 and 1988, the Bureau of Forest Development was the primary recipient of only one loan and had a secondary role in eight others, in total implementing about US$60 million. In contrast, between 1988 and 1992, DENR received loans worth over US$500 million, accounting for a major portion of Philippine development assistance. The OECF provided a large share of these loans. The two largest loans were the 1988-92 Forestry Sector Program Loan from the ADB (US$120 million) and the OECF (US$120 million) and the 1991 Environment and Natural Resources Sector Adjustment Loan (ENR-SECAL) from the World Bank (US$224 million) and the OECF (US$100 million) •172 DENR also implemented grants and grant-funded projects from USAID, several UN organizations, and numerous Northern governments. To understand lnterview, Coordinator of JICA Indonesia, Jakarta, 1 March 1994. 71 72Korten, “Environmental Loans,” pp.6-7, including footnote 13 and footnote‘ 53, p.27. The ENR-SECAL program has main six objectives:‘ “a) design an integrated Protected Areas System; b) provide program support for management of ten priority protected areas; c) improve the monitoring of logging operations and enforcement of forestry laws and regulations through the provision of equipment, training and technical assistance to DENR offices...; and d) develop the capacity of LGUs [local government units) and line agencies to generate community-based resource management and livelihood projects in watershed areas. .“ Philippine Department of Environment and Natural Resources, “Highlights of the ENR-SECAL Program,” DENR Policy Bulletin (February 1993), p.9. For more details, see Ibid., pp.9-li. 323 match Development 4 Second 1994, most non-governmental, a from nurture were theory, default. wealth.” 73 Yet loan US$7.8 -- this step degraded next intended the different February if the ‘ 73 Korten, environmental this ‘ 74 lnterview, on significant Prior loan, The were section reforestation, negotiations 80 Forestry this billion. OECF a contractors the to project, percent Philippines forest Although long laudable, to remaining 1994. tack, Office, trees. The is reforest evaluates loan. 1988, “Environmental and still Sector OECF drawbacks. land. Senior using of and The As the impact expensive many were were the Quezon The and often in responsible the accepted 358,000 noted family now DB ADB/OECF Interviews, Program the contracts Bureau of the 1988-92 officer, paid To still while trees of provided has the City, 1988-92 hiring background earlier, reforest journey Japanese groups Loans,” based hectares principles of more 324 1-UDB being some Loan survived Forestry Forestry 3 for to Forest Asian February local Forestry another guidelines on in DENR, include areas than toward any (1993-1995). building p.8. conducted this development the and managing over Development Development repercussions, after Sector Sector and residents 10 survival were providing area US$100 restoring National 1994. corporate, Sector five million concepts on and 3 with reforested, Program forest would Program years, years, lessons million assistance, As procedures of Program Bank, to had yen the the hectares of Forestation their behind cost areas. community, plant even Loan conducted credit.’ 74 then Loan February nation’s “a OECF Manila, learned for Loan. trees there about first if took this the the and was for the to by In of plantations arborea. Korten, at misunderstandings, active local capital; loan. percent Patron-clientelism after tended contributed burned scope reforestation contractors group locals established tended contractor Los ‘ 78 Contractors ‘ 77 lnterview, ‘ 76 Ibid., 175 Korten, Despite inhabitants three and of Banos, Contractors to the 176 participants. to “Environmental of instead be residents), speed area. involve their would This years and to effective never family p.14. 1 “Environmental problems, sites February made these of of College were less reduced target.’ 77 be In further mostly planted often contractors, and links paperwork reforestation some them failed. fully or forest hired than Loans,” Many insufficient of scattered including 1994. had committed to more cases, distorted planted the Forestry, trees, 40 paid. 175 the contractors as Several few plantations. Loans,” rather percent pp.16-17. 325 low-wage susceptible environmental genuine Sometimes community, connections contractors under poor and a NGOs the University studies p.9. accomplishments, training In than single of sometimes supervision potential ‘community planters the that lived some trees trees Successful they on-site to Forestry to reached have species worked disease benefits cases, for in had of the had instead died, benefits local the contractors’ the estimated by survived. contractors. 178 personal community inspections), closely less Sector Philippines DENR contractors contractors -- and provincial sometimes residents of of numerous gmelina than of pests. (which being many ties this Loan with that and The 20 (a to DENR officials. Reforestation funds were used for bureaucratic patronage and ‘corruption’ was common. DENR officials syphoned funds by awarding reforestation contracts to ‘fictitious’ 79people.’ Although perhaps somewhat exaggerated, one scholar estimated that 60 percent of the Forestry Sector Loan was ‘lost’ and only 40 percent went into reforestation.’ Besides mixed environmental 8 results, the Forestry Sector Program Loan has major economic° drawbacks. The agreement stipulated that the loan be placed in the Central Bank to establish a ‘peso account’ to fund DENR’s contract reforestation program. Foreign exchange was supposed to be used to purchase essential foreign products. However, according to Frances Korten, many “items eligible for financing were for the use of loggers and wood industry enterprises, some of which were the cause of the deforestation that the loan was presumably trying to 18reverse.” The annual interest rate for the OECF loan -- after ’an initial seven year grace period -- is 2.7 percent. This must be repaid in yen after 25 years. While on the surface these are soft terms, as the yen appreciates, repayment will become increasingly 82onerous.’ lnterv±ew, College of Forestry, University of the Philippines at Los79 Banos, 1 February 1994; and Sajise, et al., State of the Nation Reports. Saving the Present For The Future, p.19. The ‘disappearance’ of funds is not unique to the Forestry Sector Program‘ Loan. As noted money and earlier, reforestation contracts have become a key tool of state forestry patrons. lnterview, Department of Forest Resources, University of the Philippines80 at Los Banos, 2 February 1994. 81Korten,‘ “Environmental Loans,” p.24. ‘82Ibid., footnote 46, p.24. ‘ 326 This expands the Filipino debt, adding even more pressure to generate foreign exchange by exporting natural 83resources.’ As Korten notes, “lending that couples the environmental agenda with foreign exchange. . . is likely to accelerate the very damage it is intended to reverse.”’ While Japan considers this loan part of its environmental aid, the concept ‘environmental loan’ is an oxymoron. CONCLUSION: A LOOK TO THE YEAR 2000 Politics since Marcos is remarkably similar to previous political regimes as tenacious patron-client networks battle for access to and control over state resources. Many timber-based patron-client networks that dissolved in the wake of Marcos, realigned in the Aquino years. But with less valuable commercial timber, fewer quick profits, and greater voter concern with environmental degradation, ties between top state leaders and timber operators are now more tenuous and brittle. In this setting, the state has pushed harder to tackle timber mismanagement and rein in ‘corrupt’ state implementors. The state has cancelled, suspended, or refused to renew many timber licences; made scattered attempts to punish illegal loggers and their state allies; and -- with support from international donors -- increased reforestation 1n May 1993, the Philippine debt was US$34.3 billion. Philippine‘3 Department of Environment and Natural Resources, State of the Philippine Environment and Natural Resources, (Manila: Republic of the Philippines, received by author February 1994), p.2. 84Korten, “Environmental Loans,” p.30. ‘ 327 provided manage productivity logical management cooperation environmental while necessitate extensive have log ecological equivalent low logging networks enforce distort techniques, between officials, they of the degraded past, state purchases little Post-Marcos are still timber. source local in rules state unable to soil as ‘environmental timber shadows. enforcement have to paying primary direct inadequate projects land. finding state capture and impact political erosion legal Rebuilding and of at policies or left Philippines revenues produce leaders for impact funds. Yet unwilling prices collect forests Japanese the production), of or state deep and concomitant officers, silvicultural there Japan’s grants and funds loans’. on climate a and continue fight calamitous Yet scars bureaus, far viable and timber taxes. military also trade, are to 328 and allow there in past to below and national break still highlights changes that insufficient environmental commercial maintain means forestry. to management. While technology, timber treatments, practices, crippling As are leaders, drive timber-based floods. pervasive impair intrinsic the a to that parks currently these operators. stability result, deforestation. cost the replace timber reduce current Instead, reforestation, middle-level state and Japanese damage, But potent extensive (estimated clientelist problems. Considering yen of investment past patron-client industry poor no lost agricultural and capacity sustainable loans These efforts residue Japan technical including aid Japanese control, forests logging illegal to As links state have will is ties has the now and to of be to in a supplied foreign exchange and financed a few successful reforestation and conservation sites, there are severe problems. In the case of the ADB-OECF First Forestry Sector Program Loan, a large portion of the money was wasted by administrators and contractors, or syphoned by bogus NGOs, local political and military leaders, and DENP. officials. Moreover, the concept ‘environmental loan’ is flawed; rather than offsetting Japanese past practices, these loans will eventually create even more pressure to extract and export natural resources to service the accompanying debt. Over the last century, commercial loggers -- protected by state patrons and driven by Japan’s shadow ecology -- have ravaged Southeast Asia’s primary forests. In 1900, primary rain forests covered 250 million hectares of Southeast Asia; by 1989, only 60 million hectares 85remained.’ The history of timber mismanagement in the Philippines suggests a bleak forecast for the rest of Southeast Asia’s primary 86forests.’ Japan’s shadow ecology is 85Mark Poffenberger, “Introduction: The Forest Management Crisis,” ‘ in Potfenberger, ed., Keepers of the Forest, p.xix. ‘86 is already too late for Thailand. Thai commercial loggers -- protected by state patrons and driven by Northern markets and funding -- cleared and degraded much of the country over the last four decades. Largely as a result, forest cover declined from 70 percent after the Second World War to 19 percent at the end of the l980s. In 1989 when logging was banned most of the best timber tracts were already exhausted. Today, timber companies survive by importing logs from Cambodia, Burma, Laos, and Vietnam, and by extensive illegal logging in Thailand, estimated at 2.5 million cubic metres a year. Peter Dauvergne, “The Failure of Forestry Management in Thailand: Politics Behind Deforestation,” 1993, an unpublished paper presented at a SEADOC Seminar, Centre for Southeast Asian Research, University of British Columbia, 27 January 1993. 329 pushing Borneo Malaysia and Indonesia down the Philippine path of widespread deforestation. Poorly designed Japanese aid programs often tied to corporate motives, inappropriate technology transfers, short-sighted purchasing practices, and voracious consumption have facilitated and accelerated destructive timber extraction. As well, low purchase prices and tariff barriers to processed wood (especially Indonesian plywood) have reduced Southern state revenue essential for sustainable management. These practices have left deep environmental and economic scars that impede current efforts to fund and manage sustainable timber operations. Problems are reinforced and exacerbated by elite attitudes, a need to service foreign debt, and international incentives to ‘develop’. Besides Northern pressures, clientelist forces are also driving Borneo Malaysia and Indonesia toward a future similar to the Philippines. As leaders battle to survive in societal webs of patron-client ties, clientelist networks flourish at all levels of the state and society. These pervasive links distort state policies, contribute to a small elite prospering from timber profits, create complex and murky layers of subcontractors, generate an unpredictable atmosphere that encourages quick and destructive extraction, subvert supervision of state implementors, and thwart state enforcement of timber regulations. Protected by state patrons, Southeast Asian loggers damage one-third to two thirds of the trees left after legal harvesting. Illegal logging -- often in parks, wildlife sanctuaries and watersheds -- is an 330 even greater problem. In Indonesia alone, as much as 35 million cubic metres of illegal logs -- equivalent to the legal harvest -- are cut each year. Many of these logs are then smuggled overseas or used by inefficient local processors. Extensive illegal logging and smuggling decrease state revenue necessary for sustainable management. State coffers are further plundered by timber companies that evade remarkably low royalties and taxes. In Borneo Malaysia and Indonesia, the state only collects a small fraction of potential timber revenues. In addition, clientelist states and private companies have neglected conservation and reforestation or, as in Indonesia, the government has used ‘reforestation’ to build immense fast-growing timber plantations. Without radical changes to the clientelist states of Southeast Asia or to Japan’s shadow ecology, there is no chance that Indonesia, Sabah, Sarawak, or the Philippines will reach the ITTO goal of sustainable timber management by the year 2000. Reforming Southeast Asian political and social interaction is obviously a. difficult task. As the Philippines shows, patron-client relations are resilient; even breaking these ties at the top of the state will not guarantee significant improvements to timber management. Rather than navigate the treacherous shoals of possible Southern political reforms -- a route that I believe is especially precarious for cultural outsiders -- it is more productive, and perhaps more feasible, if still arduous, to manipulate Northern shadow ecologies. In theory, Northern resources can promote sustainable management, and perhaps even undercut particularistic 331 0 h Pi I-h CD uJ (Q cI L (I H 0 CD H- p.) j c-I- I CD b H- C) i CD 0 H c-I- II H- U) CD p.) H CD Pj H- 0 U) z U) c-I H 0 C) p.) CD c-I- CD c- w w H [\) c-I- L 0 H fr-h CD Ci) U) 0 H- q c-I HP) P.) c-I- H- d çI c-I- P) CD CD ) j p.) c-I- - C) CD U) p.) CD pj t C) C) U) Cl) 0 H- H- c-I- H c-I ) c-I- Q CD LQ I.< I-h H 0 CD I-C U) CD I-h U) PJ 0 c-I- I-C I-C 0 C) CD Aid potent management, Southeast Japan’s contributed have altered trade address timber. government I reforms tariffs. 1990s, export assistance, transfers; three timber argue now The This continue core JAPAN’S fewer assess in element and concentrates timber the to the that Even Japanese Asia, chapter the I elements overseas encourage and to grants, the environmental consumer fundamental outline detrimental the clientelist though recent ECOLOGICAL marginal to trade particularly trade, of residual accelerate repercussions evaluates government of and Japan’s environmental less are Japanese the Japanese sustainable Japan’s prices, improvements including loans; essential. SHADOW impact main and on states impact effects the Conclusion deforestation. shadow JICA facilitating proximate has shadow investment, corporate trends corporate 333 wasteful of impact OF of of of corporate timber post-1990 technical focused policies, TIMBER Southeast Japan’s to on ecology overseas ecology: from of ODA repercussions investment, Southeast management consumption, Japan’s and commercial technology, on IN forestry the Fundamental Japanese purchasing cooperation ecological and SOUTHEAST -- government government reshaping Asia. activities 1950s shadow ODA. discuss initiatives and Asian in corporate I logging, to of and examine and the practices, ASIA reforms technology ecology shadow the projects. This technical moves have Japanese the possible aid timber South. import least mid and has now not and the in to of to of more on conservation, large-scale reforestation, and improving Southern processing efficiency. But there are still serious deficiencies. JICA and OECF environmental guidelines are vague and non-binding. There are few JICA or QECF environmental experts, and most aid staff have little field experience in tropical forests. Poor coordination between Japanese ministries, aid distribution based on Southern elite requests, informal ties to Japanese companies, poor cooperation with NGOs, and inadequate supervision of aid money compounds these problems. Partially as a result, environmental reviews of forestry projects are often ineffective, and Japanese aid -- under the guise of ‘reforestation’ -- has supported inappropriate technology transfers and fast-growing timber plantations. Finally, the forestry sector receives only a small portion of environmental aid, much of which has been misguided -- such as environmental loans to the Philippines. While the government tinkers with aid projects, new Japanese corporate environmental departments and guidelines, and revised rules to integrate environmental factors into corporate decisions have produced more sophisticated rhetoric and token forestry conservation projects, but few concrete changes to business practices. Both Japanese companies and powerful government departments ignore or superficially address the critical factors driving Southeast Asian deforestation: wasteful consumption of tropical timber from unsustainable sources; timber prices far below replacement or sustainable management costs; import tariffs that syphon Southern revenues essential for sustainable management; and 334 residual effects that leave Southern governments struggling to find the funds to cope with a plethora of environmental and economic problems. Japan has the potential to facilitate sustainable management rather than accelerate destructive logging. But considerable reforms are necessary. The Japanese government must accept responsibility for past environmental practices, and restructure and increase the amount of environmental aid. Japanese consumers must use less and pay more for tropical timber. These additional revenues must be transferred to sustainable Southern timber concessions. Japanese companies and the Japanese government must avoid intentional or inadvertent policies and practices that undercut Southern state capacity to collect revenues, enforce regulations, and manage environmental problems. And once bilateral or multilateral mechanisms are built to determine ‘sustainable’ and ‘unsustainable’ timber, Japanese companies must limit timber purchases, investments, credit lines, and technology transfers to sustainable concessions. JAPANESE TECHNICAL ASSISTANCE, GRANTS, LOANS AND TROPICAL FORESTS Under pressure from the international community, Japan rapidly increased the quantity of ODA in the l970s and 1980s. Today, Japan is the world’s largest bilateral aid donor and the major contributor to the Asian Development Bank. This aid has provided vital scientific and technical assistance to many Southern countries. But while Japanese aid has certainly provided benefits, 335 b H ci H Li M CD CU CD M Mi cc H- pi U) P H U)O CD c Li 0 CU 0 0 U) I-’ < Pi 0 0 Li Li CD Cl) 3 o cc () H c-t i- ‘-rJ U) c- II Mi Q C) Mi fJ) Li CU 0 Cl) Cl) C) Cl) 0 0 CD Mi 1 Li H- Li H- 0 U)CD I-I CT) C) h H- U) Q P Li Li II u CD CD H- C Li Ct U) CD CD H CD U) H Hi CL) C CUCUCU U) U) H U) CD ç U) H- U) - - H- 0 CD H H- I 0 U) - U) U) OH- U c-I. 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CD CU U) P1 P1 CD II I I H- Li C H- —. p1 I-I U) C) b’ H- Li CD Ci) U) Li C) CD CD ct cc 0 Ct Mi p1 c-c Li’ II Li C) cc CU C) H- CD CD CD LiH- U) U) CD 0 (.Q CD U) CU 0 II CU CD Li c- ci C) CU P1 - ccC) -• 0 CD - P II C -< - U) 1d Li H U) 0 Li’ Li U) Li Agriculture, Cooperation JICA, minimal forestry Forestry JICA forestry official, that and provided Limbang, indigenous these South. wood community forestry forests, Japanese cooperation essential intergovernmental 5 This 4 lnterviews, environmentalists concessional Since also imports. loans Tokyo, Of projects environmental projects Sarawak; loans companies 144 conserving in Cooperation for people’s these, forestry. 4 data encourages the funded Division, projects Forestry an 12 soft logging to early effort More was April Senior 51 emphasize tend and Japanese loans fast-growing loans OECF offset rights, were are 1990s, provided and JICA, rain 6 projects and companies to to benefits. 1994; Centre, criticized JICA in only official, linked loans to Fisheries, forestry be appease risky massive the corporations. clearing forests, Tokyo, broad fewer Japanese small, has fund and Philippines. 5 337 monoculture by now timber to funded Forestry to social these JICA Senior also projects: plantations log Forestry 12 an commercial these natural According community-based stress Tokyo, plant and April companies official exports; intergovernmental investments. changed critics, infrastructural aspects, official, From projects developing tree Agency, a 19 forests, regenerating Cooperation 1994. 15 In variety April loggers to in 1974 in plantations. and the at investing the JICA while degraded Indonesia; a projects. OECF International past, to the 1994. for and Ministry senior emphasis now or social of 1994, Division, providing community Forestry loans projects degraded ignoring securing forestry endemic many ensures in Social areas. NGOs JICA JICA 1 and the of of of in to species to foster bio-diversity. In addition, to facilitate corporate participation 6 in forestry conservation, JICA recently established an Environmental Protection Credit Line. Loans will supposedly reforest degraded areas; protect watersheds and primary forests; and support social and community forestry projects. Despite these apparent improvements, JICA’s 7 forestry and environmental projects still have significant problems. JICA’s guidelines and procedures for pre-and-post-project environmental reviews are vague and inconsistent. Projects still fund technology transfers with little institutional support - - in some cases, the equipment never leaves the 8box. As Forrest notes, instead of promoting conservation, Japan “transfers high-technology equipment, ensuring lucrative profits for Japanese companies.” As well, JICA still supports dubious reforestation techniques9 in Southeast Asia, particularly fast-growing eucalyptus and acacia mangium plantations.’° In Indonesia, JICA emphasizes large-scale industrial timber estates. JICA’s last project in Sabah -- the JICA-SAFODA Re-afforestation Technical Development and Training Project which ended in 1994 -- provided technical support for fast lnterview, Senior official, Forestry Cooperation Division, JICA, 6 Tokyo, 12 April 1994. 7Ibid. lnterviews, Environmental consultants, Bogor Indonesia, 24 February8 1994. 9Forrest, “Japanese Aid and the Environment,” pp.31-32. ‘°See Kanda, “A Big Lie: Japan’s ODA and Environmental Policy,” p.44; and Forrest, “Japanese Aid and the Environment,” p.31. 338 growing acacia-mangium plantations. At present, there are no JICA forestry projects in Sabah or the Philippines, and only one in Sarawak, designed to improve domestic processing efficiency. Despite the new policies, it is clear that only a negligible portion of JICA technical cooperation actually supports social and community forestry projects, natural forest regeneration, and primary rain forest conservation. Along similar lines as JICA, the OECF and the EXIM Bank have also expanded their environmental departments and developed procedures to consider environmental factors when evaluating loan applications. This has contributed to more refined rhetoric, but no obvious changes to forestry loans. Although it is difficult to be certain since OECF and EXIM Bank environmental procedures and evaluations are shrouded in secrecy, few loan requests seem to be rejected for environmental reasons.’ OECF and EXIM Bank environmental departments 1 more appear concerned with avoiding scandals than promoting environmental management in the South. General problems with Japanese ODA hinder attempts to incorporate environmental and social factors into grants, technical cooperation, and loans. Despite some commendable principles, Japan’s new Environment Law and ODA guidelines are ineffective. Numerous clauses are ambiguous and there are no concrete enforcement mechanisms or penalties. There is also little “At present, the EXIM Bank is not financing any logging projects in the Philippines, Malaysia, or Indonesia, although unlike the World Bank, the EXIM Bank is prepared to provide loans to tropical loggers. Interview, Senior official, Environment Section, Export-Import Bank of Japan, Tokyo, 11 April 1994. 339 Sadahiro, Ramon have 16 allotment to about based effective more protection, tech become objectives. turn objectives. Ministry on are expertise, reviews cultures guidelines or Planning coordination May concessional Japanese the further ‘ 2 For been infrastructure to environmental than Mitra’s aid 1994, increasingly two unsustainable and Agency, and of example, Japanese of syphoned “ODA field further implementing and obscure Foreign Southern any aggravated trading Recipient p.1. ODA eco-systems or As allegedly 1992 a loans cooperation funds the experience, the other Japanese fragmented aid by projects accountability. undermines Affairs, protection, onerous. Philippine Environment companies, states yen Southern natural -- projects countries is by donor’s agencies, used which of also appreciates, a ODA insular with lack the -- between or in aid resource Rather 340 patron-client poorly funds comprise moves are and in presidential in-depth and are Ministry Agency Manila immediate of -- structure JICA search undermined tend Southeast Environmental often were poor aid than key also to supervised exports. and repaying and election,” over staff to knowledge apparently ministries integrate of promoting cooperation ambivalent of economic the the thwart request Finance, impede networks. 12 half foreign campaign. Asia. by with Forestry OECF. and Japan’s continuing these miscalculations of Daily of aid environmental environmental environmental channelled environmental environmental returns. -- large Japan’s The or the exchange the with Convoluted loans MITI, apathetic for Agency Yomiuri, Finally, request- emphasis Economic Takashi diverse chunks NGOs, high- links ODA, The has the to -- -- and Based marginal environmental problems a Japanese In loans economic erosion environmental Moreover, reforestation, part especially exporting definition in of JAPANESE environmental ‘environmental logical this the the Indonesia, ‘ 3 According The In on like derived Philippines, aid. case FY1992, and environmental more in growth ENVIRONMENTAL aid environmental ‘environmental Philippines source urban of the the of siltation, Under than groups aid -- environmental from aid’. or repercussions Philippines. by 1988-92 propelled almost to the water which of tropical has 50 MITI simply late forest only Forestry and funds There interviews rewards and had 17 AID is Forestry technology guidance, can loans’ devastating January a communities. percent by sewage forestry small AND little managers to are now reclassifying aid But unsustainable be and of Sector 341 tackle TROPICAL have clear Japan’s seen to in Sector portion struggling is management. considerable of environmental deforestation, impact to Sabah, late management.’ 3 accounted ambiguous; Japanese in floods, tackle problems Program as environmental Program FORESTS response March Indonesia has partially on Sarawak, traditional resource industrial funded timber to ODA and for Loan, economic As with 1994. this aid Loan a was -- about cope including rural result, and this has Kuala environmental imports conservation, derived management. the and total allocated -- penalties. pollution, focused 70 with Malaysia, projects. aid. have economic poverty. forestry Lumpur, percent was except -- soil from had the The is on as in burden is compounded by the failure of many reforestation sites, by contractors and government officials who wasted funds, by patron- client networks that syphoned substantial portions (perhaps as much as 60 percent), and by the steady appreciation of the yen. JAPANESE CORPOPATE INVESTMENT AND TECHNOLOGY TRANSFERS To increase the speed and volume of log extraction in Southeast Asia, Japanese trading companies have supplied capital, equipment (chain saws, bull dozers, and road machinery), and technical advice, often in exchange for logs. Through credit, equipment, and minority shares Japanese traders have influenced prices and export volumes. However, except in Indonesia in the late 1960s and 1970s, Japanese companies have avoided major direct investments in logging operations or timber processing, and instead have emphasized securing and buying large amounts of high-quality logs at the lowest possible 4price.’ Most Japanese investors pulled out of Indonesia after the gradual log export ban in the first half of the l980s. Today, as accessible and valuable tropical timber becomes increasingly scarce, as Japan’s plywood industry fades, and as environmental criticism mounts, Japanese companies have even less interest in lengthy commitments to Prior to the late 1960s, Indonesia had little logging infrastructure.4 Risky investments enabled Japanese traders to secure ‘ access to Indonesia’s vast primary forests. These investments were facilitated by MITI, strategic ODA disbursements, and Indonesian foreign investment laws. 342 / Southeast Asia’s logging 15sector. Trading companies now provide few technical advisors or long-term lines of 6credit.’ Even with the rapid appreciation of the yen since the mid-1980s, there is almost no Japanese investment in the timber industries in Borneo Malaysia and the Philippines, and only a small amount in wood processing and pulp and paper in Indonesia.’ Japanese plywood processors also have no plans to 7 relocate to Southeast Asia, despite the financial struggles of many mills in 8Japan.’ Despite abundant profits from the tropical timber trade, Japanese companies have been even more reluctant to finance or participate in major conservation or reforestation projects. Several factors inhibit Japanese investment in forestry conservation and timber processing. Trading companies are structured to maintain stable resource supplies, and preserve corporate equilibrium. These companies generally purchase large volumes with low profit margins, and avoid long-term commitments essential for effective reforestation or sustainable timber operations. According to Yuta Harago of the WWF Japan: “They are JATAN, Tropical Forest Destruction and Japan’s Timber Trade, Summary5 of the Revised Version of Timber from the South Seas (WWF Report, ‘ 28 February 1994), p.1. lnterviews, Senior officials, Green Environmental R&D Division,6 Sumitomo Forestry Co., Ltd., Tokyo, 20 April 1994. 17Other Northern MNC5 have also avoided timber investments, and most ‘timber operations in the Philippines, Borneo Malaysia, and Indonesia are now controlled by domestic interests. Gulls, “The Logging Industry In Tropical Asia,” p.179. lntervlew, Executive Director, Japan Plywood Manufacturers’ Association,8 Tokyo, 8 April 1994. ‘ 343 AWSJ, Japanese Japanese A. deforestation poorly implications thirds JAPAN’ Finally, sudden change little corporate feed basically environmental to and import joint in Japanese terms develop the 20 Nectoux 19 Kathryn The voracious 8 S ventures. political managed, security of prices. February TIMBER informal media traders companies quite of investment. traders, timber the Corporate sensational of 30-year and in consequences Graven, tend TRADE wood tropical naturally Northern likely Southeast shifts for 1990. considered On rules Kuroda, Southeast trade not have to the imports. IN projects.” 19 investors. Purchasing While investors. doomed “Japan’s scrutinize that SOUTHEAST other that dominated stories timber processors has Timber, firms Asia. may the clientelist could Asian timber Instead, be allow hand, 344 been source Timber do products Practices far about Southeast Japanese p.18. AS undercut and So In this politics not IA and even operations. greater, a quick, they addition, fervently or as Consumption purchasing states want key trade. consumers, though long-term supplies on aren’t companies Asia concession profitable also force to the it are accounts environmentalists is At the criticize sink obliged world natural have more curb practices environmental Draws no they accelerating economic are licences money time dwindled, difficult market. 2 ° logging. Japanese for to wary provide prey Fire,” timber think have two- into and and or of to declined Sarawak. year, metres cubic million Indonesia, key cubic from Philippines, Sarawak. a tropical Japanese depleted, Philippine decade. and Southeast continued the the or firms lesser after source early Philippines Sabah Southeast In metres Japan metres have of cubic 1970, as companies extent However, 1960s, Southern logs. logs In and to of After for Asia. over simply logs, imported accessible, from 4.1 from 1971, logs. metres rise the Asia as around from was Sarawak. Philippine 7 million the Sarawak. Philippines 6.1 Japanese the Japan moved million as increasingly throughout governments Indonesia Japanese peaked the In Indonesia, nearly from mid-1970s, accessible Philippines, one-third million that main cheap to cubic imported Sabah, at cubic logs In 11.5 new consumption year, source replaced log 26.8 was log the 1974, 345 metres cubic have 5.7 turned sources. accounted million and -- Japanese Philippine metres Japan still stocks imports l960s, million 7.5 and million of of Japanese 1.9 restricted metres from Japanese to the Japanese imported 950,000 million of Japan’s million cubic from Sabah, dwindled peaking for In Philippines log Sabah, cubic tropical from cubic primary the from tropical around metres Sabah, imports tropical cubic exports, largest cubic Indonesia, 8.2 cubic log metres. 1950s the metres and at and Indonesia, million two-thirds logs imports forests of the 3.9 metres metres 1.5 log Philippines as as and metres gradually logs source logs. from Japanese million Japan’s end million Japan’s In imports surged, and 1960s, cubic from that from were from from the 4.0 the of of to In -- plywood industry contracted. In 1976, Japan imported 22.2 million cubic metres of Southeast Asian logs: 9.7 million cubic metres from Indonesia, 8.5 million cubic metres from Sabah, 1.7 million cubic metres from Sarawak, and 1.7 million cubic metres from the Philippines. By 1980, total Japanese log imports from Southeast Asia had dropped to 19.0 million cubic metres: 8.6 million cubic metres of logs from Indonesia, 6.3 million cubic metres from Sabah, 2.3 million cubic metres from Sarawak, and 1.1 million cubic metres from the Philippines. As Indonesia slashed log exports in the early 1980s, Japanese traders maintained a steady supply from Sabah, and boosted log imports from the lower-grade forests of Sarawak. In 1982, Japan imported 15.1 million cubic metres of logs from Southeast Asia: 6.4 million cubic metres from Sabah, 4.0 million cubic metres from Sarawak, 2.5 million cubic metres from Indonesia, and 1.3 million cubic metres from the Philippines. In 1987, after the complete ban on Indonesian and Philippine log exports, Borneo Malaysia accounted for over 90 percent of Japan’s total log imports from Southeast Asia: 7.0 million cubic metres from Sabah and 5.5 million cubic metres from Sarawak. Without access to the vast tracts of Indonesian old-growth forests, in that year Japanese log imports from Southeast Asia dropped to 13.7 million cubic metres. In the late 1980s, as accessible, high-quality commercial forests became increasingly scarce in Sabah, Japanese companies turned even more to Sarawak. In 1988, Japan imported 5.4 million cubic metres of logs from Sabah and 5.3 million cubic metres from 346 Sarawak. Japanese log imports from Sabah then fell sharply, from 4.6 million cubic metres in 1989 to 3.4 million cubic metres in 1990, to 2.1 million cubic metres in 1992, to less than 300,000 cubic metres after the log export ban in 1993. Sarawak is now Japan’s most important source of logs. Japanese log imports from Sarawak climbed to around 6.7 million cubic metres in 1989 and 1990, then fell slightly to 6.5 million cubic metres in 1991 and 6.4 million cubic metres in 1992. After the Sarawak government imposed greater log export restrictions in 1993, Japanese log imports dropped to 4.9 million cubic metres. To partially replace tropical logs from Borneo Malaysia, Japan has increased log imports from Papua New Guinea, the Solomon Islands, Burma, and 2Africa. Nevertheless, tropical log imports continue to fall as ’hardwood supplies diminish throughout the Asia-Pacific region, as Japan’s recession impedes builders, as Japan imports more tropical plywood, and as plywood processors refine techniques to make softwood 22plywood, using temperate logs from the U.S., Canada, New Zealand, China, and Russia. As a result of all these changes, in 1993 Japan 211n 1990, Japan imported 608,000 cubic metres of logs from Papua New Guinea, 254,000 cubic metres from the Solomon islands, 29,000 cubic metres from Burma, and 126,000 cubic metres from Africa. By 1993, Japan imported 1,662,000 cubic metres from Papua New Guinea, 335,000 cubic metres from the Solomon Islands, 85,000 cubic metres from Burma, and 507,000 cubic metres from Africa. JATAN, “Asia-Pacific Forests,” Table I, based on data from the Japan Tariff Association. 221n 1993, more than 40 Japanese mills manufactured softwood or mixed (softwood and hardwood) plywood, accounting for 14.6 percent of total production. “Wholly or partly softwood plywood is 15% of total plywood production last year,” Japan Lumber Reports, published by Japan Forest Products Journal, no. 198, 9 September 1994, p.1. 347 Manufacturers’ p.8; Cambodia,” Timber, Mitsui Plywood statistics received Cambodia, the The volumes, embargo over Southern than customs Southeast imported -- smuggling bulk Solomon “UNTAC 23 5ee were Besides one and was officials Figure 24 Industry by of only million customs species, and Chart Asia recorded data The caught are the these accuses these Islands, syndicates, other 7.4 Association, Japan have B7, from author, I from cubic have on logs smuggling million in documents. p.118. legal by extent less cooperated the the Times, Mitsui Japan, the Filipino routinely have Papua 4 metres Japan next important log April transfer cubic Japan of been Plywood logs 18 of purchases, page. New 1993, Plywood processing, more with February 348 1994. customs violating In metres forged shipped out Lumber Guinea, exporters pricing, Borneo Industry -- Philippine pp.24-25; The of Also Manufacturers’ and legal officials. of Cambodia Japanese 1993, category to Importers’ ban Southeast perhaps see Vietnam, Malaysia, and Japan. in and in log on p.2. Nectoux the logs Japan, the log after export timber log schemes ‘other’ participated More region. Japan In entered Asian Burma, diameters exports Association, Association, loggers April and 1981 the documents. traders recently, to includes Kuroda, Plywood 1993 logs. 23 alone, These Laos, 1994, Japan alter from and UN on in in ____ Chart I Japanese Log Imports From SE Asia Million Cubic Metres 30 25 20 0) C’) 15 10 5 0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 Year Philippines Sabah [JJl Sarawak Indonesia lllllll Other B. Export and Consumer Prices, Consumption, and Low State Revenue Japan’s share of global tropical wood consumption soared from 4 percent in 1950 to about 50 percent in the 251980s. Today, Japan is the world’s largest importer of tropical logs and 26plywood. Since the 1950s, Japanese traders have paid remarkably low prices for Southeast Asian logs, sawn timber, veneer, and plywood. These prices have assumed that primary forests are essentially free, reflecting extraction and transportation costs, and ignoring the investment, manpower, and time it will take to regrow a tree, and the social and environmental costs of degrading the forest eco system. This fosters two bizarre consumption patterns in Japan. It is cheaper to import primary dipterocarp logs than to harvest domestic plantations to manufacture 27plywood; and it is more economical to burn hardwood furniture and kon pane than to reuse or recycle them. As a result, Japanese consumers have ‘wasted’ enormous amounts of tropical 28timber. Cheap timber imports have also enabled Japan to protect its own forests. In 1991, the OECD estimated that Japan extracted only 53 percent of their annual 25Boyce, The Philippines, p.227. 26JATJ “Asia-Pacific Forests,” p.1. 27Japanese plywood processors import 92 percent of their log supply. Japan Plywood Manufacturers’ Association, Plywood Industry in Japan, 1994, p.5. 281n 1987, about one-third of Japanese plywood was used as kon pane. Sandra Postel and John C. Ryan, “Reforming Forestry,” State of the World 1991. A Report on Progress Toward a Sustainable Society. (New York: W.W. Norten & Company, 1991), p.85. Japanese builders now use more coated kon pane, which can be reused three to ten times. But this is still an incredibly wasteful drain on tropical timber. 350 growth, allowing a significant net increase in forest 29cover. Today, around two-thirds of Japan is covered in forests; about 41 percent of these forests are planted. As a result, Japan is one of “the most heavily forested countries in the 30world.” While Japanese timber traders and processors have made substantial profits, and while Japan has judiciously protected its own forests, low log export prices -- coupled with illegal logging, smuggling, low Southern timber fees, and the inability of clientelist states to collect domestic taxes and royalties -- have left Southern states without enough revenue for sustainable management. A 1991 ITTO study showed that “producer countries captured only 9 percent of the final product price (comprising production costs, government revenues and profits) .. .when exporting raw logs.. .The remaining 91 percent went to consumer countries.” For some Southern states, forest charges to assess the value of the standing tree were less than 1 percent of the final ’3price. C. Indonesian Plywood Exports and Japanese Import Barriers Bob Hasan and Apkindo have exploited wasteful consumption habits to break into Japan’s plywood market. Since the mid-l980s, Apkindo has flooded Japan with cheap plywood. Indonesia now supplies around 40 percent of total Japanese plywood consumption 29Summarized in Boyce, The Philipiines, pp.27-228. 30Japanese Forestry Agency, Forestry White2 Paper: Fiscal Year 1992, Summary (Tokyo: Government of Japan, 1993), p.2. Surnmarized in Arden-Clarke, “South-North Terms of Trade,” p.127. 31 351 Japan. Exploitation,” pp. sell Emerging December Apkindo a extraction had South use these international the sometimes, stocks percentage and wasteful 7.34 Japanese “Global insufficient plywood market production state price companies. 33 full ignore and mutual 339 dropped few impact of about million 33 Nippindo 32 Japan’s economic for -369. of to issues. and wood and environmental disappear, economic directly, Plywood bombards Markets interdependence 1993, plywood Issues import Japanese economic wholesalers as and destroy of 70 to corporate of to waste. cubic Indonesian plywood in Japan. 32 environmental As timber percent costs 5.95 footnote p.4. consumption. timber still is For Sabah, in incentives in charges and the bypassing a metres and Japanese and million sold consumption Forest Forest result, of an This forced markets and uses market industry revenue. revenues Apkindo of social as with extraction revenue 70, and analysis to and on social of points kon Southern conventional cubic Policy Japanese for processors, Products,” Japanese p.93. change manufacturers vulnerability plywood. no plywood with Some Indonesian processors. on change pane. has also 352 warning. efficient for accruing of costs metres. Japan, to The authors of cheap had and and (Vancouver: sustainable established states a Indonesian trading overseas in further the neglected To result By severe but political transportation. in Apkindo the distribution see plywood, plywood 1992, processing In Japan capture to have social of to Peter also restrict North. 1987, Patricia companies South-North the export economic Urano, trading decrease is started plywood UBC timber Lumber Nippindo has plywood, area underestimate N. prices responses proliferate consequences as Japanese Japan’s Japan suppressed Press, This and 40 Nemetz, log tropical of and channels M. management, “Commercial problems Journal, which production to percent Indonesian processed research: Moreover, effective to not Marchak, resource suggests exports, shipping a explore plywood 1992), in state, import large then ed., only the log and the the in of as 31 of JAPANESE ENVIRONMENTAL GUIDELINES AND THE TIMBER TRADE The current campaign by the Japanese government, Keidanren, and the major trading companies to improve Japan’s international environmental image has contributed to more sophisticated environmental rhetoric and perfunctory corporate and government efforts to support better timber management. Corporate brochures now call for advice and equipment to improve the efficiency of Southern wood 34processors -- a move that would presumably reduce wood waste and decrease some of the pressure on tropical forests. There are also scattered corporate calls to reduce wasteful tropical timber consumption and buy timber from sustainable sources. Marubeni claims that it “will only purchase timber from such logging companies who strictly follow laws and regulations on logging and adhere to environmentally sound 35management.” The Japanese Building Contractors Society -- comprising 81 key companies -- announced in 1992 a non-binding target to reduce tropical plywood consumption by 35 percent over the next five years, “in order to help protect the world’s tropical rain 34For example, see Marubeni, “Friendly To Forests And To Our Mother Planet,” Internal document (Tokyo: Marubeni, undated); Marubeni, Earth Conscious (Tokyo: Marubeni, March 1994); and Sumitomo Forestry, Sumitomo Forestry: Annual Report 1993 (Tokyo: Sumitomo Forestry, 1993) , p.4.. Marubeni, Earth Conscious, p.7. Also see Marubeni, “Friendly To 35 Forests.” At the same time as publicly declaring ‘new’ purchasing practices, Japanese trading companies downplay their role, claiming local slash-and-burn farmers are the key cause of deforestation while the timber trade has little global impact. Makoto Inoue, “Who’s Killing the Rain Forests?” Jaian Views Quarterly (Autumn/Winter 1992), p.12. This view was confirmed during interviews at Keidanren, Mitsubishi, Itochu, Nissho Iwai, Sumitomo, and Marubeni, Tokyo, April-June 1994. 353 36forests.” On a voluntary basis, in the early l990s the Japanese Lumber Importers’ Association (JLIA) -- comprising 131 companies, including the major trading companies -- developed importing guidelines to improve forestry management. Companies agreed to import in “an orderly manner,” follow ITTO’s ‘Guidelines for Continued Management of Tropical Natural Forest’, and urge “timber suppliers of long term contract to abide by the ITTO guidelines.” These companies also agreed to buy and use scrap wood, provide information to local cutters to encourage better cutting practices, and promote value added processing in the 37South. Meanwhile, the Japan Plywood Manufacturers’ Association -- with technological support from the Japanese government -- also plans to lower tropical wood consumption and use softwood logs for 30 percent of plywood production by 1996. The Japanese government has also made sporadic calls to lower tropical timber imports, improve corporate purchasing practices, 36Japanese Building Contractors Society, “Methods To Reduce The Consumption of Plywood Forms Which Use Tropical Timber,” Internal document (Tokyo, Building Contractors Society, Board of Directors, 19 February 1992). Government of Japan, “Japan’s Paper For Proposed Progress Towards37 The Year 2000 Target,” Presented at the International Tropical Timber Council, November 1991, pp.3-5. Also see “Lumber Importers Issue Rain Forest Guidelines,” The Daily Yomiuri, 5 December 1991. 38”Wholly or partly softwood plywood is 15% of total plywood production last year,” Japan Lumber Reports. Published by Japan Forest Products Journal,- no. 198, 9 September 1994, p.1; and Government of Japan, “Japan’s Paper,” p.5. Japanese plywood makers claim that the move to softwood logs is motivated by environmental concerns. But it is far more likely an attempt to survive the onslaught of cheap Indonesian plywood and more expensive hardwood logs, and prepare for the future collapse of tropical log stocks. 354 and internalize environmental costs into timber prices. The Construction Ministry’s new industry guidelines call for builders to reduce practices that waste tropical 39timber. The Forestry Agency has also announced plans to encourage companies to limit timber purchases to sustainable sources and lower tropical timber imports by 20 percent over five 4years. At a 1991 International Timber Council ° Tropical session, Japan declared that it “intends to make active contributions to a series of ITTO meetings which will estimate and examine the costs of sustainable management, aiming that prices of tropical timber cover the costs of sustainable management.” At the same meeting, the Japanese government 4announced a program for “rational utilization” to reduce tropical ’timber consumption. Japan agreed to support measures to use less and reuse more kon pane, substitute non-tropical logs to make plywood, and educate the Japanese public on the inherent value of tropical rain forests. Japan also agreed to promote research, 39lnterview, JATAN, Tokyo, 26 May 1994. Sunimarized in Yoichi Kuroda, “The Tropical Forest Crisis and the Future40 Course of Japanese Society,” Research on Environmental Disruption toward Interdisciplinary Cooperation (Special Edition, Global/International Environmental Problems 2, Iwanami Shoten, July 1991), p.6. Government of Japan, “Japan’s Paper,” p.6. Not surprisingly, Japanese41 corporations are extremely hesitant to connect low prices with environmental mismanagement. Keidanren’s Environmental Charter does not address incorporating environmental costs into price. Interview, Global Environment Department, Keidanren, Tokyo, 7 April 1994. In the case of Sumitomo, officials argued that the price of tropical timber has actually been quite high -- particularly in 1993 -- and there is no evidence of insufficient funds for reforestation or sustainable management. Interviews, Green Environmental Research R&D Division, Sumitomo Forestry, Tokyo, 20 April 1994. 355 document no Mitsubishi’s and project world’ 1992 This Japanese brochures forestry the amount Nagoya, -- to sources Japanese recently, ITTO commercially to training, (Tokyo: and implementing establish 70 “study early Government that 43 For 42 Government Despite objective public s percent to of by forests. The to and supplied conservation trade governments modest it and example, and l990s, the the the tropical replant would Government Sapporo relations project rules less more a technology by central year to practices utilization measures. funding of profusion 1997. there of by limit reduce accepted refined the of 2000, Japan, an an Japan, kon to -- -- projects timber Tokyo government indigenous campaign is official However, of recreate trade have for including tropical for or pane and government little Interview, “Japan’s Japan, species.” 42 of National reforestation, to of Metropolitan value-added trade, agreed also to 356 used -- non-wood the glossy has at it a timber evidence timber such reiterated January forest Tokyo, announced natural attitudes MITI. is Paper,” with to in contributed environmental Action JATAN, not as “contribute Since produced public use forest corporate a Southern government Osaka, Sumitomo’s in mandatory of view rain 1994), especially pp.5-6. by Tokyo, plans East Plan its of concrete then, 50 projects. 43 forest to products decision Kanegawa, from support to processing, percent p.62, Kalimantan for conserving rhetoric to to 26 several environmental and announced experimental a research discussions sustainable May reduce changes in Agenda few there internal and makers. by for Sarawak 1994. Kyoto, token since local 1995 More are and the and the the the 21 at in to Japanese 45universities. But the new Environment Law, Keidanren’s Environmental Charter, revised corporate environmental 46guidelines, and new corporate environmental departments appear designed more to deflect environmental critics than to improve overseas environmental 47management. During 1994 discussions, most government and business leaders ignored, disputed, or dismissed as irrelevant the environmental impact of wasteful consumption, low resource prices, unsustainable purchasing practices, import tariffs, and past environmental practices. There are also no signs of specific government measures to eliminate import charges on processed wood, introduce environmental surcharges, raise consumer prices, provide ‘environmental reparation payments’, regulate corporate purchasing practices and technology transfers, or ensure funds are ploughed into sustainable Southern timber operations. Instead, in the last few years, as timber prices increase and imports 48decrease, the Japanese government and companies have There are no plans to increase the scope of reforestation or conservation45 in Southeast Asia. Interviews at Mitsubishi, Sumitomo, Marubeni, Nissho Iwai, Itochu, and Keidanren, Tokyo, April to July, 1994. According to a Keidanren survey, over 70 percent of Keidanren members46 now have internal structures to integrate environmental concerns. “Global attention turns to industry,” The Japan Times, 12 June 1992, p.3. 0f47 course, some individuals at corporate environment departments are concerned, keen, and want to make a difference; but little change has occurred to corporate mentality or practices. Interview, Professor, University of Tokyo, 17 May 1994. 48From 1991 to 1994, prices for tropical timber have risen while prices of other commodities have remained level or fallen slightly. The Economist, “Chainsaw massacres,” 25 June 1994, p.39 However, since Japanese traders purchase timber with merican. 357 opportunistically announced policies to reduce tropical timber imports for ‘environmental reasons’. But these trends are driven by less abundant tropical timber stocks and a shrinking Japanese plywood industry, not by greater concern for tropical forests. JAPAN AND SOUTHEAST ASIAN TIMBER MANAGEMENT: RECONMENDATIONS It is tempting to remain in an analytical cocoon and predict -- based on the potent Northern and Southern political and economic forces driving deforestation -- the extinction of Southeast Asia’s primary forests. Even though my analysis leaves little room for optimism, and despite the danger of sounding naive or ethnocentric, I feel compelled to provide some concrete recommendations to improve tropical timber management. These are preliminary suggestions, in no way provide a comprehensive solution, and are not presented in any order of priority, although trade reforms will certainly have more impact than changes to ODA. My hope is merely to spark constructive and relevant South-North discussions. A. Reform Japanese Aid JICA and the QECF should be more transparent and 49accountable. The government should increase public access to ODA feasibility studies and project assessments, and provide Southern dollars, the appreciation of the yen has largely offset these higher prices. While I propose numerous reforms to Japanese aid -- in part because 49 it is easier to find specific problems and specific solutions -- it is crucial not to overestimate the potential for aid to improve commercial timber management. 358 and Northern environmental groups and NGOs with more input into aid projects. JICA executives and field staff should also receive better environmental training and more experience in the South. As well, JICA and the OECF should cooperate more with other Northern donors and hire more foreign consultants, especially environmental experts. Japan should also accept responsibility for the final results of aid. Allowing or ignoring the ‘disappearance’ of large chunks of aid bolsters patron-client networks, undermines state capacity, and burdens Southern states with loans syphoned by private actors. Japan should overhaul its environmental aid program. The Japanese government should develop a coherent definition of environmental aid, clear and binding environmental guidelines, and effective social and environmental impact assessments. As well, Japan should restructure the administration of ervironmental aid to improve distribution, implementation, and supervision. The Environment Agency should have more input while MITI and its corporate partners should be relegated to a peripheral role. Japan should also change the tenets of environmental aid. At present, the focus is on procuring ‘environmental profits.’ Considering Japan’s role in driving over-logging and deforestation, Japan should lead a financial wave to support better timber management, rather than repeating historical patterns, sweeping profits back to Japan. Instead of environmental loans, Japan should increase the amount of grants, on the principle of returning past ‘environmental profits’. The South needs compensation for the immediate and 359 Development Activity Harsh Hall Timber Timber Barbier, York: Economic Tropical Japanese Ignore the and Environment,” processors, general B. and timber be technology conservation reparation forests forestry timber import residual used Trade: Harago, silvicultural links 51 See 50 Other Trade and World W.W. Council prices tariffs and to and management. 5 ’ Global public aid “Policy conservation environmental Arthur (PCM(XI)/4), Timber Linkages Corporate between push and can payments’ the Hilary regenerate Norton Research of “Japan’s authors to construction that in and in that knowledge Trade,” be Japanese Sustainable enhance State Issues J. should Trade Environmental Kuala techniques. 5 ° reshaped have trade Between long-term & have Hanson, Purchasing F. have Centre, Official Company, should -- 14th of natural pp.116-150. and Lumpur, effects ignored tropical and syphoned companies only particularly French, to and the Ideally, also firms, Options Session and improve the Management A Sustainable World: 1992), tropical target Development reforestation, New forests. purchase 360 Practices 12-13 social 1993), of controlled recommended International forestry Change revenue. to unsustainable “Reconciling government Kind Concerning Japanese Southern of 1993 chapter long-term, May invest projects and deforestation, pp.l5 8 -179; the of These of Woridwatch timber 1993. Forest management. (Ottawa: environmental Assistance, Tropical Japanese International to Sharing: more five, extensive processing Linkages payments trading support and agencies, to Trade For risky, from timber Management,” in Trade preserve “Choices and transfer an Institute natural ‘environmental Forests, International Why in see pp.15-21. sustainable See overview sustainable Between should reforms companies, efficiency purchases, low-profit costs, Edward and We Tropical Tropical and June Forrest primary in forest Can’t ITTO more also (New the the the the and D. B. of to Markku Malaysia: monitor While Study, et., documents. management, stamp officials definite prices, international certification corporate, interests Southern the better there efforts sustainable certification unsustainable optimistically, comprehensive or concessions sources. at endorsement 53 For al., 52 To are least of expensive, Malaysian Simula, manage check force to danger approval state formidable who background WWF help Forest consumer, weaken, Otherwise, and receives will Strict move sources. points, are Malaysia, companies criteria inspectors sources program their would undercut capacity Certification that South-North force Stewardship trying FSC of it for in hijack patron-client purchasing political on Southern reasonable and concessions) GATT, evaluate is Consultative this current these provide has Japan certification or has timber August to to essential to state patron-client must effective combat no purchase direction. cooperation acceptable certification enforce informal the Council should and mismanagement. Schemes concession and market certification, 361 behaviour. 53 1993); work prices an practices potential ties Northern . destructive technical Study that important sustainable tougher participate At closely tools will (FSC) and ‘partners’ Baharuddin based -- For criteria -- the networks international sites, An can Working timber become political and All -- Malaysian to obstacles to on programs, moment, potentially international regulations. 52 with see and certify although where timber tool Timber and increase timber, to Haji an in from Salahudin illegal for Group in Southern verify reorganize international and international there to Consultative timber -- (or, Ghazali timber sustainable the sustainable and inspectors there effective corporate and including dissolve, (Selangor loggers. regulate consumer customs perhaps Timber are Yaacob South, timber While state boost is from from and and no a C. Trade: Import Restrictions Another possible option to reshape trade is to impose unilateral restrictions on tropical timber imports. But import restrictions have severe 54drawbacks. JATAN -- the most important Japanese NGO tackling tropical forestry issues -- is now pressing local Japanese governments, business organizations, construction firms, and trading companies to restrict timber 55purchases. This strategy is flawed. Although import restrictions may temporarily reduce Southern logging rates, repressing demand, without compensation or higher prices, will undercut the economies of Southeast Asia, provide incentives to convert forests to more profitable 56fiinctions, encourage companies to extract higher volumes to offset lower prices, and leave even fewer funds for sustainable 57management. Import bans could even increase Products, Report for the ITTO (Yokohama: ITTO, 15 April 1994); and Barbier, “Policy Issues and Options,” pp.22-26. 54For a critique of complete trade bans, see Barbier, “Policy Issues and Options,” pp.7-B. For selective bans, see Ibid., pp.9- 10; quantitative restrictions, pp.lO-1l. 55For a description of JAPAN’s approach, see JANNI, “Reshaping ‘Development’,” p.45 and Kuroda, “The Tropical Forest Crisis,” pp.6-7. There is also a growing movement in Europe to ban or restrict tropical timber imports. 56Former Indonesian Forestry Minister Harahap warned: If consumer countries “impose a boycott, the wood will have no economic value for us. We may turn the forests to things that are useful to us.” “Jakarta may turn forests into farms over timber boycott,” Straits Times, 14 October 1992, p.12. Following similar reasoning, former Indonesian Minister of 57For and Environment Emil State Population Salim has criticized unilateral Northern moves to boycott tropical timber. Third World Network, “South-North development monitor,” no. 2591, 24 April 1991, in World Rainforest Movement, The Endangered Rainforests and 362 management problems as prices fall and the demand short-fall is filled by domestic or other foreign consumers. Import restrictions also discriminate against Southeast Asian producers in favour of softwood exporters like Russia, Canada, New Zealand, and the United 58States. The South will likely perceive unilateral Northern import bans as environmental 59imperialism, reducing the capacity of the North to influence Southern forestry policies and practices. Even though there are clear problems with Southern state capacity to enforce regulations, and despite substantial evidence of straightforward corruption, it is still imperative to reach solutions through North-South cooperation and 60dialogue. The Fight for Survival, volume 1 (Penan, Malaysia: World Rainforest Movement, 1992), p.520. In theory, selective import restrictions on timber produced from unsustainable sources and open markets for timber from sustainable sources could improve management in the South. But first it will be necessary to establish international sustainable management criteria and a means to certify sustainable timber. 58Many Southern leaders are concerned that temperate timber exporters will use restrictions on tropical timber imports to increase their market share. For example, Sabah Timber Association president Datuk Andrew Tham argues that New Zealand has lobbied Japan to restrict tropical timber imports “in their attempt to boost their export of softwood.” Quoted in Mark Kong, “Sabah, S’wak condemn NZ’s timber boycott,” The Star, 8 April 1992, p.6. 59For example, the South reacted strongly to Austria’s unilateral legislation to require labels -- such as ‘sustainable forest management’ -- on tropical timber imports. After harsh criticism, especially from Malaysia and Indonesia, Austria withdrew this proposal. See Jeffrey Ramayah, “Austria warned of likely ASEAN boycott,” New Straits Times, 27 October 1992, p.7; “For the chop,” The Economist, 30 January 1993, p.63; and “Malaysia’s New Jungle War,” Asiaweek, 10 February 1993, p.47. 605ee Hall and Hanson, A New Kind of Sharing, especially the conclusion, “The New Dialogue,” pp.297-311. Southern log export restrictions are also not an effective tool to promote sustainable timber management. To increase economic benefits of timber exports 363 D. Trade: Purchases, Import Volumes, Prices, and Consumption Japanese tropical timber consumption must not exceed sustainable yields of Southeast Asian producers. While a Japanese ban on tropical timber imports could quickly reduce consumption, a more constructive way to lower timber consumption is to internalize environmental and social costs into consumer 6prices. If prices are high enough, strong incentives can ’ be created for ‘conscientious consumption’ and recycling. While public campaigns that explain the causes and effects of tropical deforestation, or pressure on construction and trading companies to treat tropical timber as a limited and valuable resource may help reshape wasteful consumption patterns, it is vital that consumer prices reflect -- and presumably raise revenue and increase incentives for effective management -- the Philippines, Indonesia, Sabah, and to a lesser extent Sarawak, have all placed constraints on log exports and provided processing incentives. Even though this has created some jobs, there are severe problems: domestic processors are inefficient and waste wood; there are now far too many domestic processors -- often with close links to state patrons -- who firmly resist moves to lower log production to sustainable levels; and severing foreign demand has suppressed log prices. Despite these problems, however, dismantling export barriers could make the situation even worse as processors scramble to survive and loggers exploit new markets. For now, it is more productive to reshape Northern shadow ecologies and improve Southern enforcement and sustainable management. 611n 1990, tropical timber producers issued a joint call on the North to adjust timber prices “so that the costs of forest management and reforestation can be considered.” Quoted in Third World Network, “South-North development monitor,” no. 2591, 24 April 1991, in World Rainforest Movement, The Endangered Rainforest, p.521. But many Southeast Asian leaders are nervous that temperate wood will substitute for more expensive tropical timber. For this reason, many Southern managers insist that temperate and boreal timber also internalize environmental and social costs. Interviews, the Philippines, Sabah, Sarawak, Indonesia, and Peninsular Malaysia, January to March 1994. 364 these 62attitudes. In theory, export prices that internalize environmental and social costs would increase Southern state revenues and foster sustainable management. But in Southeast Asia, clientelist states are too weak to collect timber royalties, control illegal loggers, or impede destructive concessionaires. Without first gaining control of particularistic, rent-seeking patron-client networks, higher export prices will create even stronger incentives to extract illegal logs or mine legal concessions as timber operators make even more 63money. This presents a practical logjam. It is unreasonable to expect the South to strengthen state controls and implement sustainable policies without adequate funds. But it is equally unreasonable for the North to pay higher prices only to bolster greedy elites and fuel patron-client networks. To overcome this problem, Japan -- in conjunction with Southeast Asian exporters -- could create a sustainable management fund by imposing an environmental surcharge on Southeast Asian timber imports. This surcharge -- which should absorb processed wood import tariff s -- Presuntably, if consumer prices for products like kon pane reflected62 environmental and social costs then Japanese builders would either find cheaper substitutes or change their construction techniques. 63This has occurred in the Philippines where higher log prices in the 1990s have stimulated illegal logging rather than better management. Interview, Senior official, ENR-SECAL Program, Department of Environment and Natural Resources, Manila, 3 February 1994. 64Numerous Southern officials argue that the North should remove import barriers on processed tropical wood. Interviews, the Philippines, Sabah, Sarawak, Indonesia, and Peninsular Malaysia, January to March 1994. 365 could partially internalize environmental and social costs into consumer prices and still keep export prices at a moderate level. By placing higher surcharges on timber from primary forests, and lower surcharges on timber from secondary forests, Japan-Southeast Asian management teams could lower consumption of primary forest timber and maintain sustainable yields in secondary forests. This sustainable management fund could be used to support Southern conservation, protect primary forests, regenerate natural forests, manage sustainable logging, and bolster Southern state capacity to enforce regulations. Great care would be required to ensure that these funds were not syphoned by the Japanese state, Japanese corporations, Southern firms, or Southern patron-client networks. Environmental import surcharges could also help control consumer prices. Prices must be high enough to reduce excessive consumption but not so high they destroy demand. Quite naturally, as timber prices rise, consumers will substitute other products -- like plastics, metals, and temperate timber. If consumption falls too far, timber concessions would lose economic value, state timber revenue would erode, and state and private managers would have fewer incentives to manage and regenerate secondary 65forests. Using environmental import surcharges, prices could be manipulated to maintain sufficient demand for a viable commercial industry and maximize Southern revenue. A sustainable management fund is only a partial solution, and will involve considerable political 65This point was emphasized by numerous Southeast Asian business and state officials during interviews, late January to late March, 1994. 366 cooperation and transaction costs. But until Southern states internalize environmental and social costs into timber prices, and until Southern timber operators strictly obey management policies, Northern import surcharges -- coupled with Northern environmental reparation payments -- are reasonable ways to offset some of the environmental costs of 66trade. LESSONS FOR NORTH-SOUTH INTERACTION AND ENVIRONMENTAL MANAGEMENT The inability of Southern clientelist states to impede destructive loggers, collect timber revenues, and enforce regulations, and the current and residual impact of Japan’s ecological shadow of timber cast an ominous darkness over the forests of Southeast Asia. Other Northern shadow ecologies -- with patterns similar to Japan -- add to the pall over these 67forests. 661n 1992, a World Bank report recommended that the North establish a one to two U.S. billion dollar a year fund -- separate from development aid -- to conserve biodiversity in primary rain forests. The report argues that rich states must compensate poorer tropical countries for sacrificing short-term economic gains and preserving global biodiversity. Summarized in Cherian George, “Rich nations urged to pay for preserving forests,” Straits Times, 17 May 1992, p.4. Numerous Southern leaders -- including Malaysian Primary Industries Minister Datuk Sen Dr Lim Keng Yaik and former Sabah Chief Minister Pairin Kitingan -- support environmental premiums. Unlike my proposal, however, most Southern elites demand that proceeds are transferred to Southern managers with few strings attached. See A. Rachel, “Sustaining tropical timber,” New Straits Times, 12 May 1993; “Lim: ITTO membership needs a look,” and “M’sia seeks perks for timber products,” The Star, 12 May 1993, p.3; and Third World Network, “South-North development monitor,” no. 2591, 24 April 1991, in World Rainforest Movement, The Endangered Rainforest, p.519. Comparative studies of the impact of Northern shadow ecologies67 on Southern resource management is an important area for future research. 367 promote a political policies), non-forestry While will improve rights, critical international To buy Southern dismantle states Northern “Conclusion: ploughed sustainable and consumers transfers powerful slowing analysis that effects Effective ‘sustainable’ valuable move timber environmental 68 The Until breaking Northern also can industrialization deforestation in federal-provincial into tropical of of producers political factors shadow must and trade process must solutions from sustainable outline population this enforce have management. Japan’s findings South-North forestry financial policies timber. South-North bureaucratic shadow use sustainable target barriers direction, ecologies driving to timber forest of costs. of to forces shadow sustainable to ecologies and possible management. deforestation growth, consider -- timber create sustainable organizations, global (e.g. more at to will Ideally, policy interaction. 68 deforestation, trade management, to in sources ecology Northern leaders, It relations, all timber can ensure international efficiently the poverty, entail 368 and deforestation resettlement Southern is costs. ties the management implications,” be South, multinational Southern more Aid, and in from timber certified, states the is -- that impact long-term Southeast land Northern Gillis apathetic investment, in and while productive public exceedingly sustainable content comprehensive and and Extrapolating sufficient use operations. clientelist Gillis should policies world mechanisms will and of pay broad perhaps and rights, and governments policy pp.396-407. economic, Asia, companies of for Southern Repetto and attitudes have exchange cooperate until and to and environmental forestry complicated. concessions. the and profits temporarily it reforms uninformed indigenous manipulate technology states to solutions to Repetto, Southern Northern is costs from provide collect social, verify should should tackle debt, clear that rate with and are are to of an policies timber. environmental dialogue, networks. South clientelist and to capacity. Southern provide management South find perhaps residual including These channelled support environmental Southern tropical sufficient bypass 69 There Northern environmental sufficient cannot to environmental environmental multilateral and and sustainable states timber producers and soil Instead, funds timber sacrifice as patron-client Transforming states is immediate structures. a and absorb shadow standards aid erosion, a plethora funds to imports are social revenues, strong will grants tackle South-North -- funds only -- ecologies the for Southern reparation some effects should surcharges require flooding, South-North costs to and of Northern Southern a sustainable concomitant It management - networks must - partial Northern create innovative sovereignty, surcharges will is impose into 369 of teams must the timber essential not payments. Northern and also shadow argument sustainable timber solution. can North and teams states also need problems. environmental management. fuel rural costs international require operators. on help enhance prices. to ecologies to be can extensive shadow to -- patron-client temperate This for poverty sacrifice establish of manipulated The in compensate use management internalize the deforestation imposing Aid, money cooperation ecologies. Southern North Bilateral these surcharges international and and -- South-North investment, Sustainable and money, mechanisms -- and must domestic Southern funds to for similar perhaps funds. 69 boreal timber state still -- push also with some the The the on or to -- community to confront Southern political forces driving deforestation. This may well be impractical in a world that jealously guards artificial borders, relentlessly pursues economic growth and higher consumption, and invariably protects powerful political patrons. If so, the world’s primary rain forests will soon disappear. 370 ACRONYMS AND INDIGENOUS TERMS ADB: Asian Development Bank. Apkindo: [Asosiasi Panel Kayu Indonesia], Indonesian Wood Panel Association. Berjaya: Bersatu Rakyat Jelata Sabah (political party). BFD: Philippine Bureau of Forest Development. BN: Malaysian Barisan Nasional (political party). BULOG: Indonesian Agency for Rice Stabilization. DAC: QECD Development Assistance Committee. DENR: Philippine Department of Environment and Natural Resources. DPR: Indonesian House of Representatives. EIA: Environmental Impact Assessment. ENR-SECAL: World Bank and QECF Environment and Natural Resources Sector Adjustment Loan for the Philippines. EPA: Japanese Economic Planning Agency. EXIM Bank of Japan: Export-Import Bank of Japan. FAQ: Food and Agriculture Qrganization. Hankam: Indonesian Department of Defense. ICETT: International Centre For Environmental Technology Transfer. ITCI: International Timber Corporation of Indonesia. ITTQ: International Tropical Timber Qrganization. JAS: Japanese Agricultural Standard. JICA: Japanese International Cooperation Agency. JLIA: Japanese Lumber Importers’ Association. JPMA: Japan Plywood Manufacturers’ Association. Keidanren: Japanese Federation of Economic Qrganizations. Kon pane: disposable Japanese construction panels for moulding 371 TLAs: STIDC: RITE: SSIA: SNAP: Repelita: SKEPHI: SAFODA: RETROF: Sogo NPA: OECF: NFP: PBB: ODA: Nippindo: MPR: PBS: PBDS: NGOs: MNCs: MITI: MDF: Shosha: Earth. Forest. Overseas Parti current Medium Philippine Philippine in Indonesian concrete. Parti Japanese Philippine Sarawak Sabah Japanese Nongovernmental Parti Multinational Japanese Sarawak Japanese Sabah Indonesian Japan. a Indonesian Bersatu branch Bumiputra Sawmillers Bangsa Density Japanese Sarawak National Forestry Development Research Timber Overseas Ministry National Communist People’s Research Timber of NGO Dayak Sabah Corporations. Fibreboard. Barisan Five Apkindo Trading Industry Organizations. Bersatu, Network Development Industries Party. Institute Licence Economic of Association Sarawak Forestation Consultative (political Year Assistance. New International Nasional designed Company. People’s Development 372 for Plans. Agreements. the Cooperation (political of Association. Authority. Tropical party). most Innovative for Program. to Assembly. coalition Army. Reforestation import Trade powerful Corporation. Forest party). Fund. Technology and and government. Conservation. member market Industry. of Tropical plywood for in the the WALHI: USAID: USNO: TPTI: TPI: Indonesian United Indonesian U.S. Indonesian Agency Sabah Selective Selective NGO National for Forum International Cutting Cutting Organization For 373 the System. and Environment. Development. Replanting (political System. party). ‘ Cl) Iui i- H- H- IH- H IP CD CD H- CD CD 0 CD CD HH- HI< 0 Lxidi fl(tI LO ItoH-Cl) C1dW U-] Phi- IH”- Hi—a H-P) ooo CDOO o I (X) CT) ‘°IT1 Hi rt 0 H- .- - IC,)- - QF- KDPJ tI)’-< Di QCD —0(0 I’E’iCD ‘tJPJ frUJJ IC!) Hjh IIi- IP’ H- H-H i- - ‘dU) Ci)CI) OC)CI) H-Cs Ii- Ic H- kt C) C) 0 (Drt U) •‘- 379 1’i IrJ L’i Lii Lii Lii Ii H- H- C) 0 0 0 0 0 CD Cl) U) U) H- CD 0 0 LQ t- 9) Cl) Cl) CD II H 9) H CD CD 9) U) U) - - 0 0 CD - 0 H C)HU) U) I° H-IO-] ‘•tS(.Q H’-< H IQ 0 PICiD $)rt $Jr? IQ •-O DtIMH- ‘nH- Q C-F- cotyZ I(DCD Dirt- frfr H C-t$J rt$) 19) IC- 9)i9)0 •U) U) cxCDH- IH- CD ‘oIi-’ (DO- rt-i bDç ‘1Q I-i PC-F CD U’ 0 Irt0 (DC) wipi U) CD FC-t Qc1 IP)H I’— O• L’JH- —‘d iCDH- •Irt U)H-q I H- ICD i0CD iP) U9 3’-Cl ‘0$) i’iP U) ICD(D 0j $)H cICD - 9-’ i9)i H-U) $)I$’ I - H’ (D PCi) .LQCD HH- {Qi $p c-tC? -Q Ci) CD C-F C-F C-F H- H P 1 IH- Q p. p <1 C) H- H $1 U) IH- p. H H H (DU). CD’ 10 H-iH C-F 3rt I(D< ‘ 0 q , H- I-’- CD - 0 (V 0 C p. H- lU)’ W CD . $i . iU)o2 ‘ ‘ “ - • $)Ci) = 09) CD CD pip9, p. H$)H0 P H-H F] H- H-’Iirt CDC-t HH q- 0(1) HO ‘ U) 9) H-$l O H-t1 p. tP i 0 H-Il LXJ $1 $) II CD Q.O p QH CD9) pit!) OCD Il CDCD LQ$) U)H CD (OH PC-F p) U)p. $) CD rt ‘d H-C-F’ 0 H 0H-O 0 . H- U) HP <- 0 0 (V O 0 IlC-9jO 0 IlH- k H H H H H H H IH 10 IL’i rr CD 0 0 0 0 0 0 0 rr 0 to c-i- to I’- CD c-i- H- 0 IH-(1) HOd) CCD xiG) HxICD HH(D ‘-< c Jackson, Karl D. Traditional Authority. Islam, and Rebellion: A Study of Indonesian Political Behaviour. Berkeley: University of California Press, 1980. 387 JATAN. JATAN Japanese Japanese Japanese Japanese Japan Japan JANNI Jackson, Jackson, Jackson, Jackson, World Draft Association and February Consumption of Internal Environmental Network Summary. Japan. 1992. Japan. Villages Proceedings 1994. Jackson Indonesia-Japan Power. Culture the Relations: Power. Communications California, Communications (Japan (Japan Plywood Plywood “Asia-Pacific Directors, Karl Forestry Ministry Analysis Building Karl Karl Ministry Karl Environmental paper Rainforest Tokyo: Tokyo: Tropical on and NGO in document. D. Tokyo: 18-21, of D. D. Manufacturers’ Manufacturers’ D. Indonesia, presented Indonesia,” For “Bureaucratic of Pye, 1978. West Network of Agency. and The Japan of Japan of “The Movement 19 Contractors “Urbanization of the Promotion Government 1994, in Plywood Forest Forests.” in February Power Foreign eds., Movement Java,” Relation Pye, Tokyo, Foreign INGI Political Plywood Plywood the Changing Preservation on Forestry at Indonesia. pp.1-9. 1993. in and Political Lucian Action Indonesia). the in Kanagawa Neighbourhoods Forms in Building Affairs. of Polity: 388 Japan. Association. Association. 1992. Meeting, Society. of November Jackson Manufacturers’ Manufacturers’ Affairs. Communications International Jackson from International and Implications White Japan, Network). W., Which Quality Tokyo: Symposium. Power. the A Berkeley: Contractors Grassroots’ in Japan’s eds. Theoretical and and New Reshaping Paper: “Methods 1993. 1993. The Use Rise Asia-Pacific. Pye, Plywood Plywood Government Pye, of Delhi, “Republic Political Workshop of Cooperation, Association, Association, Forefront Tropical in Presented Fiscal of ODA of Bandung Tokyo: eds., eds., University To Indonesia,” Society, “Development”: Structure Patron-Client Interpersonal Framework India, 1993. Perspective. Industry Industry Reduce Year of for Power of Japan Political Political Timber.” and Korea.” of at Seoul, Forest Tokyo: Japan, April Board April 1993. 1992, 1993. the The NGQ the and and the for in in in of q q q q q q q q q q o 0 0 0 H H H H H H H non cm cm cm cm CD o pi pi - U) U) U) • dirt -Q 1j- flIIJ rtdiJpj n2Qpi 1(I)- (I) H ‘dCDo Ic 11’i t do (1) i bc o 9J j. . çii çu- W1H- P 1i CD OI’- ‘i - P3CD CDp) - CD CD • rtL’i. rrhiP’ CD H I çt H U) rr tJ • • = tflj = Ii CDI. Jukof sky, Diane. “Problems & Progress in Tropical Forests.” American Forests 97 (Jul/Aug 1991), pp.48-53. Kahin, Audrey R. “Crisis on the Periphery: The Rift Between Kuala Lumpur and Sabah.” Pacific Affairs 65 (Spring 1992), 3049pp. Kalimanthu, K. Ramanathan. “The Sabah State Elections of April 1985.” Asian Survey 26, no 7-12 (1986), pp.815-837. .- Kamieniecki, Sheldon and Sanasarian, Eliz. “Conducting Comparative Research on Environmental Policy.” Natural Resources Journal 30 (Spring 1990), pp.321-339. 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The Marcos File: Was he a Philippine Hero or Corrupt Tyrant?. San Francisco: San Francisco Publishers, 1987. McGuire, G. and Hering, B. “The Indonesian Army: Harbingers of Progress or Reactionary Predators?,” in Doran, ed., Indonesian Politics. McKendrick, David. “Indonesia in 1991, Growth, Privilege and Rules.” Asian Survey 32, no. 2 (February 1992), pp.103-110. McVey, Ruth T. “The Beamtenstaat in Indonesia,” in Anderson and Kahin, eds., Interpreting Indonesian Politics. Means, Gordon P. Malaysian Politics: The Second Generation. Singapore: Oxford University Press, 1991. Medard, Jean-Francois. “The underdeveloped state in tropical Africa: Political clientelism or neo-patrimonialism?” in Clapham, ed., Private Patronage. 395 0 H- H H H H H- H- H- H- H- L.J H- H- CD H H H H H t H- H H H H H H H LJ II CD CD Cl) Cl) CD 1J Cl) IdCD Ixjjpi H 0 r1ltf) ‘rJ Q’rJ- I- Myers, Norman. The Primary Source: Tropical Forests & Our Future (Updated for the 1990s). New York: W.W. Norton & Company, 1992. 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Orr, Robert M., Jr. The Emergence of Japan’s Foreign Aid Power. New 398 CD Cl) CD CD CD IJ II H- CF H 1J PJ U) C) 1 H 0 II I C) H- Pi CF H- - H- C) CI) U) U) C) ) 3 (1) H Xd ‘- 0 0 H- H- H H- H- H- LII CD CD CD CL) CD CD CD 0 i-] CI CD H- H- - - LII 0 CD CD CD CD 0 0 U) U) Cl) 0 rt rt rt rt CD H H ‘d0 )Q IC1 IH I— Ct)H- 21- rr H :Ij frtjrt Pc-t Hr-nt Iç-t (ID- OH- OH ‘dH-i 1J ICDH IH CD 0 1J1 Ioo -Di3O Io H- hMi IOhI H P Ip I’-CD - ‘l CDU ntCD IH- ‘-D)- U)CD kID- Li ri- c-t P H- icu I1 IL’l Cl) 0 CD U) IH- Q ri- ni- I L( - fr-i- - (i Q —art- • CD. •CD CDq H I-] CDCD IOj H- H- S) II H- - H- ntO r-O Q H- 0 CD I Q U) 1W H CDO jt-CD ICD J iU)b Ipic 00 CDH- i O I- Hl HO2 ICl)CD CDCD rTCD H H- pi •• - H-U) nt CDU) CD CD rt p . PJ H- 1 rr CDf-t- l>J[1 ..P) pj ‘rt a OH CD L’IH- CDxj O o. • a-rt ii H IH- r- ICD’Q •• U) PiP rt. OU) H0 M. 0 ri-p 10Pi CD 1< H-H- Ii U) - U)P) - U)U) rt F] O ICI) H Q i(-t c-t o ODY M I- IU)H HH- H ‘ fl aCD Li O c-t 1” F]r- ‘oO .. CD °H ‘0 O Lxl i-oH Ct,o CD CD . IH 13 -c-I- WH- U)F] CD p •.CD r- ‘P) H- CD j HCD 0(1) CD f-i- rr pi pJ 0 0 0 0 0 0 U) 0 0 P) CD C) Mi H H H H U) U) rt 1Q U) C Cl) - 1) IflJ C1Q H- MCD IC!)- HIfltT CID CH 0 L’J Ci) H IO PJ H- —a- wloo- do rt- >( 0i P)IPJ oIo CD CDq il-i 0 PJ I< Ii CD H-CD Hi° t- H-IhP’ rt CDO H O(D H-rI CD 0 rtPJU) iOrt H-0 piCD H-CD 0 CD - • U)HJ) 0 PJCD LQIi- C? H- C? rtlii CD CDPJO QIP) 9 C? - Ht- ICD WCD i h- I Iq iq c- q iq H IH H 0 10 ‘-j Li i iij i’- i i i kD CD I IC’) C’) PJ IP-’ i I IH C’i 0 Ipi Ip-’ I w 1w 1w IH I HH P- IP- IC II IC IH- IH- 1w CD H- IH- IH FH- C’) C’) C’) C’) IPJ CD <1W C III Ib hi IH IH H- I C’) Ipi Ipi III i i Ii I’- - CD I’d id CD Li IC < < I 1w I I pi 10 C C’) IC” Ct I) H- I C’) I I lCD I kp hi IH- 1 i IC’) C’) ff1 I w Iç Ipi w IH- 11< 1W 1w II I CD lCD H- 1W IH- H- I Ct H-lCD H- hi hi çt 1w IC < tfl C’) H- P H I I . 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IC’) I I CD 0 ‘d IH I k Ii-< I P ‘ IH- icr Icr Pi I-i I ItD lCD icr Ic 1Z 1< I Cl) 0 I IP) I P) I’- Cr H- H- CD Iii iii lCD 1(1) IC Pi i I IH- H Cl)IE’ H H Ipi I I i IC R H- iCl) IH- 1-3 C) I — CD H- H- IH- ‘Cl] I P C) I icr I H- (0 H- icr If-] Ct) It!) H q ti) IH- U) it!) Ih ID) IH Cr I QCD IC I Ib C) H- H - i fli F I H i C CD IC ‘-3 (1) lCD H IH- P Cl) Cl) CD CD I H- Cl] Ih ili i lCD C) H- I IP) lCD Cl) H lCD 1H Cl) II cr 1w CD • C pi 11 L’J ii o H- C) • H II C) 0 ‘1 cr H (0 • CD C H- C) CD CD Ii H H w Cl) CD H- C CD ii ct w C 0 H ‘1 CD ct U) frb C 1b 0 wCD Cr INTERVIEWS From late January 1994 to the end of July 1994, I conducted more than 100 in-depth, open-ended, confidential interviews -- generally between 1 to 3 hours -- with government officials, business leaders, academics, private consultants (whose firms remain anonymous), and NGO representatives in the Philippines, the Malaysian states of Sabah and Sarawak, Peninsular Malaysia (Kuala Lumpur), Indonesia, Singapore, and Japan. I am indebted to numerous individuals at the following organizations. A. INDONESIA APKINDO [Asosiasi Panel Kayu Indonesia], Jakarta. Asian Wetlands Bureau, Bogor. Bogor Agricultural University, Faculty of Forestry, Kampus IPB Darmaga, Bogor. Bogor Agricultural University, Environmental Research Centre, Kampus IPB Darmaga, Bogor. Centre For International Forestry Research (CIFOR), Bogor. Centre for Economic and Environmental Studies, Environmental Economics Studies Foundation, Jakarta. Indonesian Eco-Labelling Program, Jakarta. International Tropical Timber Organization (ITTO), Indonesia Office, Jakarta. JICA, Indonesia Office, Jakarta. Ministry of Forestry, Indonesia, PHPA (Forestry Conservation), Bogor. Ministry of Forestry, Indonesia, Bureau of International Cooperation and Investment, Jakarta. Ministry of Planning [BAPPENAS], Jakarta. Ministry of Forestry, Indonesia, Forest Utilization, Jakarta. Ministry of Forestry, Indonesia, Forest Protection and Nature Conservation, Jakarta. PEL.ANGI INDONESIA (Policy Research for Sustainable Development), Jakarta. 413 Rimbawan Muda Indonesia (RMI) [Indonesian Institute for Forestry and Environmental Research & Service], Bogor. SKEPHI [NGO Network For Forest Conservation in Indonesia], Jakarta. State Ministry for the Environment, Jakarta. WALHI, (Indonesian Forum for the Environment), Jakarta. B. JAPAN Centre for Environmental Policy & Advocacy: Tokyo (CEPAT), Tokyo. Environment Agency, Office of Overseas Environmental Cooperation, Tokyo. Environment Agency, Global Environment Department, Tokyo. EXIM Bank of Japan, Environment Section, Tokyo. Friends of the Earth Japan, Tokyo. International Development Centre of Japan, Tokyo. International Tropical Timber Organization (ITTO), Yokohama. Itochu Corporation, Department of Global Environment, Tokyo. Japan Plywood Manufacturers’ Association, Tokyo. Japan Lumber Importers’ Association, Tokyo. Japan Plywood Inspection Corporation, Tokyo. JATAN, [Japan Tropical Forest Action Network], Tokyo. JICA, Forestry Cooperation Division, Forestry & Fisheries Development Cooperation Department, Tokyo. JOFCA [Japan Overseas Forestry Consultants Association] , Tokyo. Keidanren, [Japan Federation of Economic Organizations], Global Environment Department, Tokyo. Marubeni, Environmental Protection Department, Tokyo. Ministry of Agriculture, Forestry, and Fisheries, Forestry Agency, International Forestry Cooperation Centre, Tokyo. MITI, Environmental Policy Division, Industrial Location and Environmental Protection Bureau, Tokyo. 414 MITI, Global Environment Division, Tokyo. Mitsubishi Corporation, Environmental Affairs Department, Tokyo. Nissho Iwai, Environment 21, Tokyo. OECF, Environment and Social Development Division, Tokyo. RETROF [Research Association For Reforestation of Tropical Forest], Tokyo. Sumitomo Forestry Co. Ltd., Green Environmental R&D Division, Tokyo. University of Tokyo, International Environmental Planning Centre (INTEP), Tokyo. University of Tokyo, Faculty of Agriculture, Department of Forestry, Tokyo. WWF [World Wide Fund For Nature] Japan, Tokyo. C. PENINSULAR MALAYSIA Asian Wall Street Journal, Kuala Lumpur. Far Eastern Economic Review, Kuala Lumpur. Malaysian Timber Industry Board, Ministry of Primary Industries, Kuala Lumpur. Ministry of Primary Industries, Kuala Lumpur. Universiti Pertanian Malaysia (UPM), Faculty of Forestry, Serdang, Selangor. WWF Malaysia, Petaling Jaya. D. PHILIPPINES Asian Development Bank, Mandaluyong, Metro Manila. Centre For Investigative Journalism, Manila. Department of Environment and Natural Resources (DENR), ENR-SECAL Program (World Bank/DENR), Quezon City. DENR, National Forestation Development Office, Quezon City. DENR, ENR-SECAL Program (World Bank/DENR), Monitoring and 415 Timber Sabah Sabah Sabah Kinarut. Ministry Sabah Sabah Office, Sabah Sdn. Rakyat Kinabalu. Department WWF Kinabalu. E. Manila. Institute Consulate University Laguna. Innoprise DENR, Philippine Philippine City. International Enforcement (Sabah), [Sabah SABAH, Philippine Bhd., Re-aftorestation Melale State Forestry Sawmillers Forest Forestry Association Foundation], Berjaya Kota Kota of MALAYSIA of Corporation For Kota Institute News of of Library, Office, Tourism Wood Kinabalu. Japan, Management Kinabalu. Rice Industrial Development the Development Program, Sdn. Department Kinabalu. and Industries Industries, of Research Philippines, Kota Kota Features. Quezon Bhd., and for [Perpustakaan Sabah Technical Sdn. San Bureau, Development Kinabalu. Kinabalu. Environmental Development Authority a City. Studies, [Jabatan Association, Juan, (TAS), Bhd., Institute subsidiary Sdn. 416 Development College Forest Metro a Negeri Rota Bhd., Studies subsidiary Perhutanan Institut (SAFODA), and (IRRI), Development Kinabalu. Economic Manila. of Kota Kota of Sabah], Research Innoprise and Forestry, (PIDS), Kinabalu. Kinabalu. Los Kajian Kota Training of Sabah], Division, Kota Banos, Yayasan Kinabalu. (Sabah), (Sabah), Makati, Corporation Pembangunan Los Kinabalu. Regional Project, Laguna. Banos, Quezon Sabah Metro Kota Kota WWF Malaysia, Sabah Office, Kota Kinabalu. Yayasan Sabah [Sabah Foundation], Kota Kinabalu. F. SARAWAX, MALAYSIA JICA’s Effective Wood Utilization research Project, Timber Research and Technical Training Centre, Kuching. Sarawak Timber Association [Persatuan Kayu Kayan Sarawak], Kuching. Sarawak Forest Department (various sections), Kuching. Sarawak Timber Industry Development Corporation [Perbadanan Kemajuan Perusahaan Kayu Sarawak] , Kuching. Universiti Malaysia Sarawak, Kota Samarahan. 417 I-’ H- Ct H < H-lw 0 13 :3 U) 0 W 15 CD cn 9) cr, CtCt 01 . H t9) H 59) I :3 . w. 0 H- IH ‘•-