Between 1986 and 1998, when President Suharto’s 32-year rule came to an end, 17 million hectares of forest were cleared by timber, pulp and oil palm companies. If anything, the situation has got worse since then, not better. According to the World Bank, Indonesia is now losing 2 million hectares of forest – an area half the size of Taiwan – each year, and if present trends continue, the lowland forests of Sumatra will be gone by 2005.

Researchers have confirmed a long-suspected link between logging and the devastation of forest fires in tropical rain forests. Forest fires that ripped through East Kalimantan, Indonesia, in 1998 burned more than 12 million acres (5 million hectares). The Center for International Forestry Research (CIFOR), based in Bogor, Indonesia, estimated that the economic loss to Indonesia exceeded U.S. $9 billion and that carbon emissions were high enough to make the country one of the largest polluters in the world.

With much of the world’s attention riveted on Afghanistan, it is easy to forget that armed conflicts are bringing death and misery to millions of people in scores of countries around the world. Since 1989 the number of civil wars has tripled.

Ministers from East Asian countries emerged from a regional meeting last week with a declaration committing them to crack down on illegal logging. Government officials are calling the declaration historic, but critics doubt the agreement will make a meaningful difference in stanching the flow of unlawfully cut timber from Indonesia and other countries in the region.

The growth of Indonesia’s paper industry shows what happens when investors don’t grasp the fundamentals

Last March, Asia Pulp & Paper, the world’s largest emerging-market corporate debtor, sus­pended payments of interest and principal on roughly $13.4 billion in outstanding obligations. APP’s massive default has brought to an abrupt halt the seven-fold expansion of Indonesia’s pulp and paper sector over the past decade. However, the scale of the problem may not be fully understood yet.

Charlie Pye-Smith goes to Indonesia to test the theory and to see whether conservation and market forces can make perfect bedfellows.

Fly over East Kalimantan, in Indonesia, and you witness the processes that are destroying, worldwide, an area of tropical forest the size of Greece each year. Much is being cleared to make way for agriculture, for crops such as palm oil and rice. Great swathes are being felled for timber and pulpwood, and even in areas protected as national parks, illegal logging is rampant. Another 10 years of this and there will be precious little left.

In the wake of the Asian financial crisis in 1997/98, one Indonesian company, Asia Pulp and Paper (APP) seemed to emerge from the economic chaos relatively unscathed. Before and after the financial crisis, international financial institutions have queued up to finance and guarantee the rapid expansion of their operations. Three years on, however, APP is one of the largest corporate debtors in Asia, on the verge of bankruptcy, and has been accused of rainforest destruction, pollution and conflict with local communities.

TARAKAN, East Kalimantan (JP): You can’t hear the chain saws in Tarakan harbor, but their handiwork is plain to see.
Vast quantities of round logs, felled in the rain forests of East Kalimantan, await shipment to Malaysia and elsewhere. Not long ago most of the timber here came from large-scale concessions to the west of Malinau, a frontier town over 100 kilometers upstream from Tarakan. But an increasing quantity now comes from small-scale logging permits.