Indonesia cannot be trusted to lock up its forests as part of future global carbon trading schemes while corruption in the logging industry remained a US$2 billion-a-year problem, a human rights group said yesterday.
Indonesia is home to one-tenth of the world’s rain forests and could earn billions of dollars from the world’s major polluters under a future scheme that will be discussed at a UN climate change conference in Copenhagen next week.
Under such an international scheme to replace the Kyoto Protocol in 2012, a developed country could offset its own greenhouse gas emissions by paying heavily wooded, developing countries such as Indonesia to curb logging.
However, Human Rights Watch yesterday released a report that found corruption and mismanagement inside the forest industry was now costing Indonesia US$2 billion a year — the equivalent of its entire health budget.
Joe Saunders, the New York-based human rights group’s deputy program director, said an influx of carbon trade dollars would likely worsen the corruption while the lack of controls and conflicts of interest within the forestry sector were being addressed.
“The hope of carbon trading is that at last there’s real money on the table to compete with the forces of evil, but if you’re not watching the money flow, it’s going to feed into a leaking system that doesn’t show results,” Saunders said.
Rachmat Witoelar, Indonesia’s National Council on Climate Change executive chairman, said the fight against corruption should not slow the fight against deforestation.
“I agree ... the money should be prevented from going into corrupt people’s hands,” he said. “But this is not a reason that we should stop saving the forest.”
Indonesian Forestry Minister Zulkifli Hasan said he would read the report but would not comment yesterday.
The Human Rights Watch report said its investigation revealed that Indonesia had forgone US$6 billion in four years through 2006 because of taxes lost on illegal logging, underpriced forest royalties and companies’ undervaluing of reported export sales to offshore subsidiaries.
The losses have gathered pace, starting at US$1.2 billion in 2003 and rising to US$2 billion in 2006, the latest year for which data was available.
Indonesia’s national, provincial and district authorities spend that much each year on healthcare, it said.
The report said the losses were conservative because they did not take into account smuggled wood that is not reported by either Indonesia or any importing country. The figures also did not include lost company and tax revenues.
Elfian Effendi, executive director of the conservation organization Greenomics Indonesia, said the report grossly undervalued the corruption in the industry, which he estimated exceeded US$5 billion a year.
Despite the losses, forests earned Indonesia US$6.6 billion in 2007, making its industry the most lucrative of any country after Brazil.
Destruction of those forests — generally through slash-and-burn clearing to make way for oil palm plantations, mines and commercial development — contributes to making Indonesia the world’s No. 3 top emitter of heat-trapping gases, after the US and China.
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