Between CAFTA and environmental considerations

Ali Rama published an attention-grabbing article entitled “China’s emergence and its impact on ASEAN” (The Jakarta Post, Feb. 4, 2010). His work analyzed the impact of implementing the China-ASEAN Free Trade Area (CAFTA) on ASEAN countries and put forward a number of suggestions. However, I do disagree with some of his suggestions.

In his article, Rama proposed that China‘s market would provide huge opportunities to increase export performance by shipping agricultural products such as rice, rubber, sugar and palm oil. Concerning palm oil, I want to highlight and discuss this matter further.

Let’s look at the data, according to Sawit Watch around 50 percent or 7.8 million hectares of palm oil plantations in Indonesia are controlled by foreign investors from Malaysia, Singapore, US, UK and Belgium (cited in Antara News Aug. 12, 2009). And a number of Malaysian investors have one of the biggest controlling shares of the plantation.

It could mean that CAFTA will facilitate more Malaysian products directly and indirectly to invade China’s market. Directly by exporting its product in the form of CPO (crude palm oil) and indirectly by creating and producing value-added products, like cosmetics, soap and margarine before sending the finished goods to destined countries.

On the other hand, starting up palm oil plantations, of course, will destroy forest and farmland as well as other vegetation.

Not to mention, there would be a thick haze shrouding our sky, even coloring our neighboring countries caused by land-clearing using slash-and-burn methods done by some palm oil firms.

Besides, according to environmental experts, the establishment of new oil palm plantations on peat land in Sumatra and Kalimantan will speed up global warming due to the release of greenhouse gasses, particularly CO2, into the atmosphere.

In other words, Malaysia seems to have more advantages than Indonesia. Not to mention the environmental burdens that Indonesian people have to suffer.

Another of Rama’s suggestions that needs to be discussed is that due to China’s lack of natural resources while ASEAN countries have huge deposits, CAFTA makes it possible for Indonesia to benefit from this situation.

This idea jeopardize Indonesia’s environment. In my beloved island Kalimantan; particularly in South and East Kalimantan provinces, for instance, long before CAFTA kicked off, coal-mining activities have been rampant, involving small- to large-scale enterprises.

They run their businesses without strong control from all levels of bureaucracy: district, provincial and central governments. Sadly, they — mostly small-scale enterprises — operate without first securing Environmental Impact Assessment (Amdal) documents.

Even big companies holding Amdal documents have failed to comply with environmental regulations by failing to refill pits (the Post, Feb. 4, 2010).

It is therefore not surprising to find widespread environmental damage. I would like to express my concern that if Rama’s recommendations were employed by the current administration to enhance and mask our export performances, the negative impacts of deteriorating environmental damages would soon hit the Indonesian people, particularly those living nearby mining sites.

As long as the Indonesian government lacks holistic legal framework and strong political will to enforce such laws protecting our environment, it is hard to accept Rama’s suggestions as a way out in facing CAFTA.

Rather than exporting our natural resources such as coal and LNG (liquefied natural gas), why don’t we prioritize, strengthen and fulfill our domestic energy demand? We need to back up our industries in competing with China’s products by supplying sustainable power and competitive tariffs.

It is ironic that we have an abundance of energy sources, but blackouts and power shortages are common in Indonesia, even in East and South Kalimantan, which are well-known as two of the country’s biggest coal producers.

All in all, instead of providing the best solution over CAFTA issues, the implementation of Rama’s suggestions could result in a worse situation.

Not only could Indonesia’s economy be hammered by Chinese products but the Indonesian people might also have to endure environmental damage following the massive exploitation of our natural resources.


The writer is a postgraduate student at University of Wollongong, NSW, Australia.