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Jakarta Post
The Jakarta Post
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Discourse: Indonesia may use Norwegian funds for oil palm plantation

Tue, September 27 2011 | 08:00 am

Indonesia has signed a Letter of Intent (LoI) to seal US$1 billion fund assistance from Norway to conserve its rain forests under REDD+ projects. In spite of many delays, the government has completed some preconditions for the fund disbursement. The Jakarta Post’s Adisti Sukma Sawitri talked to Norway’s Minister of the Environment and International Development, Erik Solheim, on the progress over the past year. Here are the excerpts:

Question: How does Norway see the progress of REDD+ projects in Indonesia?

Answer: Overall, we are pleased and impressed. It is normal that not everything is done according to plan. We are completely satisfied, however, that all the groundwork has been done. The moratorium is in place, the task force has been given a proper role. Direction is the most important thing and it has been positive.

We will not aim to be involved on how exactly it will be done. Indonesia will design the path and we will supply assistance on the basis of the produced results.

We will not be sitting back in Europe and finger-pointing how Indonesia should use the money. It is not a traditional overseas development assistance (ODA); it is based on the principle of equal partnership.

If the deforestation decreases, Norway will provide money; if it does not go down, however, we will not provide assistance. That is exactly what we did in Brazil and Ghana.

Up to now, only a small amount of money has been allocated to the Indonesian government: approximately US$30 million, a tiny fraction of what has been promised. The bulk of the money will form result-based compensation on the reduced deforestation. It is expected to be paid in 2014.

What should Indonesia do in the near future?

The most important thing for Indonesia is to find a path for the nation, which will ensure rapid economic growth while, at the same time, conserving the forests. That can be done; in Brazil, for instance, over the last seven years, they’ve reduced 70 percent of emissions without any negative impacts on economic growth.

It is important to have a national REDD+ strategy ready before we can have a system to ensure reduced deforestation in all regions, not just localized projects.

The strategy has been discussed by multi stakeholders around the country.

The strategy has been out for public hearings for 30 days and is in its final stage. The strategy will help to see how Indonesia wants to spend the money.

How will the partnership conduct verification and assure transparency?

There must be an independent verification body; it cannot be verified by Norway or by Indonesia, and it must be absolutely transparent. There must also be the highest standards for anticorruption measures and a consultation process with indigenous people. All the final details have not yet been decided.

Apart from that, however, whether Indonesia wants to use the money from the project for agriculture or for industrial projects or road buildings or schools, that’s up to Indonesia.

Would the Norwegian government object if Indonesia used the project money to expand its oil palm plantations, even in the degraded natural forest areas?

That is a feasible policy if it is already degraded land. We have seen some positive developments with some of the big palm oil producers wanting to adopt an environmentally friendly outlook. Some of them have accepted international verification for selling their products without destroying the forests.

But that cannot replace conservation of the rain forests because rain forest cannot be cut down and then reforested. The government has revoked a regulation that would have recognized oil palm plantations as forests. From our perspective, this is positive news.

Norway has a huge petroleum fund from our oil production and that fund is basically making a one percent investment in many companies globally and some of them have palm oil production. But this is a small financial transaction and there is an ethics committee for the oil fund to monitor whether these companies are operating in an acceptable manner; and they will act against the companies that carry out ecological destruction. If it finds any, it will propose to our government to withdraw its investment. So far, we have withdrawn investment from companies producing tobacco, and those employing child labor.

What if there’s a dispute between Indonesia and Norway’s governments, such as regarding the classification of forest plantations; how would this affect the partnership?

It’s completely normal. Indonesia is a country with so many different interests, and palm oil is one of its core political issues.

You can never expect this process to be easy. There will be a lot of discussions on this issue. The most important thing is we treat openess and transparency very seriously.

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