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Nurturing negligence
Last month, the Nusantara Capital City (IKN) Authority unveiled a plan to offer tax breaks to private companies willing to rehabilitate damaged forests around the planned capital city.
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This photo taken on Nov. 2, 2023, shows nighttime construction work on the Core Government Area (KIPP) of the Nusantara Capital City (IKN) project in East Kalimantan. President Joko “Jokowi“ Widodo's administration aims for the KIPP to be completed by Aug. 17, 2024. (Antara/Hafidz Mubarak A)
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ast month, the Nusantara Capital City (IKN) Authority unveiled a plan to offer tax breaks to private companies willing to rehabilitate damaged forests around the planned capital city. Participating firms will be able to claim a tax deduction of two times the reforestation expenses they incur.
The IKN Authority is hoping to attract miners with Forest Area Use (PPKH) permits, which are legally required for companies to rehabilitate forests outside their own concession areas, under the Watershed Rehabilitation (DAS Rehab) scheme, particularly firms struggling to find suitable land to fulfil their reforestation obligations.
The authority wants the companies to meet their responsibilities near the new capital city instead of restoring watersheds or forests within the borders of their own concessions. The authority is also open to the participation of plantation firms in the initiative.
The policy may appear to be a creative way to attract funding to reforest land around the planned capital city, but in reality, it represents the government’s neglect of its obligation to hold companies responsible for causing the environmental damage in the first place.
According to climate advocacy group Tuk Indonesia, 78 percent of the land designated for Nusantara has been damaged by mining. Other reports show that some of the land was used for plantations.
The government must take action against the companies responsible for doing the damage in the first place. The swap mechanism will simply allow the offenders to avoid their responsibilities.
This sets a bad precedent for the enforcement of environmental law. The failure to punish the offenders will encourage other firms to follow their example.
The mechanism also gives incentives to firms to clean up others’ messes. Rehabilitating watersheds near a firm’s concession borders should remain the only game in town. If swaps become the norm, environmental degradation will escalate except around the new capital city, which contradicts the government’s commitment to global environmental, sustainability and governance principles.
The government wants to present Nusantara as a model for Indonesia’s development and a blueprint for urban planners around the world on how to harmonize modern lifestyles with environmental sustainability. But if this supposed greenness comes at the cost of increased environmental degradation elsewhere in the country, can Indonesia really be called a champion of sustainable development?
It would be a weak excuse to say the damage was done long before the new capital city project began. With or without the project, the land damage should not have been left unaddressed, and the government’s long-standing negligence will make instating its planned “smart forest” concept a major challenge. Extractive industries will continue to contribute to environmental degradation if they can evade their responsibility to restore and rehabilitate the areas surrounding their concessions.
Indonesia has a history of overlooking violations or writing them off in quid pro quo exchanges, such as the country’s past two tax amnesty periods and policies that write off past forest encroachment in oil palm plantation concessions.
Potential investors should take this into account before casting their lot with the IKN project. They cannot just rely on what the government decides to write in its reports and regulations, which can easily be bent to the will of the powerful.
For the sake of their own reputations, investors have the right to demand that the government properly resolve past violations involving the land slated for Nusantara’s development. And the public at large must hold the government to its professed principles.
