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How Indonesia’s neighbours can help it fight the haze

06 May How Indonesia’s neighbours can help it fight the haze

Indonesia is making every effort to ensure that the terrible fires and haze suffered last year will not recur. This reassurance was given at the recent 3rd Singapore Dialogue on Sustainable World Resources (SDSWR) by Mr Nazir Foead, who heads the newly created Peatland Restoration Agency (BRG).

This is the clearest indication yet by a senior Indonesian official of the priority given to this issue by the administration of President Joko Widodo.

Given that fires have recurred since 1997-1998 and worsened in the past two years, some may cynically dismiss this as nice words on paper that is not fireproof. But Indonesia is undergoing a sea change in attitudes towards addressing this problem.

The statement by Mr Nazir, who holds a ministerial-level appointment, did not come out of the blue. Last year, President Jokowi, as he is popularly known, visited provinces hit by the haze and saw first-hand how terribly it afflicted Indonesians living nearest to the fires. At last December’s Paris meeting to conclude the global agreement on climate change, the President pledged to cut emissions, which in Indonesia mainly come from forest fires.

Early this year, the BRG was formed with the clear and ambitious aim of protecting and restoring 2 million ha of peatland, one of the key sources of fires and haze. In March, the Riau provincial government declared a state of emergency after fires in some districts began spreading rapidly because of strong winds. Recognising and declaring the emergency allowed an earlier and stronger response, and more than 700 police and soldiers were deployed to ensure the fires did not get out of hand.

These are clear signs that the Jokowi administration intends to respond not only with speeches but also with hard work on the ground and in reshaping vital agro-forestry sectors.

For Indonesia, taking leadership is in the country’s national interest. The fires and haze cause severe social, environmental and economic costs; last year, some 2.6 million ha of forest and farmland in Indonesia were burnt, and the cost to the Indonesian economy was estimated by the government to be as much as US$33.5 billion (S$45.5 billion).

For the first time, a number of concession licences have been cancelled. Bank Mandiri, the country’s largest bank, has stopped granting loans to develop palm oil plantations on peatlands. Just before Mr Nazir spoke, the president announced a moratorium on new concessions for oil palm plantations.

Still, questions remain. Different interests are at play. Large corporations may still find it convenient not to care about the fires or the broader questions of sustainability since these can add to their production cost. Many such firms have political influence and bringing them to task will not be easy.

Moreover, there are many small-scale farmers who do not have the means or financial capacity to switch to land-clearing without fire. While these communities must be protected from the fires and haze, they also need to find ways to continue to work for their livelihoods. These are important economic and social dimensions to be resolved in tandem with the need for better environmental protection.

In many ways, the challenges of dealing with the fires and haze are symptomatic of much wider questions in Indonesian politics and the change promised by Mr Jokowi, as the non-elite “people’s President”. These questions are still to be resolved by Indonesians.

But this does not mean that others outside of Indonesia cannot assist. Now that the Indonesian government is taking the lead in addressing the issue, what can others do to support it?

Singapore, the region and indeed the global community can help in three main ways.

The first is to strengthen governance in the resource sector including the cross-border corporations that dominate it. The second is to foster an informed consumer movement and generate support for sustainably sourced products. The third is to increase the capacity of local communities to prevent and respond to fires.

First, the cross-border control of corporations has been an exercise in finger-pointing for many years, with allegations that Singaporean and Malaysian firms are involved in and condone unsustainable practices. Singapore’s Transboundary Haze Pollution Act (THPA) attempts to address that.

Singapore has in the last year been active in taking to task corporations and their key officers involved in the haze. As reported at the SDSWR by Singapore Minister for the Environment and Water Resources Masagos Zulkifli, the Government has served notices on a number of companies and will hold all Singapore-based companies to account. Moreover, it recently served notice to a foreign director of one such company while he was visiting Singapore.

A second dimension of governance concerns how these corporations obtain financing. If environmental protection and sustainability, alongside commercial considerations, are integrated and quantified as part of the risk framework for banks, errant companies will have to mend their ways or face difficulty in obtaining financing for their operations. At present, many international banks already screen their loans on environmental, social and corporate governance (ESG) criteria, seeking certification or other proof that their clients’ practices are internationally acceptable. The gap has been with the regional banks.

Here, Indonesia’s own banking regulator, the Financial Services Authority (OJK), has taken the lead. OJK released its Sustainable Finance Roadmap last year and has since launched an 18-month project to help local banks integrate ESG criteria into their credit approval frameworks. At the SDSWR, the chairman of OJK, Dr Muliaman Hadad, pointed out that sustainable finance can be profitable and that Indonesia will continue to promote the concept in the financial sector.

Banks and financial regulators in the region can support Indonesia’s efforts by harmonising measures with one another. This will prevent firms that cannot meet the ESG standards from shifting to other markets and lenders with lower or no standards.

Finally, Singapore and the international community can support Indonesia’s grassroots efforts to prevent and suppress fires by collaborating transnationally with them on capacity-building projects at the provincial level. The haze crisis last year saw ground-up efforts by civic groups in Singapore to supply masks and humanitarian aid to villages in some of the worst-hit provinces. More community-to-community projects can be promoted to encourage good agricultural practices and eventually help local communities mitigate the external risks arising from climate change.

The Jokowi administration has demonstrated resolve and leadership to avoid a repeat of last year’s haze. More can be achieved when we stand ready to lend our full support.


Simon Tay is Chairman of the Singapore Institute of International Affairs and Lee Chen Chen is Director for Policy Programs. The SIIA launched a policy brief on haze titled ‘Southeast Asia’s Burning Issue: From the 2015 Haze Crisis to A More Robust System’ at the 3rd Singapore Dialogue on Sustainable World Resources on 15 April 2016. This commentary was originally published in The Jakarta Post on 30 Apr 2016 as ‘Indonesia leads on fires and haze: What others should do’ and also appeared in TODAY on 6 May 2016.

Photo Credit:
Singapore Ministry of Defence