Indonesia’s resource management practice and diplomacy: hazy or clear skies ahead?

Updated On: Mar 17, 2006

March 13 saw the resolution of a four-year long dispute between Indonesia’s state petroleum company Pertamina and US energy giant ExxonMobil to develop the country’s largest untapped oil and gas field in Java’s Cepu region. 

The settlement offers joint operation to both companies but perhaps at the expense of the state’s resource management practice and diplomacy. According to nationalist factions in Pertamina and the state legislature, Pertamina will lose power from the deal such as keeping lower costs and “American control would amount to another form of colonisation” (The Straits Times, 14 March).

Such sentiments are shared by Muslim organisations such as Hizbut Tahrir Indonesia (HTI) and the Muslim Community Forum (FUI) as they gathered outside the US Embassy on March 14 in protest, condemning “US imperialism” and American exploitation of the country’s natural resources, and questioning the settlement’s timing with US Secretary of State Condoleezza Rice’s visit. Ministers were swift to deny political motivations behind the Pertamina-ExxonMobil deal (Jakarta Post, 15 March). Instead promising economic figures were offered promptly as defence for the deal. Indonesia’s status as Asia-Pacific’s only Opec member will be boosted through raising oil production by a fifth and overcoming a US$7.3 billion (S$12 billion) oil trade gap last year due to weak investment in exploration.

Another American mining firm, PT Freeport, also suffered flak through ongoing protests in Jakarta and Papua over its alleged human rights violations in the Mimika district gold and copper mining operations. The PT Freeport conflict defies swift resolution however, as the social impacts are immediately palpable: ‘security forces’ were injuring civilians and Papuan activists stormed the Sheraton Timika hotel on March 14 to confront senior provincial government officials after being left out of their Freeport investigations.

Meanwhile, fires are spreading rapidly through some 20,000 hectares of forest in Riau, Sumatra – the same area where the 300-point hazardous mark on the Air Pollution Index was breached less than a year ago. Pekan Baru (capital of Riau) and other districts were shrouded in thick smoke over the last two weeks. Malaysiaand Singapore also experience hazy skies, albeit within comfortable air quality readings. The former has extended help to the Riau province, and Indonesia’s response and management of what has become an annual issue, remain under close monitoring by its neighbours. 

The timing of America’s recent interest in Southeast Asia, and call on Indonesia to “play a leadership role in the region” (AFP, 16 March) should be taken as an opportunity also for Indonesia to promote regional environmental security and take closer account of its resource management practice and diplomacy.

Promising efforts are demonstrated by the government’s recent invitation for Malaysia and Brunei Darussalam to jointly adopt an operational concept on Conservation of Bio-Diversity (CBD), and conserve forest areas shared by the three countries in Kalimantan (Antara, 14 March). Resource governance within the domestic arena however, requires closer scrutiny and accountability.


Mass demonstrations await Rice in Jakarta (Antara, 13 March 2006)    

FUI stages demonstration rejecting Rice`s visit to Jakarta (Antara, 14 March 2006)

Rice lauds Indonesia's Vibrant Democracy, work in Aceh (Antara, 14 March 2006)

RI invites MalaysiaBrunei to adopt CBD concept (Antara, 14 March 2006)

Finally, stalled oilfield to start pumping (The Straits Times, 14 March 2006)

Govt denies U.S. pressured for Cepu deal (Jakarta Post, 15 March 2006)

Hazy days are back again (The Straits Times, 15 March 2006)

Haze alert (The Star, 15 March 2006)

Malaysia begins upset with forest fires in Indonesia (Antara, 15 March 2006)   

Rice plays up importance of SE Asia, urges Indonesia to show leadership (AFP [reproduced in The Nation], 16 March 2006)

Freeport protests hit hotel, politicians flee (Jakarta Post, 16 March 2006)

Demonstration against Freeport still going on in Jayapura (Antara, 16 March 2006)