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Deforestation, rent seeking and local elections in West Kalimantan

Deforestation, rent seeking and local elections in West Kalimantan
Published: Jul 02, 2014

Danang Widoyoko

In early May 2014, Indonesia’s Corruption Eradication Commission (KPK) arrested the District Head of Bogor, Rahmat Yasin, for accepting bribes to allow conversion of forestland into a housing area. Rahmat received bribes from real estate companies totalling around Rp.4.5 billion for licenses to convert 2754 hectares of forest. This kind of corruption case is not uncommon in democratic Indonesia. In March 2014, former Governor of Riau, Rusli Zainal, was sentenced to 14 years in prison for similar practices; the District Head of Pelalawan, Tengku Azmun Jafar, the District Head of Siak, Arwin AS, and several public officials at local forestry offices in Riau were also implicated in corrupt forest licensing.

The enormous profit to be gained from the mining and plantation industries, or from real estate businesses, drives expansion into protected forest areas. At the same time, candidates for public office need huge funds to campaign in local elections. This coalescing of interests means that bribery in the issuing of business permits and land concessions has become a key source of political funding, particularly for incumbents. This essay studies the 2010 district election in Ketapang, West Kalimantan, because it provides fascinating insight into the relationship between electoral politics, private business interests and environment damage.

Background to Ketapang’s district election

Ketapang is the largest district in West Kalimantan by size, but is inhabited by only 9.8 per cent of the provincial population. Despite its small population, Ketapang’s forests are not well conserved. Link-AR Borneo, an environmental non-government organisation (NGO) based in Pontianak, maintains that forest coverage in Ketapang in 2013 was only 21.55 per cent of the total area, while the rest has been allocated for mining and plantation licenses as well as housing and other land usages. Part of the problem is how forest concessions are abused for political gain.

In Ketapang’s 2010 district head election, Yasir Ansyari and Martin Rantan (Golkar, PKS) ran against Henrikus and Boyman Harun (PDIP, Demokrat, PAN) in a second-round showdown. Yasir is a local businessman, a member of the district parliament, and part of a politically prominent family. He is the son of Morkes Effendy, former district head of Ketapang who served two full terms. (Morkes also ran in West Kalimantan’s 2012 gubernatorial elections, but lost to current Governor Cornelis.) Morkes was chairman of Golkar’s provincial branch and Yasir was chairman of Ketapang’s district branch. Henrikus was deputy district head during Morkes tenure as district head. Yasir is Malay, while his running mate, Martin Rantan comes from Kalimantan’s Dayak community. Meanwhile, Henrikus has a Dayak background and Boyman is Malay. Melayu and Dayak are the main ethnic groups in Ketapang so, in what has become standard practice across Indonesia, both pairs made sure to form a multi-ethnic ticket.

Yasir – Ketapang’s licensing middleman

Prior to the election, Yasir sold his company, PT Lanang Bersatu and another five affiliated companies to investors. These companies controlled lucrative mining concessions, so whoever bought them would automatically own those concessions. Yasir’s companies were not serious mining enterprises. Rather, they were a vehicle for rent-seeking. Conducting a mining business requires not only the land concession, but also capital, technology, labour and access to international markets. Yasir was only focused on getting the land license, with the sole goal of selling it on to companies with more capital and better knowledge of the mining sector. As the son of a Bupati, Yasir could get concessions easily and at good rates. In fact, it is widely believed by informants that he was not selling all of his stocks. Yasir and Morkes were retaining some ownership of PT Lanang Bersatu and other companies. The money that Yasir raised via his enterprise as a mining license middleman went toward his own political campaign in 2010.

Morkes also made significant contributions to his son’s campaign. It’s now common knowledge that every investor has to give district leaders an extra payment on top of formal fees for licenses and permits, particularly in mining and plantation industries. As district head, Morkes was able to collect a significant amount of money through these illegal fees to fund, not only his son Yasir to run in the Ketapang district election, but also his previous campaign in the 2009 district legislative election, and Morkes’s own campaign for governor of West Kalimantan in 2012.

Yasir’s competitor and former deputy district head, Henrikus, did not possess the authority to obtain bribes in the way that Morkes was able to. Henrikus strategy was, instead, to raise cash via donations from companies. It is common knowledge that all of the mining and plantation companies in Ketapang gave campaign contributions to all candidates. Companies spread their financial support amongst the candidates to secure their business sustainability in the future, whatever the electoral outcome. If they are only given to a specific candidate and that candidate is defeated, the company will suffer financial loss. In other words, businesses that do not put in for the successful candidate’s campaign might face more complicated bureaucratic procedures and regulations down the track, compared with those that did make a financial contribution.

In the end the amount of funds collected by the Henrikus camp was not as big as Yasir Ansyari. Several informants estimate that Henrikus spent around Rp.8 billion while Yasir’s spending was around Rp.50 billion. Of course, these estimates were much bigger than their official campaign report to the local electoral commission (KPUD), which had Yasir spending only around Rp.3 billion and Henrikus only Rp.1 billion.

It’s not all about business

But money and business connections alone are not enough to win an election. In the end, Henrikus won the election with 52.24 per cent of the vote while Yasir received 44.76 per cent. In the case of Ketapang ethnic politics played a part in the electoral outcome. An important part of Henrikus’s successful campaign was the promise not to grant mining and plantation licenses anymore, which marginalised the Dayak people. Extractive businesses were given local land, but their profits stayed with investors while Dayak people remain poor. Henrikus also campaigned on a platform to build better infrastructure and better public services for the poor, particularly the Dayak.

As a representative of the Malay ethnic group, Yasir and his father worked to mobilise the Malay community through The Malay Cultural and Adat Council (Majelis Adat dan Budaya Melayu, or MABM). MABM is a cultural organisation but also a political machine. His partner, Martin Rantan was also Chief of the Dayak Adat Council (Dewan Adat Dayak or DAD), and Martin used it as the vehicle to mobilise support from Dayak ethnic groups. However, Governor Cornelis was chief of DAD at the provincial level. Following Cornelis’ instructions, in the second round of the Ketapang election, almost all Dayak people voted for Henrikus instead of Martin Rantan.

Cornelis and his high profile daughter and People's Representative Council (DPR) member, Carolin Margret Natasha, gave full support to Henrikus. These were two important allies, both in terms of their public popularity and their business networks. Governor Cornelis engaged Oesman Sapta Odang, a rich businessman and well-known politician at the national level in support of Henrikus. Observers assume that Oesman contributed financially to support Henrikus. Cornelis’s backing of Henrikus was strategic because he was to compete against Yasir’s father, Morkes in the forthcoming 2012 gubernatorial election. A defeat for Morkes’s son was a victory for Cornelis. This strategy paid off and in the provincial election, Cornelis dominated in Ketapang, winning more votes here than Morkes.

A new style of administration or just a new style of rent-seeking?

Unfortunately, after Henrikus took power, his behaviour was markedly similar to Morkes. Instead of building a new style of administration, Henrikus started to engage in rent seeking, albeit in a different form than that employed by Morkes. Henrikus has two sons, businessman Alexander Tommy Henri and Jecky Hendrik, a public servant. Once Henrikus took power, Jecky got promoted to a strategic position in the district administration to control all local government tenders. Now businesses in Ketapang have to deal with Jecky or Tommy to get government contracts. Henrikus has kept part of his promise not to grant new licenses for plantation and mining businesses. However, rather than dispensing new licenses, Henrikus can keep making money from the licenses granted by Morkes.

This is because there are several procedures for obtaining permission to operate a resource extractive company – they need a Principal Permit, a Location Permit, and either a plantation or mining Right of Use Permit (amongst others). During the Morkes administration, a particular company might have obtained a Principle Permit, but still needed to obtain other kinds of permits. So rather than put a stop to these land use licenses granted by Morkes, Henrikus continued providing the subsequent permits and was able to capture rents in the same way that Morkes did.

The way forward

The story of Ketapang illustrates the dark side of Indonesia’s electoral reforms. Campaign financing has had an unforseen and shocking impact on the country’s forests. Yasir Ansyari used a unique strategy in raising political finances by selling companies that owned forest licenses. Yasir’s case demonstrates the weakness of monitoring and supervision by the government bureaucracy. Strong local businessmen such as Yasir who have networks and influence among politicians and policy makers can easily cheat existing regulations on licensing tenders and on forest conservation. We now know that similar trends occur across the country. According to a study by Burgess et al (2001) illegal logging increases by 42 per cent in the year prior to an election, which the authors infer is because illegal logging and forest conversion licenses are a major source of funds for candidates.

While this trend is now widely recognised, so far only a few district leaders or governors have been successfully prosecuted by law enforcement agencies. It should be the task of Province or National level government to ensure that all licenses have been granted legally. Independent supervision and monitoring by bodies like the State Development Auditing Agency (BPKP) or the President’s Delivery Unit for Development Monitoring and Oversight (UKP4) is fundamental. Independent agencies need to be tasked with ensuring licenses are granted to legitimate companies, and according to the law. Only with more involvement from national level, independent monitoring bodies can Indonesia stop further deforestation and environmental destruction caused by corrupt state-business alliances.

Danang Widoyoko, is Head of Indonesian Corruption Watch, one of Indonesia’s leading anti-corruption NGOs. He is also a doctoral candidate at the Department of Political and Social Change, College of Asia and Pacific, Australian National University.

Inside Indonesia 117: Jul-Sep 2014{jcomments on}

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