VZCZCXRO2614
RR RUEHCHI RUEHDT RUEHHM
DE RUEHJA #1930/01 2710509
ZNR UUUUU ZZH
R 280509Z SEP 06
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 0569
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHBY/AMEMBASSY CANBERRA 9960
RUEHBJ/AMEMBASSY BEIJING 3660
RUEHKO/AMEMBASSY TOKYO 0030
RUEHUL/AMEMBASSY SEOUL 3760
RUEHTC/AMEMBASSY THE HAGUE 3258

UNCLAS SECTION 01 OF 02 JAKARTA 011930 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EAP/IET, OES/IET, AND OES/ETC 
 
E.O. 12958: N/A 
TAGS: SENV TPHY TBIO EINV ID
SUBJECT: ENVIRONMENTAL DEGRADATION CONTINUES IN SOUTH 
KALIMANTAN 
 
 
¶1. (SBU) Summary:  Although South Kalimantan's legal forest 
products industry has suffered a sharp decline, illegal 
mining and logging continue to degrade the province's 
environment.  Overlapping and conflicting central and 
provincial government responsibilities and a lack of local 
resources compound the problem, although police in the 
province have had some success in prosecuting illegal miners 
and loggers.  With few realistic development alternatives, 
local governments in the province continue to encourage 
investment in both mining and plantations to better use idle 
land and create jobs.  End Summary. 
 
¶2. (U) We made a September 18-20 swing through South 
Kalimantan province to assess the degree of illegal mining 
and logging in the area and assess the province's response 
to avian influenza (AI).  South Kalimantan Province is the 
smallest of four provinces in Kalimantan, and occupies both 
river and swamp territories.  It has three million people 
living in 11 regencies and two cities.  The province's 
capital, Banjarmasin, is the largest city with a population 
of 540,000).  The province's per capita income is only $692 
per year in 2004, far below Indonesia's average per capita 
GDP of $1,140 (World Bank, 2004) and $1,280 (World Bank, 
2006).  The leading economic sectors are agriculture, mining 
and industry (mostly forest products), contributing 22, 18 
and 17 percent to provincial production respectively. 
 
FOREST LOSS LEADS TO EMPLOYMENT DECLINE 
--------------------------------------- 
 
¶3. (U) According to local government officials, the forest 
products industry dominated the economy of South Kalimantan 
through the late 1990s.  However, after years of forest 
exploitation, the wood industry collapsed in 2000 due to 
inadequate sources of raw materials, and only small saw 
mills and limited forest concessions operate today.  The 
province has no remaining significant original tropical 
forests, with the exception of an area close to Meratus 
Mountain.  Even among the limited remaining forests, the 
authorities are unable to control illegal logging and fires. 
During our visit, a forest fire erupted in a protected area. 
The authorities let the fire burn itself out rather than 
attempting to contain the flames due to a lack of equipment 
and firefighting staff.  Deforestation also has resulted in 
significant job loss in the province and contributed to a 
massive landslide in the area in 2005 that killed more than 
20 people. 
 
¶4. (U) In an effort to repair some of the environmental 
damage, the Ministry of Forestry has cooperated with 
Japanese NGOs and private companies to reforest 300 hectares 
(741 acres) along the banks of the Barito River.  We also 
visited a state-owned acacia plantation, used primarily for 
paper and pulp products, that operates in once deforested 
land.  The plantation is now sustainable, with lands rotated 
for tree planting and tree harvesting on a scheduled basis. 
According to the concession owners, animals are returning to 
the area after leaving following the destruction of the 
original forests. 
 
¶5. (SBU) According to Governor Dr. H. Rudy Ariffin, with the 
closure of saw mills in 2000, the government began to 
encourage investment in mining (coal, diamond, gold, nickel, 
iron ore, quartz, sand, and lime stone) and plantations 
(palm oil, rubber, coconut, coffee, sugar palm and cinnamon 
bark) to help create jobs.  Ariffin explained that while 
mining requires different skills than those used in the wood 
industry, the plantations are able to utilize effectively 
former wood industry workers. 
 
COMBATTING ILLEGAL ENVIRONMENTAL ACTIVITIES 
------------------------------------------- 
 
¶6. (SBU) Police and local government officials in 
Banjarmasin reported that increased mining and agricultural 
activity is contributing to environmental degradation in the 
province.  South Kalimantan's Head of Police, Brigadier 
General Halba R. Nugroho, described the challenges involved 
in combating illegal mining and associated crimes, including 
the convening of unlawful protest rallies, the creation of 
illicit road blockades, and the development of various 
shakedown schemes.  He identified three factors fueling 
illegal mining in the province: 
 
 
JAKARTA 00011930  002 OF 002 
 
 
--Overlapping and conflicting central and local government 
responsibilities that lead to inappropriate issuance of 
permits, misuse of authorizations, and overlapping 
concession areas.  Poor regulation of the sector also 
presents relatively easy opportunities for permit forgery, 
illegal purchasing, embezzlement, fraud and corruption; 
-- A 15% disparity between the market fuel prices legal 
mining companies pay and the subsidized fuel illegal miners 
can buy on the black market. 
--Widespread poverty in the community that creates an 
environment conducive to illegal activities. 
 
 ¶7. (SBU) Nugroho presented statistics on 65 illegal mining 
cases the police investigated in 2005 that resulted in 74 
arrests.  Although prosecutors successfully reached 
convictions in a number of cases, sentences averaged only 
three to five months.  The short sentences act as a 
disincentive for robust police enforcement activities. 
Police data for illegal logging raids are similar. In 2005, 
the authorities successfully prosecuted 183 cases covering 
237 suspects.  However, the resulting sentences were limited 
to prison terms of roughly three to five months.  The crimes 
prosecuted include unlawful cutting and transport of non- 
documented wood, smuggling, misuse of forest documents, 
bribery of police and military officials, and manipulating 
forest production reports.  Nugroho requested training for 
staff to better handle investigations and resources to 
further expand their operations. 
 
¶8. (SBU) NGO contacts and local forestry officials expressed 
pessimism about current efforts to protect the environment. 
Without clearer lines of authority between local and central 
authorities, increased resources and heavier penalties to 
more effectively deter criminal activity, these observers 
believe degradation will only continue. 
 
HEFFERN#