Indonesia leads on fires and haze: What others (Singapore) should do

Simon Tay and Lee Chen Chen Jakarta Globe 30 Apr 16; also in Today Online 6 May 16;

Indonesia is making every effort to ensure that the terrible fires and haze that occured last year will not recur. The reassurance was given at the recent third Singapore Dialogue on Sustainable World Resources ( SDSWR ) by 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 “Jokowi” Widodo.

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

The statement by Nazir, who holds a ministerial-level appointment, does not come out of the blue. Last year, President Jokowi, as he is popularly known, visited provinces hit by haze and saw first-hand how terribly it inflicts Indonesians living nearest to the fires.

At the Paris meeting to conclude the global agreement on climate change, the President gave substantial undertakings to cut down emissions, which mainly relate to the fires and deforestation.

Early this year, the BRG was formed with the clear and ambitious aim to protect and restore two million hectares of peatland, which is 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.

Recognizing 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 in speeches but also in hard work on the ground and in reshaping important agro-forestry sectors of its economy.

For Indonesia, taking leadership on the issue is logical and in the country’s national interest. The fires and haze cause severe social, environmental and economic costs — in 2015, some 2.6 million hectares of forest and farmland in Indonesia were burned, and the cost to the Indonesian economy was estimated by the Jokowi administration to be as much as US$33.5 billion.

For the first time, a number of concession licenses have been cancelled. Bank Mandiri — the largest bank in the country — has now stopped granting loans to develop palm oil plantations on peatlands. Just before Nazir spoke, the President announced a moratorium on new concessions for oil palm plantations.

Still, questions remain. Different interests are at play. Many larger corporations may still find it convenient not to care about the fires or the broader questions of sustainability since these can add to their cost of production. Many such corporations have influence in politics 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 President Jokowi, as the non-elite “people’s President”. These questions are still to be resolved by Indonesians and left to their internal processes.

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

We believe that Singapore, the region, and indeed the global community can lend assistance in three main ways. The first is to strengthen governance in the resource sector including the key corporations that are often dominant players and who deal freely across borders. 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.

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

It is therefore a step ahead that Singapore has in the last year been active in addressing corporations and their key officers involved in the haze.

As reported at the SDSWR by the 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 criteria are integrated and quantified as part of the risk framework for banks, alongside commercial considerations, errant companies will have to mend their ways or face greater 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, it is notable that Indonesia’s own banking regulator, the Financial Services Authority ( OJK ), has taken the lead. OJK released its Sustainable Finance Roadmap in 2015 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, Muliaman Hadad, pointed out that sustainable finance can be profitable and that Indonesia will continue to mainstream the concept into the financial sector.

Banks and financial regulators in the region can support the efforts of Indonesia by harmonizing measures with one another so as to prevent firms that cannot meet the ESG standards from shifting to other markets and lenders with lower or no standards.

While the domestic consumer market in Singapore is comparatively small by ASEAN standards, the government has made clear its stand to support environmental sustainability by committing to procure only printing paper products that are certified under the Singapore Green Label.

Likewise the Malaysian government’s green procurement and eco-labeling initiatives can promote a sustainable agro-forestry sector in the region by sourcing only from certified origins.

Finally, Singapore and the international community can support Indonesia’s grassroots efforts to prevent and suppress fires through transnational collaboration 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 external risks arising from climate change.

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

Simon Tay is chairman of the Singapore Institute of International Affairs ( SIIA ) 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 third Singapore Dialogue on Sustainable World Resources on 15 April 2016.

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