How Indonesia can ensure sustainable growth


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By Agus Purnomo

JAKARTA, Indonesia (25 May, 2011)_Indonesia cannot carry on as if it’s business as usual. Climate change calls for a fundamental shift in how the government and business community evaluate situations, make plans and implement them. Environmental sustainability has to become an integral part of Indonesia’s economic development.

President Susilo Bambang Yudhoyono, when speaking at the Global Business for Environment forum in Jakarta in late April, reiterated Indonesia’s pledge to cut greenhouse gas emissions and put the country on a more environmentally sustainable growth path.

Indonesia has had first-hand experience how unsustainable business practices can harm the environment. Rural communities throughout the country have learnt the hard way that an unregulated pursuit of short-term economic gains often comes at a terrible long-term cost.

The Mega Rice Project, which was launched  in Central Kalimantan in 1996, is a case in point. The scheme was meant to convert peat swamp land into rice fields but ended up destroying the local environment.

The roads and waterways built for legal forestry and agriculture projects paved the way instead for illegal logging. Forested areas were cleared and peat fires have continued unabated since then, releasing tonnes of carbon into the environment. Today, vast tracts of land there offer no economic benefit.

The Mega Rice Project is not an isolated case. As the President reminded the business community at the forum, Indonesia has more than 30 million hectares of degraded land: the product of unsustainable development over decades.

Indonesia needs to think big, plan well and execute smartly to achieve the strong and sustainable economic growth the President has laid out in the 7/26 commitment: to maintain an economic growth rate of 7 per cent while reducing the country’s carbon footprint by 26 per cent over the next 10 years.

Economic growth and sustainability are not “either or” options but two aspects of one national priority: to build up the economy and cut the country’s greenhouse gas emissions. To achieve this, changes in business practices and operations, along with significant private and public sector investments, will be needed. I outline below the most obvious opportunities for sustainable growth.

Palm oil is one of Indonesia’s most vital industries. But expansion through deforestation and the use of fires to prepare the land have also made it one of the country’s biggest sources of carbon emissions.

The President has pledged that palm oil producers can expand into Indonesia’s more than 30 million hectares of degraded land: a vast area that can be used productively, economically and without adverse effects for the environment.

Furthermore, Indonesia’s palm oil plantation productivity is only one third of that of a neighbouring country. Yields can thus be multiplied by increasing productivity rather than acreage.

Indonesia also needs to run its timber concessions more sustainably. This will ensure continued access to export markets which are increasingly concerned about green practices.

Tapping Indonesia’s resources in renewable energy such as geothermal and biomass sources represents yet another opportunity for sustainable economic development.

The government will continue to make policy and regulatory changes to improve its economic growth model. For example, developing mechanisms to give businesses and local communities fair and transparent access to degraded land. Equally, it is the government’s responsibility to ensure that everyone can get accurate data on the use of forests, land titles, spatial plans, and which degraded land is available for cultivation.

The President has laid the course for sustainable economic growth in Indonesia. It is now up to  the government and the business community to follow his lead down this path.

The writer is Indonesian President Susilo Bambang  Yudhoyono’s Special Assistant on Climate Change and this piece was first published in the Straits Times.

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