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Inonesia

Did You Know?

ECA sponsored projects in the pulp and paper and oil industry have led to the destruction of millions of hectares of rainforest as well as relocation of established communities. Indonesia’s Mining Advocacy Network (JATAM) reports that rainforest is being lost at a rate of 2.4 million hectares a year, partly due to illegal harvesting to feed the appetite of some ECA-backed projects. Meanwhile, UNOCAL’s oil terminal in East Kalimantan has forced the people of Semangkok and Kampung Baru to lose their most productive farmland. The Export Credit Agency of Indonesia is PT. Bank Ekspor Indonesia (Persero, or BEI).

"We in Indonesia want the taxpayers of the industrialized world to stop subsidizing the expropriation of our land, the destruction of our environment, and the ruination of public health through ECA projects that their country's own aid agencies and the World Bank would reject." --Titi Soentoro, speaking on behalf of Bioforum, Indonesia, a coalition of some 70 Indonesian non-governmental groups, in a 1999 ECA Watch press release

Clouded Leopard, Indonesia Photo Credit: Greenpeace UK

* Important Background Documents on Indonesia
* Unocal Kalimantan Project Summary
* Asia Pulp and Paper Projects Summary
* News Items 2004-05
* News Items 1999-03

Important Background Documents:

Export Credit Agencies activities are destructive: an Indonesian case study 2000 by Stephanie Fried; Titi Soentoro.

Summary of Export Credit Agency Finance in Indonesia Featuring the Mining, Oil, and Gas Sectors (PDF) June 2002 by Stephanie Fried; Titi Soentoro.

Unocal Kalimantan Project Summary:

View the Kalimantan Image Gallery!

The Overseas Private Investment Corporation (OPIC) has agreed to loan USD $350 million of US-taxpayer dollars to US-based Unocal Corporation for an offshore oil and gas field in Indonesia. The annual production yield has been projected at 145,000 barrels of oil. OPIC is a US-government agency that provides political risk insurance and financing to US corporations investing abroad. Jaringan Advokasi Tambang (JATAM), an Indonesia-based mining watchdog, said in a press release "[this is the kind of] arrogant behaviour that has been shown since the first time the company [Unocal] entered the Marangkayu region, with the evictions of the community at Semangkok village in 1970 to the shooting incidents of October 8, 2000, also known as 'Dark Sunday'". (Source: JATAM letter to Harvey Himberg, February 14, 2002; Worldwide Projects Inc, March 1, 2002.)

• The Dark Story Behind UNOCAL's Operations in East Kalimantan - February 16, 2000 by JATAM KALTIM (published in the Kompas Daily)

Asia Pulp and Paper Projects Summary:

The rise of the corrupt Suharto regime in Indonesia allowed a growth in the number of ECA-backed projects, including the incredible rise of the Asia Pulp and Paper (APP) industry. The pulp and paper industry grew so rapidly that the demand for paper production in Indonesia soon outgrew Indonesia's ability to legally supply it. The APP's rapid growth was due to the fact that they obtained much of their material from untouched forests rather than second-growth. The destruction of the natural forest environment was coupled with pollution of the air and water by the paper mills, reducing the quality of life for Indonesian people. The APP took a downturn as their failure to replant felled forest area began to take its toll. APP was driven into debt by foreign investors demanding to be repayed until they were forced into bankruptcy. APP's practice of resolving outstanding debts to foreign creditors has been linked to further expansion of their operations. APP has financed its growing debt in part by raising more finance to support new expansion of its pulp and paper facilities. Such a vicious circle of debt-driven destruction has directly led to more deforestation.

The Indah Kiat company is the engine that drives APP, accounting for 77% of its pulp production capacity and 40% of Indonesia's overall pulp output. Its ECA sponsors include the Swedish Exportkreditnamnden, Finland’s Finnvera, Spain’s CESCE, Denmark’s Exportkreditfonden, Canada’s EDC, Germany’s Hermes, and the US EXIM Bank. In 1999, its mills ran at full capacity, consuming 6.8 million m³ of wood - equivalent to one quarter of Indonesia's entire legal wood supply. It is reported that Indah Kiat has clear cut over 3000 hectares of the local indigenous Sakai people's forest gardens. Clashes have occurred between pulp mill employees and the Sakai as a result of the destruction being wrought on the indigenous people's ancestral land. Because of its spotty environmental and social record, APP has designed marketing strategies to bring paper to its main markets in a way which obscures its identity as the original manufacturer of the paper. As much as 50% of the UK's stationery may be contaminated with Indonesian pulp processed by APP.

More useful links

• ECA Watch Page on Pulp and Paper

• Asia Pulp and Paper in Indonesia: Cases

• WALHI Summary on APP
  Sept. 2004

• Asia Pulp and Paper: Clear-Cutting Out of Bankruptcy
  by Pacific Environment

• NADI Asks: Why Should Common People Pay for Bad ECA Debt [PDF]
  2003 by NADI Report contains key recommendations for ECAs to mend their ways.

News 2004-2005:

Asian Pulp and Paper Faces Charges on ECA-Backed Projects
February 2, 2005

News 1999-2003:

Support Walhi's Call for Disclosure of Loan Agreement for Koto Panjang Dam Project November 2003 The Indonesian NGO, Walhi (Friends of the Earth, Indonesia), is calling for letters to the Japanese Bank for International Cooperation (JBIC), the Japanese Official Development Assistance (ODA) and other financial institutions, demanding disclosure of the loan agreement for the Koto Panjang Dam Project. The call for letters parallels a lawsuit representing approximately 8,400 Sumatrans against ODA for human rights violation and environmental destruction.

Exim Bank Files Lawsuit Against Asia Pulp and Paper 23 October 2003 The Export-Import Bank of the United States (Ex-Im Bank) filed a suit against Asia Pulp & Paper Co., Ltd. (APP) and three of its operating subsidiaries located in Indonesia to recover approximately $104 million of credits.

4000 Indonesians Sue JBIC Over Destructive Dam March 27, 2003 (Planetark) Over 4000 Indonesians plan to sue two Japanese agencies, the Overseas Development Agency and the Japanese Bank for Reconstruction and Development (JBIC), over their financing of a destructive dam in Sumatra. Claiming 5 million yen each in compensation, the plaintiffs say the Kotopanjang Dam devastated the natural environment, and denied them water supplies and job opportunities in their area of resettlement.

ECA Angst on APP (link to Yahoo news expired) March 25, 2003 (AP World) The Indonesian Bank Restructuring Agency has rejected a US$ 6.7 billion debt restructuring proposal from foreign creditors for the Asia Pulp and Paper Co. ECAs, from the US, Japan and European countries are among the creditors, proposed a separate plan, and urged Jakarta to intervene.

ECAs Block APP Debt Restructuring, while PT Paiton Debt Restructuring Proceeds February 7, 2003

Position Statement From the Communities Impacted By PT UNOCAL: REJECTION OF FINANCIAL SUPPORT FROM OPIC TO PT UNOCAL, April 2002

OPIC-supported Offshore Oil drilling project in E. Kalimantan by UNOCAL Press Release by JATAM, September 2002: "The West Seno Project, hailed by Unocal as bringing in revenues of Rp 1 trillion for East Kalimantan in the future, has already begun to spread disaster for the environment and community in and around the Tangjung Santan shore, with an oil spill occurring at the Ranggas 6 well, approximately 75 kilometers out into the Makassar Strait..." Read the full press release [PDF]

Unocal Accused of Covering Up Offshore Oil Spill - October 01, 2002, Jakarta Post, By Fitri Wulandari

Deceived Again? The "War Against Terrorism", OPIC, and UNOCAL Operations in East Kalimantan - June 2002, Stephanie Fried, Environmental Defense "This 'War on Terrorism' initiative...was rushed ahead despite the fact that local communities in this deeply religious Muslim area have apparently been severely affected by pollution, loss of resource-dependent livelihood, and the climate of terror and intimidation associated with Unocal operations in East Kalimantan for decades, including the recent shootings & beatings. To all appearances, with 40 new wells in planning stages and two new proposed 60 kilometer-long pipelines, the climate of terror in coastal East Kalimantan is now poised to grow far worse." [more]

UNOCAL ADMITS TO INDONESIAN OIL SPILL: Environmental Defense Questions OPIC Support For Troubled Project In East Kalimantan - September 26, 2002, Honolulu, Environmental Defense

OPIC ANNOUNCES INDONESIAN OIL PROJECTS Monday, February 4, 2002

JAPANESE INVOLVEMENT IN NICKEL MINING IN INDONESIA [] - July 13, 2002, By anto sangadji, PT Inco is the foremost mining firm in Indonesia. Assistance has been given to pay for various nickel production facilities in Soroako through the Overseas Economic Cooperation Fund (OECF) and Jexim/JBIC. It is Japanese taxes that pay for, and have already been used by, PT Inco to finance its mining activities that have caused significant human rights violations and environmental damage. [read more]

Indonesia and Corruption - Publicly Guaranteed Corruption - Corrupt Power Projects and the Responsibility of Export Credit Agencies in Indonesia - November 2000, By Peter Bosshard, Berne Declaration

OPIC, Lloyds Pay Power Plant Insurance Claims in Indonesia January 31, 2000

INDONESIA: Wood-processing Industry under Scrutiny December 17, 1999

Commentary: Abhorrent Siblings September 22, 1999 By William Keeling

For more information, contact the ECA Watch Facilitator.

ECA Watch Campaign Member Links:

NADI, Titi Soentoro, Policy Coordinator - titi at apwld.org, euron at indo.net.id

Environmental Defense, Stephanie Fried, Senior Scientist: International Program - www.environmentaldefense.org

JATAM, Jaringan Advokasi Tambang - www.jatam.org

WALHI/ Friends of the Earth Indonesia - www.walhi.or.id