Indonesian government failing to collect more than $1 billion in deforestation fines

Friday, August 25th, 2017

The remains of a burnt tree in East Kalimantan, Indonesia. Photo: Josh Estey/AusAID, used under Creative Commons license

The Indonesian government is failing to make firms convicted of illegal deforestation pay more than US$1 billion in fines, hampering efforts to restore the peat and forest habitats damaged by their operations.

In 2016, a Supreme Court verdict ordered the timber firm PT Merbau Pelalawan to pay 16 trillion rupiah (US$1.2 billion) for illegally clearing 5,590 hectares of forest near Sumatra’s east coast. But the firm has not yet paid the fine, and recently filed a case review challenging the Supreme Court’s verdict.

In 2015, the oil palm company PT Kallista Alam was fined 360 billion rupiah – more than US$27 million – for clearing 1,000 hectares of land in the Tripa peat swamp region of Sumatra’s northwest coast. Initially, the firm filed a case review against the court’s decision, which was rejected. Then, in July 2017, the company sued the government, alleging that the coordinates for its concession used by the ministry in court were wrong. Observers have questioned why the issue was not settled during the original trial.

The Ministry of Environment and Forestry is considering new measures to force companies to pay, including forming a task force invested with more power to enforce the rulings. The proposal would unite officials from several relevant government agencies, including the Financial Transaction Reports and Analysis Center, the Financial Services Authority, the Attorney General’s Office and the Ministry of Law and Human Rights.

Fines levied on firms for illegal deforestation serve two purposes: compensation for the state, and funds to fully restore the affected forests back to their original condition. Failure to collect fines prevents these restoration efforts taking place, according to Ministry officials.