World Bank and IFC: The Big Bucks Behind Indonesia’s Rainforest Destruction

By Margaret Ran

With oil gushing in the gulf, activists locking down in boardrooms, the ball of financial reform being thrown from Wall Street to Washington and back again, and Indonesia announcing a two year freeze on the parceling out of its forests to international corporations, the world’s focus seems to be on corporations.

But in the struggle to hold onto the last of Indonesia’s rainforests – and the biodiversity, culture, livelihoods, and global climate stability these threatened forests provide – recent actions by the multilateral institutions International Finance Corporation (IFC), and the World Bank (WB) must not be ignored.

Multilateral institutions, funded by nations worldwide to implement projects, give loans, and steer ‘underperforming’ economies into globalized capitalism, are big, powerful, and active in Indonesia’s forests. The World Bank and its private investment arm, the IFC, have long seen agribusiness as a key growth sector in the tropics. In Indonesia and Papua New Guinea, both groups have given huge loans to encourage the expansion of palm oil and pulp wood plantations, to the benefit of multi-billion dollar corporations like Cargill and Wilmar.

After developing plantations with World Bank aid money, Cargill sold their PNG palm oil plantations for a profit of hundreds of millions of dollars.

Encouraged by the palm oil boom in Malaysia that created enormous wealth in that tropical country, the World Bank and IFC began giving out tens of millions of dollars to encourage the same process of industrialization in Indonesia’s forests.

But rather than work directly with Indonesia’s 30 million forest peoples and those that were concerned with the rational use of Indonesia’s natural resource wealth, the World Bank made the decision to fund some of the world’s largest agribusiness corporations, and trust that Wilmar and Cargill would act responsibly and with concern for the common good.

Today, after thirty years of World Bank and IFC’s support for the palm oil and pulp and paper industry, the social and environmental consequences of their trust in agribusiness is clear. The rich forests of Sumatra are now almost completely parceled out and in the control of corporations clear cutting the forest to produce forest commodities. The Orang Rimba, one of the world’s last truly nomadic cultures, are undergoing a mass exodus because their forest homes have been cleared for palm oil.

Gumpa, and all of the Orang Rimba, are threatened by palm oil expansion
Gumpa, and all of the Orang Rimba, are threatened by palm oil expansion

Newly cleared forests to make way for the planting of palm oil and pulp wood burn, releasing smoke plumes that travel for thousands of miles. In Papua New Guinea social unrest and upheaval created by the first industrial monoculture plantations is threatening to tear communities apart.

After thousands of media articles, exposes, research projects, and political appeals, The Forest Peoples Programme and Sawit Watch, supported by hundreds of additional environmental, social, and development groups, convinced the World Bank and IFC to freeze all of their projects supporting oil palm plantations. The process started with the Forest Peoples Programme and Sawit Watch filing a complaint with the IFC’s own internal auditing office over the destructive and dangerous practices of the palm oil producer Wilmar, which received a loan from the IFC for expansion.

Oil palm plantations destroy globally important rainforests
Oil palm plantations destroy globally important rainforests

The evidence of open burning and social conflict at Wilmar plantations was enough for the IFC to initiate a freeze on their support for oil palm while they carried out a review of their funding policies. Mounting evidence of the negative impacts of their oil palm plantation projects in Papua New Guinea combined with the IFC’s internal review to push the World Bank to declare their own moratorium on support for palm oil projects while they undergo their own review of the dangers of palm oil expansion.

The decision was one of the biggest wins to protect Indonesia’s forests in memory, as much for the implication on the ground for World Bank and IFC expansion projects as for the strong signal the moratorium send to private banks and agribusiness companies. The World Bank’s current moratorium serves as a warning to the private sector: the palm oil industry as a whole needs to be treated with great caution.

As the multilateral institutions proceed with consultations and internal reviews, and a final decision on palm oil funding is expected soon, almost two hundred leading Indonesian and International voices have called for the World Bank and IFC to implement significant reforms before the Bank returns to funding oil palm.

“Major reforms are needed in places like Sarawak and Indonesia to stop oil palm development doing further harm, including land tenure reforms, recognition of indigenous peoples’ rights, a halt to land-grabbing and a ban on clearance of forests and peatlands” says Marcus Colchester of the Forest Peoples Programme.

The thirty years of damage from the World Bank and the IFC’s support of the oil palm and pulp and paper sectors can not be undone, but immediately implementing needed reforms throughout the entire World Bank Group will be a positive step for Indonesia’s forests, forest peoples, and the climate.

**This blog post previously mis-characterized the nature and details of the demands put forward by Forest Peoples Program, Sawit Watch, and their allies.  These groups have never called for a permanent moratorium on World Bank funding of palm oil projects; this mis-characterization of their position was the authors mistake. The text of the blog post has been changed to more accurately reflect these groups demands.**

Below is the list of environmental and social groups that have submitted and endorsed a statement urging the IFC and World Bank to freeze the funding of oil palm:

Submitted by:

Forest Peoples Programme

Sawit Watch

Lembaga Gemawan

Scale Up

Lestari Negri, Provinsi Riau

Serikat Tani Serumpun Damai (STSD), Kabupaten Sambas, Kalimantan Barat

SAD Kelompok 113 Sungai Bahar, Kabupaten Batanghari, Provinsi Jambi

DebtWatch Indonesia

Serikat Petani Kelapa Sawit (SPKS)

Jaringan Kerja Pemetaan Partisipatif (JKPP)

ELAW Indonesia

Setara, Jambi

Yayasan PADI Indonesia, Provinsi Kalimantan Timur

Supported by:

1.      Nordin, Save Our Borneo, Provinsi Kalimantan Tengah

2.      Rivanni Noor, CAPPA

3.      Hendi Blasius Candra, WALHI Kalimantan Barat

4.      Andi Kiki, Individu

5.      Korinna Horta, Ph.D., Urgewald, Germany

6.      Nasahar, Dewan AMAN NTB

7.      Jelson Garcia, Asia Program Manager, Bank Information Center

8.      Erwin Usman, WALHI Eksekutif Nasional/Ketua Badan Pengurus Nasional Koalisi Anti Utang-KAU)

9.      Victor Mambor, Koordinator PJIK Foker LSM Papua

10.     Dadang Sudardja, Aliansi Rakyat Untuk Citarum – ARUM

11.     Rebecca Tarbotton, Executive Director (Acting), Rainforest Action Network

12.     M. Zulficar Mochtar, Destructive Fishing Watch (DFW) Indonesia

13.     Virginia Ifeadiro, Nigeria

14.     Titi Soentoro, Manila

15.     Hisma Kahman, Individu

16.     Kamardi, Direktorat Perluasan Partisipasi Politik Masyarakat Adat, AMAN

17.     Natalie Bridgeman, Accountability Counsel, USA

18.     Dedi Ratih, WALHI Eksekutif Nasional

19.     Khalid Saifullah, Direktur Eksekutif WALHI Sumatra Barat

20.     Among, KRuHA

21.     Bustar Maitar, Forest Campaign, Team Leader, GREENPEACE South-east Asia

22.     Tri Wibowo, individu

23.     Anuradha Mittal, the Oakland Institute, Oakland, CA, USA

24.     Molly Clinehens, International Accountability Project

25.     Yon Thayrun, Executive Editor, Voice of Human Right Media

26.     Kristen Genovese, Senior Attorney, Center for International Environmental Law

27.     Edy Subahani, POKKER SHK, Kalimantan Tengah

28.     Nasution Camang, Yayasan Merah Putih (YMP) Sulawesi Tengah

29.     Ibrahim A. Hafid, Institut Transformasi Lokal (INSTAL)

30.     Rizal Mahfud, Individu

31.     Sirajuddin, Ketua BPH AMAN Sulawesi Selatan

32.     Mahir Takaka, Wakil Sekretaris Jendral, AMAN

33.     Haitami, Pengurus AMAN Bengkulu

34.     Suryati Simanjuntak, KSPPM Parapat, Sumatra Utara

35.     Arifin Saleh, Pengurus AMAN

36.     Shaban Stiawan, Individu, Kalimantan Barat

37.     Fien Jarangga, Individu, Papua

38.     Frida Klasin, Individu, Papua

39.     Anike Th Sabami, Individu, Papua

40.     Bernadetha Mahuse, Individu, Papua

41.     Bata Manurun, BPH Wilayah AMAN Tana Luwu

42.     Irsyadul Halim, Kaliptra Sumatera, Riau

43.     Don K. Marut, Direktur Eksekutif INFID

44.     Arie Rompas, Walhi Kalimantan Tengah

45.     Ahmad SJA, PADI Indonesia, Balikpapan, Kalimantan Timur

46.     Thomas Wanly, Sampit, Kalimantan Tengah

47.     Datuk Usman Gumanti, Ketua BPH AMAN Wilayah Jambi

48.     Itan, Mitra Lingkungan Hidup Kalimantan Tengah

49.     Chabibullah, Serikat Tani Merdeka (SeTAM)

50.     Asmuni, Sekretaris Jendral, SPKS Paser, Kalimantan Timur

51.     Jazuri, Sekretaris Jendral, SPKS Tanjabar

52.     Lamhot Sihotang, Sekretaris Jenrdal, SPKS Rokan Hulu Riau

53.     Zuki, Sekretaris Jendral, SPKS Kabupaten Sekadau

54.     Riko Kurniawan, Perkumpulan Elang Riau

55.     Rano Rahman, Yayasan Betang Borneo, Kalimantan Tengah

56.     Risma Umar, Solidaritas Perempuan (SP), Jakarta


58.     Mohammad Djauhari, Koordinator KpSHK, Bogor

59.     Diana Gultom, Debtwatch Indonesia

60.     Suzanne Jasper, First Peoples Human Rights Coalition, United States of America.

61.     Jaya Nofyandry, Yayasan Lembaga Bantuan Hukum Lingkungan, Jambi

62.     Jason Pan, TARA-Ping Pu, Taiwan

63.     Thaifa Herizal, ST, Direktur Eksekutif, Atjeh Int’l Development

64.     Hegar Wahyu Hidayat, Eksekutif Daerah WALHI Kalimantan Selatan

65.     Fabby Tumiwa, Institute for Essential Services Reform (IeSR)

66.     Puspa Dewy, Solidaritas Perempuan

67.     Giorgio Budi Indrarto, Koordinator, Indonesia Civil Society Forum on Climate Justice

68.     The Environment and Conservation Organisations of Aotearoa/NZ

69.     Puspa Dewy, Solidaritas Perempuan

70.     Leonardus Bagus, lPPSLH purwokerto

71.     Chandra, WALHI Riau

72.     Heny Soelistyowati, Program Manager – Komunitas Indonesia untuk Demokrasi

73.     Agung Wardana, Nottingham

74.     Haryanto, Belitung

75.     M. Ali Akbar, Eknas WALHI

76.     Mardiyah Chamim, Tempo Institute

77.     Tandiono Bawor Purbaya, PHR Perkumpulan Huma

78.     Arif Munandar, WALHI Jambi

79.     Wirendro Sumargo, Forest Watch Indonesia

80.     TM Zulfikar, individu

81.     Hariansyah Usman, Direktur Eksekutif WALHI Riau

82.     Ida Zubaidah, Direktur, Wahana peduli Perempuan Jambi/WPPJ

83.     Ismet Soelaiman, Direktur, WALHI MALUT

84.     Koesnadi Wirasapoetra, Sekretaris Jendral, Sarekat Hijau Indonesia

85.     Teddy Hardiyansyah, Kabut Riau

86.     Edo Rakhman, Direktur WALHI Sulawesi Utara

87.     Asman Saelan, LBH Buton Raya

88.     Wilianita Selviana, Direktur WALHI Sulawesi Tengah

89.     R. Yando Zakaria, Lingkar Pembaruan Desa dan Agraria./KARSA, Yogyakarta

90.     Adrian Banie Lasimbang, President, Jaringan Orang Asal SeMalaysia (JOAS)/ Indigenous Peoples’ Network of Malaysia

91.     Ramananda Wangkheirakpam, North East Peoples Alliance, North East India

92.     Joan Carling, Asia Indigenous Peoples Pact, Thailand

93.     Sandra Moniaga, Jakarta, Indonesia

94.     Muliadi SE, Diretktur PETAK DANUM Kalimantan Tengah

95.     Idham Arsyad, Konsorsium Pembaruan Agraria (KPA)

96.     Mukri Friatna, Eksekutif Nasional WALHI

97.     Sanday Gauntlett, PIPEC (Pacific Indigenous Peoples Environment Coalition)

98.     Rizki Anggriana Arimbi, Deputi WALHI Sulawesi Selatan

99.     Javier M. Claparols, Director, Ecological Society of the Philippines

100.    Agustinus Agus, LBBT, Pontianak

101.    Endah Karyani, individu

102.    Happy Hendrawan, Komunitas Transformatif Kalimantan Barat

103.    Maharani Caroline, Direktur, YLBHI – LBH Manado

104.    Budi Karyawan, AMAN-NTB

105.    Taufiqul Mujib, Indonesian Human Rights Committee for Social Justice (IHCS)

106.    Giring, Perkumpulan Pancur Kasih, Pontianak, Kalimantan Barat

107.    Hironimus Pala, Yayasan Tananua Flores Ende NTT

108.    Philipus Kami, JAGAT,  NTT

109.    Nikolaus Rima, AMATT Ende, NTT

110.    Agus Sarwono,TiLe, Individu

111.    Dickson Aritonang, Yayasan Ulayat Bengkulu

112.    Mina Susana Setra, Aliansi Masyarakat Adat Nusantara (AMAN)

113.    Alma Adventa, PhD, University of Manchester, UK

114.    Marianne Klute, Watch Indonesia!, Jerman

115.    Aidil Fitri, Yayasan Wahana Bumi Hijau – Sumatera Selatan, Indonesia

116.    Anja Lillegraven, Rainforest Foundation Norway (RFN)

117.    Judith Mayer, Ph.D., Coordinator, The Borneo Project, Earth Island Institute

118.    Septer Manufandu, Forum Kerjasama  LSM di Tanah Papua

119.    Andik Hardiyanto, The Indonesian Social and Economic Rights Action Network

120.    Hartono, WALHI Sulawesi Utara

121.    Stephanie Fried, `Ulu Foundation

122.    Sarah Lery Mboik, Individu (Anggota DPD RI Daerah Pemilihan NTT)

123.    Julia Kam, Pontianak-Indonesia

124.    Jupran Abbasri, Ketua Lembage Jurai Tue-Semende

125.    Agapitus, AMAN Kalimantan Barat

126.    Sainal Abidin, Perkumpulan WALLACEA Palopo

127.    Macx Binur, Belantara Papua-Sorong

128.    Sri Hartini, Walhi Kalimantan Barat

129.    Ecologistas en Acción (Spain)

130.    Muhammad Juaini, GEMA ALAM NTB

131.    Budi Arianto, Banda Aceh, Indonesia

132.    Solihin, Individu

133.    Aylian Shiau, Kahabu Culture and Education Association of Nantou County

134.    Sultan Darampa, Sulawesi Channel

135.    Thomas Irawan Sihombing, Perkumpulan KABAN, KalBar

136.    Yohanes RJ, Sintang, Kalbar Indonesia

137.    Ranto Sibarani, Sekretaris Eksekutif, KOTIB

138.    Nikmah, INFID

139.    Ahmad, Deputy Director, ED. Walhi Sulteng

140.    Sarma Hutajulu, Koordinator, Jaringan Aktifis Perempuan/Pendukung Penguatan Pr Sumut

141.    Hamsuri, Individu, Balikpapan, Indonesia

142.    Imanche Al Rachman, Koordinator Eksekutif Komnasdesa-Sultra

143.    Asep Yunan Firdaus, HuMa

144.    Juliade, Individu, Banjarmasin, Kalimantan Selatan

145.    Arief Candra S Hut, Kelompok Studi Konservasi (KSK) HIMBA

146.    Chia Tek-khiam, Director, Takao Indigenous Kakatao Council, Taiwan

147.    Serge Marti – LifeMosaic

148.    Betty Tiominar, Bogor

149.    Rukmini Paata Toheke, AMAN

150.    Carolyn Marr, UK Coordinator, Down to Earth

151.    Yuni Riawati, Ketua BEK SP Komunitas Mataram

152.    Geert Ritsema, Coordinator International Affairs, Friends of the Earth Netherlands

153.    Gindo Nadapdap, Kelompok Pelita Sejahtera  (KPS) Medan, Sumatra Utara

154.    Eko Waskito, Lembaga Tiga Beradik Merangin, Jambi Sumatera Indonesia

155.    Haryanto Ramli, Tanjungpandan – Belitung, Provinsi Kep. Bangka Belitung

156.    Benget Silitonga, Sekretaris Eksekutif Perhimpunan BAKUMSU

157.    Yuyun Kurniawan, Yayasan Titian

158.    M. Rafli Kaitora, Ketua PD.AMAN Enggano

159.    Ronny Christianto, Sahabat Masyarakat Pantai (SAMPAN), Kalimantan Barat