timber traffickers

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TIMBERTRAFFICKING

www.eia-international.org

Illegal Logging in Indonesia, South East Asiaand International Consumptionof Illegally Sourced Timber

environmental investigation agency

www.telapak.org


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Contents

Introduction 1

Consumer Culpability 3

Forest Plunder in South-East Asia 6

Indonesias Illegal Logging Epidemic 11

The Ramin Racket 16

Combating Illegal Timber Trade 29

Conclusions and Recommendations 32

References 33

Acknowledgements

EIA and Telapak Indonesia would liketo t hank the following organisations

and individuals for their help incompiling this report, while stressingthat the views contained in the reportare the sole responsibility of EIA andTelapak Indonesia:

Madanika, Betang Borneo, CIMTROP,HAKIKI, LPS-Air, ARuPA, YLL

They would also like to thank t he manyother community groups, individualsand NGOs working together withEIA/Telapak on the illegal logging issue

but for whose safety we cannot na me.

EIA and Telapak Indonesia would like tothank the Richard and Rhoda GoldmanFund for their support in publishing thisreport. EIA and Telapak Indonesia alsowish to thank the Barbara DelanoFoundation, John Ellerman Foundation,Ruben and Elisabeth Rausing Trust,Rufford Foundation, SustainableSolutions, Josh Mailman, Wildlifeline

and other donors for their kind supportof their work.

Ma ny thanks to Brian Emmersonand all at Emmerson Press for theprinting of th is report (Emmerson Presstel: 01926 854400)

Designed by Clare Mellor at Full Stop([email protected])

Written and Edited by Dave Currey,

Faith Doherty, Sam Lawson, JulianNewman, and A. Ruwindrijarto.

Additional Research by M.YayatAanto, Ha psoro, Geetha Jayabose,Mardi Minangsari, Nick Mole,and Arbi Valentinus.

Front Cover: Illegally sourced logs from Indonesia arrivingin the Malaysian port of Melaka, 11th August 2001

front & back cover photos : Dave Currey/Environmental Investigation A gency


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Introduction

2

There have been some efforts bypoliticians and government ofcials to tackleillegal logging in Indonesia, and the formerMinister of Forests banned all cutting andtrade in ramin, to try and r educe the pressureon this valuable species and the last areas of swamp forest where it grows. Indonesia hasplaced ra min on Appendix 3 of the Convention

on International Trade in Endangered Species(CITES) with a zero quota, to seek international support for th eir actions. YetEIA and Telapak Indonesia investigators havealready w itnessed illegally cut ramin freelyentering ports in Malaysia, the only otherproducer-countr y of ramin.

At a newly built Malaysian timber-processingyard EIA and Telapak observed immigrationfacilities provided for Indonesian seamen,designed to ease the ow of the illegally sourcedtimber. In Sarawak the state-owned HarwoodCompany accepts unmarked illegally sourcedtimber and provides it with the necessaryMalaysian paperwork, effectively launderingIndonesian timber on to the world market.

Indonesia is by no means unique in sufferingfrom rampant illegal logging. Across South EastAsia the pattern is repeated, with huge quant itiesof stolen timber owing across the regionsborders and onto the global market.

Illegal logging is often portrayed as smallcommunities cutting a few trees that they were

not legally entitled to cut. It is time we dispelledthis myth once and for all. In the long run it isthe small communities that have the most to losewith their forests destroyed and their resourcesstolen. The scale of illegal logging is enormous

with huge commercial interests at stake.Illegal logging provides the greediest section

of a society with increased wealth and power. Itweakens local communities and breaks downthe rule of law. It creates a situation where law-abiding citizens nd it difcult to exist withoutbuying into the lawlessness. It thrives oncorruption, bullying and violence. Local peoplelose their resources and central government ischeated out of revenue.

There are a few welcome signs that thisplunder of the forests is at last beginning toreceive the attention it deserves at governmentlevel. The G8 nations have accepted that actionneeds to be taken and the UK government hasstarted to dr aw up policy options for thesenations plus the European Union. The rstregional ministerial conference on Forest Law

Enforcement and Governance is taking place inSouth East Asia which provides an oppor tunityto look at r eal solutions to the complexpolitical, environmental and social issues thatillegal logging raises.

It is already too late for hundreds of thousands of forest dwelling people who havelost their homes and for vast tracts of denseforest biodiversity including some o f the laststrongholds of the endangered o rangutan.Consuming nations must legislate to stopillegally sourced logs and timber productsentering their markets, and timber-producingcountries must fight the corruption at t he coreof th is issue and co-operate regionally. It willtake political courage to act now, but if solutions are not found quickly, it will alreadybe too late for some of the worlds lasttropical forests.

Dave Currey, Director Environmental Investigation Agency

A. Ruwindrijarto, Executive Director Telapak Indonesia

September 2001

Above: Illegal loggingin Gunung LeuserNational Park,Sumatra

The scale of illegal logging is enormous

with huge commercial interests at stake

A . R u w i n d r i j a r t o , E n v i r o n m e n t a l I n v e s t i g a t i o n A g e n c y / T e l a p a k


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Consumer Culpability

3


Rampant illegal logging of most of the worldsremaining tropical forests is a direct result of the massive demand for cheap and plentifultropical timber in the consuming markets of theUS, European Union, Japan an d China. T hevoracious appetite for tr opical timber in theworlds most afuent nations, plus the emerging

Chinese economy, corrupts and devastates thedeveloping countries that feed them.

With the major tr opical timber exporterssuch as Indonesia, Brazil and Cameroonsuffering an illegal logging rat e of at least half the total t imber production, it is evident thathuge quantities of illegal timber are entering theconsuming markets unchecked. To date bothgovernments and industry in consuming nationshave failed to take steps to eliminate illegal

Left: Barge towing

logs, Osaka Port,Japan. Japan isthe worlds largestconsumer oftropical timber

Global Witness

huge quantities of illegal timber are entering the consuming markets unchecked


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timber from the supply chain, and are oftencontent to turn a blind eye.

It is ironic that while the worlds mostafuent nations pay lip-service to the problemof deforestation and pour millions of dollarsinto conservation schemes in countries likeIndonesia and Brazil, they are failing toadequately address the problem at home. Whilea proportion of illegally-logged timber is usedwithin the producing nations, it is the highprices on the international market forcommercial expo rt species which is fuellingcurrent pat terns of tropical forest destruction.

The G8 group of leading nations has madea series of public pronouncements concerningthe need for sustainable forest management, yetcontinues to import vast amounts o f timber,much of it illegal at source. In 1996 the G8plus the EU imported 280 million cubic metresof wood p roducts, equivalent to 74 per cent of the worlds imports of timber and timberproducts

1. The major suppliers to the G8 are

the countries suffering the highest rates of illegal logging. For instance the US aloneimported over $450 million worth o f timberfrom Indonesia in 2000 2. Based on an illegallogging rate of 70 per cent in Indonesia, theinference is that the US imported over $330million worth of timber stolen at source inIndonesia in a single year.

In its 1998 Action Programme on Foreststhe G8 n otes that international tr ade inillegally harvested timber exacerbates theproblem of illegal logging and commits its

members to identify and assess theeffectiveness of t heir internal measures tocontrol logging and international trade inillegally harvested timber and identify areasneeding improvement 3. Yet to date no G8

member has enacted legislation allowing illegaltimber or iginating from outside its ownboundaries to be seized. If it could becategorically proven that a consignment of timber entering a G8 country had beenacquired illegally in the exporting nation, itwould still be allowed to proceed to itsdestination.

The European Union is a major r ecipient of illegal tropical timber, but has failed toimplement policy initiatives to stem the ow. In1999 the EU imported 10 million cubic metresof trop ical timber with almost half comingfrom just three exporters Indonesia, Braziland Cameroon 4. By ana lysing these imports inconjunction with illegal logging rates in themajor supplying countries it can by estimatedthat half of the tropical timber imported into

the EU is illegal at source, worth around $1.5billion annually. 5

Within the EU the United Kingdom standsaccused of being the largest importer of illegaltropical timber. In 1999 the UK imported 1.6million cubic metres of tropical timber, with 92per cent supplied by just three countries Indonesia, Malaysia and Brazil. It is estimatedthat 60 per cent of the UKs tropical timberimports are illegal at source imports which in1999 were worth around $200 million. The UKalone accounts for one-fth of illegal tropicaltimber entering the EU. 6

France is the second biggest importer of illegal tropical timber in the EU, with aroundhalf of its annual import s of 900,000 cubicmetres derived from illegal sources, followed byBelgium, G ermany and the N etherlands. TheEUs irresponsible consumption of tropicaltimber, with no heed as to its source, is directlyresponsible for forest destruction in SouthAmerica, West and Central Africa and South-East Asia. Its consumption of illegal tropical

timber alone is equivalent to over 700,000hectares of tropical rainforest being loggedevery year. 7

The timber markets of East Asia areequally culpable of driving illegal loggingthrough unfettered demand for timber. Japanimports around one third of internationallytraded wood products and imports more logsand plywood than any other country in theworld. 8 Most of Japans tropical timberoriginates in Malaysia and Indonesia, and

based on illegal logging rates in t hesecountries 50 per cent of Japans tropicaltimber imports are illegal at source. 9

While Japans over-consumption of tropicaltimber has already laid waste to large swathes

Above: Ramin kitchencabinets on sale inthe US

G r e e n p e a c e

half of the tropical timber imported into the EU is illegal at source,

worth around $1.5 billion annually


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Illegal logging takes place when timber isharvested, transported, bought or sold in violationof national laws. Illegalities occur right through thechain from source to consumer, from illegalextraction, illegal transport and processing throughto illegal export and sale, where timber is oftenlaundered before entering the legal market.13

Illegal logging is rife in all the major tropicaltimber producing countries, for example:

Indonesia over 70 per cent of log production isderived from illegal sources, equivalent to 50million cubic metres of t imber every year.14

Brazil in 1998 the Brazilian Secretariat forStrategic Affairs reported that 80 per cent oflogging in the Brazilian Amazon was i llegal,equivalent to 20 million cubic metres oftimber.15

Cameroon half of all timber is sourced

through illegal logging.16

It is clear from the illegal logging rates in tropicaltimber exporting nations that a vast quantity ofblack market timber is being traded around theworld, representing at least half the total globaltrade and worth billions of dollars annually.

The consequences of the huge uncontrolledglobal market in stolen timber are exacerbatedby key characteristics of illegal logging:

It targets the most commercially valuabletree species. In Indonesia loggers working

inside Tanjung Puting National Park haveremoved vast quantities of ramin, a valuablehardwood classied as vulnerable.17

It is disproportionately focused on protectedforest areas and so threatens vital areas ofbiodiversity. At least ve protected areas inIndonesia where the endangered orangutanis found in viable numbers are currentlysubjected to widespread logging.

It is focused on natural forest areas. A surveyof 200 areas of high biodiversity around theworld found 65 per cent threatened by illegallogging.18

It is high impact logging, with no thought forfuture sustainability.

It causes governments to lose much-neededrevenue. Indonesia, yet to recover from thenancial crisis of the late 1990s, loses $125million a year due to the activities of just 18illegal logging syndicates.19

It creates social strife and fosters corruption.In Cambodia the prots from stolen timberhave been used to fund both the governmentmilitary and the Khmer Rouge.20

It undercuts legal timber on the internationalmarket. The supply of cheap illegal logs toIndonesias bloated plywood sector has leftplywood producers committed to sustainablesupplies unable to compete.21

Illegal Logging: Denition and Impacts

of rainforest, a more recent threat has emergedin China, where timber imports have risendramatically in the last few years. China hascommendably sought to slow deforestationwithin its own bor ders through t ough loggingcontrols. Yet the emphasis on supply controlsrather than demand has prompted a ood of illegal timber entering the country.

Between 1997 and 2000 Chinas domestictimber production fell by 97 per cent, to justone million cubic metres a year. At the sametime recorded log imports have soared from ve

million cubic metres in 1997 to 15 millioncubic metres in 2000. 10

The discrepancy between current timberdemand in China of 260 to 280 million cubicmetres a year, and the documented supply of only 140 million indicates substantial importsof illegal timber. Left unchecked the situationwill worsen, as by 2025 China is predicted tohave an annual wood decit of 200 millioncubic metres per year. 11 Recent trade statisticsshow that China is now one of the main tworecipients of Indonesian timber. 12

by 2025 China is predicted to have an annual wood decit of 200 million cubic metres per year


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Forest Plunder in South East Asia

damage through illegal exploitation. In thePhilippines 16 million hectares of natural foresthave been reduced to just 700,000 hectares,with illegal logging causing much of thedestruction 2. In the mid-1990s one third of alllogging in Malaysia was illegal, while at thesame time illegal timber export from Burmastood at 276,000 cubic metres, generating $86million a year 3.

Within South-East Asia illegal logging is aregional problem which cannot be adequatelyaddressed at the national level. Much of the illicittimber ows across porous borders, where

neighbouring states often legitimise the timber byissuing paperwork to mask its true origin. Illegaltimber smuggling has been documented across theregion from Indonesia to M alaysia, Singaporeand China, from Cambodia to Thailand andVietnam, and from Burma to China. 4

The timber processing and export industriesin several countries in the region, notablyMalaysia, Thailand and Singapore, haveproted from a regular and cheap supply of rawmaterials smuggled from neighbouring states. In

both Malaysia and Indonesia the bloated timberprocessing industry has been allowed to expandat a r ate disproport ionate to the amount of legaland sustainable timber available.

Unilateral actions have exacerbated the

Forest Plunderin South-East AsiaThe issue of illegal logging within this region isnot just about the illegal cutting of trees.Corruption, br ibery, fraud and in some casesextreme violence are all part and parcel of thetra de in illegal timber. Illegal logging exploitsthe poor, takes away revenue for the state andputs into t he hands of the powerful, nanceswhich enable them to buy political power and

ensure vast fortunes all at the cost of acountrys natural resources.The for ests of South-East Asia have been

decimated by unconstrained logging, much of itillegal, over the last two decades. Currentpatterns o f forest exploitation in the regionthr eaten ecological security, b iodiversity, a ndthe livelihoods of millions of peop le who live inthe remaining forest areas.

As a whole the Asia-Pacic region contains17 per cent of the worlds remaining forests,but has lost 88 per cent of its original frontierforest area. While the South-East Asian regioncontains six per cent of the worlds forests, it hasglobal signicance in terms of b iodiversity. 1

This precious resource has suffered severe

Above: The rainforestsof South East Asiaare shrinking

M i c h a e l M a r c h a n t / E n v i r o n m e n t a l I m a g e s

Illegal timber smuggling has been documented across the region


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problem. In 1989 Thailand introduced a loggingban revoking logging concessions in all forests.The result of this ban has been a dramatic fall inThailands legal domestic timber production, asurge in illegal impor ts from neighbou ringcountries such as Burma, Cambodia and Laos,and an increase in illegal logging. 5 As a result,by 1992 Burma was exporting around 1.7million cubic metres of illegal timber toThailand. 6 A similar pattern has been observedrecently in Ch ina as a consequence of stringentdomestic logging controls introduced in 1998,only on a much larger scale. The Chinesegovernment has also slashed import tariffs,prompting a massive ow of both legal andillegal timber into the country.

There has been a dramatic global shift inthe production and consumption patterns of

the tropical timber industry in both the South-East Asian region and the wider area of EastAsia. With the r egions own forest resour cesdepleted at a rapid rate Asian loggingcompanies have expanded their operationsaround the world, n otably in South Americaand Africa. Around 90 per cent of the globaltropical timber trade is controlled by Asianlogging companies, and 80 per cent of alltropical timber exports go to China, Japan,Malaysia, Indonesia, Taiwan and South Korea,either for consumption or processing. 7

The consequences of such a massive andinstitutionalised plunder of forest resourceswithin the region are not merely environmentaldegradation, but impact the wider society.Corruption, br ibery, fraud and in some casesviolence are engendered through the trade inillegal timber. Illegal logging exploits thevulnerable who ar e paid a pitta nce to log, andtakes away revenue for the state by putting itinto the ha nds of the powerful timbersyndicates and bosses, allowing them to buyinuence and accrue illicit fortunes at theexpense of a countrys natural resources.

Enforcement in the region has beenwoefully inadequate. While stringent lawsrequiring authorisation to cut, transport,process and expor t timber exist in most of thecountries, they are simply not enforced, either

through under-capacity or the complicity of ofcials in the illegal timber trade.

As well as enforcement, political will is vitalto ensure that existing laws to p rotect acountrys forest are implemented no matterhow powerful the individual that commitsforest crimes. In many cases political decisionsare made in terms of prots or personal gainrather than for th e wider nat ional interest.Good governance will never be achieved unlessthe issue of corruption is addressed at the sametime that forest laws are enforced.

Below: Logs waitingto be shipped inBorneo

Steve Morgan/Environmental Images

Enforcement in the region has been woefully inadequate


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A Regional Overviewof South-East Asia

BurmaFifty per cent of Burmas total land area iscovered by forests, of which 18.6 per cent isprotected. Although declared export earningsfrom teak and hardwoods totalled $201 millionfor 2000 8, these ofcial gures do not reect

the true amount export ed as a substantial black market in timber exists between Burma and itsneighbour s principally China, T hailand andIndia. Logging bans in both Tha iland a ndChina have resulted in a greater ow of illegaltimber from Burma to help satisfy an insatiabledemand for tr opical timber.

In 1988, in desperate need of funds theMinistry of Forests awarded 42 ve-yearlogging concessions to 36 Thai companies,increasing the area of forest being logged bythr ee times. Despite this ofcially sanctionedexpansion, illegal logging and cross-bordertimber smuggling also increased. In 1992 theBurmese regime cancelled all Thai loggingconcessions but th is did no t stop t he ow of

illegal timber from crossing the many bordersBurma shares with its neighbours. 9

By 1994 Thailands reported log importsfrom Burma were four times higher thanBurmas declared exports. Burma declared nolog export s to China in 1995, yet Chinarecorded imports of 500,000 cubic metres. 10

CambodiaIn 1997 illegal logging in Cambodia stood at overfour million cubic metres annually, ten times thelegal production, and was costing the governmentover $180 million in lost revenue 11. Field researchreveals the movement of illegal timber acrossborders into the neighbouring countries of Thailand, Vietnam and Laos.

In May 2000 it was reported that illegalexports to all of Cambodias neighbours werecontinuing, and involved the collusion of theLaotian, Thai and Vietnamese authorities.Between N ovember 199 9 and April 2000

around 130,000 cubic metres of illegal timberfrom Cambodia entered t hese three countries. 12

Timber illegally felled in nat ional parks inCambo dia has been tracked moving alonglogging roads crossing the border into

E n v i r o n m e n t a l I n v e s t i g a t i o n A g e n c y

By 1994 Thailands reported log imports from Burma were four times

higher than Burmas declared exports


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Vietnam. In 1998, 200,000 cubic metres of illegal logs from Ratanakiri Province movedacross the land border into Vietnam. Gar denfurniture imported into t he UK wasmarketed as coming from well-managedforests in Vietnam, bu t t he tru e origin w asCambodia. 13

LaosLaos has signicant problems in the protectionof its forests. Forest cover in the country hasdropped dramatically from 70 per cent of theland area in 1940 to less than 40 per centtoday, and a large part of this can be attributedto illegal logging. 14 A year ago it was reportedthat community groups in Laos estimate thatthe volume of illegal logging is at least one-sixth of the legal harvest. 15

Laos has an export ban of teak from th ecountry, but despite this, rampant commercialillegal logging occurs and in most casesThailand is reported to be the main importerof both teak and rosewood. Laotian statisticson logs exported to Thailand are only half of the volume recorded as imported from Laosby Thai authorities. 16 As a result of theamount of illegal timber in the system, in1997-8 the State received only a third of the

royalties owed from logging. 17

MalaysiaIn the mid 1990s it was estimated that onethird of all logging in M alaysia w as illegal 18

yet few successful prosecutions have beenmade. 19 Ten years on from recommendationsby an International Tropical Timber

Or ganisation mission to Sarawak todramatically reduce the log harvest, the Statecontinues to log far in excess of the volumesconsidered to be sustainable. 20

As domestic supply of logs has declined,Malaysias timber industry has increasinglyexploited instability and poor enforcement inneighbouring Indonesia to secure plentifulsupplies of cheap illegal timber. In the quest fortropical timber Malaysian logging companieshave also expanded their operations intorainforests across the tropics, and have beenimplicated in illegal logging activities in anumber o f countries including Cambod ia andPapua New Guinea. 21

See Indonesias Illegal Logging Epidemicfor detailed information on M alaysian importsof illegal timber.

ThailandThailands porou s border with Burma providesa convenient cover for illegal timber stolen

from national parks and forest plantations

Left: Illegallysourced logsfrom Indonesiabeing unloadedin Melaka,PeninsularMalaysia,August 2001

D a v e C u r r e y , E n v i r o n m e n t a l I n v e s t i g a t i o n A g e n c y / T e l a p a k


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within Thailand but claimed to come from itsneighbour. In January 1998 it was reported thata sawmill in Tak province had its licencesuspended after 13,000 teak logs from SalweenNa tional Park were found at t he mill. In a laterinspection of the logs it wa s found that 4,000of the conscated logs had gone missing. 22

At the same time the Thai government wasunder pressure from Thai timber companies tore-open a border check point to allow left overtimber from Burma into Thailand for export.This was known to be a way to smuggle illegallyfelled teak logs out of the Salween National Park and falsely document them as Burmese logs. 23

It has been estimated tha t 1.5 million teak logshave been illegally felled from the Park andbribes worth Bt100 million ($2.7 million) hadbeen offered in exchange for the teak logs from

Thailand to be falsely documented as beingfelled in Burma. 24

Illegal logging in Thailand s N ationalParks are not the only source of illegal timber.

Illegal logging also occurs in the ForestIndustry Organisations plantations in thenorth of the country. It has been reported thatten forest plantat ions in the area arethr eatened b y illegal loggers. 25

A logging ban introduced in 1989 meant adramatic decline in the availability of legaldomestic timber, and resulted in Thailandsvoracious timber industry resorting to relyingon trees illegally felled within the country orillegally imported from neighbouring statesincluding Cambodia, Vietnam and Laos. 26 Afterthe logging ban came into effect ThailandsRoyal Forestry Department also decentralisedits enforcement of illegal logging operations tothe provincial level resulting in thedestruction of a large number of natur al forestsand plantations. 27

In one incident in 1997, Thai ofcials seized amassive haul of illegal teak logs and sawn woodthat according to those involved were legallyimported from Laos. Police ofcials suspected theteak had in fact originated from Burma - showinghow the source of timber exported fromThailand can be easily obscured. 28

VietnamSixty per cent of Vietnams forest cover w asdestroyed dur ing the war with the UnitedStates. Vietnams remaining forests a re b einglost at a rat e of 1.4 per cent a year 29 , and it hasbeen reported that with the present rate of deforestation there will be no substantial forestcover left by the year 2020. 30

While it is estimated that up to one millioncubic metres of timber is illegally extracted fromprotected areas within the country each year 31,Vietnam is also a major importer of illegal timber,mainly from Cambodia. Despite a 1996 ban onlog imports from Cambodia imposed by the

Vietnamese government, by 1998 seventy fullyladen trucks of logs illegally cut in Cambodiawere crossing the border into Vietnam each day,with much of the timber destined for export toEurope as garden furniture. 32

G l o b a l W i t n e s s

Left: A garden chair made in Vietnam from illegallylogged Cambodian timber

by 1998 seventy fully laden trucks of logs illegally cut in Cambodia were crossing the border into Vietnam each day


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Indonesias Illegal Logging Epidemic

Indonesias IllegalLogging Epidemic

The sprawling archipelago of Indonesiaexemplies the disastrous impact of rampant

illegal logging. With an illegal logging rate farin excess of legitimate log production, a hugeprocessing industry r eliant on illicit supplies,and systemic corruption, virtually all thecountrys remaining forest areas includingprotected areas have been invaded by loggers.

The countrys economic problems coupledwith corruption and collusion by the authoritiesand paralysis by central government have fosteredthe emergence of regional timber barons and well-organised criminal syndicates earning huge

amounts through the illegal timber trade, oftenwith the assistance of the military and police.Much of the timber stolen from Indonesias

dwindling forests nds its way on to theinternational market either directly or vianeighbouring states, especially Malaysia andSingapor e, where the t imber is effectivelylaundered and sent on to t he US, Europe,Japan, Taiwan and mainland China.

Although the situation has worseneddramatically since the late 1990s, the roots of the present a narchy and p lunder can be tra cedto the policies of the New Order regime of former-President Suharto, w ho appropriatedIndonesias forest resources and d ivided themup between family and business cronies.

Research indicates that between 1985 and1997 Indonesia lost an average of 1.5 millionhectares of forest cover every year, leaving only 20million hectares of quality production forest. It ispredicted that at the current rate of deforestationlowland dry forests will disappear from Sumatraby 2005 and from Kalimantan by 2010 adevastating indictment of the wanton destructionof a countrys natural heritage and resources. 1

By the time of Suhartos fall in 1998 all theconditions were in place for an upsurge in

illegal logging, supplanting the state-sponsoredexploitation of the countrys forests. This wasorchestrated by powerful regional timber bossesoften linked to smuggling networks inneighbouring countr ies and beyond.

Now Indonesia has an a nnual log harvest of around 78 million cubic metres, more thanthree times the governments sustainab le yield,and the capacity of unlicensed sawmills is

Below: Forestdamage,Kalimantan,Indonesia

Faith Doherty/ Environmental Investigation Agency

between 1985 and 1997 Indonesia lost an average of 1.5 million hectares of forest cover every year


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fuelled the escalation of timber theft inIndonesia. Malaysian companies faced withdeclining round w ood supplies at home haveproted from a ready supply of cheap illegaltimber from Indonesia.

While the Indonesian authorities must t akeresponsibility for failing to take decisive actionagainst the timber barons and the widespreadcollusion of enforcement ofcials, neighbouringcountries are also culpable for failing to stopthe illegal timber from entering their territories.In the case of Malaysia, huge amounts of illegaltimber from Indonesia are effectively beinglegalised by the government.

Investigations carried out by the formerSecretary-General of Indonesias Ministry of Forests identied four major smuggling routes:West Kalimantan to Sarawak, East Kalimantan

to Sabah, Jambi and Riau to peninsular Malaysiaand Singapore, and West Papua to China 5.

Malaysia, Singapore, and ChinaWhile log shortages within Malaysia haveforced the countrys timber companies toexpand op erations into South America andAfrica, they have also been quick to exploit aplentiful supply of cheap timber from closer tohome neighbouring Indonesia.

In the early 1990 s Ma laysias domestic logproduction stood at 4 0 million cubic metresannually, but by 1999 it had almost halved to22 million cubic metres. Yet wh ile log supplyhas fallen, the coun trys wood processingindustry has maintained an installed capacityof 40 million cubic metres a year, with over1,000 sawmills still in operation 6. It is clearthat considerable quantities of timber stolenfrom Indonesias forests are destined for thewood industries in Sarawak, Sabah andPeninsular Malaysia.

West Kalimantan to Sarawak, MalaysiaThe West Kalimantan provincial capital of Pontianak and the Sarawa k capital of Kuchingare key points in a burgeoning illegal timbertrade wor th millions of dollars a month.Investigations carried out by EIA/Telapak Indonesia reveal the involvement of Pontianak-based businessmen in illegal sawmills andtimber transport from Tanjung Puting NationalPark, Central Kalimantan. The criminalnetwork extends to Kuching and Sibu inSarawak, where commercial species such asramin ar e laundered before being export ed tomarkets ar ound the world, including Italy,Germany and China. 7

double that of legal operations 2. This rate of illegal logging far outstrips M alaysia, ofciallythe worlds largest producer of tropical timberwith 30 million cubic metres annually 3.

Detailed field investigations carr ied out byEIA and Telapak Indonesia ha ve illustratedhow illegal loggers are ta rgeting preciousNational Parks in the search for commercialtimber species, and how violence andintimidation is used by the bosses controllingthe trade 4. All over Indonesia illegal logging iscarried out with impunity and often with theconnivance of the authorities.

While internal factors unique to Indonesiahave contributed to the creation of a vast illicittimber trad e, events beyond the country havealso played a major role.

Current log shortages faced by Japan,

China, Korea, Ma laysia and Thailand have

Below: Indonesiasnatural forests are

dwindling

D a v e C u r r e y / E n v i r o n m e n t a l I n v e s t i g a t i o n A g e n c y


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Timber theft along the West Kalimantanand Sarawak border is rampant. Fieldinvestigations carried out in the Indonesiandistrict of Kapuas Hu lu last year r ecorded up to80 trucks carrying illegal timber into Sarawak every da y 8. Much of the timber comes from theprotected forests of Lake Sentarum andBentung Karihun. As Sarawak does not allowthe import of logs, Sibu-based businessmenhave set up sawmills along the road fromLanjak to Badau on the Indonesian side of theborder t o pr oduce rough-sawn b locks, whichare then moved across the border by tr uck.Local sources claim that the Indonesiancustoms post in Badau accepts payment toallow the illegal timber to cross the border inAugust 2000 aroun d 50 companies were payingRupiah 30 million ($4,500) every month to

operate unhindered by t he autho rities.9

Once it reaches the Malaysian border townof Lubok Antu, the illegal timber is processedby the Harwood Timber Company, asubsidiary of t he state-owned Sarawak TimberIndustry Development Corporation. For a feeof Malaysian Ringit 22 ($6 ) per cubic metrethe timber is measured and graded andpaperwork issued, effectively laundering thestolen t imber and easing its eventual expor t.Throu gh this system a steady supply of material is guaranteed for Saraw aks woodindustry and the state r aises revenue.Conversely the losers are the Indonesiangovernment, which loses revenue, and theforests and people of West Kalimantan .

Harwood runs a similar operation inSematan, a somnolent coastal town in the farwest of Sarawak. Harwoods presence here isexplained by the fact that Sematan is adesignated po rt of entry for small woodenboats from Indonesia, and is where the road toKuching ends. O n t hree occasions EIA/Telapak

have witnessed boats ying the Indonesian agunloading unmarked timber at the HarwoodTimber Company site in Sematan. On a singleday 60 trucks were seen tran sporting the landedtimber towards Kuching. A source working inthe port area stated that most of the Indonesianships come from Pontianak and the NatunaIslands. As only small wo oden vessels fromIndonesia are allowed to enter, some of thetimber is transferred to Malaysian steel coastalfreighters and tr ansported t o Sibu. 10

A third Harwood depot for processingstolen timber is located at Tebedu, close to theinternational bord er crossing point. It isestimated that the thr ee Harwood sites processaround 50,000 cubic metres every month, and

Above: Lorries carrying unmarked Indonesian timber fromthe government owned Harwood Company checkpoint atSematan, Sarawak, for processing

E n v i r o n m e n t a l I n v e s t i g a t i o n A g e n c y / T e l a p a k

Timber theft along the West Kalimantan and Sarawak border is rampant

at least 500,000 cubic metres of Indonesiantimber every year. Around 250,000 cubicmetres passes through Sematan annually,150,000 cubic metres through Tebedu and100,000 cubic metres through Lubok Antu. Inaddition to the documented import s of illegal

timber, it is estimated that a similar amountenters Sarawak through undocumentedsmuggling. Altogether around one million cubicmetres of timber stolen from West Kalimantanenters Sarawak every year. 11


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both Riau and Kalimantan through the westerncoastal towns of Melaka and Batu Pahat.

In M elaka EIA/Telapak witnessed asuccession of Indonesian boats unloading bothlogs a nd sawn timber at timber yards on theMelaka River. Both the crew on the boats andworkers in the yards conrmed that the timberhad come from Riau, a mere six-hour voyageaway across the Straits of Melaka. The logs areordered by Malaysian Chinese businessmen,then bought in Riau and shipped over. Theboats y Indonesian ags in Indonesian watersbut switch to Malaysian ags in Malaysianwaters to avoid detection. The un loading of theunlicensed Indonesian logs and timber is carriedout in full view of the Malaysian authorities.

The mixed timber includes large quantities of meranti and ramin. EIA/Telapak observations

concluded that between 100 and 200 tonnes of logs and timber are unloaded in this port eachday. Each boat carries about 16 tonnes and crewon one boat claimed to sail from Pulau Rupat inRiau to Melaka four times a month. 16 Thetimber is processed by local sawmills and alsotransported to Kuala Lumpur.

EIA/Telapak investigations also uncoveredlarge commercial trade in ramin and other treespecies from Kalimantan to Batu Pahat. In thecentre of town on the river Indonesian woodenboats carrying unmarked logs were waiting to beunloaded in a yard with a new customs building,cranes and containers yard. A regular bargeservice exists to transport the timber in containersto Port Kelang, near Kuala Lumpur. At an inletout of town EIA/Telapak watched an Indonesianbarge laden with ramin and meranti beingunloaded at an expanding timber processingfactory. 17 This timber was also being transportedby truck to a sawmill in Johor Bahru.

The port of Pasir Gudang in the M alaysiancity of Johor Bahru provides another entrept

for timber smuggled from Riau and Kalimantan.Malaysian timber industry sources claim thatbarges of logs from Kalimantan a re tran sportedto Pasir Gunang. 18

Sumatra and Kalimantan to SingaporeThe prox imity of Riau province in Sumatrato Singapore offers a simple smuggling route.Field investigations carried out in Kuala Gaung,the coastal region of Riau, in August 2000found boats and barges belonging to aSingapore company loading logs, despite theexpiry of legal logging concessions in the a rea. 19

On May 5th 2000 activists in Pontianak,West Kalimantan, forced port ofcials to ordera cargo ship bound for Singapore back to port.

Below: Kutai NationalPark, EastKalimantan. Timberfrom this provinceis smuggled intoneighbouring Sabah

East Kalimantan to Sabah, MalaysiaThe Malaysian state of Sabah is experiencingan acute wood supply shortage as aconsequence of an ill-considered Stat egovernment industrial expansion policy.Throughout the 1980s and 1990s theexpansion of Sabahs timber processing sectorwas encouraged to a point where over 300mills now have a capacity of 16 million cubicmetres. 12 Yet Sabahs log production in 1999reached just 3.4 million cubic metres, leading toa huge shortfall which again is partly met bytimber smuggled from Indonesia.

Following an operation against illegallogging in East Kalimantan, the then Secretary-General of the Forestry Ministry claimed tha tMa laysian military personnel are involved inthe cross-border timber trade. He claimed that

between 80,000 and 100,000 cubic metres of illegal timber moves through the port of Tarakan and into Sabah every month. 13 Aroundone million cubic metres of timber stolen fromEast Kalimantan enters Sabah every year.

In total timber smuggling from Kalimantaninto Malaysia is estimated to have lost theIndonesian government at least $580 million inthe last decade. 14

Riau and Kalimantan to Peninsular MalaysiaSmuggling of timber from Riau Province inSumatra to Peninsular Malaysia was estimatedat 70 ,000 cubic metres every month by the thenSecretary General of the Ministry of Forests inJune 2000 . 15 Subsequent eld investigations byEIA/Telapak reveal that this illicit businesscontinues unbridled. In August 2001 largequant ities of logs and sawn t imber weredocumented entering Peninsular Malaysia from


EIA/Telapak investigations uncovered large commercial trade in ramin and other tree species from Kalimantan to Batu Pahat


17/3615


The ship was found to have 42 containers of timber onboar d, but only seven had the pr operdocuments. A company called CV Brata, linkedto a police foundation, owned 16 of the illegaltimber containers. 20

In August 200 0 Indon esian aut horitiesstopped a cargo ship off Riau. It was loadedwith illegal meranti an d was bo und forSingapore. 21 As a major p ort Singapore alsoplays a key role as a transit point for illegaltimber bound for international markets.Singapore, a small island state, has 181

timber import ers and export ers listed in thetelephone directory.

Indonesia to ChinaThe Indonesian timber industry has voicedconcerns that the growing supply of illegal

timber to China is undermining the legitimatemarket. It is alleged tha t export s had dr oppedby more than one million cubic metres a yeardue to the availability of cheaper illegal suppliesfrom Kalimantan and Sumatra. 22

Left: Batu Pahat,PeninsularMalaysia, 9thAugust 2001.Indonesian shipsunloadingunmarked timber


Left: The shipProgress A wasintercepted in

Sumatra en routeto Singapore witha cargo of illegaltimber

T e l a p a k I n d o n e s i a


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22/3620

A Case Study: The Ramin Racket

to be extremely difcult despite the promise bythen President Abdurrahman Wahid to removeRasyids parliamentary immunity to prosecution.Despite the existence of an ofcial dossiercompiled by the then Secretary General of theForest Ministry detailing breaches of the law byRasyid and his companies, no legal moves ensued.After almost two years of prevarication, it took anew Attorney General to seek the immunity fromthe President, which once granted, opened thecase. 11 Sadly, Attorney General Baharuddin Lopadied of a heart attack in July 2001 and it iscurrently unknown whether this case will bepursued by the new administration of PresidentMegawati Sukarnoputri.

The Loggers

During the last three years there have beenthousands of loggers within Tanjung PutingNational Park working for a group of timberbrokers serving as middlemen. It has beenpossible to watch the speedboats ferry the

middlemen up the rivers with supplies and wagesto keep their teams of men in the forest. Anylocal person nearby can tell you who themiddlemen are and which part of the Park theyare logging.

The loggers work in appalling conditions,living in the swamp with mosquitoes andleeches as part of the daily hazards, sometimesfor weeks on end. A small chainsaw gang of about three people heads the team, with afurther group of ve to eight people totransport the logs along wooden rails builtthroughout the forest. 12 In recent months steelrails have been laid in the pa rk and roads havebeen constructed for tr ucks to carry timber outof the east of the park . 13

The workers come from a ll over Indonesia,including local communities. Some of them

found working in the Park recently were loggerswho had previously worked in Malaysia. Othersare from Java and Lombok, and other parts of Kalimantan. The loggers earn a payment of around 25,000 rupiah (US$2.20) for each cubicmeter of ramin felled. 14

The MiddlemenThe lawlessness in Central Kalimantan and theriches of Tanjung Puting National Park havenoticeably changed the fortunes of certainmembers of the local community. The localport of Kumai was never the scene of abjectpoverty, but it supplied timber to a eet of sailing ships bound for Surabaya, Jakarta andKuching. A few hostels providedaccommodation for seamen and tourists whocame to Kumai to rent a small boat o rspeedboat to visit the Park.

By 1999 most of the boat ow ners haddiverted their bu siness from tourism to thetransport of illegal timber. At times it has been

difcult to nd an available boat becausevirtually all of the large eet of small boats andspeedboats were towing ramin log rafts ortransporting loggers and middlemen with theirsupplies into the Park. 15

New sawmills, mainly working with ramin,have sprung up in the area each providing newwork and a few Kumai residents havespearheaded the looting of the Park. This isdespite no new permits for sawmills being issuedsince the late 1980s. 16 These individuals haveorganised the logging teams, provided theirsupplies, chainsaws and fuel.

This lawlessness has created its ownproblems, with power struggles and argumentsalso falling outside the law. The headquarters

Below: Illegallylogged ramin inTanjung PutingNational Park,9th August 2001


The loggers earn a payment of around 25,000 rupiah (US$2.20) for each cubic meter of ramin felled


23/3621


of the National Park were burned to theground a nd one of the ringleaders of therioters was a prominent timber middlemanknown to be operating in the park. 17 Sincethen, arguments have ared and fuelled ethnictensions resulting in the murder of localpeople. Ethnic violence has forced manyresidents to ee and this once peaceful portsuffers from a strong undercurrent of fear.

The massive extraction o f timber from thepark has tran sformed the climate in the nearbytowns of Kumai and Pangkalanbun

The Enforcement AuthoritiesEnforcement within Tanjung Puting Nat ional

Park should be a relatively easy operation. Theillegal logs are oated down the main riversystems to the sawmills outside the Park. Itwould take very little enforcement activity topermanently patrol these few river systems andprevent the passage of logs. Permits are alsorequired to be in the Park and anyone withoutthis permit could be arrested.

Yet at the core of the issue of illegallogging of ramin and other species iscorruption . This reaches all levels of societyincluding the enforcement authorities.Throughout the destruction o f Tanjung Putingand other areas within Central Kalimantan,most of these authorities have been silent. Insome cases, evidence has surfaced showing

collusion between these enforcement authoritiesand the timber barons and middlemen. 18

After pressure has been applied on centraland provincial government, there have beenenforcement sweeps when ramin logs havebeen conscated. Each operation usually lastsonly a few days and the loggers are pre-warnedso that they clear out of the forest. When t heoperation is over, the loggers return.

Conscated logs are held by the police andhave been auctioned. Observers have noted thatin some cases, the logs are already being loadedonto barges by local illegal sawmills before theauction has taken place. 19 Those accused of organising the illegal logging are often thebuyers of the conscated timber. In January

2001 alone around 20 ,000 cubic metres of illegaltimber from the park seized by the au thorities,the majority of which was ramin, was auctioned.

The quant ity of illegal ramin taken from thePark over the last few years is staggering. Thelegal cut of ramin set by the Ministry of Forestry for forest concessions for 2001 was24,000 cubic metres before a morato rium wasimposed 20 . Set against this background thecommercial nature of the plunder of the park isrevealed. In 1999 and 2000 steel barges eachloaded with about 2,000 cubic metres of ramincould be seen in Kumai Bay opposite the Park infull view of the authorities. Each week aboutthree of these barges left the bay representing anannual theft of over 300,000 cubic metres.

Left: Sawmill nearTanjung PutingNational Parkprocessing ramin,April 2001

S a m L a w s o n , E n v i r o n m e n t a l I n v e s t i g a t i o n A g e n c y / T e l a p a k

at the core of the issue of illegal logging is corruption


24/3622


The only police activity witnessed byindependent observers was harassment of tour ists taking photographs of these barges. 21

The M inistry of Forests has attempted t oinvestigate the illegal logging of Tanjung Put ingNa tional Park on a number of occasions. Theresults have not been made public although theformer Secretary General of the Ministry of Forests has made many public statements,presumably based on these investigations. Thepark staff have been overwhelmed by theloggers and it is easy to see why they could notprevent the illegal logging without police ormilitary backup. Yet some of the staff have alsoreceived payment from the loggers.

During the kidnap of two environmentalistsin Pangkalanbun in January 2000 by the timberbarons company executives, it became clear that

the local Police Chief Koto was acting in theinterests of the company. Koto unsuccessfullytried to persuade the EIA staff member to leaveher Indonesian colleague behind, leaving nodoubts as to his role in working for the interestsof Tanjung Lingga. 22

The local justice system also failed in thiscase by placing the two company executives onthree months proba tion for their violence.Nobody really expected the local court toprovide any justice when the timber baronscompany executives were accused.

The PoliticiansMoney politics has created a system o f endemic corruption in Indonesia and manylocal, provincial and national politicians havesuccumbed to it. In fact it is where they buildup most of their wealth. The local districtgovernors are able to buy their positions orthey are bought for them, and their investmentis easily returned by the vast opportunities to

extract money from every element of districtlife including logging.

Members of the local Central Kalimantanbranch of Indonesia Corruption Watch statedthat the provincial parliament in Palangkaraya isabout 95 per cent ruled by money politics. 23

The rise of timber baron Abdul Rasyid isillustrative of the links between the illegal timbertrade and corruption. H e has used the illicitwealth garnered partly through the looting of ramin from Tanjung Puting to become a politicalforce, rst in Central Kalimantan and thennationally. When the national and internationalpressure increased to take action to stop thecommercial illegal logging of the park andRasyid had been publicly named as the main

Tanjung Puting National Park is a 400,000 hectare conservation area ofglobal importance, providing an island of biodiversity amid the rapidlydiminishing forests of Borneo. It is recognised as a world BiosphereReserve by the United Nations 50 and forms the largest protected area ofswamp forest in South-East Asia.51 It is one of the few remaining habitatsfor the endangered orangutan.

The park embraces tropical heath forest, mangrove and peat swamp

forest. It contains a number of commercial tree species including ramin(Gonystylus spp .) and meranti (Shorea spp. ) as well as over 200 birdspecies, 17 reptile species, and 29 mammal species includingendangered species such as the estuarine crocodile, clouded leopard,Malayan sunbear and Storms stork. 52

Nine of Borneos thirteen primate species occur in the park, includingthe orangutan, the proboscis monkey, the agile gibbon and the silveryleaf-eating monkey.

Recent estimates by the Indonesian Ministry of Forestry state thatabout 40 per cent of the park has already been damaged by illegallogging and forest res.

Tanjung Puting NationalParks Biodiversity

E n v i r o n m e n t a l I n v e s t i g a t i o n A g e n c y


25/3623


Ramin (Gonystylus spp.) is a tropical hardwood tree species, occurringin peat swamp and lowland freshwater swamp forest in Borneo,Sumatra and Peninsular Malaysia. It is widely used for furniture,dowels, picture frames, futons, snooker cues, and mouldings. It is themost valuable commercial tree species in Indonesia and has beencommercially logged-out in most of its range. Protected areas are theonly areas where quantities of large trees still exist and most of theseare now being illegally logged.

It occurs in a number of protected areas throughout Indonesia,including

In Kalimantan: Tanjung Puting National Park, Lake Sentarum NationalPark, Gunung Palung Nature reserve, Mandor Nature Reserve, Muasra

Kaman Nature Reserve, Gunung Penrisen/Gunung Nyiut Game Reserve,Pleihari Martapura Wildlife Reserve.53

In Sumatra: Gian-Siak Kecil Wildlife Reserve, Danau Bawah and PulauBesar Strict Nature reserve and Berbak Game Reserve. 54

Ramins Last Standculprit, the then Governor of CentralKalimantan set up a committee to take over theprotection and ma nagement of the Park . Rasyidsbrother Ruslan was app ointed as its chair. 24

Rasyids company also received new forestconcessions in 2000.

At a national level certain politicians haveclearly stood in the way of any action beingtaken. Others have expressed helplessness atthe situation. Despite professed Presidentialsupport to ght illegal logging, the instability of the Wahid government contributed to thecontinuing decline of this Park.

Indonesia is under extreme economicpressure and donors to this fragile economyhave used their weight to try to see some actionagainst illegal logging. Foreign donorsorganised under the Consultative Group on

Indonesia including the USA, Japan, Europeancountries and the World Bank have repeatedlysought and received assurances that illegallogging in Nat ional Parks was a priority forthis government. The donors have recognisedthe economic import ance of the forests and tha tthis could be one wa y to push for bettergovernance in Indonesia.

It is in this political climate that the formerMinister o f Forests Marzuki Usman must begiven credit for taking the rst action necessaryto curb the logging within Tanjung Puting. InApril 2001 he issued a Ministerial decree 25 toplace a temporary moratorium on the cuttingand t rading of ramin. To support this initiativehe also notied the secretariat of theConvention on Internationa l Trade inEndangered Species (CITES) tha t Indonesia wasplacing its ramin on Appendix III of CITESwith a zero quota.

With this initiative the Indonesian governmenthas placed some responsibility for ramin timbertheft on the importing countries. They are now

bound by their CITES implementing legislation toprevent imports of Indonesian ramin after August6th 2001 when this CITES listing becomes active,with the exception of stockpiles and ramin fromDiamond Raya Timber, a companycontroversially certied in spring 2001.

The International tradeA huge amount o f timber looted from TanjungPuting over the last few years has been sold onthe international market. A sophisticatednetwork o perates to move ramin stolen fromKalimantan and Sumatra onto the internationalmarket, with Malaysia and Singaporeeffectively laundering t he plundered t imber. At

the centre of the Kalimantan network lie theports of Pontianak in West Kalimantan ,Kuching, the capital of the Malaysian state of Sarawak , and the state of Johor in PeninsularMalaysia

Brokers from Kuching often travel acrossthe border to deal directly with theircounterparts in Pontianak, who then pass theorder further down the chain to local loggingbosses. One such boss is the owner of Kumai-based company UD Muslim Halim, accused bythe Indonesian government of illegallytransporting timber to Malaysia. 26

The Pontianak-based brokers play a keyrole in facilitating the transport of illegal timberfrom Central Kalimantan. In June 1999 the

authorities seized the barge Sinar Pawan II withillegal ramin on board. Shipping recordsrevealed that t he barge was owned andoperated by a Pontianak-based company. In thesame year EIA and Telapak investigatorsobserved another Pontianak-registered barge,Sapphire 7, loading illegal ramin. The cargovessel Femini I, owned by a Pontianak-basedrm, has been observed on two occasionsloading illegal ramin from sawmills on theSebangau River.

Malaysia is a crucial pivot in theinternational trade in illegal ramin. As thecountrys own supplies have been over-exploitedand fallen dramatically, its industry has movedto secure fresh sources by exploiting the situation

Malaysia is a crucial

pivot in the international trade in illegal ramin


26/36

RIAU

PENINSULAR MALAYSIA

M A L

I

SINGAPORE

Kuala Lumpur

Melaka

Batu Pahat

Johor Bahru

Kuala Gaung

S U M A T R A

Illegal ramin being loaded in Riauon board a vessel owned by a

Singapore-based company

Illegal Indonesian timberat Melaka, PeninsularMalaysia, August 2001

National Parks and other protected areas containing ramin

Routes taken by illegal ramin timber

H a k

i k i , E n v

i r o n m e n

t a l I n v e s t

i g a t

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A g e n c y

/ T e l a p a k

24



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CENTRAL KALIMANTAN

WEST KALIMANTAN

EAST KALIMANTAN

SARAWAK

SABAH

A Y S I A

N D O N E S I A

Jakarta

Sibu

Kuching

Pontianak

Palangkaraya

Tegal Semarang

Pangkalan Bun

Kumai

Kuala Pembuang

Lubok Antu

Sematan

Sebangau River

A V A

Illegal Indonesian ramin from Malaysia,Singapore and Indonesia enters the world market

Japan, Taiwan, US, UK, Italy, Hong Kong andmainland China are some of the major destinations

Indonesian boats carryingillegal Indonesian timber,

Sematan, Sarawak, Malaysia

Illegal ramin log raft in theSebangau River basin, May 2001

E n v

i r o

n m e n

t a l I n v e s t

i g a t

i o n

A g e n c y

/ T e l a p a k

An orang-utan in TanjungPuting National Park

D a v e

C u r r e y ,

E n v

i r o n m e n

t a l I n v e s

t i g a t

i o n

A g e n c y

Environmental Investigation Agency/Telapak

25



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in neighbouring Indonesia. EIA/Telapak havewitnessed ramin stolen from Indonesia enteringMalaysia through Melaka, Batu Pahat, Sematanand Lubok Antu.

Almost all of Sarawaks peat swamp forests the habitat of ramin - have been logged over atleast once 27, and as early as 1990 a mission byITTO reported that ramin was being heavilyovercut. 28 In 1989 Sarawak produced 620 ,000cubic metres of ramin a year, but by 2000 thishad fallen to just 67,000 cubic metres. 29

Ramin enters Sarawak at checkpoints run bythe government owned Harwood TimberCompany. At Sematan ramin has been observedstored at the Harwood facility. The company has

built a large riverfront quay and storage yard tocope with the steady stream of Indonesian boatscarrying their illegal cargo.

Illegal Indonesian ramin also passes throughthe land border crossing at Lubok Antu, and feedsthe sawmills clustered in Sibu, Sarawak. Raminillegally logged from the protected area of LakeSentarum in West Kalimantan is gathered at thetown of Lanjak, and transported by road toLubok Antu. Industry sources estimate thatbetween 10 and 20 per cent of the 500,000 cubicmetres of timber passing through Harwoods threedepots is ramin. 30

Sawmills in Peninsular Malaysia also protfrom illegal ramin supplies. Although it hasvirtually no swamp forest left, exports of raminfrom Peninsular Malaysia have soared during thelast few years. In 1999 exports of sawn ramin

from Peninsular Malaysia jumped to 24,000 cubicmetres by 122 per cent compared with theprevious year. Between January and September2000 exports were recorded at over 31,000 cubicmetres, a rise of 82 per cent compared with thesame period in the previous year. 31

The roundwood equivalent of these sawnramin exports is of a similar magnitude to theramin production in Sarawak for 2000, revealingthat Malaysias legal ramin production for thatyear is almost accounted for by exports of sawnramin from Peninsular Malaysia alone, withouteven considering Sarawaks large wood processingsector or exports of nished ramin products suchas mouldings.

The answer to this conundrum can beobserved in the ports along the west coast of Peninsular Malaysia. In August 2001 EIA/Telapak uncovered a ourishing business in illegallysourced Indonesian ramin in Batu Pahat in thestate of Johor. An Indonesian barge Sumber MasXV fully loaded with unmarked ramin logs and afew meranti logs from Kalimantan was observed

at a wharf and factory complex owned by E.S.Ng Holdings Sdn Bhd on 9th August 2001. It hadarrived that same day and staff at the timber yardexplained that this barge brings logs once amonth from Kalimantan. The yard wasexpanding with a new quay being developed. Ithad large storage areas, saws and drying facilitieswith a new kiln. It also had moulding machineryand stacks of moulded timber were stored incovered areas. 32 A worker at the factory toldEIA/Telapak that the company also transports

some of the imported timber directly to a sawmillin Johor Bahru. A subsidiary of E.S NG Holdingsknown as Jaya Fuda Timur, runs a largemouldings factory in a timber industrial site atTanjung Manis, near Sibu in Sarawak and has a

Below: Smuggledlogs from Indonesiabeing unloaded atMelaka, PeninsularMalaysia, 11thAugust 2001


Below: Kalimantan barge Sumber Mas XV laden with ramin, docked nearBatu Pahat, Peninsular Malaysia, 9th August 2001



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27

third operation at Bintulu, Sarawak. 33

Ramin also comes ashore at Melaka, shippedby small wooden boats from Riau. According toa crew member on one of the timber ships abusinessman buys ramin for Rp 200,000 (aboutUS$30) per tonne in Riau and sells it in Melakafor 900 Malaysian Ringit (about US$240) pertonne. The ramin is both processed locally andtransported north to Kuala Lumpur.

In June 2001, 360 tonnes of ramin was seizedby customs ofcials in Riau Province. Two ships,KM Aiwan Jaya and KM Iqbal, were seized and athird escaped. The ships were on their way to BatuPahat in Malaysia. 34 Ramin illegally logged inneighbouring Jambi Province is also destined forMalaysia. A local NGO has reported widespreadillegal logging of ramin in Berbak National Park,with over 130 tonnes being shipped to Malaysia

between March and June 2000.35

This inux of illegal ramin into Malaysia ismotivated by high prices paid for this valuablespecies. While other commercial species logged inMalaysia such as meranti and keruing fetchbetween RM600 ($158) and RM800 ($210) percubic metre for sawn timber, ramin is worthbetween RM1,400 ($368) and RM2,700 ($710)per cubic metre. 36

The burgeoning trade in ramin from Indonesiais also reected in Singapores trade statistics,which indicate a rapid rise in sawn ramin exportsfrom 6,155 cubic metres in 1997 to 47,100 cubic

metres in 2000. The dubious source of much of this timber is indicated by the fact that whilecustoms gures for Singapore recorded no importsof sawn ramin from Indonesia for 1998 and 1999,Indonesian gures show exports worth $500,000for the same period. 37

In August 2000 an NGO documented illegalramin being loaded onto barges in Kuala Gaung,Riau. The barges and tugboat carried the insigniaof a timber company with eld operations inSumatra and its headquarters in Singapore. At thistime legitimate concessions in this area had allexpired. 38 Riau police also seized 100 tonnes of processed ramin in Kuala Gaung in March 2001and arrested two boat captains. This timber iswithout any legal documents and is beingsmuggled to Singapore with a sale value of morethan Rp 10 billion, because the price can reach up

to hundreds of million rupiah per tonne statedthe Riau police information ofcer. One of thearrested men claimed that 45 boats carry timberbetween this area and Singapore every day. 39

In mid-August 2001 a telephone survey of Singapore timber expor ters revealed that onebroker was expecting imminent delivery of ashipment of sawn ramin from Kalimantan, despitethe export restrictions on Indonesian ramin whichhad come into force over a week earlier.

Taiwans imports of sawn ramin indicate avast increase since 1997 while export statistics forthe same period from Indonesia indicate the trend

Ramin beingloaded onto abarge owned bya Singapore-basedcompany, Riau,Sumatra

H a k i k i , E n v i r o n m e n t a l I n v e s t i g a t i o n A g e n c y / T e l a p a k

In June 2001360 tonnes of ramin were seized by customs ofcials in Riau Province


30/3628


going in the opposite direction (see table). 40

Less than one tenth of the sawn ramin importedinto Taiwan in 1999 had been recorded as legallyexported by Indonesia. This can be explained bythe increase in illegal logs during this period notbeing included in Indonesian statistics.

Analysis of po rts o f call by vessels knownto transport illegal timber illustrates theregional d imension of the prob lem. TheProgress A cargo vessel owned by AbdulRasyids company was seized in August 2000carrying illegal logs. 41 It was bound forSingapore and its voyage history shows it hascalled at Singapore, Bangkok (Thailand) andJiangsu Province, China as well as Indonesianports including Pangkalan Bun near TanjungPuting National Park since 1999. Rasyidsother ship Ginza has visited Thailand,Malaysia, Singapore, Taiwan, China allmajor consumers of ramin timber as well

as ports in Indonesia. 42

The ConsumersRamin provides a clear example of theculpability of consuming nations in helping todrive illegal logging and illegal timber trade.Ramin is a high value species used in expensivefurniture, wooden blinds and picture frames

there is little demand for it in the countrieswhere it grows. Most of th e timber nds itsway to a small number of rich importingcountries, either in the form of raw timber ortimber pr oducts. Ma jor end-consumers includeG8 members such as the USA, Italy, Japan andthe UK, while Singapore, Hong Kong, Taiwanand mainland China, are also prominent asconsumers or transit countr ies. 43

Importers and consumers have taken littleresponsibility for the legality of the sourcing of their timber. While ramin is illegally logged inIndonesia, and Indonesian ramin is launderedthrough the only other country where thespecies commercially originates Malaysia allramin is potentially tainted and none should beaccepted. This lack of action by consumingnations is partly attributable to ignorance, but

as the issue of illegal logging becomes morepolitically controversial and publicly debated,consumers are likely to show concern.

Already Lowes, th e second largest homeimprovement company in the USA has stoppedusing ramin because of concern over its legalityat source. 44 A number of other high proleretail outts in the USA and Europe are likelyto follow suit unless action is taken to removeillegal timber from the supply chain.

The economics of the internationalillegal trade in ramin

Logging gang in Tanjung Puting NationalPark, Indonesia receives $2.20 per m3

Broker buying illegal ramin in Riauprovince, Indonesia pays $20 per m3

Broker selling ramin in Melaka,Malaysia receives $160 per m3

Buyer of ramin sawn timber inMalaysia pays up to $710 per m3

Exporter of sawn ramin (S4S) inSingapore charges $800 per m3

Buyer of moulded ramin in US pays $1,000 per m3

Below: Raminblinds on sale in theUK. August 2001

D avid Simms/Environmental Investigation Agency

Discrepancies in ramin trade from Indonesia to Taiwan1997 1998 1999

Imports of sawn ramin fromIndonesia reported by Taiwan 721,828 1,986,807 8,125,507

Exports of sawn ramin to

Taiwan reported by Indonesia 1,730,033 659,894 611,002


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Combating Illegal Timber Trade

29

Combating IllegalTimber Trade

The main consuming markets continue to protfrom cheap illegal timber, with scant regard forthe impact on remaining tropical forests andthe corruption and violence engendered byrampant illegal logging. The EU, US, Japan andChina must implement policies to curb theinward ows of illegal timber as a matter of urgency. Possible policy solutions include:

Use of Existing InternationalAgreements

The Convention on International Trade inEndangered Species (CITES) regulates trade inora and fauna between its 170-plus membercountries. It serves to conserve endangeredspecies through the operation of trade contr ols,ranging from regulated trade to an outright ban.

In the absence of any other relevant

legislation , a listing under CITES is currentlythe only means by which importing countriescan seize timber which was sourced illegally.

In April 2001 the government of Indonesiainformed the CITES Secretariat of its intention

to place ramin on Appendix III with a zero

quota. Through this measure Indonesia iseffectively calling on t he internationalcommunity, especially the major tropical timberconsumers, to assist in conserving a threatenedtree species that is a prime target for illegallogging gangs.

This measure became effective on 6thAugust, and outlaws importat ion of Indonesianramin by any party to CITES, with theexception of stockpiles and a small quantity of FSC certied timber. Already EIA/Telapak havedocumented ramin being openly smuggled intoMalaysia since this listing became effective.Implementation of CITES remains a problem,but the use of such a powerful and pre-existingmechanism may be appr opriate for othercommercial timber species threatened byrampant illegal logging.

Procurement PoliciesAt the 2000 G8 Summit in Okinawa, Japan,the w orlds leading economies plus Russia

undertook to examine how governmentprocurement policies can be tailored toeliminat e illegal timber. Th e UK governmenthas taken the lead in t his area, announcing anew policy binding all central government

Above: Indonesian

logs laid out infront of storageareas and kiln atE. S. Ng Holdingsnear Batu Pahat,Peninsular Malaysia



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Combating Illegal Timber Trade

timber products. Already, in the case of fauna,the US Lacey Act makes it a criminal offence toimport any fauna or fauna product which wastaken or sold in violation of the laws of thecountry of origin.

Customs authorities have a crucial role toplay in clamping down on cross-border timbersmuggling and the importation of timber illegalat source. However, currently none of the majorimporters of tropical timber have legislationempower ing customs ofcers to seize timberand t imber products proven to have beenobtained illegally at source.

In February 2001 the Senior Vice Ministerof Agriculture, Forestry and Fisheries for Japanstated that his ministry was considering animport ban on wood obtained through illegallogging, especially from South-East Asia. The

Vice-Minister expressed Japa ns intention tolead the world in establishing such a ban,saying that setting up a wall at the consumingcountry end would help reduce illegal logging,but no further details have emerged since. 5

Laws are worthless without effectiveenforcement. Improved customs resources andcooperation and border surveillance is also needed.

Regional Co-operationIt is essential that governments in theproducing regions develop means to co-operate with each other t o pr event launderingof illegally-sourced timber and timberproducts by neighbouring countries. This willrequire genuine political will from the leaderswithin the region.

The Forest Law Enforcement andGovernance Conference in Bali in September2001 gives Ministers from East Asia anoppor tunity to d iscuss co-operation andincreased border controls.

Is also vital that an assessment of industrycapacity is looked at in the regional context.The overcapacity of industry in most countriesin East Asia has already exacerbated the illegallogging of valuable forests. Unilatera l loggingbans to protect nat ional resources haveimmediately put pressure on other countries inthe region.

Penalties for illegal activities in forestrydiffer greatly and are r arely effectively imposed.A look at the effectiveness of nationallegislation on this issue would be useful formany countries and lessons learned byneighbouring countries are likely to be crucialin the development of effective legal structures,penalties and enforcement.

Strengthening Civil Society andLaw Enforcement

There has been a serious breakdown of lawenforcement in many countries in the region.This has been due to different factors but it isrecognised in some countries that lawenforcement agencies are involved in protingfrom illegal logging.

Ow nership of the resources and theempowerment of local communities havebecome difcult and contentious issues in manycountries. But there will have to be recognitionof the importance of involving localcommunities in many of the decisions regardingforestry. The strengthening of civil society willcreate open debate, greater tra nsparency andmore information. Independent monitoring of

forest resources will have to involve localcommunities and non governmentalorganisations. In the last few years strongerlinks have been forged between local NGOsand communities with international NGOs andgovernments. A vast knowledge of the illegalindustry has been built from these sources and,in part, the open discussion of illegal logging isalready due to these links.

Left: Training inforest monitoring,Indonesia


The overcapacity of industry in most countries in East Asia has exacerbated illegal logging


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Conclusions and Recommendations

Conclusions

Illegal logging rates in the major tropicaltimber producing countr ies are at least equalto the legal harvest 50 per cent inCameroon, 73 per cent in Indonesia and 80per cent in the Amazon. The global illegaltimber trade is a multi-billion dollar industry.

Consumers of illegally-sourced timber andtimber products have no mechanisms in placeto seize the timber and timber products.

Declarations by the G8 and other timberconsuming countries on illegal logging areyet to provide any practical steps to curbthis illegal trade.

Chain of custody information is difcult toaccess in an industry that is unregulated andout of control.

Some governments within South East Asiahave extr eme difculty in tackling illegallogging which, in part is driven by hugeconsumer demand. Unilateral policies in theregion have failed to tackle the problem.Regional cooperation is needed.

Law enforcement agencies in some countrieshave been unable to tackle widespreadcorruption which is often dr iven by the

political or military elite.

National Parks are being illegally logged inmany parts of South East Asia since theycontain some of the last remainingcommercially valuable t imber.

In Indonesia, even huge publicity andevidence has failed to bring timber barons,such as Abdul Rasyid, to justice.

Civil society in many countries has notproven strong enough to tackle widespread

political and military corru ption. Traders in illegally-sourced timber and

timber products easily use corruption to gainfalse paperwork and smuggle the timber.

Massive qua ntities of illegally-sourced t imberare traded around the East Asia region a ndto international markets.

Investigations show that huge quantities of illegal logs and sawn timber are regularlytransport ed from Indonesia to Singapore andMalaysia and laundered into theinternational system.

CITES is currently one of the only internationalmechanisms available to legally controlinternational trade in threatened tree species.

Recommendations

For Major Timber Importing Nations

Enact legislation which prohibits the importand sale of illegally-sourced timber and

timber products.

Provide political will and resources forenhanced bor der controls to prevent theimport of illegally-sourced timber and timberproducts.

Develop government procurement policieswhich require sources of timber and timberproducts to have come from demonstrablylegal sources.

To require industry to adopt transparentchain of custody processes which allowstimber tracking from source to ma rket.

Provide nancial and technical support totimber producing countries to combat illegallogging and trade in illegally-sourced timberand timber products.

Support enforcement efforts in timberproducing countries by activities such asincluding forest crimes in their embassyenforcement staff mandate.

For Timber Producing Nations in South-East Asia

Use CITES Appendix III listings to control thetrade in threatened tree species, such as ramin(with a zero quota) in Indonesia.

Formalise a system of cross-border cooperationbetween national enforcement authorities,focusing on major smuggling routes.

Enact legislation allowing the conscation of illegal timber and those dealing in it outsidethe country o f origin.

Conduct a regional assessment of futuretimber requirements and form policy as agroup, to prevent national instruments suchas logging bans creating adverse impacts inneighbouring countries.

Include forest crime in the ASEAN(Association of South-East Asian Nations)forum on trans-national crime.

Review national legislation in all ASEANmembers relating to illegal logging and timbersmuggling, including evaluation of penalties.

Provide alternative employment andopportunities for communities living in areasthat are heavily illegally logged.


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References

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timber traffickers

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