Indonesia's Protected Forests Now Open to Development

Indonesia continues to have one of the highest rates of deforestation in the world. (Reuters Photo/Yusuf Ahmad)

President Susilo Bambang Yudhoyono has signed a decree to allow mining, power plants and other projects deemed strategically important to take place in protected forests.

The decree, which took effect on Feb. 1, is certain to anger environmental groups given that the country already has one of the fastest rates of deforestation in the world.

“The use of forest areas for development activities can be done for unavoidable strategic purposes,” said the decree, which said key development projects included power plants, renewable energy, toll roads and train lines.

The decree said open-pit and underground mining could take place in production forests, which is a forest area considered neglected or abandoned after trees have been cut.

“In a protected forest, mining can be done through underground mining,” the decree said.

The decree defined mining activities as including oil and gas, minerals, coal and geothermal.

Yudhoyono has pledged to cut red tape and prevent overlapping regulations from slowing down projects ranging from mining to toll roads. Increasing exploitation of mineral resources and speeding up infrastructure development are seen as keys to boosting growth and creating jobs.

State-owned oil and gas company PT Pertamina has urged the Forestry Ministry to allow geothermal activities in protected forests as most of the country’s geothermal reserves are located in these areas.

There has frequently been confusion over whether companies can exploit resources in forest areas, with various ministries requiring permits.

The Forestry Ministry recently asked Freeport McMoRan Copper and Gold to submit a request to use land in a protected forest area, a ministry official said on Tuesday. Freeport operates the huge Grasberg copper and gold mine in Papua. Grasberg has the world’s largest recoverable reserves of copper and the largest gold reserves.

In 2004, the government allowed 13 mining firms, including Freeport, to continue mining operations after the introduction of a law in 1999 that banned open-pit mining in forested areas.

Last month, police temporarily shut the Jorong coal mine in Kalimantan operated by a unit of Thailand’s top coal miner, Banpu, over a permit problem. Banpu said the closure would only have a slight impact on production at its domestic unit, PT Indo Tambangraya Megah.

Indonesia has struggled to attract fresh investment into mining, as well as for developing new oil and gas fields, partly due to uncertain regulations and red tape.

The government has previously said it expected mining investment to hit $2.5 billion this year, up from $1.81 billion in 2009, supported by greater certainty after the introduction of new mining regulations.

Reuters