Transboundary Haze Pollution:

Policy recommendations for Indonesias next

government.

Nicols H. Martins

November 2013

Policy Brief submitted as part fullment of course requirement of Government, Markets & Global
Change (CRWF 8000), Crawford School of Public Policy,
The Australian National University

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THP: Policy recommendations for Indonesias next government.

1. Introduction
Transboundary Haze Pollution (THP) is a persistent policy concern that remains
unresolved in the Indonesian government agenda since 1997, when extensive forest and
peat fires in Sumatra and Kalimantan, combined with a climate phenomenon called El
Nio, resulted in the worst haze of the century, affecting several countries in the SouthEast Asian region (Byron & Shepherd 1998). Although Indonesia and the ASEAN
community have introduced a number of policy measures to address this issue, such as
zero-burning provisions, fire-fighting funding and training programmes (Mayer 2006),
local and regional efforts continue to fall short, as last Junes episodes of haze reflect
(Kwok 2013; Hunt & Quiano 2013; Channel Asia 2013).
The key issue behind THP is the lack of economic incentives from major stakeholders
in Indonesia to shift from traditional agricultural practices including illegal timber
logging and slash-and-burn deforestation for rice and palm-oil plantations to
environmentally sustainable ones. The central and local governments, international
firms, land-owners and local communities in Indonesia benefit from fiscal receipts,
profits and jobs derived from these economic activities, while the main costs in terms of
carbon emissions, public health, transportation and biodiversity loss are born by the
neighbouring countries (Tacconi 2003; Murdiyarso et al. 2004; Sodhi 2009; Thakur &
Foo 2013). The weak environmental governance (Parnell 2013) and existing corrupt
practices in Indonesia (Sentana 2012), along with ASEANs principle of noninterference, in turn, reinforce the problem.
This paper presents two policy solutions for the next Indonesian president. The first one
focuses on improving domestic governance through the development of better
regulation, enforcement mechanisms and compliance at the country-level, while the
second one relies on streamlining the ASEAN Agreement on THP (AA-THP) through
greater cooperation from the international community. Due to the underlying vested
interests in the continuation of current agricultural practices and the growing external
pressure from neighbouring countries, I conclude that a regional-global policy
alternative could be more effective at addressing the haze through a socially and
ecologically resilient strategy that internalises global social costs (Adger 2000).
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2. Alternative strategies to tackle THP.

2.1 Improving governance: amend zero-burning law, centralise responsibility and
increase transparency.
Indonesias blanket ban on burning is unrealistic and unenforceable because it does not
take into account different fire contexts. In the last decade, the haze has been mainly
caused by fires on peatlands rather than forests fires (Miettinen et al. 2011; Yulianti et
al. 2012). Furthermore, the palm oil industry has increasingly been identified as the
main originator of the haze (Cheam 2013; Reyes 2013), whereas there is no evidence
that slash and burn agriculture is an important source of catastrophic fire (Tacconi &
Vayda 2006). While the worlds top brands, such as Unilever and Cargill, have
committed to increasing their environmental compliance (Schonhardt 2013; BBC News
2013), Malaysian and Singaporean investors control more than two-thirds of Indonesian
palm plantations and are accused of being the main culprits (Varkkey 2012). Therefore,
the zero-burning policy should be amended so that, similar to the Malaysian approach,
controlled burning for smallholder shifting cultivators is allowed except in peat soil
(Mayer 2006). Hence, a more finely differentiated regulation should help central and
local governments to concentrate their monitoring and punishment efforts on industries
and geographic areas which have been identified as the main sources of haze generation.
In terms of government oversight, the lack of coordination among ministries,
overlapping authority issues among local agencies and split responsibility between fireprevention and fire-suppression activities have led to strong deficiencies in the
institutional capacity required to address Indonesian fires (Jones 2008, p. 69). The postSuhartos regional devolution resulted in the spread of smaller-scale logging and land
clearing rights that boosted provincial and local government revenues which, in turn,
overlooked environmental risks (Tan 2005). The proliferation of poorly enforced local
rules added to the confusion surrounding regulatory prerogatives, which was further
seized by the existing web of political patronage in the form of collusion between
regional state officials and plantation companies, as well as through irregular
subcontracting practices (Mayer 2006, p. 213-14). Therefore, the concentration of
enforcement powers in only one national ministry, either in Agriculture, Environment or
Forestry, along with exemplary economic sanctions, could help to increase the states
regulatory capabilities. Furthermore, as the Human Rights Watchs report (2013)
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suggests, the central government should amend the timber verification system to
include assessment of government and company compliance with laws protecting local
land rights and compensation agreements, issue a presidential instruction excluding
traditional territories from state forest and industrial concessions, incorporate clear and
transparent legal standards into the accredited monitoring system (SVLK), and
review existing timber and palm-oil concessions prior to lifting the moratorium on new
permits for clearing natural forest (p. 11).
Finally, in terms of transparency, the central government should clarify provisions for
the penalties derived from unlawful use of public information in the Freedom of
Information Law and the State Intelligence Law (UCL Constitution Unit 2013). Greater
efforts through community capacity building should, in turn, be pursued at local
bureaucracies, where the provision of public information is deficient or hampered by
government officials (OpenGov 2013). Thus, common citizens and NGOs would be
able to access public information on logging concessions and maps of industrial
plantations without being afraid of legal retaliations from affected parties (Gaveau &
Salim 2013).
2.2 Promoting a stronger regional-global commitment based on recent AA-THP efforts.
Greater commitment from the international community could help to achieve the
necessary land management and governance reforms to mitigate the haze in Indonesia.
Although recent regional and international initiatives have partially addressed the
symptoms of THP by enacting zero-burning policies and improving fire-management
capabilities in Indonesia, their soft and imprecise recommendations lacked binding
protocols and strict mechanisms for environmental compliance (Murdiyarso et al. 2004;
Jones 2008). Furthermore, the scarcity of the pooled funds necessary to subsidise the
high compliance costs of local stakeholders has reduced the chances of ratifying the
AA-THP at the Indonesian parliament. Therefore, a more effective multi-level
agreement could be reached if greater and continuous international support was
committed to investments in environmentally safe technologies required for sustainable
land practices in Indonesia (Tacconi et al. 2007).
In terms of funding, in the case of Southeast Asian countries, as Nguitragool (2011)
claims, ASEANs principle of sovereign equality by which every country should
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contribute with equal amounts to the regional fund should cease to be applied to the
ASEAN THP Control Fund, as it is not a fair distribution of cooperation costs among
member states. Instead, countries like Singapore and Malaysia, which are the most
affected by the haze, are wealthier than other countries in the region, and are the
countries of origin of polluting firms in Indonesia, should be able to contribute to the
fund according to their stake in the situation. Binding financial contributions could be
estimated by a cost-sharing stakeholders approach (Quah 2002) through which victim
countries would increase their financial support to the perpetrator country up to the
point equal to the economic losses derived from the haze. As for the main global
powers, Irawan et al. (2013) state that, at current carbon prices, greater commitment
from developed economies such as the EU, Japan or the US would be cost-competitive
and economically feasible through market-based initiatives.
Regarding the necessary institutional mechanisms to provide greater degree of external
control, Tacconi et al. (2007) suggest an innovative outcome-based strategy by which
rich countries concerned with climate change would provide a constant flow of funding
but leave it up to regional coalitions of governments and other groups to design and
implement programs (p. 11). By adopting Grafton et al.s (2004) accountability
framework, funds would be disbursed to recipient countries in this case, Indonesia
under clear objectives of pollution reduction with verifiable benefits to the international
community. The strong interest of ASEAN countries, especially Malaysia and
Singapore, in preventing the haze would, thus, enable them to become effective
principals of donor countries in order to hold the programme accountable. Hence, a
broader pool of funds could be administered by the main affected parties, who should
work closely with the Indonesian government in the allocation of subsidies to local
stakeholders for mechanical technologies for specific agricultural practices. Further
assistance in the implementation process should be provided in order to comply with
environmental standards.
4. Conclusion and recommendations
More than a decade and a half have gone by since the 1997 Indonesian fires and, though
several policy measures were imposed at national and regional levels, they have not
been able to prevent the recurrent THP phenomenon. From a political economy
perspective, the lack of progress can be explained in terms of the overall opportunity
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costs for Indonesian stakeholders to shift from traditional slash-and-burn to

environmentally safe agricultural practices, which are too high (Irawan et al. 2013, p.
79). Therefore, even when a strong governance reform in Indonesia was able to achieve
a more stringent environmental compliance, it would collide at the local level with the
role of government bureaucrats and farmers in the process of implementation because
the economic benefits derived from existing logging, timber and palm-oil plantation
activities on their districts would be seriously affected. Therefore, from a broader
stakeholder perspective (Siddiqui & Quah 2003), a regional and increasingly global
solution that was able to cover the high compliance costs of alternative land-use and
fire-prevention activities in Indonesia could be more effective to mitigate the haze.
In conclusion, the future Indonesian government should reframe the current THP policy
debate by claiming that it represents a global environmental governance issue that
requires greater collaboration from neighbouring countries as well as from the
international community. By giving special emphasis on peatland fires as the main
contributor to the haze, Indonesian authorities should commit to ratify a revised
ASEAN Agreement on THP at the Parliament provided increased financial support was
made available. This should help to subsidise the necessary technological investments
required to convert existing agricultural practices to environmentally sustainable ones
and, in time, improve weak governance.

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