Saturday 26 September 2015

Singapore takes Indonesian companies to task over haze in September 2015

Singapore clamps down on five firms over haze
Legal action started; govt leaders also speak out against Indonesian officials' comments

By Chang Ai-Lien and Audrey Tan, The Straits Times, 26 Sep 2015

In its toughest anti-haze measure yet, Singapore has begun legal action against five companies it believes are among the culprits behind Indonesia's polluting fires.

It has also slammed statements from Indonesian officials over the crisis that forced the Republic to close schools yesterday when air quality became hazardous.

Naming the firms for the first time yesterday, Minister for the Environment and Water Resources Vivian Balakrishnan stressed that the haze was a man-made problem that should not be tolerated. "Ultimately, errant companies must know that there is a price to be paid for damaging our health, environment and economy," he said.

Ongoing investigations by NEA have indicated that the haze may have been related to fires in lands held via concessions...
Posted by Vivian Balakrishnan on Friday, September 25, 2015

Haze levels here peaked at a 24-hour Pollutant Standards Index (PSI) reading of 267 to 322 at 8am yesterday. They improved slightly later but remained very unhealthy. The three-hour PSI showed greater fluctuations - hitting 341 at 5am and dropping to 80 at 2pm, before rising again to 154 at 9pm.

Unhealthy haze pollution - when the 24-hour PSI is over 100 for at least 24 hours - has occurred four times since Sept 10.

The National Environment Agency (NEA), which has been gathering evidence by monitoring hot spots, smoke plumes, maps, meteorological data and satellite images, yesterday served Singapore-listed firm Asia Pulp and Paper a legal notice to supply information on its subsidiaries in Singapore and Indonesia, as well as measures taken by its suppliers in Indonesia to put out fires in their concessions.

Four Indonesian companies - Rimba Hutani Mas, Sebangun Bumi Andalas Wood Industries, Bumi Sriwijaya Sentosa and Wachyuni Mandira - have been told to take measures to extinguish fires on their land, not to start new ones, and submit action plans on how they will prevent future fires.

Under Singapore's Transboundary Haze Pollution Act, those guilty can be fined up to $100,000 a day, capped at $2 million, for causing unhealthy haze.

Dr Balakrishnan said Singapore will put economic pressure on errant firms. The Government is looking at how to support those with sustainable practices down the supply chain, particularly those in the palm oil and forestry sectors. The results of the NEA's ongoing investigations will also be made public.

Government leaders here, including Law and Foreign Minister K. Shanmugam, spoke out against comments from Indonesian officials. Indonesian Vice-President Jusuf Kalla, for instance, has repeatedly said Indonesia need not apologise to its neighbours over the haze.

Singapore has offered to help fight the haze-causing fires five times, an offer Indonesia has yet to take up.

Additional reporting by Yeo Sam Jo

We are coming after you: Haze group to companies burning land
A volunteer group in Singapore wants to sue the companies involved in starting fires in Indonesia, and is looking for an "ideal plaintiff" and funds to do so.
Channel NewsAsia, 25 Sep 2015

A volunteer group called the Haze Elimination Action Team (HEAT) wants to sue and boycott the companies involved in starting fires in Indonesia - and put an end to the haze.

The group is led by Dr Ang Peng Hwa, a professor at Nanyang Technological University's Wee Kim Wee School of Communication and Information.

Speaking to Channel NewsAsia on Friday (Sep 25), Dr Ang said that they are looking to "identify an ideal plaintiff" to successfully sue these companies.

"Most of us have incurred some form of loss during the haze," said Dr Ang. "What we are looking for is someone or an organisation that has incurred losses of a few thousand dollars or more due the haze.

"An ideal plaintiff would be someone who has been hospitalised, for example," he said.

He cited hotels and tour agencies which had their bookings cancelled as other examples. He asked potential plaintiffs to keep their receipts and contact him privately. This person or company would not have to pay anything, he said.

The group is also looking for a lawyer with experience in corporate forensics, so that they can "trace the ownership pattern" of the fires.

They need to raise funds of S$50,000 to S$100,000 for the suit, and are looking to get pro bono legal help as well, Dr Ang said.

The group was formed in 2007 and has about 800 members from all walks of life ranging from housewives and students to working professionals. After haze levels reached hazardous levels in Singapore on Thursday (Sep 24), its Facebook page saw an increase of about 40 member requests.

"To the companies suspected of starting fires, we are coming after you," said Dr Ang.

Indonesia's biggest paper firm back in the spotlight
It is told to supply info on its Singapore and Indonesia subsidiaries and what suppliers are doing to fight fires
By Marissa Lee, The Sunday Times, 27 Sep 2015

It is the largest pulp and paper firm in Indonesia, backed by the powerful Widjaja family.

But it seems Asia Pulp and Paper (APP) is now Singapore's biggest target in the fight against illegal forest fires, which have led to the haze crisis affecting millions across Singapore, Malaysia and Indonesia.

It has been ordered by the National Environment Agency (NEA) under the Transboundary Haze Pollution Act to supply information on its Singapore and Indonesian subsidiaries, as well as what its suppliers are doing to fight fires.

APP stood out among the five companies that Environment and Water Resources Minister Vivian Balakrishnan named on Friday as possible culprits behind forest fires in concession land in Indonesia.

This is because compared to the four firms also under investigation, two of which are its suppliers, APP is one of the world's largest manufacturers of tissue, stationery and other paper products. Contrary to earlier reports, APP is not listed on the Singapore Exchange (SGX) and remains under the control of the Widjajas' Sinar Mas Group, one of the largest Indonesian conglomerates. The group's business covers pulp and paper, agriculture, property, financial services, energy, infrastructure and telecommunications.

Despite its business pedigree, APP has on a number of occasions found itself thrust under the spotlight of the authorities here.

In 2001, APP was the subject of a probe by the Commercial Affairs Department (CAD), after creditors and investors cried foul when APP defaulted on US$13.9 billion of debt earlier that year. But the case, along with a parallel probe by the CAD into APP's sister company, Asia Food and Properties, was closed two years later without any disclosure as to why the firms were investigated.

Today, Sinar Mas ranks among Indonesia's richest business groups. Investors have since funded five Singapore-listed firms controlled by Sinar Mas with $4.3 billion of loans and bonds.

This has helped the Widjaja empire reach a market value of US$7.5 billion (S$10.7 billion) on the SGX, data compiled by Bloomberg in May showed.

Singapore-listed firms run by the Widjajas include the world's second-largest palm oil producer Golden Agri-Resources, Indonesia's largest developer Sinar Mas Land, coal miner Golden Energy and Resources, investment holding company Bund Center Investment and lifestyle developer Top Global.

APP is the timber plantation and paper manufacturing arm of Sinar Mas. The firm and its suppliers control concessions covering 2.6 million ha in Indonesia.

Reports indicate that there were more than 300 fire alerts recorded on those concessions in Sumatra earlier this month.

APP also has dozens of subsidiaries from Mauritius to the Cayman Islands, in different functions such as trading, distribution, investment and financing.

The paper supplier does not compile an annual report on its website, posting only two annual reports of two operating subsidiaries based in Jakarta, Indah Kiat Pulp and Paper, and Pabrik Kertas Tjiwi Kimia.

From these, The Sunday Times learnt that APP also provides management services to the two subsidiaries, deriving income in the form of management fees.

For instance, Indah Kiat paid APP a management fee of US$8.6 million for the six months ended June 30, according to its latest financial report.

Tjiwi Kimia paid APP a management fee of US$4.7 million in that same period.

Sinar Mas does not consolidate its total group earnings in one financial report either. It had previously said the rationale for this is that each company in the group is independent.

However, the pulp and paper arm of Sinar Mas is one of the group's largest divisions by asset size.

Indah Kiat had US$6.56 billion and Tjiwi Kimia US$2.76 billion in total assets at the end of June this year, according to their latest financial reports.

The last year for which APP reported its accounts to Singapore's Accounting and Corporate Regulatory Authority (Acra) was 2013.

A search with Acra revealed three directors in connection with APP. They are Indonesian Suresh Kilam, Australian Cosimo Borrelli, and Japanese Kunihiko Naito.

APP company secretary Lee Tai Wai, a Singaporean, is also one of the owners of limited-liability partnership Audit Alliance, the firm appointed to audit the accounts of the Aljunied-Hougang-Punggol East Town Council.

Efforts by The Sunday Times to contact the four men were not successful by press time.

Environmental activists have also been attacking Sinar Mas for years, resulting in companies such as toymaker Mattel cutting APP-made paper packaging out of their supply chain.

Some, like sustainability expert Jessica Cheam, called the NEA's latest invocation of the Transboundary Haze Pollution Act "significant".

"It is the first time that Singapore has commenced legal action and also the first time that the Act will be tested since it was passed last year," she said. "The litmus test would be how the companies respond to it, and whether it would prove an effective measure for taking companies to task if they are found responsible for the illegal fires."

Responding to queries on the latest enforcement action by the NEA, an APP spokesman said the company is preparing to respond to the agency.

But she added that as a forest-based business, APP gains absolutely nothing from burning land.

"Fires, therefore, pose an economic threat for APP and cost us a lot of money and resources to deal with," she said. "In addition, the resulting damages from fires cause sufferings to our employees and communities within our operations, as well as threaten the very forests that we have invested to protect."

Yesterday, Indonesian President Joko Widodo said on Facebook that he was committed to cracking down on the culprits behind the forest fires. "My commitment alone, however, will not work without the support of all parties: government, private and public," he said.

Agency's scrutiny puts Indonesian firms into public spotlight
By Wahyudi Soeriaatmadja, Indonesia Correspondent In Jakarta, The Sunday Times, 27 Sep 2015

Before this weekend, the names Rimba Hutani Mas, Sebangun Bumi Andalas, Bumi Sriwijaya Sentosa and Wachyuni Mandira would hardly have rung a bell with Singaporeans.

The National Environment Agency (NEA), however, changed that by connecting the companies to peatland fires in Indonesia detected on concession lands under their charge.

These illegal fires remain the source of the haze that has adversely affected millions of people, not just in Indonesia but also in Malaysia and Singapore .

While this may be the first time the four Indonesian firms have come under the scrutiny of the NEA, it is not their first brush with controversy for some of them.

Rimba Hutani Mas and Sebangun Bumi Andalas Wood Industries are both suppliers for Asia Pulp and Paper (APP), Indonesia's largest pulp and paper company.

APP is also the most established business entity among the companies which the NEA said it is investigating under the Transboundary Haze Pollution Act.

Rimba Hutani Mas, which is a unit of Indonesian conglomerate Sinar Mas, runs pulpwood concessions in the Musi Banyuasin regency in South Sumatra. It is reportedly under investigation by police in the province for illegal land-clearing practices.

Sebangun Bumi Andalas is also a Sinar Mas subsidiary. It operates pulpwood concessions in the Ogan Komering Ilir regency in South Sumatra. The Musi Banyuasin, Ogan Komering Ilir and Banyuasin regencies are three of the areas worst hit by peatland fires in Sumatra this year.

APP and its suppliers control concessions covering 2.6 million ha in Indonesia. There were more than 300 fire alerts recorded on those concessions in Sumatra earlier this month.

Bumi Sriwijaya Sentosa runs a sugar cane concession in Ogan Komering Ilir. It has been reported that the firm had land disputes with residents from 17 villages, who accused the firm of encroaching on to land owned by farmers.

Wachyuni Mandira is a shrimp-farming company that is also based in Ogan Komering Ilir. The firm was granted 30,000ha of land for non-forestry purposes. This means it cannot cultivate pulpwood trees, for instance.

The owners of Bumi Sriwijaya Sentosa and Wachyuni Mandira could not be traced, but they have no known ties to any of the major conglomerates in Indonesia.

Lucrative illegal market for crop land a key cause of fires: Researcher
By David Fogarty, Assistant Foreign Editor, The Straits Times, 28 Sep 2015

A lucrative illegal market for land to plant crops such as oil palm is a major cause of annual fires in Indonesia, a senior forestry researcher says, with the racket driven by complicit local officials and the global demand for commodities.

Dr Herry Purnomo is part of a team at the Bogor-based Centre for International Forestry Research looking at the political economy of fires and haze in Indonesia.

The political economy, he explained, refers to how economic actors at different levels influence and weaken law enforcement at all levels. "The actors can be individual powerful elites that are connected to the companies," he added.

Dr Purnomo said there is a well- established market for abandoned or conflict land, with land cleared by burning fetching a premium. Using excavators and other heavy equipment to clear the land is costly and time- consuming.

"You need to understand that the fire and haze create a lot of money. Quite a lot of money. There is a market for burned land and also it is a way for cheap and quick land preparation for HTI (pulpwood) and oil palm," he told The Straits Times in an interview last week.

"Because if you grab the land, the forest - it can be concession land or state land - you can sell it. My research shows that the price is around eight million rupiah (S$800) per hectare. But if you burn that land, the price will increase," he said.

"Some people can claim that land and can sell to the network of people. And the buyers can be someone in Jakarta, Bogor, everywhere... It can be 10ha, 20 or even 100ha."

Data shows mid-level investors can come from places outside Indonesia, such as Malaysia, he added.

According to Dr Purnomo, the price per hectare is US$665 (S$950) after the land is slashed and cut. If the land is burned, the price goes up about US$200 per hectare: a more or less 30 per cent rise.

"There is a market for people who mostly prepare for oil palm. You can imagine if they grow the oil palm, after three years, then the price of that land can reach US$3,077 per ha," he said, basing his research on land prices in Sumatra's Riau province.

"This provides a huge incentive for people to buy that land and try to grow the oil palm. No bank will give you that kind of profit."

Trust is an important part of the deal. "This is like organised crime. My friends who have that land never see that land. But they receive photos. They got a return from that investment. You don't need to bribe people. Because there are people who manage the land - you pay... and they will work through their connections and you will get the return," Dr Purnomo said.

He said the illicit land deals can also involve land inside big company-owned concessions.

"Not all land within the concession is actually enforced. That is actually a huge problem. So they receive the land, but some land is still in conflict and then the government and concession owner can't secure that land so it is becoming a source of... burning... even inside the concession."

This is a particular problem with pulpwood concessions because of the way the land is given by the national government. A company pays for the licence for a concession and is responsible for everything inside, including communities who are often not consulted on the deal. This often leads to conflicts with the company.

Dr Purnomo also said it is very hard for big agricultural companies to really know what is going on in their supplier concessions. Some big palm oil and pulpwood companies have dozens of suppliers.

"Even the big companies operate in a big landscape but are divided into smaller companies that are connected, affiliated or are subsidiaries of the big companies.

"To me there is not enough monitoring (by the parent companies). The monitoring system is not in place. There are many things happening on the ground. It is not as though, if you are good, the people in your company are good."

The haze, international law and global cooperation
By S. Jayakumar and Tommy Koh, Published The Straits Times, 6 Oct 2015

Once again, the forests of Kalimantan, South Sumatra and parts of Riau are on fire. The fires are destroying Indonesia's forests, rich biological diversity and natural heritage. The fires are also endangering the health of Indonesians, Malaysians and Singaporeans. The people most affected by the haze are Indonesians living in Kalimantan and South Sumatra.

The haze is causing economic loss to the three countries. The fires are also causing harm to the world because of the carbon emitted into the atmosphere. The United States National Aeronautics and Space Administration (Nasa) has warned that the haze this year could be as bad as that in 1997 when the

United Nations declared the forest fires in Indonesia an ecological disaster for the world.

The problem is not new and has been occurring almost annually for over two decades. The laws of Indonesia forbid the use of fire to clear land. Indonesia's leaders have promised annually that they will enforce their law and that they have the capacity to put out the fires. They have declined and continue to decline offers of assistance from Malaysia and Singapore.

The former president of Indonesia, Dr Susilo Bambang Yudhoyono, had publicly apologised to Malaysia and Singapore for the harm and damage caused by the haze. Other leaders of Indonesia have, however, taken the opposite stance, declaring that Indonesia owes no apology to its neighbours and making unreasonable statements that we should be grateful that Indonesia has provided us with clean air for 11 months of the year.


In view of this, we will begin by asking whether Indonesia has any legal responsibility under international law.

The first principle of international law is that a state has the sovereign right to exploit its natural resources, including its forests. The sovereign right of a state to do so is, however, not unlimited. It is limited by a second principle.

The second principle is that a state has the responsibility to ensure that activities within its jurisdiction or control do not cause damage to the environment of other states or to areas beyond the limits of its national jurisdiction.

In other words, Indonesia is responsible for the harm and damage which activities within its jurisdiction or control have caused to its neighbours. These principles are well established. The bottom line is that Indonesia is morally and legally responsible for the haze.


The second issue which we wish to highlight is the Asean Haze Agreement which is binding on all 10 Asean countries.

One of the guiding principles of that agreement is the obligation to cooperate and coordinate in order to prevent and to monitor transboundary haze pollution. We respectfully call on Indonesia, which is a party to that agreement, to comply with its obligation.

In the spirit of Asean solidarity and good neighbourliness, Singapore wishes to cooperate with Indonesia in dealing with the problem of forest fires. An example of a successful cooperation is with the Jambi provincial government which began in 2007. The number of hot spots in the Jambi province has been reduced by 70 per cent since 2006. Jambi and Singapore would like to extend their agreement, which expired in 2011, but Jakarta has refused to give the green light. We respectfully request President Joko Widodo to allow Jambi to renew the agreement with Singapore.

When fires occur, they should be put out quickly in order to limit their spread. We should work cooperatively to strengthen the firefighting capacity in all the Asean countries. We support Malaysia's initiative to request assistance from Canada in firefighting expertise. We should also engage the International Association of Fire Fighters in this regard.


Two-thirds of the fires in Indonesia occur on peat wetlands. It is not widely known that Indonesia has the largest tropical peat wetlands in the world. Research has shown that these wetlands are rich in biological diversity. We should therefore cooperate with Indonesia to preserve its peat wetlands.

The Convention on Wetlands of International Importance, also known as the Ramsar Convention, is an intergovernmental treaty which provides the framework for national action and international cooperation for the conservation and prudent use of wetlands and their resources. Singapore should consider joining the Ramsar Convention. By doing so, Singapore would be in a position to cooperate with other states to assist Indonesia in protecting the peat wetlands of Sumatra and Kalimantan.

Developing countries have rightly pointed out that it is within their sovereign rights to cut down their forests. They have, therefore, argued that they should be compensated if the world wishes them to conserve their forests.

In response to this argument, the World Bank, with the support of donor countries such as Norway, has launched an initiative called Reducing Emissions from Deforestation and Forest Degradation, or REDD+ in short.

Norway has offered to compensate Indonesia financially if it agrees not to destroy its forests on certain conditions. The conditions pertain to Indonesia's capacity, transparency and good governance. Progress has been very slow. Singapore should consider cooperating with Indonesia and with Norway in order to facilitate the early implementation of REDD+.


We should be clear in our minds that the forest fires in Indonesia are not a natural phenomenon which lawyers refer to as "an act of god". The fires are man-made and those responsible are palm oil companies and pulp and paper companies.

The motive is money and profit. They must be held accountable for their unconscionable and illegal behaviour.

We therefore support the actions taken by our National Environment Agency to investigate five companies. If the investigations prove that the fires had taken place in their concessions and the smoke from those fires is causing the haze in Singapore, we hope that the Attorney-General will consider initiating criminal proceedings against them.

We also support the efforts of a group of consumers, led by Professor Ang Peng Hwa of Nanyang Technological University, to take civil proceedings against the companies, if they were convicted in the criminal proceedings.

Finally, the Singapore Government should work closely with the civil society and private sector in our collective endeavour to stop the forest fires. We applaud the work of conservation body WWF and the Roundtable on Sustainable Palm Oil (RSPO). We should encourage all the financial institutions in Singapore to join RSPO. We support the initiative of the Singapore Environment Council to ensure that we procure paper and palm oil only from certified companies and sources. We endorse the UN Global Compact and the Singapore Exchange's Guide to Sustainability Reporting for Listed Companies.

Professor Jayakumar is the chairman of the International Advisory Panel and Professor Koh is the chairman of the Governing Board of the Centre for International Law, National University of Singapore.


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