The Effects of Decentralisation on Forests and Forest Industries in

<strong>The</strong> <strong>Effects</strong> <strong>of</strong> <strong>Decentralisation</strong> on Forests and Forest Industries in Berau District, East Kalimantan
a peaceful solution. In such negotiations,
community groups have <strong>of</strong>ten found themselves
at a distinct disadvantage. In some cases, they
have succeeded in obtaining compensatory
payments for the timber taken from areas that fall
within their traditional domain; and, at times, they
have secured a release <strong>of</strong> small areas from the
concession sites and/or agreement that the
concession holders will not log along the edges <strong>of</strong>
rivers or other waterways. <strong>The</strong>se agreements,
however, have generally been structured to provide
short-term fixes to the conflicts at hand, and not
to provide local communities with long-term
livelihood benefits.
by allowing them to negotiate claims for
compensation and fees from HPH concession
holders. However, these benefits are uncertain at
best, and unlikely to provide significant livelihood
opportunities for forest communities that can be
sustained for future generations.
Berau <strong>of</strong>ficials have recognized that timber
production by large-scale HPH concession holders
was central to both the formal and informal
revenue base <strong>of</strong> the district government during
the New Order period, and is likely to remain so
under decentralisation. As such, they have taken
steps to shield the companies from land claims
and requests for compensation or fees by local
communities that they deem to be ‘unlawful’ . At
the same time, the district government has sought
to secure a direct equity stake in some <strong>of</strong> the
district’s larger concession holders. By 2002, for
instance, the district government had obtained a
50% equity share in an 83,250 ha concession block
previously controlled by PT Inhutani I. At that
time, negotiations for a similar arrangement
between the district government and other HPH
companies in the district (e.g. PT Inhutani II) were
also in process.
Overall, these developments suggest that
decentralisation has done little to relieve pressures
on Berau’s forests. On the contrary, it has probably
intensified pressures in some areas by legitimising
the clearance <strong>of</strong> forested areas outside the formal
‘Forest Estate’ through the allocation <strong>of</strong> districtissued
IPKTM permits. In most parts <strong>of</strong> the
kabupaten, it appears that the district government
is encouraging HPH timber concession holders,
including the Inhutani concessions previously
controlled by the central government, to continue
with their logging operations, albeit with the district
government as an equity partner. <strong>The</strong> district
government has facilitated the provision <strong>of</strong> limited
benefits to local communities—notably through
the allocation <strong>of</strong> IPPK and IPKTM permits, and
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