Malaysia’s Green Economy & Indonesia’s Forestry Moratorium

Malaysia’s Green Economy & Indonesia’s Forestry Moratorium

Malaysia is launching an ambitious plan to build a “green economy” with the help of an advisory council that includes economist Jeffrey Sachs and the UN climate change chief Rajendra Pachauri. Meanwhile, Indonesia has revealed a long list of exemptions to a two-year moratorium on new permits to clear forest, even though it is aimed at reducing greenhouse gas emissions from deforestation under a US$1 billion climate deal with Norway. But the final version was a let-down for environmentalists hoping for wider protection of carbon-rich peat and endemic wildlife. Read more

Wed May 18, 3:39 am ET AFP

KUALA LUMPUR (AFP) – Malaysia is launching an ambitious plan to build a “green economy” with the help of an advisory council that includes economist Jeffrey Sachs and the UN climate change chief.

The initiative is part of economic reforms instituted by Prime Minister Najib Razak since taking power two years ago, aimed at pushing the Southeast Asian country towards developed-nation status by 2020.

His administration has already promised major infrastructure projects and financial market liberalisation to attract foreign investment and boost growth, but critics say the results have been limited.

Najib on Tuesday convened the first meeting of an eminent 42-member Global Science and Innovation Advisory Council in New York to help the nation achieve ambitions of becoming a science and technology innovation destination.

Malaysia’s vision of a “green economy” would see it moving beyond its status as a manufacturing hub, and establish “low carbon emissions, highly efficient use of resources, and a healthy, well-educated populace.”

“Malaysia’s ambitious goal is to simultaneously reduce poverty and achieve a green economy,” Najib said in a statement from New York.

“We see science and technology innovation as key to achieving that goal, guided by the advice and active support of some of the world’s most distinguished entrepreneurial, scientific and economic experts.”

“These experts will liaise and work actively with key Malaysian agencies and institutions to develop ‘quick wins’ in the palm oil industry, in the creation of a smart city and smart village, and in education.”

As well as Sachs and Rajendra Pachauri, the chairman of the UN’s Intergovernmental Panel on Climate Change, the panel also includes media tycoon Steve Forbes and two Nobel laureates.

Najib said the council would aim to “raise the number of scientifically and technically-trained individuals, entrepreneurs and innovators in our country.”

Malaysia also hopes to develop smart cities and villages, where the Internet is available and resources, such as water and electricity, are managed efficiently through information technology.

Currently, the middle-income nation of 27 million people suffers from urban sprawl and traffic congestion in its capital Kuala Lumpur, and a lack of basic services in rural areas.

Citigroup economist Kit Wei Zheng said Najib’s administration had achieved some successes including boosting foreign direct investment, but was under pressure to deliver ahead of elections tipped to be called within a year.

“At least on some fronts, there seem to be some results coming in… There are some steps forward but it’s slow and probably not as big as the announcements that are being made,” said the Singapore-based economist.

The export-dependent Southeast Asian nation saw a sharp decline in foreign direct investment (FDI) in 2009, tumbling 81 percent to $1.4 billion from $7.3 billion in 2008.

However, FDI jumped 141 percent to 17.1 billion ringgit ($5.5 billion) in the first nine months of 2010, in a rebound partly attributed to the reforms.

Malaysia has previously sought out high-profile international advisers like Microsoft’s Bill Gates when it launched its Multimedia Super Corridor project to build up its information technology industry in the 1990s.

“It’s a very fuzzy thing; we don’t know what it is… The word ‘green’ is used very broadly,” Gurmit Singh, chairman of the Centre For Environment, Technology and Development Malaysia, said of the latest scheme.

“There seems to be a lot of hot air. In terms of what happens sometimes at the ground level, it’s a repackaging of projects,” he told AFP.

Najib has said he expects the economy to expand by 5.0-6.0 percent this year despite the challenges of slower global growth and rising crude oil prices.


Indonesia Forest Moratorium a ‘Bitter Disappointment:’ Greenpeace

Olivia Rondonuwu & Michael Taylor for Reuters in The Jakarta Globe (25 May 2011):

Indonesia revealed a long list of exemptions on Friday to a two-year moratorium on new permits to clear forest, a concession to the hard-lobbying plantation industry in the world’s top palm oil producing nation but vexed some green groups.

The moratorium, taking effect on Friday after a five-month delay, will exempt permits already given in principle by the forestry ministry and extensions of existing permits, as well as projects to develop supplies of energy, rice and sugar.

The exemptions were wider than expected after pressure from firms worried about expansion and a forestry ministry concerned about losing billions each year in revenue from chopping down forests in Southeast Asia’s biggest economy.

“There were lots of pressures on the Indonesian government from the palm oil industry about this ban since we bring in significant investments. Today’s final details show that agreeable concessions have been made,” said a Malaysian planter with assets in Indonesia, who declined to be identified.

However, the moratorium will not provide compensation for firms unable to expand into protected land.

The moratorium ordered a freeze on new permits to log or convert 64 million hectares of primary forests and peatlands. This is aimed at reducing greenhouse gas emissions from deforestation under a $1 billion climate deal with Norway, but the final version was a let down for environmentalists hoping for wider protection of carbon-rich peat and endemic wildlife.

“This is a bitter disappointment. It will do little to protect Indonesia’s forests and peatlands. Seventy-five percent of the forests purportedly protected by this moratorium are already protected under existing Indonesian law, and the numerous exemptions further erode any environmental benefits,” said Paul Winn of Greenpeace Australia-Pacific. 

President Susilo Bambang Yudhoyono on Thursday also signed a decree to allow underground mining activities in protected forests for 20 years, provided conditions such as an environmental assessment have been met, likely to further upset green groups but provide relief for miners such as Newmont, Eramet and Bumi Resources.

Yudhoyono’s adviser on climate change, Agus Purnomo, said the forest moratorium would not hinder planters’ expansion.

“There is no limitation for those who want to develop business-based plantations. We are not banning firms for palm oil expansion. We are just advising them to do so on secondary forests,” Purnomo told a news conference.

Joko Supriyono, secretary general at the Indonesian Palm Oil Association (Gapki), told Reuters that uncertainty over the plan had slowed expansion last year to 300,000 hectares of palm oil plantations, from a minimum 500,000 hectares in recent years.

“It won’t put a lot of downward pressure on the (palm oil) sector. There is plenty of land available to plant palm oil or other crops. The land is there — you can plant plantations in environmentally agreeable areas assuming there is access to infrastructure,” said Andreas Bokkenheuser, Singapore-based commodities analyst at UBS.

Indonesia-listed plantation firm Astra Agro Lestari was up 0.8 percent and SMART climbed 6.3 percent, though Gozco fell 1.3 percent. Gozco’s palm oil production is expected to rise more than 30 percent this year and it has permits for 56 percent of its landbank, but expansion in the rest could be hit by the moratorium, an executive told Reuters on Thursday. 

The forestry ministry has defined primary forest as forest that has grown naturally for hundreds of years, of which there is estimated to be around 44 million hectares in a sprawling tropical archipelago where illegal logging is common.

The exclusion of rice, sugar, oil, gas and power plant projects shows the importance of food and energy security to the government of the G20 member, aiming to feed the world’s fourth-largest population and fuel GDP growth of more than 6 percent.

Indonesia exports most of its palm oil but the former OPEC member is struggling to maintain energy supplies amid growing domestic demand. The country’s efforts to achieve self-sufficiency served it well in the financial crisis, since a lack of reliance on exports — unlike many Asian countries — kept its economy growing and led to it becoming an investor darling on the brink of a coveted sovereign investment grade rating.

The country still surprised markets with bumper rice imports early this year, and relies on sugar imports. Firms such as top listed palm oil planter Wilmar and investment firm Rajawali Group are planning to grow sugar plantations in the lushly forested eastern Papua province.

“If they are excluded from the moratorium it means they will just continue to deforest, doesn’t it?” said Jonathan Barratt, managing director of Commodity Broking Services in Sydney.

However, he said it was a step in the right direction for efforts to develop projects to cut emissions of climate-warming greenhouse gases from deforestation, in the absence of agreement on a new global climate pact following years of troubled UN talks.

“There are a lot exclusions there but there is a conscience. It gives the basis from which they can build on to reduce their emissions,” Barratt added.


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