Resources energise Kalimantan growth – but at what cost?

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Coal mining is big business in Kalimantan

In Kalimantan, the Indonesian side of the island of Borneo, the abundance of coal, oil and gas in the Indonesian state of Kalimantan has fuelled a surge in investment and accompanying growth in the region.

By Oliver Ellerton

With companies both foreign and local established, or looking to set up in Kalimantan, provincial capitals such as Balikpapan and Pontianak have become the focal points for the rise in energy demand from China and Indonesia’s dash for growth and development. However, as has become the norm for contemporary ASEAN growth, the environment and local populations have become an afterthought with long term environmental degradation and human rights abuses common.

The office of the Working Team of Masterplan for Acceleration and Expansion of Indonesia’s Economic Development (MP3EI) in Kalimantan announced in June that investment into Kalimantan reached 741 trillion IDR (USD$73.5 billion) in 2013 of which 237 trillion IDR (USD$23.5 billion) came from oil and gas, 211 trillion IDR (USD$21 billion) from coal and 106 trillion IDR (USD$10.5 billion) from bauxite.

The abundance of raw materials has attracted global energy companies as well as local behemoths. Balikpapan, the resource capital on East Kalimantan’s coast hosts international energy giants such as France’s Total E&P, America’s Chevron and Australia’s Thiess among others, many of whom use Balikpapan as their regional base.

However Balikpapan is not the only port in Kalimantan to take advantage of Indonesia’s growth. Banjarmasin Port in South Kalimantan recently announced a 5% growth in the first half of 2013, driven primarily by the increased trade brought on by Indonesia’s growing economy and Kalimantan’s increasing energy and resource exploitation. Banjarmasin experienced 218,436 TEUs (20-foot equivalent units) passing through the port according to the state-run port operator, Pelindo III, with upgrades announced to extend the existing berth to 505 metres – thus allowing even more ships to berth.

Regional and local companies investing into Kalimantan includes Well Harvest Winning Alumina Refinery (Indonesia, China) which is sinking over USD$1billion into a new aluminium smelter in West Kalimantan, the first of its kind in Indonesia, with output going towards the domestic market. Malaysia’s Felda Ventures Holdings Bhd (FGV) is investing USD$89million over the next 6 years into West Kalimantan to develop palm oil and rubber plantations.

Kalimantan burns: Sumatra is not the only Indonesian province to suffer from forest fires

However, as with much of ASEAN’s growth, the environment and local populations have come a distant second in the race for development and economic prosperity. The Indonesian state, headed by the soon-to-be outgoing President Susilo Bambang Yudhoyono, has made plenty of noises towards protecting the environment and has even passed a series of laws in that respect. Yet the enforcers of these laws, be they the police, government or security forces, rarely if ever uphold these measures designed to protect the environment. This was in clear view during the Haze emergency – where smoke from fires lit in Sumatra blew over to Singapore and Malaysia. Although the Sumatran fires gained the most notoriety, few people noticed the fires in Kalimantan, initiated to clear land for agribusiness. CTP Holdings (Singapore), a company which operates palm oil plantations in Indonesia, was quick to deny any involvement in the Sumatran fires. Yet it is accused by US-based environmental lobby group Rain Forest Network of vast environmental abuses in the Kalimantan region including clearing of rainforests and starting forest fires. Additionally, the increase in mining and agribusiness companies moving into Kalimantan has created friction with the local population who see their own way of life, and environment around them threatened.

It remains to be seen whether the Indonesian government is able to develop its outlying regions in a sustainable and fair manner. However recent experiences in the archipelago and throughout Southeast Asia provide a poor forecast for the environment and its people.

 

 

 

 

 

 

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Reading Time: 3 minutes

Coal mining is big business in Kalimantan

In Kalimantan, the Indonesian side of the island of Borneo, the abundance of coal, oil and gas in the Indonesian state of Kalimantan has fuelled a surge in investment and accompanying growth in the region.

Reading Time: 3 minutes

Coal mining is big business in Kalimantan

In Kalimantan, the Indonesian side of the island of Borneo, the abundance of coal, oil and gas in the Indonesian state of Kalimantan has fuelled a surge in investment and accompanying growth in the region.

By Oliver Ellerton

With companies both foreign and local established, or looking to set up in Kalimantan, provincial capitals such as Balikpapan and Pontianak have become the focal points for the rise in energy demand from China and Indonesia’s dash for growth and development. However, as has become the norm for contemporary ASEAN growth, the environment and local populations have become an afterthought with long term environmental degradation and human rights abuses common.

The office of the Working Team of Masterplan for Acceleration and Expansion of Indonesia’s Economic Development (MP3EI) in Kalimantan announced in June that investment into Kalimantan reached 741 trillion IDR (USD$73.5 billion) in 2013 of which 237 trillion IDR (USD$23.5 billion) came from oil and gas, 211 trillion IDR (USD$21 billion) from coal and 106 trillion IDR (USD$10.5 billion) from bauxite.

The abundance of raw materials has attracted global energy companies as well as local behemoths. Balikpapan, the resource capital on East Kalimantan’s coast hosts international energy giants such as France’s Total E&P, America’s Chevron and Australia’s Thiess among others, many of whom use Balikpapan as their regional base.

However Balikpapan is not the only port in Kalimantan to take advantage of Indonesia’s growth. Banjarmasin Port in South Kalimantan recently announced a 5% growth in the first half of 2013, driven primarily by the increased trade brought on by Indonesia’s growing economy and Kalimantan’s increasing energy and resource exploitation. Banjarmasin experienced 218,436 TEUs (20-foot equivalent units) passing through the port according to the state-run port operator, Pelindo III, with upgrades announced to extend the existing berth to 505 metres – thus allowing even more ships to berth.

Regional and local companies investing into Kalimantan includes Well Harvest Winning Alumina Refinery (Indonesia, China) which is sinking over USD$1billion into a new aluminium smelter in West Kalimantan, the first of its kind in Indonesia, with output going towards the domestic market. Malaysia’s Felda Ventures Holdings Bhd (FGV) is investing USD$89million over the next 6 years into West Kalimantan to develop palm oil and rubber plantations.

Kalimantan burns: Sumatra is not the only Indonesian province to suffer from forest fires

However, as with much of ASEAN’s growth, the environment and local populations have come a distant second in the race for development and economic prosperity. The Indonesian state, headed by the soon-to-be outgoing President Susilo Bambang Yudhoyono, has made plenty of noises towards protecting the environment and has even passed a series of laws in that respect. Yet the enforcers of these laws, be they the police, government or security forces, rarely if ever uphold these measures designed to protect the environment. This was in clear view during the Haze emergency – where smoke from fires lit in Sumatra blew over to Singapore and Malaysia. Although the Sumatran fires gained the most notoriety, few people noticed the fires in Kalimantan, initiated to clear land for agribusiness. CTP Holdings (Singapore), a company which operates palm oil plantations in Indonesia, was quick to deny any involvement in the Sumatran fires. Yet it is accused by US-based environmental lobby group Rain Forest Network of vast environmental abuses in the Kalimantan region including clearing of rainforests and starting forest fires. Additionally, the increase in mining and agribusiness companies moving into Kalimantan has created friction with the local population who see their own way of life, and environment around them threatened.

It remains to be seen whether the Indonesian government is able to develop its outlying regions in a sustainable and fair manner. However recent experiences in the archipelago and throughout Southeast Asia provide a poor forecast for the environment and its people.

 

 

 

 

 

 

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