7.2 Allocation and Access: Analyzing Institutional Performance
159
and, in particular, the “plasma obligation” is also a form of reducing land conflicts
(Feintrenie et al. 2010a; McCarthy et al. 2012), a tactic that could easily be regarded
as also a form of co-optation. A study by the Worldwatch Institute suggests that
self-employment in traditional farming can provide livelihoods to 260 times more
people per hectare than oil palm plantations do (Renner et al. 2008). However, these
alternatives are simply not on the agenda.
The government’s strategy has been to promote private oil palm agroindustries
as “agents of change” to increase domestic (renewable) fuel supplies and improve
rural socio-economic standards. Such an approach is clear from how regulatory and
economic incentives are nearly all aimed at the private sector. Even instruments that
target other actors, such as subsidized credit to farmers, seem ultimately linked to
the industry—in this case, because farmers need a loan guarantor, who is usually a
private company (McCarthy 2010). Therefore, this lending works as a tool to enable
rural Indonesians to participate in such privately-run systems. Arguably, it indirectly
targets the industry as much as it targets the smallholder.
Meanwhile, economic burdens are allocated to the state—and not only in the
form of subsidies. Pertamina’s role as Indonesia’s sole fuel distributor means it has
to absorb the higher costs of blending biofuels despite cheaper gasoline and diesel.
As such, not only does the policy channel public funds to the private sector, but it
also allocates the least economical step of the value chain to the state.
7.2.2 Access to Resources: Land, Water, Food and Energy
Access to land in Indonesia is conflictive both at the institutional level and on the
ground (Colchester et al. 2006; Colchester 2011; Dhiaulhaq and McCarthy 2020).
Most disputes refer to customary ownership versus land-use rights granted by the
government to private companies for mining or plantation development (Colchester
et al. 2006; Caroko et al. 2011). Regulations are fuzzy, and land tenure status is often
unclear. Although the Basic Agrarian Law of 1960 recognizes customary ownership
rights, it makes them subordinate to national interests as interpreted by the state (see
Bastos Lima et al. 2013). As such, many conflicts have either emerged or been exacerbated by oil palm expansion and biofuel promotion (Marti 2008; McCarthy and Zen
2010; Colbran 2011, Colchester 2011; Abram et al. 2017). Throughout the 2010s, the
Indonesian NGO Sawit Watch annually registered over 500 land conflicts involving
local communities and palm oil companies in Indonesia (see Drost et al. 2019). Such
conflicts have significantly affected indigenous peoples and other forest-dependent
communities. Their lands rest mostly on agricultural frontiers (e.g., Kalimantan,
Papua), and their customary rights are hardly recognized in practice (Colchester
2011; Abram et al. 2017).
7
7 Indigenous peoples seem also more sensitive to losses in terms of aesthetic values, sacred sites,
and traditionally used plants (Colbran 2011).
159
and, in particular, the “plasma obligation” is also a form of reducing land conflicts
(Feintrenie et al. 2010a; McCarthy et al. 2012), a tactic that could easily be regarded
as also a form of co-optation. A study by the Worldwatch Institute suggests that
self-employment in traditional farming can provide livelihoods to 260 times more
people per hectare than oil palm plantations do (Renner et al. 2008). However, these
alternatives are simply not on the agenda.
The government’s strategy has been to promote private oil palm agroindustries
as “agents of change” to increase domestic (renewable) fuel supplies and improve
rural socio-economic standards. Such an approach is clear from how regulatory and
economic incentives are nearly all aimed at the private sector. Even instruments that
target other actors, such as subsidized credit to farmers, seem ultimately linked to
the industry—in this case, because farmers need a loan guarantor, who is usually a
private company (McCarthy 2010). Therefore, this lending works as a tool to enable
rural Indonesians to participate in such privately-run systems. Arguably, it indirectly
targets the industry as much as it targets the smallholder.
Meanwhile, economic burdens are allocated to the state—and not only in the
form of subsidies. Pertamina’s role as Indonesia’s sole fuel distributor means it has
to absorb the higher costs of blending biofuels despite cheaper gasoline and diesel.
As such, not only does the policy channel public funds to the private sector, but it
also allocates the least economical step of the value chain to the state.
7.2.2 Access to Resources: Land, Water, Food and Energy
Access to land in Indonesia is conflictive both at the institutional level and on the
ground (Colchester et al. 2006; Colchester 2011; Dhiaulhaq and McCarthy 2020).
Most disputes refer to customary ownership versus land-use rights granted by the
government to private companies for mining or plantation development (Colchester
et al. 2006; Caroko et al. 2011). Regulations are fuzzy, and land tenure status is often
unclear. Although the Basic Agrarian Law of 1960 recognizes customary ownership
rights, it makes them subordinate to national interests as interpreted by the state (see
Bastos Lima et al. 2013). As such, many conflicts have either emerged or been exacerbated by oil palm expansion and biofuel promotion (Marti 2008; McCarthy and Zen
2010; Colbran 2011, Colchester 2011; Abram et al. 2017). Throughout the 2010s, the
Indonesian NGO Sawit Watch annually registered over 500 land conflicts involving
local communities and palm oil companies in Indonesia (see Drost et al. 2019). Such
conflicts have significantly affected indigenous peoples and other forest-dependent
communities. Their lands rest mostly on agricultural frontiers (e.g., Kalimantan,
Papua), and their customary rights are hardly recognized in practice (Colchester
2011; Abram et al. 2017).
7
7 Indigenous peoples seem also more sensitive to losses in terms of aesthetic values, sacred sites,
and traditionally used plants (Colbran 2011).