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By ROD McGUIRK
Associated Press Writer
Report: Indonesia loses $2B from forest corruption70 days ago
(AP:JAKARTA, Indonesia) Corruption and mismanagement inside Indonesia's lucrative forest industry now costs the developing country $2 billion a year _ the equivalent of its entire health budget, a human rights report said Tuesday.
Human Rights Watch is the latest independent organization to allege widespread corruption within one of Indonesia's most important export industries, but its report shines new light on the problems just a week before a climate conference that is expected to consider a plan to pay poor countries to protect their forests.
The New York-based human rights watchdog said its investigation revealed that Indonesia had forgone $6 billion in four years through 2006 because of taxes lost on illegal logging, underpriced forest royalties and companies' undervaluing of reported export sales to offshore subsidiaries.
The losses have gathered pace, starting at $1.2 billion in 2003 and rising to $2 billion in 2006.
Indonesia's national, provincial and district authorities spend that much each year on health care, it said.
Despite the losses, forests earned Indonesia $6.6 billion in 2007, making its industry the most lucrative of any country after Brazil.
The report said corruption in the industry was an issue of human rights as well as of environmental and economic importance because money desperately needed by the health sector and other social programs was being pocketed by corporate executives and corrupt officials.
It also warned governments to be wary of paying Indonesia to maintain its rain forests, which are among the world's largest _ a proposal to be discussed next week at the international climate conference in Copenhagen.
The framework hopes to give poor countries an incentive to protect their forests, which play an important role in absorbing global carbon dioxide emissions.
Destruction of those forests _ generally through slash-and-burn land clearing to make way for oil palm plantations, mines and commercial development _ contributes to making Indonesia the world's third-largest emitter of heat-trapping gases, after the United States and China.
"Until the lack of oversight and conflicts of interest are taken seriously, pouring more money into the leaky system from carbon trading is likely to make the problem worse, not better," Human Rights Watch deputy program director Joe Saunders said in a statement.
"It will take strong action at the top levels of Indonesian government and international trading partners to halt the corruption in the timber industry," he added.
Indonesia's Forestry Ministry was not immediately available for comment on the report.
In June, Washington agreed to reduce Jakarta's debt to the United States by $30 million after Indonesia committed to protecting its forests, which are being torn down for lumber, paper and oil palm plantations.
The report urges Indonesia's trading partners to outlaw illegal wood imports and to ensure that their banks were not receiving money from the black market trade.
Indonesia was targeted last week by Greenpeace protesters who say the country's once abundant forests are rapidly being destroyed, contributing to global warming and threatening endangered wildlife as well as the livelihood of local tribes.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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