The Involvement of Dutch Banks in the Financing of Oil Palm Plantations in Indonesia
In 1997 and 1998, extensive forest fires in Indonesia burned an area three times the size of the
Netherlands. The international donor community committed substantial funds and equipment
for fire fighting campaigns, but to no avail. The fire fighting efforts were ineffective because
most fires were lit intentionally, among other by oil palm companies which have been
implementing extensive expansion programmes in the last 5-6 years, notably in Sumatra and
Kalimantan. To convert their substantial concession areas into oil palm estates, the companies
used fire as an easy, cheap and quick means of land clearing. The 1997/98 drought, caused by the
El Niño climatic phenomenon, opened a window of opportunity for the companies in their
efforts to clear as much land as possible. Many of their fires ran out of control, while yet others
resulted from intense struggles between local communities and the plantation companies that
encroach in their areas.
If the plantation industry continues to expand the way it did in the past, further forest fires will
be inevitable in the future. Because of this threat, Indonesian non-governmental organisations
(NGOs) established Sawit Watch in 1998. Currently more than 40 NGOs, active throughout
Indonesia, from Sumatra, to Kalimantan, Sulawesi and Irian Jaya, are members of this network.
Sawit Watch strives to raise awareness about the environmental and social impacts of
irresponsible oil palm expansion at the local, national and international level and to support
local communities in their struggle.1 Individual Sawit Watch members have courageously filed
and won lawsuits against plantation companies’ burning and land grabbing practises, while
others have tried endlessly (but often fruitlessly) to enter into dialogue with industry
representatives. In conjunction with their partners in Indonesia, Dutch NGOs (Greenpeace,
Both ENDS, Friends of the Earth and the Working Group on Indigenous Peoples) aim to raise
awareness among the public about the environmental impacts caused by the plantation sector in
which Dutch consumers may be involved.
Obviously, the expansion of Indonesia’s plantation industry requires large amounts of capital.
The role and responsibility of financial institutions is therefore of special interest, as they
provide the credits, equity and other financial services that plantation companies require to open
and expand their estates. Financial institutions that are substantially involved in providing this
capital would be able to influence the environmental policies of their clients. This form of fire
fighting may prove far more meaningful than throwing money at the flames.
Greenpeace Netherland, bekerjasama dengan AIDEnvironment, Telapak & Contrast Advies, 2000
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