Dec 7, 2006

Bayangan indah globalisasi...

Baru-baru ini indeks globalisasi dirilis ke enam kalinya oleh majalan Foreign Policy bekerjasama dengan A.T. Kearney Inc (here and pdf). Menariknya dari laporan tersebut, negara-negara yang tercatat sebagai 20 besar teratas dari 62 negara yang diukur, mewakili beberapa negara sedang berkembang antara lain negara Eropa timur seperti republik Ceko, Slovenia dan Hungaria. Dua negara Asean yaitu Singapura menempati posisi teratas dan Malaysia berada di urutan 19 negara ter-global. Dimana posisi Indonesia? Tidak berubah dari posisi dari tahun lalu, kita masih berada di urutan ke-60.


Globalisasi adalah sebuah fakta yang tidak bisa dihindari. Jargon bahwa globalisasi membuat jarak semakin dekat dan dunia semakin kecil tampaknya mendekati kenyataan. Tidak mengherankan penggunaan internet merupakan indikator penting dalam dimensi koneksi teknologi. Internet dalam beberapa hal sangat berperan dalam pengurangan jarak diantara belahan dunia. Secara ekonomi, globalisasi diartikan sebagai integrasi perekonomian dengan mengukur perdagangan luar negeri dan investasi langsung luar negeri. Selain itu, partisipasi dalam percaturan politik global menjadi nilai tambah tersendiri. Selanjutnya, jumlah perjalanan wisata, lalu lintas telephone internasional and lalu lintas pengiriman uang dari dan ke luar negeri menjadi indikator penting dalam kontak personal.

Apa artinya indeks globalisasi bagi Indonesia? Pertama, indeks ini mematahkan mitos globalisasi sebagai fenomena ekonomi. Dalam tataran tertentu terlihat jelas kaitan antara perdagangan internasional dan globalisasi. Sebaliknya, indeks ini menunjukkan bahwa performance ekonomi tidak selalu sejalan dengan globalisasi. Misalnya Amerika Serikat yang berada pada urutan ke-3, dalam hal integrasi ekonomi justru berada pada posisi 2 terbawah. Hal ini didukung oleh fakta bahwa perdagangan domestik mendominasi mengingat tingginya tingkat konsumsi dalam negri AS. Kecenderungan yang sama juga terlihat pada negara maju lainnya yang masuk dalam jajaran 20 besar kecuali Singapura. Walaupun demikian, negara sosialis Eropa timur justru mendapat keuntungan luar biasa dari globalisasi antara lain terbukanya pasar tenaga kerja.

Kedua, bagi para penentang globalisasi penerbitan indeks ini merupakan pukulan telak. Indonesia yang menempati posisi ke-60 justru berada di kutub yang sebaliknya. Bisa dikatakan Indonesia belum sepenuhnya terintegrasi kepada sistem global. Ditambah lagi dengan kelemahan kita dari segi koneksitas teknologi, kita sungguh jauh tertinggal. Minimnya jaringan komunikasi termasuk internet yang melayani wilayah pedesaan, pulau terpencil dan kawasan tertinggal lainnya merupakan indikator bahwa kita belum mengglobal. Bagi kelompok pro liberalisasi perdagangan, argumen ini dapat dipastikan membuka jalan bagi kesempatan liberalisasi yang lebih luas.

Pesan yang ingin disampaikan dalam studi ini sangatlah jelas yaitu mendorong negara-negara di dunia untuk lebih terbuka terhadap globalisasi. Namun, diskusi mengenai globalisasi tidak bisa berhenti pada deretan angka-angka seperti paparan studi ini. Dalam beberapa hal studi ini mengandung kelemahan ketika indeks ini tidak bisa menyatakan siapa menang-siapa yang kalah hanya berdasarkan urut-urutan. Lihat saja Iran di urutan terakhir (62) tetapi dalam hal teknologi nuklir beberapa langkah lebih maju. Justru pertaruhannya adalah menyangkut kehidupan orang banyak. Persoalan yang lebih struktural antara lain akses terhadap sumber daya sama sekali tidak dibahas dalam studi ini. Pertanyaan yang sungguh perlu dijawab adalah apakah globalisasi mengakibatkan pemerataan akses terhadap sumber daya? Ini justru sangat krusial.

land question: access to the land

In responding to Peter Timmer in Jakarta Post (here), I would comment on his point on the lack of agriculture land. Since the debate of rice economy mainly discusses who should play a role in food policy, the market or the state? Let step aside from it and look back to farmer’s household having tiny plot of land. What is wrong with that? It is argued that small plot brings lower yield regardless the productivity probably be higher with advance investment. It is true though. But this is not the farmers’ fault having small plot of land.

The land has been distributed bias toward large capitalist farmers. Since they have more resources (capital, labor etc), they are able to accumulate the land and leaving other peasants with small plot of land. Many peasants are also left from agriculture sector and becoming rural wage labor (see Lenin)

My point is the access to the land is still problematic coupled with imperfect information and interlinked market. Some poor farmers do have a dream to enlarge their holding but then they don’t have enough access to credit for buying more land. The same happens whenever they want to improve land productivity but then the input market is not farmers’ friendly. Since the farmers are poor, the increased cost would be covered by loan from someone else’s pocket (usually money lender, often large holding landlords).

Instead of playing with the price, first, land distribution must be worked out. Some people are reluctant to this idea since it sounds as communist approach. Well, I can say our government starts doing this too (here). So does our government turn to be communist?

so if we want to improve the welfare of the poor farmers but they do have tiny plot, why dont we give them the land for doing farming?

Nov 8, 2006

Saatnya individualisasi aset...

Minggu-minggu ini berita kedatangan De Soto ke Indonesia (red. Jakarta) telah menimbulkan kehebohan tersendiri. Bukan hanya isu seputar pengangkatan dirinya sebagai konsultan ekonomi SBY (tentu saja harganya selangit) tetapi juga aliran pemikiran yang ditawarkan menjadi perdebatan.

Lalu kemudian kita bertanya, apakah sudah saatnya aset-aset orang miskin di privatisasi seperti disarankan oleh De Soto dalam beberapa publikasinya?

Kita tahu bahwa aset bagi kaum miskin adalah sebuah berkah. Dalam konteks ini aset yang akan dibicarakan adalah tanah. Asumsinya tanah dalam status yang tidak jelas mengharuskan intervensi (salah satunya dengan sertifikat) agar aset tersebut bernilai di pasar.

Masalah lain, akses terhadap tanah dipengaruhi oleh banyak faktor terutama faktor sosial budaya yang mengatur bagaimana suatu masyarakat memperoleh akses terhadap tanah. Di wilayah ini yang lebih dominan adalah hak milik bersama (communal property) dibandingkan kepemilikan individu.

Ternyata kepemilikan bersama tidak menyelesaikan masalah. Penguasaannya justru didominasi oleh para elite yang mengatur akses warga komunitas. Warga komunitas yang marginal otomatis akan semakin terpinggir.

Mentransformasi kepemilikan bersama menjadi kepemilikan pribadi, tidak mudah. Bentuk penguasaan pribadi yang terbentuk sesudahnya sangat berkaitan bagaimana akses terhadap tanah didefinisikan pada masa kepemilikan bersama. Lagi-lagi hanya warga-warga tertentu yang saja yang menangguk keuntungan dari transformasi ini. Warga yang tidak sempat berpartisipasi dalam akses tanah di masa sebelumnya, sesudah transformasi tidak mengalami perubahan. Bahkan situasinya justru semakin memburuk.

Terkait dengan kepemilikan pribadi, banyak yang menyayangkan tanah-tanah itu nantinya dijual. Benar, alasannya akses terhadap sumber mata pencaharian, dalam banyak kasus, relatif terbatas sehingga penjualan tanah bisa dilihat sebagai 'langkah terakhir' penyelamatan. Artinya seandainya pemegang kepemilikan individu dapat memperoleh mencukupi kebutuhannya secara optimal, penjualan tanah setidaknya berkurang.

Kedua, akses kepemilikan pribadi belum tentu mendapatkan akses kredit yang luas. Alasannya informasi berkaitan dengan ketersediaan kredit dan kebutuhan akan kredit tidak tersebar sempurna diantara lembaga keuangan kredit dan pemilik aset.

Terakhir, menjawab privatisasi 'a la' De Soto layak dipertimbangkan jika perangkat institusi pasar sudah berjalan secara sempurna. Tampaknya kesempurnaan ini sulit dicapai sehingga ide De Soto didengarkan saja, tidak usah dilaksanakan.

Nov 2, 2006

Land certificate or Land insecurity?

It is a common view among rank and file that there is a sense of insecurity dealing with an individual land transaction. This is because the transaction is just equipped with the land release letter and in some cases the letter isn’t secure enough to defend from other claims for instance another buyer who had the same letter for the same plot of land. The notion of double sales is also important to reveal since it operates through two ways. First, the land sellers didn’t consult their decision to sell the land with the other families and second, due to poor records, the village head re-issued the letter for the same plot. In addition to that another dimension of insecurity was not only because of double sales, but also amid the process of issuing land certificate by BPN.


As experienced by some buyers who applied for land certificate, they were ended by waiting their application for more that a year. There is a feeling of insecurity when the original released letter was submitted to the BPN, should there are any calamities so the letter is lost, the applicant would be more insecure. Therefore some buyers prefer keeping the original letter with him than applying for the certificate (yyy, interview).

It doesn’t mean that the land certificate is not important; in fact it provides a means to defend from other claims. But the weaknesses are not the certificate itself but more on the lack of law enforcement. This is not exceptional case for this island but it happens all over the country.

Jul 11, 2006

Privatization of the land: will it lead to land security?

Land tenure is argued has a link with land security. It is why many believe that private land tenure provides more security than customary land tenure. This brief argues that private land tenure is not necessary applied in every situation; customary land tenure has an equal importance as individual land tenure. Securing individual land tenure might not be achieved through getting a land certificate; many conditions influence the land security.

In the context of Indonesia, the issue of land security is important despite the fact that the country is land and natural resources’ abundant. The access to the land is associated with security of access in terms of ability to get livelihood on the land as well as providing food security. In addition the land as a capital plays a role to access the credit in the financial market. Therefore the lack of security of property right over the land is an indication the difficulties encountered by poverty reduction program. Realizing the importance of the issue as reported also by World Bank (2005) that only 17 million parcels of land have been registered out of 80 million parcels(a), the government has committed to provide land certificate for 200 thousand of poor people in the year of 2007(b).

Before moving toward assessing land policy in Indonesia, some problems have been identified covering cross-cutting issues including intersection between the land and natural resources issues:

  1. Acknowledgement of property right over land at different level

According to the constitution, all water, land and natural resources beneath the earth belong to the state and serviced to the welfare of the society (Constitution 1945, article 33). The idea was very good but it is not always the case since the government was so powerful. By basing from this law the government has legitimacy to acquire the land for development use like set up transmigration area, allocate forest for concession and so on. One of the striking facts, Brown (1999) calculated 585 timber concessions covering 62 million hectares of forest by the end of 1995 (c). This was an indication of the prevailing role of the government by which it didn’t always recognize the indigenous right based on customary relationship.

On the other hand, the Basic Agrarian Law (BAL) no 5/1960 attempted to accommodate customary land right but still the state sovereignty has to be preceded over the customary rights (d). These basic laws have been inspiring the latter laws like forestry law no. 41/1999 recognized the indigenous community and customary land right though it is not fully; there is a condition of the existence of the community practicing their customs. The debate between community right and the statutory law has never ended; at least the parliament passed a decree (Tap MPR) IX/2001 in order to reorganize the agrarian reform and natural resources management. Still it has little implication on the recognition of customary tenure.

  1. The escalation of conflicts involving local community, private companies and the government

This complexity of law enforcement finally led to some conflicts between the government and the local indigenous people. National Spatial Coordination Board-BKTRN (2004:5-6) found the conflicts are mainly the occupation by the community in the land that claimed as customary land be it estate, forest, or mining areas (e). This also includes the overlapping allocation of forest land but it has already converted into non-forest or no forest standing anymore. Currently the conflict moves from the community versus the private sector toward the community versus the local government in the context of decentralization. Furthermore the conflicts are also happening within the groups of the society as the World Bank (2004:5) indicates that many conflicts related to the land ownership are associated with food security (f).

  1. New decentralization policy

The decentralization policy was established in 1999 and intended to distribute the power over central government to district government. However, some of the authorities were still kept by central government including land policy formulation; it is still under central government authority. Some laws and regulations are conflicting started with government regulation 25/2000; land policy is under the central government authority then it is given to district/municipal government to manage land use in district level including settle the land dispute involving customary land by President Decree 34/2003. Having so many regulations, the latest President Regulation 10/2006; it returns the land policy and management authorities to the National Land Board (BPN) which is still centralized institution in nature (g).

The factors affecting land security

The overlapping authority is leading to ignore the central issue of dispute between the government and the local community. For some communities, the land are controlled under communal management by which it rooted on traditional claims, unwritten law and passed through generation based on genealogy and territorial relationship. This type of land tenure is prevalent over the country especially in the eastern part of Indonesia. Even within the country there is no single system except what has been programmed by the government namely land registration and administration through certification. As it has been mentioned before about 63 million parcels of the land have not been registered yet; the government conducted the land registration and certification program for the purpose of giving legal security as it is the only means recognized by the law (BAL) (h).

Despite the certification program would lead to secure ownership, up to now the programs are predominantly imposed by the government. Such enforcement is important but it undermines the fact that the owners are able to motivate themselves to register their property. This voluntary registration doesn’t happen since land certification is neither cheap nor uncomplicated especially for poor people.

The other reason for not applying land certificate is the status of the land is under customary land. The land often indivisible since it is controlled by the lineage family; they are reluctant to divide for the whole community as the existing of some forms of power relation and inequality. Besides division of the land is rather difficult as a result everyone will get small parcel of land. In this sense, the use of the land for agriculture purposes becomes worthless and only creating inefficiency. As soon as the people get the land certificated; the land becomes uncontrollable. By means of a certificate, the land can be easily commercialized or using it as collateral having the loan in the bank. As a result the land can be concentrated and only affordable for the rich. A worried regarding to the losing of the land as manifestation of the relationship to the ancestors; customary land would be disappeared. This kind of feeling was experienced by local community in rural West Sumatra given the fact that the land administration project (LAP) was on a trial certifying the customary land (i).

It is often argued that clear land ownership as well as proven by land certificate as indications of secure land tenure. In fact, the certification process is meant to make land market works, improving efficiency in terms of resource allocation and to be able to improve economic growth but not for the welfare of the peasant (j). Market is not always working in the case of the information like price, location, number of buyers and so on might not be distributed evenly. The buyer would get different information from what the owners have therefore certificated land is not always marketed at its market value, sometimes less or even more.

Considering the process of certification might take time as well as has financial implication, the promise that it is free might not be the case in the field (k). There is an administration cost regarding to record the title, infrastructures, and human resources. It has not yet considered when the collusion and corruption occur at various level of the process. Finally, the costumers need to pay the fee for this kind of bureaucratic inefficiency.

Institutional arrangement has further implication for giving secure property. The fact that rules and regulation are often overlapping leading to more insecurity. It has a contribution to uncertainty situation. The authority of the government to appropriate the land for the public use is one of the latest regulations (President Regulation 36/2005). Although the purpose is good in terms of delivering public services, it opens to abuse. The compensation scheme embedded in this law however should be critically looked at. Having paid for the compensation, it doesn’t mean that the government can take over any land but it has to be based on particular spatial plan. In fact, spatial plan is exist in the paper but the reality might not say so; the application is still questionable. The payment for the compensation might not always at a market value of the land implying the government often gets the land at a lowest cost. Furthermore, the distribution of the compensation often leads to a conflict related to how much is the compensation and its disbursement might not at once leading more insecurity for the people.

Having no paper proof is a big problem but having it also doesn’t always solve the problem of land insecurity. In many cases the same plot of the land has more than one certificate by which one source of the conflict between certificate’s holders. One holder can have no security until 5 years after land registration, by the law, it is prohibited to assign new certificate afterward. Since not every land belongs to private property right, in the case of customary land when the selling is not informed to the other lineage family, other family might reclaim the land or even worst they can get the same certificate. To resolve the court might argue that new certificate can be given as long as equipped with new evidences (l).

Policy implication

The policy need to be taken is to facilitate the recognition of customary land. The fact that it is very prevalent in Indonesian society, the government needs to accommodate such system in the national legal system. Up to now the system has not pointed specifically on legal aspect of customary land. However to make it a written law might not suitable with the nature of customary law that is flexibility and adaptability. Still, the government needs to consider the existence of the system.

Voluntary land registration might be one solution in the case of customary land relation is still strong. Some of community has not used their customary law therefore for they can become a subject for the government’s land registration program. But for those who don’t want to transfer from the communal right to the individual ownership, the government can’t enforce the community to surrender their land. In that case, the community has to be consulted if the land would be used for public use.

The government has to provide a better compensation scheme to allow the people maintain their livelihood having no land. The government needs to improve the governance on land administration system. It comprises the process and mechanism of land registration; provide appropriate compensation for acquiring the land for public use. It has also deal with the problem of speculation in the case of the land for public use since the negotiation process opens to abuse and rent seeking activities.

Finally this brief argues that the privatization and giving land ownership to individual might not be applied in a single system. The existence of other system of land ownership should not limit the opportunity of such the communities to get equal public services. Thereby the government needs to consider the system as part of the richness of the culture and dealing with them properly would benefit not only the government but also the people.

a- World Bank (2005). Land Policy, Management and Administration, Indonesia Policy Brief – ideas for the future, January 2005
b- Tempo Interaktif, Sertifikasi Tanah Gratis pada 2007 (Free Land Certification in 2007), http://www.tempointeraktif.com/hg/nasional/2006/03/21/brk,20060321-75368,id.html accessed on Saturday, July 08, 2006 7:28 PM
c- Brown, David (1999). Addicted to Rent: Corporate and Spatial Distribution of Forest Resources in Indonesia; Implications for Forest Sustainability and Government Policy, http://www.geocities.com/davidbrown_id/Atr_main.html accessed on 23 December 2005 at 11.00 am
d- McCarthy, John F (2000) Biodiversity Policy in Indonesia: A Case Study, Institute for Sustainability and Technology Policy, Murdoch University, Australia http://wwwistp.murdoch.edu.au/publications/e_public/Case%20Studies_Asia/bioindon/03.htm accessed on Wednesday, December 14, 2005 12:59 AM
e- BKTRN (2004), Kerangka Kebijakan Pertanahan Nasional (National Framework for Land Policy), http://www.bktrn.org/article_document/Kerangka%20Kebijakan%20Pertanahan%20Nasional_Isi%20Lengkap.pdf
f- World Bank (2004), Konflik Lokal di Indonesia: Peristiwa dan Pola (Local conflicts in Indonesia: Pattern and Action), Social Development Notes: Conflict Prevention and Reconstruction No.18, June 2004
g- Kompas, Kewenangan yang Masih Diperebutkan (The struggles for the authorities), Friday 16 June 2006, http://www.kompas.com/kompas-cetak/0606/16/Politikhukum/2732549.htm accessed on Sunday, July 09, 2006 11:50 AM
h- Gabriel Triwibawa, Merenungkan 45 Tahun Setelah Uupa Diundangkan (Contemplating the 45 years after Basic Agrarian Law was Enacted), Kedaulatan Rakyat Newspaper, 24 September 2005, http://222.124.164.132/article.php?sid=28018 accessed on Sunday, July 9, 2006 at 1:05 pm
i- See SMERU, A Communal Land Mapping Pilot Project, SMERU News No.4, October-December 2002
j- Federation of Indonesian Peasant Union (FSPI), Pandangan dan Sikap Dasar Federasi Serikat Petani Indonesia (FSPI) tentang Pembaruan Agraria (The View and The Position of FSPI with regard to Agrarian Reform) http://www.fspi.or.id/index.php?option=com_content&task=view&id=23&Itemid=37 accessed on Saturday, July 08, 2006 12:46 PM
k- A case found in Bandung District that community paid IDR 50 – 100 thousand for the land administration. See http://www.pikiran-rakyat.com/cetak/2006/032006/09/0206.htm, accessed on Sunday 9 July 2006 at 11:20am
l- Sinar Harapan (2003). Jalan Berliku Perjuangan Hak Atas Tanah (a long road for land right struggle) , Monday 29 September 2003, http://www.sinarharapan.co.id/berita/0309/29/nas02.html, accessed on Friday 14 April 2006 at 20.00pm

May 22, 2006

Beyond land security: private or communal right?

Land tenure security becomes major importance in developing worlds. I choose this issue in the context of Indonesia that the country is well known of land and natural resources abundant. Those resources become invaluable if the policy makers fail addressing the potential of the resources especially land resource. The importance of this issue suggests that land must be secure enough in order to allow the owner to invest in their land and participate in the market as further result improved economic growth. Realizing the important of such issue, the parliament has already passed a decree regarding to agrarian reform and natural resource management in 2001.



Land ownership is diverse across Indonesia because of the cultural difference of the people who living in different islands and even characterized by language diversity. Those systems are resulted in different ways to access land in the society. Some are likely to have private ownership and the others are communal ownership and the combination between the two also exists resulting a variation of land holding and ownership. For instance in communal societies outside Java Island, land was acquired by occupying area hence they claimed it as communal possession. They based the ownership on genealogical or on territorial relationships formalized by unwritten law[2]. Some problems took place as a result of land tenure insecurity. Different type of land ownership has escalated conflicts between local people and other parties. They are basing their claim on different level of ownership for instance local people insisted for their communal right whereas the company approved by the government perceived land as state property.

The debate mainly related to who should entitled land ownership? For some communities, giving it totally to individual will ignore the historical and traditional value. On the other hand, informal right such as communal right is not suitable for market economy, which needs security in terms of property right to ensure the holders are willing to invest in the long term. The further debate deals with the transformation of right by abolishing communal right into individual right. Is it suitable and morally acceptable? About land registration and administration, the main problem is the lack of land based information system intensified by only small part of the land in Indonesian territory has been registered. World Bank (2005) found that 17 million parcels of land have been registered leaving the other 63 million parcels are lack of legal protection.

In addition to that institution capability is still in question to conduct such registration and land administration. A range of possible policy responses has been identified as follows: · Government should design system of land ownership in order to foster investment and market economy · Government should ensure that land be available for all people · Government centrally controls and manages the land under state property rightFrom those responses, the first response is going to be assessed in this paper. The reason of choosing this response that it is important for the people under uncertainty circumstances to get land ownership. The fact that the variety of land tenure system in Indonesian is obvious, it generates insecurity in terms of ambiguity of land right, high transaction cost and difficulties to place land in the market economy.

It is widely accepted that by giving right to individual therefore it makes the owner to invest in the land or at least manage them in order not to be degraded. Not doing so may increase the cost such as maintenance costs. Therefore to maximize benefit, the owner had better doing investment on the land. In the long run, individual right provide more security to the owner. From government side, land registration potentially increases tax revenue. Only by securing land ownership, government can collect land tax. Land also plays a role as critical safety net in crisis time. It means that land ownership gives the opportunity to the owner instead keeping it as dead capital; he can sell the land during crisis time. It is argued that credit market will work after property right is secure enough however it is not always the case. Informal credit market as oppose to formal credit market that is bank and formal financial institutions may exist and provide credit to the people. One of them is moneylenders that sometimes operate based on a trust between them and the borrowers.

Besides that, people could use other form of property such as motorbike as collateral while not having land. In addition to that, some counter argument for this policy proposal. First, there is a tendency to land polarization since market made it possible for transferring land easily. As a result, land might concentrated in the hand of people who have ability to buy more and more of it. Second, securing property is one condition to foster investment however land investment simply doesn’t happen since information is asymmetric among the owner, the user and the market.

Third, having no paper proof is a big problem but having it also doesn’t solve the problem of land insecurity. There is a case when the same plot has two or more land certificate.
Fourth, in order to make land available for individual in communal society, land need to be divided among member of society. This would escalate conflict within community. Then the opposing policy response would allow the existing land tenure system to develop with government as facilitator. By this, government should acknowledge and accommodate communal land right into national land system. As previously discussed, individual land registration ignores the existing communal system and attempt to abolish them however the latter proposal suggest that giving acknowledgement to communal land also improve land security. The position of communal system is often weak when it has to negotiate with external parties. Many cases that local people are ignored from decision making process because their right over land is not recognized. There is a risk by local people when the right is not acknowledged they may be expelled from their land.

The limitation of this process when particular society has been partly even wholly integrated into modern world, thus the system becomes under crisis. It may not in favor but should the people decide what is the best for them either using the system or not. This choice is also valid for those who want to keep using communal system as basis for land management. To summarize the whole set arguments presented above; I would reject the claims that land registration makes the market work and foster investment. Ownership dimension is not about relation between individual and the things that is land but it is a social relation (Sayer, 1995:146). This implied that the way in which relationship is formed have a consequence on land ownership. By owning the land, ones can have power but the others become powerless. Besides market is not a neutral idea; it carries individualist and self-interest value. The value may deteriorate collective value owned by communal society. I propose communal land should be entitled and acknowledge by the state. Past experiences has been shown that indigenous people were easily expelled from the land because their rights were unnoticed. McCarthy (2000) found that state allocation of forest concession often overlapping with pre-existing land tenure hold by community surrounding forest. Not surprisingly conflicts were took place between people and the companies. Therefore government’ acknowledgement is important. In addition to that, the capacity of communal society needs to be improved. This can be done by identifying and mapping the border of communal land with assistance of NGO. These map should be approved and accommodated into national map, spatial planning and land use planning map (Evers 2006:6). Moreover, government needs to develop legal framework that recognizes and protects communal land including dispute settlement when conflict over it take place. -=((o))=-

[2] http://tanahkoe.tripod.com/bhumiku/id3.html accessed on 13 April 2006 at 22.35 pm

May 3, 2006

Forest Property Right in Indonesia: Discussion and Conclusion

It has been argue above that both approaches recognized state property right over forest resources but have different point of view. CBA view state property right enforces the process of social differentiation that leads to depeasantinization. As the result, CBA would see the workers as a social class, encounter the worst impact of capitalism in forestry sector compared to concession holders, capitalist class, who get much surplus. In the other hand, NIE has different view that property right is seen as a way to reduce transaction costs. State property right should be chosen because state can be external guarantor in order transfer and exchange is possible (Stein, 1994: 1834). NIE emphasizes the objective of property right is to improve market allocation. In terms of actor involved in forest management, CBA sees that only private sector involved in forest management because state acts to support capitalist interest. on the contrary, NIE would argue that no matter of parties involved in forest management whether big company or small company even community as long as such arrangement would reduce transaction cost. It also would have implication to whom property right be given. Since forest management consists of large capital, it explains in the eye of NIE that only big companies involved. The distinct feature of class-based analysis is an approach based on class as a result of different access to means of production. CBA also clarifies the process of class differentiation however in the case of explaining rural change in forestry sector, it comes slightly different from what CBA argued. In the context of forestry sector, indigenous people never move toward rich farmers nor capitalist agriculture. They would even become landlessness. The transformation of rich peasant to capitalist agriculture, as Lenin said, does not happened. In terms of differentiation based on economic wealth, it happened when some inhabitants works in companies and able to improve their well-being compared to medium or poor peasants. One strength of NIE that it explains the significance of non-market mechanism by acknowledging transaction costs (anon, 2005). Therefore transaction cost becomes one of important feature that should be reduced in order to improve imperfect market. Compared to the other approach from which NIE derived, neo-classical approach, NIE offers more realistic, historical and social in its approach. The central objective of NIE is to reduce transaction costs therefore in the case of property right, it opens opportunity to the other property right regimes such as community-based property right. Moreover, NIE does not have any opposition whether community, private or state property right as long as transaction costs is reduced then it would be acceptable. In some cases that most players are locally based and transaction cost can be reduced so that applying state property right would somewhat increase transaction cost instead of reduced it. To the question of resource degradation, NIE left confusing explanation that as institution develops it assumed transaction costs would be minimized. In the other hand, moral hazard, derived from asymmetric information, sharply have impact to forest degradation. In other words to say that in the reality of forest management, although property right has been set up moral hazard still also happened in parallel. Thus, institution failed to explain how to overcomes this problem. In that sense, weak state might be explanation why environmental degradation happened in the settled institution (Bromley, 1997). CBA obviously is not a perfect approach. The approach has been developed in the context of agrarian society however in the contemporary world differentiation based on agrarian criteria is not really useful. Other basis for differentiation like demographic (anon 2005) and economic wealth might relevant to consider in the context of some wage labors are able to improve their livelihood. Capitalist class nowadays doesn’t only constitute in farmers society but also industrious capitalist who own financial capital. Apart from class approach, it doesn’t consider gender relation, which to some extent produce similar inequality to means of production (anon, 2005).
To conclude the discussion above and answer central question in which approach is the most suitable to explain agrarian change in forestry sectors in Indonesia, it is the class-based approach which clarify some points related to the process of rural change. The approach perceived the underlying problems in inequality of access to means of production therefore the process of differentiation become inevitable. As the result, indigenous people forced out from their land and often conflicts took place struggling to get their access back over the land. Some of them might have permanent lost their access to land becoming landlessness. For peasants, the only choice is dissolving into wage laborer. In the context of state property right in forest management in Indonesia, class-based approach demonstrates that the notion of conflicts is persistence over time during the beginning of commercial forest management[5]. Indigenous people become resistance to capitalist pressure because they are the one who get the worst impact of forest exploitation in terms of abandoning their existence as well as their customary right. The approach also explain environmental degradation resulted from expropriated rent by concessionaires. However the approach has weaknesses that is, it doesn’t consider gender relation in which produce similar inequality and theory focuses in farming society but nowadays capitalist class has been developed covering non-landed capitalist such as financial capitalists and knowledge capitalists.

Reference:
Akram-Lodhi, Haroon (2005). Institutional Theories Of Agrarian Change, MAJ4109 session 12, 8 December 2005, Institute of Social Studies, Den Haag
Ankarloo, Daniel (2000). Capital and Class, http://www.findarticles.com/p/articles/mi_qa3780/is_200210/ai_n9105817 accessed on 18 December 2005 at 7.52 pm
Anonymous (2005). MAJ 109 Thinking About Rural Livelihoods: Theoritical Perspectives on Rural Change (Staff Version), handout distributed on 12 December 2005, Institute of Social Studies, Den Haag
Bromley, Daniel (1997). Environmental Problems in Southeast Asia: Property Regimes as Cause and Solution , http://www.idrc.org.sg/eepsea/ev-8768-201-1-DO_TOPIC.html accessed on 21 December 2005 at 2.33 am
Brown, David (1999). Addicted to Rent: Corporate and Spatial Distribution of Forest Resources in Indonesia; Implications for Forest Sustainability and Government Policy, http://www.geocities.com/davidbrown_id/Atr_main.html accessed on 23 December 2005 at 11.00 am
Ellis, Frank (1993). Peasant Economics: Farm Households and Agrarian Development, Cambridge University Press, 2nd edition, Cambridge, UK
HP, Arimbi and Emmy Hafild (1999), Practising the Mandate of Article 33 of Basic Constitution 1945 (Membumikan Mandat Pasal 33 Uud 1945), Walhi, Indonesia, http://www.pacific.net.id/~dede_s/Membumikan.htm accessed on 23 December 2005 at 10.45 am
Kay, Cris (2005). Theorising Agrarian Change: The Class-Based Approach, MA Course 4109 Lecture 10, Institute of Social Studies, Den Haag
Lenin, V.I. (1982). The Diferentiation of The Peasantry, in J. Harris (ed.)(1982), Rural Development: Theories of Peasant Economy And Rural Change, London: Hutchinson, ch 5, pp. 130-138
Mauri, Michael (2005). High-grading in Massachusetts: Cause for Concern, http://www.massforesters.org/high-gra.htm accessed on 20 Desember 2005 at 11.01 pm
Magin, Georgina. (2001) Forests of Fear.The Abuse of Human Rights in Forest Conflicts, Fern, The Netherlands
McCarthy, John F. (2000a). The Changing Regime: Forest Property and Reformasi in Indonesia, in Martin Doornbos, Ashwani Saith, and Ben White (eds.)(2000). Forest: Nature, People, Power, Blackwell Publishers Ltd, Oxford, UK, p. 89-127
--------- (2000b). Biodiversity Policy in Indonesia: A Case Study, Institute for Sustainability and Technology Policy, Murdoch University, Australia http://wwwistp.murdoch.edu.au/publications/e_public/Case%20Studies_Asia/bioindon/03.htmaccessed on 14 December 2005 at 12.59 am
Ministry of Forestry, Basic Forestry Law (Undang-Undang Pokok Kehutanan) No.5/1967 http://www.theceli.com/dokumen/produk/1967/5-1967.htm accessed on 22 December 2005 at 21:05 pm
Peluso, Nancy Lee (1992). Rich Forests, Poor People: Resource Control and Resistance in Java, University of California Press, Berkeley
Peluso, Nancy Lee and Emily Harwell (2001). Territory, Custom and Cultural Politics of Ethics War In West Kalimantan, Indonesia in Nancy L Peluso and Michael Watts (eds.)(2001). Violent environments, Cornel University Press, Ithaca, New York, pp. 83-116
Romstad, Eirik (2001) Forestry and The Environment, Journal of Forest Economics 7(2): 2001 http://www.manuscript-submission.de/journals/files/jfe/2001/editorial.pdf accessed on 15 January 2006 at 11.30pm
Stein, Howard (1994). Theories of Institution and Economic Reform in Africa, World Development Vol.22, No.12, pp.1833-1849

end notes
[1] http://www.theceli.com/dokumen/produk/1967/5-1967.htm
[2] Peluso (1995) in John McCharty (2000a) The Changing Regime: Forest Property and Reformasi in Indonesia, in Martin Doornbos, Ashwani Saith, and Ben White (eds.)(2000). Forest: Nature, People, Power, Blackwell Publishers Ltd, Oxford, UK, p. 91
[3] See http://www.massforesters.org/high-gra.htm
[4] Arimbi HP and Emmy Hafild, http://www.pacific.net.id/~dede_s/Membumikan.htm
[5] there has been many scholar wrote about conflict in forest in Indonesia, just to name some examples: Peluso (1992), Peluso and Harwell (2001), Magin (2001), McCarthy (2000)

Forest Property Right: Class-Based Approach

Class based approach (CBA) defines path of agrarian transition, class formation and social differentiation (Kay, 2005). The transition is based on capitalist relationship of production and surplus value of production. In this relation livelihood of people is highly determined by ownership and effective control over productive resources, the means of production, that is land, variable inputs, instruments of production and machines (Ellis, 1993: 47). Therefore social relation of production will explain clearly how relation of serf-feudal lords and capitalist-the workers. From that point of view, capitalists who have control over means of production would also control other social class’ live (serf, the workers). It means that they must work for another social class (feudal lord, the capitalist) to get their livelihood. In the relation of production, social reproduction is needed to maintain a society to renew itself overtime (Ellis 1993:49). It can take form of simple reproduction, which is sufficient to continue production at recurrent level. The other form is expanded reproduction, which require simple reproduction forms plus extra production for raising output further over time. Capitalists use this form of production when surplus produced are continuously re-invested in the new means of production in order to raise future output. It is argued that surplus over and above recurrent needs is prerequisite to increase the output however it is not the case. CBA would argue that class structure in society become important (Ellis 1993:49). In capitalist society, the workers sell their labor and produce surplus for the capitalist class (Ellis 1993:50). They utilize the surplus to reinvest in new means of production to raise output in the successive period. The capitalists can do so because they have control over means of production in contrast to the workers. The implication so far that a process of social differentiation is ongoing which lead to integration of peasants into two social classes in the society that is capitalist farmers and rural wage labor (Lenin as quoted by Ellis 1993:51). The reasons why this is happening are the implication of private property in land, different agricultural technology adaptation, inability to compete with more advance neighbors and growing employment for wage labor in capitalists farming (Ellis 1993:52). In earlier process, differentiation occurs involving rich peasant, middle peasant, poor peasant and landless laborer (Lenin, 1982). In the context of forest property right in Indonesia, CBA would view that state assumed in line with private interest (Kay, 2005). It is not surprising then after announcing forest under state control, there were many private companies involved in forest operation and operated across the country mainly in Sumatra, Kalimantan and Irian Jaya (now Papua). Brown (1999) calculated 585 timber concessions covering 62 million hectares of forest in the end of 1995. The concession companies, most of them, had link with military organization. Dauvergne in McCarthy (2000) found that logging become opportunity for financing political and military ellites at that time. Passing resources to capitalist class has contribution to the process of social differentiation. The fact that MoF gave the concession to private sector without consultation with local people (McCarthy 2000a: 104), lead to social differentiation and changing structure of access to land and resources. While concession was operationg in particular forest area, people were losing their access to forest in term of access to land, food and income. Most of forest dwellers depend on forest in order to survive for example Dayak communities in Kalimantan had developed market for timber and non-timber products such as rattan traditionally with China and Arab for centuries[4]. Furthermore, in the early 1970s, the government mapped, demarcated and allocated management of forest area which known as production and protection forest (Peluso and Harwell 2001:94-95) given forest zoning as a tool for organize space and control of its use. This implied that forest enclosure prevail to exclude and abandon the existence of indigenous people, expelled from their land and unable to take part in capital-intensive forest management unless being wage workers. There have been evidences in Europe of the sixteenth until eighteenth centuries that enclosure escalated conflict and local resistance similar to Asia during colonialism period (Peluso 1992:14). The conflicts are still happening since forest has been allocated to private sector, indigenoues expelled from accessing the source of livelihood in forest as well as land. Moreover, the externality arises that is forest has been destructed because of concession operation. Magin (2001:15) noted the conflict between RAPP (Riau Andalan Pulp and Paper) and 3 villages (Kerinchi, Sering, and Delik) claiming of portions of the 285,000 ha was one of prolonged conflict since 1997. The conflict was escalated when people were occupying the claimed land until company invited police to disperse them. The use of police as state instrument, once again, tells us that state is in capitalist side as class-based already noticed. Related to capitalist relation of production, surplus value, in the context of forestry sector, surplus value has been created through labor exploitation in the form of cheap labor. Rent in forestry refers to a surplus value above its normal profit. Brown (1999) found that when the price of Meranti timber is around US$80, extraction cost in forestry business in Indonesia is around US$17 and putting normal profit US$5, hence the concession still enjoy US$58 as a rent (Brown, 1999). As long as capitalists enjoy the rent, they become addicted for the sake of accumulation motives. Therefore the worst consequences would be bear by indigenous people since they have been excluded, lost their livelihood and push back toward simple reproduction by capitalist (Ellis 1993:53). So that the way to survive would be joining labor regime in capitalist production–in this case to be the workers in concession company.

New Institutional Approach to Forest Property Right

II.

New institutional approach (NIE) has been a path-breaking approach to the understanding of capitalism (Ankarloo, 2002). NIE has significant contribution because it attempts to make neo-classical economics more historical, realistic and social in its approach. That is why institutions become important to reflect an idea of well-functioning market economy will work if institutional framework is effective. In the NIE point of view, institution exists as a means of reducing transaction and information costs (Stein 1994:1835). The theory assumed that market is imperfect and information is asymmetric in the case that price information on particular product is received differently between the buyers and the sellers. Consequently NIE explains rationality arising out of asymmetric information is bounded depend on information that each parties have. It assumed that market is not working perfectly because of misallocation of resources. In that case, the role of institution is to provide structure for exchange, which reduces transaction and information costs (North 1990 as quoted by Stein 1994:1837). Property right represents agrarian institution, which determined how social, cultural, political and economic relation in agrarian society are conducted (Akram-Lodhi, 2005). In the context of forestry management in Indonesia, state property right represent the way in which it would reduce transaction cost. Considering that large forest area covered by MoF as well as diversity took place within archipelago, state property right is the best way to resolve the problem of property insecurity. In addition, at early 1970s in order to encourage investment especially in forestry, it is important for government had to secure of property right (McCharty 2000b). As soon as property right was settled down to implement exclusivity and transferability of forest, MoF had performed mechanism upon it such as mapping, mark forest boundary and forest allocation. It has been argued that well-functioning market is result from institutional effectiveness. State property right thus acts to make exchange possible especially between the state and investors. NIE would argue that when MoF mark forest boundary, map the forest and allocate them then transaction would be low (Ankarloo, 2002). Stein (1994: 1834) would also suggest that state plays a role as external guarantor to make forest transferable and exchangeable. Furthermore NIE believe that gains from trade would be obtained similar result from that of neoclassical argument. In that point the role of state is obvious in forest management in Indonesia. MoF has set rules and regulation regarding to forest exploitation. As it has been said before that concessionaire would get right to use forest over 35 years as well as the liability of concessionaire to minimize environmental impact during concession period. In addition, the basic forestry law stated that MoF would manage forest by allocating and giving concession right to any parties who are able to comply with concession contract. Considering that forest management is capital-intensive investment, not surprisingly only big companies involved in forest extraction. The famous timber tycoons are Prajogo Pangestu and Bob Hasan, the earlier has concession over 5.5 million ha of forest (McCarthy 2000a: 103) The implication of asymmetric information is moral hazard (Akram-Lodhi, 2005) lead to environmental degradation. Principal agent model (Romstad 2001:100) explained that agent (concessionaire) is more well informed rather than of principal (state). That is why although state impose forest levies in order to control unsustainable practices, concessionaires who have better information try to maximize their profit by choosing the cheapest method that they could. In 1998, forest fire delivered haze, which had cause widespread health problems as well as halt economic activity. Forest plantation companies are one of actors who contributed to the escalation of the fire (McCarthy 2000a: 112). For company it is cheaper to burn the land while preparing the land. Another case is high grading[3] where for profit motives, concessionaire take only valuable species and left others standing. This is because concessionaires know better the location of valuable species even in reality they steal it from other area such as protection forest. Concession arrangement become important for defining secure environment for company to operate as argued by NIE it can reduce transaction costs. Thus, the length of concession has to be taken into account, which gives capacity to concession holder to invest in the long-term. In Indonesia, within period of 35 years, concession holder works under their bounded rationality in knowing whether the concession would be extended or not. In addition, in 35-year concession period, company only have 1 round forest extraction which means companies do not have any incentive to replant even recover any environmental damage because of such uncertainty above. As a result, they turn uncertainty over concession period into maximizing timber production as already describe above.

Apr 29, 2006

On Sachs: The End of Poverty

Sachs laid his argument on some elements as follows. First, lack of effort to provide basic needs such as health, water sanitation, and food in developing countries. Sachs believes it is somewhat practical but rich countries did fewer investments to provide it. Second, isolation comes from specific circumstances such as geographic, climate, soil so that people can’t get developed rapidly. In addition, some of them were also neglected being involved politically, economy, international market and trade. Third, the way to perceive development has to be changed by diagnosing problems, reducing generalization and doing it case-by-case analysis. Fourth, the LDC countries need for resources for development by increasing development aid and setting up proven technology. It is quite paradoxial that only smaller amount of aid i.e. 6¢ from US to Africa in 2002.[1] This brings to the fifth point; to enable people by giving adequate resources to do so. This is done by reallocating funding within country.

Sachs approach’s was based on assumption that development as process transformation from traditional society to modern society which changes from simple to complex technology, subsistence farming to cash crops and human power to machine power. His argument that countries should be brought into ladder of development is analogous to Rostow’s on 5 stages of development. In order to achieve modern state, countries should pass some stages of development. Advance technology would drive investment, increase productivity and stimulate them to market in order to benefit also from international trade.

On the other hand, increasing productivity using technological innovation will reduce labour absorption so that increase unemployment. Import substitution strategy also requires intensive capital goods as well as raw material then depreciates foreign exchange and balance of payment. The worst case is when the countries fail to diversify primary agriculture export until they are unable to pay additional capital needed. Therefore it needs more capital, which can be gained from international assistance. This makes them more dependent to their creditor[2] as a consequence of modernization similarly happened in Latin America.

I do not agree to his proposal on aid for development. Aid nowadays becomes a way to tie up developing countries and let donor dictates them. We suppose that aid would go directly to families but it isn’t. Government uses it for extracting resources in order to provide goods and service and achieve government agenda. It should be noted that aid is also such a business that donors want to get profit from their investment. Aid is just a means to an end but not the end itself[3]. In his proposal, Sachs didn’t address structural problems such as income and resource distribution that makes difficult for countries to do development. Behind the idea of ladder of development, it is worth to think the seriousness of developed countries to make development works as they might kicking the ladder to prevent developing countries to climb up[4].

Reference:

Adams, Patricia and Lawrence Solomon, In The Name of Progress, Earthscan Publication, London, 1985 (pp. 37-38)

Apter, David E., Rethinking Development: Modernization, Dependency and Postmodern Politics, Sage Publication, Newbury Park, 1987 (pp 17)

Chang, Ha-Joon, Kicking Away the Ladder – Development Strategy in Historical Perspective, Anthem Press, London, 2002 (an article based on his book)

Kay, Christobal, Latin American Theories of Development and Underdevelopment, Routldge, London, 1989 (pp 129-130)

Rojas, RĂ³binson, Modernization Theory And The Laws Of Social Change, 1996, <http://www.rrojasdatabank.org/capital8.htm>

Time Magazine, 14 March 2005 (pp 44-54)




[1] Time magazine, 14 March 2005, p. 54

[2] Sunkel (1967:51-5) as cited in Cristobal Kay (1989: 130)

[3] Patricia Adams and Lawrence Solomon, In The Name of Progress, Earthscan Publication, London, 1985 (pp. 37-38)

[4] Ha-Joon Chang , an article is based on his book, Kicking Away the Ladder – Development Strategy in Historical Perspective, Anthem Press, London, 2002.

Apr 21, 2006

Forest Property Right in Indonesia: Introduction

Forest has been acknowledged as state property right in Indonesia since Dutch colonial era in the early 19th century (McCarthy 2000b). It was based on forest destruction that happened in Java in 1808 hence colonial bureaucracy would manage trees, land and labor. In that era, land was made available for sugar, tea, rubber and coffee production. Colonial authority was also encouraging private investment in agriculture plantation. Agrarian act of 1870 thus facilitated this by taking all land that were not certified under state property right. After Indonesia independence, the important standpoint is in 1967 where Foreign Investment Act no.1 and Forest Law No.5 were passed, enabling the large-scale exploitation of forest resource (Peluso and Harwell, 2001; McCarthy 2000a, 2000b). The law stated in article 5 that all forest in Indonesia territory including resources upon it are belong to the state. State is also given authority to confirm and control planning, functioning, supplies and utilizing forest on condition that give benefit to citizens and state[1]. Under that law, it divided forest area into land use categories stand for objectives of timber production, conversion to agriculture and forest conservation. To emphasized state control over forest, there were series of forest mapping exercise[2]. Government then produced forest land use plan (TGHK) which comprises of areas such as protection forest, nature conservation area, production forest, limited production forest, conversion forest and area for other uses. In area mapped as production or limited production forest, concession is given over 35 years under supervision of ministry of forestry (MoF). The essay is proposed to answer central question on how state based property right is representing agrarian change?. From the two different point of view, new-institutional and class-based theory would be employed in order to understand and explain the central question. Each of theory would address different problems from the same reality. Under new institutional approach, the problem focus on what would lead concession holder to internalize moral hazard? In the other hand class-based approach would deal with how will state-based property right lead to process of landlessness? The paper would arrange and present the analysis in three parts, first, explanation of change under new-institutional theory and followed by class-based approach on state property right. Second, to compare both two theories in explaining the question in term of its contrast and similarities, strengths and weaknesses between approaches. The analysis would also decide what approach best explaining phenomena despite of its weaknesses. Third, to conclude and answer the problem under particular approach set in part two.