[Jakarta, 9 July 2020] Development that relies on the extraction of natural resources has reached a point of saturation and has proven incapable of delivering prosperity across the archipelago. It is time for Indonesia to rise by advancing an economic development model that does not destroy the environment. This was stated by Muhammad Teguh Surya, Executive Director of Yayasan Madani Berkelanjutan, during the TalkShop 1000 Economic Ideas forum themed “Adapting to New Norms: Building an Economy Without Environmental Destruction,” held on 9 July 2020.
Also speaking at the online discussion were Ismid Hadad, MPA, Chair of the Board of Trustees of Yayasan KEHATI, and Rimawan Pradiptyo, PhD, Head of the Department of Economics at the Faculty of Economics and Business, Universitas Gadjah Mada (UGM). The session was further enriched by responses from Prof. Emil Salim and Prof. Dr. Ir. Agus Pakpahan.
Despite being fertile and rich in natural resources, Indonesia’s geographic conditions—located along the Pacific Ring of Fire, at the convergence of four tectonic plates, and increasingly vulnerable to climate crises—demand a development model that accounts for these inherent risks. Near-uncontrolled natural resource extraction is neither an appropriate choice nor the future of Indonesia.
The massive forest and land fires that raged for three months in the latter half of 2015 failed to become a turning point for reforming development models, even though the disaster burned an area 4.5 times the size of Bali and caused economic losses estimated at IDR 221 trillion. In 2019, forest and land fires occurred again, burning 1.6 million hectares of forests and peatlands.
Who truly benefits from today’s economic development mindset? The palm oil plantation sector is often portrayed as a backbone of the national economy, contributing USD 20.54 billion (approximately IDR 289 trillion) in foreign exchange earnings in 2018 alone, while converting 16.3 million hectares of productive land—including forests and peatlands—into oil palm plantations. However, closer examination reveals that among the 10 provinces with the largest average increases in oil palm plantation areas, only three provinces—Riau, East Kalimantan, and Jambi— show relatively high levels of rural welfare. Even in these provinces, rural welfare is not solely derived from palm oil, as other commodities such as rubber, coconut, and cinnamon also play significant roles.
From the perspective of farmer welfare, oil palm smallholders actually lag behind farmers engaged in food crops and horticulture. Madani’s studies in Riau and West Kalimantan show that the Farmer Terms of Trade (NTP) for food crop and horticulture farmers during the 2014–2018 period consistently outperformed that of oil palm farmers. Over those five years, only in 2017 did oil palm farmers’ welfare surpass that of the other two sectors—an important consideration for future policy.
A similar pattern is evident in the mining sector. In 2018, Indonesia’s Supreme Audit Agency (BPK) reported that losses caused by waste disposal from Freeport alone amounted to USD 13 billion, equivalent to IDR 185 trillion. Despite hosting the world’s largest gold mine and witnessing mountains of gold flattened into deep craters, critical questions remain: Are Indigenous Papuans living in prosperity? Has Indonesia truly progressed? These figures also exclude the hundreds of lives lost in abandoned coal mining pits—often referred to as toxic lakes—due to the absence of post-mining environmental restoration and rehabilitation.
“Persisting with extractive development will only harm the national economy and exacerbate welfare inequality. Yet our Constitution clearly guarantees every citizen the right to a good and healthy environment, as stipulated in Article 28H of the 1945 Constitution. It also mandates that natural resources be utilized to the greatest extent for the prosperity of the people, as stated in Article 33(3). Furthermore, Article 33(4) affirms that the national economy shall be organized based on economic democracy, guided by principles of solidarity, efficiency, justice, sustainability, environmental stewardship, self-reliance, and balance in national economic progress and unity,” Teguh added.
“There is only one Indonesia that we inhabit, and it is we who will bear the consequences—good or bad—of its economic and environmental conditions. There is no alternative but to commit to building a new Indonesia. Madani calls on all stakeholders to contribute ideas and initiatives so that Indonesia’s economic development can be sovereign, just, and sustainable,” Teguh urged.
Since 2019, Madani has been gathering ideas from economists and practitioners in the fields of economics and the environment. To date, 13 essays from 10 authors have been compiled, including contributions from Prof. Emil Salim; Ismid Hadad, MPA; Prof. Hariadi Kartodihardjo; Rimawan Pradiptyo, PhD; Dr. Hakimul Batih; Dr. Mubariq Ahmad; Joko Tri Haryanto, SE, MSE; Ronny P. Sasmita; Prof. Dr. Ir. Agus Pakpahan; and Dr. Mochamad Indrawan.
Contacts:
M. Teguh Surya
Executive Director, Yayasan Madani Berkelanjutan
Phone: +62 812 9480 1453Luluk Uliyah
Senior Media Communication, Yayasan Madani Berkelanjutan
Phone: +62 815 1986 8887
