Saturday, July 3, 2010

Excerpts Chapter 2 : The Unofficial Appropriation of Rain Forest Rent by Rulers In Insular Southeast Asia Between 1970 and 1999

"Indonesia, Sarawak and Sabah were the three largest tropical timber exporters in the world over the period covered by this study, 1970 to 1999 (World Bank 1992o)."

"Forestry agencies are unable to stop heads of state who, in order to increase their wealth and maintain power, are dependent on funds diverted to them and their followers unofficially from the timber industry. Neither patrons nor clients want to see their personal income stream diminished by an increase in official timber revenues paid to the government. Therefore, clients to some extent, and definitely patrons, place pressure upon departments of forestry not to increase timber revenues. "

"The degree to which state leaders and their political supporters have personal financial interests in the forest products industries of Indonesia, Sarawak and Sabah, the independent variable, is measured in terms of their stakes in the control of timber concessions, that is to say, licenses to harvest timber from specific areas of public forests.

The first step in measuring this variable was to obtain lists of timber concessions in Indonesia, Sarawak and Sabah. The better part of two years was spent trying to piece together a list of timber concession holders in Indonesia and Malaysia, based on what I was able to glean from the business press, investment bank reports, intergovernmental organization documents, nongovernmental organization reports, but all without much success. Finally I found a variety of published sources and individual researchers who had compiled this data. "

"Obtaining data on concession holders in Sarawak and Sabah was even more difficult than in Indonesia. As Chee Yoke Ling, then Secretary of Friends of the Earth Malaysia, put it, "[Even] the [federal] government has had a hard time getting state governments to provide a list of legal concession holders" (FEER 1993). As to state-owned forestry entities like the Sabah Foundation, "Unlike Northeast Asia where information has been made readily available for . . . rigorous assessment . . . most data on state sponsored enterprises are held in secrecy in Malaysia" (Rajah 1996: 6). Notwithstanding these difficulties, I eventually was able to compile reliable lists of the timber concessions of the top timber conglomerates in Sarawak and Sabah.

With respect to Sarawak (see Table 4.3), a graduate student from a leading Southeast Asian university provided me with a list of the timber concessions controlled by the state’s three largest private concession holders. I cross-checked the contents of this list with an internal list of the timber concession holdings of the largest of the three private groups, and the two lists verified one another. A separate list revealing the timber concession holdings of the current chief minister of Sarawak was made public by his uncle, a major political rival at that time (Sarawak Tribune 1987). I removed duplicates from all of these lists and then compiled a master list of all timber concessions controlled by Sarawak's four largest concession holding companies (see Table 4.3)"

"In Malaysia, I spent weeks in the Kuala Lumpur Registry of Companies, where I purchased microfiche documents of incorporation for the largest timber concession holding groups in Sarawak and Sabah. For Sarawak, I obtained documents of incorporation for concessions said to be controlled by the chief minister of Sarawak as well as by the Samling, Rimbunan Hijau, and KTS conglomerates. For Sabah, I obtained documents of incorporation for all timber concessions larger than 5,000 hectares, and for logging contractors to the Sabah Foundation. In order to obtain data on timber companies that were not on file in Kuala Lumpur, special trips were made to the Kota Kinabalu (Sabah) and Kuching (Sarawak) Registry of Companies. "

"Given the difficulty of identifying proxies, if a relatively clear consensus was lacking among informants as to the identity of a shareholder or board member or their relationship to senior officials, then that individual is not included. Lack of agreement among informants led to the exclusion of many possible proxies from this report. "

"It also tells us that the bomoh for Sarawak's Chief Minister Taib, who may be thought of as a proxy, earned $4.8 million from a single concession in a single year."

"Finally, and by far the most important, the story I uncovered is an important one: heads of state had appropriated money crucial to the economic development of the states they governed while destroying an irreplaceable biological treasure. The next three chapters tell this tragic story."

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