Debt Bondage, Child Labor, and Fraud
The palm oil industry is growing exponentially in Indonesia, a country of plentiful natural resources, vast tracts of fertile soil, and comparatively limited industrial regulations. As with many industrial sectors around the globe, the palm oil industry in Indonesia is rife with conflict. Allegations of environmental degradation, deforestation, and human rights abuses have surfaced repeatedly, and campaigns have been waged for years to promote industry reform and more sustainable practices.
The Indonesian federal government appears to be taking steps toward protecting its virgin rainforests and bringing to justice any corporations found implementing unsustainable practices within its borders. These are welcomed efforts towards long-term improvement in the palm oil industry. The emerging dialogues are essential for Indonesia, whose booming palm oil industry has seen its exports triple in the last thirty years alone. However, these steps don’t get at the root of the problems facing Indonesian forests, nor do they prevent the exploitation of workers and affected local populations. As the industry expands, the human costs of the industry cannot be kept an open secret, as they perhaps were in the past.
Bloomberg Businessweek, seeking to explore these human costs, has recently published the findings of a nine-month investigation into palm oil production in Indonesia. Their team spent time on twelve plantations in Sumatra and Kalimantan (Indonesian Borneo) to discern and document the industry’s negative impacts on workers and local populations. These plantations are all owned by Kuala Lumpur Kepong (KLK), the Malaysian multi-national company recently implicated in the massive June-July 2013 forest fires in the Riau Province of Sumatra.
The Bloomberg report indicates significant human rights abuses in KLK operations and by its contracting firms. These violations include human trafficking, violence against workers, contract and pay fraud, dangerous and unsanitary conditions, little or no medical care, child labor, debt bondage, forced captivity, and de facto slavery.
The human costs of palm oil production are often overlooked by international organizations justifiably focused on its deleterious environmental and ecological effects, but the Bloomberg report is helping to raise awareness about the social costs of this massive global industry. In this article, we explore how the issues outlined in the Bloomberg report impact Indigenous populations in the regions where KLK operates. We also provide background on the complexity of Indigenous rights issues in Indonesia–a nation home to more than 350 distinct ethnic groups–and explore recent legislative reforms that may pave the way for greater recognition of the rights of Indigenous Peoples in the archipelago.
The Cost of Feeding Global Demand
Indonesia and Malaysia produce 90% of the palm oil used around the globe, and Kuala Lumpur Kepong (KLK) profits enormously from serving the ever-growing international need for inexpensive vegetable oil and biofuel. Human rights abuses within the industry are linked to the cheap and dirty means of production often implemented to meet these steep international demands more quickly while retaining wide profit margins.
Palm oil is exported in huge quantities from Indonesia and Malaysia to almost everywhere around the globe. According to Bloomberg, exports to North America and Europe accounted for 26% of last year’s KLK exports (though this market’s demand may decrease slightly in the coming years). The American multi-national Cargill, Inc. has received at least 31 shipments from KLK in the past three years, distributing palm oil and palm oil derivatives to Nestlé, General Mills, Kraft, and Kellogg. Proctor & Gamble has also been a major KLK export recipient, and its subsidiaries include Crest, Gillette, and Oil of Olay (these are all leading product lines in the US and China). Palm oil demand has been growing exponentially in China and India, and Malaysian palm oil producers, including KLK, are rising to the challenge. Many of these corporations’ plantations are located in Indonesia.
Deferring responsibility and blame for human rights abuses, KLK has suggested that any malpractice on their plantations is the result of negligent contracting firms, such as CV Sinar Kalimantan, hired as middlemen to manage recruitment and employment. KLK has further claimed that ineffective local law enforcement are to blame when situations arise on the ground. This finger-pointing persists in spite of KLK’s apparent devotion to corporate responsibility.
Cargill, speaking out on KLK’s behalf, has confirmed that KLK is in compliance with international labor laws and Roundtable on Sustainable Palm Oil (RSPO) regulations; the company did not comment on the labor practices of KLK’s contracting firms, since legally it needs only to be concerned with the conduct of its direct supplier. Contracting firms found in violation of industry standards can be blacklisted, and KLK has declared that such condemnation would send a clear message to other negligent firms. Greenpeace, however, has suggested that industry enforcement of human rights as well as industry standards “remains weak” overall. KLK, as the world’s fifth largest producer of palm oil, certainly carries some of the responsibility for human rights abuses on its Indonesian plantations; sending a message is very different from proactively ensuring that employees are not abused, enslaved, and trafficked in the name of corporate profits.
The palm oil industry is active on many islands within the archipelago, primarily Sumatra and Kalimantan, which are homes to a variety of Indigenous and ethnic groups. Also residing in affected areas are migrants sponsored by the government to relocate during transmigrasi programs designed to relieve overpopulated islands like Java and Bali. Contract workers frequently migrate temporarily for work with extractive industries, lured by promises of steady work and reliable wages. After signing two-year contracts, many workers on plantations are, after their arrival, forcibly kept on the premises, given rotten food rations, and rarely able to access fresh water for basic needs and drinking. This was proven to be the case on KLK plantations.
Indigenous Peoples and local migrant or blended communities are also affected by the presence of KLK and the many other extractive corporations working across Indonesia. Communities living in the areas surrounding industrial plantations face the detrimental environmental affects of deforestation and illegal slash-and-burn clearing techniques as well as the ever-present risk of land theft, which reduces their access to resources that sustain their livelihoods. Limited restrictions on operations give companies enormous freedom, as is the case in many developing countries that have yet to legislate sustainability measures or Indigenous rights or the ability to enforce enacted legislation on initiatives to improve environmental and human protections.
Indigenous Rights in Limbo
Indonesia is a fascinating case study in Indigenous rights and affairs for a variety of reasons. As global awareness of human rights abuses within extractive industrial operations rises, greater and more careful attention will be paid to the archipelago and industries operating within it.
The Bloomberg report on KLK human rights abuses has been one of many contributing factors to recent federal initiatives in protecting Indonesian rainforests, preventing corporate abuse of employees, and legally recognizing the existence of Indigenous Peoples within its borders (which it has historically and effectively denied). Several local and national organizations within the country have also been making contributions in these struggles, including Aliansi Masyarakat Adat Nusantara (AMAN Indonesia).
Headquartered in Jakarta, AMAN Indonesia has responded with great initiative to the gross under-representation of Indigenous Peoples in federal and provincial policies (only two of Indonesia’s 30 provinces mention Indigenous Peoples in their bylaws). A severe lack of legal rights has left Indigenous communities with no standing for asserting their customary land or land use rights. This has been very convenient for corporations seeking concessions on public lands, and the government has historically been very willing to grant them.
Palm oil contributes at least 3% to the country’s GDP. Palm oil exports alone account for 19% of total agricultural GDP. The federal government of Indonesia, more interested in the economic advantages of palm oil production than the long-term consequences of unsustainable production, has granted hundreds if not thousands of concessions on public lands, many of which are in Sumatra and Kalimantan. Concessions have been granted regardless of presence of Indigenous communities or customary land use. As the global movement for Indigenous rights has grown, particularly since the 2007 United Nations Declaration on the Rights of Indigenous Peoples (to which Indonesia is a signatory), so has the strength of Indigenous voices and coalitions in Indonesia, including AMAN.
Recent struggles undertaken by the organization for recognition and land rights have led to a groundbreaking Constitutional Court ruling in favor of Indigenous communities’ customary land rights. Though still “stuck in red tape,” the new legislation will dictate that public lands are no longer under the federal jurisdiction, but rather those Indigenous communities that have traditionally used them. The May2013 ruling has given hope to other Indigenous organizations in the country, such as Jaringan Kerja Pemetaan Partisipatif (JKPP), a community mapping network dedicated to mapping the customary land use of Indigenous Peoples throughout Indonesia.
Though the status of Indigenous Peoples’ recognition and rights in Indonesia remains in limbo, these recent developments all point to a tide of positive change within the country for Indigenous communities. The attention on the palm oil industry from mainstream Western media, the results of the Bloomberg report on human rights abuses within the industry, and the efforts of AMAN, JKPP, and other NGOs working to further Indigenous causes in Indonesia are all contributing to exposing the palm oil industry’s negative practices. The next step will be to promote new initiatives for sustainability and the elimination of human rights violations in the sector. Increased scrutiny of the practices of companies such as KLK is a good first step toward industry-wide reform. Considering the increasing demand of growing economies such as those in the BRIC countries (Brazil, Russia, India, and China) for cheap palm oil, quick and long-lasting reforms are absolutely essential for the protection of tropical rainforests, the health and well-being of local employees, and the welfare of Indigenous Peoples in all countries where palm oil production occurs.
(Photo source: OneGreenPlanet)