When fieldwork was undertaken in mid-2000, the local governments of Kutai Kartanegara and Kutai Barat were keen to develop the oil palm sub-sector as they saw it as a potential revenue generator. However, they were becoming increasingly frustrated with the central government, which implemented a moratorium on further forest conversion for plantation development in 1998 (Casson 2000). At a meeting held in Samarinda, the Assistant Head of East Kalimantan’s Provincial Legislative Assembly publicly stated that provincial and district governments would no longer allow the central government to limit their ability to establish and promote further oil palm developments in the area:
If the government continues to insist that they will not give out forest release permits to companies or communities in East Kalimantan, then the Kutai government is ready to seize them (translated from Kaltim Post, 1 May 2000).
He then went on to say that carrying out autonomy in the current era of globalisation is a great opportunity for East Kalimantan to move forward and open one million hectares of forest land for plantations, be it oil palm or other crops (ibid.).
In order to open one million hectares for plantation development, the Assistant Head of the East Kalimantan Legislative Assembly said that the provincial and district governments would seize control of forest release permits in order to facilitate development. He further said that they would legitimise this process by issuing their own legislation on the release of forest land for plantation development (Kaltim Post, 1 May 2000). The Bupati of Kutai Kartanegara was very supportive of these actions, stating that there were over 200 entrepreneurs waiting to invest in the sector. Many of these entrepreneurs were said to be from overseas countries, including Germany, Japan, Korea, Singapore and Malaysia (Kaltim Post, 28 July 2000).
To facilitate the development of oil palm plantations in the area, the National Land Agency (Badan Pertanahan Nasional) at both the provincial level and Kutai Kartanegara district level had discussed ways in which they could speed up the allocation of permits for oil palm estates. During an interview, the head of the provincial office of the National Land Agency explained that his office planned to lobby the provincial assembly to pass legislation that would enable them to issue location permits and land-use rights. Forest release permits would pass through the Dinas Kehutanan office at the district and provincial levels to the Governor of East Kalimantan. It was hoped that the Governor would be given the authority to release forest land in the province and pass on his recommendation to central government. By cutting the central government out of the permit-allocation process, the provincial and district governments expected to be able to accelerate oil palm development and forest conversion. At the time, the central government appeared to be willing to accommodate these plans, as a meeting was held in March 2001 between the National Land Agency and the National Development Planning Agency (Badan Perencanaan Pembangunan Nasional) to review the 1960 Agrarian Law in an attempt to simplify the permit-allocation process for potential investors (Jakarta Post, 2 March 2001). According to the provincial head of the National Land Agency potential investors were optimistic about these plans and eagerly awaited their implementation (personal communication, August 2000).
The Kutai Barat district government also wished to facilitate further oil palm development, but it was concerned about the fact that PT LonSum had failed to build a palm oil processing plant and had stopped further planting in the area. The district government was also aware that conflict surrounding PT LonSum’s plantations was deterring other investors from developing oil palm plantations in the region. In order to attract investment, the district government was trying to secure the company’s land use permit and to support the establishment of a palm oil processing factory (personal communication, Kutai Barat District Government Secretary, 28 July 2000). While it looked certain that the land use permit would soon be issued, it seemed unlikely that LonSum would be able to establish a factory or resume planting in the near future.
The Bupati of Kutai Barat was of the opinion that problems arising from the LonSum development were a consequence of central government control over the licensing procedures. He felt that the central government did not adequately consult or inform the local people about the company’s development plans and that this had resulted in a number of misunderstandings which led to conflict and the occupation of the base camp. He was confident that decentralisation could provide district governments with the opportunity to better manage conflict with local communities because they would be more responsive to local needs and more aware of problems arising from such developments. He also felt that local government would better understand the concerns of local communities and be more able to accommodate these concerns into development plans (personal communication, Bupati Rama Asia, July 2000).
A number of international donor organisations and local NGOs held a similar opinion. Most thought that decentralisation had the potential to allow a lot more community consultation and participation in local government decision making. They were of the opinion that the central government had proved that it could not manage natural resources sustainably, and they were confident that decentralisation could improve the situation if implemented in a manner that supports good governance (Usher 2000). Many of the Samarinda and Balikpapan NGOs had committed themselves to helping the Kutai Barat government to build up their expertise, skills, knowledge and revenue (GTZ 2000). Some, such as Plasma, were also helping the district government to draw up district regulations. It remains to be seen if the local government of Kutai Barat has the skills and expertise to manage natural resources. There is always the danger that the Kutai Barat government will speed up the forest conversion process in order to facilitate further oil palm development and generate much-needed district revenue.