Oil Palm Industry Economic Journal Vol. 5 (2) September 2005 p. 23-36

Environmental Issues in an Age of Regional Autonomy: The Case of Pollution in the Plantation Sector of North Sumatra

Zahari Zen; John McCarthy and Colin Barlow
Received:    Accepted:    Available Online:


Discussion of the agro-industry sector to date has largely neglected the significant impact of Indonesia’s extensive plantation sector on the rural environment. This article discusses this problem in North Sumatra, the historical centre of Indonesian agro-industry, examining the underlying factors leading to the failure of legal and economic instruments to control agro-industrial and plantation activities before and during decentralisation. It examines the reasons for the failure of bureaucratic regulation, arguing that the underlying problems of political accountability of state officials continue to undermine law enforcement. As well as improving the accountability of state officials, a policy to mitigate the large-scale pollution associated with the sector needs to be better crafted to suit the characteristics of the industries concerned and address the wider socio-economic realities within which the problems are embedded and where any policy tool must be applied. The sector can be profitable without having to harm the environment through both self-motivated changes and government support. Although the government of Indonesia has created a legislative framework for pollution control, rubber factories and palm oil mills across the country continue to generate large quantities of solid waste, air and water pollution. A key factor behind this is that many institutions and interpersonal relations are involved apart from the legislative framework, and are often beyond the reach or even knowledge of the policy makers and legislators (Eckersley, 1995). While scholars and activists have widely addressed the problems of deforestation, forest fire and haze associated with plantation expansion, they have largely neglected the environmental issues of air pollution and effluent in the rivers (Kantor Menteri Negara Lingkungan Hidup, 1998; IFFM/GTZ, 1998; Gonner, 1998; Gellert, 1998; Down to Earth, 1998; Casson, 2000; Alwy, 1998; WRM, 1998; Wakker, 1999). The latter are major problems affecting the quality of life of local communities living around crumb rubber factories (CRFs) and oil palm mills (OPMs), and are crucial in the environmental context.

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