Southeast Asia has largely been spared a recurrence of the haze that blanketed Singapore, Kuala Lumpur and Jakarta in 2015. Good weather and better management procedures in 2018 helped prevent the Indonesian forest fires that had done so much damage three years earlier, and Indonesian officials are predicting they’ll be able to handle firespots when this year’s hazy season comes around in late June.
Countries other than Indonesia have a stake as well. Malaysia has fires in Sabah and Sarawak, while Singapore is home to major commodity traders as a financial centre. Each government needs to play its part. The following is an excerpt from my recent book The Sustainable State: The Future of Government, Economy and Society:
On a clear afternoon in October 2015, I flew from Hong Kong to Kuala Lumpur – a flight I had made countless times before. But something was different this time around. As the plane approached the Kuala Lumpur International Airport, the scene outside my window seemed much less bright than usual, to the point where the glass appeared to be tinted. In my rush to get off the plane, I put the matter out of my mind.
I realised the cause when I left the climate-controlled and air-filtered airport terminal to wait for a taxi outside. What welcomed me to my home country of Malaysia was stale, acrid, choking air. Smog hung low in the sky, reducing visibility to only a few hundred metres at most. This was my first encounter with the legendary and crippling haze of Southeast Asia. Nasa said it was the worst in 20 years.
I began to wonder what the cause of this pollution might be. With my training as an environmental consultant and my awareness of the region, I began to connect the dots. Burning forests on the island of Kalimantan. A worse-than-usual dry season due to La Niña. The expanding production of palm oil for packaged food, shampoo, and other consumer products. Industrial agricultural companies, many of which were based in Kuala Lumpur and nearby Singapore.
This was perhaps the greatest man-made environmental catastrophe in modern human history, yet no one seemed really capable of doing much about it. The fundamental cause of the haze crisis was deforestation. Over half of Borneo’s forest has been chopped down since the mid-1990s; forest cover will drop to merely a third of its original size by 2025 if current trends continue. The tropical peatland underneath, now exposed, becomes easy tinder for any fire that starts.
Indonesia haze may have caused more than 100,000 premature deaths
The whole situation – the functioning of Kalimantan’s agricultural sector, the island’s deforestation, and the resulting catastrophic forest fires and haze – is ultimately the result of weak state governance.
In 2002, Asean signed an agreement on controlling transboundary haze, but the organisation has not done enough in practice, given the scale of the impacts, to control it. Indonesia’s vice-president, Jusuf Kalla, when asked about the haze situation, noted that “for 11 months, they enjoyed nice air from Indonesia and they never thanked us. They have suffered because of the haze for one month and they get upset … Somebody once told me that Indonesia must restore its tropical forests, and I told him, ‘Excuse me? What did you say? Do you know who damaged our forests?’”
Kalla was perhaps being overly defensive, but he had a point. Many of the plantation companies that engaged in slash-and-burn agriculture were based outside Indonesia in the wealthier countries of Singapore and Malaysia. Wealthier Asean countries and global consumers also benefited from the “cheap” products produced by Kalimantan plantations, such as wood pulp and palm oil. Singapore and Malaysia were happy to externalise the cost of their plantation companies so long as they saw no cost to themselves, and only woke up when the scale of the haze created a public backlash.
Major food companies, such as Nestlé, Hershey’s, Mars, and Kraft Heinz, use palm oil in their products as a “healthier” food oil. Neither Europe nor the United States has taken action against these companies despite the clear externalisation of cost. Almost everyone has turned a blind eye.
If the haze crisis is going be solved, then Indonesia is going to have to take the lead. A strong Indonesia should first take a tough stand on all matters with regard to illegal encroachment of the forest, enforce the no-burning regulations that are in place, and start to internalise the external costs of plantation farming.
Jakarta can tax the products of plantations before they leave the country. This would ensure that palm oil, wood pulp, and other environmentally damaging products are priced accurately before they are sold to suppliers. Indonesia can also implement regulations that snap into place when Jakarta declares a national haze crisis. When a crisis is declared, there could be greater enforcement of forest conservation measures, funded by levies that go into immediate effect on farms and plantations to help counteract the crisis.
A burning issue for Singapore: Indonesia readies for haze battle
Finally, Indonesia can mandate that commodity traders disclose the details of their businesses and transactions, as well as detail where goods were procured. This can help determine the “inverse” of value creation along the supply chain: at what points are costs externalised to a third party? The Indonesian government can then stage economic interventions at these points to reconcile the difference between private and external cost.
But merely punishing plantation owners without ensuring that alternatives are available will guarantee that much of the punishment will fall onto poor farmers in Borneo, worsening the rural underdevelopment on the island. The government needs to invest heavily in a more sustainable agricultural sector that can provide farmers with livelihoods and a steady income to sustain themselves.
Perhaps it is best to start with what we would like the island of Borneo to look like, and work backward from there. In this vision for Borneo, the country has an economy based not on industrial agriculture but on smallholder farmers growing high-value food crops (to attain a decent livelihood and to be self-sufficient in the staples), which does not widen the threat to the remaining forest and even aids in the regeneration of degraded land.
These small farmers are able to make a decent living from their work, grow enough food to provide food security to their communities, and have enough economic opportunity to encourage people to stay. There are limits on land expansion, with incentives for farmers to avoid the use of excessive chemical fertilisers and other inputs; preserve, if not regenerate, the forest; and adopt practices that naturally restore soil quality. Finally, the island’s resources are managed in a manner that preserves them for future generations.
We could imagine a public-backed corporation – the Kalimantan Agricultural Development Corporation or something to that effect – that provides services on an affordable basis with a mandate of encouraging the growth of smallholder farming in Borneo. It can invest in cold chains, delivery systems, and harvesting equipment to ensure that farmers can rely on them. It could even act as a buyer and seller of last resort, providing price support to account for vagaries in world prices or poor harvests.
Singaporeans willing to fork out one per cent of their income to ensure no more haze
Orthodox economists will complain that these measures would be propping up inefficient agricultural practices, keeping businesses and farms alive without letting them wither in the free market. But this assumes that the government’s only goal is to have the most “efficient” economy possible. These orthodox economists understand efficiency and productivity without considering the massive externalities many of these so-called efficient businesses place on third parties. The goal is to create not an efficient economy but a fulfilling and sustainable one that provides the basic rights of life and a path to moderate prosperity, while still conserving resources.
The haze crisis will only be solved in the long term if the government offers a quid pro quo. The state will provide universal access to basic needs and support towards alternative paths to prosperity, including subsidies and investments in supporting services. In exchange, the government will implement very strict controls on environmental protection, resource management, labour rights, land tenure, and sustainability.
In other words: the government says, work within the rules and parameters we set down, in exchange for help toward a more moderate prosperity and a better economic model. Enforcement of the rule of law is critical to the success of this only viable approach, and for that a strong state is the only option. Chandran Nair is the founder and CEO of the Global Institute For Tomorrow (GIFT), an independent pan-Asian think tank based in Hong Kong