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The monsoon rains have come, clearing the haze that has until recently blanketed much of the Southeast Asian region. The result of uncontrolled burning associated with 'slash and burn' cultivation predominantly in Sumatra and Kalimantan and exasperated by urban and industrial pollution, the haze seems now to be an almost yearly dry-season occurrence. It was evident this year from early July to end August, and then from late September to end October. In October, Air Pollution Index (API) readings of over 100 (regarded as 'unhealthy') were recorded in East and West Malaysia and similar Pollutant Standards Index (PSI) levels were recorded in Singapore. Southern Thailand and Brunei also reported haze problems, while conditions in parts of Indonesia nearer the fires were far worse - visibility levels as low as 100-500 metres were reported. The haze forced Indonesians to don facemasks and, in the region, led to the issuing of health warnings for outdoor activities and increases in reported respiratory problems, school closures, air traffic and shipping disruptions, tourist cancellations and economic losses.
It was reminiscent of 11-12 August 2005 when haze levels reached dangerous levels (an API reading of over 500) necessitating the declaration of a state of emergency in Port Klang and Kuala Selangor. The worst of all, however, was the September 1997 haze when Sarawak was placed on a state of emergency footing and losses in the region in tourism, business and due to extra health costs were estimated to be of the order of US$9 billion. It was the 1997 haze that prompted regional leaders to intensify cooperation - begun in the aftermath of the 1991 and 1994 smoke haze episodes - towards solving the problem.
A whole raft of plans and policies has since been forthcoming. A Regional Haze Action Plan (RHAP) was adopted in December 1997. The Hanoi Action Plan of 1998 required the implementation of the RHAP and, also by 2001, the strengthening of the ASEAN Specialised Meteorological Centre so as to monitor forest and land fires and provide early warning on trans-boundary haze. In April 1999, ASEAN Environment Ministers adopted the policy on 'zero burning'. However, this policy was 'not intended to be prescriptive'; actual practice could vary according to ground conditions, vegetation, and the resources and policies of individual companies; and, it was 'not applicable to small-holders who may not have the resources or economies of scale'. In June 2002, ASEAN nations signed the Agreement on Transboundary Haze Pollution which called for the development and implementation of legislative and other regulatory measures, as well as, programmes and strategies to promote the zero burning policy. (Indonesia has yet to ratify this latter agreement.) During the most recent haze episode in October, both Singapore and Malaysia were critical of Indonesia for the way it was (and was not) handling the problem. Indonesian President Susilo Bambang Yudhoyono apologised for the haze, but said that Indonesia simply lacked the resources to effectively handle the problem. Without giving a time frame, his spokesman indicated that Indonesia would be prepared to ratify the 2002 Agreement. A regional meeting suggested by Singapore was held on 13 October at Pekan Baru in Kalimantan at which Malaysia mooted the idea of a regional fund to help combat the disaster. The First Meeting of the Sub-Regional Ministerial Steering Committee (MSC) on Transboundary Haze Pollution - comprising Malaysia, Singapore, Indonesia, Brunei and Thailand -was held on 9 November 2006, endorsing the MSC's Terms of Reference, Indonesia's Plan of Action in Dealing with Transboundary Haze Pollution and Indonesia as chair of the MSC for the first two years. This preceded the 10th ASEAN Ministerial Meeting on the Environment, which was held on 10-11 November also in Cebu, Philippines.
But what has actually been achieved to-date and are there measures in place on the ground to prevent a return of the haze next year? The statements from this latest meeting are less than reassuring.
The MSC is to meet every three months 'to discuss the matter further', according to one report, or 'to oversee concrete actions to address land and forest fires', according to another. ASEAN environment ministers agreed to set up an early warning system for haze and, Malaysia, Singapore, Thailand and Brunei will 'adopt' fire-prone regions in Indonesia to assist in tackling the problem. Need for an early warning system was identified, as the current detection of hotspots via satellite was inaccurate, detecting areas that were not only on fire but also those showing high temperatures. (The early warning system and the region adoption programme are on the agenda for future meetings.) Countries affected also agreed to contribute US$50,000 each to set up the Asean Haze Fund, though Indonesia had stated that US$60mil was needed to fight the haze. (There has been as yet no detailed discussion as to how the haze fund will be structured and how it will be used.)
Despite the shortcomings, clearly increasing pressure is being placed on the Indonesian government to tackle the problem. Lacking in resources, it is also struggling to enforce its regulations and policies. With population pressures, ordinary farmers will necessarily continue to rely on traditional clearing and farming practices. With the international demand for timber and the potential for palm oil and (so-called ecologically friendly) bio-diesel products, locally and foreign-owned companies will continue to look to Indonesia for expansion of their interests. For example, on 23 November newspapers reported a proposed merger of nine Malaysian companies related to Sime Darby Bhd, Golden Hope Plantations Bhd (GHope) and Kumpulan Guthrie Bhd to create a 'global plantation giant' with a combined land-bank of more than 600,000ha - enabling better strategizing of 'investment and expansion plans in Indonesia'. But it would be wrong to point the finger solely at this industry. The problem is much wider and more complex.
The immediate pressure may be off for the moment, but it is an issue that must be faced, providing challenges and opportunities for intra-ASEAN relations.
WATCHPOINT: What concrete measures can be put in place on the ground ahead of next year's 'burning' season?
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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