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Analysis: Indonesia Renews Moratorium On Logging, Palm Plantations
Commentary/Analysis by Kemen Austin, Fred Stolle and Ariana Alisjahbana, WRI May 16, 2013 Editor’s note: This commentary is an analysis by three experts from the World Resources Institute (WRI). The post originally appeared at Indonesia Extends Its Forest Moratorium: What Comes Next? . Indonesia’s President Susilo Bambang Yudhoyono made a bold and courageous decision this week to extend the country’s forest moratorium . With this decision, which aims to prevent new clearing of primary forests and peat lands for another two years, the government could help protect valuable forests and drive sustainable development. Enacted two years ago, Indonesia’s forest moratorium has already made some progress in improving forest management. However, much more can be done . The extension offers Indonesia a tremendous opportunity: a chance to reduce emissions, curb deforestation, and greatly strengthen forest governance in a country that holds some of the world’s most diverse ecosystems. Boosting Achievements from Indonesia’s Forest Moratorium Indonesia ranks as one of world’s biggest greenhouse gas emitters, largely due to the clearing of forest and peat lands. The forest moratorium aims to address this problem by prohibiting any new licenses to log, clear, convert, or otherwise alter pristine forest and peat lands, an area encompassing more than 43 million hectares of land. Forest users with existing licenses are still allowed to operate in these regions, and there are several exceptions to the rule. The biggest achievement of the moratorium thus far is that it created a much-needed window of opportunity to begin developing critical forest governance reforms. Now that the government has extended the moratorium, it’s important that these reforms are not only implemented, but strengthened to truly benefit Indonesia’s forests and the people who depend on them. Deforestation in Indonesian Borneo. Photo by Rhett A. Butler A few opportunities for further reforms include: Tracking Forest Permits : Currently, national agencies and local government offices oftentimes do not share information with each other on permits for logging, mining, palm oil development, and other forest uses. As a result, multiple forest users may operate in the same area, creating confusion and conflict. Indonesia’s REDD+ Task Force , the government body in charge of coordinating all REDD+-related activities , is currently capitalizing on the moratorium to develop an online, publicly accessible database of all forest licenses in the country. The team aims to publicize all permits from one province, Central Kalimantan, by June 2013. The Task Force should expand this process to Indonesia’s remaining 33 provinces after the pilot project. Strengthening the Permit Review Process : Before the moratorium, government agencies lacked technical guidance on how to review a permit’s compliance with Indonesian regulations—such as the limits on converting peat lands and the steps required to obtain a forest license. The REDD+ Task Force is currently piloting a new review process in three districts in Central Kalimantan and evaluating how permits comply with Indonesian rules and regulations. However, it is unclear if or how this assessment will impact illegal permits. If successful, this initiative should give rise to a stronger national policy on granting and reviewing forest permits. Designating Forest Area : Indonesia, like many nations, designates “official” Forest Estate ( Kawasan Hutan ) through zoning. The designation of forest area provides the foundation for deciding what types of forest use can occur and where. It’s a critical first step for improving land-use planning and forest management. However, due to conflicts between national and subnational governments, Indonesia’s forest delineation process is only 14 percent complete . The moratorium allows the REDD+ Task Force, in close collaboration with the Ministry of Forestry and local governments, to pilot measures to overcome conflicts and accelerate delineation. The Task Force has begun this work in one district, South Barito in Central Kalimantan, but it still needs to be completed and then applied to the rest of the country. Accelerating Spatial Planning : A slow Forest Estate delineation process has stalled the development of district and provincial land use plans, which help direct public and private investments. Only 45 percent of Indonesian provinces and 56 percent of districts had finalized their spatial plans as of April 2013. The moratorium prompted creation of an agency to guide this process, but it has not yet accelerated spatial planning to the degree necessary. Formalizing Community Plans : Regions occupied by local, traditional communities, known as adat areas, have historically been left out of Indonesia’s formal spatial planning system, the Rencana Tata Ruang Wilayah (RTRW). Ignoring adat communities’ land rights spurs poverty, hinders economic development, and deters environmental stewardship. During the moratorium, the REDD+ Task Force invited civil society to submit community maps and land use plans. However, because the moratorium doesn’t require full recognition of adat lands, government ministries must provide further clarity on how community plans will be incorporated into the formal spatial planning process. Peat forest clearing for an oil palm plantation in Indonesian Borneo. Photo by Rhett A. Butler 3 Ways to Strengthen Indonesia’s Forest Moratorium Extending the forest moratorium can help ensure that ongoing governance reforms reach their full potential. But to really capitalize on the extension and improve the forest sector, the government should also pursue new reforms, such as: Evaluating Greenhouse Gas Emissions During Permitting : Authorities who issue forest use permits lack the tools they need to evaluate the proposed activity’s potential greenhouse gas emissions. The new online permit database should be combined with data on forest cover, peat land extent, and carbon stocks to account for emissions risks. This review process could also support efforts to shift agricultural expansion from forested land to non-forested , “degraded land.” WRI estimates that there are more than 14 million hectares of low-carbon, degraded land in the four Kalimantan Provinces alone. Disseminating Technical Guidance at the Local Level : WRI and partners recently interviewed forest agency officials in eight districts to assess the level of local understanding of the moratorium. While all respondents were aware of the moratorium, just five out of eight knew the types of land protected, while only three had accessed the map delineating these areas. Ensuring a basic level of understanding at the district level will be a critical next step for boosting the moratorium’s application. Better Monitoring and Enforcement : The same forthcoming study revealed that half of district forest service respondents did not know who was responsible for monitoring the moratorium. Many said there were no mandated monitoring activities, and if there had been violations, they did not know where to report them. A robust monitoring and enforcement system is essential to ensuring an effective moratorium . Curbing deforestation, reducing emissions, and improving quality of life for millions of Indonesian citizens all hinge on sound forest governance. Extending the moratorium for two more years does not guarantee more emissions reductions or better forest management, but it’s a critical starting point. Now it’s time to capitalize on this opportunity and move forward with forest sector reforms. Read more at http://news.mongabay…D8Rytbh7EFur.99 Continue reading
New Funds: May 20
http://www.ft.com/cms/s/0/b106c054-bef4-11e2-87ff-00144feab7de.html#ixzz2U1nHMF00 ● Diapason Commodities Management is launching a ForestCare Investment fund, which will invest in forestry-related equities, bonds and derivatives, as well as forest plantations on a sustainable basis. Aimed at pension funds and institutional investors, the A class shares (€125,000 minimum investment) carry a 1.45 per cent management fee while the institutional class shares (€1m minimum investment) charge 95bp. ● Russell Investments has expanded its fund range with the Russell Absolute Return Bond fund (RARBF). ● RWC is to launch the RWC Global Horizon fund, a long-only unconstrained global equities fund. It will be managed by Louise Keeling who joined in April from Marathon Asset Management. Fees have yet to be finalised. ● Allianz Global Investors has brought to market the Allianz Europe Equity Growth Select fund, a concentrated portfolio of 30-45 stocks targeting structural growth ideas. The A share class carries a 1.5 per cent management fee and a 30bp administration fee. ● BlackRock is expanding its range of European corporate bond exchange traded funds with a new ETF focused on financial issuers. The iShares Barclays Euro Corporate Bond Financials ETF provides exposure to fixed rate, investment grade bonds issued by financial companies, and it carries a total expense ratio of 20bp. ● Cambria Investment Management has launched an ETF providing exposure to “yield-rich” US and international equities. The Cambria Shareholder Yield ETF, known as SYLD, carries an annual expense ratio of 59bp. ● Guotai Asset Management has brought out a Nasdaq 100 index that will trade on the Shanghai stock exchange, providing a new route for Chinese investors to the US stock market. Continue reading
The Winners And Losers In Overseas Property Game
Exotic, obscure locations were the place to buy in 2006 but the game has changed. By Graham Norwood GRAHAM NORWOOD SATURDAY 18 MAY 2013 Ah, the good times. Back in 2006 the insatiable British appetite for buy-to-let and holiday home investment meant we did not settle for Brighton or the Costa del Sol but sought ever-more exotic locations in which to sink our spare cash. Remember those “emerging markets”? Property supplements and estate agency windows extolled the virtues of buying in places many Britons could not even find on a map. The reasons given for investing in out-of-the-way locations then are almost the complete reverse of criteria investors might adopt now. European cities looked tempting, especially in countries poised to adopt the euro; off-the-beaten-track US locations were no-brainers as America’s economy grew 5.6 per cent in the first quarter of 2006; and you could invest easily by remortgaging your UK home. That was then. In the seven downturn years most emerging property market capital values and rents have crashed and burned. A mortgage famine and poor exchange rates deter new British purchasers from snapping up the homes of those wishing to bail out. For example, a €200,000 apartment in 2006 would have cost you £136,000 whereas today it would be £170,000; a US$250,000 villa in December 2006 would have been £127,250 but today it’s up to £163,000. So what has become of five of the most-hyped emerging markets from 2006? 1. Dubai At first sight, this looks a success story. The respected property consultancy CBRE says house prices are up 16 per cent and rents up 17 per cent in the year to March 2013, while high-end estate agent Knight Frank says Dubai is the world’s second-most booming market (behind Hong Kong) following a 19 per cent rise in 2012. That sounds a steal until you realise prices crashed an average 50 per cent between 2008 and 2011 and the city’s property market required a $10bn bailout from Abu Dhabi, a neighbouring member of the United Arab Emirates. Therefore many values are still 35 per cent below 2006 levels. Building work has resumed and analysts say 15,000 to 18,000 new homes will go on sale both this year and next, so there is a worry about a crash if supply exceeds demand again. As a result, mortgages are difficult to obtain. Even so, excess remains Dubai’s defining characteristic: Chesterton Humberts is selling a four-bedroom flat in Burj Khalifa, the world’s tallest residential tower, for £4,993,940. 2. Bulgaria In 2006 this was THE place to buy. UK estate agents like Savills and Knight Frank were selling flats in Bansko ski resort and on the Black Sea coast. Even renowned designer Philippe Starck fashioned the interiors for one scheme. There was a construction surge in 2006 with a pipeline of 22,000 new holiday apartments in the Black Sea region alone according to international estate agency Colliers. But demand for resort properties plummeted from 500 a month in 2006 to 30 in 2008 and prices followed suit. Nothing much has changed since. Some Britons sold their apartments to vulture funds, which were buying properties in 2008, but those who held on have seen only modest rental returns and significant capital depreciation. Rightmove is advertising one-bedroom flats in Bansko for £30,615. Seven years ago similar units were on sale for £50,000. 3. Las Vegas An international buy-to-let market built in a town laden with casinos was always going to be a gamble but perhaps unexpectedly, it may be about to pay off. In 2005 Colliers was selling one, two and three-bedroom apartments to Britons from £140,000 but Las Vegas values collapsed 59 per cent between 2006 and 2012, according to Zillow, a house sales website that analyses price changes. Yet the city’s economy is improving and mortgage foreclosures are down 17 per cent since spring 2012. Average house prices are up 22.3 per cent in the past year. The wider US housing market is showing sustained recovery. Some US mortgage lenders offer overseas investors 15 or 30-year mortgages on Las Vegas homes with up to 70 per cent loan-to-value, although individuals may have to put a hefty sum in a US bank account first. 4. Turkey Buyers here may have been luckier than elsewhere as prices in holiday home hotspots dipped only 10 per cent in the global downturn. The country’s unsophisticated mortgage system did not overstretch its banks to the degree seen elsewhere. Most purchases have been cash because house values are low by UK standards and the few mortgages that exist for foreign buyers typically have rates of seven per cent or more. In 2006 villas were on sale for under £120,000 and flats for £35,000 in Bodrum, Alanya and Antalya, three key tourist spots. They are much the same now. supply exceeds demand in most resorts. However, the market is looking up again. Construction sites mothballed five years ago are resuming work and Turkish house prices rose 10.5 per cent in 2012, says Knight Frank. 5. Montenegro Tourist havens like Kotor, Budva and Sveti Stefan suddenly became must-have places to buy apartments in the booming 12 months after this tiny but strikingly attractive country gained independence from Serbia in 2006. Prices were high: new-build inland villas were £700,000 while coastal apartments hit £1m or more and some agents claimed 100 per cent price rises in 12 months. But prices “dropped about 30 per cent after the crisis and have since come back circa 10 per cent”, according to John Kennedy of developer Boka Group. It has become hugely dependent on just one source – there are 50 flights a day from Russian cities. Continue reading




