The 1970s marked the start of globalisation, which brought about a heightened in the levels of local and foreign demand for commodities like pulp, paper, plywood and palm oil. Coupled with corruption, it created the conditions for rainforests to be overly exploited by profit driven corporations.
Palm oil is widely used as an ingredient in many consumer products such as cooking oil, instant noodles, shampoo, and detergent. Besides using it in consumer products, palm oil can be used as bio-fuels to substitute fossil fuels.
Hence, this results in the taking over of peatlands for the creation of huge palm plantations by palm oil companies such as Wilmar, Golden Agri, Indofood, London Sumatra, leading to large scale deforestation and destruction of existing habitats, driving animals to extinction.
Source:http://www.pecad.fas.usda.gov/highlights/2007/12/Indonesia_palmoil/
On top of the commodities industries, the logging industry is also driven by local and overseas demand for timber, which is another major cause of deforestation in Indonesia. The total export value of forest products such as timber products, furniture, pulp and paper has risen over recent years, from USD$ 7.33 billion in 2005 to USD$ 9.71 billion in 2010, and this motivates firms to produce more timber products in order to reap profits of the increased price levels.
Despite government attempts to ban logging nationwide, the deforestation rate has in fact increased in recent years. These profit-driven companies do not comply with legal restrictions, employing environmentally harming methods such as forest fires to clear the land for agricultural purposes.According to WWF, 40-61% of timber production in Indonesia is believed to stem from illegal logging.
Illegal logging inevitably creates a vicious cycle that encourages high level of illegal logging activities. As the timber that is illegally logged avoids payment of duties and taxes, this decreases market price of timber. According to WWF, illegal logging depresses world timber prices by between 7% and 16%. As a result, other logging companies are motivated to employ the same strategies in order to maintain their market share and profits, creating a endless loop of environmental devastations.
Photo: An Indonesian police officer with a haul of illegal logs.
Source: http://www.telegraph.co.uk/news/politics/9576104/Revealed-taxpayer-funded-aid-consultants-on-six-figures-a-year.html
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This intense commercial logging brought about serious environmental implications such as deforestation, soil erosion, massive forest fires and even desertification, which will be covered under “Impacts”