Indonesia the problem of trans boundary haze

Introduction

Sustainability of environment becomes an embedded eco-political concern of development strategy in today’s globalized world. In spite of encouraging economic growth, Transboundary haze pollution (THP) is incurring a serious menace to environment in South East Asian Nations (ASEAN). Smoke haze resulted from land and forest fires frequently stemming from Indonesia, the largest country of this region, as a consequence of illegal logging, traditional agricultural actions and some adverse climate conditions like El Nino South Oscillation (ENSO) have imposed immense socio-economic and environmental costs for the whole region. Along with the constant threat of climate change and degradation of biodiversity, the direct measurable impacts comprise huge monetary loss especially for health damage, tourism losses, and industrial production losses. Singapore being the neighboring country of Indonesia also suffers a lot with the corollary. The people outcry always pressurizes the government to uphold the country’s self-interest by mitigating the economic losses while inducing further stress to Indonesia. At the same time government also has to be diplomatic in its intra-regional approach of dealing with the issue. It is a difficult proposition and the question is how best Singapore can strategize its policy to extract best solution of this persisting hazard.

Key Issue:

From Singapore’s perspective, the THP is an outcome of environmental externality. Whole state of affairs is a bit complex since under the regional or bilateral framework, Singapore has very little to do to resolve the problem by itself. Sandler (1997) argues that haze free environment in ASEAN region is non-excludable and non-rivalrous aggregative type of public good whose total benefit is the totting up of individual efforts. Such an international public goods gives room for strategic actions by countries concerned that would result into sub-optimal outcomes. Sandler concludes that such strategic approach thus can create a Prisoner’s Dilemma if the costs offset the benefits. In this context, Lin and Rajan (2001) expressed their concern on failure of such multilateral solution due to conflicting preferences and priorities between countries for reducing these forms of pollution. Therefore, a bilateral approach towards ecological and eco-political strategic options rather than multilateral approach should be more effective for this THP. However, in terms of taking correct strategy, Singapore seems to be into a Prisoner’s Dilemma like situation, which is the key issue to be addressed for dealing with this long-lasting problem.

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Why this issue is the most important:

ASEAN’s regional efforts to resolve THP has been facing stiff challenges due to lack of bindings and cooperation from all parties. Florano (2004-05) states that both 1995 ASEAN Cooperation Plan on Transboundary Pollution and RHAP of 1997 was ineffective due to its ASEAN way’s emphasis on volunteerism. Jayachandaran (2005) refers that, Indonesia-the host of THP, has been so reluctant to implement the agreements due to its internal socio-political dynamics. Tan (2005) also argues that Indonesia’s mindset of non-ratification of ATHP has been disrupting effective regional cooperation from ASEAN countries in this issue. Tacconi et.al.,(2008), in addition to these, points on the lacking of international monitoring, compliance and inspection in ATHP. At such a dismal situation, Singapore irrespective of other affected countries has to decide its own strategies based on overall pay-off while coming out the disastrous situation with time.

Solutions:

Option-1. Induce more pressure on Indonesia:

There is a group of analyst who think that impose bi-lateral pressure on Indonesia to act positively towards the problem. This is more a political approach. They argue for constant raising of this issue during bilateral meetings with Indonesian counterparts, which would work while reminding them about the adverse effect of this inaction would impact the bilateral relations. In fact, this is also supported by some evidences in recent past. Former foreign ministry official of Singapore Gerald Giam states that,

Recommended Policy Actions:

a. Trade barriers:

Singapore has huge formal and informal cross-border trade with Indonesia. In fact, Indonesia is Singapore’s 4th largest trading partner in 2009 with total trade amounting to S$58.5 billion, up from S$75.1 billion in 2008 (source: IE Singapore’s StatLink, 2010). Singapore imports palm oil and rubber from Indonesia, while Indonesia hugely depends on Singapore for many manufacturing, electronics goods and services. Figure shows a significant trade advantage (measured in net export) in favor of Singapore. There are also many Singapore-based MNC in Indonesia. So any sorts of trade barrier could create some pressure on Indonesia at this moment.

Singapore-Indonesia bilateral trade (S$ Thousands): 

Singapore’s Data

2008

2009

Imports

24,827,467

20,659,212

Exports

50,299,127

37,857,815

Total Trade

75,126,594

58,517,027

Source: IE Singapore’s StatLink

b. Squeeze Other Development Projects:

Singapore supports Indonesia to establish most competitive industrial zone at Batam, Bintan and Karimun free trade zone (BBK-FTZ)where they can develop electronic, shipbuilding and network storage and server industry which would bring huge economic boost for those region of Indonesia. So reducing the scale of investment or technological support would extend the pressure over Indonesia.

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c. Regional organization against Indonesian imputes approach:

For mounting the pressure on Indonesia, Singapore government can act to form a group of sufferer incorporating the other countries like Malaysia, Brunei or Thailand and place their issue to International court for Environmental disputes. Malaysia already has taken necessary preparation to do that. This would be very unfortunate for this regional integrity, however, suffering countries the suffering countries could but think about that.

Analysis of outcomes:

Reacting towards the public outcry, Singapore government may have to go for such kind of compulsive policy as long as it works for a while. They can expect timely and effective actions taken by Indonesian government for rebuilding investors’ confidence in Indonesia, Indonesia’s international eminence and ASEAN’s integrity would not be affected. However, in the longer run, this pressurize policy would result instability in regional unity and integration. The concept and objective of ASEAN would be hampered as well. On the other hand, this policy would not be able to bring any instant solution to the problem.

Option- 2. Intensify Cooperation to Indonesia with region-specific bilateral projects against THP:

In a prisoners’ dilemma, the cooperation strategy often maximize the pay-off for both the parties. Though the THP is the externality resulted from Indonesia, but to get some positive implication of this problem, all concerned parties should effectively act and help each other in an integrated manner so that the degree of hazard comes down with time. After Sub-Regional Ministerial Steering Committee on Transboundary Haze Pollution (MSC) in November 2006, 35 fire-prone districts in 8 provinces have been identified into Indonesia’s Plan of Actions for immediate consideration. Indonesia has invited ASEAN countries to work together to develop its capability to tackle land and forest fires in those fire-prone areas. Singapore already has responded positively to extend its cooperation to Indonesia’s State Ministry of Environment (KLH) to implement the plans for managing land and forest fires at Jambi Province.

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Recommended Policy Actions:

a. Extend technical and financial supports:

The US$1 million Jambi province project seems to be a success so far. Recent study reveals that the number of hot spots explored from forest fires has reduced by one-fifth in last few years. So following the experience of this success, Singapore can extend its cooperation with technology and finance for some other regions that directly cause problem to them.

b.More support areas:

Some proactive prevention monitoring and approach can be initiated with best possible art-of-states. These may include:

  1. Socialization Workshop for farmers on Sustainable Farming (i.e. Cultivating crops without resorting to burning)
  2. Developing the Capacity of the locals in understanding and interpreting the Satellite images and hotspot information
  3. Developing local land-use map
  4. Installing Geographical Information System to facilitate the monitoring of fire and haze and assess accordingly
  5. Developing air and weather monitoring stations
  6. Enhance fire fighting and suppression Capacities of local people.

c. Better monitoring and Positive feedbacks:

The outcome of the above collaboration projects should be monitored in regular basis and the success part should be broadcast to others so that it would give positive signs to other nations to come forward resolving the long-lasting problem.

Analysis of the outcomes:

Certainly these collaboration projects would result more financial cost for Singapore. However, welfare should be ascertaining with the implication of comparative advantage frameworks. In fact, factors should be deployed according to the comparative advantages each country has. For instance, Singapore could provide technical and financial support with expertise in managing the environmental pollution wide-spreading, while Indonesia would provide with some cheaper labor and other infrastructures. Singapore can extend its support to some region especially the Sumatra that creates more problems to it. Again, more technology transfer would also ensure more earnings and ultimately a quicker recovery of the dire situation.

Choosing the Option:

Considering the following three factors

  • Environmental Sustainability
  • Short run Cost-Long run benefit
  • Marginal cost of combating (for both Indonesia and Singapore)

I would like to suggest implementing option-2 [cooperation] for Singapore government to combat against the adverse effect of THP since it will ensure betterment of environmental sustainability in this region with some long-term aggregated benefits for all using the comparative advantages of minimized cost.

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