Funding Forest Destruction

The Involvement of Dutch Banks in the Financing of Oil Palm Plantations in Indonesia

In 1997 and 1998, extensive forest fires in Indonesia burned an area three times the size of the
Netherlands. The international donor community committed substantial funds and equipment
for fire fighting campaigns, but to no avail. The fire fighting efforts were ineffective because
most fires were lit intentionally, among other by oil palm companies which have been
implementing extensive expansion programmes in the last 5-6 years, notably in Sumatra and
Kalimantan. To convert their substantial concession areas into oil palm estates, the companies
used fire as an easy, cheap and quick means of land clearing. The 1997/98 drought, caused by the
El Niño climatic phenomenon, opened a window of opportunity for the companies in their
efforts to clear as much land as possible. Many of their fires ran out of control, while yet others
resulted from intense struggles between local communities and the plantation companies that
encroach in their areas. Read more