The recent severe floods in Sumatra caused extensive destruction—damaging homes, sweeping away infrastructure, and accelerating deforestation. One striking detail was the large quantities of cut and dried wood carried downstream, suggesting not natural debris but processed timber originating from upstream activities. This raises an important question about what is happening in Sumatra’s forests.
The drivers of deforestation in Sumatra
Extensive research has documented long-standing and accelerating deforestation in Indonesia, including Sumatra. This loss is driven by illegal logging, mining operations, large-scale plantations, and small agricultural activities. A study by Austin et al. (2019) found that oil palm and timber plantations are the largest contributors to forest loss, together accounting for more than two-fifths of Indonesia’s nationwide deforestation.
Conversion of forests into grasslands and shrublands is another major driver, followed closely by small-scale agriculture. Although logging roads and mining contribute less in overall terms, the role of mining has increased steadily over time. These findings reaffirm Indonesia’s position as one of the countries with the highest rates of primary forest loss in the tropics.
Deforestation as a political economy issue
Forestry loss in Indonesia cannot be understood solely as an environmental crisis. It is deeply rooted in the country’s political structures, elite interests, and development ideology. Peter Dauvergne (1993) argues that explaining deforestation requires examining Indonesia’s centralized political system, the perspectives of decision makers, and international support for development-oriented agendas.
Indonesia’s political system, especially during the Suharto era, was highly centralized and dominated by Javanese elites. This arrangement facilitated long-standing corruption supported by military networks, where natural resources were often used as political rewards. The central government’s control over local resources contributed to tensions with regional communities whose forests and land were appropriated for national or elite interests. Deforestation was the consequence of elite-oligarch collusion in exploiting the country’s resources for their interest.
Government views on development have been shaped by colonial legacies and Western ideas that equate progress with industrialization. Under the New Order, forests were treated primarily as financial assets necessary to support rapid industrial growth and national stability.
Officials frequently blamed swidden agriculture for forest loss, using it as justification to relocate Indigenous communities and divert attention from the more significant drivers of destruction, including industrial logging and large-scale development projects. Even after Suharto’s fall, developmentalist thinking continues to dominate public policy and political discourse (Simandjuntak, 2019; Aspinall & Warburton, 2019). Deforestation was sanctioned under the banner of developmentalism.
Both legal and illegal logging remain central to forest destruction. Logging concessions were often granted as political or military favors, and the timber industry benefitted from state protection and subsidies. Large-scale state projects such as the transmigration program also intensified forest loss by relocating millions of people into forested regions.
Decentralization did not solve the issue
While centralization under Suharto is often seen as the root of Indonesia’s governance problems, research suggests that decentralization did not eventually bring the expected improvements. Instead of empowering local democracy, decentralization in many regions enabled elite collusion, weakened accountability, and expanded opportunities for corruption and resource extraction. Studies by Hadiz (2004) and Hadiz & Robison (2013) show how local elites used decentralized structures to consolidate power.
Another research by Burgess et al. (2012) demonstrates that the creation of new districts actually increased deforestation, partly because monitoring became more fragmented. They found that adding a single district to a province tends to raise the province’s deforestation rate and that this increase occurs in both legal and illegal logging zones. These patterns reflect a dynamic similar to a Cournot-style market, where more jurisdictions create more competition for resource extraction, resulting in higher extraction levels and lower timber prices.
The role of leadership
This evidence shows that institutional reforms alone are insufficient when underlying incentives remain shaped by elite interests. Institutions matter, but they do not operate independently of the people who run them. Leadership plays a decisive role in shaping national outcomes, especially in settings where institutional constraints are weak.
Research by Jones and Olken (2005) shows that leaders significantly influence national growth, particularly in autocratic contexts. Changes in autocratic leadership—often through unexpected events—can result in improvements in economic performance by opening space for policy change and institutional reform.
However, good leadership alone does not guarantee successful reform. Acemoglu and Robinson (2012) offer the example of K. A. Busia, Ghana’s leader from 1969 to 1972, who attempted to implement beneficial policies but failed because they conflicted with the interests of powerful domestic groups. His case illustrates that even leaders with good intentions cannot succeed if institutions are captured by entrenched elites.
Leadership matters, but it is effective only when supported by strong institutional design. Likewise, institutions require capable leaders who can uphold them. Addressing deforestation in Sumatra—and across Indonesia—requires both: leaders committed to environmental stewardship and governance systems that prevent the capture of resources for elite interests.
