|In Place of the Forest: Environmental and Socio-economic Transformation in Borneo and the Eastern Malay Peninsula (UNU, 1990, 310 pages)|
|Part 1 : Background and the course of events|
|Change since World War II|
Collapse of a mining industry
Up to the mid-1980s, the principal metallic mineral produced in the region remained tin from Peninsular Malaysia and the Indonesian islands of Bangka and Belitung. Malaysia's 450 mines gave it a preeminent position, with 32 per cent of world production in 1980. By 1984, competition from new lower-cost mines in Brazil had already led to a sharp reduction in both Malaysian and Indonesian output, but the world price was sustained until October 1985, when it crashed by 50 per cent. The Malaysian industry then shrank rapidly, surpassed in 1988 by Indonesia, which continued to support its mines with large subsidies (Burke, 1990). By 1992, restructuring and employment reduction had reportedly brought the Indonesian mines back to at least the edge of profitability (H. Hill, pers.comm.). Malaysian production, however, has declined further and, for the first time, tin mining rates no mention in the current national plan (Government of Malaysia, 1991a). The last floating dredge ceased operation in 1993 (G. Burke, pers. comm.).
Prospects for large-scale mining of metallic minerals currently focus only on Kalimantan, where there is a large gold mine operated by an Australian-based multinational, deep inland and at present accessible principally by helicopter, at Kelian in East Kalimantan. It employs almost 900 people (Callick, 1993). There is also a major nickel prospect close to the border between West and East Kalimantan, costly to develop but very likely to go ahead within the 1990s. Beyond this, small-scale gold mining continues along a number of rivers in Central Kalimantan, much of it illegal but collectively significant (G. Burke, pers. comm.). Mineral search continues, and there is a scatter of small enterprises, but the expectations of the late 1980s have dwindled with the actual or likely failure of a number of the smaller foreign companies involved. The fact that Borneo's minerals were important in regional trade for 1,000 years has little relevance today.
The major industrialization that has taken place since about 1970 in the western Peninsula, and its much more limited spillover into the eastern Peninsula, is more background to this volume than central to its story. It is discussed in numerous books, including one edited by one of us (Brookfield, 1994d). We are really concerned here only with the part that is vertically linked to resource extraction, especially extraction from the forests, and this is discussed in chapter 5.
What happened in the Peninsula after 1970 was a major drive toward export-oriented industrialization, with an initial emphasis on simple rawmaterial processing and textiles, then on electronics, and moving latterly into heavier industries, and - less successfully - to more sophisticated downstream production from domestic raw mat erials. The effect was to move manufactured exports into first place by the early 1980s, and also to make manufacturing the largest sector in terms of employment creation. By 1990, two-thirds of manufactured exports were electrical, electronic, and textile goods, with electrical goods forming the largest single category. The base remains narrow, however. Fong (1990: 79) remarks that "it is ironical that Malaysia has been successful in areas such as electronics-component assembly and textile manufacturing where it has no comparative advantage other than an appropriate workforce - and highly unsuccessful in downstream processing and manufacture of products based on commodities of which it is the world's major exporter." A further important change lay in the fact that Malays formed almost two-thirds of the new industrial workers by the late 1980s (Government of Malaysia, 1991a: 129). Together with the growth of service employment among Malays this had important consequences for the rural economy, reviewed in chapter 5.
Especially during the late 1970s and early 1980s, efforts were made to disperse manufacturing employment around the Peninsula and into Sarawak and Sabah, with the creation of a considerable number of industrial estates. These went so far as to encourage assembly of a luxury car in Sarawak for the national market. However, market forces determined that, with the signal exception of resource-based petrochemicals in Terengganu on the east coast of the Peninsula and at Bintulu in Sarawak, much the greater part of new industrial development, investment, and employment has remained concentrated in the "west coast corridor" of the Peninsula. Dispersal efforts now focus on setting up facilities for small and medium industries, and both Sarawak and Sabah share significantly in this planned new infrastructural investment (Fong, 1990; Government of Malaysia, 1991a).
The pattern of industrialization in Indonesia has been radically different. Growth in manufacturing after 1965 was geared mainly to the large domestic market, to which were added only the grandiose enterprises of the state oil monopoly. As late as the end of the 1970s, "the Indonesian manufacturing sector [was] composed of industries processing agricultural goods" (McCawley, 1981: 74). When exportbased industrialization was seriously initiated in the early 1980s, it was overwhelmingly raw material based, with plywood as the only major non-oil product. It is only since 1985 that significant diversification has taken place, but, notwithstanding further grandiose plans, this diversification has in no way yet followed the highertechnology path of Malaysian manufacturing (Hill, 1994).
There is also a significant spatial contrast between Indonesian and Malaysian industrialization, arising directly from these different development strategies. Whereas the oil and gas plants, and most associated petrochemical manufacture, of both countries are in the oil-producing areas - Borneo, Sumatra, and the east coast of the Peninsula - there is a sharp contrast between the growing concentration of other Malaysian manufacturing in the "west coast corridor" that is also the heart of the country, and the declining relative share of Java in Indonesia's total manufacturing investment and employment (Hill, 1994), though that island still dominates the industrial scene. Indonesian manufacturing has a heavier dependence on national raw materials than that of Malaysia, and a lower dependence on the growing web of technology and services. However, this is changing, especially in the large conurbation, "Jabotabek," around Jakarta. The strongest relative growth in recent years has been in the periphery, and in Kalimantan and Sumatra in particular. This concentration on resource-intensive manufacturing may, however, be starting to decline, with the recent (post-1988) surge in the importance of textiles, clothing, and footwear, exports of which now surpass those of plywood. Hill (1992) notes that the slow growth of plywood exports in recent years reflects the beginning of supply constraints, especially in Kalimantan. The labour-intensive industries of clothing and footwear are mainly located in Java, as are some alternative wood-based industries, such as furniture, which draw their raw materials from several provinces. Plywood and sawmilling are located closer to the supply sources away from Java, as will be the proposed new pulp and paper plants.
The growth of cities
This contrast in manufacturing notwithstanding, the pattern of modern urbanization is, at least superficially, similar in both countries. The dominant feature is the rapid growth of major cities in the national heartlands. Java has two cities more populous than any in Malaysia, and Jakarta is the world's eighth-largest city. However, Kuala Lumpur, together with its satellites, now has a higher proportion of the Malaysian national population than Jakarta's share of the whole Indonesian population. Though technically not within our region, the transnational conurbation (or "growth triangle" as it is nowadays termed) comprising Singapore together with Johor Bharu in Malaysia and Batam in Indonesia is only a little larger than the whole Kuala
Lumpur conurbation, with almost 4 million people in the former and over 3 million in the latter.
Of more concern to us, however, is urbanization in areas away from the national heartlands. East of the main range the Peninsula has no city larger than 230,000 people; there are four in Borneo that are of greater size. Because of problems of boundary definition, ill accommodated to the modern spread of quasi-urban buildings, data on town size are notoriously hard to interpret in this whole region, and especially so in Malaysian Borneo (Samad Hadi, 1990). On the basis of a realistic definition of "urban," however, Banjarmasin in south-east Kalimantan, with almost 500,000 people, is the largest city in either Borneo or the eastern Peninsula.
With the exception only of Kota Bharu, Palangkaraya, and Banjarbaru/Martapura, all the major centres are on the coast or are riverine seaports, albeit that some of the modern deepwater ports or anchorages - as at Kuching, Bandar Seri Begawan, and Sibu - now lie well downstream from the towns. Inland towns are quite numerous, but almost all are small. Only a few exceed 20,000 and most have fewer than 15,000 people. Except in Sabah and the eastern Peninsula, the great majority are on rivers navigable to small craft, although improvement in roads is reducing the significance of riverine location.
The towns of Borneo are the location of much of the manufacturing industry found in the island, including all the larger plywood mills and sawmills. Before the logging boom commenced in the late 1960s, Banjarmasin, Pontianak, and Kuching derived much of their small industrial income from rubber processing, the principal peasant cash crop since the early 1900s. Oil and timber are now the dominant industrial raw materials. Samarinda, Balikpapan, and Tarakan combine a population of 1 million people. Together with the industrial centre at Bontang, with its large LNG plant, they constitute a typically immigrant, "enclave" economy - 49 per cent of East Kalimantan's population is urban. Samarinda has one of the world's largest concentrations of sawmills, plywood factories, and other timber industries (Schindele and Thoma, 1989).
The contrast between the two countries persists. With the exception of the oil and gas centres of Miri, Bintulu, and Kemaman, the larger towns of Malaysian Borneo and the eastern Peninsula are all old-established regional centres with little industrial development.5 Most Malaysian manufacturing industry is located elsewhere. While Banjarmasin and Pontianak are even older regional centres, they and the newer cities of Samarinda and Balikpapan may be ranked among the principal industrial centres of Indonesia outside Java and North Sumatra. Substantial differences in urban character, population composition, and social conditions flow from these contrasts. We discuss the urban problems of Borneo, in particular, in greater detail in chapter 10.