Regional Formation and Development Studies

This paper evaluates the impact of corruption on deforestation in Indonesia. The world’s nature environment and global warming questions are one of the main factors of international concerns. Massive deforestation threatens Indonesian biodiversity. This research paper analyses issues of whether deforestation in Indonesia is caused by corruption and supported by crude palm oil production. This issue was questioned earlier by using Engel Granger cointegration test, three time series of data, specifically corruption perception index (CPI), rate of deforestation and price of crude palm oil that was inspected for a long-run relationship. Yet long-run relationship was not found. The author of this article shows that while answering this question, CPI values are not as important as the very nature of corruption in Indonesia. However, CPI is still extremely high in Indonesia as the nature of corruption is convenient for illegal logging. Thus, international response is needed so that to decrease the level of deforestation in Indonesia. With the new European Union Law that requires legal sourcing of wood products, Indonesia commits to enforce new rules in the Asia’s largest rainforest. For example, FLEGT licensing became operational on November 15, 2016. The European Union is strictly enforcing these rules what is a good step against deforestation in hand with illegal logging in Indonesia. In this way to analyse in detail the FLEGT programme and the EU activities, is beyond the scope of this paper. There stays questioned the Indonesian Presidents’ ban on new palm oil plantations and mining licence, because such approach can potentially increase corruption and unofficial economy at local levels. The author of this paper wants to fulfil the gap in understanding about the link between deforestation in Indonesia and corruption. The level of corruption in Indonesia is not the main issue, but the nature of corruption is the main problem.