#1Kalimantan in the firing line: impacts of the global economic crisis Lesley Potter, Human Geography ANU#2OUTLINE OF PRESENTATION Indonesia and the GEC: commodity prices and exports vs household consumption. Kalimantan's export crops Oil palm and rubber in Kalimantan, 2008-9 New unemployment and under-employment, both urban and rural 'Old' and 'new' poverty: Malinau vs Landak Government programs to mitigate crisis impacts Is the crisis now over? Conclusion#3Indonesia and the global economic crisis: commodity prices and exports vs household consumption#4Although Indonesia's economy was doing well early in 2008, spurred on by high commodity prices, it began to be affected by the World Economic Crisis in the third quarter of the year. However, GDP growth did not experience the sharp downturn of most Asian countries. GRAPH 1. THE INDONESIAN ECONOMY STARTED TO SLOW IN THE THIRD QUARTER OF 2008 GDP Growth % YoY 14 12 10 8 6 st 4 China Indonesia Philippines Thailand -Malaysia Korea 2 Japan 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 -2 2006 2007 2008 Source: Danareksa Research Institute: Yearly Outlook, July 2009#5• Observers cited Indonesia's large population and local consumption as a reason for its being partly shielded from overseas events. However, the World Bank in a Policy Note classified the country as among those likely to experience ‘high exposure', with both decelerating growth and increasing poverty. Decelerating Growth Jamaica Jordan Kazakhstan Albania Kenya Argentina Latvia Armenia Libya Azerbaijan, Rep.of Lithuania Belarus Macedonia Bosnia & Herz. Malaysia Bulgaria Mexico Brazil Moldova Chile Nicaragua China, P.R. Mainland Panama Colombia Costa Rica Paraguay Poland Croatia Romania Dominican Republic Ecuador Russia Senegal Slovak Rep. High Exposure Afghanistan Benin Mauritania Burundi Angola Myanmar Bangladesh Mongolia Bhutan Mozambique Botswana Namibia Burkina Faso Niger Cambodia Nigeria Central Afr. Rep Pakistan. Chad Philippines Comoros Rwanda Congo, DR Sierra Leone Ethiopia South Africa Eq. Guinea Sudan Gambia, The Swaziland Ghana Tanzania Haiti Tajikistan India Timor Leste Indonesia Togo Turkmenistan Cameroon Congo, Rep. Guinea High Poverty Guinea-Bissau Ivory Coast Kyrgyz Rep. Liberia Madagascar Malawi Nepal Papua New Guinea Uganda El Salvador Egypt Gabon Sri Lanka Thailand Georgia Trinidad & Guatemala Honduras Hungary Lao, PDR Tobago Tunisia Lesotho Mali Turkey Uzbekistan, Vietnam Zambia Iran Ukraine Uruguay Venezuela Source: Sources: Growth estimates: WEO January 2009 forecast and Bank staff estimates. Poverty: 2008 WDI estimates for 2005..#6GRAPH 2. HOUSEHOLD SPENDING, INVESTMENT, AND EXPORTS SPURRED GROWTH IN THE FIRST THREE QUARTERS OF 2008 Source of Growth do % 16 Export 14 12 Investment Government Cons. 10 |Household Cons. 00 8 co 6 +++ 2 0 2007 2008 High commodity prices increased export earnings and investment in 2008, but those prices had dropped drastically by the 4th quarter (not shown on graph). Government expenditure increased, perhaps in preparation for the elections. (Source Danareksa Research Institute: Yearly Outlook Jan 2009)#7Growth decelerated in the 4th quarter of 2008, when exports and manufacturing took a hit from the global recession. Imports also fell. Export growth Import growth % 60_ Current account- % of GDP _ 4 45_ 3 30_ _ 2 15. _1 0. 0 -15_ -1 2007 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 Q4 Source: World Bank 2009 Graph to March 2009#8The oil palm price ‘bubble' peaked in March 2008. The rapid decline from Oct 2008 surprised growers. Rubber prices followed a similar trajectory. Palm Oil Price History: 1998-2009 US$ Per Metric Ton 1400 1200 1000 800 600 400 200 0 1998 1999 2000 Though CPO prices have fallen 56% in the past year, current price levels are above long-term averages, and well-above reported production costs Estimated cost of production on a well-managed Govt estate Source: USDA, Oilworld Monthly Avg Malaysia FOB Palm Oil Price 2007 2008 2009#9Kalimantan's export crops#10Historically, rubber became an important export crop in much of Kalimantan (especially South and West Kal.) by the 1920s. Although there are a few plantations, the industry has been largely dominated by smallholders. Rubber proved a flexible component of traditional systems, so was able to spread into remote locations. Oil palm was introduced from Sumatra in the late 1970s, but its main growth began in the 1990s. Because of the need for rapid processing of the fruit and the export orientation of the industry, oil palm plantations have tended to be located where road transport is available.#11Though the Trans-Kalimantan Highway is incomplete, the ‘south link' and parts of the 'central link' are critical to major oil palm areas. Merbau (Liky) Tanah Hitam PETA JALAN LINTAS KALIMANTAN Malinau Simaroparts Alang WU- Nunukan Mensalong Se F.BUNTU Puran P.TARAKAN Tarakan Pimping i Longemut ANJUNG SELOR south link Longpujungan Longagung Datadlan Longrawan north link Sengan Kartan Metulang SAMBAS Jago Batang Selas Br. Martinue Tabes 1 Кефа anggau Ledo Na Merakas jak Sibau Hulu Bungen SINGKAWANG Sepuh На Вафан PUTUSSIBAY Banglayang Sp. Tig Bedual Sel Duri Serimbu Chatong Jaskalangan embayan Odnap Na Kantuk Tionghang Sp.Memakal PN KED Na Ersk Hanga samangut . MEMPAAH PONTIANA Nangatapul Selh Sebedu Ngabang OSANGGAU SINTANG Tayan Sekadau central link Terju Nangapinch Nargaheta Baalbekuak Aurbining Teluk Batang Sandal KETAPANG P. PANJANG TAHJUNGREDER, P. MARATUA K50 km, 100 Perdu A Wa hau Sp Bumper MaLembal Sangata Bontang Sangkurang LEGENDA: BATAS PROPINSI BATAS PANTAI BATAS NEGARA IBUKOTA PROPINSI KOTAMADYA IBUKOTA KABUPATEN IBUKOTA KECAMATAN JALAN LINTAS KALIMANTAN POROS UTARA POROS TENGAH POROS SELATAN south link U Tumbang Nanga Tumbang Senemang Tumbang Samba Ratambang Fbg Talken 8pM.Badak Sambora tabangun D Pucukau TENGGARONG SAMARINDA Kusun Papar Punjung QUJARATEWEH -Lampeong Loojanar Senuato Kandul Kanangar Pena BALIKPAPAN Takais Pata Kadaren Timp Kasongan BUNTOR Ampah Bitco Kuto TANJUNG TANAHGROGOT Palantaran Asam Bany PALANGKARA Runtu Km 85 Tamianglayang Berengbengkel Pase/pans Pangkalanada PANGKALANBUN SAMPIT Km 35 Pulang jung Pahatan Pembuang BARABAI KANDANGAN KUALAKAPUAS RANTAU Sel Kupang KOTA BARU south link Tarung Puting BANJARMASIN MARTAPURA PALAIHARI Asamosa mben Maks Puth Fungal Ball P. SEBUKU#12INDONESIA: Regional Palm Oil Production 18 Sumatra Sulawesi 2 27 6 Kalimantan 8 PALM OIL PRODUCTION MAJOR MINOR Java Nusa Tenggara Numbers indicate percent of total national production each province contributed in 2007/08. Sulawesi 2% 2007/08 Palm Oil Production Sumatra Kalimantan 17% 80% <1 Papua Maluku Data Source: Secretariat of Directorate General of Estates/Qtjenbun, Indonesia, 2007 Foreign Agricultural Service USDA Office of Global Analili IPA Dilon The government has encouraged the spread of oil palm beyond its Sumatran base: the four provinces of Kalimantan now have 17% of production.#13Kalimantan experienced a boom in planting over the past decade (and much ‘hype' over potential planting, which did not always materialise). • It did achieve the country's fastest rate of growth, but 45% of the existing area is immature. This applies more to East and Central Kalimantan than West. INDONESIA: Annual Palm Area Growth 10-Year period (2000-2009) Sumatra Kalimantan Sulawesi 6.0% 8.0% 13.2% Milon Hectares INDONESIA: Palm Area Growth by Owner 6.0- 5.0- 1.26 4.0 3.0 Papua 2.9% Java 3.6% 2.0 3.80 0.84 1.0- 0% 2% 4% 6% 8% 10% 12% 14% Immature Mature 1.03 0.05 0.01 0.0- Sumettra Kalimantan Sulawesi Papua Source: Indonesian Palm Oil Commission (IPOC), Directorate General of Estate Crops, 2009#14Percentage of sub-district land planted to oil palm: West Kalimantan In both Central and West Kalimantan, extensive areas remain outside the oil palm belt, though coastal peat swamps are coming under increasing pressure. Carto ANU 07-036 SAMBAS Sambas 7 6 0 SEKADAU International border Province border District border Subdistrict border Province capital City 0 Kilometres 150 SINGKAWANG CITY BENGKAYANG 11 KAPUAS HULU 10 15 8 9 LANDAK 16 17 18 26 12 14 19 SANGGAU 30 35 27 13 Sangga 21 SINTANG 20 PONTIANAK 23 28 Sintang 34 37 22 PONTIANAK 32 33 29 CITY 38 25 31 39 PONTIANAK 40 36 MELAWI MALAYSIA BRUNEI West Kalimantan Central East Kalimantan 43 42 KETAPANG 45 46 Ketapang 47 44 123 Tebas Sambas 3 Sejangkung 4 5 Ledo Sanggau Ledo 6 Seluas 7 Jagoi Babang 8 Mempawah Hulu Menyuke 9 10 Kuala Behe 11 Air Besar 49 48 12 Sengah Temila 26 Belitang Hulu 27 Belitang Hilir 28 Sekadau Hilir 29 Sekadau Hulu 30 Ketungau Hilir 31 Sepauk 32 Tempunak 33 Sungai Tebelian 34 Sintang 35 Silat Hilir 36 Belimbing 37 Sungai Ambawang INDONESIA Kalimantan South Kalimantan % of subdistrictland occupied by oil palm 13 Sebangki 14 Ngabang 15 Beduwai 16 Kembayan 17 Bonti 25-39.9 20-24.9 18 Jangkang 19 Tayan Hulu 15-19.9 10-14.9 20 Balai 21 Parindu 5-9.9 1-4.9 0.1-0.9 25 Meliau 22 Tayan Hilir 23 Sanggau Kapuas 24 Mukok 38 Sungai Raya 39 Telok Pa'kedai 40 Kubu 41 Batu Ampar 42 Simpang Hilir 43 Sungai Laur 44 Sandai 45 Nanga Tayap 46 Tumbang Titi 47 Marau 48 Kendawangan 49 Manis Mata#15Percentage of sub-district land planted to oil palm, Central Kalimantan 21 345678 Lamandau Bulik Balai Riam Sukamara Arut Utara Kotawaringin Lama Arut Selatan Kumai MALAYSIA BRUNEI 9 Seruyan Tengah West Kalimantan 10 Hanau 11 Danau Sembuluh 12 Antang Kalang 13 Mentaya Hulu 14 Parenggean East Kalimantan, INDONESIA Central Kalimantan South Kalimantan 15 Cempaga 16 Kota Besi 17 Baamang 18 Katingan Tengah LAMANDAU 19 Katingan Hilir 20 Teweh Tengah 21 Gunung Bintang Atwai 22 Dusun Selatan 23 Pematang Karau 24 Dusun Tengah 25 Dusun Timur 26 Benua Lima 25-39.9 20-24.9 % of subdistrictland occupied by oil palm International border Province border District border Subdistrict border Province capital City 0 Kilometres 150 MURUNG RAYA 20 KATINGAN GUNUNG MAS 12 KAPUAS 18 PALANGKA Muara Teweh BARITO UTARA 21 RAYA 1 2 5 14 CITY 22 23 24 19 9 13 15 KOTAWARINGIN PALANGKARAYA BARITO 25 ° TIMUR KOTAWARINGIN TIMUR 26 BARITO 4 6 BARAT 10 16 8 17 Sampit Pangkalanbun 11 SERUYAN 15-19.9 10-14.9 5-9.9 SUKAMARA 1-4.9 0.1-0.9 SELATAN PULANG PISAU Kuala Kapuas Carto ANU 07-036#16The price 'boom' 2007-8 The high commodity prices led farmers to follow the market, often reducing their range of activities to monocultures of oil palm or rubber, or working as labourers in these industries. From 'sleeping land' (i.e. swidden fallows) to rubber or oil palm smallholdings (less land in food crops) From logging (legal or illegal) to rubber (West Kal) or oil palm labourers (C. Kal) Many plantation smallholders (plasma) paid off their debts to the estates. They also splurged on consumer goods and incurred new debts. The large estates were highly export-oriented, with the result that local cooking oil prices soared as supplies became scarce. Fertiliser shortages were felt by small farmers, as large estates expanded their production and commandeered supplies.#17Oil palm and rubber in Kalimantan, 2008-9#18... And bust, 2008-9 By November 2008 the world economic crisis produced a rapid reversal. The export price of Crude Palm Oil (CPO) dropped from Rp8,210/kg (July) to Rp3,581 (Nov). • A temporary imbalance occurred in October between the export price (Rp 5,211) and those set monthly by the provinces for farmers' palm fruit (FFB) (e.g. Rp1,064/kg for fruit from 10 year old trees in West Kal), as 5 kg of fruit was needed to make 1 kg of CPO. Some estates refused to accept farmers' fruit, especially from independent growers, while those still linked to the estates (‘plasma') found that factory production levels had been halved.#19Trucks queue to deliver farmers' palm oil fruit to the government mill PTPN XIII in Parindu (West Kalimantan). (Photo Piers Gillespie)#20Smallholders react to the palm oil price drop In East Kal, where many trees were younger and less productive, fruit prices had dropped to Rp500/kg and nobody could afford to use fertilizer (selling at Rp8,000 per kg). Although some fertilizer was subsidized by the government, accessing supplies was difficult. In Parindu (West Kal) many had debts to their co- operative or agri-bank for purchases of motor cycles and other goods in the 'glory days'. Others still had debts to their estate, which cut their income by 30%. ➤ In Pangkalan Lada (Central Kal) smallholders said bitterly that they needed the support of the estate sector but their income was below production cost.#21Impact of the drop in rubber prices As the price declined from Rp12,000 to Rp3,000/kg, the government decided to cut production, suggesting that farmers tap their trees twice rather than three times per week, which reduced incomes still further. Farmers in the (remote) eastern districts of West Kal were said to rely on 'rubber, rubber and rubber'. They were described as 'sinking away', and affected psychologically. Villagers were reported to be 'struck dumb' with the impact. 'The crisis has shaken the foundations of people's lives' (Borneo Tribune, 3.1.09). It was the rapidity and size of the price decline that farmers found most shocking: they were used to fluctuations in rubber prices of 5-10%, but not 75%! Officials recommended a return to small-scale mixed farming, but where was the food crop land? Even those with rice swiddens were reported to be buying food: holdings were very small and yields low because of lack of fertilizer and rat problems.#22• A few oil palm smallholders had been able to retain enough of their land to practise mixed farming. On Malaysian-owned estate PT SIA in Parindu (W. Kal), many farmers had managed to avoid providing the company with the required 7.5ha per family. On other plantations the company's 'core' took up 80% of the land, leaving only 20% for smallholders.#23Oil palm with village land in background, Sanggau district West Kalimantan#24Many rubber trees were old and unproductive, with government plans for 'revitalisation' of the industry proceeding only slowly. Current plans covered only 55,000ha for the whole country in 2009, while in West Kal alone, more than 500,000ha of smallholder rubber was grown. Some farmers attempted to use improved clones, but these were expensive and not always available.#25New unemployment and under-employment, both urban and rural#26Kalimantan's recent economic growth by sector (2000 prices, % year on year) Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Kalimantan GRDP 7.2 7.2 5.7 2.2 1.0 1.1 Agriculture 4.3 8.0 7.0 0.2 -2.0 -3.1 Mining 8.9 6.7 5.9 1.7 -0.1 -0.5 Manufacturing 2.6 3.4 0.2 -3.2 -3.4 -2.3 Services 10.7 10.4 9.5 7.8 6.6 7.1 Indonesia GDP 6.2 6.4 6.4 5.2 4.4 4.0 Source: Resosudarmo & Yusuf, 2009 (in press)#27The low rates of growth experienced by Kalimantan in every sector except services between the fourth quarter of 2008 and the second quarter of 2009 (rates which were the worst in the country), did not bode well for the maintenance of employment in agriculture and manufacturing. By December 2008, there were reports of worker dismissals from oil palm and rubber processing plants, timber and plywood factories. There were reductions in the plantation labour force as expansion was postponed. Some workers were told to go home and wait until conditions improved, meanwhile being paid a small retainer. This strategy saved the estates or factories providing severance pay for sacked workers. In other cases workers were not dismissed, but asked to work shorter hours, thus becoming under-employed. Although migrants laid off from jobs overseas were being forced to return home (an estimated 100,000 from electronics industries in Malaysia), this aspect did not have a serious impact on Kalimantan. Most of these largely female migrants were from Java or Sumatra.#28Workers in industries assessed as especially exposed included much of Sumatra and West and Central Kal, the chief palm oil and rubber producers (World Bank, 2009). Vulnerability of Employment to the Global Downturn % of provincial workforce vulnerable 41 to 60 31 to 40 21 to 30 11 to 20 0 to 10 Sources: BPS and World Bank '#29However, in East Kal a major problem concerned the wood industries, clustered around Samarinda city. Plywood exports dropped more than 50% from Jan. 2008 to Jan. 2009 and only 8 out of 25 factories survived, with more than 24,000 workers laid off. ‘Orders dropped, prices dropped and raw materials were hard to find...' In West Kal, the 13 rubber factories (mainly in Pontianak) were having trouble obtaining raw materials, as many farmers stopped tapping when the price dropped. Again several factories closed and their workers became unemployed. While large drops in factory employment were mainly urban, declines in rural incomes affected many small services.#30"As prices [of rubber] have fallen, families... have been forced to economise. As well as eating less nutritious food... they are cutting back on... medical advice. And as rubber-dependent families rein in their spending, market stall-holders, petty traders, motorbike taxi drivers and café owners are all seeing their incomes decline too". (DFID report, Tumbang Malahoi village, Central Kalimantan, 18/5/09) Many rubber growers turned to small-scale mining, especially gold mining in the rivers of Central and West Kalimantan. This activity has caused serious environmental damage and mercury pollution of the streams, but is seen as a last resort by many cash-strapped farmers, some of whom had previously worked in timber, but had seen that industry decline.#31'Old' and 'new' poverty#32In a 2006 paper, (World Development, 34 (1):180-202) Jonathan Rigg reflected on the production and reproduction of poverty in the Rural South. He identified two kinds of poverty: "Old" poverty, perceived to stem largely from remoteness, dependence on traditional technology and lack of market access; "New" poverty, brought about as a result of the development process and the direct engagement of people with the market. To what extent are these ideas relevant to Kalimantan's experience during the Global Crisis?#33District level data for 2007 (BPS 2008, before the crisis) reveal moderate levels of poverty in parts of West and East Kalimantan, higher in rural areas than in the cities. There is a clear correlation between more remote districts, a high percentage of people employed in agriculture and high poverty levels, e.g. the thinly peopled Malinau district in East Kal: 23.6% poor (highest in the province), with 92.4% of the 55,000 population employed in agriculture. Malinau has large areas of primary forest and national park. A 'conservation district' with no oil palm and little rubber, it would appear to qualify as experiencing "old poverty", and not be much affected by the global crisis. Yet Malinau's people are urgently seeking 'development' and ignoring any likely downsides of market exposure.#341234561 Sambas 13 Sukamara 27 Kutai Barat Singkawang City 14 Lamandau 28 Malinau Bengkayang 15 Kotawaringin Barat 29 Nunukan Landak 16 Seruyan 30 Tarakan City Pontianak 17 Kotawaringin Timur 31 Bulungan Pontianak City 18 Katingan 32 Berau 7 Sanggau 19 Gunung Mas 33 Kutai Timur 8 Sekadau 20 Palangka Raya City 34 Bontang City 9 Sintang 21 Pulang Pisau 35 Kutai Kertanegara 10 Kapuas Hulu 22 Kapuas 36 Samarinda City 11 Melawi 23 Barito Selatan 37 12 Ketapang 24 Barito Timur 38 25 Barito Utara 39 Pasir 26 Murung Raya Balikpapan City Penajam Paser Utara BRUNEI 40 Tabalong 41 Balangan 42 Hulu Sungai Utara 43 Hulu Sungai Tengah 44 Hulu Sungai Selatan 45 Tapin 46 Barito Kuala 47 Banjarmasin 48 Tanah Laut 49 Banjarbaru 50 Banjar 51 Tanah Bumbu 52 Kota Baru MALAYSIA Sambas 7 Sanggau PONTIANAK 8 Sintang 5 WEST KALIMANTAN 11 Ketapang 10 0 MALAYSIA 29 200 L Kilometres Carto ANU 07-078 30 Tarakan 31 32 28 EAST KALIMANTAN 33 27 34. Bontang 26 35 36 SAMARINDA 25 19 Muara Teweh 12 14 CENTRAL KALIMANTAN 38 -37 Balikpapan 39 18 21 20 24 22 17 40 Tanjung Tanah 15 PALANGKARAYA 23 Grogot Sampit 41 13 Pangkalanbun 52 SOUTH 16 International border Province border District border Province capital 0 City 21 Kuala Kapuas 46 45 50 BANJARMASIN CITY Batu Banjar Licin Baru City 51 KALIMANTAN Kota Baru 52 47 48 49 districts/cities Population Density/km² > 2000 300.1-2000 120.1-300 60.1-120 30.1-60 10.1-30 <10#35• Malinau has a long and largely mountainous border with Sarawak, the border region being difficult to access from the district centre. In November 2008 people in 3 sub-districts were threatening to move to Malaysia unless transport was improved. Both transport costs and basic goods were considered far too expensive. By January 2009 there was some discussion of the global crisis, with acknowledgment that new poverty could emerge with increased unemployment. While carbon trading and eco-tourism were seen as possibilities for the future, in a few areas the forest status was changed so more land could be planted with food or estate crops. Meanwhile, three oil palm companies were awaiting approval to clear forest...#36Landak, the poorest district in West Kalimantan in 2007 (24.95% poverty) had 87.4% involvement in agriculture. Its population of more than 350,000 is within reasonable distance of the capital, Pontianak. Landak was one of the earliest districts to plant oil palm, much of which is now old and unproductive, with some newly replanted. It has W.Kal's second largest smallholder rubber area. This district was hard hit by the slump in commodity prices. Prices as low as Rp300-350/kg were being offered some farmers for young oil palm fruit in November 2008, from a high point of Rp1,200 just a few months earlier. Cuts in the labour force of both oil palm and rubber holdings were taking place. Landak, highly dependent on export commodities, would appear an example of market-induced "new" poverty, superimposed on an already rather stressed land base.#37However...government intervention has reduced poverty levels#38Before the crisis, the Yudhoyono government already had in place several anti-poverty programs, which provided cash grants to vulnerable people (BLT) and small loans of rotating credit or equipment, such as fishing gear (KUR). The cash grants program is credited with minor reductions in poverty between 2007 and 2008, and the reductions appear to be continuing. Recent figures from BPS show consistent declines in poverty across all Kalimantan provinces to March 2009. Health insurance for poorer households (Jamkesmas), and scholarships for poor students have also helped. In addition, the community block grants programs (PNPM), when focussed on improving rural infrastructure, can reduce unemployment. The President's stimulus package, aimed largely at protecting the business sector through tax cuts, included low cost cooking oil. Resosudarmo and Yusuf (2009 in press) suggest that election campaign spending has also assisted in cutting poverty levels.#39Is the crisis over in Kalimantan?#40By July 2009, the price of palm oil appeared to have stabilised around USD 600/ton. Although this was far below the level reached during the 'bubble', it was sufficient for normal production. Prices for farmers' fruit in Central Kalimantan had been restored to Rp1,000 for 10-year old fruit as early as May, to then plateau for the following five months. Further proof of recovery was reached when plantation clearing was resumed in August, with the usual complaints of burning in both West and Central Kalimantan. Although monthly export figures remained well below those of 2008, they improved each month from June 2009. The one commodity still lagging was rubber, with incomes remaining low in the more remote districts and many farmers turning in desperation to illegal mining. Indonesia's rubber growers are directly affected by tyre sales in the US. Prices finally began to pick up in September-October.#41Conclusion#42'Surprise, surprise' is the title of the Economist's most recent analysis of Indonesia's economic performance during the global crisis, from which the country seems to be emerging well, according to macro-economic criteria. • This study has briefly examined the particular case of Kalimantan, where greater dependence on 'boom' crops and declines in timber have led to increased unemployment and social distress. 'Old' and 'new' poverty may be recognised, though the levels have moderated, thanks largely to government intervention. While the impact of the global economic crisis was severe in parts of Kalimantan for about 9 months, the oil palm areas have largely recovered, but much of the interior rubber- growing region has been suffering from a depressed economy until very recently. It is important that the trajectory of recovery be monitored carefully in Kalimantan, as rates of growth have been very low and continuing pockets of poverty and unemployment will need to be addressed.#43THANK YOU