Indonesia's industrial growth leaves rivers polluted

November 21, 1993|By Chicago Tribune

JAKARTA, Indonesia -- If the production of toxic and hazardous waste is one measure of economic development, then WMX Technologies' foray into Indonesia heralds industry's slow but steady emergence in this still-backward economy.

The Oak Brook, Ill.-based disposal firm's international arm early next year will open Southeast Asia's first hazardous-waste landfill about 25 miles from downtown Jakarta. The $20 million landfill is the first phase of a $70 million multiyear project that eventually will include a chemical-treatment facility and a toxic-waste incinerator.

In a country usually berated for exploiting its vanishing rain forests, the Waste Management project might seem a sideshow to the major environmental problems facing Indonesia. But to the nation's highest environmental officer, it is the first step in cleaning up its biggest environmental headache: polluted rivers.

"Our No. 1 problem is water," said Nabiel Makarin, director of Bapedal, the Indonesian Environmental Agency. "Millions of people still use river water for daily use."

Because of industrialization and urbanization, it is water that increasingly is filled with chemical poisons and human waste. World Bank studies have warned that many rivers on Java -- the main island, is home to nearly two-thirds of Indonesia's 184 million people -- may become completely unfit for human use by the end of this decade.

The landfill project provides a good example of how U.S. aid programs that are designed to help developing countries cope with their most pressing problems also can pave the way for U.S. business opportunities abroad. On the darker side, the project shows how rampant corruption in Indonesia affects nearly every business endeavor.

Government officials first recognized the need for a hazardous-waste dump nearly a decade ago. New pesticide and chemical-processing industries feeding off large oil and gas reserves were generating increasing volumes of hazardous waste.

Labor-intensive industries such as shoes and textiles that began flocking to Indonesia for cheap labor also generated wastes, as did the handful of steel-processors and electronics firms and a government-sponsored aerospace industry.

While responsible companies stored their hazardous and toxic effluent at their factories, many firms, especially locally owned firms with no exposure to international environmental regulation, took the easier route. They dumped it on the ground or in local rivers.

U.S. consultants hired

About five years ago the government identified an abandoned cement plant as the site for its first landfill.

It used a U.S. Agency for International Development grant to hire Washington-based consultants Dames & Moore to study the site, as well as investigate a dump's commercial viability.

Meanwhile, the government began the slow process of erecting a regulatory framework. Unlike former British colonies, with their relatively strong civil-service traditions, or Chinese-influenced countries, with their Confucian-style bureaucracies, this former Dutch colony has lagged behind other Asian countries in developing strong, independent government agencies for carrying out policy.

It wasn't until three years ago that Bapedal, the environmental agency, enacted water-discharge standards for industry. A detailed hazardous- and toxic-waste standard won't be ready until the end of this year.

The government also turned over rights to develop the landfill to Bimantara Citra Group, a company with facilities near the site but no hazardous-waste handling experience. Its president and a major stockholder is Bambang Trihatmodjo, the second son of President Suharto, who in addition to his business dealings was recently elevated to a high-ranking position in the ruling Golkar party.

Bimantara's search for a capable partner to manage the project led to an international competition won by WMX Technologies (formerly Waste Management Inc.) in 1991. The company, whose London-based international division accounted for 14 percent of the parent firm's $8.7 billion in sales last year, forged a 70-30 joint venture partnership with Bimantara (WMX is the majority partner) and submitted a blueprint for the dump last year.

"We'd been looking for opportunities throughout Asia for several years," said Patrick Heininger, president of PT Waste Management Indonesia. Mr. Heininger was extremely cautious when describing Waste Management's relationship with his local partner and its contribution to the joint venture.

"They provide the contacts and entree to other big companies like Pertamina [the state-owned oil company]," he said. "They helped us get all the proper government permits and go through the environmental-impact assessment. That's how you get things done here," he said.

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