on the environment. For example, the international competitiveness of exports of agricultural and agro-processing products increased. During the second half of 1997, export of agro-processing products rose by 47 percent from the same period in the previous year. In 1998, the exports of agricultural products also rose dramatically, by 33.6 percent. This is significant because agriculture accounts for approximately 42 percent of land use and it consumes about 90 percent of total water usage in Thailand.

Similarly, fishery depletion has increased after the devaluation of the baht. Canned fish exports alone rose 58.4 percent. Fishing trawler activity in neighboring waters increased dramatically. Moreover, to feed the need for foreign currency, the government has increased its fishery promotion budget. In 1995, the fisheries conservation budget was around one-third of the promotion budget. In 1999, the ratio had changed. For every baht spent on conservation, five were spent on promoting extraction. As a result, field reports claim that government patrol boats can no longer afford to monitor activities in protected areas, and illegal activities such as dynamiting and cyanide fishing in protected coral reefs have increased.

The financial crisis has had lasting impacts on the environment in Thailand, impacts that were neither foreseen nor considered by the IMF.

Source: Bullard 1999

Indonesia

In 1997, Indonesia became the second recipient of the Asian financial contagion that originated in Thailand. Spooked investors fled the country, sparking a precipitous drop in the national currency and a spike in the rate of inflation. As a result of this crisis situation, Indonesia signed an economic bailout package with the IMF. Together with pledges from the World Bank and the Asian Development Bank, the loan totaled US$43 billion.

In the wake of the Suharto era, an era characterized by collusion, corruption and nepotism, the economic crisis and adoption of reforms offered opportunities to change the tide of rampant environmental destruction, particularly of Indonesia’s vast forests. IMF policies aimed at creating competitive markets were meant to break trade monopolies, particularly in the forestry sector, eliminating opportunities for corruption and fostering better forest management practices.

Unfortunately, these efforts have been ineffective. Only 15% of forest concessions known to have been allocated through corrupt means have been revoked. Illegal logging has increased dramatically as the economic crisis has forced people to use desperate measures to survive. The result has been threats to the existing forest preserves and wildlife habitat. The majority of illegal logging is said to involve timber barons, the military and police, as well as conservation authorities.⁹

A major problem in these forestry sector conditionalities is that Indonesian civil society, who would be best placed to identify forestry sector problems and to recommend policies to their own government, are excluded from any meaningful process in designing the new forestry sector policy. Indonesia’s Letter of Intent*** with the IMF called for the establishment of a new forestry law in 1999. Indonesian NGOs felt that the time allocated for the process, and consultations were inadequate. Not surprisingly, the new law focuses on forestry for economic purposes by opening up the sector to competition without ensuring critical issues such as indigenous land rights and regulatory reforms that address forest conservation.

Enforcement mechanisms needed to ensure that existing policies achieve their intended goals are woefully...

***The Letter of Intent is the document that indicates a country’s agreement to enter into an arrangement with the IMF. For non-International Development Assistance countries that are not eligible for IMF concessional funds, the Letter of Intent and the associated Memorandum of Economic and Financial Policies contain the economic policies that are part of the agreement.