Indonesian ‘island auction’ to go ahead despite concerns over permits

Widi Reserve. Image: Sotheby’s
Widi Reserve. Image: Sotheby’s

Shares of a private company with the rights to develop tourism facilities inside a marine reserve in Indonesia have reappeared for auction later this month despite the government’s plan to annul a key agreement with the firm.

Developer PT Leadership Islands Indonesia (LII) is putting up its shares for bidding via Sotheby’s Concierge Auctions in New York from Jan. 24-30 in an effort to bring in international investors to finance its plans to develop an eco-resort in the Widi Islands, in eastern Indonesia’s North Maluku province. The online auction had initially been planned for Dec. 8-14, 2022, but the Indonesian government nipped that in the bud following mounting concerns that the islands were being bundled off to foreign private owners, in direct violation of Indonesian laws. The government also cited the Bali-based developer’s failure to obtain the permit required to ensure that development in the islands complies with prevailing zoning plans and guarantees economic and ecological benefits.

The government also plans to revoke LII’s 2015 memorandum of understanding with local authorities that would allow the company to build an eco-resort and luxury residential properties in the Widi Islands. The agreement included the rights to develop the area for 35 years with a possible extension of another 20 years.

“Up until now, the government, in this case the Ministry of Marine Affairs and Fisheries, has not been informed about PT LII’s plan to put back up its shares for auction on Jan. 24-30 to develop a resort in the Widi Islands Protected Forest Area,” Victor Gustaaf Manoppo, the ministry’s director-general of marine zoning, told Mongabay in a statement received Dec. 31, 2022.

The archipelagic province of North Maluku, in green, where the Widi Islands are located. Image via Wikimedia Commons (CC BY-SA 3.0).
A screenshot of Sotheby’s webpage showing the scheduled plan of auction of LII’s shares.
A screenshot of Sotheby’s webpage showing the scheduled plan of auction of LII’s shares.

Victor noted that LII still hasn’t submitted any application to obtain the permit and that due to the area’s protected forest status, the company is also required to obtain a separate permit, known as a development lease, from the Ministry of Environment and Forestry. Mongabay reached out to the forestry ministry for comment on the matter but did not receive a response as of the time this story was published. The deputy forestry minister, Alue Dohong, on Dec. 6 told local TV news that the government had annulled the initial plan to auction off shares.

The Widi Islands are part of a marine reserve inside the Pacific Coral Triangle, a region that’s home to the highest diversity of corals and reef fishes on the planet. LII is planning to develop less than 1% of the protected rainforest and 0.005% of the entire reserve, with zone restrictions for tourists and a limit on visitor numbers.

The company told local news media that it was not auctioning off the islands, only looking for investors. Indonesia’s home affairs minister, Tito Karnavian, said the developer had been given seven years to start construction, but an apparent lack of funds seemed to have prompted it to auction off shares in an effort to raise money. Tito said foreign investment would be allowed as long as the developer continued to be legally based in Indonesia.

Mongabay Indonesia visited the Widi Islands in May 2022 and spoke to local fishers about the planned tourism development. There’s been hardly any progress in the past couple of years, the fishers said, besides a few gazebos and a wooden jetty built for an international fishing tournament. At the time of the visit, these facilities appeared to be unmaintained and deteriorating.

Fishers gather on Daga Gane, one of the few inhabited islands in the Widi archipelago. Image by Mahmud Ichi/Mongabay Indonesia.

The company’s plan has met mounting concerns in Indonesia, with experts saying it would be essentially selling the islands off to foreigners. Privatizing the islands, even the uninhabited ones, could cut off local fishing communities from key fishing grounds with social and cultural importance, impacting their lives and livelihoods.

North Maluku, an archipelagic province in Indonesia’s east, is made up of 395 islands, only 64 of which are inhabited. Experts say these islands shouldn’t be written off as “desert islands” that can be sold off for development, given that fishers depend on them for their livelihood.

The Widi Islands are peppered across 10,000 hectares (24,700 acres) of the western Pacific, and have a combined coastline of about 150 kilometers (93 miles). The marine reserve of which the islands are a part spans some 300,000 hectares (741,000 acres), with nearly 6,000 hectares (14,800 acres) of coral reef, 85 hectares (210 acres) of mangroves, and almost 3,000 hectares (7,400 acres) of seagrass beds. The reserve is home to a rich diversity of marine life, including several threatened species.

“We’re asking PT LII to obtain the permits to develop small islands and surrounding waters as required by the regulations and laws,” Victor said.

Basten Gokkon is a senior staff writer for Indonesia at Mongabay. Find him on Twitter @bgokkon. Read the original story on Mongabay.

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