The past five decades of land-use change in Borneo mark an unprecedented, vivid example of land exploitation to induce economic development. Borneo, the world's third-largest island located in Southeast Asia (Figure 1.1), was endowed with one of the oldest rainforests in the world. However, since the 1970s the island has experienced rampant timber extraction on a massive scale; a huge amount of valuable tropical wood was logged and exported, either as raw logs or plywood, resulting in millions of hectares of deforestation and forest degradation. In total, about 20 million ha of old-growth forests were destroyed from 1973 to 2018, largely due to human activities (CIFOR 2020).

In the 1980s, the cultivation of oil palm, a lucrative cash crop grown mainly for export, was introduced throughout the island. By 2018, about 22 million tonnes of the world's vegetable oils (12 per cent) came from the island, compared to 5 million tonnes in 2000 (FAOSTAT 2021). The widespread logging and replacement of forests with oil palm and other crops has resulted in serious degradation of peatland (mainly in Central Kalimantan, Sarawak and West Kalimantan) and greatly escalated the risk of fires, especially during periodic long droughts (Santika, Budiharta, et al. 2020). Repeated peat and forest fires have led not only to enormous carbon stock loss but also transboundary haze that has exerted detrimental health impacts over the entire region (Zhang and Savage 2019).

While land-based developments over the past five decades have substantially reduced poverty, these achievements have been secured at the expense of the environment. Such exploitative activities have generated quick revenues for Malaysia and Indonesia, but peoples’ livelihoods have also been threatened, from immediate local health risks to long-term global climate change (Santika, Wilson, Budiharta, Kusworo, et al. 2019; Santika, Wilson, Budiharta, Law, et al. 2019). There is also evidence that the newly generated wealth has been mostly concentrated in the hands of a small group of elites, creating huge wealth gaps among the people. Communities continuing to seek traditional livelihoods (planting dry rice in swiddens, creating rubber, rattan, or mixed fruit gardens, engaging in small-scale mining, hunting, fishing, or collecting forest products), as well as those working as day labourers on plantations, have found themselves victimized or “left behind” in the wave of development.

The great yield breakthroughs are a chief reason for the past century's population boom and economic growth (McArthur and McCord 2017). These were achieved through improving plant varieties, increasing mineral agro-inputs, upgrading irrigation, and intensifying animal farms. At the same time, demand per capita has also been growing significantly. Global per capita food supply increased from 2,196 to 2,929 kcal/day between 1961 and 2018. The United States is leading with 3,782 kcal/day, while China has doubled its average to 3,203 kcal/day. Both Indonesia and Malaysia, however, stay close to the world average (FAOSTAT 2021).

Nevertheless, yield breakthroughs have not taken place evenly. In reality, the continuously surging demand for agricultural products has triggered both abandonment of low-yield cropland and massive conversions of forests to new cropland across the world. Improving land-use efficiency through intensification has been deemed by productivists as a direct measure to reduce unsustainable expansion, forming the basis of a bio-economy (Garnett et al. 2013). An ambitious estimate made by Tilman et al. (2011) shows that moderate intensification of existing low-yield croplands is sufficient to reduce potential cropland expansion from 1 billion ha down to 0.2 billion ha by 2050, indirectly preventing global deforestation.

In Borneo, the tightened control over land concessions by the governments as well as the rising land cost is gradually shifting the trend from rapid expansion to the intensification of existing oil palm cultivation (Varkkey, Tyson, and Choiruzzad 2018; Yusuf, Roos, and Horridge 2018). Private plantation companies, supported by both federal governments are significantly investing in improving their productivity (Bernama 2020). While oil palm is already regarded as the most productive oil crop in terms of land area used, theoretically the yield can still be further boosted by narrowing the gap between actual and attainable yields. Timber plantations have also received considerable attention for intensification but more on the aspect of long-term productivity and sustainability. The effectiveness of this strategy thus lies within the question of how much palm oil and timber can be further produced from the existing plantations without triggering unwanted environmental consequences.

The modern development of Borneo has so far been characterized by largescale land exploitation, accompanied by the wax and wane of commodity cycles, economic polarization, rural-urban disparities, and environmental destruction. Especially in the past two decades, the island has been in massive disruption and constant change. It is not simply a series of land cover and biophysical changes but also societal evolution with deep implications for future generations. The transformation is still ongoing and hopefully evolving from large-scale land exploitation to more sustainable ways of development.

How to improve livelihoods without causing further environmental impacts but also repairing the damage done in the past? This book has been written to gather insights into the understanding of such transformation, walking through the changes from 2000 to 2021 using the framework of ten transformative strategies under productivity-oriented “bio-economy” and conservation-oriented “eco-economy”. Generally, utility-based development strategies with wealth creation as the centre of policymaking may prevent further degradation but are inadequate to repair the previous environmental damage to the island. This can be especially observed in the case of Sarawak where no significant restoration initiatives were implemented in the territory in the past two decades. Similarly, strategies that emphasize restoration have shown a relatively limited contribution to economic progress as observed in the case of the Kalimantan provinces. The interconnected nature of economic productivity and conservation means that no single strategy is a perfect solution, although some can be more practical and effective than others in different places and periods, or more acceptable by multiple stakeholders. “Stepping outside rhetorical extremism is necessary”, as Meijaard and Sheil (2019) justly summarized for the case of oil palm, “if we seek resolution and pragmatic advances”.

However, formulating “pragmatic advances” with the right combination of strategies would not be an easy task considering the variation in places and the timing of implementations. For example, boosting upstream productivity of cash crops (Chapter 3) and enhancing landscape agroecological resilience (Chapter 8) can be contradictory or complementary under different conditions, such as the amount of fertilizers or water resources used (Rockstrom et al. 2017).

Diverting future agricultural production onto underutilized, low-carbon land with insignificant ecological services is deemed a better option than converting forests or other high-carbon lands for production, especially in the face of the growing demand for food and materials. This may effectively avoid carbon stock loss from forest conversion, in comparison to the expected business-as-usual scenario (Austin et al. 2015). Also, proper management of these lands may help to avoid further land degradation and replenish lost carbon stock. Activating underutilized low-carbon land is thus deemed a key strategy in establishing a sustainable bio-economy.

Various names, e.g., “abandoned”, “degraded”, and “marginal” land, have been proposed to quantify land available for future expansion. For example, the terms “lahan kritis” (“critical land”) and “lahan suboptimal” (“suboptimal land”) are used by the forestry and agricultural departments in Indonesia, respectively, to describe land that has experienced degradation. However, their definitions or criteria may be different, and some are not entirely clear, e.g., abandoned land is not necessarily degraded, and vice versa (Smit et al. 2013). A study by Gibbs and Salmon (2015) shows that global estimates of “degraded” land based on different databases and methodologies can vary widely from 1 billion ha to over 6 billion ha. Furthermore, the conditions of land may change significantly from time to time, complicating the monitoring efforts. At the moment, high-resolution monitoring on a landscape scale is still too costly to be implemented.

In the past, ambiguous definitions had created unrealistic expectations and unintended consequences in policymaking. In some cases, the classification of degraded land was used as an excuse for forest clearing under the guise of reforestation programmes, although the “degraded” land may still be rich in carbon stock and biodiversity (Obidzinski and Dermawan 2010). On this basis, it is crucial to understand how future expansion may take place on these lands, considering the multiple factors and perspectives of various stakeholders. This chapter explores this strategy in the aspects of agroecology, economy, society, and institutions.

AGROECOLOGICAL PERSPECTIVES

To be more explicit, land resources with the following criteria, or socalled underutilized low-carbon (ULC) land, may potentially be used where: (i) the lands are in non-ecologically sensitive areas; (ii) the level of carbon stock is low so that land utilization is unlikely to incur additional carbon stock loss; and (iii) the current economic productivity of the land is insignificant or low.

My experience with this book began rather later than that of Chun Sheng. During his post-doc at Harvard in 2020, he had compiled a draft, but lacking access to either the university library or interested staff because of COVID-19, he was unsure of some of the data and his conclusions. He asked me to check the manuscript, which I agreed to do, but then I began to discover gaps and to proceed to fill them. The result has been a substantial rewrite by both of us over the succeeding three years and our agreement to produce a joint volume.

Following completion of my PhD in Guyana (South America), for McGill University (Montreal), I moved to the University of Adelaide and began field studies in Borneo (mainly Kalimantan) in 1983. My initial introduction to Banjarmasin was to a city living on private generators, as the level of the hydropower dam was too low to be operational and there was a serious El-Niño drought. This soon developed in the logging regions of East Kalimantan into a large-scale forest fire, brought about by the “changed condition of the forest”, according to a leading commentator. After several field seasons resident in Banjarese and other villages in the Upper Riam Kiwa, I shifted my focus, from a concentration on the forests and the active deforestation and grassland formation still taking place, to attempted reforestation and replanting, eventually of oil palm, the new “golden child”. This brought a move to field sites in West Kalimantan, then a leading oil palm centre, especially to Dayak smallholder villages in Sanggau district. Consultancies also followed with the Centre for International Forestry Research (CIFOR). Later work also involved first-hand knowledge of various transmigration sites in Central Kalimantan, including the notorious “Million Hectare Rice Scheme”. I had meanwhile been involved in research in the environmental history of Borneo through archives in the Netherlands and collaboration in work of the KITLV anthropological group in Leiden. managed to acquire some knowledge of Sabah, Sarawak and Brunei through overland travel and conference attendance, while residence on logging company sites, oil palm estates and in national parks like Kayan Mentarang (North Kalimantan) helped to fill in my “Borneo” experience and enabled me to understand the rapid changes taking place.

I was twelve when, first in my lifetime, I was told to put on a white dust mask before stepping out of the house. A thick haze blanket shimmered across my hometown, Penang, blocking the sun's rays from reaching the surface. It was 1997, and the particle-laden air persisted for months. As I was told, the source of this greyish matter came from the land fires in Indonesia. The reason for the fires was reduced to a set of clichés in the understanding of the general public in Malaysia: the fire was set by the “irresponsible” farmers in Indonesia who used fire to clear forest land for farming. Interestingly, the region was experiencing drastic changes at the same time—in both financial and political landscapes. The most significant change would be the fall of Suharto's dictatorship following the financial crisis in 1998.

I was twenty-eight when I made my first trip to Central Kalimantan as a junior researcher at Utrecht University, working on a research project called “Large-scale Investment in Food, Fibre, and Energy: Options for the Poor”. Central Kalimantan is one of the most affected areas that generate massive haze during prolonged, severe droughts. With a local friend, Pak Agustinus, we rode across the province on a motorbike and went deep into the mountains, forests, plantations, and gold mining sites on large rivers and small streams. In these few months, I met a wide range of people, including indigenous people, migrants from other islands, urban settlers, local officials, entrepreneurs, activists, and plantation workers. I was, however, struggling to put all the pictures together—there are no simple ways of framing the fire events with complex on-ground socio-economic dynamics. While many uncontrolled fires were made unintentionally (such as a carelessly discarded cigarette butt), there were also reports about massive fires set purposely for land clearing. Ironically, many oil palm companies operating in these fireprone areas are owned by Malaysians and have close patronage relationships with the government, if not actually government-linked.

Coincidentally, in later years I was involved in several projects related to agriculture and forestry in both Malaysian and Indonesian Borneo in different capacities, including policy design, industrial development, and research.

Borneo is home to a wide range of natural products with various functions. While many of them are commonly used by local communities, these products may have potential in medium or high-end markets. Across the world agricultural and forestry products are marketed with names of regions or places for authenticity and exotics like “Thai rice”, “Gouda cheese”, and “Swiss chocolate”, or with special labels like “organic” and “natural”. The word “Borneo” itself also represents exotic and mysterious flavours to many foreigners. How to leverage this advantage to create new income sources and conserve nature would be a potential strategy for developing a sustainable eco-economy. In the past, the indigenous people in the hinterlands exchanged their forest products with extra-local traders through riverine hubs, such as trade-hub longhouses once found in Sarawak (Sakuma 2017).

The smallholder-centric approach is different from the large-scale certifications described in Chapter 6 which mainly focused on highly industrialized cash crops, as it seeks to connect the buyers more directly with the efforts of small farmers to improve their livelihoods. In other words, “small” itself can be a key branding element. This is bound to the enhancement of economic opportunities for a heterogeneous group of small farmers, with the ultimate goal to alleviate persistent poverty. Effective branding provides opportunities for not only upgrading the value chain but also improving the land-use practices of farmers, as securing livelihoods is a precondition for environmental conservation (Suwarno, van Noordwijk, et al. 2018).

Globally, products characterized by small-scale production systems have been receiving extra attention in the past few decades. Especially, the market share of those certified for sustainability has been growing (Willer et al. 2019). The presence of market differentiation for such products offers opportunities for small farmers to capture a better share of the selling price. The numerous successful branding and marketing stories of smallholders around the world, such as tea, coffee, and cotton with various certifications have reflected the potential of such a strategy to be adopted in Borneo. This chapter provides a brief description of a range of local specialities and geographical indications, as well as several potential niche markets for the small farmers in Borneo. Some thoughts on ways forward are also elaborated.

To facilitate the conservation of natural environments, some economists have proposed to include environmental goods and services in financial accounting. It is argued by the advocates that putting environmental goals explicitly into the economic dimension can help decision-makers in designing and implementing interventions in environmental management. To this end, the concept of “natural capital” was created to explain the spatio-temporal interactions between man-made economies and natural ecosystems (Guerry et al. 2015; Polasky et al. 2015). It regards “natural capital” as the stock of natural ecosystems that may be somehow expressed in monetary terms. Natural capital provides various ecosystem services (ES) to human society. In agriculture and forestry, ES provided by soil and water are among the most conceivable in terms of economic consideration as land price is largely correlated to fertility and productivity (Robinson et al. 2014). It is, however, more complicated to link some ES to productivity in the short term, such as regulating services provided by carbon sequestration and biodiversity, although both have long-term effects on agriculture and the overall ecosystem.

Following this direction, a strategy that advocates incorporating ES with the contemporary market economy through monetizing “nature” with economic accounting practices has emerged as a means to address unsustainable land-based economies (Missemer 2018). This forms the basis for developing a conservation-oriented eco-economy. Commonly, the term “payment for ecosystem services” (PES) is used to describe such a strategy. More specifically for the case of Borneo, it proposes the creation of compensation schemes for landholders who choose conservation over intensive cash crop cultivation (especially palm oil) or logging. In a broad sense, the landholders will be paid a certain amount of money for some sort of ES provided by their land. Logically, the amount should be more or less equivalent to net benefits, in all aspects, received in other less sustainable land-use scenarios.

This requires linking natural capital to human benefits on a monetary basis. In any case, the precondition is a standard mechanism to quantify ES so that there are manageable attributes of natural capital stocks for interventions to take place (Maseyk et al. 2017). The next challenge is creating schemes to monetize the ES and platforms for the transaction (Gunton et al. 2017).

This chapter lays a foundation for the other chapters, especially for readers not familiar with Borneo Island. First, the geographical background is provided before the chapter moves into a brief history of land-based development in Borneo. The summary is divided into five parts: the period of massive timber extraction in 1970–2000; the rise and fall of mega landbased projects from the 1990s; the concurrent growth of coal mining; the era of oil palm expansion in the first two decades of the twenty-first century and the ongoing, gradual shift to sustainable development beginning about 2010. For readers interested in understanding the detailed history of landbased development in Borneo, the books and publications described in Chapter 1, in the paragraphs before the section “Scope and Structure”, are recommended for further reading.

Special thanks to Jennifer Sheehan at the Australian National University (ANU) for drawing the maps in this chapter.

GEOGRAPHICAL BACKGROUND

Borneo is the world's third-largest island located in Southeast Asia. The name “Borneo” relates to the phrase “Brunei Darussalam”, which possibly has a Sanskrit root of Váruṇa, i.e., the Hindu god of rain. The island is also called “Kalimantan” by the Indonesians, likely a derivation from Kālamanthāna, a Sanskrit word that carries the meaning of burning and hot air. The island has an area of 73 million ha, almost thrice the size of the United Kingdom, or eighteen times the size of the Netherlands. There are long swampy coastlines, a mountainous interior, and extensive river networks. As swampy and mountainous environments are generally less suitable for agriculture and not easily accessed, most settlements are concentrated in drier flat areas, traditionally along riverbanks.

Borneo is politically divided between Malaysia (26 per cent) and Indonesia (73 per cent), with the remainder forming Brunei Darussalam. The current political division in Borneo is a result of colonial history. The northern territories were under British control, while the south was colonized by the Dutch. Physically, the north and the south of the island are divided by a central spine of rugged mountains that vaguely form the political boundary between Malaysian and Indonesian Borneo (Figure 2.1).

INTRODUCTION

Ho Chi Minh, Vietnam’s national liberation hero, once said, “Land is the house, sea is the door. How can we protect the house without guarding the door?”. Throughout history, foreign powers cracked open “the door” to Vietnam through sea-borne attacks multiple times. As such, defending Vietnam’s maritime space is of utmost importance, especially since Vietnam’s land borders have been secured through the conclusion of border treaties with Laos (1977), Cambodia (1985) and China (1999).

Vietnam prioritizes the maritime frontier also for reasons beyond historical experience. It is a maritime nation with a coastline of 3,260 km and an exclusive economic zone (EEZ) of more than 1 million km²—three times the size of its land area. Many of Vietnam’s 3,000 islands and archipelagos are of economic, security and strategic significance. Half of the Vietnamese population resides in 28 coastal provinces, and 80 per cent live within 160 km of the coastline. Economically, Vietnam relies on the South China Sea, which encompasses vital arteries of international commerce through which an estimated one-third of global shipping passes. The South China Sea’s abundant marine resources, including oil reserves, gas, minerals, fisheries, and renewable energy, sustain Vietnam’s galloping economy. The marine economy and coastal cities account for nearly half of the country’s GDP.

Vietnam is a South China Sea disputant and claims sovereignty over the entirety of the Paracel Islands (Hoang Sa) and the Spratly Islands (Truong Sa). There have been voluminous studies done on Vietnam’s perspective on this topic for two main reasons. First, Vietnamese strategists and leaders consider the South China Sea dispute their country’s most pressing national security threat, not least because of China’s recent militarization of disputed features and maritime coercion. Given Vietnam’s power asymmetry, geographical proximity, and troubled history vis-à-vis China, leaders in Hanoi are wary of Beijing’s intentions. Second, scholars and policymakers alike are interested in how small and medium-sized states like Vietnam cope with the intensifying great power competition in the Indo-Pacific, which manifests prominently in the highly contested South China Sea.

However, non-traditional security concerns have also been high on the Vietnamese leadership’s agenda.

INTRODUCTION

The COVID-19 pandemic, growing geopolitical tensions and trade disputes between the US and China, and the Russia-Ukraine war have further increased the risk of global value chain (GVC) disruptions and forced firms to strengthen resilience in their supply chains and operations. The GVC is the sequence of all functional activities required in the process of value creation involving more than one country (UNCTAD 2013). These activities range from preproduction (e.g., research and development, product design, and branding) to production and postproduction (e.g., marketing, distribution, and retailing). According to the World Bank (2020), about half of global trade involves GVCs, with services, raw materials, parts, and components crossing borders multiple times.

However, GVCs are facing risks. Firstly, the pandemic has brought disruptions on both the supply and demand sides. On the supply side, infections reduce labour supply and productivity in export-oriented sectors, while lockdowns, business closures and social distancing cause supply disruptions. On the demand side, layoffs, loss of income and worsened economic prospects reduce household consumption and corporate investment. The extreme uncertainty about the path, duration and impact of the pandemic could lead to reductions in business and consumer confidence which in turn could increase job losses and investment. Secondly, US-China trade tensions have added 20 per cent to global uncertainty since 2016, peaking during the first quarter of 2020 and declining under the Biden administration (Solingen, Meng, and Xu 2021).

The McKinsey Global Institute estimates the negative economic impact of the pandemic to be at US$30,000 billion or 35.2 per cent of global gross domestic product (GDP) in 2020, and that of the US-China trade dispute at US$200 billion or 0.2 per cent of global GDP. Balancing the economic efficiency gains from the GVCs and the economic costs of the pandemic and geopolitical shocks entails a search for an ideal GVC that can resist, mitigate and adapt to disruptions in supply and production chains.

This study assesses risks to GVCs in thirty-five sectors in nine ASEAN countries using value-added trade data from the Asian Development Bank’s (ADB) multi-region input-output tables (MRIO).

• • While the South China Sea dispute remains Vietnam’s top security concern, the country also confronts a variety of growing non-traditional threats, such as illegal fishing, maritime violence, smuggling, ecological degradation and climate change.

• • These issues adversely affect Vietnam’s external relations, socio-economic development, marine ecosystems and political stability, while engendering and exacerbating regional tensions.

• • In response, at the national level, Vietnam has focused on building a blue economy and strengthening its law enforcement capacity.

• • At the international level, Vietnam has participated in a variety of bilateral and multilateral cooperative mechanisms. However, these efforts have been impeded by internal and external factors, such as corruption, inadequate capacity and lack of budget, as well as ASEAN’s institutional limitations and sovereignty sensitivities.

• • To better confront these multifaceted maritime issues, Vietnam will need to (1) formulate a comprehensive national strategy for maritime security; (2) streamline the overlapping responsibilities of maritime security agencies; (3) enhance its maritime domain awareness; (4) ensure proper policy and investment to improve climate resilience and coastal development; and (5) optimize its approach to multilateralism.

The economic, political, strategic and cultural dynamism in Southeast Asia has gained added relevance in recent years with the spectacular rise of giant economies in East and South Asia. This has drawn greater attention to the region and to the enhanced role it now plays in international relations and global economics.

The sustained effort made by Southeast Asian nations since 1967 towards a peaceful and gradual integration of their economies has had indubitable success, and perhaps as a consequence of this, most of these countries are undergoing deep political and social changes domestically and are constructing innovative solutions to meet new international challenges. Big Power tensions continue to be played out in the neighbourhood despite the tradition of neutrality exercised by the Association of Southeast Asian Nations (ASEAN).

The Trends in Southeast Asia series acts as a platform for serious analyses by selected authors who are experts in their fields. It is aimed at encouraging policymakers and scholars to contemplate the diversity and dynamism of this exciting region.