Photo: Arsyad Ali / AFP (2023)
A report by the Indonesian Coalition for Monitoring Infrastructure Development
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13 April 2023
Background of the Project
The Mandalika Urban Development and Tourism Project is a large-scale tourism infrastructure development project on the Indonesian island of Lombok. It is a core part of the Indonesian government’s strategy to develop ten “new Balis.” It is the first standalone project in Indonesia of the Asian Infrastructure Investment Bank (AIIB), which approved a loan of US $248.4 million that makes up 78.5 percent of total funding. The state-owned Indonesian Tourism Development Corporation (ITDC), a parastatal corporation whose shares are fully owned by the Ministry of State-Owned Enterprises of the Government of Indonesia, is leading the implementation of the Mandalika project. The Mandalika International Street Circuit, a motorcycle racetrack, has been aggressively marketed as a major tourist attraction for the island.
The AIIB approved financing for the Mandalika project in December 2018. Prior to project approval, land disputes intensified in the Mandalika area, with ITDC and the government of Indonesia ramping up involuntary land acquisition in preparation for the Mandalika project. Despite these worrying developments at the local level and Lombok’s well-documented legacy of violent land disputes, the AIIB failed to exercise the necessary due diligence to avoid, minimize, or mitigate the risks of involuntary resettlement and forced evictions of affected Indigenous peoples. Since project approval, the AIIB has shifted the responsibility for meeting its own environmental and social standards to its borrower, the ITDC. As a result, AIIB’s failure to meet its own mandatory due diligence requirements has caused irreversible negative impacts on Indigenous Sasak communities.
Survey Findings
In order to shed light on the continued socio-economic and human rights impacts of the Mandalika project, the Koalisi Pemantau Pembangunan Infrastruktur Indonesia, or Coalition for Monitoring Infrastructure Development Indonesia (KPPII), conducted a survey of 105 affected community members in December 2022 and January 2023.
The survey found that 98% of the respondents were not asked for their consent regarding the Mandalika project. Only 6% had ever participated in a consultation meeting held by ITDC or by the AIIB. These figures represent an obvious and evident breach of the AIIB’s Environmental and Social Framework (ESF), which requires that its clients meaningfully consult with affected communities and provide “evidence of broad community support” of Indigenous Peoples.
The AIIB’s ESF also stipulates that in situations “when the Bank is unable to ascertain that […] broad community support has been obtained from the affected Indigenous Peoples”, activities that would affect those communities should be “excluded from the project.” Yet in KPPII’s survey, 82% of respondents said that they would not have given their consent for the Mandalika project. When civil society organizations called on the AIIB to suspend the Mandalika project, citing the lack of meaningful consultation and intimidation of Indigenous Populations, the AIIB did not address these issues. Instead, the bank removed these standards from its ESF without any public consultation, effectively weakening protections for communities affected by AIIB-funded projects around the world.
KPPII’s survey data also reveals a pattern of intimidation and coercion of communities affected by the Mandalika project.
Virtually all respondents surveyed feel that they were not offered fair and adequate compensation for their land, homes, and crops that were acquired or destroyed due to the Mandalika project. Due to loss of land and access to the sea and other natural resources, many locals have had to take on debt to feed their families. Indeed, since its launch, the Mandalika project’s purported development efforts have pushed affected communities further into a state of food insecurity and extreme poverty.
Women, in particular, have faced challenges advocating for their land rights and have been routinely neglected in consultation meetings held by the ITDC and AIIB— despite the fact that women and children have been disproportionately affected by the Mandalika project’s negative socio-economic and human rights impacts.
Involuntary resettlement caused by the project has further impoverished affected communities. Many of these families have lived for more than three years in a temporary shelter and continue to endure its unsanitary and difficult conditions to this day. Households who were able to move to a permanent resettlement site worry that its remoteness and the lack of land available for livelihood activities will render them more vulnerable and make it more difficult for children to continue their schooling.
Only one respondent surveyed believed they can trust the ITDC’s grievance redress mechanism or the AIIB’s complaints mechanism.
Through this report, KPPII hopes to amplify the experiences and concerns of project-affected people. Their voices should be at the center of deliberations made by the AIIB, ITDC, and the Indonesian government—yet instead, they have been categorically ignored.
Unlike other Development Financial Institutions that are increasingly adopting commitments to respect human rights, the AIIB does not recognize international human rights law or have explicit human rights commitments integrated in its safeguards. Despite multiple calls issued by the United Nations Special Procedures and Indonesian civil society organizations, the AIIB has not addressed the serious violations of its standards by the ITDC or the devastating impacts of the Mandalika project on local communities. Instead, the bank has deliberately weakened the protections guaranteed to Indigenous Peoples affected by the projects it funds globally, without providing any opportunity for affected communities or civil society to provide input.
The Mandalika project risks creating a dangerous new precedent for the implementation of other projects financed by AIIB in Indonesia, Southeast Asia, and around the world. Taxpayers’ money should not lead to the further impoverishment, marginalization, intimidation and coercion of Indigenous communities. It is imperative for the AIIB and ITDC to disclose key data relating to the project, such as the land audit of the Mandalika area, and to provide affected community members adequate compensation and meaningful redress immediately.
Recommendations
As a precondition for project approval, the AIIB conducted its own audit of the ITDC’s land survey. Despite the intensification of land disputes in Mandalika, its devastating impacts on local communities, and numerous reports of intimidation and coercion from Indonesian civil society and the United Nations, the AIIB has yet to make public its audit of the ITDC’s land survey. It is imperative for this document to be released to the public.
In light of the numerous violations documented in this survey, the AIIB must suspend its financing of the Mandalika project until the following conditions have been met:
- The ITDC and Government of Indonesia has excluded elements of the state security including the military, police and intelligence from any future land acquisition, project implementation, or land dispute resolution process.
- All land acquisition issues are adequately resolved by providing adequate compensation reflecting the market value of the land and property lost, as well as the loss of income from crops and natural resources. Particular attention must be granted to households that were coerced into ceding their land at below market value and involuntarily resettled, and who are currently completely excluded from the ongoing land dispute resolution process led by the Indonesian government, despite the devastating negative impacts of the Mandalika project on their lives and livelihoods.
- The ITDC and Government of Indonesia has provided remedies to affected populations for the negative socio-economic impacts and human rights violations linked to the Mandalika case.
- The ITDC and Government of Indonesia has effectively resolved issues relating to involuntary resettlement.
The AIIB claims that security forces are regularly monitored and held to rigorous Standard Operating Procedures (SOP) throughout their deployment to the Mandalika project area. Given the ample opposing evidence on the ground, the bank and the ITDC must release their SOP so that civil society organizations and affected communities can provide input and report any non-compliance of security forces to the bank.
Shareholders of the AIIB must press the bank to take serious efforts to ensure that the long-standing instances of intimidation, retaliation and manipulation of project-affected communities are reported, investigated, and addressed with transparency, sensitivity and accountability.
The AIIB must take responsibility for its complicity in bankrolling the Mandalika project, which has fueled land conflicts and human rights abuses, by conducting an independent evaluation. This evaluation should be staffed by human rights experts chosen in consultation with and agreed by NGOs and project-affected peoples, in order to ensure that these bad practices do not become a precedent for other AIIB-funded projects in Indonesia, Southeast Asia, and elsewhere in the world.
