The New Law on Coastal Management

Tuesday, April 15, 2008

Here's my recent Article on Coastal Management Law in JP:
Theoretically, there could be around 12 nautical miles times 81,000 kilometers of "greenfield" spaces in the sea, ready for exploitation, for up to 20 years. This is indeed a huge business opportunity. For companies whose core business is aquaculture (shrimp ponds, fishes, coral reefs, pearls) and eco-tourism, HP3 would be a crucial issue. What makes HP3 even more valuable is the fact that it can be used as security for loans.

HP3 is also considered to be a pro-rich policy, as it would be unreasonable for traditional and local fishermen to enter into such a scheme which entails high administrative costs.

Let us first consider the arguments above. Indeed, some parts of our coast could be vulnerable of tsunamis, but those located in internal waters are likely to be less exposed to the dangers. For the vulnerable parts, disaster mitigation measures might require the building of artificial or ecological infrastructure (sea defenses) in order to break the waves and such measures -- they argue -- might be in collision with HP3 rights. This concern is nevertheless already addressed by the law.

The second argument on public participation is important. Our Constitution specifically states the economy must be carried out as a "common endeavor" based on familial principle. The Coastal Management Law does say that when granting and monitoring HP3, public aspirations must be taken into account. But this role is only consultative as the public takes no part in the final decision-making process.

In addition to the lack of clarity on the participation of local communities in the granting of HP3 as explained above, the current law also opens a wide opportunity for private parties to apply for HP3 certificates, while ignoring that local and traditional communities have capacity constraints in doing the same thing.

The granting of HP3 certificates might be expensive, as there are quite a few prerequisites that the applicants must fulfill. As corporations are closer to banks, they can get loans easily. On the other hand, local and traditional fishermen may not be as bankable as corporations and the decision-making process there may entail higher transaction costs compared to corporations.

So, there is an asymmetrical position between the players here. The weaker parties must be granted facilities due to these asymmetries and the current law does not seem to guarantee this.

The law actually accommodates existing practices by obligating HP3 holders to "respect" the adat (customary) law. Nevertheless, the language of the law reflects that the rights of traditional societies are not treated on equal footing with certification-based rights. So, there are risks of "expropriation" of the pre-existing customary rights. Adat communities with fishery practices would therefore have a legal standing before the court, as their interest is clearly affected.

Another crucial point would be anticipation of the risks of the HP3 market. As explained above, HP3 could be used as a security for loans. If the market is good, it is theoretically possible to purchase as much HP3 certificates as possible (with loans from banks) and then re-sell to another company for a profit, while the field remains neglected.

Its a huge business opportunity, Im telling you ;)