Wednesday, August 22, 2007

Closure concerns for paper groups.

Financial Times (UK)
August 20, 2007

Closure concerns for paper groups.


Two of Asia's biggest pulp and paper companies have warned they
could close within two months with the loss of up to 1m jobs
unless Indonesia's police and forestry department resolve a
dispute over alleged illegal logging.

Indah Kiat Pulp & Paper, a subsidiary of Asia Pulp and Paper,
and Riau Andalan Pulp & Paper, part of the Raja Garuda Mas
group, have been caught up in an eight-month police operation to
stamp out illegal logging in Riau province in Sumatra, where
they are both based.

The forestry department has accused the police of enforcing
out-of-date laws and punishing people operating legally.

More than 1m people could lose their jobs if the companies
close, and analysts warn the dispute is having a chilling effect
on Indonesia's cool investment climate.

Indah Kiat, which exported pulp and paper products worth about
Dollars 3bn last year, and Riau Andalan, almost Dollars 2bn,
employ 540,000 workers directly.

Brigadier Suciptadi, Riau's police chief, said licensed
companies were free to operate. "The ban has only been imposed
on companies which are violating environmental regulations, such
as cutting trees in natural forests or conservation areas," he
said. "Based on our investigations, there is a network operating
that is committing corporate crimes."

He declined to say if Indah Kiat or Riau Andalan were involved
in illegal activities. Both companies insist they obtain all
their wood from legal sources.

Joice Budikusuma, an executive of Sinar Mas, which owns APP,
said Indah Kiat's supply rate was down by almost three-quarters
because the law enforcement operation was so harsh that even
contractors with all the correct licences were afraid to cut and
transport logs. "We only have one month's stock left," she said.

Rudy Fajar, chief executive of Riau Andalan, said his company's
supplies would probably last until October.

Sofyan Wanandi, the head of the country's employers'
association, said he was not surprised by the dispute. "This
fight between the police and the forestry ministry is creating
all sorts of problems and there's no end to the dispute in

He warned it could well hit inward investment. "How can you ask
for investment from overseas when you can't even settle disputes
with local companies?"

Sunday, August 19, 2007

Logs felled by APRIL partner company confiscated

Pekanbaru (EoF News)-- Following his raid to an Asia Pulp Paper's subsidiary concession in Indragiri Hilir two weeks ago, Chief of Riau Police Brig.-Gen. Sutjiptadi pledged to conduct aerial observation as he believed the forestry companies clearcut the forests in remote area.

At a discussion held by Walhi Riau in Pekanbaru Tuesday, the Chief of Riau Police said that he and his team have confiscated felled logs from natural forest in the concession of PT Citra Sumber Sejahtera, a partner pulpwood company of Asia Pacific Resources International Holdings Limited (APRIL).

The police alleged the company conducted illegal logging as its pulpwood plantation license is flaws. "We have confiscated logs and heavy machineries operated by PT CSS in Indragiri Hulu district used to commit illegal logging," Sutjiptadi told the discussion on illegal logging.

The ongoing deforestation in Riau has caused the police to conduct surveillance on the ground as aerial observation found many pulp plantation sites clearcut wood from natural forests in remote areas.

The timber companies preferred to clearcut forest in remote areas where public accesss to reach them is difficult, the chief said.

Riau Police vowed to keep monitoring from the air to detect the forest clearcutting which not comply with existing laws and regulations. "We will do so hand by hand with all stakeholders," Sutjiptadi said.

Meanwhile, Susanto Kurniawan, coordinator of Jikalahari, the NGOs network for Riau forest rescue, said that a solution is needed to minimize deforestation in the province.

"The sustainable ecosystem will be extremely disconcerted due to severe deforestation occurs right now," Susanto said. Expansion by forestry companies to boost their production capacity played a role in deteriorating the deforestation, he added.

The workshop attended by Riau NGOs agreed to seek solution to reduce deforestation in the province by proposing logging moratorium. Despite this, it is needed thorough preparation to make it come true.

Monday, August 13, 2007

Industrial Forest Plantations in Kalimantan

New CIFOR publication:
The Revival of Industrial Forest Plantations in Indonesia’s Kalimantan Provinces
Will they help eliminate fiber shortfalls at Sumatran pulp mills or feed the China market?

"Banks, Pulp and People" - new report on controversial projects in pulp industry
Urgewald targets pulp industry in new report and website