Foreign investors watch for outcome of Indorayon case<\/p>\n
JAKARTA (JP): Although Indonesia's pulp and paper industry
\nremains attractive to foreign investors, they are monitoring the
\nresolution of the PT Inti Indorayon dispute, the chairman of the
\nIndonesian pulp paper association (APKI) said.<\/p>\n
Muhammad Mansur told reporters on Wednesday that foreign
\ncompanies were eager to invest in Indonesia's paper industry
\nbecause of access to vast forestry resources, cheap labor,
\nskilled workers and expanding Asian markets.<\/p>\n
"But they are still waiting for conditions to improve,
\npolitically and economically," he said on the sideline of a
\nhearing with the House of Representatives's Commission V on
\ncommunications, transportation, public works, tourism, and public
\nhousing.<\/p>\n
"They are also waiting for the government's decision about PT
\nIndorayon," Mansur said, referring to the publicly listed pulp
\nand paper producer with massive operations in North Sumatra.<\/p>\n
"If Indorayon's case is not resolved through the court, they
\nfear that their companies will also be forced to close. But if it
\nis done through the court, they can accept the decision," Mansur
\nsaid.<\/p>\n
The government has come under strong public pressure to close
\nthe operation in North Sumatra as a result of claims that it has
\ncaused environmental destruction in the area.<\/p>\n
The company, which manages a massive forestry concession
\nspanning the regencies of Dairi, Simalungun, North Tapanuli and
\nSouth Tapanul, has been out of operation since July 1998 pending
\nan independent environmental audit of its activities.<\/p>\n
Pressure grew further in January after State Minister of
\nEnvironment Sonny Keraf recommended Indorayon's closure. Economic
\nministers in the Cabinet however quickly explained that the
\ngovernment would obtain a court ruling first.<\/p>\n
A unit of Raja Garuda Mas Group, Indorayon's shares are listed
\nin New York, hence the keen interest of foreign investors.<\/p>\n
Mansur also painted a brighter picture for the industry this
\nyear, saying that exports should increase to 5 million tons from
\n4 million in 1999.<\/p>\n
Exports thrived, especially in the Asia region, he said.<\/p>\n
"We are ahead of other producing countries, like Brazil,
\nbecause we are closer to Asian markets," he said, adding that
\nIndonesia competed against Thailand, Korea and Japan for paper
\nexports, while holding a monopoly in the pulp market.<\/p>\n
Mansur predicted increased production capacity for pulp to 6.6
\nmillion tons from 4.9 million tons in 1999, and for paper, 10.3
\nmillion tons from 8.3 million in 1999.<\/p>\n
He did not explain the sources of the additional capacity.<\/p>\n
Mansur said domestic demand for paper had returned to normal
\nafter a sharp decline during the economic crisis in 1998.<\/p>\n
He said domestic consumption of paper rose to 16.5 kilograms
\nper capita this year from 5.5 kilograms in 1998. (10)<\/p>",
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"sponsor": "Okusi Associates",
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