PT Inti Indorayon Utama likely to resume operations shortly<\/p>\n
JAKARTA (JP): Publicly listed pulp and rayon fiber maker PT
\nInti Indorayon Utama is seeking government approval to resume
\noperations which have been suspended for at least 15 months now
\nover environmental and social disputes.<\/p>\n
The trustee of the company's shareholders, Palgunadi T.
\nSetyawan, said on Wednesday that Indorayon had received support
\nfrom the government to find a way for the immediate reactivation
\nof its mills without having to wait for the establishment of the
\ngovernment's initiated audit process.<\/p>\n
\"Since we already have the approval in principle, we will
\nresume operations as soon as we can obtain and deliver raw
\nmaterials to the factory,\" he told a media briefing.<\/p>\n
He said the company could not wait for the establishment of
\nthe government's initiated audit team to assess Indorayon's
\noperations management as the bid for interested audit firms had
\nyet to be concluded.<\/p>\n
T. Mulya Lubis, who represents foreign shareholders that own
\n86 percent of Indorayon, said the immediate reopening of the mill
\nwas very important to restore foreign investors' confidence in
\nIndonesia.<\/p>\n
He said the company's foreign shareholders remained committed
\nto Indorayon and had supported the company's efforts in improving
\nenvironmental management.<\/p>\n
Palgunadi said Indorayon would also restart intensive
\ndiscussions to unravel the differences with communities
\nsurrounding the company's factories and forest plantations in
\nPorsea, North Sumatra.<\/p>\n
\"This time we will use a better method to deal with the
\nproblems. We will approach the local communities and help them
\nwith their daily concerns ... We are committed to allocating 1
\npercent of our annual total production costs or about Rp 5
\nbillion (US$715,000) to a community development fund,\" he said.<\/p>\n
Community fund<\/p>\n
He said the estimated Rp 5 billion community fund, which would
\nbe used to support the development of local economic, social and
\ninfrastructure facilities, would be disbursed immediately after
\nthe company resumed operations.<\/p>\n
Indorayon holds a concession right to 269,060 hectares of pine
\nforest areas in the regencies of Dairi, Simalungun, North
\nTapanuli and South Tapanuli in North Sumatra.<\/p>\n
The company's factories in the Porsea district have the
\ncapacity to produce 240,000 metric tons of paper pulp in addition
\nto 60,000 tons of rayon fiber a year.<\/p>\n
The company became the target of demonstrations in July last
\nyear when residents living near Lake Toba opposed its operations
\nover alleged improper environmental-related operation management,
\nwhich resulted in bad odors and polluted water and air.<\/p>\n
Environmental organizations alleged Indorayon had caused the
\nwater level in Lake Toba to decrease and had harmed forests in
\nthe area.<\/p>\n
The House of Representatives ordered the company in July last
\nyear to suspend its operations pending an audit on the
\nenvironmental impact of its activities.<\/p>\n
The company resumed operations in November, supposedly to
\nallow the environmental audit to take place. The audit, however,
\nwas called off and demonstrations turned ugly when protesters
\nclashed with company employees fearful of losing their jobs.<\/p>\n
The violence forced then president B.J. Habibie in March to
\ncompletely suspend the company's operations pending an audit by
\nan independent auditor to be appointed through a bidding process.<\/p>\n
The government said five bidders from Germany, the United
\nStates, Finland and Australia would enter the final round in
\nSeptember, but no progress has been made so far.<\/p>\n
Palgunadi said Indorayon had passed an environmental, safety
\nand health audit conducted by the United States-based Labat-
\nAnderson Inc. in 1995.<\/p>\n
He rejected the accusations on unsustainable production and
\nforest management, saying that most of the criticisms were rather
\ngroundless.<\/p>\n
\"Indorayon applies a sustainable forestry management system.
\nMost of the accusations leveled on us appeared to occur due to
\nthe critics' lack of proper knowledge on the case,\" he said.<\/p>\n
He said the company did not destroy the forest areas in North
\nSumatra as it had only harvested 27.5 percent of its 269,060
\nhectare concession and spared 37.2 percent of the remaining plot
\nfor a conservation area and 30.4 percent for community
\nsettlements.<\/p>\n
Indorayon's finance director David Pile said the 17 month-
\nclosure had inflicted the company some $96 million in lost
\nprofits in addition to $110 million in operational costs.<\/p>\n
The government, Pile added, also lost $54 million in potential
\ntax revenues and other government fees.<\/p>\n
The company booked roughly $60 million and $7.8 million a year
\nin profits from the sales of pulp and rayon fabric respectively,
\nPile said.<\/p>\n
Indorayon is a unit of the Raja Garuda Mas Group, a
\ndiversified conglomerate controlled by local businessman Sukanto
\nTanoto.<\/p>\n
The company is listed on the Jakarta and Surabaya Stock
\nExchanges and has its American Depository Shares floated in New
\nYork. (cst)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pt-inti-indorayon-utama-likely-to-resume-operations-shortly-1447893297",
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