Abdurrahman promises to find solution to Indorayon dispute
JAKARTA (JP): President Abdurrahman Wahid moved on Thursday night to break up the fight between those who supported and those who were against the closure of pulp and rayon fiber producer PT Indorayon Utama's plant in Porsea, North Sumatra.
Speaking at the Indonesian Democratic Party of Struggle's (PDI Perjuangan) 27th anniversary celebration, Abdurrahman promised to find an amicable way to resolve the problem while upholding the rules of law.
"We have to always uphold our commitments to both the regulations and international laws," he said. "In the Indorayon case, for instance, our international commitment must be upheld."
He said the government was in a dilemma.
Wahid also said the government would try to resolve the problem in a fair way without having to succumb to any particular interests.
He said the government guaranteed that the resolution for Indorayon, which was recommended by State Minister of Environment Sonny Keraf, to be shut down for alleged violations of environmental laws, would benefit the local people.
The dispute over Indorayon erupted earlier this month when Sonny's recommendation to shut down Indorayon received mix reactions from environmental organizations and fellow ministers.
Local non-governmental organizations such as Friends of the Earth Indonesia and the Lake Toba Preservation Foundation supported Sonny's recommendation, saying the decision should have been made years ago.
But, Minister of Trade and Industry Jusuf Kalla, State Minister of Investment and State Enterprises Development Laksamana Sukardi as well as Director General for Chemical, Agricultural and Forestry Industries Gatot Ibnusantosa insisted that Indorayon could not be shut down without a court decision.
Indorayon's management itself has been calling for the government to hold a meeting to discuss the problem, together with other concerned parties, as a preferred resolution process before bringing the case to court.
Indorayon has been under fire since 1998 when it became the target of demonstrations of residents living near Lake Toba who opposed its operations over alleged improper environmental- related management, which resulted in bad odors and polluted water and air.
Environmental organizations alleged Indorayon had caused the water level in Lake Toba to decrease and had harmed forests in the area.
Indorayon holds a concession right to 269,060 hectares of pine forest areas in the regencies of Dairi, Simalungun, North Tapanuli and South Tapanuli in North Sumatra.
Commencing operations in 1989, the company's mill in the Porsea district has the capacity to produce 240,000 metric tons of paper pulp in addition to 60,000 tons of rayon fiber a year.
The House of Representatives ordered the company in July 1998 to suspend operations pending an audit on the environmental impact of its activities.
The company resumed operations in November, supposedly to allow the environmental audit to take place. The audit, however, was called off and demonstrations turned ugly when protesters clashed with company employees fearful of losing their jobs.
The violence forced then president B.J. Habibie in March 1999 to completely suspend the company's operations pending an audit by an independent auditor to be appointed through a bidding process.
President Wahid's pledge to find an immediate and fair resolution to the dispute boosted the trade of Indorayon's shares on the Jakarta Stock Exchange (JSX) on Friday.
Indorayon's shares jumped by 50 percent from Rp 400 (50 U.S. cents) to Rp 600 per share during the first trading session.
The price surge led to JSX management temporarily suspending the trading of Indorayon's shares at 9:44 a.m.
Indorayon is a unit of the Raja Garuda Mas Group, a diversified conglomerate controlled by local businessman Sukanto Tanoto.
Indorayon has also floated its shares in the United States through American depository receipts. (cst)