Controversial timber estate ready for harvest
By Sylvia Gratia M. Nirang
SUBANJERIJI, South Sumatra (JP): After facing sharp criticism from environmental bodies since the early stages of its inception, PT Musi Hutan Persada (MHP) is now ready to harvest part of its 193,500-hectare timber estate.
Company general manager H. Agusnang said MHP would harvest 2.5 million cubic meters of wood from 10,000 hectares of its estate in the middle of this year to supply a new plant owned by PT Tanjung Enim Lestari Pulp and Paper.
He said the US$1 billion pulp plant, scheduled to start operations in Aug. 1999, would need 2.5 million cubic meters of wood for an initial production capacity of 450,000 tons of pulp per year.
"This year, we will harvest about 10,000 hectares of our Acacia mangium trees to supply the pulp plant," Agusnang said.
The timber estate and the pulp plant are subsidiaries of Barito Pacific Timber, a giant timber company controlled by timber tycoon Prajogo Pangestu.
Barito Pacific owns 60 percent of MHP's shares, while 40 percent is controlled by state-owned timber estate PT Inhutani V.
The government has granted the company a 296,400-hectare concession area for its timber estate in South Sumatra, but it is only able to develop 193,500 hectares, as the remaining land is either owned by local residents or is designated as a conservation area.
Barito Pacific holds 51 percent of PT Tanjung Enim's shares, while Sumatra Pulp Corporation controls 33 percent and PT Tridan Satriaputra Indonesia owns the remaining 16 percent.
PT Tridan Satriaputra is controlled by President Soeharto's eldest daughter Siti Hardiyanti Rukmana, while Sumatra Pulp Corporation is a joint venture of Marubeni Corporation, Nippon Paper Industries and Japan's Overseas Economic Corporation Fund.
Agusnang said MHP had planted Acacia mangium trees on 160,000 hectares of its estate. The tree has been a raw material for the company's pulp since the start of its plantation activities in 1990.
He explained that after its initial production needs of 2.5 million cubic meters of Acacia mangium wood in its first year, the pulp plant would require 4.5 million cubic meters of raw material to meet a targeted production capacity of one million tons of pulp per year starting in its second year.
MHP will supply the raw material for the plant's second year of production from 25,000 hectares of its timber estate.
Agusnang said the pulp plant was originally scheduled to begin operations in mid-1998 and that the delay has forced MHP to review its operational plans.
"We have sold premier seeds produced by our nursery in Subanjeriji to other timber estates just to keep our cash flow moving. We also sell furniture wood such as sengon and sungkai," he said adding that the company has sold 500 tons of premier seeds of trees per year since 1994 at an average price of Rp 350,000 per kilogram.
He said the delay in the plant's operation was mostly due to criticism from environmental analysts on the development of the pulp plant and the timber estates.
The Indonesian Forum for Environment (Walhi), for example, has said the development of Tanjung Enim Lestari's plant would cause "massive social problems".
The company has "seized the people's forests and farmland without any prior consultation," said Walhi, a prominent non- governmental organization.
The pulp and paper mill, according to Walhi, will also benefit from conservation forests in the area, thereby endangering forest sustainability.
The plant straddles two subdistricts, Gunung Megang and Rambang Dangku in Muara Enim regency, about 130 kilometers west of South Sumatra's capital of Palembang.
MHP's timber estate is 25 kilometers south of the pulp plant and is in the regencies of Ogan Komering Ulu (OKU), Muara Enim, Musi Banyuasin, Lahat and Musi Rawas.
The company divides its concession into three sections. The first, Martapura, covers 10,350 hectares of forest in OKU regency. The second, Subanjeriji, covers 87,354 hectares of forest in Muara Enim, while Benakat, the third, covers 198,741 hectares of forests in Lahat, Musi Banyuasin and Musi Rawas regencies.
Walhi also has said it has discovered that MHP, in order to establish its timber estate, appropriated its land from local people at extremely low prices.
According to Walhi's site surveys in 1995, MHP designated extremely low-density forest areas for its conservation sites while selecting high-density forest areas for its timber operations.
Agusnang said there was no problem because MHP only used 193,500 hectares of its 296,400-hectare concession for timber development.
The company also maintains 86,450 hectares of lowland tropical forest in its concession as a conservation area while the rest of its concession is jointly managed with local villagers, who plant rubber trees and seasonal crops, he said.
"All the problems have been carefully taken care of, but it is impossible to satisfy everyone," Agusnang said.
He said MHP also planned to build a chip wood mill and a medium density fiberboard (MDF) plant because MDF was deemed to be a growing industry.
He said the MDF plant would be built solely by his company and it was expected to produce 240,000 tons of MDF per year.
The raw material for the MDF plant is to come from surplus supplies designated to Tanjung Enim's pulp plant.
He said the prospects for the MDF industry were good because market demand was increasing and raw materials in the country were abundant.
He also said MHP was ready to join the ecolabeling assessment process conducted by the Indonesia Ecolabeling Foundation this year in anticipation of the global trade era.