Controversial timber estate ready for harvest

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.