Djajanti Group urged to raise responsibility

Djajanti Group urged to raise responsibility

JAKARTA (JP): Members of the House of Representatives
yesterday questioned the Djajanti Group, which has widely
diversified operations in the eastern provinces, and its
commitment to meeting social and environmental responsibilities.

Members of the House's Commission IV, which oversees
agricultural and forestry affairs, expressed concern in a hearing
with Djajanti executives yesterday regarding its 2.8 million
hectares of forest concessions, from which Djajanti has allocated
only 60,000 hectares for reforestation projects, including the
establishment of industrial timber estates.

"Although we acknowledge Djajanti's efforts in developing
eastern Indonesia, we also urge the group to increase its social
responsibilities -- such as the welfare of transmigrants -- as
well as its environmental obligations," said legislator Djasman
Ismail.

Djajanti currently holds 21 concessions for 2.8 million
hectares of forests in Central and South Kalimantan, Maluku and
Irian Jaya, as compared to only one concession measuring 217,000
hectares in 1970.

It has grown into a conglomerate of integrated wood-based and
fishery-based industries. It also operates in the shipping,
sagoflour and cement businesses, and owns some 30,000 hectares of
cacao and oil palm plantations.

Extension

A.D. Erlangga, the director of Djajanti's forestry division,
said yesterday that from the group's 21 forest concessions, four
-- all of which are located in Kalimantan -- have expired.

"But only today, we received word that the licenses of our
concessions have been extended, with the state-owned firm
Inhutani III to be involved in our management," he said.

Erlangga said that the extension of the four concessionaires,
covering a total of 600,000 hectares, was possible because they
were located in a single area and could be merged under a single
management.

The Ministry of Forestry stipulates that the operating permits
of concessionaires which fail to demonstrate sound forest
management would not be extended unless they are willing to
involve state-owned forestry firms in their management.

Effendi Sastrawidjaja, a member of Djajanti's board of
directors, also disclosed yesterday that the group's subsidiary,
PT Artika Optima Inti (AOI), which operates wood-based industries
and holds forest concessions in Maluku, would soon go public.

"It is only a matter of time before we can conduct the public
offering," he said.

Independent surveyors estimate that AOI's concessionaires can
supply wood to the company's industries for as long as 15 to 20
years only.

Meanwhile, House members yesterday praised the Djajanti Group
for managing to survive despite the extreme lack of basic
infrastructure and public facilities in the region.

Investment

"Development in eastern Indonesia is not easy... It requires
great amounts of investment and therefore the House highly
regards the management of the Djajanti Group for being able to
utilize natural resources in eastern Indonesia," said legislator
P.H.M. Siahaan, who led yesterday's hearing.

Djajanti owner, Burhan Uray, recollected his experiences in
developing the forestry and fishery resources in Kalimantan,
Maluku and Irian Jaya, which he first started in 1956.

He said that compared to more developed regions in the
country, the difficulties in Indonesia's eastern provinces
resulted in higher capital costs of investments.

President Soeharto has called for more concerted efforts to
accelerate the development of the eastern provinces since 1990.
However, the response from the private sector has been lukewarm
due to the challenges posed by the backwardness of the region.
(pwn)