Finnish company enters Indonesia's pulp industry

Finnish company enters Indonesia's pulp industry

JAKARTA (JP): Enso Gutzeit of Finland will team up with PT
Inhutani III, the state-owned forestry company, and a subsidiary
of PT Gudang Garam to build a pulp mill in West Kalimantan.

Forestry Minister Djamaloedin Suryohadikoesoemo said yesterday
that the construction of the pulp plant, which will have a
production capacity of around 400,000 tons per annum, will cost
about US$600 million.

Speaking to newsmen following his meeting with President
Soeharto, the minister said that the subsidiary of Gudang Garam,
a major clove-blended cigarette producer, and the state-owned
Inhutani III will also develop a 130,000 hectare industrial
forest in West Kalimantan to support the operation of the planned
pulp plant.

The forestry minister met with the President to report the
outcome of his official visit to Denmark, Sweden and Finland
earlier this month to promote bilateral cooperation in the
management of industrial forests.

During his Finnish trip, the minister also witnessed the
signing of a memorandum of understanding agreement between Enso
Gutzett, Gudang Garam and Inhutani III on the construction of the
pulp plant.

"Enso and its two Indonesian partners will jointly own the
planned pulp plant. But with the industrial forests, the Finnish
firm will only provide technical assistance," he said.

Djamaloedin said the government has allocated around 130,000
hectares of land for the development of the industrial forest,
but around 80,000 hectares of the designated area is being
claimed by local residents.

The 130,000 hectares of barren land, mostly overgrown with
coarse grass, is owned by the government under the management of
Inhutani III.

Djamaloedin said his ministry and the local administration
will cooperate in the appropriation of the land for the joint
venture company.

Optima

Speaking about the delay of the initial public offering of the
timber division of the widely diversified Djajanti Group, the
minister said that he still awaited further confirmation from the
governor of Maluku before giving a green light to the company's
"go-public plan."

Artika Optima Inti, Djayanti Group's timber division,
announced its plan to sell a portion of its shares to the public
late last year but the plan has since been delayed as the company
has yet to receive an approval from the forestry ministry.

The forestry minister refused to issue a letter of
recommendation as the company, which operates a number of forest
concessions in eastern Indonesia, operates no processing plant in
Irian Jaya to support its timber production in the province. The
ministry also charges that the company has carried out illegal
felling of trees to support its timber processing plant in
Maluku.

"We are waiting for a confirmation from the local
administration that the company has not been involved in illegal
felling of trees to support its pulp plant in Maluku," he said.

The minister also said yesterday that he needed confirmation
from the governor of Irian Jaya whether his administration allows
the processing of timber harvested from the province carried out
in other provinces, namely Maluku. (hen)