Mon, 15 May 2000

Government still sees environment as minor issue

JAKARTA (JP): A local environment organization said here on Saturday that the government still considers environmental problems as minor issues and often sides with investors in settling environmental disputes.

Mas Achmad Santosa, executive director of the Indonesian Center for Environmental Law (ICEL), said the government must change such attitudes in the future, and that complying to environmental regulations should be mandatory for investors wanting to operate in Indonesia.

"Unfortunately, what the government cares about now is getting as many investments as possible. The preservation of the environment has taken a back seat," he told a media briefing.

He said the government must also issue a regulation that clearly states sanctions for violating the regulations, and how and when the sanctions will be executed.

Mas Achmad said the government had always taken sides with foreign investors, although the latter caused damage to the environment with their recklessness.

The fact that the government eventually allowed pulp and paper company PT Inti Indorayon Utama to recommence its controversial pulp plant operations in Porsea, North Sumatra has proven that the government is leaning on the side of the investors, he said.

"I'd say that the government agreed to allow Indorayon to reopen its plant because it has eaten up the lobbying by the company," he said.

"Indorayon's executive Palgunadi and lawyer Mulya Lubis are known for their strong lobbying and good connections to people in decision-making circles," he added.

After placing a temporary suspension on Indorayon in 1998, the government finally decided last week to allow the firm to resume its pulp production, but ordered it to permanently shut down its rayon-making unit for environmental reasons.

Mas Achmad said the government made a big mistake by assuming that pulp production was less damaging than the rayon production.

He said the government itself had clearly stated that industrial projects, such as pulp and paper plants, using sulfite or chlorine in the operations were totally prohibited.

But, the government said the final decision was still subject to an environmental audit, which would be conducted within one year, before it decides whether the pulp plant should be allowed to continue operations, be relocated to another area or be shut down forever.

The two-decade presence of Indorayon's pulp and fiber factory, which has a capacity to produce 240,000 metric tons of pulp in addition to 60,000 tons of rayon fiber a year, has led to mounting criticism and pressure from local people and many non- governmental organizations.

Former President B.J. Habibie decided in 1998, to suspend the company's operations following prolonged protests from local residents for alleged environmental damages.

He ordered an independent audit, but it was only recently that the audit was completed.

The foreign shareholders of Indorayon, who jointly own 86 percent of Indorayon, threatened late last month to file suit with the International Center for the Settlement of Foreign Investment Disputes in Washington D.C. against the Indonesian government for its unlawful closure of the operation.

"Obviously, the shareholders' threat has successfully scared the government and it thus decided to allow Indorayon to reopen its pulp plant," Mas Achmad said, adding that several environmental organizations planned to sue Indorayon for damaging the environment.

Indorayon, a unit of local conglomerate Raja Garuda Mas Group, is listed on the Jakarta Stock Exchange and is also traded in the United States through American depository receipts.

The company said its inability to operate for the last two years had resulted in a sharp drop in its market capitalization value from about US$1.4 billion in 1996 to only around $40 million at present.

Indorayon has continued paying more than 6,000 employees despite the production stoppage beginning in late 1998 and as a result booked a total loss of $95.18 million last year, up from a deficit of $46.2 million the year before. (cst)