Independent team to decide Indorayon's fate: Minister
Independent team to decide Indorayon's fate: Minister
JAKARTA (JP): The government will form an independent audit
team to decide whether to close or relocate PT Inti Indorayon
Utama's pulp and rayon fiber factory in Porsea district, North
Sumatra.
State Minister of Investment and State Enterprises Development
Laksamana Sukardi said on Wednesday he would coordinate with
State Minister of Environment Sonny Keraf and Minister of
Industry and Trade Yusuf Kalla in forming the team.
"If necessary, we'll hire a top-notch auditor from abroad with
financing provided by Indorayon," Laksamana said after a hearing
with House of Representatives Commission V for trade and
industry.
The plan follows recent accusations by Keraf that Indorayon
has damaged the environment with its operations. The state
minister recommended the factory be shut down.
Indorayon suspended its operations in Porsea in June 1998,
following a series of protests by local residents who accused the
company of causing environmental damage in the area and
threatening residents' health.
The company, which began operations in the area in 1980, has
an annual capacity of 180,000 metric tons of pulp and 600,000
tons of rayon.
The company is listed on the Jakarta Stock Exchange and is
also traded in the United States through American depository
receipts.
American auditor Labat-Anderson Inc. conducted a
environmental, safety and health audit on Indorayon's factory in
1995, concluding the factory met all environmental standards.
However, concerned by the lingering controversy, the
administration of former president B.J. Habibie ordered an
independent audit of the factory last year.
An international tender was held but the results were never
announced and an auditor never named.
It remains unclear if the team proposed by Laksamana will
include the auditor selected through this earlier tender.
Laksamana said he expected several possible results from the
audit, two of which he outlined.
First, the audit may conclude the company has caused
environmental damage, but that the damage is repairable. As a
result, the company will have to pay for the cleanup, he said.
The second result is that the company will be found to have
caused such extensive environmental damage that the factory will
have to be closed or relocated.
If the audit proves the company has caused environmental
damage, Indorayon will be required to compensate local residents
for all losses, regardless of the extent of the damages,
Laksamana said.
"This would serve as a lesson to other investors to respect
local environmental standards," he said.
Laksamana, who gained the support of the House commission for
the formation of the team, said an independent audit was
necessary to help investors avoid the sudden suspension or
closure of their operations due to alleged failures to meet
environmental standards.
"We still don't have a policy regulating the closure of
companies on charges of violating environmental standards," he
said.
Laksamana said the government would not allow the closure of
companies' operations based on unclear policies, particularly if
foreign investors were concerned.
"We're trying to attract foreign investment here, so how can
we expect them to enter Indonesia if we can't assure the
supremacy of law for existing investors," he asked.
Because of this, Laksamana said the government currently is
drafting a new investment law that will include guidelines for
cases similar to Indorayon's. (03)