Indorayon hopes to resume operations

JAKARTA (JP): Shareholders of troubled pulp producer PT Indorayon Utama named new directors on Wednesday and proposed a new corporate name, PT Toba Pulp Lestari, in the hope of resuming its operation in North Sumatra after a nearly two-year hiatus.

The proposed name change and the line up of the board of directors were intended to show Indorayon's "commitment to the aspirations of the local people," it said in a statement.

In the shareholders' general meeting of the publicly-listed company in Jakarta, Bilman P. Butarbutar, formerly a member of the board of directors, was appointed president replacing Herbun Darlin, Indorayon said in a statement.

Other directors appointed to the board are new faces: Lennardi P. Anggijono, Rosman, and Dedy Sutanto. The meeting confirmed Julian C. Hill as chief commissioner in place of Palgunadi T. Setyawan.

"The new management's chief task is to prepare the resumption of operations at the Porsea plant," the statement said, referring to the site that has been the target of violent attacks by locals and environmentalist groups.

The company is developing a management concept which strives to "rebuild its relations with the community," it said.

Indorayon was forced to shut its operation by the government in 1998 amidst pressure from the local people and environmental groups who claimed that its operation was destroying the environment, including the famous Lake Toba.

Every attempt to reopen the plant since then has been widely opposed, at times involving violent clashes between locals and plant and security workers.

Acknowledging that there were still some opposition to Indorayon resuming its operation, the company said that a series of meetings through the good offices of the North Sumatra governor yielded a number of commitments on Indorayon's part.

They include resuming the Porsea plant operation "with a new paradigm to avoid negative impacts on the environment and the health of the people."

The company pledged to prevent destruction of natural resources and the ecosystem around Lake Toba and Indorayon's nearby forestry concession.

It also underlined an appeal by North Sumatra Governor Tengku Rizal Nurdin to the local people to accept the outcome of the meeting and to allow the company to conduct tests of its pulp plant in the near future.

State Minister of Environment Sonny Keraf recommended in January that Indorayon be shut down completely but his proposal was quickly opposed by economic ministers in the Cabinet who feared that a closure would undermine foreign investor confidence.

Indorayon is 86 percent owned by foreign investors. Apart from trading on the Jakarta Stock Exchange, Indorayon has also floated it shares in the United States through American depository receipts.

The chief commissioner in his report to the shareholders meeting said Indorayon's sales of pulp paper in 2000 reached only 5,353 tons, down from 51,590 tons in 1999 because of the disruption to the plant.

The statement did not give the 1999 financial figures but said the company switched to using U.S. dollars from rupiah because the majority of its transactions were conducted in the American greenback and because of the instability of the rupiah.

Indorayon holds rights to 269,060 hectares of pine forests in the regencies of Dairi, Simalungun, North Tapanuli and South Tapanuli in North Sumatra.

The company, which started commercial production in 1989, has the capacity to produce 240,000 metric tons of pulp, in addition to 60,000 tons of rayon fiber a year.

Indorayon shares were suspended in July after its 1999 financial report was submitted with a disclaimer from auditors. They last traded at Rp 340 per share. (03)