Indorayon wins backing for controversial mill

Indorayon wins backing for controversial mill

JAKARTA (JP): Pulp and rayon fiber producer PT Indorayon Utama
has gained further backing for its controversial plant in the
Porsea district, North Sumatra, with chairman of the National
Economic Council Emil Salim warning the government on Saturday
not to restrict operation of the factory without prior legal
process.

Emil said the indiscriminate closure of the factory would
taint the image of Indonesia in the eyes of investors and would
further discourage foreign investment.

"A legal decision proving the company has caused environmental
damage is required to close down Indorayon's factory," Emil was
quoted by Antara as saying in the North Sumatra capital of Medan
after delivering a speech at a ceremony to install new board
members of the Association of the University of North Sumatra's
Management School Graduates.

The former minister of environment noted that the government
was in the process of trying hard to woo back investors to the
country to revitalize the country's economy, which has been
battered by the protracted economic crisis.

He said foreign investors were watching whether the new
government of Indonesia would deliver on its promise to uphold
law enforcement.

"By conducting a legal procedure in dealing with the case of
Indorayon's factory, Indonesia will demonstrate to the
international world its seriousness in upholding law
enforcement," he said.

Emil said the ministries in charge of industry and trade,
forestry and plantations, and agriculture had to prove in a court
of law that Indorayon was at fault.

With regards to the demand of local people for the closure of
the factory, Emil said he hoped the company and the local people
could settle their dispute in talks mediated by the local
government.

Minister of Environment Sonny Keraf recommended last month
that the Indorayon factory be closed, citing the alleged
environmental damage caused by the company.

The Porsea factory, which commenced operations in 1989, has a
production capacity of 240,000 metric tons of paper pulp in
addition to 60,000 tons of rayon fiber a year.

Local non-governmental organizations such as Friends of the
Earth Indonesia and the Lake Toba Heritage Foundation supported
Sonny's recommendation, saying the decision should have been made
years ago.

But several top officials, including Minister of Trade and
Industry Jusuf Kalla, State Minister of Investment and State
Enterprises Development Laksamana Sukardi as well as Director
General of Chemical, Agricultural and Forestry Industries Gatot
Ibnusantosa insist that Indorayon could not be shut down without
a court decision.

Indorayon's management itself has been calling for the
government to hold a meeting to discuss the problem, together
with other concerned parties, as a preferred resolution process
before bringing the case to court.

President Abdurrahman Wahid promised late last month to find
an amicable way to resolve the problem while upholding the rule
of law.

Indorayon has been under fire since 1998 when it became the
target of demonstrations of residents living near Lake Toba who
opposed its operations over alleged improper environmental-
protection management, which reportedly resulted in bad odors and
polluted water and air.

Environmental organizations have alleged that Indorayon has
caused the water level in Lake Toba to decrease and has harmed
forests in the area.

Indorayon holds a concession right to 269,060 hectares of pine
forest areas in the regencies of Dairi, Simalungun, North
Tapanuli and South Tapanuli in North Sumatra.

Indorayon is a unit of the Raja Garuda Mas Group, a
diversified conglomerate controlled by local businessman Sukanto
Tanoto.

Indorayon has also floated its shares in the United States
through American depository receipts. (jsk)