Indorayon's fate hinges on social, environmental audit

JAKARTA (JP): Publicly listed PT Inti Indorayon Utama's pulp and rayon mills in North Sumatra would have to undergo a social and environmental audit process before the government determined their fate, a leading government official said.

Director General of the Ministry of Trade and Industry Gatot Ibnusantoso said on Friday that although the existing law only stipulated environmental performance as the criteria for closing down an industry, the government has decided also to audit Indorayon's social performance in the region.

"In terms of environmental performance Indorayon may be good, but if the social performance is poor this is wrong," he told reporters on the sidelines of the Indonesia Forum conference.

He declined to disclose the criteria for the assessment of the social performance, pointing out that the criteria for both the environmental and social performances were still being prepared by a small government team, which was expected to complete its work next week.

"It will be something like contributions in developing education, traditional markets, and other social infrastructure in the area," he said.

He explained that Indorayon's mills had to be audited because people living nearby demanded the mills be closed down on allegations that they had damaged the environment.

"But we can't just close down the mills, we have to audit them first to determine whether they have in fact damaged the environment," he said.

The mills were forced to stop production in early July after local protesters blocked the main access roads to the plants, thereby disrupting the deliveries of supply.

They, however, resumed operation late last month as they have to be working for some five weeks before a government-appointed independent audit team begins work.

Gatot said that the government will select the auditors next Friday, and the auditing process would start immediately.

After months of audit, the auditors would then provide a recommendation to the government, but Indorayon would be given a chance to challenge the result, he said.

He added that the final result would be handed over to the minister of investment, and the final decision would be in the hands of President B.J. Habibie because Indorayon was a foreign investment venture.

Indorayon, which has invested US$600 million in its mills and timber estates near Lake Toba, is listed on the Jakarta Stock Exchange. It has an annual production capacity of 240,000 metric tons of pulp and 60,000 tons of rayon fiber. (rei)