Ministry warns RI's biggest pulp maker

Ministry warns RI's biggest pulp maker

JAKARTA (JP): Minister of Forestry Djamaludin Suryohadikusumo
said on Tuesday his office has sent a warning to the listed PT
Indah Kiat Pulp and Paper, Indonesia's biggest pulp manufacturer,
regarding the company's management of its forest concessions.

"A letter of warning, signed by the Director General of Forest
Development, has been sent to Indah Kiat, so that the company
will improve its planning," Djamaludin told reporters after
opening a meeting with the Association of Indonesia's Forestry
Consultants on Tuesday.

Indah Kiat is part of Asia Pulp and Paper (APP), which also
includes PT Pabrik Kertas Tjiwi Kimia of the Sinar Mas Group. APP
was listed on the New York Stock Exchange last month.

Djamaludin declined to cite when the letter was sent, or which
forestry regulations Indah Kiat has supposedly violated.

"Indah Kiat's logging program is a bit dubious right now," the
minister said.

He added, that if the company did not respond within the two-
month deadline, his office might "take serious considerations"
before deciding to approve Indah Kiat's annual logging plans or
extend its concession rights.

Indah Kiat, a subsidiary of the Sinar Mas Group, controls a
timber estate of approximately 223,650 hectares in Riau, Sumatra
through an affiliate called PT Arara Abadi, whose current
concession was granted in October 1991 and expires (if not
renewed) in October 2034.

In 1993, the Ministry of Forestry fined Indah Kiat close to
one billion rupiah (almost US$500 million) for failures to pay
reforestation and royalty fees.

A reliable source at Indah Kiat, who requested anonymity, told
The Jakarta Post by phone on Tuesday that, "We have not received
any letter from the ministry recently."

However, the source confirmed the report that Minister
Djamaludin had criticized Indah Kiat's logging plans during a
visit to the company's concessions in March.

Concerns

"It is true that at that time Minister Djamaludin had
expressed his concerns about our logging plans," the source said.

The source also denied recent reports that Indah Kiat has been
facing a severe shortage of wood.

"The Indah Kiat mill in Riau needs about 3.5 million cubic
meters of wood every year, instead of the reported four million
cubic meters," the source said.

"To fulfill that annual need for wood, we always rely on our
harvest and land clearing from within our concessions, as well as
wood coming from outside our concessions," he said.

"In short, we are still producing at full installed capacity,"
the source said.

The source also confirmed that Indah Kiat is receiving some
wood from a palm-oil estate owned by the Salim Group in Riau.

The source declined to elaborate on the details of the
cooperation between the two groups.

According to data from Indah Kiat, the company's mill in Riau
is capable to produce 790,000 tons of pulp and 254,000 tons of
printing and writing paper annually.

Indah Kiat's latest consolidated financial report stated that
the firm reported a 36 percent rise in profits last year to Rp
146.9 billion from 1993.

The report also cited that the company's total assets grew to
Rp 4.05 trillion last year from Rp 3.56 trillion in 1993. (hdj)