Pulp mills put heavy pressure on forests: Study

Pulp mills put heavy pressure on forests: Study

The Jakarta Post, Jakarta

The remaining natural forest in Riau Province is on the brink of
destruction as the country's giant pulp producers, Sinar Mas
Group and Raja Garuda Mas Group, plan to clear almost 500,000
hectares of natural forest in Sumatra by 2007, according to a
joint study compiled by the World Wide Fund for Nature (WWF) and
the Center for International Forestry Research (CIFOR).

Christopher Barr, a policy scientist at CIFOR, said in a
statement on Friday that both conglomerates relied heavily on
unsustainable sources of fiber, much of which was obtained
through the clear-cutting of natural forests.

The study reveals that the industry's seven-fold expansion
since the late 1980s has proceeded far more rapidly than efforts
to secure a sustainable supply of raw materials through the
development of industrial pulpwood plantations (HTIs).

Both conglomerates claim that by 2008 all of their wood will
come from sustainable, managed plantations. But the WWW-CIFOR
study says that both companies are likely to fall well short of
these "sustainability" targets.

"Although these producers are now taking steps to bring HTI
plantations online, the areas they have planted thus far are
likely to supply no more than 50 percent of the wood the mills
need," Barr said.

The study estimated that of the 120 million cubic meters of
wood consumed by the pulp industry during 1988-2000, only ten
percent was harvested from HTIs.

"Both producers will face significant shortages of legally and
sustainably harvested wood for at least the next seven years, and
quite possibly well beyond," Barr said.

Indonesian pulp and paper producers are also carrying very
large amounts of corporate debt, as US$15 billion has been
invested in the industry since the late 1980s.

All four of the industry's major producers, Sinar Mas, Garuda
Mas, Barito and Bob Hasan conglomerates, have been forced to
pledge much of their physical assets to the Indonesian Bank
Restructuring Agency (IBRA) to cover their debts.

The WWW-CIFOR study concludes that IBRA is likely to use
public funds to write off at least 70 percent of these debts.

CIFOR Director General David Kaimowitz said that by writing
off debts held by the forestry conglomerates, IBRA would give
these groups a substantial capital subsidy.

"This will place added pressures on Indonesia's forests by
encouraging the companies to undervalue the forest resource. It
will also undermine the nation's macroeconomic recovery by
encouraging them to engage in high-risk practices," Kaimowitz
said.

Elsewhere WWF Indonesia director Agus Purnomo said that to
improve the pulp and paper sector, the Ministry of Forestry must
firmly uphold its moratorium on the conversion of natural
forests, adding that Indonesian pulp producers should allow an
independent, public audit of their forestry operations and
transparent monitoring of their wood supply program.

Agus urged IBRA to hold forestry debtors fully accountable for
their financial obligations and said that no haircuts should be
given to companies able to pay their debts.