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.