Soeharto endorses plan on state-owned pulp companies

JAKARTA (JP): President Soeharto endorsed yesterday a plan to involve state-owned companies in the production of pulp in Indonesia, Forestry Minister Djamaludin Suryohadikusumo said.

"The President has already approved the plan," he announced after his meeting with Soeharto.

The minister said that the involvement of state-owned companies in the production of pulp is important if the government is to effectively monitor the country's pulp industry.

"We hope that the entry of state-owned companies will make the management of the pulp industry more transparent," he said, adding that the public is unaware if a pulp producer is incurring losses or receiving unusually big profits due to their reluctance to disclose financial and operational records.

The plan to involve state-owned companies in pulp production was announced late last month following widely circulated reports on the acute shortage of raw materials for pulp and paper production.

The minister said that under the plan, new investors intending to develop pulp forest estates should involve state-owned plantation companies in their pulp production activities through a joint venture arrangement.

He said, however, that the state-owned plantation companies are not necessarily required to inject fresh funds into such a joint venture.

"The equity participation of the state-owned firms could be in the form of the incorporation of its plantation assets," he said, adding that the state-owned companies' shares could also be paid by dividends from those joint ventures.

Djamaludin said that the equity participation of the state- owned companies in new pulp companies is mandatory, while that in existing pulp manufacturers is an appeal.

The Forestry Ministry, which previously limited licenses for the development of pulp estates and pulp production to 13 companies, reopened the pulp industry to new investors to deal with the acute shortage in the raw materials for pulp and paper production in the country.

The ministry said that two of the existing 13 pulp producers, Mercu Buana and Henzo, have agreed to include state-owned firms as shareholders in their pulp industries.

Indonesia's pulp and paper industries, with an annual production capacity of around 1.04 million tons per year, require an annual raw material supply of around 5.2 million cubic meters.(hen)