Sumatra's pulp producers told to stop expansion

Sumatra's pulp producers told to stop expansion

JAKARTA (JP): The Ministry of Forestry has ordered pulp
producers in Sumatra to stop production expansion due to a
shortage of raw material.

Minister of Forestry Djamaludin Suryohadikusmo said after a
hearing of House Commission IV for agriculture, forestry and
transmigration: "I've written to all pulp producers in Sumatra to
tell them not to increase their production capacity."

This move was supported by the office of the Coordinating
Minister for Production and Distribution and the Ministry of
Trade and Industry, he said.

Djamaludin said any attempt by pulp producers to increase
production capacity at present would result in illegal
activities, such as timber theft from natural forests, because
Sumatra had a shortage of pulp raw material.

Other islands did not have the same raw material problem, he
said.

Pulp producers either import raw material or use material left
over from land-clearing activities to feed their pulp plants.

But, observers say they also buy raw material from the public
who illegally cut it from protected natural forest.

Twelve pulp and paper producers operate in Sumatra with a
total capacity of 2.5 million tons of pulp and 472,200 tons of
paper a year.

They include PT Tusam Hutani Lestari, PT Indonusa Indrapuri,
both in Aceh; PT Inti Indorayon Utama, PT SSPI, PT Kumala Karya
Lestari, in North Sumatra; PT Wirakarya Sakti in Jambi; PT Arara
Abadi, PT Riau Andalan Pulp & Paper, PT Intan Prima Cell in Riau;
PT Musi Hutan Persada and PT Pakerin in South Sumatra.

To anticipate a raw material supply problem, they started
establishing pulpwood estates in 1989, but none are ready for
harvest.

An informed source said the Ministry of Industry and Trade,
which overseas industrial companies, did not coordinate with the
Ministry of Forestry in issuing expansion licenses for pulp
producers.

This caused the imbalance between the pulp industry's
production capacity in Sumatra and the area's capacity to supply
raw material, he said.

"Ideally, the ministry issues expansion licenses after
checking the raw material supply," he said.

Djamaludin said the government would issue a new rule to
regulate the expansion of timber-related industry. This would
replace government regulation No. 13/1995 which allowed
industrial companies to expand capacity up to 30 percent without
a license, he said.

He earlier called for the timber-related industry to be
exempted from the 1995 regulation.

"Too much freedom to expand for the timber industry would
prompt illegal logging and accelerate the pace of deforestation,"
he said. (jsk)