Toba Pulp Lestari moves production plant to China

Apriadi Gunawan, The Jakarta Post, Medan

Tired of the long-standing dispute with local people and the local administration, PT Toba Pulp Lestari has moved its rayon production plant from North Sumatra to China, an official said on Tuesday.

Toba Samosir deputy regent M.S. Manurung revealed the firm, formerly called PT Inti Indorayon Utama, was currently dismantling the factory's machinery.

"They will ship the machines to China and the (transferring) process will finish in September," Manurung told The Jakarta Post at his office.

The company's chief commissioner, Dedy Sutanto, however, declined to comment on the reported transfer to China. "No comments," he said.

Manurung dismissed speculation that the local administration had demanded the rayon factory be relocated, saying the move was taken upon the factory's own will due to its long-standing dispute with local people.

"It is their right to move out or take the factory's machinery apart," he said, while citing that the company had given prior notice about the relocation of the rayon plant to the local administration.

A local newspaper, the Waspada daily, quoted the company's spokesman, Fadmin Malau, in its Monday's edition as saying the rayon plant was sold to the Chinese government for US$200 million.

Manurung said that it was probably due to the closure of its rayon factory in 1998 that the company had decided to move its rayon production to China.

Established in 1986 with startup capital of US$600 million, Indorayon had been held responsible for the declining water level of Lake Toba and illegal logging in North Sumatra.

Local people also accused the company of dumping poisonous waste water directly into Asahan River, polluting the air and causing lung disease among local people.

The government ordered the closure of the company's rayon production in 1998 following public complaints.

Bowing further to public pressure to close down the plant, former president Abdurrahman Wahid ordered the closure of the whole company in 2000 for environmental reasons.

Dozens of people have been killed in a series of demonstrations against the company owned by businessman Sukamto Tanoto of the Radja Garuda Mas Group.

Listed on both the Jakarta and New York stock exchange, Indorayon exports pulp and paper products to a number of European countries, Japan and the United States.