“Social conflict and environmental disaster: A report on Asia Pulp and Paper’s operations in Sumatra, Indonesia” is a new report by World Rainforest Movement. Written by Rivani Noor of the Community Alliance for Pulp Paper Advocacy (CAPPA) and Rully Syumanda of Friends of the Earth Indonesia (WAHLI), the report discusses the social, environmental and economic impacts of APP’s operations.
The report points out that Asia Pulp & Paper (APP) is “responsible for the large-scale destruction of Indonesia’s forests” and documents how the company has “generated a number of conflicts with various community groups in Indonesia which have yet to be settled.”
APP is part of the Singapore-based Sinar Mas Group. It is also Asia’s largest pulp and paper producer. Following the Asian economic crisis in 1997-98, APP convinced foreign investors that an expansion in production was essential if they were going to get any of their money back. International financial institutions including leading banks, investment groups and export credit agencies seemed to race after one another to offer loans and guarantees to accelerate the company’s expansion. Three years later, APP was almost bankrupt, with a debt of almost US$14 billion, the largest of any company in Asia. The company’s value on the New York stock exchange crashed.
APP is now expanding its destructive operations to China. Perhaps surprisingly, some of the same financial institutions (Germany’s Hermes, for example) that supported APP’s expansion in Sumatra are also supporting APP’s expansion in China.