Indonesia

Posted: 21 May 2007 in Pulpmillwatch.org

Pulpmillwatch

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The capacity of pulp mills in Indonesia expanded rapidly during the 1990s, increasing from 1 million tonnes a year in 1990 to 5.9 million tonnes a year by 2001. During this same period, the consumption of paper per person in Indonesia increased from 7.6 kilogrammes to 23.19 kilogrammes. While paper use increased by about three times, pulp production has increased by a factor of almost six. The massive increase in pulp production supplies paper mills in Indonesia, but the enormous increase in capacity has little to do with increased demand for paper in Indonesia. It is for export.

In Sumatra, the pulp and paper industry has contributed to the loss of large areas of tropical rainforest. By 2000, according to CIFOR, the pulp industry had destroyed an area of 835,000 hectares of high biodiversity rainforest [1]. The impact on rural communities and their livelihoods has been devastating.

Pulp companies and their expansion plans

The pulp and paper industry in Indonesia is dominated by two companies, APP and APRIL, which together control more than 75 per cent of total pulp capacity [2]. APP and APRIL both plan to expand their operations in Sumatra this year, and are eager to participate in the national government plan to expand pulp and paper plantations by five million hectares over the coming decade [3].

  • APP plans to increase its pulp capacity by 800,000 tonnes a year.
  • APRIL plans to increase its pulp capacity by 600,000 tonnes a year.

Several plans have emerged in recent years to also build new pulp mills in Kalimantan.

  • A South Korean company called Korindo has plans to establish a pulp mill.
  • A group of Indian and Malaysian investors is reported to be looking at a potential pulp project in Kalimantan.
  • In January 2007, Bisnis Indonesia reported that two companies are planning to invest a total of US$ 3 billion in massive new pulp mills. PT Garuda Kalimantan Lestari plans a 1.2 million tonne capacity pulp mill and associated chemical plant in West Kalimantan. PT Kaltim Prima Pulp & Paper plans a 1.2 million tonne capacity pulp mill in East Kalimantan.
  • Earlier this year, United Fiber Systems opened a new 700,000 tonne wood chip mill on the island of Pulau Laut off the coast of South Kalimantan. Local fishers in Pulau Laut have already seen the impact of the wood chip mill as coral reefs around the island were destroyed to construct the port for the mill. The wood chip mill is the first stage of UFS’ proposed pulp projects in Kalimantan. UFS is in negotiations to take over the 525,000 tonnes a year Kiani Kertas pulp mill in East Kalimantan and has been running the mill since July 2005. Between 1999 and 2003, the mill relied on timber from native forests for about 60 per cent of its fibre. It has also imported wood chips from Australia. In South Kalimantan, UFS is also planning a 600,000 tonnes a year pulp mill.

The impacts of these plans on the communities and forests of Kalimantan will be devastating. UFS claims that it will only use timber from plantations to feed its operations. But forestry studies by UFS’ hired consultants are classified as “confidential documents”. Research and calculations carried out separately by CIFOR, Down to Earth, and Global 2000 (Friends of the Earth Austria) indicate that the area of plantations is far from adequate to supply UFS’ proposed pulp operations. Large areas claimed by UFS as productive plantations are agroforestry areas managed by local communities, or have poor growth rates due to lack of maintenance and fires.

Plantation expansion with the help of the World Bank

In spite of all the acknowledged problems caused by pulp wood plantations in Indonesia, the government is promoting the establishment of a further five million hectares of pulpwood plantations. The World Bank has announced its support for the government’s plans to expand plantations, rating this as “among the highest priorities”.

The logic behind this plan is that there is not enough plantation wood to supply the huge pulp capacities and companies rely on natural forests as a consequence. CIFOR estimated in 2005 that three-quarters of the timber consumed by the pulp industry in Indonesia was from native forests. “Expansion of pulp processing capacity has occurred much faster than plantation development,” CIFOR points out. The yields from plantations cannot meet the demand from the existing pulp mills and legal supplies of wood from native forests in Sumatra “are rapidly being exhausted” [4] . But instead of recommending a downsizing in pulp mill capacity, the World Bank wants to support the expansion of pulpwood plantations.

Indonesian and international NGOs have criticised the se plans. “The push to establish between five to seven million hectares of industrial plantations will cause tremendous harm to our forests and the women and men whose livelihoods depend on them,” Farah Sofa of WALHI, Friends of the Earth Indonesia, told Environment News Service [5]. WALHI is a national coalition of more than 450 NGOs from across Indonesia. It is demanding a moratorium on further forest conversion and has called on the government to stop all new permissions for industrial timber plantations that will convert forests or cause land conflicts with local communities.

APP and APRIL both plan to expand industrial tree plantations by clearing and draining peat swamp forests. Existing pulpwood and oil palm plantations on peat soils in Indonesia have led to rapid oxidation of the peat soils and extensive fires, releasing billions of tonnes of CO2 into the atmosphere. About 80 per cent of Indonesia’s emissions come from destruction of peat forests and forest fires, making Indonesia the third biggest emitter of CO2 in the world, behind the USA and China [6].

Both APP and APRIL have also acquired plantation operations in Kalimantan. In October 2004, APP bought the Finantara Intiga plantations in West Kalimantan from Stora Enso. In 2005, APRIL bought PT ITCI and Adindo plantations in East Kalimantan. Both companies may use the plantations to supply fibre to their operations in China. The search for timber to supply their mills is not limited to Indonesia. In 2004, a company associated with APP was caught red-handed logging inside Bokum Sakor national park in Cambodia.

Ongoing deforestation in Sumatra for pulp production

In Riau province , APP’s Indah Kiat mill and APRIL’s Riau Andalan Pulp and Paper (RAPP) both have a capacity of two million tonnes of pulp a year [7]. Deforestation in Riau province has accelerated in recent years, in spite of APP and APRIL’s promises to conserve forests. WWF Indonesia calculates that timber concessions associated with APRIL include 570,000 hectares of forest. APRIL uses 70 per cent native forests (mixed tropical hardwood) in its Riau Andalan pulp mill and pulped the equivalent of 90,000 hectares of forest in 2005, according to WWF Indonesia.

A July 2006 article in the Japanese newspaper The Daily Yomiuri describes the scene at one of APRIL’s logging operations: “Drying tropical timber was stacked in piles between thick tree stumps – as if it were a heap of bones. The place looked like a field that had been hit by a bomb.” In February 2007, police sealed off the piles of native tropical timber ready for pulping at APRIL’s Riau pulp mill, and commenced an investigation into the use of illegal wood by APRIL. As of June 2007, the police investigation was ongoing, and APRIL could not use the piles of mixed tropical hardwood. Apparently this has forced the mill to reduce pulp production by about 30 per cent .

Land Tenure Conflicts

Land tenure conflicts in Indonesia pose significant risks for pulp companies and investors. The national government established much of the national forest estate since the 1970s without respecting the land rights of indigenous communities. Almost all logging and plantation concessions in Indonesia have overlapping claims with indigenous peoples, and conflicts over land use are common.

Indigenous communities have land claims over much of the area that APP and APRIL has already planted. In 2001, APP lost 70,000 hectares of its land to local land claims in Jambi, amounting to about one-quarter of APP’s total concession in that province.

A 2003 report by Human Rights Watch documents violence associated with the pulp industry’s expansion in Sumatra. APP’s plantations, for example, “were established in Riau during the 1980s and 90s largely on land unlawfully seized from indigenous Malay and Sakai communities, without due process and with little or no compensation. These land seizures took place under intimidation by armed police and military agents.”

Since President Soeharto’s dictatorship ended in 1998, communities have started to protest the loss of their lands and livelihoods. These protests “have been met with violent attacks by organized mobs of hundreds of club-wielding company enforcers, trained by and sometimes accompanied by state police,” reports Human Rights Watch [8].

The government has recently allocated large areas of forest land for industrial tree plantations: 500,000 hectares in South Kalimantan and about one million hectares in East Kalimantan. This is leading to increased land conflicts, as much of these lands are claimed and used by local communities. Clearance for industrial tree plantations is increasing deforestation, threatening local economies, biodiversity and water values.

The allocation of new pulpwood concessions follows a history of land conflict caused by pulp plantations in Kalimantan. In the 1990s, companies belonging to Bob Hasan, the businessman and close friend of Soeharto, built the Kiani Kertas mill and targeted primary forests in East Kalimantan where Bentian indigenous communities lived. The first thing the Bentian communities heard about the proposed plantations was the sound of chain saws in their customary forests. Workers bulldozed their gardens, fruit trees and forests. Ancestral graves were destroyed and looted. The plantation companies then claimed “reforestation funds”, in order to establish plantations on the deforested sites. Much of the land was then burned and abandoned. Hasan’s companies gave no meaningful compensation to affected communities. After Soeharto’s fall, Hasan was jailed for corruption.


Footnotes

[1] Barr, Christopher (2000) “Profits on Paper: the Political Economy of Fiber, Finance and Debt in Indonesia’s Pulp and Paper Industries”, Centre for International Forestry Research (CIFOR) and WWF-International’s Macroeconomics Program Office.

[2] Barr, Christopher and Christian Cossalter (2005) “Pulp and Plantation Development in Indonesia. An Overview of Issues and Trends,” Centre for International Forestry Research (CIFOR) Seminar for EC Asia Pro Eco Project, Brussels, December, 2005.

[3] For a collection of recent information about APP and APRIL, see appwatch.blogspot.com and aprilwatch.blogspot.com .

[4] Barr, Christopher and Christian Cossalter (2005) “Pulp and Plantation Development in Indonesia. An Overview of Issues and Trends,” Centre for International Forestry Research (CIFOR) Seminar for EC Asia Pro Eco Project, Brussels, December, 2005.

[5] “Indonesian Forest Plan Angers Environmental Groups”, Environment News Service, 23 February 2007.

[6] Hooijer, A., Silvius, M., Wösten, H. and Page, S. (2006) “PEAT-CO2, Assessment of CO2 emissions from drained peatlands in SE Asia”, Delft Hydraulics report Q3943 in cooperation with Wetlands International and Alterra.

[7] Barr, Christopher and Christian Cossalter (2005) “Pulp and Plantation Development in Indonesia. An Overview of Issues and Trends,” Centre for International Forestry Research (CIFOR) Seminar for EC Asia Pro Eco Project, Brussels, December, 2005.

[8] Human Rights Watch (2003) “Without Remedy: Human Rights Abuse and Indonesia’s Pulp and Paper Industry”, January 2003.


Further Reading

WALHI – Friends of the Earth, Indonesia
Eyes on the Forest
Down to Earth
Robin Wood
APP-Watch
APRIL-Watch
World Rainforest Movement

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