International Paper “clarifies” its proposals in Indonesia

Posted: 5 August 2008 in Indonesia, International Paper

In an interview with Pulp and Paper International, Thomas E. Gestrich, president, International Paper Asia and senior vice president, International Paper expands on the company’s plans in Indonesia:

PPI: Could you please enlarge upon IP’s strategy in Indonesia?

In IP, we look at global as well as regional strategies. We’ve been International Paper company for 110 years, and a large part of our business focus is on forestry. Several years ago, we began a transformation process and part of that was selling quite a lot of our forests, as well as non strategic businesses.

The purpose was to generate cash that would be used to pay down debt, return value to shareholders and make broader international investments where high growth was occurring. Asia has been and will continue to be one of those areas. Opportunities like forestry depend on government regulations, climates, local tribes, so lots of things you have to put together. To start a project may take us 12 to 18 months before we really feel comfortable. Once we agree to a deal, then we have to plant trees and so on, so it’s seven to eight years down the road before we have our first year’s harvest. We are not interested in mixed tropical hardwoods; we prefer land that is cleared, and we can grow trees and practice sustainable forestry. We believe we can add lots of value to whatever we decide to do.

International Paper has been reported to be looking at a US$4 billion investment in Indonesia. The proposal would include 500,000 hectares of plantations in West Papua and Central Kalimantan. Gestrich does not explain where or how the company plans to find such a vast area of land that is not already in use by local people, and PPI, of course, does not ask. Nor does PPI ask what the impacts on local people living near the plantation would be, as their streams and water sources are sucked dry and their lands are converted to monocultures.

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