World Rainforest Movement

The Pulp and Paper Industry in Indonesia: A Growing Disaster

In the early 1980s the Indonesian government launched an ambitious forestry plan entitled “Industrial Timber Plantation (HTI) and Pulp Industry Development.” In the early stages of its development, pulpwood plantations were claimed to rehabilitate degraded land and to reduce the pressure on natural forests. This misleading propaganda was indeed intended to disguise an ambitious plan of the Indonesian government for the country to become a world major pulp and paper producer.

To achieve this plan, the government did not only issue a large number of regulations that enabled concessionaires to log natural forests, but it also disbursed millions of dollars in interest-free loans as an incentive to encourage corporations to get involved in the business, with the additional benefit of extracting timber from the concessions as well as receiving many other political and economic privileges.

The expansion of the project was running smoothly. Up to 2001 more than 8 million hectares of land had been given to some 175 companies to be converted into HTIs. Some 5 million hectares of the total were allocated for fast growing monoculture tree plantations (Acacia mangium and Eucalyptus). Pulp production sharply rose from 980,000 tons in 1987 to 8 million tons in late 2000. This changed Indonesia’s status from net pulp importer into net pulp exporter.

However, as plantations expanded, the process was gradually generating a disaster chain to the environment and to the economic, social and political lives of the Indonesian people.

There is no relevant data to support the argument that the pulp industry is efficient and productive. On the contrary, the official data showed that only 1.85 million hectares (23.5% of the total designated area) had been planted with trees to feed the pulp mills. The figure might be even lower in the field, as plantations were often established on land unsuitable for HTIs such as the peat swamps or swamps (for example, the Asia Pulp and Paper Company in Jambi had a 1:3 qualitative-quantitative ratio, meaning that for every 3 trees planted on the swamps only 1 survived). Free timber in the concessions was obviously the main reason for corporations’ involvement in the business: once the forest was cleared and the timber removed, the concession was abandoned without having planted the trees that were supposed to be planted.

HTI concessionaires themselves did not maintain their plantations well. In 2002 the government revoked the license of some HTIs for various reasons such as unpaid debts, mismanagement and misuse of the Reforestation Fund, thus showing that the HTIs did not perform well.

Ironically, no care was given to the logged-over sites, degrading millions of hectares of land, once primary forests or sources of livelihood for local communities, and turning it them into “no people’s land” (abandoned land). This in turn degraded the balancing function of the land and when the structural environmental degradation built up, the results were floods, forest fires and landslides.

To make matters worse, it was clear that the seven pulp industries based in Sumatra and Kalimantan were using raw material from natural forests. The 2003 data of the Ministry of Forestry showed that on average each of the industries had a raw material deficit of 700,000 – 2,000,000 cubic meter per year, with plantations only supplying 20-25% of the total demand, and with half of the wood from natural resources being extracted illegally.

The above figure might have been much higher if we had taken the ministry’s previous data. The 2001 Forest Management Statistic showed that while demand reached 25 million cubic meters of wood per year, the total production of related plantations, was only 3.8 million cubic meters per year, meaning that 85% of pulpwood was extracted from forests and not from plantations.

It is obvious that pulp industries will continue to rely on natural forests to fulfill the demand of raw material. In March 2004, a national newspaper reported statements from Asia Pulp and Paper (APP) and Asia Pacific Resources International Holding Ltd (APRIL) that they would stop receiving raw material from natural forests in 2007 and 2008. However, we doubt that this will be so, because their HTI’s production was far below their industrial capacity, as revealed by research carried out by Indonesia’s NGO network.

The authoritarian system implemented by the government in the forestry sector produces a closed licensing system, which has fuelled corruption, collusion and nepotism. More technically, the land allocation processes have suppressed indigenous/local community’s sovereignty, resulting in prolonged social conflicts between the concessionaires and local communities.

According to data from the Ministry of Forestry, during 1990-1996 more than 5,700 conflicts over HTI’s establishment occurred throughout Indonesia. The conflicts were mostly of struggle for land ownership between indigenous peoples and other local communities with the concessionaires.

In Porsea, North Sumatera, conflicts between the local community and PT Inti Indorayon Utama (IIU) escalated into the use of violence by the government-supported company. Hundreds of people were attacked, with the result of some suffering permanent disability, scores going to jail and several dying. The company also completely destroyed the harmony between the environment and the local community. Areas around the factory were contaminated by stinky chlorine odor, making it difficult to breathe. The community’s rice land was polluted by the factory chemical waste.

After long years of struggle, the mill was eventually closed down. However, the corrupt legal system and the political complexities led to the re-opening of the business run by tycoon Radja Garuda Mas. The re-opening of the company under a new approach, a new name (PT Toba Pulp Lestari) and a new orientation (no longer producing rayon, but producing only pulp) by President Megawati clearly showed that she turned a blind eye to the military violence against the local community.

Other companies have used different though equally oppressive methods. For instance, APP created a kind of local militia (called PAM Swakarsa) to quell local community’s protests and so did Indah Kiat Pulp & Paper and Riau Andalan Pulp & Paper. In Jambi, PT Lontar Papyrus and PT Wira Karya Sakti cleverly managed to use their influence to have the local administration accommodate their interests in local regulations; for example, they managed to convert the designated rice land into HTI in the vicinity of Parit Pudin.

It can be concluded that the pyramid of social conflicts generated by the establishment of pulp mills and HTIs is the result of the structural and systematic policies carried out by the government in collusion with the companies, and of the paradigm of natural resource and conflict management that place the environment and communities as mere objects.

Excessive expectations from a prosperous pulp industry has made the government violate its own regulations. The government supports HTI concessionaires not only through an unclear and business-favorable licensing system but also through interest-free loans as an economic incentive for such business. Moreover, it keeps issuing policies favouring the companies.

In late 2003, through the Ministry of Forestry, the government arranged some ministerial regulations concerning the HTI sector and four ministerial decrees were issued. Ironically, all of them refer to HTIs’ privileges and continue to ignore the problems. The decrees stipulate that any HTI can be established without having to conduct feasibility studies. The decrees thus elude the issue of HTI’s bad performance and open the way to industrial pragmatism and to environmental and socio-economic problems. The decrees also stipulate that both established HTIs and non-performing ones are allowed to alter their investment structure through divestment, which clearly puts public funds (channeled through government loans) at risk. Any HTI’s assets or shares sold to the private sector will no longer belong to the public.

Problems surrounding the pulp industry and HTIs have eventually led to natural occurrences that communities have had to endure: i.e. the natural disasters that are increasing in frequency, scope and intensity. Bad HTIs leave degraded land or badly-maintained plantations. This might alter the weather, i.e. increasing the local temperature. In early 2003, an extensive fire occurred in Jambi. Almost 500 hectares of the HTI managed by PT Dyera Hutan Lestari (PT DHL) were burning for 3 weeks due to bad management, to the conversion of peat swamps to plantations that destroyed the sedimentation structure of water and mud, and to a bad canal system. In another part of Jambi, in the vicinity of Mendahara Ulu the area was flooded because the mangrove forests in the upper course had been destroyed by an HTI.

The beginning of 2003 saw a big flood lasting for almost a whole month in Riau. The flood destroyed everything along its course and caused a loss of up to 764 billion rupiahs, equivalent to 64% of the 2002 regional budget. A report from the Indonesian NGO WALHI revealed that the large amount of converted land in the upper course had caused the loss of carrying capacity of the soil, resulting in erosion, sedimentation and flooding.

Still in Riau, mid 2003 saw another big flood followed by a forest fire that destroyed more than 245,000 hectares of forest in less than 23 days. Thirty two of the 54 companies clearing forests with fire were HTIs.

Floods, landslides, forest fires and smog are not the culmination process of nature, but the products of exploitative management regulated by economic interest-seeking policies that ignore sustainable resource management. The disasters therefore prove to be structural ones, generated by super-structured policies and corrupt governmental officials. It is therefore crucial to understand the roles of actors and policies outside the forestry sector -which directly and indirectly relate to forestry issues- in viewing the pulp and HTI sector.

By: Rivani Noor, Rully Syuamanda, Rudy Lumuru & Longgena Ginting (Presented at the Forest Movement Europe-Taiga Rescue Network Paper Strategy Meeting, Helsinki-Finland 22-25 April 2004)

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