Our firefighters are 'working around the clock': Asia Pulp and Paper

The pulp and paper giant says it is working on a response to the National Environment Agency, after it was served a notice seeking information on what it is doing to put out fires on its land concessions.
Channel NewsAsia 27 Sep 15;

SINGAPORE: Asia Pulp and Paper Company (APP), one of the world's largest pulp and paper companies, said its firefighting teams are working around the clock to manage forest fires on its suppliers’ land in Indonesia.

In response to queries from Channel NewsAsia on Saturday (Sep 26), APP said it was bringing in additional resources from across its supply chain to battle the blaze.

On Friday, Singapore's National Environment Agency (NEA) said it has served a notice to APP under the Transboundary Haze Pollution Act, seeking information on its subsidiaries in Singapore and Indonesia, as well as measures taken by its suppliers in Indonesia to put out fires in their concessions.

NEA's action comes as smoke from raging forest fires in Indonesia's Sumatra and Kalimantan has pushed air quality to unhealthy levels in Singapore for several days over the past fortnight.

APP, a member of Indonesia's Sinar Mas Group, has an office in Singapore. "We are coordinating with the relevant parties the appropriate responses to the NEA," it told Channel NewsAsia.

It added that the causes of fire are "highly complex". "They involve the rights of local communities, illegal activity by small and medium enterprises and fundamental complexities over land use rights, spatial planning and maps, ownership and protection. This is why we are working with other stakeholders to focus on prevention and to find a long term solution to the causes of fire," APP stated.

The company said it takes forest fire "very seriously" and has operated a "Zero Burning" policy in its supply chain since 1996.

APP products include Enlivo notebooks, Inspira paper and Paseo tissue paper.

Supermarket chain FairPrice, which carries APP products, said it is seeking clarification from the company on the notice from NEA.

“FairPrice cares for our environment and encourages our partners to adopt sustainable practices in their operations. We are deeply concerned over this matter and are in contact with our suppliers to seek clarification from them,” its spokesperson said.

- CNA/ly


Indonesia's biggest paper firm back in the spotlight
It is told to supply info on its Singapore and Indonesia subsidiaries and what suppliers are doing to fight fires
Marissa Lee Straits Times 27 Sep 15; also AsiaOne

It is the largest pulp and paper firm in Indonesia, backed by the powerful Widjaja family.

But it seems Asia Pulp and Paper (APP) is now Singapore's biggest target in the fight against illegal forest fires, which have led to the haze crisis affecting millions across Singapore, Malaysia and Indonesia.

It has been ordered by the National Environment Agency (NEA) under the Transboundary Haze Pollution Act to supply information on its Singapore and Indonesian subsidiaries, as well as what its suppliers are doing to fight fires.

APP stood out among the five companies that Environment and Water Resources Minister Vivian Balakrishnan named on Friday as possible culprits behind forest fires in concession land in Indonesia.

This is because compared to the four firms also under investigation, two of which are its suppliers, APP is one of the world's largest manufacturers of tissue, stationery and other paper products. Contrary to earlier reports, APP is not listed on the Singapore Exchange (SGX) and remains under the control of the Widjajas' Sinar Mas Group, one of the largest Indonesian conglomerates. The group's business covers pulp and paper, agriculture, property, financial services, energy, infrastructure and telecommunications.

Despite its business pedigree, APP has on a number of occasions found itself thrust under the spotlight of the authorities here.

In 2001, APP was the subject of a probe by the Commercial Affairs Department (CAD), after creditors and investors cried foul when APP defaulted on US$13.9 billion of debt earlier that year. But the case, along with a parallel probe by the CAD into APP's sister company, Asia Food and Properties, was closed two years later without any disclosure as to why the firms were investigated.

Today, Sinar Mas ranks among Indonesia's richest business groups. Investors have since funded five Singapore-listed firms controlled by Sinar Mas with $4.3 billion of loans and bonds.

This has helped the Widjaja empire reach a market value of US$7.5 billion (S$10.7 billion) on the SGX, data compiled by Bloomberg in May showed.

Singapore-listed firms under Sinar Mas include the world's second-largest palm oil producer Golden Agri-Resources, Indonesia's largest developer Sinar Mas Land, coal miner Golden Energy and Resources, investment holding company Bund Center Investment and lifestyle developer Top Global.

APP is the timber plantation and paper manufacturing arm of Sinar Mas. The firm and its suppliers control concessions covering 2.6 million ha in Indonesia.

Reports indicate that there were more than 300 fire alerts recorded on those concessions in Sumatra earlier this month.

APP also has dozens of subsidiaries from Mauritius to the Cayman Islands, in different functions such as trading, distribution, investment and financing.

The paper supplier does not compile an annual report on its website, posting only two annual reports of two operating subsidiaries based in Jakarta, Indah Kiat Pulp and Paper, and Pabrik Kertas Tjiwi Kimia.

From these, The Sunday Times learnt that APP also provides management services to the two subsidiaries, deriving income in the form of management fees.

For instance, Indah Kiat paid APP a management fee of US$8.6 million for the six months ended June 30, according to its latest financial report.

Tjiwi Kimia paid APP a management fee of US$4.7 million in that same period.

Sinar Mas does not consolidate its total group earnings in one financial report either. It had previously said the rationale for this is that each company in the group is independent.

However, the pulp and paper arm of Sinar Mas is one of the group's largest divisions by asset size.

Indah Kiat had US$6.56 billion and Tjiwi Kimia US$2.76 billion in total assets at the end of June this year, according to their latest financial reports.

The last year for which APP reported its accounts to Singapore's Accounting and Corporate Regulatory Authority (Acra) was 2013.

A search with Acra revealed three directors in connection with APP. They are Indonesian Suresh Kilam, Australian Cosimo Borrelli, and Japanese Kunihiko Naito.

APP company secretary Lee Tai Wai, a Singaporean, is also one of the owners of limited-liability partnership Audit Alliance, the firm appointed to audit the accounts of the Aljunied-Hougang-Punggol East Town Council.

Efforts by The Sunday Times to contact the four men were not successful by press time.

Environmental activists have also been attacking Sinar Mas for years, resulting in companies such as toymaker Mattel cutting APP-made paper packaging out of their supply chain.

Some, like sustainability expert Jessica Cheam, called the NEA's latest invocation of the Transboundary Haze Pollution Act "significant".

"It is the first time that Singapore has commenced legal action and also the first time that the Act will be tested since it was passed last year," she said. "The litmus test would be how the companies respond to it, and whether it would prove an effective measure for taking companies to task if they are found responsible for the illegal fires."

Responding to queries on the latest enforcement action by the NEA, an APP spokesman said the company is preparing to respond to the agency.

But she added that as a forest-based business, APP gains absolutely nothing from burning land.

"Fires, therefore, pose an economic threat for APP and cost us a lot of money and resources to deal with," she said. "In addition, the resulting damages from fires cause sufferings to our employees and communities within our operations, as well as threaten the very forests that we have invested to protect."

Yesterday, Indonesian President Joko Widodo said on Facebook that he was committed to cracking down on the culprits behind the forest fires. "My commitment alone, however, will not work without the support of all parties: government, private and public," he said.