Singapore firm 'has no links to concession land in Indonesia'

Marissa Lee, Straits Times AsiaOne 2 Oct 15;

Singapore's effort to pressure Indonesian firms into ending the burning in Riau has just come up against another speed bump.

In a first last Saturday, Singapore began legal action against five companies to weed out haze culprits, including a request for information from locally incorporated Asia Pulp and Paper (APP) Company Limited. But this company has no links to concession land in Indonesia and its relationship with the larger Asia Pulp and Paper Group has changed, a group spokesman has claimed.

"It's two different companies... There was a relation in the past... That's why, when they received the notice from the NEA (National Environment Agency), I did not know until three days after," APP Group managing director of sustainability Aida Greenbury told The Straits Times by phone yesterday.

The NEA has asked about the nature of the connection between the two firms, among other demands for transparency.

Ms Greenbury claimed that APP Group is still collecting that information, but is "confident" of submitting a reply to NEA by today. Public attention fell on APP last week, as it is the only one of five firms named by NEA that is based here. Filings with Singapore's Accounting and Corporate Regulatory Authority describe the Singapore firm as an investment company with US$2.07 billion (S$2.9 billion) in paid-up capital.

The firm reported a US$25.8 million loss after tax from continuing operations in 2013, the last time it submitted its accounts. It also had an accumulated loss of US$7.42 billion at the time.

The Singapore firm also counts among its directors one Suresh Kilam, an Indonesian who is a director of APP Group subsidiaries such as Indah Kiat Pulp and Paper, Lontar Papyrus Pulp and Paper, and Pabrik Kertas Tjiwi Kimia.

APP Group arranged for spokesmen from two conservation groups in Indonesia to speak to The Straits Times. The Forest Trust claimed it found "no indication" that APP Group or its suppliers caused the burning on its concession land.

The group and its suppliers have 3,000 trained firefighters between them, and three helicopters, said Ms Greenbury. "All these helicopters are now being used in South Sumatra because this is the area that is affected by fire," she said, whereas fires up north in Riau are smaller.

Ms Greenbury denied that APP Group's complex network of subsidiaries and chain of supply made it difficult to know who is at fault. "APP Indonesia's structure is very clear. It has been available publicly in our sustainability report for many years," she said.

Mr Bustar Maitar, global head of the Indonesia Forest Campaign for Greenpeace, was part of the phone call with The Straits Times. He said he has faith in Indonesia's ability to contain the haze, adding: "Jokowi is my president, I saw with my own eyes he put himself in the middle of the forest fire. We're all angry here, not only people in Singapore."

Agriculture Shares Feel the Heat From Forest Fires
Jakarta Globe 2 Oct 15;

Jakarta. Some publicly-listed plantation firms in Indonesia are struggling with an increasing number of forest fires in their concessions, putting further pressure on agriculture stocks amid low commodity prices and slowing demand.

Plantations in Sumatra and Kalimantan are an facing uphill battle against fires that have forced the government to declare a state of emergency amid one of the country's worst droughts in nearly a decade.

The fires are causing massive haze problems in Sumatra and Kalimantan, but also in Singapore and Malaysia.

"The occurrence of forest fires does have an impact on agriculture shares because it has a direct impact on sales, especially if the fire occurs in productive areas," said Guntur Tri Hariyanto, an analyst at rating agency Pefindo.

"With low commodity prices, production volume and sales volume become very important. A company will have to boost its sales volume, but if production decreases because of the fires, some companies will have to buy the goods to uphold their contracts, thus increasing cost," he added.

Agriculture stocks within the Jakarta Composite Index, or JCI, have collectively fallen by 29 percent so far this year, ranking among the top-three worst-performing sectoral indices so far this year.

Actual effects from the forest fires and haze crisis, which have occurred in the past month, are likely to be seen in the production volume and the sales volume of plantation firms during the third quarter, according to Guntur.

Companies are scheduled to release financial statements for the July-September period in the next few weeks.

In a listing on the local stock exchange on Thursday, Sinar Mas Agro Resources and Technology, the agribusiness arm of Sinar Mas Group, reported that roughly 239 hectares of planted area in its concessions in Jambi and Central Kalimantan has caught fire between Aug. 1 and Sept. 25.

Shares of SMART, which is among the largest agribusiness firms in Indonesia with a total of 139,100 hectare in oil palm plantations, lost 1.1 percent to Rp 4,400 each on Friday, dropping 47 percent so far this year.

Jo Daud Dharsono, president director of SMART, maintained that the fires have started outside of the company's concessions -- sparked by the drought from the El Nino phenomenon -- and he noted that the company has applied a "zero-burning" policy since 1997.

Last week, Austindo Nusantara Jaya, whose shares closed unchanged at Rp 1,610 on Friday, also reported in a listing on the local bourse that 356 hectares of its 17,998 concession area in Sumatra and Kalimantan were on fire as of Sep. 22, citing "wind-borne sparks" from fires outside of the plantation area.


APP denies involvement in Sumatra forest fires
Anggi M. Lubis, The Jakarta Post 2 Oct 15;

Asia Pulp and Paper (APP), part of local conglomerate Sinar Mas Group, has denied involvement in recent pollution-producing Sumatra forest fires after the company’s name was brought into the media spotlight over the issue.

APP managing director for sustainability Aida Greenbury said it was impossible for the country’s largest pulp and paper producer to intentionally burn down its own investment and open a new area by scorching natural forests within its concession, since the company was engaged in a zero-burning and zero-deforestation program.

“We are a hundred percent certain that we are not involved in the fires. We produce pulp and paper, and timber within our industrial forest concession. It would be illogical to burn our own material,” she told reporters in a press conference held in Jakarta on Thursday in response to media coverage on the company’s possible involvement.

“We have been committed to a zero-burning policy since 1996 and zero-deforestation policy since 2013. If we ever lose natural forests in our concession due to fires, it will cost us dearly to restore and conserve the area,” she added.

APP, she explained, had to disburse between US$500 and $1000 per hectare for industrial forests, and between $1000 and $2000 to restore and conserve each hectare of its natural forest.

The company operates 1.1 million hectares of industrial concessions in Riau and the southern part of Sumatra, while its natural forest is around 800,000 hectares, Aida said.

Aida claimed that the company had carried out fire prevention and suppression programs, and also had been involved in conflict resolution with nearby communities, with the moves costing the company $120 million thus far.

She also added that her company had 2,900 firefighters and had trained 2,600 locals from 221 villages near its concession.

APP’s name surfaced after Singapore’s National Environment Agency (NEA) sent a notice to the company’s Singapore office last week inquiring about its possible involvement in the fires that have produced transboundary haze and record-high pollution in the region, forcing the neighboring country to close schools temporarily.

Forest fires in Sumatra and Kalimantan and transboundary haze are annual regional issues, often causing tension between Indonesia and its neighbors Malaysia and Singapore, as slash-and-burn practices have been pointed out as the main factor behind the fires, which have been exacerbated by El Niño this year,

Strait Times reported that APP stood out among the five companies that Singapore’s Environment and Water Resources Minister Vivian Balakrishnan named last week as possible culprits behind forest fires in concession land in Indonesia, 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.

Another company that has been mentioned in the forest fire case is Bumi Mekar Hijau, one of the company’s suppliers.

Sinar Mas’s managing director, Gandhi Sulistio, said that his group would comply with any legal procedures and support efforts for transparency, adding that the conglomerate group would cut ties with any of its suppliers that are proven to be involved in forest fires.