Asia Pulp & Paper, also known in the paper industry as APP, based in Jakarta, Indonesia, is one of the largest pulp and paper companies in the world. It was founded by Eka Tjipta Widjaja with the help of co-founder Singgih Wahab Kwik (Kowik) who was also the adviser of the previous owners of Indah Kiat and former head of commissary and deputy of Sinar Mas Group, who had significant ties to the Soeharto ruling family in Indonesia. With 14 major companies in Indonesia and China, APP has a current annual combined pulp, paper, and packaging-grade capacity of more than 18 million tons per year, and markets its products to more than 120 countries across six continents.
Video Asia Pulp & Paper
History
Asia Pulp & Paper (APP) has its roots in 1972, when Eka Tjipta Widjaja founded a small caustic soda manufacturer called Tjiwi Kimia. In 1978, Tjiwi Kimia commenced paper production of 12,000 tons/year. In December 1976, Indah Kiat was formed as a joint venture between CV Berkat (an Indonesian company), Chung Hwa Pulp Corporation and Yuen Foong Yu Paper Manufacturing Company Ltd. from Taiwan. In April 1979, Indah Kiat Tangerang mill's Paper Machine 1 and 2 started with a production of 100 tons/day of wood free paper. By March 1984, Indah Kiat Perawang mill's Pulp Machine 1 started producing bleached hardwood kraft pulp with an initial capacity of 250 tons/day.
In May 1986, Sinar Mas Group acquired 67% of Indah Kiat's total shares by the order of Singgih Wahab Kwik (Kowik). Chung Hwa and Yuen Foong Yu had 23% and 10% shares respectively. In 1987, the first cast coating machine installed at Tjiwi Kimia, and in April 1990 Tjiwi Kimia was listed on the Jakarta and Surabaya Stock Exchange.
In 1991, Tjiwi Kimia's PM 9 started operation with an annual capacity of 207,000 tons. The following year, Indah Kiat acquired PT Sinar Dunia Makmur, a manufacturer of industrial paper located in Serang with a production capacity of 900 tons/day.
Tjiwi Kimia commissioned the Carbonless Paper Plant in March 1993 as an experiment.
The company Pindo Deli under control of CPP in February 1994, and by 1997 its paper machine No. 8 and No. 9 would both have begun operation with production capacity of 240,000 tons per year. In 1998, paper machine No. 11 started tissue production in Pindo Deli with annual production capacity of 400,000 tons started to operate.
APP-China began investing in China in 1992, with an emphasis on the Yangtze and Pearl River Deltas. APP-China's pulp and paper mills now include Ningbo Zhonghua, Goldeast Paper, Ningbo Asia, Gold Huasheng, Gold Hongye, Hainan Jinhai Pulp and Paper, and Guangxi Jingui Pulp & Paper.
APP-China was registered in Singapore in October 1994. APP-China employs over 37,000 people and created 5,000 new jobs in 2009.
On 4 January 2016, Asia Pulp and Paper announced that it had hired Jose Raymond as its Vice President of Corporate Affairs (Singapore). Jose Raymond was the former Chief Executive of the Singapore Environment Council, who had also served as Senior Director of Corporate Communications and Stakeholder Management at the Singapore Sports Hub.
Maps Asia Pulp & Paper
Indah Kiat Perawang
Indah Kiat Perawang is APP's largest pulp mill in Indonesia. Pulp is sold to APP paper mills in Indonesia and China. Indah Kiat Perawang was increasing its pulp production from ~2 million tonnes in 2009 to an estimated ~2.3 million in 2010-2011.
Financial issues
In 1994, the company moved its headquarters from Indonesia to Singapore and began to borrow money to expand aggressively. It was soon heavily leveraged; from 1996 to 1998, it only produced 1.5 times as much cash flow as its interest costs. In March 2001, during the Asian Debt Crises, APP declared a moratorium on U.S.$13.9 billion in debt, resulting in one of the largest debt defaults in the Asian market. Most of the debt was subsequently rescheduled at lower values. In November 2003, Jakarta-based subsidiary Indah Kiat sued the underwriter and holders of an issue of debt (in United States dollars) it had issued in 1994 under New York law; it sued, however, in Indonesia, and in February 2007 the Indonesian court declared the debt invalid.
Deforestation - Sustainability Roadmap
NGO and activist criticism
Various NGOs have criticized APP on environmental grounds. According to a Friends of the Earth report from 2005, APP has cleared over 280,000 hectares of rainforest in the past decade, and planned to cut another 300,000 over the next five years.
The company has been at the center of many environmental controversies and has been accused of being involved in illegal logging in Cambodia and in Indonesia. The company is also known for defaulting on debt repayments in 2001, during a period of wide-scale financial problems in the South East Asia region.
In 2003, APP signed a Memorandum of Understanding with the World Wildlife Fund, but this ended six months later after WWF refused to approve the environmental management plan, and questioned the figures APP was supplying.
Despite the failure of the WWF partnership, APP entered into a five-year partnership with Rainforest Alliance in 2005. This partnership was supposed to allow Rainforest Alliance to identify and monitor high conservation value forest within four concessions managed by APP in Pulau Muda, Serapung, Siak, and Bukit Batu, and provide independent "verification statements" to attest to the scope and results of the company's efforts to protect these high conservation value areas. Rainforest Alliance made a number of requests for changes in the management of these areas in the first year of the contract, and found that the situation had deteriorated by late 2006 and some areas had been cleared, leading Rainforest Alliance to terminate the agreement in February 2007, stating:
The company has not demonstrated a comprehensive, consistent or dedicated approach toward conservation management necessary to maintain or enhance the forest ecosystems fundamental to the survival of the High Conservation Value Forests present there.
In February 2014, the Rainforest Alliance announced it will evaluate the progress of APP's forest conservation policy and commitments, including its pledge to stop clearing natural forests across it supply chains in Indonesia. Upon re-engaging with APP, Richard Donovan, the organization's Vice President of Forestry said: "There is strong commitment at the highest levels of the organization, which signals that APP is serious this time around."
In November 2007, Forest Stewardship Council (FSC) formally disassociated itself with APP, rescinding the rights of APP to use its logo. On the termination of all ties with the FSC in 2007, a spokesman for WWF commented "Apparently the company has decided to run a global propaganda campaign rather than protect forests with high conservation values. "
In March 2008, an investigation by an environmental coalition called Eyes on the Forest showed evidence of a new road built by APP, heading through the Kampar peninsula, one of the world's largest contiguous tropical peat swamp forests, with more carbon per hectare than any other ecosystem on Earth. The investigation found tracks on the new road of the critically endangered Sumatran tiger, whose wild population has been reduced to less than 500 individuals. APP claimed that it was building this state-of-the-art, paved highway for the benefit of the local communities, though satellite imagery shows that the road does not go anywhere near the two settlements. The authors of the report stated:
We strongly urge APP to join the ranks of responsible businesses and conduct its operations within the law.
Sustainability Roadmap Vision 2020
On June 5, 2012, APP announced its Sustainability Roadmap Vision 2020 plan, in which the company pledged to be wholly reliant on raw materials from plantations and that all its suppliers must operate by High Conservation Value Forest (HCVF) standards by 2015 following independent audits. This program led to:
- 14 November 2012: All nine of APP's Indonesian mills had received SVLK timber legality certification, which is the Indonesian Timber Legality Assurance System, designed to ensure the mills only receive and process timber from legal sources, and that all products exported from the country are traceable to verifiable points of origin. APP was then authorized by the European Commission to import fiber products.
- 5 February 2013: Immediate halt of natural forest clearance across its entire supply chain.
- Partnership with the non-profit organisation The Forest Trust, which is assisting the company with High Conservation Value (HCV) and High Carbon Stock (HCS) assessments to identify forested areas for protection. TFT worked with APP and Greenpeace to design APP's Forest Conservation Policy and will be monitoring and reporting on APP's progress towards achieving its commitments. In addition, APP's policy specifically welcomes third party observers to verify the implementation - a first for APP and for the industry.
- 5 June 2013: Absolute deadline of 31 August 2013 for all natural forest wood felled prior to 1 February 2013 to be accepted at its pulp mills. APP also launched a pilot online monitoring dashboard, which provides access to updated technical information.
- 5 February 2014: Forest Conservation Policy (FCP) Anniversary Report with a call for NGOs, governments and businesses to work together in to help tackle deforestation in Indonesia.
As a result of the announcement of its zero deforestation plan, Greenpeace, Rainforest Action Network and other NGOs expressed cautious optimism and welcomed the company's Forest Conservation Policy. Greenpeace also agreed to halt its global campaign against APP and open discussions to ensure that the company properly implements its policy.
Previous Greenpeace campaigns
Mattel
On 8 June 2011, Greenpeace launched "Barbie, It's Over", an international campaign criticising Mattel's use of Asia Pulp & Paper's products in its packaging, particularly in its line of Barbie products. Within two days of the campaign's start, Mattel ordered its packaging suppliers to stop buying from Asia Pulp & Paper pending an investigation into Greenpeace's deforestation allegations, and further ordered its suppliers to report on how they source materials. Asia Pulp & Paper welcomed Mattel's response, believing that Mattel's investigation would conclude that its "packaging materials are more than 95% recycled paper sourced from around the world."
On 5 October 2011, Phil Radford of Greenpeace announced that Mattel stated that it would no longer purchase pulp and paper products from Asia Pulp & Paper due to the effects that its logging practices had on the Sumatran tiger population.
Sumatran tiger incident
During late July 2011 Greenpeace revealed images and footage on their website that showed a critically endangered Sumatran tiger. This tiger had become trapped by an animal snare at the edge of an APP concession, and had been there for at least seven days, without food or water. Attempts to tranquilize and rescue the tiger failed due to its poor condition of health. APP stated that the trap was set by local villagers and was intended to target small mammals.
In February 2012, WWF listed US toilet papers that may have a direct impact on the 400 Sumatran tigers left in the wild.
To help conserve this endangered species, APP has created a 106 000 hectare sanctuary, Senepis Buluhala Tiger Sanctuary from four companies logging concessions. The sanctuary is surrounded and protected by production forests, where workers are continually on guard for illegal logging and wild fires that threaten the endangered Sumatran tigers' habitat.
Ramin logging
Ramin trees Gonystylus are legally protected under Indonesia's laws and its national CITES regulations. Sumatra's peat swamp forests are a key ramin habitat. In 2012 Greenpeace did an expose video on APP's illegal logging practices. In the video they show logs from ramin trees sitting in an APP pulp yard.
According to Greenpeace in March 2012, APP's main pulp mill in Indonesia (Indah Kiat Perawang) mixes illegal ramin logs regularly with other rainforest species in its pulpwood supply. APP denied the allegations, stating "APP is grateful to Greenpeace for bringing this report to our attention. We take very seriously any evidence of violation of the regulations concerning the protection of endangered tree species...APP maintains a strict zero tolerance policy for illegal wood entering the supply chain and has comprehensive chain of custody (CoC) systems to ensure that only legal wood enters its pulp mill operations." Since Indonesia banned the logging of and trade in ramin in 2001, more than one quarter of this ramin habitat has been cleared - much of this from areas currently supplying APP. Government maps show that 800,000ha (28%) of Sumatra's peat swamp forests were cleared between 2003 and 2009. In 2003, 80% of Sumatra's peat swamp forests, a key ramin habitat, were also identified as critical habitat for the survival of Sumatran tigers.
Operational criticism
In 2004, Zhejiang Hotels Association announced that it would no longer purchase APP products because of the firms illegal logging activities in Yunnan province, leading APP to threaten to sue. The suit was later dropped because of a major publicity campaign by Greenpeace China.
In 2005, APP was also found to be conducting illegal logging in Yunnan Province in China, while a subsidiary of the firm called "Green Rich" was caught illegally logging in Cambodia.
According to Asia Times Online, APP's business model is a tactically aggressive one: it turns huge profits by quickly stripping forests bare, exploiting age-old forests and indigenous peoples, and leaving town before the environmental consequences are felt.
An investigation published in March 2008 by an environmental coalition called Eyes on the Forest showed evidence of a new road built by APP, heading through the Kampar peninsula, one of the world's largest contiguous tropical peat swamp forests, with rich biodiversity, and more carbon stored per hectare than any other ecosystem on Earth. The investigation found tracks on the new road of the critically endangered Sumatran tiger, whose wild population has been reduced to less than 500 individuals. APP claimed that it was building this state-of-the-art, paved highway for the benefit of the local communities, though satellite imagery shows that the road does not go anywhere near the two settlements.
The authors of the report stated:
We strongly urge APP to join the ranks of responsible businesses and conduct its operations within the law.
In January 2008, the office retailer Staples ended their 11-year relationship with APP, which had formerly supplied between 5 and 9% of the paper sold at the chain "due to their clear lack of progress in improving their environmental performance." Other companies including Office Depot and Wal-Mart had cut ties previously on environmental grounds, and these have been followed more recently by Australian retailer Woolworths Limited.
In 2010, Patrick Moore, a former Greenpeace activist, describes APP as not responsible for deforestation but that it is caused mostly by locals "illegally encroaching on forests in search of better livelihoods. By employing Indonesian people, APP is reducing deforestation, as more employment means less poverty, which means less pressure to move into the forest."
In 2011, when asked if he believes APP is sincere in reforming its logging practices, Dorjee Sun, CEO of Carbon Conservation, stated that. "Change in large organizations always takes time, so our goal by 2020 is to build sustainability practices, targets and a roadmap with accountable milestones which will result in true sustainability throughout the entire corporation."
APP continues construction and logging in Sumatra's Kampar peninsula. Due to consumer and marketplace pressures, in February 2013, APP made a commitment to improving forest conservation, which it dubbed its Forest Conservation Policy. However, from 2013 to the present, APP has also planned and/or implemented several major expansions to increase production capacity. Because over capacity has been linked to negative environmental and social impacts, APP partners raised concerns that the commitments outlined in the Forest Conservation Policy could not be met.
In response to these concerns, APP commissioned an independent study to analyze whether it would be able to meet its commitments. According to APP, the September 2014 unpublished results from The Growth & Yield - Wood Supply Study "confirmed that Asia Pulp and Paper Group (APP) has sufficient plantation resource to meet the pulp requirements of its existing mills as well as its future mill in OKI, South Sumatra."
A 2016 study "by twelve international and Indonesian NGOs shows that in spite of its high-profile sustainability commitments, Asia Pulp & Paper (APP) is building one of the world's largest pulp mills in the Indonesian province of South Sumatra without a sustainable wood supply." From the study's Executive Summary:
On February 5, 2013, Asia Pulp & Paper (APP) announced "an end to the clearing of natural forest across its entire supply chain in Indonesia, with immediate effect." The group's "no deforestation" pledge and other sustainability commitments appeared to mark a sharp change from APP's practices over the preceding three decades. Since developing two large pulp mills in Sumatra in the mid-1990s (its first pulp mill began operation in the 1980s though at a lower capacity), Indonesia's leading pulp and paper producer and its affiliates had relied heavily on "mixed tropical hardwoods" (MTH) sourced from clearance of natural forests. ...Five months after making these sustainability commitments, APP announced in July 2013 it is building a third, mega-scale pulp mill in Indonesia, financed by $2.5 billion in loans from China's state-owned banks.
"In March 2014, the former governor of Indonesia's Riau province was sentenced to 14 years in prison and ordered to pay almost USD90,000 in fines for illegally issuing logging permits to APP subsidiaries. In addition, three wood suppliers of APP are among 14 companies which the Ministry of Environment has under examination for possible liability suits over environmental damages." With high-profile criminal cases linked to the corporation, concerns remain about APP and its conduct in relation to environmental and social issues, including the prevention of "catastrophic fires in the [South Sumatran] region" and "severe land subsidence, [and] increasing flooding".
See also
- Eka Tjipta Widjaja
References
External links
- Asia Pulp & Paper
- The Forest Trust
- APP Watch Blog - NGO exchange of information about the ecological, social and economic record of Asia Pulp & Paper in Indonesia and elsewhere
- Friends of the Earth Briefing on APP's record
- Does chopping down rainforests for pulp and paper help alleviate poverty in Indonesia? - Mongabay.com's deconstruction of APP's environmental, social, and economic claims
- The beginning of the end of deforestation in Indonesia? - Mongabay.com's review of APP's new environmental commitments and Forest Conservation Policy
Source of the article : Wikipedia
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