Pulp and Paper Amid Covid 19; Government Policy, Forest Crime, Deforestation and the Role of Financiers

Medan, February 5, 2021 In the midst of Covid-19, government acts business as usual; as do corporations in the pulp and paper industrial plantation sector whose wood supplies come from seizing customary territories, criminalizing indigenous peoples, destroying biodiversity ecosystems, burning forests and land, evading taxes. The financiers continue to invest on corporations who clearly commit crimes.

The presence of PT Toba Pulp Lestari (“TPL”) in Tanah Batak creates many problems: agrarian tensions and conflicts continue to happen in the concession area. Customary community (masyarakat adat) continues to fight company’s claims in their customary territory. In the midst of the unresolved conflict, various National Strategic Projects (PSN) that suddenly appeared also added to the problem. The latest is the appointment of Humbang Hasundutan Regency as the Area for the Development of Food Estate Program.

There is an area of 23,225 hectares in Humbang Hasundutan allocated for the Food Estate Area. The state claims that the status of the area is Forest Area with Production Forest Function (20,354 ha) and Limited Production Forest (2,871 ha). Approximately 16,000 hectares of this area represents a reduction in TPL concession area. On the other hand, the Supreme Court acknowledged as customary territory.

There are two adat communities who are currently struggling to defend their customary territory in the area: Pandumaan Sipituhuta Community and Pargamanan Bintang Maria-Parlilitan Community. Apart from having the potential to increase agrarian conflicts, this National Strategic Program for Food Security also has the potential to cause deforestation.

“The determination of Pandumaan Sipituhuta Customary Forest covering an area of ​​2,383 hectares by the Ministry of Environment and Forestry on December 30, 2020, confuses and disappoints the Pandumaan Sipituhuta Indigenous Peoples, because the government unilaterally allocated 2,051 hectares of their customary territory as area for food security project. In the area of ​​2,051 hectares, from the data collection conducted on January 25, 2021; there are around a million incense trees. Indigenous people reject their incense forest to be allocated as areas for food security project,” said Delima Silalahi, Director of KSPPM, an organization advocating for the adat community.

The government has also allowed TPL to criminalize the indigenous peoples of Ompu Ronggur Simanjuntak, descendants of North Tapanuli, and the Huta Natumingka indigenous peoples in Toba Regency who have been trying to maintain the integrity of their customary territories. At end of 2020, TPL reported to the North Tapanuli Police, five indigenous Ompu Ronggur people and one Huta Natumikka indigenous community, accusing them of committing criminal acts of using forest areas and destroying plants.

“This adds to the long list of victims of criminalization of Indigenous Peoples in Tano Batak. Until now, there have been 70 indigenous people who have been criminalized by PT TPL for defending their customary territory and stopping forest destruction. This criminalization effort is also getting stronger because of the discriminatory and unprofessional behavior of the police, “said Roganda Simanjuntak, Chairman of Aman Tano Batak. “TPL’s activities destroyed agricultural land that have been cultivated from generation to generation has threatened their survival, as well as the destruction of customary forests for conversion to monoculture crops, all exacerbates environmental destruction and water pollution, ” he further added.

Walhi North Sumatra reveals that TPL has become the largest contributor of deforestation in North Sumatera in the last 10 years; which was legalized by the government. Of the total 167,912 hectares of TPL’s concession permits, an area of ​​46,885 hectares is located in the Tele landscape area. “The impact is the destruction of natural forests, damaging water catchments and disrupting the sources of life for indigenous peoples, such as incense forests,” said Putra Septian, Manager of Studies and Advocacy at Walhi North Sumatera.

TPL is also embezzling taxes. The findings of the Tax Justice Forum alleged transfer of profits of TPL’s dissolved pulp export in 2007-2016 have caused potential state losses of Rp1.9 trillion. The alleged method is deliberate misclassifying code of the export product; it was reported as paper grade pulp coded HS 470329, the product code for bleached hard wood craft paper (BHKP) which is used to produce paper and tissue. It is noted that the authorities in China receive shipments of dissolved pulp from Indonesia. During that period, it was only TPL who produced dissolved pulp within Indonesia.

The dissolved pulp is registered as HS 470200; used to produce viscose for textile products, and the price is much higher than paper grade pulp. During 2007-2016 Indonesia’s total dissolved pulp exports were recorded at 150,000 tons. However, China recorded that it imported 1.1 million tons of dissolved pulp from Indonesia. In 2017, PT TPL reported its export products as dissolved pulp, but in fact APRIL Group, a corporation in Riau whose owner is the same as TPL: Sukanto Tanoto, is suspected of repeating this misclassification practice in its exports from Riau to China.

In Riau, APRIL Group, through the PT RAPP complex, has built PT Asia Pacific Raya to produce viscose. PT APR has prepared ANDAL and AMDAL and is in the process of socializing it through the Environment and Forestry Service of Riau Province. “Surprisingly, APRIL is actually developing additional pulp production capacity to 5.8 million tons/year from 2.8 million tons/year originating from Sumatra and Kalimantan. Only relying on industrial plants is not enough; cutting down natural forests or receiving wood from natural forests is a quick way to meet these raw materials, “said Made Ali, Jikalahari Coordinator.

Jikalahari’s findings show that APRIL group through its subsidiary PT NPM funded HKM to clear 1,565 ha of natural forest in Kuansing Regency, which is the remaining natural forest in the landscape of Rimbang Baling biodiversity ecosystem. During 2015-2019 APRIL group deliberately burned forests and land covering an area of ​​74,416 ha which caused smoke pollution in Riau, also felling natural forests and creating new canals in the area of ​​PT RAPP, Siak-Pelalawan district.

In the midst of cutting down natural forests and continuing to seize forest lands of indigenous peoples in Sumatra, APRIL launched “APRIL 2030” containing commitments of: zero carbon emissions from land use; 25% reduction in product carbon emission intensity; strengthened protection, conservation and restoration of nature, zero loss of protected areas; eradicated extreme poverty in society and encouragement for scientific developments on tropical peatlands. “This is a form of greenwashing to trick financial service institutions so that they continue to disburse big funds,” said Made Ali.

Data from forestsandfinance.org reveals that sole pulp and paper’s section of Royal Golden Eagle received funding assistance in the forms of loan and underwriting worth US$ 3,375 Million from January 2016-April 2020.

“Directly or not, the Indonesian Financial Authority/OJK is responsible for the destruction of forests and the lives of indigenous peoples in Sumatra for allowing financial institution pouring out moneys without measuring ESG impact of the financing,” said Made Ali. “In fact, without funding from the financiers, APRIL can stop destroying forests and seizing indigenous peoples’ territories. OJK has that role to force banks to stop funding from APRIL.”

It is not too late to stop the crime APRIL is committing, the Coalition recommends:

  1. The Minister of Environment and Forestry to revoke the permits of PT TPL and APRIL Group in Sumatra, then returned the customary areas of the people that had been seized by the corporation.
  2. The Minister of Environment and Forestry to cease the Food Estate Project which in fact creates conflicts with indigenous peoples because the process of determining the Food Estate is done without involving the indigenous peoples
  3. OJK evaluates the performance and impact of financing in sectors that put forests and people at risk, especially ARPIL Group. OJK needs to immediately issue Environmental, Social and Governance regulations that are in accordance with the principles of sustainability and quickly implement NDPE in financing.

Contact persons:

Delima, Director of KSPPM – 082165522065

Roganda, Chairman of Aman Tano Batak – 085261444399

Aldo, Manager of Advocacy and Campaigns, Jikalahari – 081261116340

Putra Septian, Manager of Studies and Advocacy, Walhi North Sumatera – 0853726260177


About Nurul Fitria

Staf Advokasi dan Kampanye Jikalahari

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