Indonesia's forestry minister axes deal with paper firm over 'irregularities'

Company did not go through proper procedures before pact with ministry on managing park, wildlife reserves

 Indonesian Environment and Forestry Minister. Siti Nurbaya Bakar.
Indonesian Environment and Forestry Minister. Siti Nurbaya Bakar.PHOTO: THE JAKARTA POST

Indonesia's Environment and Forestry Minister Siti Nurbaya Bakar has vetoed a land management agreement with a member company of pulp and paper company Asia Pacific Resources International Holdings Limited (April) over irregularities in the way the deal was struck last month.

The ministry's secretary-general Bambang Hendroyono told The Straits Times yesterday that the memorandum of understanding signed between the ministry's conservation agency in Riau province and April's Gemilang Cipta Nusantara on June 29 was cancelled after the ministry found that the company had failed to comply with "proper procedures".

"Firstly, the procedure in reaching that agreement is incomplete, such as having to go through the secretariat-general. This is part of the ministerial regulation," he said.

"And secondly, the ministry will need to evaluate the performance of the company first before approving the collaboration."

According to the agreement, the Riau Conservation Agency and Gemilang Cipta Nusantara were to jointly manage 50,000ha of land in Riau, comprising Zamrud National Park and several wildlife reserves in the Kampar Peninsula.

The 31,480ha Zamrud, which has carbon-rich peatland, was declared open only last Thursday by Vice-President Jusuf Kalla, and the government is still working out how to run it, said Mr Bambang.

He said that while the ministry is open to collaborations, there is "no need" to partner with the private sector in forest conservation for now. "We don't want the government to be seen as incapable of managing it," he said, adding that officials suspected to be involved in the agreement are being investigated.

April is headquartered in Singapore. Last December, it announced a US$100 million (S$136 million), 10-year investment to more than double the peatland areas it will restore and protect in the Kampar Peninsula.

Earlier this month, the company was in the news when one of its suppliers was issued a stern warning by the forestry ministry for fires that flared up in their concession in Riau province.

April, responding to queries from The Straits Times, confirmed that it has received an official letter from the ministry on the cancellation of the agreement on Monday.

"We acknowledge the ministry's decision with full respect and deeply regret that this situation occurred," said April corporate affairs director Agung Laksamana.

April and the ministry's representatives had worked on the agreement since October last year "in good faith and the best of intentions", he said. "We followed the proper processes in a transparent manner and were not made aware of any irregularities."

Green groups contacted by The Straits Times backed Ms Siti's move, saying it would prevent companies from disrupting the government's authority in managing conservation forests and protected areas.

Dr Herry Purnomo, a scientist at the Centre for International Forestry Research, said the private sector should understand that the government "takes the lead" in managing national parks and that they are "only invited to contribute".

April had released a statement last week to announce the collaboration, possibly making "the government feel that April has overclaimed its contributions", said Dr Purnomo.

A version of this article appeared in the print edition of The Straits Times on July 27, 2016, with the headline 'Indonesia's forestry minister axes deal with paper firm over 'irregularities''. Subscribe