Asia Pulp & Paper

Asia Pulp & Paper (APP) is an Indonesian pulp and paper company based in Jakarta, Indonesia. One of the largest pulp and paper companies in the world, it was founded as Tjiwi Kimia by Eka Tjipta Widjaja in 1972. Asia Pulp & Paper is a subsidiary of Sinar Mas Group and was officially formed in 1994 when Sinar combined its paper and pulp operations from Tjiwi Kimia and PT Inda Kiat Pulp & Paper.

Asia Pulp & Paper
TypePrivate
IndustryPulp and paper
FounderEka Tjipta Widjaja, Singgih Wahab Kwik (Kowik)
Area served
Worldwide
ProductsPackaging, paper, tissue
ParentSinar Mas Group
Websitewww.asiapulppaper.com

History

Asia Pulp & Paper was founded as Tjiwi Kimia by Eka Tjipta Widjaja who at the time was a refiner of coconut oil. In 1972 he started Pabrik Kertas Tjiwi Kimia along with Taiwanese investors with the purpose of making paper.[1] Widjaja was already operating what became known as Sinar Mas Group, and started Tjiwi Kimia based on his success in commodities.[2]

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. Sinar Mas acquired 67 per cent of the venture's total shares.[3] Tjiwi Kimia was listed on the Jakarta and Surabaya Stock Exchanges beginning in 1990. In 1992, Tjiwi Kimia began establishing paper industries in Yangtze and Pearl Delta in China,[3] leading to paper mills Ningbo Zhonghua, Goldeast Paper, Ningbo Asia, Gold Huasheng, Gold Hongye, Hainan Jinhai Pulp and Paper, and Guangxi Jingui Pulp & Paper.[4]

In 1994, Sinar Mas incorporated Asia Pulp & Paper in Singapore, consolidated its pulp and paper operations in Indonesia by combing operations from Tjiwi Kimia and PT Inda Kiat Pulp & Paper. The following year it was listed on the New York Stock Exchange.[1] It began investing capital to become an industry leader in paper and pulp, spending $4.7 billion on capital investments in 1996 and 1997. By 1999, its total paper and packaging production was more than four million metric tonnes per year.[1]

During the Asian Debt Crises in 2001, APP defaulted on $13.9 billion of debt. The default was reported as the largest debt default in the history of the Asian markets, with APP also filing for bankruptcy in the United States.[5] The default was attributed to the drop in pulp and paper prices as well as years of aggressive expansion by the company.[6] 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.[7][8]

Asia Pulp & Paper moved its headquarters back to Indonesia and eventually spun off APP China in a debt-for-equity swap.[9] It agreed to repayment of $7 billion in debt over the next 10 years, covering the debts of its Indonesia subsidiaries.[10] By 2010, Asia Pulp & Paper was operating five of the top paper mill companies in Indonesia, including Indah Kiat, Lontar Papyrus, Pindo Deli, Tjiwi Kimia, and Ekamas Fortuna. Its principal operations were in Indonesia and China with Indonesia producing 13 million tonnes of paper and China producing 6.4 million tons on an annual basis.[3] The same year it hired former Greenpeace activist Patrick Moore who authored a report that describes APP as not responsible for deforestation in Indonesia.[11]

Operations

Activist criticism

Asia Pulp & Paper has been the focus of campaigns by groups like Greenpeace and Rainforest Action Network, including a 2012 exposé by Greenpeace accusing APP of illegal logging practices.[12][13] It has been at the center of environmental controversies and has been accused of being involved in illegal logging in Indonesia.[14] NGOs have called for APP customers to cancel their contracts.[15] Campaigns have been focused against companies such as Mattel and Kraft Foods for using APP products in its packaging,[16][17]

Asia Pulp & Paper has entered into agreements with NGOs for monitoring of its sustainability practices. As a result of the announcement of APP's zero deforestation plan, Greenpeace, Rainforest Action Network and other NGOs welcomed the company's Forest Conservation Policy while expressing cautious optimism.[18] Greenpeace also agreed to halt its global campaign against APP and open discussions to ensure that the company properly implements its policy,[19] an agreement it terminated in 2018 claiming that APP was "not genuinely serious" about ending deforestation.[20]

In 2003, APP signed a Memorandum of Understanding with the World Wildlife Fund. This ended six months later based on WWF refusing to approve the environmental management plan.[21] APP entered into a five-year partnership with Rainforest Alliance in 2005 to identify and monitoring high conservation areas. The agreement was terminated in 2007,[22] but Rainforest Alliance re-engaged with APP in 2014 to evaluate the progress of its conservation policy.[23][24][25] In September 2015, the Singaporean National Environment Agency (NEA) named APP as one of five companies possibly responsible for the 2015 Southeast Asian Haze.[26] The Singapore Environment Council instituted a temporary restriction on the use of Singapore Green label certifications for APP products in response, causing companies such as NTUC FairPrice to pull products sourced by APP.[27] In response, APP implemented better fire suppression strategies and later received the Singapore Environment Council's (SEC) enhanced Green Label certification after SEC audits of its suppliers,[28] allowing its products to return to Singapore shelves.[29]

In November 2007, Forest Stewardship Council (FSC) formally disassociated itself with APP, rescinding the rights of APP to use its logo.[30] "

Sustainability

In 2012, APP announced its Sustainability Roadmap Vision 2020 plan. The company pledged to be wholly reliant on raw materials from plantations and have all its suppliers operate by High Conservation Value Forest (HCVF) standards by 2015, using independent audits to track progress.[31][32][33] By 2012, all 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. Following such, APP was authorized by the European Commission to import fiber products.[34]

By February 2013, APP had halted the clearing of natural forests across its supply chain.[35][36][37] The same year it worked with The Forest Trust and Greenpeace to design its Forest Conservation Policy and to monitor and report on the company'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 the industry.[38] It also began identifying natural forests through High Conservation Value (HCV) and High Carbon Stock (HCS) assessments across all APP land concessions in Indonesia,[39] and launched a pilot online monitoring dashboard, which provides access to updated technical information.[40]

In 2014, APP coordinated with the government of Indonesia and NGOs, implementing a plan to restore and support conservation of 2.5 million acres of rain forest in Indonesia.[41] In 2015, APP received PEFC certification.[42]

Conservation

In 2010, APP created Senepis Buluhala Tiger Sanctuary, a 106,000-hectare sanctuary to help conserve the endangered Sumatran tiger.[43]

APP continues construction and logging in Sumatra's Kampar peninsula. In February 2013, APP committed to improving forest conservation, which it dubbed its Forest Conservation Policy. However, from 2013 to the present, APP also planned and/or implemented several major expansions to increase production capacity. Because overcapacity 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.[44]

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 resources to meet the pulp requirements of its existing mills as well as its future mill in OKI, South Sumatra". However, since the results were never published it is not possible to verify the results of the study, nor can the claim of independence be verified.[45]

See also

References
  1. Borsuk, Richard (5 March 2011). "The Rise and Plummet Of APP's Widjaja Family". The Wall Street Journal. Retrieved 2 February 2022.
  2. Olsen, Robert (27 January 2019). "Indonesia's Third-Richest Person Dies At Age 98". Forbes. Retrieved 2 February 2022.
  3. Hidayat, Herman (2018). Sustainable Plantation Forestry. Springer Singapore. ISBN 9789811076534. Retrieved 2 February 2022.
  4. APP-China Sustainability Report 2009, APP, Bund Center, Shanghai, China, Nov. 2010.
  5. Corrigan, Tom (16 August 2019). "Asian Paper Maker's Debt Lands in U.S. Bankruptcy Court". Wall Street Journal. Retrieved 3 February 2022.
  6. "Asia Pulp & Paper to Default on $12 Billion in Debt" Bloomberg, 12 March 2001
  7. "Can Indonesian corporates get away without repaying bonds?". Financeasia.com. Archived from the original on 4 August 2009. Retrieved 7 June 2012.
  8. "Asia's Worst Deal". Bloomberg News. Archived from the original on 22 November 2018. Retrieved 22 November 2018.
  9. Webb, Sarah (6 January 2016). "Asia: The Untouchables – Indonesia's Widjajas". Euro Money. Retrieved 3 February 2022.
  10. Hawkins, John (27 February 2011). "Asia Pulp and Paper – A History by John Hawkins". Tasmanian Times. Retrieved 3 February 2022.
  11. "Why is a former Greenpeace activist siding with Indonesia's logging industry?". The Guardian. 2 December 2010. Archived from the original on 19 January 2016. Retrieved 18 December 2013.
  12. Publication – 1 March 2012 (1 March 2012). "Asia pulp & paper under investigation part two: | Greenpeace Canada". Greenpeace.org. Archived from the original on 8 June 2012. Retrieved 7 June 2012.
  13. Schonhardt, Sara (5 February 2013). "Paper Producer to Stop Clearing of Indonesian Forests". The New York Times. Retrieved 3 February 2022.
  14. Keith Andrew Bettinger. "A forest falls in Cambodia". Archived from the original on 2 August 2012. Retrieved 7 June 2012.{{cite web}}: CS1 maint: unfit URL (link)
  15. "Greenpeace breaks up with APP after investigation links paper firm to deforestation". Archived from the original on 22 November 2018. Retrieved 22 November 2018.
  16. Anne, Sarah (7 February 2011). "Greenpeace protests Barbie at Mattel headquarters – BlogPost". The Washington Post. Archived from the original on 12 November 2012. Retrieved 9 June 2011.
  17. "Paper Giant Pledges to Leave the Poor Rainforest Alone. Finally. Asia Pulp & Paper—the notorious destroyer of pristine tiger and orangutan habitat—says it's changing its ways". Mother Jones. Retrieved 27 November 2013.
  18. Sutherlin, Laurel (5 February 2013). "Rainforest Action Network Responds to Asia Pulp and Paper's New Forest Commitments". Rainforest Action Network. Archived from the original on 24 October 2013. Retrieved 16 October 2013.
  19. Maitar, Bustar (5 February 2013). "APP commits to end deforestation!". Greenpeace International. Archived from the original on 16 October 2013. Retrieved 16 October 2013.
  20. "Greenpeace: Paper giant cut forests during conservation pact". Associated Press.
  21. Donnan, Shawn (21 February 2006). "/ Home UK / UK – The usefulness of scholarships and tigers". Financial Times. Archived from the original on 5 August 2012. Retrieved 7 June 2012.
  22. "Rainforest Alliance Public Statement: Termination of Contract to Verify High Conservation Value Forests (HCVF) for APP in Sumatra, Indonesia, January 2007" (PDF). Archived from the original (PDF) on 15 July 2007. Retrieved 7 June 2012.
  23. "Rainforest Alliance report 'An Evaluation of Asia Pulp & Paper's Progress to Meet its Forest Conservation Policy (2013)". Greenpeace USA. 5 February 2015. Retrieved 29 March 2020.
  24. "Rainforest Alliance, Peatland Experts to Evaluate APP Progress". Environmental Leader. 10 February 2014. Archived from the original on 28 March 2014. Retrieved 27 March 2014.
  25. "Rainforest Alliance's Upcoming Evaluation of Asia Pulp and Paper Group". Rainforest Alliance. Archived from the original on 9 March 2014.
  26. "Indonesia's biggest paper firm back in the spotlight". Archived from the original on 22 November 2018. Retrieved 22 November 2018.
  27. Cochrane, Joe (8 October 2015). "Southeast Asia, Choking on Haze, Struggles for a Solution". The New York Times. Retrieved 3 February 2022.
  28. Zhuo, Tee (29 May 2019). "Asia Pulp & Paper, once linked to haze, set to return to shelves after getting green certification". The Straits Times. Retrieved 3 February 2022.
  29. Jye, Ng Ren (29 May 2019). "Asia Pulp & Paper products to be back on Singapore shelves after passing checks". The Business Times. Retrieved 29 March 2020.
  30. "FSC rules in upheaval after green groups level accusations at APP | printweek.com | Latest Print Industry News, Jobs, Features, Product Reviews, Used Printing and Packaging Machinery". printweek.com. 1 November 2007. Archived from the original on 29 September 2011. Retrieved 7 June 2012.
  31. Bellman, Eric (15 May 2012). "Asia Pulp & Paper Tightens Forest-Conservation Efforts". The Wall Street Journal. Archived from the original on 27 August 2016. Retrieved 3 August 2017.
  32. "Asia Pulp & Paper Pledges 'Sustainable Forest Management'". Environmental Leader. 6 June 2012. Archived from the original on 16 October 2013. Retrieved 16 October 2013.
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  34. Gyekye, Liz (30 November 2012). "APP receives SVLK timber legality certification for ninth mill". Packaging News. Archived from the original on 22 May 2013. Retrieved 16 October 2013.
  35. Butler, Rhett (5 February 2013). "The beginning of the end of deforestation in Indonesia?". Mongabay.
  36. "A new era for APP". The Forest Trust. 19 February 2013. Archived from the original on 17 October 2013.
  37. Ho, Yudith (5 February 2013). "Asia Pulp and Paper Halts Clearing in Indonesian Natural Forests". Bloomberg. Archived from the original on 29 November 2014. Retrieved 5 March 2017.
  38. "Logging the good news". The Economist. 25 May 2013. Archived from the original on 15 February 2017. Retrieved 24 August 2017.
  39. Taylor, Michael (5 February 2013). "Paper firm says to stop cutting Indonesia's natural forests". Reuters. Archived from the original on 24 September 2015. Retrieved 30 June 2017.
  40. "APP issues progress report on "No Deforestation"". TAPPI. Archived from the original on 16 October 2013. Retrieved 15 October 2013.
  41. Pate, Andrew (12 December 2014). "Asia Pulp and Paper Tries to Recast Its Image". Retrieved 3 February 2022.
  42. "April, APP Get Forest Certification from PEFC". Indonesian Forestry Certification Cooperation. 8 June 2015. Retrieved 25 November 2019.
  43. "APP engaged in protecting tigers". The Jakarta Post. 22 February 2010. Archived from the original on 19 December 2013. Retrieved 18 December 2013.
  44. "Asia Pulp and Paper – APP Indonesia". BankTrack. 22 September 2016. Archived from the original on 13 April 2017. Retrieved 12 April 2017.
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