BANK OF SCOTLAND INVESTMENT
IN CONTROVERSIAL INDONESIAN PAPER PULP PROJECT PT TEL/MHP IN SOUTH SUMATRA
BRIEF NOTES FROM FRANCES CARR, CAMPAIGNER DOWN TO EARTH,
FOLLOWING HER VISIT IN MARCH 1999
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The campaign against the Tanjung Enim Lestari (PT TEL) paper pulp plant and its feeder plantation owned by Musi Hutan Persada (PT MHP) continues in Indonesia. Both companies are subsidiaries of the major timber conglomerate Barito Pacific, owned by tycoon Pangestu Prayogo, who is close to the deposed president Suharto and his family’s business interests. Indonesian activists are calling for foreign investors with withdraw from the scheme on environmental and social grounds.
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Local villagers are still opposed to the PT TEL paper pulp plant . At least 900 families are directly affected by the construction of the plant . A few (30 ish) are still refusing to give up their land. Ideally, they would like the whole development cancelled, but as the project is now so advanced their demands now focus on having their land back and/or getting fair compensation for their land and crops.
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The factory is now virtually complete and most of the equipment – from Scandivavian and Canadian companies, backed by export credit agreements from their governments – is installed. The company aims to start production in September. Start-up requires foreign technical staff and senior management who may not be in-country around the potentially turbulent election period.
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We have photos of the giant waste pipes (2m diameter). Seven of these will discharge effluent from the plant into the River Lematang – a major tributary of the R. Musi – which is the source for all water for domestic and agricultural needs for tens of thousands of people living in some 30 villages along its banks.
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Neither the company nor the Indonesian government has made clear what sort of technology the PT TEL plant will use. The 1997 official Environmental Impact Assessment (EIA) states that “The bleaching unit will use 50-100% chlorine dioxide in the initial phase. If necessary, the plant will be able to produce ECF pulp”. The company told local NGO representatives at a meeting in October last year that it would use ECF technology rather than the even more polluting chlorine bleaching method, but has not confirmed this in writing. The plant will still produce substantial amounts of air and water pollution plus toxic landfill waste. The EIA shows that 70,000 cubic metres of treated effluent will be discharged into the R. Lemtang daily and it is estimated that 18 tonnes of sulphurous gases per day will be emitted.
- There have been several large demonstrations of villagers against PT TEL to the local authorities (June 98; Nov 98 – but that was on land rights cases generally in the province; Jan 99).
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Most recent action was 5th April 1999. People from 4 villages affected by the PT TEL project took their demands to the governor’s office in the provincial capital, Palembang. They want their land back or they want fair compensation.
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One man from the village of Banuayu said “Sir, think about what is happening to us. Since I was forced off my rubber plantation, I can’t feed my family. I had no option but to leave – they threatened me.” (" Pak, pikirkan nasib kami ini, sejak penggusuran kebun karet itu kami kesulitan mencari makan. Saya dulu terpaksa membiarkan penggusuran itu, karena saat itu kami diancam," )The governor’s staff gave them a sympathetic hearing, but the outcome was disappointing for the farmers. The company, who only sent junior staff to the meeting denies responsibilitiy and said all compensation claims had been settled. No date has been fixed for any further meetings.
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The whole US$ 1.3 bn scheme has only been made possible due to financing from an international financial syndicate. The Bank of Scotland (UK) and AT & T (USA) are among the investors. All have denied any corporate social responsibility by consistently ignoring information from NGOs about the impacts of the project on the local community.
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The deal was brokered by Morgen Grenfell, now owned by the German Deutsche Bank which perports to apply strict environmental criteria. An unconfirmed DB source said these included a clause that no rainforest should be destroyed for the project. Members of the Benakat community in South Sumatra have evidence that the Barito Pacific/MHP illegally cleared 1,000 hectares of forest to set up a feeder plantation of acacia for the PT TEL paper pulp plant. This was their ancestral land - intact mature rainforest which they had protected for generations as it was the site of family graves and only used to collect wild honey, fruits, special plants, rottan and tree resins.
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MHP is known to have used fire to clear its concession area for plantation with acacia. In Pangrelo, also in South Sumatra, fires set by the company in 1993 spread onto villagers lands and destroyed almost all of the 150 ha rubber plantation on which the community depended for its livelihood. Last year PT MHP’s contractors came in to clear the remaining 2sq km of forest surrounding the village.
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In 1998, PT MHP was one of two companies found guilty by the South Sumatra courts of contributing to the disasterous 1997/8 forest fires in Indonesia by burning to clear land for pulp plantations. Plantation companies and transmigration sites were identified by the Minister of Forestry and Plantations as the major cause of the fires which are estimated to have devastated around 5 million hectares in Indonesia in 1997/8.
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Forest fires are again seriously affecting parts of Sumatra as the dry season begins. The pollution index in Singapore and Brunei is rising as ‘the haze’ drifts over from Indonesia. The Straits Times (21/4/99) reports that “Satellite pictures show that vast tracts of the Sumatran forest have been set ablaze by plantation and logging companies”. Singapore, Malaysia and Brunei are very concerned about the possibility of massive fires breaking out again in Indonesia. ASEAN is trying to force member countries to adopt a ‘zero-burning’ policy and take strict action against companies which violate this (ST 19/4/99).
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Local NGOs are still supporting the communities who have suffered from PT TEL/MHP, but communication with international NGOs and even big Jakarta-based NGOs has been poor - due to staff changes and a huge caseload from other issues, especially since the downfall of Suharto last May and the forthcoming elections.
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Local students have been accused by NGO activists of stirring up trouble. In late March some brought local villagers to PT TEL to demand that the company employs more local workers. But one local said “ We never wanted PT TEL here in the first place, let alone to work for them. Becoming a PT TEL employee does not address (the problems of ) the losses and intimidation we have suffered. If we are taken on by the factory, it will only be as casual labour.”