Chinese company plans massive timber operation in Papua

Down to Earth No 69  May 2006

Investor:
State-owned Chinese company, named as China Light.

Investment:
Plan to invest US$1 billion in a timber processing plant and acquiring merbau logs, announced by forestry minister Malam Sambat Kaban in April this year.

Impacts:
This plan links the 2008 Olympic Games to stripping Papua's forests of the highly valuable merbau hardwood. Forestry minister Kaban told reporters that the Chinese company needed 800,000 cubic metres of merbau logs (400,000 m3 of processed wood) to construct sports facilities for the 2008 Olympics.

Illegal exports of merbau (Instia spp) are supplying Chinese factories and western consumer demand for hardwood flooring. This illegal trade, which generates huge profits for timber dealers whilst depriving Papuans of their customary resources has been exposed by EIA and Telapak in their new report Behind the Veneer. (For more on Papuan forests see separate article, and DTE 65).

If the investment plan goes ahead - and the minister said he expected the deal to be concluded this year - this will effectively legalise the destruction of Papua's already hard-pressed forests (see separate article). By setting up a processing mill and exporting the merbau as processed timber, the Chinese company would be able to get round Indonesia's log export ban.

According to the forestry department's Forest Production Development Director General, Hadi S Pasaribu, Indonesia could use 300,000 cubic metres of timber confiscated under last year's crack-down on illegal logging in Papua, to supply the Chinese operation. The rest, he said, could be supplied from private timber concessions (HPH) operating in Papua. He also said China had agreed to develop timber plantations for the pulp and paper industry in the region.

The announcement may well set off a power struggle between central government in Jakarta and Papua's provincial government, which has already complained about the lack of decision-making power delivered under special autonomy measures introduced four years ago. The investment, which can be expected to accelerate the marginalisation of indigenous Papuans in the logging zones, is also likely to fuel political unrest amongst a population already angry about outsiders profiting from Papua's natural riches. The lack of benefits from decades of exploitation was underlined last year when the World Bank reported that 40% of Papuans remained below the poverty line, more than twice the national average for Indonesia (see DTE 68).

(Source: Jakarta Post 19/Apr/06; New York Times 29/Apr/06; Republika Online 19/Apr/06 www.republika.co.id/koran_detail.asp?id=244312&kat_id=4)

The EIA/Telapak report is at: www.eia-international.org/files/reports117-1.pdf