Asia Pulp & Paper
|Industry||Pulp & Paper|
|Founder(s)||Eka Tjipta Widjaja, Singgih Wahab Kwik (Kowik)|
|Products||Packaging, Paper, Tissue|
Asia Pulp & Paper, also known in the paper industry as APP, based in Jakarta, is one of the largest pulp and paper companies in the world. It was founded by Eka Tjipta Widjaja with the help of co-founder Singgih Wahab Kwik (Kowik) who was also the adviser of the previous owners of Indah Kiat and former head of commissary and deputy of Sinar Mas Group, who had significant ties to the Soeharto ruling family in Indonesia. With 14 major companies in Indonesia and China, APP has a current annual combined pulp, paper, and packaging-grade capacity of more than 18 million tons per year, and markets its products to more than 120 countries across six continents.
- 1 History
- 2 Sustainability Roadmap Vision 2020 and Forest Conservation Policy
- 3 Indah Kiat Perawang
- 4 Financial issues
- 5 Environmental issues and logging practices
- 6 See also
- 7 References
- 8 External links
Asia Pulp & Paper (APP) has its roots in 1972, when the company Tjiwi Kimia was founded by Eka Tjipta Widjaja as a small caustic soda manufacturer. In 1978, Tjiwi Kimia commenced paper production of 12,000 tons/year. 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 Ltd. from Taiwan. In April 1979, Indah Kiat Tangerang mill’s Paper Machine 1 and 2 started with a production of 100 tons/day of wood free paper. By March 1984, Indah Kiat Perawang mill’s Pulp Machine 1 started producing bleached hardwood kraft pulp with an initial capacity of 250 tons/day.
In May 1986, Sinar Mas Group acquired 67% of Indah Kiat’s total shares by the order of Singgih Wahab Kwik (Kowik). Chung Hwa and Yuen Foong Yu had 23% and 10% shares respectively. In 1987, the first cast coating machine installed at Tjiwi Kimia, and in April 1990 Tjiwi Kimia was listed on the Jakarta and Surabaya Stock Exchange.
In 1991, Tjiwi Kimia’s PM 9 started operation with an annual capacity of 207,000 tons. The following year, Indah Kiat acquired PT Sinar Dunia Makmur, a manufacturer of industrial paper located in Serang with a production capacity of 900 tons/day.
Tjiwi Kimia commissioned the Carbonless Paper Plant in March 1993 as an experiment.
The company Pindo Deli under control of APP in February 1994, and by 1997 its paper machine No. 8 and No. 9 would both have begun operation with production capacity of 240,000 tons per year. In 1998, paper machine No. 11 started tissue production in Pindo Deli with annual production capacity of 400,000 tons started to operate.
APP-China began investing in China in 1992, with an emphasis on the Yangtze and Pearl River Deltas. APP-China's pulp and paper mills now include Ningbo Zhonghua, Goldeast Paper, Ningbo Asia, Gold Huasheng, Gold Hongye, Hainan Jinhai Pulp and Paper, and Guangxi Jingui Pulp & Paper.
APP-China was registered in Singapore in October 1994. APP-China employs over 37,000 people and created 5,000 new jobs in 2009.
Sustainability Roadmap Vision 2020 and Forest Conservation Policy
On June 5, 2012, APP announced its Sustainability Roadmap Vision 2020 plan, in which the company pledged to be wholly reliant on raw materials from plantations and that all its suppliers must operate by High Conservation Value Forest (HCVF) standards by 2015 following independent audits.
As part of the company’s Roadmap, on November 14, 2012 APP announced that all nine of its Indonesian mills had received SVLK timber legality certification, which is the Indonesian Timber Legality Assurance System – a rigorous chain of custody process 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. APP was the first Indonesian business to fully achieve SVLK compliance, which allowed the company and the country of Indonesia to be recognized by the European Commission as importing legal fiber products.
APP also revealed a partnership with the non-profit organisation The Forest Trust, which is assisting the company with High Conservation Value (HCV) and High Carbon Stock (HCS) assessments to identify forested areas for protection. TFT worked with APP and Greenpeace to design APP’s Forest Conservation Policy and will be monitoring and reporting on APP’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 for the industry.
As a result of the announcement of its zero deforestation plan, Greenpeace, Rainforest Action Network and other NGOs expressed cautious optimism and welcomed the company’s Forest Conservation Policy. Greenpeace also agreed to halt its global campaign against APP and open discussions to ensure that the company properly implements its policy.
On June 5, 2013, APP announced an absolute deadline of August 31, 2013 for all natural forest wood felled prior to February 1, 2013 to be accepted at its pulp mills. APP also launched a pilot online monitoring dashboard, which provides access to updated technical information, to enable stakeholders and third parties to actively review its progress towards implementing the Forest Conservation Policy.
On February 5, 2014, APP launched its Forest Conservation Policy (FCP) Anniversary Report with a call for NGOs, governments and businesses to work together in to help tackle deforestation in Indonesia.  
That same day APP hosted an event in Jakarta where it welcomed its supporters and critics. The panel was moderated by Mongabay’s Rhett Butler, who stated “my initial take away from the discussion is that sentiment toward APP in the NGO community is generally improving as a result of its forestry conservation policy and its apparent greater openness.”  Norwegian Ambassador to Indonesia, Stig Traavik, stated that APP’s intentions presented in its sustainability policy are commendable and that “APP has been willing to open up for external review. Initial reports about implementation and ability to address problems as they arise are encouraging.” 
Indah Kiat Perawang
Indah Kiat Perawang is APP’s largest pulp mill in Indonesia. Pulp is sold to APP paper mills in Indonesia and China. Indah Kiat Perawang was increasing its pulp production from ~2 million tonnes in 2009 to an estimated ~2.3 million in 2010–2011.
In 1994, the company moved its headquarters from Indonesia to Singapore and began to borrow money to expand aggressively. It was soon heavily leveraged; from 1996 to 1998, it only produced 1.5 times as much cash flow as its interest costs. In March 2001, during the Asian Debt Crises, it defaulted on its debt, most of which was subsequently rescheduled at lower values. 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.
Environmental issues and logging practices
NGO & Activist Criticism
Various NGOs have criticized APP on environmental grounds. According to a Friends of the Earth report from 2005, APP has cleared over 280,000 hectares of rainforest in the past decade, and planned to cut another 300,000 over the next five years.
The company has been at the center of many environmental controversies and has been accused of being involved in illegal logging in Cambodia and in Indonesia. The company is also known for defaulting on debt repayments in 2001, during a period of wide-scale financial problems in the South East Asia region.
In 2003, APP signed a Memorandum of Understanding with the World Wildlife Fund, but this ended six months later after WWF refused to approve the environmental management plan, and questioned the figures APP was supplying.
Despite the failure of the WWF partnership, APP entered into a five year partnership with Rainforest Alliance in 2005. This partnership was supposed to allow Rainforest Alliance to identify and monitor high conservation value forest within four concessions managed by APP in Pulau Muda, Serapung, Siak, and Bukit Batu, and provide independent "verification statements" to attest to the scope and results of the company's efforts to protect these high conservation value areas. Rainforest Alliance made a number of requests for changes in the management of these areas in the first year of the contract, and found that the situation had deteriorated by late 2006 and some areas had been cleared, leading Rainforest Alliance to terminate the agreement in February 2007, stating:
The company has not demonstrated a comprehensive, consistent or dedicated approach toward conservation management necessary to maintain or enhance the forest ecosystems fundamental to the survival of the High Conservation Value Forests present there.
In February 2014, the Rainforest Alliance announced it will evaluate the progress of APP’s forest conservation policy and commitments, including its pledge to stop clearing natural forests across it supply chains in Indonesia. Upon re-engaging with APP, Richard Donovan, the organization’s Vice President of Forestry said: “There is strong commitment at the highest levels of the organization, which signals that APP is serious this time around."  
In November 2007, Forest Stewardship Council (FSC) formally disassociated itself with APP, rescinding the rights of APP to use its logo. On the termination of all ties with the FSC in 2007, a spokesman for WWF commented "Apparently the company has decided to run a global propaganda campaign rather than protect forests with high conservation values. "
In March 2008, an investigation by an environmental coalition called Eyes on the Forest showed evidence of a new road built by APP, heading through the Kampar peninsula, one of the world's largest contiguous tropical peat swamp forests, with more carbon per hectare than any other ecosystem on Earth. The investigation found tracks on the new road of the critically endangered Sumatran Tiger, whose wild population has been reduced to less than 500 individuals. APP claimed that it was building this state-of-the-art, paved highway for the benefit of the local communities, though satellite imagery shows that the road does not go anywhere near the two settlements. The authors of the report stated:
We strongly urge APP to join the ranks of responsible businesses and conduct its operations within the law.
In June 2013, APP published its Sustainability Roadmap Vision 2020. As part of an update to its “Vision 2020” plan and Forest Conservation Policy, APP announced an absolute deadline of August 31, 2013 for all natural forest wood felled prior to February 1, 2013 to reach its pulp mills. No natural forest fiber will be allowed in APP operations past this date.
In late 2012, APP approached FSC, stating that they had undergone fundamental changes and would therefore like to enter into a constructive dialogue on the possibility of renewed associated with the FSC. In November 2013, the FSC Board of Directors welcomed this announcement and expressed interest in APP’s re-association with the FSC by following APP’s process of achieving its Forest Conservation Policy (FCP) and compliance with the FSC Policy for Association.
Previous Greenpeace Campaigns
On 8 June 2011, Greenpeace launched "Barbie, It's Over", an international campaign criticising Mattel's use of Asia Pulp & Paper's products in its packaging, particularly in its line of Barbie products. Within two days of the campaign's start, Mattel ordered its packaging suppliers to stop buying from Asia Pulp & Paper pending an investigation into Greenpeace's deforestation allegations, and further ordered its suppliers to report on how they source materials. Asia Pulp & Paper welcomed Mattel's response, believing that Mattel's investigation would conclude that its "packaging materials are more than 95% recycled paper sourced from around the world."
On 5 October 2011, Phil Radford of Greenpeace announced that Mattel stated that it would no longer purchase pulp and paper products from Asia Pulp & Paper due to the effects that its logging practices had on the Sumatran tiger population.
Sumatran Tiger incident
During late July 2011 Greenpeace revealed images and footage on their website that showed a critically endangered Sumatran tiger. This tiger had become trapped by an animal snare at the edge of an APP concession, and had been there for at least seven days, without food or water. Attempts to tranquilise and rescue the tiger failed due to its poor condition of health. APP stated that the trap was set by local villagers and was intended to target small mammals.
In February 2012, WWF listed US toilet papers that may have a direct impact on the 400 Sumatran tigers left in the wild.
To help conserve this endangered species, APP has created a 106 000 hectare sanctuary, Senepis Buluhala Tiger Sanctuary from four companies logging concessions. The sanctuary is surrounded and protected by production forests, where workers are continually on guard for illegal logging and wild fires that threaten the endangered Sumatran Tigers’ habitat.
Ramin trees Gonystylus are legally protected under Indonesia’s laws and its national CITES regulations. Sumatra’s peat swamp forests are a key ramin habitat. In 2012 Greenpeace did an expose video on APP's illegal logging practices. In the video they show logs from ramin trees sitting in an APP pulp yard.
According to Greenpeace in March 2012, APP’s main pulp mill in Indonesia (Indah Kiat Perawang) mixes illegal ramin logs regularly with other rainforest species in its pulpwood supply. APP denied the allegations, stating “APP is grateful to Greenpeace for bringing this report to our attention. We take very seriously any evidence of violation of the regulations concerning the protection of endangered tree species…APP maintains a strict zero tolerance policy for illegal wood entering the supply chain and has comprehensive chain of custody (CoC) systems to ensure that only legal wood enters its pulp mill operations.”  Since Indonesia banned the logging of and trade in ramin in 2001, more than one quarter of this ramin habitat has been cleared – much of this from areas currently supplying APP. Government maps show that 800,000ha (28%) of Sumatra’s peat swamp forests were cleared between 2003 and 2009. In 2003, 80% of Sumatra’s peat swamp forests, a key ramin habitat, were also identified as critical habitat for the survival of Sumatran tigers.
In 2004, Zhejiang Hotels Association announced that it would no longer purchase APP products because of the firms illegal logging activities in Yunnan province, leading APP to threaten to sue to company. The suit was later dropped because of a major publicity campaign by Greenpeace China.
According to Asia Times Online, APP’s business model is a tactically aggressive one: it turns huge profiles by quickly stripping forests bare, exploiting age-old forests and indigenous peoples, and leaving town before the environmental consequences are felt.
An investigation published in March 2008 by an environmental coalition called Eyes on the Forest showed evidence of a new road built by APP, heading through the Kampar peninsula, one of the world's largest contiguous tropical peat swamp forests, with more carbon per hectare than any other ecosystem on Earth. The investigation found tracks on the new road of the critically endangered Sumatran Tiger, whose wild population has been reduced to less than 500 individuals. APP claimed that it was building this state-of-the-art, paved highway for the benefit of the local communities, though satellite imagery shows that the road does not go anywhere near the two settlements.
The authors of the report stated:
We strongly urge APP to join the ranks of responsible businesses and conduct its operations within the law.
In January 2008, the office retailer Staples ended their 11-year relationship with APP, which had formerly supplied between 5 and 9% of the paper sold at the chain "due to their clear lack of progress in improving their environmental performance." Other companies including Office Depot and Wal-Mart had cut ties previously on environmental grounds, and these have been followed more recently by Australian retailer Woolworths Limited.
In 2010, Patrick Moore, a former Greenpeace activist, describes APP as not responsible for deforestation but that it is caused mostly by locals “illegally encroaching on forests in search of better livelihoods. By employing Indonesian people, APP is reducing deforestation, as more employment means less poverty, which means less pressure to move into the forest.” 
In 2011, when asked if he believes APP is sincere in reforming its logging practices, Dorjee Sun, CEO of Carbon Conservation, stated that. “Change in large organizations always takes time, so our goal by 2020 is to build sustainability practices, targets and a roadmap with accountable milestones which will result in true sustainability throughout the entire corporation.” 
- "Company Overview of Asia Pulp & Paper Co. Ltd.". Retrieved 20 September 2013.
- APP-China Sustainability Report 2009, APP, Bund Center, Shanghai, China, Nov. 2010.
- APP-China Sustainability Report 2009, APP, Bund Center, Shanghai, China, Nov. 2010, p. 7.
- Bellman, Eric (15 May 2012). "Asia Pulp & Paper Tightens Forest-Conservation Efforts". Wall Street Journal.
- "Asia Pulp & Paper Pledges ‘Sustainable Forest Management’". Environmental Leader. 6 June 2012.
- Gyekye, Liz (8 June 2012). "APP unveils 2020 Sustainability Roadmap". Packaging News.
- Gyekye, Liz (30 November 2012). "APP receives SVLK timber legality certification for ninth mill". Packaging News.
- Butler, Rhett (5 February 2013). "The beginning of the end of deforestation in Indonesia?". Mongabay.
- "A new era for APP". The Forest Trust. 19 February 2013.
- Ho, Yudith (5 February 2013). "Asia Pulp and Paper Halts Clearing in Indonesian Natural Forests". Bloomberg.
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- "Logging the good news". The Economist. 25 May 2013.
- Sutherlin, Laurel (5 February 2013). "Rainforest Action Network Responds to Asia Pulp and Paper’s New Forest Commitments". Rainforest Action Network.
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- The Ramin Paper Trail Asia Pulp & Paper Under Investigation – Part 2 in short Greenpeace 1 March 2012
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- "Rainforest Alliance, Peatland Experts to Evaluate APP Progress". Environmental Leader. 10 February 2014.
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- Bloomberg.com Staples Ends Contracts With Asia Pulp on Environment. 7 February 2008. Staples Ends Contracts With Asia Pulp on Environment (Update1), Heather Burke – 7 February 2008 21:52
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- Asia Pulp & Paper
- The Forest Trust
- APP Watch Blog – NGO exchange of information about the ecological, social and economic record of Asia Pulp & Paper in Indonesia and elsewhere
- Friends of the Earth Briefing on APP's record
- Does chopping down rainforests for pulp and paper help alleviate poverty in Indonesia? – Mongabay.com's deconstruction of APP's environmental, social, and economic claims
- The beginning of the end of deforestation in Indonesia? – Mongabay.com's review of APP's new environmental commitments and Forest Conservation Policy