ENVIRONMENT-INDONESIA: Unholy Alliance Under Fire in Finland

HELSINKI, May 16

(IPS) By Linus Atarah

For two years Finnish NGOs and environmental activists have been up in arms against UPM-Kymmene, one of the country's biggest forestry companies, over its activities in Indonesia. They are calling for UPM to withdraw from Indonesia, where they say its partnership with an Indonesian firm, Asia Pacific Resources International Holdings Ltd. (APRIL), is depleting rain forests and dispossessing local communities of their land.

But the Finnish company has no intention to withdraw, claiming a clean record certified by specialised auditing firms. ''There is no reason why we should (pull off). Our involvement in Indonesia has introduced changes in the environmental behaviour of APRIL'', Pehr-Eric Patt, one of UPM's executives told IPS.

The environmentalists' struggle has been condensed in an 88- page book - 'Calculated Risk - launched last week in Helsinki, which contains first-hand accounts and data on the damage caused by Finnish forestry and paper concerns operating in developing countries.

Otto Miettinen, one of the book's two authors, spent one-and- half months in Indonesia last year, talking to local NGOs, community groups and environmental activists in Sumatra, where APRIL has paper mills and logging concessions. Miettinen and co-author Tove Selin are activists of Friends of the Earth, an environmental group.

For the past ten years Finnish non governmental organisations (NGO) working on environmental issues have received a number of requests from third world organisations for assistance to fight activities of Finnish companies, activist Thomas Wallgren said.

''The Finnish forestry sector, is one of the greatest players in global environmental and development politics'', said Wallgren, who also wrote the foreword to the book. ''Since Finnish forestry companies are becoming more international and more powerful, it is the responsibility of the Finnish people to carefully watch what their companies are doing abroad and whether they are doing a dignified job,'' he said, adding that the companies do not have a clean bill of records.

The book describes in detail the activities of Asia Pacific Resources (APRIL), an Indonesian company and one of the biggest paper mill companies in south-east Asia, operating in the province of Riau in Sumatra, Indonesia.

Owned by Sukanto Tanoto, an ethnic Chinese who's other business interests includes mining, agribusiness, banking and insurance, APRIL signed two years ago a joint venture agreement with Finland's UPM- Kymmene to operate in Indonesia, the book says. Both companies jointly own a paper mill factory in China, where most of the pulp resulting from APRIL's logging in Sumatra goes to, and they have also reached an understanding - now on hold - to swap shares in their respective paper divisions.

The core of the business, the book claims, is the destruction of Riau's natural rain forests to extract pulp, a process in which the entire ecosystem -included local communities often violently evicted from their land- are becoming victim. Some local people have been killed and others have been jailed as a result of their resistance to the companies' activities, 'Calculated Risk' says.

APRIL's 280,000-hectare plantation in Riau - acquired through a government concession - contains rare and valuable forest trees, say the activists, but they are being cut off and replaced with fast- growing tree species such as acacia and eucalyptus that cannot provide a habitat to many endangered plant and animal species. The activists also dispute APRIL's land concession, which they claim has been actually confiscated from local communities who were not consulted in the acquisition process and are often cheated or forced to take meagre compensation payments.

Although the Finnish corporation is not directly involved in such activities, nor does it own production facilities in Indonesia, the book maintains that UPM is the main source of funds fuelling APRIL's businesses. Without financial backing from UPM, APRIL would have fallen in the chain of business failures stemming from the Asian financial crisis, the book says.

''UPM-Kymmene comes to bear the moral responsibility for APRIL's actions, especially in Riau because UPM has entered into co- operation with APRIL and because UPM finances APRIL'', the authors say. The alliance is seen as an attempt by the two forestry and paper giants to increase their market share on a global scale. UPM is a transnational corporation with a wide presence in other parts of the world, but it did not have interests in Asia until it begun dealing with APRIL, they add.

For APRIL, UPM appeared just in time. According to the book, 97 per cent of APRIL's paper is destined to foreign markets, but as regional sales were dramatically shrunk by the crisis, UPM provided its extensive networks in Europe and elsewhere to put the produce.

Patt, vice president of Business Development at UPM's Fine Paper division, denies that people have been evicted from their land in Riau. He says land ownership in Indonesia is fraught with uncertainties and very difficult to settle in land disputes.

He also stressed that APRIL's logging practices are line with a forestry management plan adopted by the Indonesian government, by which certain areas are designated for conservation and others for food production. The Finnish government also comes in for harsh criticism in the book, accused of treating the Indonesian government with ''padded gloves.'' According to the activists, president Martti Ahtisaari deliberately steered clear of human rights issues while visiting Indonesia in 1995, when general Suharto was still in command.

The Finnish president also awarded high state honours to Indonesian Forestry minister Djamaludin Suryohadikusumo and APRIL's Sukanto Tanoto when they visited Finland last year. This caused outrage among environmentalists. Several Finnish artists who had earlier received official awards returned their medals in protest. The book charges that the business alliance between APRIL and UPM could have never been secured without a seal of approval from the government in Helsinki.

''It would have been simply a surprise if the business deal in South-Asia had gone otherwise (as) political and economic stakes were so high'', the activists write. According to UPM's Patt, however, the company's environmentally-sound policies are part of a master plan, which is audited by the Socičté Generale de Surveilance (SGS), a well- known international auditing firm also specialised in forestry projects. APRIL has indicated that it has begun work on improving community relations.

It has also provided funds for an initial micro- business in various commercial activities that stand to benefit 500 families in the villages. However, the activists dismiss these as mere cosmetic dressings. ''APRILs impact on the local population is hardly remembered for its social development projects but rather for its ruthless methods in land disputes and the poor treatment of its workers'', they say.