Asia Pulp & Paper
Encyclopedia
Asia Pulp & Paper, also known in the paper industry as APP is based in Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...

, is one of the largest pulp
Pulp (paper)
Pulp is a lignocellulosic fibrous material prepared by chemically or mechanically separating cellulose fibres from wood, fibre crops or waste paper. Wood pulp is the most common raw material in papermaking.-History:...

 and paper
Paper
Paper is a thin material mainly used for writing upon, printing upon, drawing or for packaging. It is produced by pressing together moist fibers, typically cellulose pulp derived from wood, rags or grasses, and drying them into flexible sheets....

 companies in the world
World
World is a common name for the whole of human civilization, specifically human experience, history, or the human condition in general, worldwide, i.e. anywhere on Earth....

. It was founded by Eka Cipta Widjaja
Eka Cipta Widjaja
Eka Tjipta Widjaja is the founder of the Sinar Mas Group, which was one of the largest conglomerates during the Indonesian New Order period. His flagship bank, BII or Bank International Indonesia, bankrolled many of his other ventures that made him at one time the king of copra...

, who had significant ties to the Suharto ruling family in Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...

. APP claims to obtain 80-90% of the fiber for papermaking from sustainable plantations. While several organizations continue to claim that a significant portion of its raw materials come from rainforests in addition to farmed wood, APP recognizes an imperfect early track record and is now working actively to rely on sustainable plantations for future production and to promote preservation of rainforests and peat lands.

It can produce about 2 million tons of pulp and more than 5 million tons of paper and packaging materials per year. Part of the Sinar Mas Group
Sinar Mas Group
Sinar Mas Group is one of the largest conglomerates in Indonesia. It was formed in 1962. It has many subsidiaries including Asia Pulp & Paper and palm oil producer PT SMART....

, it operates plants in Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...

 and China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...

 and sells to clients in more than 60 countries around the world. In the late 1990s various NGO's made allegations of poor environmental practices, but in recent years the company has defended itself more vocally while also making vigorous reforms in its management of land and water and its cooperation with local and national governments and other organizations. APP has announced a partnership with Carbon Conservation, an environmental and sustainability consulting firm, to craft Vision 2020, a roadmap to guide sustainability principles, goals and program execution across all aspects of the company’s Indonesian operations through the year 2020.

The company has been at the center of many environmental controversies and has been accused of being involved in illegal logging
Illegal logging
Illegal logging is the harvest, transportation, purchase or sale of timber in violation of laws. The harvesting procedure itself may be illegal, including using corrupt means to gain access to forests; extraction without permission or from a protected area; the cutting of protected species; or the...

 in Cambodia
Cambodia
Cambodia , officially known as the Kingdom of Cambodia, is a country located in the southern portion of the Indochina Peninsula in Southeast Asia...

 and in Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...

, and has breached agreements with three major environmental organizations. The company is also well known for defaulting on debt repayments in 2001, during a period of wide-scale financial problems in the South East Asia region.

In recent years, however, the company has significantly increased spending to advance sustainability and environmental protection. By the end of 2009, APP-China has invested more than 5 billion RMB in environmental protection, with emission indicators said to exceed national and international standards. At the end of June 2008, APP-China's six main pulp and paper mills and two forestry companies completed a greenhouse gas assessment (GHS) covering the entire plantation-to-industry chain, making APP-China the first Chinese pulp and paper company to conduct a comprehensive carbon footprint analysis. In 2009, APP's Gold East Paper company completed the GHS by Carbon Trust and became the first Chinese paper producer to pass PAS 2050.

To address the many challenges from limited raw material resources in Asia for pulp and paper production, APP has introduced a program called Plantation-Pulp-Paper Integration. This program combines advanced scientific forest management methods for sustainable plantations with supply chain management across its product lines. APP has also adopted a "Paper Contract with China Manifesto" that calls for the adoption of pollution standards. Key indicators being tracked for improved environmental stewardship include water consumption per ton of pulp, wastewater discharge per ton of pulp, COD emissions per ton of pulp/paper, all of which are said to now be well below international standards.

History

Asia Pulp and 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. 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, an experiment

The company Pindo Deli under control of APP in Feb. 1994, and by 1997 its paper machine #8 and #9 would both have begin operation with production capacity of 240,000 tons per year. In 1998,
paper machine #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, and Hainan Jinhai Pulp and 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.

Financial issues

In 1994, the company moved its headquarters from Indonesia to Singapore and began to borrow money to expand aggressively. It was soon heavily leveraged
Leverage (finance)
In finance, leverage is a general term for any technique to multiply gains and losses. Common ways to attain leverage are borrowing money, buying fixed assets and using derivatives. Important examples are:* A public corporation may leverage its equity by borrowing money...

; 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
Jakarta
Jakarta is the capital and largest city of Indonesia. Officially known as the Special Capital Territory of Jakarta, it is located on the northwest coast of Java, has an area of , and a population of 9,580,000. Jakarta is the country's economic, cultural and political centre...

-based subsidiary Indah Kiat sued the underwriter and holders of an issue of debt (in United States dollar
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....

s) it had issued in 1994 under New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...

 law; it sued, however, in Indonesia, and in February 2007 the Indonesian court declared the debt invalid.

Environmental issues and logging practices

APP-China invested over 300 million RMB in environmental conservation facilities and activities in 2009 alone, and had invested over 5 billion RMB in environmental protection by 2009. APP-China inn 2009 also achieved 100% treatment of its solid waste from its six major pulp and paper mills. APP-China was honored in 2009 with the "Award of Contribution to Low Carbon Business (Multinational Corporation)" at the first meeting of the Low Carbon Forum hosted by the National Committee of the Chinese People's Political Consultatative Committee (CPPCC) and the China Association for Science and Technology. APP-China also received the "Green China Campaign-2009 Scientific Development of Forest Plantation Special Award" by the China Green Foundation and the State Bureau of Forestry, Center for Economic Development Research. Further, APP-China received the "2009 Scientific Forest Plantation Development Award" by the China Green Times.

In November 2007, Forest Stewardship Council
Forest Stewardship Council
The Forest Stewardship Council is an international not-for-profit, multi-stakeholder organization established in 1993 to promote responsible management of the world’s forests. Its main tools for achieving this are standard setting, independent certification and labeling of forest products...

 (FSC) decided to rescind the rights of APP to use their logo, following pressure from other FSC Stakeholders, and a new policy approach by FSC Board of Directors.

A 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 forest
Peat swamp forest
Peat swamp forests are tropical moist forests where waterlogged soils prevent dead leaves and wood from fully decomposing, which over time creates a thick layer of acidic peat...

s, with more carbon per hectare than any other ecosystem on Earth. The investigation found tracks on the new road of the critically endangered
Critically endangered
Version 2010.3 of the IUCN Red List of Threatened Species identified 3744 Critically Endangered species, subspecies and varieties, stocks and subpopulations.Critically Endangered by kingdom:*1993 Animalia*2 Fungi*1745 Plantae*4 Protista-References:...

 Sumatran Tiger
Sumatran Tiger
The Sumatran tiger is a tiger subspecies that inhabits the Indonesian island of Sumatra and has been classified as critically endangered by IUCN in 2008 as the population is projected at 176 to 271 mature individuals, with no subpopulation having an effective population size larger than 50...

, 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.


APP was also found to be conducting illegal logging in Yunnan Province in China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...

 in 2005,, while a subsidiary of the firm called "Green Rich" was caught illegally logging in Cambodia
Cambodia
Cambodia , officially known as the Kingdom of Cambodia, is a country located in the southern portion of the Indochina Peninsula in Southeast Asia...

, leading a 2005 investigation into the company to conclude:

APP's business model is a tactically aggressive one: it turns huge profits by quickly stripping forests bare, exploiting age-old forests and indigenous peoples, and leaving town before the environmental consequences are felt. By the time communities and governments lodge complaints and lawsuits, APP has divested itself of local interests and assets.


The firm has made efforts to improve its green image, hiring the PR firm Ogilvy & Mather
Ogilvy & Mather
Ogilvy & Mather is an international advertising, marketing and public relations agency based in Manhattan and owned by the WPP Group. The company operates 497 offices in 125 countries with approximately 16,000 employees.-History:...

, and ran advertisements in The Times
The Times
The Times is a British daily national newspaper, first published in London in 1785 under the title The Daily Universal Register . The Times and its sister paper The Sunday Times are published by Times Newspapers Limited, a subsidiary since 1981 of News International...

 and the New York Times claiming that the company was committed to "conservation beyond compliance" . 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 2003, APP signed a Memorandum of Understanding
Memorandum of understanding
A memorandum of understanding is a document describing a bilateral or multilateral agreement between parties. It expresses a convergence of will between the parties, indicating an intended common line of action. It is often used in cases where parties either do not imply a legal commitment or in...

 with the World Wide Fund for Nature
World Wide Fund for Nature
The World Wide Fund for Nature is an international non-governmental organization working on issues regarding the conservation, research and restoration of the environment, formerly named the World Wildlife Fund, which remains its official name in Canada and the United States...

, but this ended six months later after WWF refused to approve the environmental management plan, and questioned the figures APP was supplying. WWF then began lobbying buyers worldwide to boycott APP products.
APP responded to early boycotts and protests with threats of legal action. Zhejiang Hotels Association announced in 2004 that it would no longer purchase APP products because of the firms illegal logging activities in Yunnan province, leading APP to threaten sue to company. The suit was later dropped because of a major publicity campaign by Greenpeace China
Greenpeace China
Greenpeace East Asia is an office serving the East Asia region of the global environmental organization Greenpeace. It is one of the largest international NGOs in China.-History:Greenpeace East Asia's first China office was opened in Hong Kong in 1997...

, who claimed:
APP was wanting to scare the hotel association to revise its green procurement policy, but it didn’t count on the huge public support (for the defendant).


Despite the failure of the WWF partnership, APP entered into a five year partnership with Rainforest Alliance
Rainforest Alliance
The Rainforest Alliance is a non-governmental organization with the published aims of working to conserve biodiversity and ensure sustainable livelihoods by transforming land-use practices, business practices and consumer behavior. It is based in New York City, and has offices throughout the...

 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 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
Office Depot
Office Depot is a supplier of office products and provides many services. The company's selection of brand name office supplies includes business machines, computers, computer software and office furniture, while its business services encompass copying, printing, document reproduction, shipping,...

 and Wal-Mart
Wal-Mart
Wal-Mart Stores, Inc. , branded as Walmart since 2008 and Wal-Mart before then, is an American public multinational corporation that runs chains of large discount department stores and warehouse stores. The company is the world's 18th largest public corporation, according to the Forbes Global 2000...

 had cut ties previously on environmental grounds, and these have been followed more recently by Australian retailer Woolworths Limited
Woolworths Limited
Woolworths Limited is a major Australian company with extensive retail interest throughout Australia and New Zealand. It is the:* largest retail company in Australia and New Zealand by market capitalisation and sales...

.

Mattel

On June 8, 2011, Greenpeace
Greenpeace
Greenpeace is a non-governmental environmental organization with offices in over forty countries and with an international coordinating body in Amsterdam, The Netherlands...

 launched "Barbie, It's Over", an international campaign criticising Mattel
Mattel
Mattel, Inc. is the world's largest toy company based on revenue. The products it produces include Fisher Price, Barbie dolls, Hot Wheels and Matchbox toys, Masters of the Universe, American Girl dolls, board games, and, in the early 1980s, video game consoles. The company's name is derived from...

's use of Asia Pulp & Paper's products in its packaging, particularly in its line of Barbie
Barbie
Barbie is a fashion doll manufactured by the American toy-company Mattel, Inc. and launched in March 1959. American businesswoman Ruth Handler is credited with the creation of the doll using a German doll called Bild Lilli as her inspiration....

 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 October 5, 2011, 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
Greenpeace
Greenpeace is a non-governmental environmental organization with offices in over forty countries and with an international coordinating body in Amsterdam, The Netherlands...

 revealed images and footage on their website that showed a critically endangered Sumatran tiger
Sumatran Tiger
The Sumatran tiger is a tiger subspecies that inhabits the Indonesian island of Sumatra and has been classified as critically endangered by IUCN in 2008 as the population is projected at 176 to 271 mature individuals, with no subpopulation having an effective population size larger than 50...

. 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 denied any responsibility, despite reports to the contrary.

Reception

English writer George Monbiot
George Monbiot
George Joshua Richard Monbiot is an English writer, known for his environmental and political activism. He lives in Machynlleth, Wales, writes a weekly column for The Guardian, and is the author of a number of books, including Captive State: The Corporate Takeover of Britain and Bring on the...

stated that "Asia Pulp and Paper (APP) could make a fair claim to being one of the most destructive companies on the planet."

External links

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