China's wood demand may hurt Indonesia forests
JAKARTA, Indonesia: Indonesia may face an onslaught of illegal logging if China's burgeoning paper industry doesn't find other sources of wood supply to feed its pulp mills, a foreign bank executive says.
China's threat to Indonesian forests -- already denuded by decades of rampant illegal logging -- reflects the widening impact that China's voracious demand for raw materials is having on global markets and the environment.
In recent years, Beijing has encouraged the growth of China's paper industry to promote self-sufficiency.
Those efforts are paying off, with China's paper output growing 21 percent on-year from January to July and paperboard production increasing 25 percent in the same period, according to China's General Administration of Customs.
Domestic plantations will be unable to meet the demand from China's rapidly expanding pulp and paper mills for the next 10-15 years, said World Markets Managing Director Don G. Roberts from the Canadian Imperial Bank of Commerce.
"These pulp mills are starting up without supplies to run them,'' Roberts said on the sidelines of a conference over the weekend hosted by the Indonesia-based Center for International Forestry Research.
"The threat is ... that (China's demand) will give an incentive for fiber exports from Indonesia into China that perhaps aren't from sustainable sources,'' he said.
A 1998 ban on felling domestic old-growth trees has made China almost completely dependent on imported wood from Malaysia, Russia, Burma, Indonesia and Gabon.
According to China's General Administration of Customs, Chinese pulp imports rose 29.7 percent in 2004.
The expected closure of thousands of smaller-scale mills that use non-wood fiber in favor of larger, modern facilities which use wood fiber will also raise demand for imports.
Without strict controls, Indonesia's forests stand to lose in the face of China's thirst for raw materials and the cash-strapped Indonesian government's search for revenue, analysts say.
A China-based firm recently invested millions of dollars to fund 80 percent of United Fiber Systems, a pulp and paper venture in Indonesia.
The Singapore-incorporated Asia Pulp & Paper Co. is also contributing to China's capacity growth with plans to invest US$1.9 billion (euro1.5 billion) in an existing Hainan-based facility.
Environmentalists accuse APP -- the world's 10th largest paper company -- of allegedly using unsustainable forestry practices on Indonesia's island of Sumatra. APP denies the claims.--AP
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