Scott Paper Quits Role in Indonesia Rain Forest Project

JAYAPURA, Indonesia —  Environmental groups are claiming victory following the decision by Philadelphia-based Scott Paper Co. to back out of a $600-million project to exploit one of Indonesia’s last virgin forests. But now they fear that a worse fate is yet to come.

Scott had set up the joint venture at the beginning of the year with Indonesia’s second-largest industrial company, PT Astra. Named PT Astra Scott Sellulosa, the joint venture had a 2-million-acre forest concession in the remote province of Irian Jaya, where it planned to build an integrated wood-chip pulp mill near the southern town of Merauke.

In announcing its decision to pull out of the project last month, Scott Worldwide President J. Richard Leaman said the company, which owned 60% of the joint venture, had determined that it could meet its future pulp needs elsewhere by using “more cost-effective recycled and high-yield fibers.”

Leaman said Scott was convinced that the project was environmentally sound and could still be carried out in a “sociologically responsible manner.”

Nonetheless, the pulp project became the focus of a worldwide campaign by environmental groups, which have raised concerns about the impact of development on quickly vanishing rain forests from Brazil to Indonesia.

It is believed to be the first time a major American company has pulled out a rain forest project since the campaign began several years ago.

A group called the Rainforest Action Network took out newspaper advertisements in the United States in October naming Scott Paper Chief Executive Philip E. Lippincott as one of eight men “who will decide the fate of your children.”

The conservation groups said the project would have depleted nearly a million acres of rain forest; new trees would have taken a generation to grow.

“We consider Scott’s decision a victory for the international environmental community,” said Hera Jhantani, a spokeswoman for SKEPHI, a non-governmental organization promoting forest conservation. “It doesn’t mean the problem is finished.”

Indeed as Jhantani’s remark indicated, environmentalists are now concerned that Scott’s decision may turn out to be a Pyrrhic victory. PT Astra has announced that it is holding talks with other firms to take over Scott’s role in the project. Speculation has centered on Japanese and South Korean companies.

“In the near term, things will be harder, because Scott was well known and, as an American company, it was publicly accountable for its actions,” said Martha Belcher, an American working with an Indonesia conservation group, Walhi. “We weren’t campaigning against Scott paper but against this project.”

Adds Tony Rahawarin, director of the Irian Jaya Rural Community Development Foundation: “Personally I felt bad about Scott’s decision. At least they were willing to sit down and talk with us.”

Barry Kotek, president of the joint venture company, said Scott so far had spent “less than $2 million” setting up a test plantation.

Kotek disputed claims by conservation groups that the project would have consumed a huge tract of rain forest, saying the final plan was to use only 200,000 acres out of a reservation of 1.3 million acres. The 200,000 acres would be planted with eucalyptus with a turnaround time of six to eight years.

The project promises to create 6,500 jobs in one of the most remote regions of Indonesia, where local residents still dwell largely in the Stone Age. Environmentalists argued that 25,000 primitive tribesmen would lose their homes.

The Indonesian government has expressed a keen interest in developing Irian Jaya and has granted another 1.5 million-acre forest concession to a joint venture with an Australian company, Perth’s Asmus MacLean Ltd.

Apart from the rain forest issue, the Scott project caused a controversy in Irian Jaya because it depended almost entirely on outside labor. The people of Irian Jaya have few skills and complain that their resources are being exploited with little returned to them.