[asia-apec 155] Suharto's global forestry interests

[George J. Aditjondro]

Article in The Nation, Bangkok, September 9, 1996:

SUHARTO CLAN'S GLOBAL FORESTRY INTERESTS
George J. Aditjondro

A new trend of South-South colonialism has emerged recently, where southern
transnational companies are making heavy investments in more backward
Thirld World countries. This observation was raised by a spokesperson for
the World Rainforest Movement, Marcus Colchester, in an interview with the
Sydney Morning Herald , on Saturday, August 31, 1996.

In this article, titled "How Asia's logging companies are stripping the
world's forests," several examples of this new trend has been mentioned,
with Malaysian and Indonesian companies at the forefront.

The only Indonesian company mentioned explicitly is Musa, which has a
60,700-hectare concession in Suriname. This is actually an understatement,
because Indonesian companies have also began to log, or began large timber
plantations and associated wood-based industries, in several other
countries. The brief reference to MUSA is also an understatement, because
it omits the high-power backing which this company enjoys in Suriname and
in Indonesia. It is, in fact, a company owned by President Suharto's
relatives from his home village of Kemusu in Yogyakarta, which has branch
offices in Suriname, Hong Kong, and Singapore.

Hence, the following cases delineate some of the (known) overseas forestry
and/or wood-processing industries controlled or owned by the Suharto clan.

How military regimes support each other

The first Indonesian investor in Burma is PT Rante Mario, one of the
numerous companies under the Humpuss Group, controlled by President
Suharto's youngest son, Hutomo Mandala Putra, aka as Tommy Suharto. Through
a joint venture with a Burmese state company, Myanmar Timber Enterprise
(MTI), PT Rante Mario is planning to build a wood processing industry with
an investment of US$ 75 million (Bt 1.8 billion).

In the first five years (since 1994), this joint venture will only produce
logs and lumber. After that, it will go into plywood production.

"Rante Mario will become a test case in involving foreign investors in
Myanmar in forest management," said Herry Sunardi, general director of PT
Rante Mario to an Indonesian business magazine, Swasembada , in its
December 1994 edition (page 41).

"If this projects succeeds, then other investors will be attracted, and
that is when Myanmar will be a challenge to Indonesia's timber export
market," adds the Humpuss Group executive.

Sunardi bases his argument on his data of Burma's excellent forestry
potentials. According to him, from Burma's total forest of 66 million
hectares, 32.4 million consists of high-density forest.

The Humpuss executive's data, however, contradicts some other sources.
According to WWF data, Burma's natural environment is already worse off
than Indonesia. As published on page 42 in the November 20, 1995 edition of
another business journal, Warta Ekonomi , Burma has already lost 71per cent
of its natural habitat, compared with 49 per cent in the case of Indonesia.


Area wise, Indonesia still has nearly 750,000 Km2 of natural habitat, while
Burma only has nearly 226,000 Km2. So, one can say that to conserve
Indonesia's own natural forest, President Suharto is allowing his beloved
youngest son to destroy a friendly nation's forest.

No wonder that Suharto so vehemently opposes any "Western interference" in
Asean's "domestic affairs", after the Slorc's Myanmar -- not Aung San Suu
Ky's Burma -- has been accepted as an observer in Asean.

Especially since another son of the Indonesian ruler is also involved in
the telecommunication industry in Burma. PT Elektrindo Nusantara, which is
51% owned by Bambang Trihatmojo, Suharto's second son, has followed his
younger brother's step by investing in small telephone central units for
256 subscribers in Rangoon, as a pilot project for a much bigger deal with
the SLORC (Swasembada , Aug1995).

Forestry interest in Malaysia, Papua New Guinea, and China

While his younger brother operates directly in the global forestry sector,
Tommy's older brother, Bambang Trihatmojo, operates in this field more
indirectly. Bambang, who himself controls his own business empire, the
Bimantara Group, is a major shareholder in another conglomerate, the Barito
Pacific Group. This group is led by a Sino-Indonesian businessman, Prajogo
Pangestu. In the group's bank, Andromeda Bank, Bambang owns 25 per cent
shares, Prajogo 50 per cent, and another Sino-Indonesian businessman, Henry
Pribadi, also per cent.

Under Prajogo Pangestu's leadership, Barito Pacific has ventured into
various forestry operations in Malaysia and Papua New Guinea. Two years
ago, Barito Pacific acquired a Malaysian company, Cash (Construction and
Supplies Houses Berhad) for M$ 1.3 billion (Bt 13 billion), to reforest
500,000 hectares of land in Sabah, East Malaysia.

Apart from that, Prime Minister Mahathir has contracted Cash to establish a
one million hectares timber plantation in Malaysia. To finance that
project, the Malaysian government has issued 'timber bonds' to be sold on
US and European stock-markets, with the full support of Mahathir.

Apart from Cash, Prajogo Pangestu also owns three other overseas forestry
operations, namely Rindaya Wood Processing in Malaysia, Lombda Pty Ltd in
Papua New Guinea, and Nantong Plywood Industry in Shanghai, China
(Info-Bisnis, April 1994; Swasembada, December 1994: 41; Asia, Inc.,  July
1995). With all these business connections between the Indonesian and
Malaysian elites, it is also no wonder why Mahathir is as vehemently
opposed as Suharto against international criticism of their countries
environmental policies.

The Musa group in Suriname

Suharto is indeed a very family-type person, who always wants to please all
his family members. Not only his immediate family, but even his relatives
in his home village of Kemusu in the province of Yogyakarta. The notorious
Musa (Mitra Usaha Sejati Abadi), which has been mentioned in the SMH
article, is owned by Yayasan Kemusuk Somenggalan, a family foundation of
Suharto's relatives in his childhood village.

Musa, which first came to Suriname in 1993, has had big ambitions in this
country, with a large ethnic Javanese population. Despite protests from the
Afro-Maroon people, it soon managed to obtain logging rights of
150,000-hectare in the Apura district in West Suriname, without the
approval of Suriname's parliament.

According to an Indonesian independent journalist's bulletin, Suara
Independen , Musa's investment approval was obtained after visits to
Indonesia by Suriname's Minister for Social Affairs, Willy Soemita, who is
of Javanese origin. A subsequent visit of Suriname's president, Mr
Venetiaan, to Indonesia in 1994, had established a 20-years cooperation
agreement between Indonesia and Suriname in the field of forestry.

Despite international protests from the world rainforest movement, Musa is
said to stand side by side with the Berjaya Group from Malaysia and another
Indonesian company, PT Suri Atlantic, in eyeing another concession rights
of more than 1 million hectare. The Indonesian anti-deforestation
organisation SKEPHI has found inextricable links that Suri Atlantic may be
coming from the same timber industry sources in Indonesia, as Musa did
(SKEPHI press release  on Apakabar , 28 Aug 1995; Suara Independen, Aug
1995; Guardian Weekly,  July 21, 1996).

So, from this case we can see, how successfully Suharto has transformed his
international political role as head of the Non-Aligned Movement into
financial assets for his extended family, from his children all the way to
his relatives in his home village of Kemusuk in Yogyakarta.