As a major emitter of greenhouse gasses from deforestation and the caretaker of a large chunk of the world’s remaining tropical forest, Indonesia finds itself at the top of the United Nations’ climate change agenda.
Yet despite a pledge by Norway to give the country $1bn as part of the UN’s landmark programme to reduce emissions from deforestation (REDD), progress has been painfully slow because of weak governance and rampant corruption.
By Jacek Siwek of Asia Pulp & Paper
Indonesia is the largest of south east Asia’s economies. It is also home to the third largest expanse of tropical forest in the world. Matching the demands of a growing population to the protection of some of the world’s most valuable forestland is a tough challenge and one felt in many timber-producing developing nations. It is a challenge to which governments and companies are responding.
It’s a tough time to be a pulp producer – something at which South America excels: the eurozone crisis sent demand for paper plummeting in the second half of 2011 and things look set to remain bleak for a while with three major new projects due to come onstream in Brazil and Uruguay in the next year boosting supply further.
So Latin American companies – Brazil’s Fibria is the world’s biggest pulp producer and Chile’s Arauco and CMPC are also in the top five, with Brazil’s Suzano about seventh – would have to be mad to think of unleashing yet more capacity on a depressed market, wouldn’t they? Maybe not.
Doing business in partnership with Hugo Chávez does not usually go hand-in-hand with pleasing the market.
Yet investors piled into Chilean forestry and wood panel company, Masisa, on Monday after the Venezuelan president announced plans to create a joint-venture.