KUCHING - The State Government has taken an unprecedented step to resume the planting of trees on land alienated earlier for the Borneo Pulp & Paper project, a press statement from the Ministry of Resource Planning and Management said yesterday.

It said the step was taken after lengthy and careful consideration as it was necessary to protect the interest of the State and its people.

"It is important for Sarawak to move ahead with the project in order to develop a viable pulp and paper industry in Sarawak and more importantly, to further diversify the State's economy," the statement said.

In 1996, the Sarawak Timber Industry Development Corporation (STIDC), a state statutory body, entered into a joint venture with Asia Pulp & Paper Co. Ltd. (APP) to implement the project. APP is the majority shareholder and the project manager under the joint venture agreement.

However, six years on, the construction of the pulp mill has yet to start and the development of commercial tree plantation is far behind schedule.
The statement said on its part, STIDC had procured all the necessary land resources, forest resources and all the necessary approval to enable the project to move ahead.

It explained that on March 12 last year, APP had unilaterally declared a debt moratorium against its worldwide creditors of over USD13 billion (more than RM50 billion).

On July 3 the same year, APP was suspended and delisted from the New York Stock Exchange and one year later, there did not seem to be any significant progress in its complex debt restructuring, it added.

The statement added that under these circumstances, STIDC had, on October 15 last year, made an offer to purchase the shares of APP in the joint venture companies.

However, some six months later, the parties had not reached a settlement and the offer by STIDC lapsed on April 30 this year. In addition, on May 9 this year, the syndicated lenders served a letter of demand on BPP, demanding payment of all outstanding debts.