Indonesian paper and pulp giant Asia Pulp & Paper Co. Ltd. (APP) withdrew its lawsuit against a hotel association in east China's Zhejiang Province on February 22. It had filed the defamation action against the Zhejiang Hotel Association in November, claiming that the association damaged its reputation by calling on its member hotels to boycott APP products.

The boycott was called in response to a November 16 Greenpeace report that criticized APP for widespread deforestation and accused it of violating China's forestry laws and devastating local biodiversity. The report received substantial media and public attention.

Two days after the report appeared, the Zhejiang Hotel Association called on 417 star-rated hotels in the province to boycott APP products. It said the association would consider the hotels' responses when conferring the "Green Hotel" designation in the future. More than 30 hotels joined the boycott.

On November 30, APP filed its legal action, demanding a public apology and more than 2.2 million yuan (US$265,000) in damages. Environmental groups nationwide soon rallied behind the Zhejiang Hotel Association.

On January 7 the State Forestry Administration (SFA) issued a circular on APP's project in Yunnan, which stated that in 2003 and 2004 APP acquired 24,709 cubic meters of lumber without a felling license. A total of 744 hectares of the area in question is in Lancang County.

Back in April 2004, an SFA research team expressed concerns about the fate of 2.4 million hectares of forest near the city of Simao. If the APP project there were fully realized, together with the possibility of damage from other wood processing companies, half of the natural forest would fall to axes.

The SFA directed the Yunnan forestry authorities to look into the APP issue in January this year. The provincial forestry department later submitted a report to the SFA and published it on its website on February 24.

The report admits that the forest involved with the APP project has been damaged, but says that local farmers are responsible for most of the illegal logging. The Yunnan government continues to support the APP project.

APP is headquartered in Singapore and has 16 major manufacturing facilities in Indonesia, China and Singapore.

The company has frequently come under fire for poor environmental practices, with Japan threatening a boycott of its products last year and Cambodia recently filing legal action against what it believes is an APP subsidiary for illegal tree harvesting.

APP has been involved for several years in debt-restructuring talks with creditors in the US, Europe, Japan and China. Some analysts believe that the alleged violations of China's forestry laws may complicate its negotiations with Chinese banks.

(China.org.cn, China Daily February 25, 2005)