Forestry investment manager New Forests has announced a joint venture partnership with Indonesian firm Sampoerna Agro to invest in a large-scale rubber plantation in Indonesia.
The New Forests Tropical Asia Forest Fund LP (“TAFF”) has purchased a 35% stake in PT Hutan Ketapang Industri (“HKI”), which manages a 100,150 hectare plantation forestry concession area in Ketapang regency, West Kalimantan province. It will enable HKI to expand the rubber plantation on the estate from the current 9,000 hectares to more than 30,000 hectares and will introduce additional conservation management areas throughout the concession.
“This investment is among the first institutional investments in large-scale, sustainable forestry in Indonesia,” said New Forests’ CEO, David Brand. “We are excited to be part of the shift in Indonesia’s forest sector toward more productive and responsible operations.”
“This partnership with New Forests is not only a positive development for HKI and Sampoerna Agro, but also for the broader forest sector and investment community in Indonesia,” remarked Marc Louette, CEO of Sampoerna Agro. “New Forests brings extensive international forestry experience and the community and environmental management expertise that will help advance HKI’s business objectives while ensuring its operations meet high standards for responsible business conduct and sustainability.”
Other activities include managing the estate with a combination of productive rubber plantation, conservation set asides, community forestry zones, and restoration of degraded areas. HKI will also adhere to the Forest Stewardship Council Principles & Criteria and follow the International Finance Corporation’s Environmental and Social Performance Standards.
The New Forests’ investment comes as the government of Indonesia is strengthening efforts to attract foreign investment and protect forest resources and peatlands.
TAFF is a $170 million investment backed by institutional investors, including European pension funds, development banks and European and American funds of funds. It is managed by New Forests with a mandate to establish a portfolio of high-quality sustainable timber plantations in tropical Asia.
“We believe the HKI business will demonstrate how responsible forestry investment can produce better results for everyone involved, creating shared value for investors and local communities. The TAFF investment will improve the capital structure of HKI and fund plantation expansion. The agreement between New Forests and Sampoerna Agro will also ensure that local communities are consulted and positively engaged in the project and that important ecosystem services are not only maintained but enhanced,” concluded Brand.