POLICY

The general management policy of the Kayu Lapis Indonesia Group is to commit to every aspect of its business in the production of a wide range of high quality manufactured wood-based products that are primarily export-oriented to serve its diverse global markets while doing its share in serving the domestic market demand in Indonesia. This basic policy requires the Kayu Lapis Indonesia Group to be ever conscious of its commitments and responsibilities to its global customers, its employees, the public in general and the environment; to manage the forest under its stewardship on a sustained yield basis for a continuous supply of nothing less than 100% legally sourced logs that are used in all its manufacturing operations; and to manage the environmental aspect of optimum forest utilization balanced harvesting with reforestation, assisting nature in renewing the forest resources and developing the rural and remote forest communities by providing jobs, technology, education and better living conditions.

COMPANY VISION AND OBJECTIVE

The Kayu Lapis Indonesia Group looks at the future with confidence and optimism as it manages its forest concession areas on a sustained yield basis and is making headway in developing industrial tree plantations in high quality and high commercial value timber species in open and deforested areas. The combination of natural forest regeneration and industrial tree plantations for harvesting in perpetuity augurs well for the Kayu Lapis Indonesia Group's future over-all timber resources. Indeed, with its considerable investments in equipment, manpower and supporting the infrastructure in all its manufacturing facilities that produce substantial volumes of plywood, particleboard, container flooring, truck flooring, blockboard, mouldings, solid wood and engineered flooring, doors and a variety of furniture products, both indoor and outdoor, its long term rests on its continuing commitment to sustainable utilization of the tropical rain forest. It aims to achieve the level suggested by the International Tropical Timber Organization (ITTO) Operating Guidelines on sustainable management of natural tropical forest for timber production.

The Kayu Lapis Indonesia Group is likewise committed to increase its participation in product and market development for the products in manufactures for its global markets with the end in view of increasing its export sales and foreign exchange earnings in which would not only benefit the Kayu Lapis Indonesia Group but the country as a whole in terms of more job opportunities and economic prosperity.

ASSURANCE OF CROPS FOR FUTURE REGENERATION

The Kayu Lapis Indonesia Group adopts the Indonesian Selective Logging and Replanting System (ISLR) as embodied in its Annual Operating Plan that is reviewed and approved by the Ministry of Forestry. As a selective cutting system, ISLR uses a cutting cycle of 35 years allowing only the cutting of trees bigger than 50 cm in diameter in production forests. ISLR provides technical guidelines for tending logged-over forests i.e., refining, inventory, liberation, nursery practice, enrichment planting, weeding and thinning.

Natural re-seeding from nearby trees that are already adapted to the site is a preferred form of regeneration as it is cost effective and an efficient way of bringing in new crop and maintaining genetic diversity. If natural regeneration is deemed not the best way to go in a particular site, the company plats seedlings, generally within three years of harvesting. To assure ample supply of seedlings, the Kayu Lapis Indonesia Group maintains its own seed orchards, nurseries and greenhouses that can accommodate and grow 3 to 5 million hardy seedlings annually.

ENVIRONMENTAL RESPONSIBILITIES

The Kayu Lapis Indonesia Group is committed to sound environmental management by conducting its business operations in a manner that safeguards the environment. By rigidly complying with all applicable environmental laws and at the same time implementing practical measures to protect environmental quality, it contributes its share in conserving the forest biotic factors (plants, animals and other living organisms) and abiotic factors (water, soil, climate, light and oxygen) to maintain the balance of the ecological system in the natural forest.

Environmental impact assessments are conducted to take account of the environmental and social consequences of the operations in the forest concession areas. Modifications are made when necessary in order to minimize adverse impacts on both the physical and social environmental aspects.

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