HONG KONG, February 9, 2001
—The International Finance Corporation today signed a US$25 million loan to support sustainable forestry plantations in China. The financing will assist two forestry companies in the Guangdong and Jiangsu provinces. Their parent company Sino-Forest Corporation is based in Hong Kong and is listed on the Toronto Stock Exchange.
IFC’s financing will help to establish wood related downstream manufacturing plants in Guangdong and Jiangsu and support the purchase and replanting of a eucalyptus plantation in Guangdong and aspen plantations in Jiangsu.
The project manufactures laminated particleboards, block boards, and finger joint boards as well as doors and cabinets for use in China’s interior decoration and furniture manufacturing industries. China’s labor-intensive forestry sector has a significant growth potential with its links to the residential construction, interior decoration, and furniture industries that form a cluster of mutually sustainable high growth activities. The project also has important environmental benefits and will help to slow deforestation and increase conservation of forested areas.
Mr. Peter Woicke, IFC Executive Vice President who signed the agreements for IFC, said the project demonstrates that viable investment opportunities exist in China’s forestry industry, a priority sector as China works to preserve its natural resources. He added that Sino-Forest is leading the way for sustainable forestry in Guangdong and Jiangsu provinces and that, by sharing the harvested wood with local communities and improving living standards by creating several thousand new jobs, the project would also meet IFC’s goal of increasing business opportunities.
Mr. Alan Chan, Chairman and CEO of Sino-Forest who signed the agreements for Sino-Forest, said the project was one of the first genuine green businesses making use of both natural resources in China and the financial skills of Hong Kong managers. With its short cycle of five years, only one-sixth of the plantations would be utilized each year making it a model for sustainable forestry. He added that Sino-Forest worked with IFC because the latter took a long-term approach to the project and provided Sino-Forest with one-stop access to the large amount of capital and policy advice necessary to help it grow.
Sino-Forest is a profitable and well-regarded forestry plantation company with headquarters in Hong Kong. Its principal business is the management, operation of, and investment in tree plantations in China and the production of wood chips used to make pulp and engineered wood products. Sino-Forest is the first foreign-owned producer and exporter of wood chips in China and has a five-year track record of earnings growth.
The mission of IFC, part of the World Bank Group, is to promote sustainable private sector investment in developing countries, as a way to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.