Indonesia’s second largest pulp and paper company is preparing to start work on a project to restore a degraded peat forest in Sumatra, marking a new direction for the company that has left some skeptical. April has been widely criticized by environmental groups such as Greenpeace, who accuse the paper giant of cutting down natural forests in Sumatra to feed its paper mills. When the company announced its Kampar Peninsula project, local environmental groups such as the Forest Rescue Network Riau (Jikalahari) called the project “greenwashing” and said the company was continuing to destroy forests in other parts of the province.

The Indonesian government plans to introduce “wood terminals” dealing only in certified lumber as part of its efforts to reduce illegal logging. Wood accepted by the terminals would include the lumber’s origin, the time of logging, the type of wood and the date it was registered. This development follows the implementation of a Timber Legality and Verification System (SVLK) as part of Indonesia’s voluntary partnership agreement (VPA) with the EU.

German Chancellor Angela Merkel visited Indonesia on Tuesday to meet with President Yudhoyono to discuss deforestation and the environment. She previously visited the country seventeen years ago when she was environment minister. The visit comes as Germany explores ways to make its financial aid to Indonesia conditional on Indonesia conserving its remaining rainforests.

Greenpeace Indonesia claim that vast regions have been deforested despite the two-year moratorium on deforestation coming into effect in May 2011. The bulk of deforestation has taken place in Kalimantan and Papua – coal concessions having already been granted prior to the moratorium in the former, and pre-existing logging concessions in the latter. The Indonesian government denies the claims and has invited Greenpeace to explain its methodology.