May 23, 2018

Public response by palm oil company raises further legal questions

JAKARTA ( - In line with its promise to, as touched on in a previous news report (Apr 26)PT Sawit Sumbermas Sarana Tbk (SSMS) has posted a public response (May 18) to clarify and provide updates on a number of matters relating to the operations of PT Borneo Sawit Gemilang (BSG).

PT BSG has been found to be developing new palm oil plantations in 2015’s burned peatlands, parts of which were in Indonesia’s targeted peat restoration areas.

It should also be pointed out that the areas being converted into new palm oil plantations all fall within a section of Indonesia's peat protection zones established by Environment and Forestry Minister Siti Nurbaya at the end of February 2017.

Meanwhile, the intensive palm oil plantation expansion in question began around 10 months later, in December 2017.

In its clarification, the Jakarta-listed company first explains that PT BSG is not its subsidiary, but rather that the two companies share the same parent company (PT Citra Borneo Indah / CBI).

However, in the context of supply chains, this point is essentially completely irrelevant, as major global brands, such as Nestle, ADM and Mars, include both SSMS and CBI in their lists of suppliers in the knowledge that the two companies are clearly legally related in terms of ownership.

As such, PT BSG's palm oil plantation expansion in Central Kalimantan's Pulang Pisau regency remains undeniably linked to global palm oil supply chains, primarily through a number of TFT members such as the aforementioned three leading global palm oil buyers, as reported earlier by (May 2)

This means that the public response from SSMS in no way refutes the fact that there is a linkage between global palm oil supply chains and the new palm oil plantation expansion undertaken by PT BSG in parts of targeted peat restoration areas and a peat protection zone, as seen in the following photos.

In another section of its clarification, SSMS also states that the new palm oil plantation development by PT BSG took place outside the company’s permit location and was done for ‘plasma (smallholder planting) at the request of the local communities.’

This statement, however, is contradicted by the on-site verification findings, as reported earlier by (April 23).

According to information from nearby communities, which was confirmed by employees working in the concession, the ongoing operations in the area are to develop new palm oil plantations for PT BSG, rather than due to a community-related request as claimed.

Non-peatland claim questionable

In its press response, SSMS also declares that, before agreeing to the ‘request of the local communities’ (to develop new palm oil plantations for plasma), experts from its research station conducted a peat assessment in September 2017 at the request of PT BSG management.

The results of the evaluation, SSMS asserts, demonstrated that the area concerned was not peatland.

Nonetheless, whatever the outcome of the assessment it asked for, PT BSG’s actions are extremely unusual in a legal sense, given that the areas it has been developing into new palm oil plantations were designated as a peat protection zone in late February 2017.

Indeed, the palm oil company should not have made a decision, based on its own non-authorized assessment, to go ahead with draining parts of a peat protection zone in order to build new palm oil plantations without requesting a consultation with and obtaining approval from the Indonesian Environment and Forestry Ministry. 

The following photos show how PT BSG has developed new palm oil plantations in parts of a peat protection zone.

SSMS at a later point states that “PT BSG has ceased land clearance in the area”, and that the palm oil company has set up communication with the Indonesian Peat Restoration Agency (BRG) regarding the issue.

However, considering that the areas being converted into new palm oil plantations not only lie in parts of the peat agency’s targeted peat restoration areas, but are also in a peat protection zone, PT BSG should really be reporting its destructive activities directly to the Environment and Forestry Ministry. 

This is even more pertinent given that there are strong indications that the palm oil company's operations involve peat violations.

Meanwhile, seeing that WWF-Indonesia has been collaborating with the peat agency in areas including the Sungai Kahayan-Sebangau peat hydrological landscape (in which PT BSG is expanding its palm oil plantations), the conservation organization’s Director of Policy, Sustainability and Transformation Aditya Bayunanda was asked for his view on the issue.

He recently replied to, emphasizing WWF-Indonesia’s stance that the government should take law enforcement actions against any companies that are found to have committed peat violations.