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Sime Darby, KLK units among firms blamed for fires

Published on Jun 26, 2013 8:22 AM
 
Villagers sit on their motorcycles as they get ready to leave their homes as a fire burns a palm oil plantation in the Bangko Pusako district in Rokan Hilir, in Indonesia's Riau province June 22, 2013. The parent companies of the Indonesian firms included Malaysia-listed Sime Darby and Singapore's Wilmar Group. Singapore has warned the "haze" - which has fuelled fears about health problems and raised diplomatic tension in Singapore, Malaysia and Indonesia - could last for weeks, or even longer. -- FILE PHOTO: REUTERS

Three firms accused of starting fires that led to the haze crisis are units of some of Malaysia's largest public companies, while another is linked to a fund that helps Malaysian Muslims save for pilgrimages.

Indonesia last week pinpointed eight firms as being responsible for setting fires to clear land.

Two of the slash-and-burn suspects are units of Sime Darby Plantation, which is part of Sime Darby, a conglomerate with a market value of RM56.7 billion (S$22.5 billion) and 100,000 staff in more than 20 countries.

Another company being investigated is a subsidiary of Kuala Lumpur Kepong (KLK), a giant company with plantation, resource-based manufacturing and property interests. It has a market value of RM22.5 billion.

A fourth, PT Multi Gambut Industri, is a subsidiary of Malaysia's Lembaga Tabung Haji, the pilgrimage fund board that runs a scheme helping Malaysian Muslims save for their pilgrimage to Mecca.

CIMB regional economist Song Seng Wun said: "Sime Darby and KLK are very large Malaysian companies with a long history. Sime Darby is seen as a government-linked company, while KLK is a family-controlled Chinese business."

Sime Darby Plantation is one of the world's largest palm oil producers, accounting for 2.44 million tonnes, or about 5 per cent of global crude palm oil output yearly.

It has plantations in Malaysia, Liberia and Indonesia's Kalimantan, Sumatra and Sulawesi. In Singapore, the Sime Darby brand is known through Sime Darby Motors, which distributes BMW cars.

The conglomerate, whose roots go back to the 19th century, also has interests in industrial equipment, energy and utilities, and health care.

Similarly, KLK started as a plantation company over a century ago. It has a land bank of over 250,000ha across Malaysia and Indonesia's Belitung Island, Sumatra, and central and east Kalimantan.

KLK's chief executive is Malaysian tycoon Lee Oi Hian, who has been named with his brother Lee Hau Hian as one of Malaysia's 40 richest by Forbes, with a combined net worth of US$1.1 billion (S$1.2 billion).

The group has now diversified into property development. It also owned retailer of bath and body products Crabtree & Evelyn, which was sold last year for US$155 million.

Both Sime Darby Plantation and KLK have denied involvement in the fires, adding that they have strict no-burning policies.

Sime Darby Plantation said its units operate in areas where there are local communities and smallholders occupying parts of the concession area linked to the haze, and they are unable to control activities in areas occupied by others.

KLK said on Monday that the purported concession area under PT Adei Plantation is mainly planted with mature palms, with no land-clearing for new plantings.

PT Multi Gambut Industri is now known as PT TH Indo Plantations. Its parent, the Lembaga Tabung Haji, said it is not involved in any open burning activities.

Aside from Sime Darby's PT Bhumireksa Nusa Sejati and PT Tunggal Mitra Plantation, and KLK's PT Adei Plantation, the others named are PT Langgam Inti Hibrindo, PT Udaya Loh Dinawi, PT Jatim Jaya Perkasa, and PT Mustika Agro Lestari.

On Monday, the Association of Plantation Investors of Malaysia in Indonesia said Malaysian firms are not involved in clearing Indonesian land using fire. Its executive secretary, Mr Nor Hazlan Abdul Mutalib, told Bernama: "Plantation owners have to set aside 20 per cent of land to nurture smallholders in oil palm planting. It is a common practice for the smallholders to clear the land by fire."

alfoo@sph.com.sg

Additional reporting by Chia Yan Min

Background story

Wilmar, Golden Agri admit links

TWO of the world's biggest palm oil companies - Wilmar International and Golden Agri-Resources - have admitted that they do business with some of the eight named companies being investigated for starting haze-related fires in Indonesia.

Both Singapore-listed companies said they are in the midst of reviewing these dealings.

The eight firms are among the 14 being investigated so far by Indonesia for the fires.

Wilmar, the world's largest palm oil processor, said it conducts business "with some of these companies as they have assured (it) that they have a no-burn policy". It is checking with these firms to ascertain their involvement.

A Wilmar spokesman said: "However, should they be found to be involved in burning to clear land for cultivation, we will stop doing business with them."

A Golden Agri spokesman said: "We have some transactions with a few of the named companies, and the management is in the process of reviewing these."

ALVIN FOO