Palm oil giant Golden Agri-Resources stops buying from firm implicated in haze

JAKARTA • Golden Agri-Resources (GAR), the world's second-largest listed palm planter by acreage, has stopped buying from a supplier sanctioned this week for allegedly causing forest fires in Indonesia, the firm said in a statement yesterday.

The Indonesian government has launched investigations into more than 200 companies as it scrambles to control fires in Sumatra and Kalimantan by the end of November, amid complaints from Singapore and Malaysia about the haze caused by smoke from the fires.

The haze has blanketed parts of South-east Asia in recent weeks, pushing pollution levels to unhealthy levels in Singapore, Malaysia and northern Indonesia.

Earlier this week, Indonesia ordered four companies to suspend operations, including unlisted oil palm company PT Langgam Inti Hibrindo (LIH). LIH is owned by PT Provident Agro, a small, Jakarta-listed company, which did not respond to requests for comment.

"Due to recent developments, we have currently halted purchases from PT Langgam Inti Hibrindo, pending further clarification from them regarding the status of their operating licence," Singapore-listed GAR said in a statement.

Provident Agro told Reuters on Tuesday that LIH had not received notice of its operational licence being suspended or revoked.

An Indonesian Palm Oil Association official yesterday said the group was discussing whether to expel LIH from its membership rolls.

The seasonal fires are caused by slash-and-burn clearances in Sumatra and Kalimantan, where large areas of forest concessions are held by pulp and paper as well as palm oil companies. GAR is monitoring known hot spots against third-party suppliers' locations, the statement said, and will work with suppliers in high-risk areas to help them in fire management, prevention and suppression.

Indonesia's current focus is on firms involved in starting fires. However, sanctions against buyers implicated are also a possibility, said Indonesian environment and forestry ministry spokesman Eka Widodo Soegiri. Any punishment for firms based overseas would be dealt with by the foreign ministry through government-to-government talks, Mr Soegiri said.

President Joko Widodo is due to visit hot spots and haze areas in both Sumatra and Kalimantan this week. He has ordered thousands of security personnel, backed by helicopters, to help fight the fires, and has threatened to revoke land permits for firms found responsible.

GAR is the parent of Indonesian palm company PT Sinar Mas Agro Resources and Technology, the target of an anti-deforestation campaign by Greenpeace in 2009 and 2010 that led to a boycott of its palm products by leading buyers.

GAR produced 2.95 million tonnes of palm oil last year, from plantations mostly in Sumatra and Kalimantan.

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 24, 2015, with the headline 'Palm oil giant stops buying from firm implicated in haze'. Print Edition | Subscribe