Response to TUK

We refer to the letter from Transformasi Untuk Keadilan (TUK) Indonesia dated 16 January 2017 related to the activities of Sime Darby Plantation in Indonesia. TUK cited four areas under PT Mitra Austral Sejahtera (PT MAS), PT. Guthrie Pecconina Indonesia (GPI), PT. Swadaya Andika (SAA) and PT. Tamaco Graha Krida (TGK).

Sime Darby Plantation, as part of our commitment to transparency, good governance and disclosure, has provided regular updates on the operations of all these companies in keeping with the processes of the Roundtable on Sustainable Palm Oil (RSPO). These reports are in the public domain. We will continue to provide updates as we seek resolution for the issues in each of these areas (see below for more information).

We would like to thank TUK for recognising that Sime Darby Plantation has already instituted corrective actions for these issues. We will continue to seek full resolution for each and every issue raised, as we believe in working constructively with all our stakeholders, especially the communities in our areas of operations. We would also like to unequivocally state that we will continue to assist the communities of PT MAS as we have over the past several years.

In 2012, PT MAS and the local communities agreed to set up a working team (TKPP) comprising local communities and the company, to discuss the 14 demands made by the community. There were representatives from 9 communities who were part of the working team. In October 2013, representatives from 2 communities, Kerunang & Entapang villages, withdrew from TKPP, alleging it was improperly formed and that there was different understanding of the issues at hand. The representatives of these two communities further claimed that the facts of their case and the solutions should be different from the other 7 communities. Despite the withdrawal from the TKPP, Sime Darby Plantation continues to engage with the Kerunang and Entapang communities and their representatives.

Meanwhile, the other villages that make up 80% of the local population, have continued to engage PT MAS through TKPP. As at end July 2015, 12 demands have been resolved with these 7 communities.

As for PT GPI, PT SAA and PT TGK, all three companies are certified by the RSPO as mentioned in the reports cited by TUK. Sime Darby Plantation has been working to resolve all issues and we continue to disclose and update on our progress to the RSPO as part of the certification process.

While there are issues that remain unresolved, as we have already reported, we would like to clarify certain inaccuracies in the statement issued by TUK.

1. According to the statement issued by TUK: The company is operating illegally on more than 3,000ha

This is not true. In reality, and as mentioned in the auditor’s report, PT GPI has sought clarification from the National Land Agency on land measurements carried out on 12 October 2011 for 1,417.99ha. Meanwhile, the Plantation Services Department has informed PT GPI that another 1,843.73ha is awaiting the issuance of the land use title decree. The National Land Agency will process the land license once all requirements have been completed. Under Indonesia’s Peraturan Perkebunan (Plantation Regulation), companies can operate in an area with a Izin Usaha Perkebunan (IUP) (Plantation Business Permit). PT GPI has a valid IUP and is awaiting the issuance of the HGU.

2. TUK statement: It has been involved in land conflicts with local communities since 1998. In 2012, local communities have raised land claims in Karang Ringin Estate. Sime Darby Plantation is engaging with all relevant stakeholders.

3. TUK statement: Lack of land use titles. PT SAA operates in an area measuring a total of 10,361.18ha. It has land titles for all of this except 62.96ha in Randi Estate for which the request is still being processed.

4. Lack of agreements with local communities over the conservation of HCV areas. Sime Darby Plantation is pleased to report that actually the communities have agreed to conserve the HCV area. The management of PT SAA has engaged the local communities on the HCV requirements on 24 March 2016 in Lanting estate and on 9 November 2016 in Selabak estate.

5. TUK Statement: PT TGK is operating on land for which it has no licence

PT TGK has been granted the HGU by the National Land Agency or BPN. RSPO audit findings indicated that some planted areas are located outside the HGU. PT TGK had engaged BPN to re-measure and confirmed that some planted areas are outside the HGU. The areas have since been administered by the local government.

6. TUK statement: PT TGK sources from almost 3,000ha of smallholder areas, for which it does not have an EIA. The company has engaged with the District Environment Agency of Morowali where a field visit was conducted on 15 June 2016. PT TGK is now preparing an EIA Addendum for smallholder schemes in the Bungku Barat Sub-District, Bumi Raya Sub-District and Witaponda Sub-District, Morowali Regency, Central Sulawesi. This is part of our on- going efforts to assist smallholders who work with us to obtain certification.

7. TUK statement: There is lack of control over pesticide and fertilizer use, and the lack of protection of worker’s health.

Workers are provided with personal protective equipment and given regular training in the use of pesticide and fertilizer. Medical checks are carried out every six months.

Sime Darby Plantation will continue to engage with the communities and all other stakeholders and offer assistance where possible, to resolve these issues. We will also continue to report on our engagements in a transparent manner to the RSPO.
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