Indonesia fines dozens of palm oil, mining companies US$2.3 billion for operating in forest areas

[JAKARTA] An Indonesian government task force has ordered dozens of companies in palm oil cultivation and mining to pay fines totalling US$2.31 billion for operating illegally in forest areas, an official said on Monday (Dec 8).

President Prabowo Subianto’s forestry task force, made up of military personnel and law enforcement officials, has this year cracked down on an unprecedented scale on plantations and on mines that authorities say have operated illegally in forest areas.

The task force has seized 3.7 million hectares of plantations and more than 5,300 hectares of mining operations, with a target to reach 4 million hectares by the end of the year.

Following the seizures, it has issued fines totalling 9.42 trillion rupiah (S$731.6 million) to 49 plantation companies and 29.2 trillion rupiah for 22 mining companies, said Barita Simanjutak, an official with the Attorney General’s Office and a task force member. He described them as some of the previous owners of the asset, but did not disclose the names of the companies.

The palm oil companies were expected to pay 25 million rupiah per hectare per year, he said, providing no explanation for how the fines were calculated.

Some companies have paid, while others have objected, Simanjuntak said. He said task force was open to dialogue, but it would be strict in its enforcement of the law.

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“We urge companies to be cooperative,” he said.

“It is not impossible for the task force to take legal action if compliance is not heeded,” he added. The task force has handed over 1.5 million hectares of plantations that it seized to state firm Agrinas Palma Nusantara, which was set up early this year, making it the world’s largest palm oil company by land size.

The military-backed seizures have unnerved the palm oil industry. Analysts predicted that, together with Indonesia’s biodiesel plan, they would exert upward pressure on global prices as they are expected to disrupt productivity. Indonesia is the world’s biggest exporter of palm oil, thermal coal, nickel and tin. REUTERS