JAKARTA — The largest case of deforestation for industrial palm oil in Indonesia is happening within a concession on a tiny island off the coast of southern Borneo, according to satellite analysis by technology consultancy TheTreeMap.

The deforestation appears to be illegal, activists say, citing the irregularities surrounding the permits associated with the concession.

Data from TheTreeMap, available at forest monitoring platform Nusantara Atlas, show that 15,822 hectares (39,097 acres) of new plantations were established in the concession on the island of Laut, part of Kotabaru district in South Kalimantan province, in 2022 and 2023.

The concession has been linked to palm oil company PT Multi Sarana Agro Mandiri (MSAM), part of the Jhonlin Group owned by influential tycoon Andi Syamsudin Arsyad, popularly known as Haji Isam.

To make way for these new plantations, up to 10,650 hectares (26,317 acres) of forest — one-sixth the size of Indonesia’s capital, Jakarta — were cleared during that period. This makes the concession the single biggest site of deforestation for palm oil in Indonesia, according to TheTreeMap.

The figure is significant for an island as small as Laut, said Jefri Raharja, campaign manager with the South Kalimantan chapter of the Indonesian Forum for the Environment (Walhi), Indonesia’s biggest green NGO.

At 202,400 hectares (500,100 acres), Laut is just three times the size of Jakarta and is barely noticeable on maps, dwarfed as it is by the main island of Borneo. Much of Laut is still forested, according to Jefri, with a mountain called Sebatung standing proud in the middle of the island. The mountain itself is designated as a protected forest area by the government.

Loss of forest on the island will undermine its water catchment areas, Jefri said.

“So the potential of environmental destruction there is very high, particularly on water resources,” he said. “Because it’s a small island, it has little groundwater [reserves].”

‘Not in line with laws and regulations’

Amid the deforestation, there are questions over the legality of concession holder MSAM’s operations on the island. A large chunk of its concession, 8,610 hectares (21,276 acres), overlaps with a logging concession held by Inhutani, a state-owned forestry company.

In September 2015, Inhutani sent a letter to MSAM to demand it stop clearing and planting oil palms in the overlapping areas, according to a 2023 report by the Indonesian NGO Sawit Watch, which monitors the palm oil industry, and the Indrayana Centre for Government, Constitution, and Society (INTEGRITY), a law firm.

MSAM ignored the letter, according to the report, and sued Inhutani over the concession boundaries in December 2015. A court in Jakarta rejected the lawsuit in June 2016.

It was during this period, between 2016 and 2017, that the Jhonlin Group reportedly bought MSAM. Under the new ownership, the company struck an agreement with Inhutani in June 2017 on joint management of the overlapping area.

Local authorities in Kotabaru weren’t convinced about the arrangement, however, and in November 2017 sent a letter to the Ministry of Environment and Forestry questioning the legal status of the agreement. The ministry confirmed that “the cooperation agreement … is not in line with laws and regulations,” according to the 2023 report.

Sawit Watch director Achmad Surambo said this should have been reason enough for law enforcers to launch an investigation into the matter at the time and for the government to evaluate MSAM’s operations. However, the company continued to operate as usual, prompting Sawit Watch to file a report with the national anticorruption agency, the KPK, in January 2022.

Irregular permitting process

Surambo said the agreement with Inhutani allows MSAM to continue to cultivating oil palms in the previously disputed part if its concession. But because this area is also technically part of Inhutani’s logging concession, that means it’s officially designated as a forest area. Under a 2013 law, this makes it strictly off-limits to oil palm planting.

To be allowed to establish an oil palm plantation in a forest area, the area must first be rezoned as non-forest area. This is done by obtaining what’s known as a forest release decree from the Ministry of Environment and Forestry. After that, the company still has to acquire a right-to-cultivate permit, or HGU, from the land ministry — the last in a series of licenses that oil palm companies must obtain before being allowed to start planting.

In MSAM’s case, it hadn’t obtained the decree from the environment ministry before signing the agreement with Inhutani, Surambo said. And it still didn’t have the decree when it obtained an HGU from the land ministry in September 2018, he added.

“While the environment ministry now says it has issued a forest release decree, the process was not normal because it was preceded by the issuance of HGU license in forest area,” Surambo told Mongabay. “We suspect that there are corrupt practices [behind it].”

By reporting the matter to the KPK, Surambo said he hoped an investigation would be launched into potential corruption allowing MSAM to operate an oil palm plantation inside a forest area before it was rezoned.

However, Sawit Watch never received any update from the KPK, despite repeated attempts to get information from the law enforcement agency. In April 2023, Sawit Watch filed a complaint with the KPK’s supervisory board, alleging that KPK officials had acted unprofessionally by failing to follow up on the NGO’s report and not providing any updates.

On Jan. 23 this year, the supervisory board finally ruled that the officer in charge of accepting report submissions from the public, Leonita Gillian Patricia Ajawaile, had breached the agency’s ethics code by not providing an update to Sawit Watch. The board ordered Leonita to apologize to Sawit Watch, but there still hasn’t been any update on its report.

“Once the ruling arrived from the KPK’s supervisory board on the ethic code violation, there should have been [corrective] measures,” Surambo said. “The KPK should have replied to our letter asking for an update.”

Pattern of persecution

With deforestation continuing to spread within MSAM’s concession — a concession whose legality remains in questioned — Surambo said the government should evaluate the company. He noted the government had established a task force to audit palm oil companies in April 2023, aimed at scrutinizing their permits, production and concession size, among other details.

Given the irregularities surrounding its concession, MSAM should be a target of the task force’s audit, Surambo said.

“For this new deforestation, the question is whether it has a permit or not,” he said.

Mongabay reached out to PT Jhonlin Agro Raya (JAR), the plantation arm of the Jhonlin Group, for comment, but didn’t receive a response by the time this story was published.

Jefri of Walhi said there was a history of the group filing criminal charges against individuals exposing its business practices. In 2018, MSAM filed a complaint with the police against a reporter named Muhammad Yusuf over at least 23 online news reports about the land conflict between the company and Inhutani, as well as covering farmers accusing the firm of bulldozing their crops to make way for its oil palms.

MSAM said in its complaint that the news reports had harmed the company’s reputation. Police arrested Yusuf on charges of hate speech and defamation, under a controversial law widely used to silence critics of the government and of big businesses. Yusuf died of a heart attack after more than a month in custody.

In May 2020, police arrested another local journalist, Diananta Putra Sumedi, on similar charges. Diananta had published an online article quoting Indigenous Dayak villagers complaining about alleged land grabbing by JAR. A source in the story later denied the quotes attributed to him, and Indonesia’s Press Council recommended the story be retracted.

Despite this, the police insisted the criminal investigation would continue. In August 2020, a court convicted Diananta of hate speech and sentenced him to three and a half months in prison.

“There seems to be a pattern [of intimidation],” Jefri said. “We could monitor [the Jhonlin Group], but there’s a risk for us if we publish anything that mentions the name of companies [within the group].”

 

Banner image: Industrial oil palm development outside Balikpapan, East Kalimantan. Image by Rhett A. Butler/Mongabay.

 

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