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Oil palm refiner Wilmar caves in to political pressure

 | March 8, 2014

The U-turn is awkward and has thrown up many questions because Wilmar's going ahead with its no deforestation policy in neighbouring Central Kalimantan and Sumatra in Indonesia.

oil-palmKUCHING: Largest oil palm refinery, Singapore-owned Wilmar International Ltd has succumbed  to  “political pressure” and rescinded its landmark environmentally friendly ‘no deforestation policy’ decision announced in December last year.

The decision, which followed its agreement with pressure groups WWF, Greenpeace and Wetlands International, means Wilmar is back to buying crude palm oil (CPO) produced from oil palm trees planted in peat swamp land and forests areas.

It means Wilmar is also back to ‘supporting’ encroachment on native customary rights (NCR) land by palm oil and logging companies.

It means that Wilmar cares less that there are over 400 NCR court cases in Sarawak against these errant companies and that reported widespread deforestation has affected the natural ecology of the state’s rainforest.

The U-turn is awkward and has thrown up many questions because Wilmar’s going ahead with its no deforestation policy in neighbouring Central Kalimantan and Sumatra in Indonesia.

Wilmar International accounts for more than a third of global trade of palm oil and its largest oil refinery in Bintulu is kept busy.

Wilmar is the single largest buyer of CPO in Sarawak at 45%. The state has some 18,000 smallholders and 41 mills, which supply CPO to Wilmar. Wilmar also buys CPO from neighboring Sabah.

In its Feb 14 letter to the state government Wilmar said from next year, it would buy CPO from oil palm grown in “areas with high carbon content” and from oil palm planted in forests before 2005.

But state Land Development Minister James Masing rubbished this eco-friendly stand. He contented that Wilmar’s decision is “pure economics and Wilmar is being used by the sunflower and soya bean producers to bully Sarawak.”

Whatever the argument, the fact remains that in Malaysia, the ones who will be deeply affected by Wilmar’s earlier eco-policy are the big boys.

More than meets the eye

Wilmar’s largest shareholders include Perlis Plantations Bhd, HSBC, Citibank and Morgan Stanley Asia.

Its other big shareholders are pension funds like the Employees Provident Fund, Armed Forces Superannuation Fund Board and Kumpulan Wang Persaraan.

In Sarawak and Sabah the bulk of the oil palm plantations are owned by the government (read in between the lines) . Small holders only control a tiny fraction in Sarawak and Sabah.

The distribution is a little different in neighbouring Kalimantan where smallholders control just over 30% of the plantations. The state owns 20% and the rest by private investors.

The biggest importers of Malaysian palm oil are China, India, Pakistan, the Netherlands, and Egypt.

Last month Sarawak Oil Palm Plantation Owners Association (Soppoa) manager Melvin Goh  noted that oil palm is an economic security crop for Malaysia and that many assumed that Wilmar’s eco-friendly pledge would only hurt the profits of plantation companies and oil palm farmers.

“It is more than that,” Goh reportedly said.

Following Wilmar’s earlier decision, Soppoa had petitioned for the federal and state governments to look into whether the company had abused its position in the market and reached the Competition Act 2010 by its decision.

Yesterday it was reported that Wilmar had given its commitment that it would return to  status quo.

Meanwhile international pressure groups will continue to monitor Wilmar in Sarawak.

Wilmar shames itself

Greenpeace International’s head of the Indonesia forest campaign Bustar Maitarat said in December last year that Wilmar’s no deforestation policy in Kalimantan and Sumatra had the potential to be a landmark win for the world’s forests and its communities.

“Wilmar’s commitment to No Deforestation has the potential to transform the controversial palm oil industry.”

“Wilmar’s policy shows that the sector has a massive problem, and while this policy is great news for forests and tigers, its success will be judged by Wilmar’s actions to implement and enforce it.”

In the case of Sarawak vis-a-vis Malaysia, Wilmar International has shamed itself.


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