KUALA LUMPUR (Aug 7): SD Guthrie Bhd (KL:SDG) group managing director Datuk Mohamad Helmy Othman Basha pointed out that less than 3% of its approximately 180,000 hectares of planted oil palm area in Indonesia is currently under review by the Indonesian government.
The review is due to the absence of forestry permits or potential land-use violations.
However, Mohamad Helmy clarified that the review is not related to ongoing illegal clearing of protected forests. The review is on land that was developed decades ago but is now being reclassified as forest reserves under updated maps issued by Indonesia’s Forestry Ministry (Perhutanan).
According to him, there is a different view between Perhutanan, which designates parts of the area as forest reserves, and the ministry that granted plantation licences, which recognised the land as valid for agricultural use.
“We are still in discussions with the Indonesian government because we believe that while they say some areas overlap [with forest zones], we don’t think that is the case,” Mohamad Helmy told reporters at the group’s financial results briefing for the second quarter ended June 30, 2025 (2QFY2025).
Last month, CIMB Securities had flagged Agrinas Palma Nusantara’s plan to take over or reforest up to three million hectares of oil palm and other crop plantations as a potential regulatory risk for Malaysian plantation firms operating in Indonesia. Agrinas, a government agency established in January under the administration of President Prabowo Subianto, has been tasked with managing seized oil palm plantations found to be operating illegally in designated forest zones.
CIMB noted that the Indonesian subsidiaries of SD Guthrie, Genting Plantations Bhd (KL:GENP) and Kuala Lumpur Kepong Bhd (KL:KLK) were included in a Ministry of Forestry decree listing companies allegedly operating in forest areas without permits. These companies have reportedly applied to legalise the affected land areas.
Mohamad Helmy explained that SD Guthrie had acquired the Indonesian plantation land from the republic during the 1997/98 Asian financial crisis.
“Just like how Danaharta operated in Malaysia, the Indonesian government had a similar process. So, when you buy something from the government, there are representations and warranties — meaning they guarantee the legal status of the asset. From that angle, we don’t believe we have contravened any ESG (environmental, social and governance) standards.
“We believe we have a strong case to show that not all of the areas now claimed to overlap with forest reserves actually do,” he said.
Shares of SD Guthrie rose two sen to close at RM4.77 on Thursday, valuing the plantation group at RM33.06 billion.