SINGAPORE: Singapore-listed palm oil producer Kencana Agri is facing an inquiry by Indonesian authorities over incidents of forest fires at its subsidiary in North Kalimantan.
Several other companies listed on the Singapore Exchange (SGX) moved on Friday (Oct 16) to distance themselves from the fires and haze, including Golden Agri-Resources and Wilmar International.
In response to queries from Singapore Exchange Regulation on Thursday concerning the recent forest and peatland fires in Indonesia and the resulting transboundary haze, Kencana Agri said Indonesian authorities have launched a preliminary inquiry into a fire incident at its subsidiary.
The inquiry concerns suspected land clearing by burning in the affected area, which is located along the boundary between the group's land and an adjacent third party's land.
Kencana Agri said in the bourse filing that based on information currently available, its subsidiary did not carry out land clearing or land preparation in the affected area.
Investigators conducted a field inspection of the affected area in September, and the subsidiary has provided information requested by investigators, the company said.
The firm noted that the inquiry is still ongoing and that it is cooperating fully with the authorities.
It said that it has not received any other inquiries, allegations, notices or requests for information from government authorities, the media or other stakeholders concerning the recent fires.
Kencana Agri also said it does not undertake land clearing by burning or use fire for land preparation, in line with its policies and government regulations.
Based on the group’s operational review, the management assessed that the information currently available does not indicate that the group’s operations or activities materially contributed to the recent forest and peatland fires or transboundary haze.
It added that it strictly enforces a zero-burning policy and maintains surveillance to prevent fires from spreading into its estates.
Kencana Agri's plantations and mills are located in Sumatra, Kalimantan and Sulawesi, covering a total planted area of about 67,862ha.
The company recorded fire incidents within concession areas operated by its subsidiaries in North and East Kalimantan, affecting an estimated 62 hectares, or less than 0.09 per cent of its total planted area.
"Based on preliminary internal assessments, it indicates that the fire did not originate from within the group’s operations, but rather spread from adjacent areas," the company said.
"The fire was handled by the relevant subsidiaries’ firefighting teams, working together with the relevant authorities and local communities, with drones and fire observation towers used to locate active fire fronts and to direct ground crews.
"The incidents are under control, with ongoing monitoring and precautionary response measures being maintained."
Kencana Agri added that it maintains fire prevention, detection and emergency response protocols across its Indonesian plantation operations.
"The board notes that the inquiry by the relevant authorities ... remains ongoing and will continue to monitor its progress closely," said the company.
"In the meantime, the group continues to maintain heightened prevention and monitoring measures across its operations to manage and assess any potential operational impact arising from the prevailing dry season conditions."
Prime Minister Lawrence Wong said on Thursday that Singapore is looking into which companies may be responsible for the forest and peatland fires in Indonesia that have caused the worsening haze.
"Where warranted, we will take action under Singapore’s Transboundary Haze Pollution Act, and explore joint action with other countries," he said in a social media post.
ZERO BURNING POLICY
Several firms have responded to queries from the SGX RegCo over the forest and peatland fires in Indonesia and the resulting transboundary haze.
Palm oil company Golden Agri-Resources said it was not aware of any information indicating that its operations or activities had caused or contributed to the recent haze.
The company said it had maintained a zero-burning policy since 1997 and a no-peat policy since 2010, both of which also apply to its suppliers.
"The group continues to monitor and verify fire incidents and will cooperate with the relevant authorities as appropriate," Golden Agri-Resources said.
Agribusiness company Wilmar International said it had maintained a strict no-burning policy across its operations since 2006, prohibiting the use of fire for land clearing, preparation or development activities.
"Wilmar has not undertaken any new oil palm planting in Wilmar-owned plantations in Indonesia since 2013," it said in a bourse filing.
"Since then, the group’s field activities in Indonesia have been limited to the replanting of existing planted areas, which is carried out mechanically and without the use of fire."
While fires have been detected within small areas of some of the group’s concession areas in Indonesia, the company's field verification to date indicates that these fires originated either outside the company's land boundaries or on community-farmed land within them, and subsequently spread into areas under the group’s management, it added.
Palm oil company PT Salim Ivomas Pratama, a subsidiary of Indofood, said it "consistently implements a strict zero-burning policy and performs mechanical land clearing for unproductive plantation areas."
The company said it monitored hotspots using satellite data from the US National Oceanic and Atmospheric Administration and NASA, allowing it to identify and respond to potential fires within its plantations.
It added that the recent forest and land fires had not had any material impact on its business activities or business continuity.
Singapore-listed palm oil producers First Resources and Bumitama Agri pointed to this year's El Nino event and fires spreading from regions where they do not operate in response to queries about its links to the ongoing haze.
In a statement released on SGX on Thursday, First Resources said there have been cases of fires originating outside its boundaries spreading into areas under its management.
Some of these fires were "too massive and fast-spreading to be fully contained" despite its efforts to do so, the company said.
Similarly, Bumitama Agri said a number of incidents appear to have developed outside areas directly managed by the group before spreading across surrounding landscapes.
"Based on the internal observations and preliminary investigations currently available to the group, no evidence has been established linking the group’s operations with initiation of the fires under investigations and to the haze in question," executive chairman and CEO Lim Gunawan Hariyanto said in a statement published on SGX.
The two companies, along with First Borneo Plantations, were identified in an Oct 5 Greenpeace report as being associated with companies whose plantation concessions are contributing to the haze.
Minister for Sustainability and the Environment Grace Fu said on Friday that Singapore will send preventive measure notices to seven companies in Indonesia responsible for fires causing the current haze.
The notices, which stem from Singapore’s investigations, will be issued by the National Environment Agency (NEA) under the Transboundary Haze Pollution Act, Ms Fu told a press conference.
The seven companies are:
- PT Bumi Andalas Permai
- PT Bumi Mekar Hijau
- PT Paramitra Mulia Langgeng
- PT Sumatera Alam Anugerah
- PT SBA Wood Industries
- PT Hutan Lestari Raya
- PT Bangkanesia
The notices will require each company to: deploy firefighting personnel to extinguish or prevent the spread of any fire on land it owns or occupies; stop or not start any burning activities on such land; and to submit to NEA its action plans to extinguish any fires on its land and prevent their recurrence.