The Business Competition
Supervisory Commission (KPPU) will investigate alleged cartel practices
implicating palm oil companies grouped together under the Indonesia Palm Oil Pledge (IPOP).
The IPOP
was established initially to promote sustainable practices in the palm oil
business. Later, it set particular standards that made it impossible for small
farmers to sell their crops to the giant companies.
Using
environmental standards as a pretext, the IPOP allegedly demanded that giant
companies reject palm oil produced by small farmers. By setting this standard,
the IPOP potentially acted beyond its authority because the government sets the
standard for the industry. The government-set standard is known as the
Indonesia Sustainable Palm Oil (ISPO) system.
“IPOP has
influenced business players and negatively affected business competition. It is
a violation of Law No. 5/1999. The KPPU will investigate this alleged
violation,” KPPU chairman Syarkawi Rauf said Thursday.
Law No.
5/1999 regulates the problem of monopoly and unhealthy business competition in
the country.
Syarkawi
said the IPOP had created a system that made it difficult for small farmers to
sell their products to IPOP members.
The Agriculture
Ministry’s plantations director general Gamal Nasir said he wanted the IPOP to
be eliminated as it was not in line with the 1945 Constitution, which
stipulates that the country’s natural resources shall be managed for the
benefit of all people.
The
Agriculture Ministry will soon file a letter with the Office of the
Coordinating Economic Minister, he said.
“In
addition, we already have the ISPO that we agreed to develop with Malaysia. We
want to have a standard system,” he added.
The IPOP
was first signed by palm oil giants Wilmar, Golden Agri Resources, Cargill and
Asian Agri in September 2014 during the UN Climate Summit in New York. Musim
Mas then signed up in March 2015 and Astra Agro Lestari followed in February
this year.
The ISPO
system, meanwhile, was developed by the government in 2009 to make sure that
all palm oil players met required agricultural standards.
While
both systems impose criteria related to high conservation value forest (HCVF),
the IPOP also applies criteria related to a high carbon stock (HCS), an
important consideration for plantation and consumer companies committed to zero
deforestation in development or in their supply chains.
Indonesia’s
palm oil and its derivative products are often subjected to international scrutiny
as many are considered environmentally unfriendly. The image has made the
country’s palm oil products less appealing in certain markets.
When
forest fires hit Sumatra and caused thick haze in Singapore, the city-state’s
largest supermarket chain banned paper products from Asia Pulp and Paper Group
(APP), which is a member of Sinar Mas Group and a major supplier of paper, pulp
and packaging.
IPOP team
executive director Nurdiana Darus said the IPOP aimed to boost Indonesia’s palm
oil image worldwide.
“Our
commitment is clear. We want to help the government and boost global demand for
Indonesian palm oil by producing sustainable palm oil that meets global customer
standards,” she said.
Source: www.thejakartapost.com,
15/04/2016
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