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The Chain: Jhonlin Group’s Refining Company Goes Public to Raise Capital

July 18, 2022

A subsidiary of Jhonlin Group, PT Jhonlin Agro Raya (JAR), is currently launching an Initial Public Offering (IPO) through the Indonesia Stock Exchange. According to the prospectus, the IPO was held from July 12-15, 2022, with the anticipation of a share listing on August 3, 2022. The company is issuing 1.22 billion new shares, with each at IDR 100 (~USD 0.0066). The company is targeting a total IDR 366.5 billion (~USD 24.3 million) from the IPO, with 21 percent of the money raised to be used to build a palm oil mill, while the rest will be allocated for operating expenditures.

PT JAR is an oil palm plantation and refining company located in Kotabaru and Tanah Bambu District, South Kalimantan. The total plantation area operated by the company is 17,020 hectares (ha). The plantation has been producing fresh fruit bunch (FFB) since 2020, with all FFB going to Jhonlin Group’s owned mills. In 2019, the company started development of a biodiesel refinery plant with total capacity of 1,500 metric tons per day. The refinery made its first shipment in September 2021, supplying 5,000 kilolitres (kL) to the state-owned energy company Pertamina despite not initially being listed as a biodiesel supplier. The shipment was enabled by an increased quota from the government.

Both the prospectus and PT JAR’s website do not mention a No Deforestation, No Peat, No Exploitation (NDPE) commitment as part of the company’s policy. But the prospectus briefly mentions a zero-burning policy for conducting land clearing activity. Analysis by Chain Reaction Research found that, between 2016 to 2021, at least 5,800 ha of deforestation alerts were detected within the concession. The largest clearing came in 2019, when almost 3,000 ha were cleared.

In November 2019, local media reported a land conflict issue involving PT Jhonlin Agro Raya. The company allegedly took land belonging to Dayak communities. The journalist who reported the news was arrested, as the news was considered to have violated the Journalist Code of Ethics due to “unbalanced information, judgmental opinions, and triggers prejudice on the basis of ethnic differences.” The reports were immediately pulled from circulation.

Jhonlin Group is owned by Haji Andi Syamsudin Arsyad (commonly known as Haji Isam), a businessman from South Kalimantan whose companies range from coal mining to agricultural commodities. The group has a longstanding history of violating NDPE commitments and is not a member of the Roundtable on Sustainable Palm Oil (RSPO). Moreover, it has never made pledges to sustainability. Since 2018, the group has listed as one of the top palm oil deforesters in Southeast Asia. Around 11,900 ha were cleared within the group’s oil palm concessions between 2018 and 2020.

Johnlin Group is also a significant deforester for industrial tree concessions. Between 2016 and 2021, around 3,000 ha of forest were cleared within its industrial concessions, mainly by PT Jhonlin Agro Mandiri in Tanah Bumbu District, South Kalimantan.

PT Jhonlin Agro Raya is the second company under Jhonlin Group that has gone public. PT Pradiksi Gunatama, an integrated oil palm plantation and palm oil company in Paser, East Kalimantan, launched an IPO in 2020. Despite being a repeat offender, Jhonlin Group appears in several NDPE supply chains, namely Nestlé, Kellogg, Grupo Bimbo, COFCO, Cargill, Fuji Oil, BASF, ADM, and AAK.

Transparency on financial institutions with links to subsidiaries of Jhonlin Group is absent. However, Nestlé, Kellogg, BASF, and AAK face reputation risk as they have strong zero-deforestation policies, and some of them might be confronted with civil society pressure because of their connections to Jhonlin Group. Moreover, companies buying for the EU market are facing future legal risk due to the upcoming EU Deforestation Regulation. This could lead to market access risk and increased costs due to fines.

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