The Chain: PT Pradiksi Gunatama’s IPO Raises Risk of Further Deforestation


July 17, 2020

On July 7, 2020, PT Pradiksi Gunatama held an Initial Public Offering (IPO) on the Indonesia Stock Exchange. On the day the IPO went public, the Indonesia Stock Exchange reported a 34.78 percent increase in the company’s share price. The IPO raised proceeds of IDR 103 billion (over USD 7 million). The company plans to use 40 percent of the new money for infrastructure development, including land clearing and new plantation development, and 60 percent for operational tools such as fertilizers.

Before it registered on the Indonesia Stock Exchange, PT Pradiksi Gunatama was owned by PT Araya Agro Lestari and PT Citra Agro Lestari. The registered owners for these two companies are Jhony Saputra and Liana Saputri (50 percent each). These two individuals are the children of Andi Syamsuddin Arsyad, also known as Haji Isam. Haji Isam’s operations are commonly referred to as Jhonlin Group and include 17 plantation companies, all owned by either Haji Isam or his two children. All Jhonlin Group plantations are located in South, East, and Central Kalimantan.

Jhonlin Group was the second biggest deforester in Indonesia and Malaysia in 2018 and 2019. The group cleared around 5,900 hectares (ha) of forest in 2019 and 5,000 ha in 2018. Chain Reaction Research estimates Jhonlin Groups’s total landbank at approximately 160,000 ha. There has been no deforestation by PT Pradiksi Gunatama in the past year, but between 2016-18 the company cleared some 788 ha of forest. Its total business permit (HGU) area is almost 23,000 ha, and approximately 1,700 hectares of forest remains on the concession. PT Pradiksi Gunatama has also been implicated in social conflict.

In the IPO prospectus, PT Pradiksi Gunatama disclosed information about its buyers and current contracts. In 2019, the company supplied two main known companies with NDPE commitments, Sime Darby Oils (through Pulau Luat refinery, PT Sime Darby Oils Indonesia and PT Laguna Mandiri) and Wings Group (through PT Karya Indah Alam Sejahtera). Jhonlin Group appears in several NDPE supply chains, including KLKSime DarbyBunge Loders CroklaanGeneral Mills, Johnson&Johnson, Kellogg’s, L’Oreal, Nestlé, PepsiCo, Danone, Friesland Campina, Hershey, Unilever, Upfield, Reckitt Benckiser, Friesland Campina, Mars, and Olam.

Jhonlin Group and PT Pradiksi Gunatama are not members of the Roundtable Sustainable Palm Oil (RSPO) and do not have a sustainability policy. Because of Jhonlin Group’s massive deforestation and lack of an NDPE policy, any company related to Jhonlin Group, including PT Pradiksi Gunatama, may have to contend with a major reputation risk. Although the prospectus highlights PT Pradiksi Gunatama’s intention to have zero-burning policy, it does not mention anything further regarding sustainability principles. The remaining forest area inside the plantation is at risk of being converted into oil palm if buyers and investors do not take any no further actions.

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