The Chain: Tabung Haji Plantations to Develop New Oil Palm Concession, Once Again Breaching Buyers’ NDPE Commitments


April 9, 2020

Malaysian palm oil company Tabung Haji (TH) Plantations has submitted an environmental impact assessment (EIA) for the development of 8,094 hectares (ha) of an oil palm plantation in Mukim Tembeling (Jerantut District, state of Pahang, Malaysia). The landowner, Deru Semangat Sdn Bhd, is 55 percent owned by Tabung Haji. The remaining 45 percent is owned by a relative of the Sultan of Pahang. THP Agro Management Sdn Bhd, TH Plantation’s subsidiary, is the project developer.

The proposed development, submitted in February 2020, is the third phase of a project that began in 2017 and covers almost 12,100 ha. A High Carbon Stock (HCS) assessment has not been conducted for these developments, rendering them in violation of industry No Deforestation, No Peat, No Exploitation (NDPE) policies. In 2017, TH Plantations submitted an EIA for a 1,619-ha concession (phase 1), and in 2018, it submitted another EIA for 2,428 ha (phase 2).

Figure 1: TH Plantations’ Development in Mukim Tembeling, Phases 1-3

The three sites are located inside the Yong Forest Reserve, which is adjacent to Taman Negara National Park. Taman Negara is Malaysia’s oldest and largest national park and provides habitat for elephants (Elephas maximus), tigers (Panthera tigris jacksoni), clouded leopard (Neofelis nebulosa) and gibbons (Hylobates lar). According to the EIA, the land TH Plantations is seeking to develop is classified as production forest that can be converted for agricultural purposes after logging activities are finalized.

Between January 2016 and December 2018, TH Plantations cleared some 2,223 ha of forest in these developments, followed by another 22 ha in early 2019. In the area designated for clearing for the third phase of the project, 7,350 ha has been logged since 2015, including 2,320 ha in 2019. The companies behind the logging in Mukim Tembeling are Fajarbaru Builder Sdn Bhd and AK Timber Sdn Bhd. Tabung Haji was a substantial shareholder of Fajarbaru Builder Sdn Bhd until 2016, but stopped in 2018.

TH Plantations’ Pahang project does not mark the first time the company has been in violation of NDPE policies. Chain Reaction Research previously reported deforestation by TH Plantations subsidiaries Persada Kencana Prima in North Kalimantan and Hydroflow Sdn Bhd in Sarawak.

Despite these known issues, TH Plantations remains in the supply chain of as many as 40 companies with NDPE policies. They include refiners/traders such as AAK, BLD Plantation, Cargill, Fuji Oil, Goodhope, HSA Group, Kuala Lumpur Kepong, Lipidos Santiga, Louis Dreyfus Company, Mewah, Musim Mas, Neste Oil, Nisshin Oillio, Olam, Olenex, Sime Darby, Wilmar. TH Plantations is also in the supply chains of consumer goods companies such as ADM, Avon, Colgate Palmolive, Danone, FrieslandCampina, General Mills, Henkel, Hershey Company, Johnson & Johnson, Kellogg’s, L’Oréal, Mondelez, Nestlé, Procter & Gamble, PZ Cussons, Reckitt Benckiser, Unilever, Upfield, Vandemoortele.

Some companies, including IOI, GAR and Bunge Loders Croklaan, have already stopped sourcing from TH Plantations, while others, including Musim Mas and Wilmar, have engaged with the company but have not stopped purchases.

In light of this anticipated plantation expansion, companies that continue to buy from TH Plantations will face increased pressure to suspend the company as a supplier. Such action would likely pose a substantial financial risk to the company, which is already actively divesting from several concessions as it tries to raise money for debt repayments.

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