President and Vice-president of Sahabat Alam Malaysia explaining findings of the study at the SAM office in Penang.

Source: The Malaysian Insider

A study has found that major Malaysian plantations groups are involved in a variety of legal and unethical practices in their operations in foreign countries, often resulting in intense conflicts between them and the stakeholders there.

Sahabat Alam Malaysia, which commissioned the study on foreign direct investment (FDI) in oil palm plantations by Malaysian companies, stressed the need for the companies to address the negative impacts and practices of their overseas investments.

“We call for strict mandatory regulations for Malaysian overseas FDI, including having companies respect the rule of law in countries they operate in, refrain from engaging in activities that are against universal human rights principles and stop environmental degradation.

“Further, companies that violate these mandatory regulations must be punished severely to ensure no repeats by others,” said SAM president S.M Mohamed Idris at a press conference here yesterday to announce the study’s findings.

Idris said the Malaysian palm oil industry represented a modest position in terms of the total overseas FDI value.

“However, the industry’s adverse impacts are significant compared to any other sector that Malaysian companies invest in because of the development of plantation estates especially in tropical forests, community land and peatlands overseas,” he added.

The veteran consumerist and environmentalist said the study found that the heads of state in four out of the six primary recipient countries of Malaysian palm oil FDI, namely Indonesia, Papua New Guinea, Liberia and the Republic of Congo,  have declared investment moratoria in order to control overseas investment in forestry and agriculture development.

In spite of these moratorium policies, it was found that several Malaysian investors have nonetheless attempted or succeeded in circumventing these moratoria, he said.        

“In essence, this does not augur well for Malaysia’s reputation and image in wanting to be a global leader in the palm oil sector.

“Therefore, we urge the federal government to study this report carefully and recognise the negative impacts of these overseas investments on local communities and the environment,” said Idris.

The study (www.foe-malaysia.org) was conducted by Netherlands-based NGO Aidenvironment and focused on key sustainability concerns associated with Malaysian OFDIs.

“This study identified 50 Malaysian companies that acquired over 200 plantation companies with a total overseas oil palm plantation land bank of 3.5 million hectares.

“The dominant recipient of Malaysian OFDI in oil palm land bank is Indonesia (52%), followed by Papua New Guinea (PNG) (31%) whilst other countries account for the remaining 17%,” he said.

In Indonesia, Malaysian companies through local collaborations own the biggest land bank for oil palm totalling 1.8 million hectares, while the total land bank in Papua New Guinea is 1.06 million hectares.

Elsewhere, Malaysian groups own 389,000 hectares of oil palm land in Liberia, 180,000ha in Republic of Congo,  23,000ha in Cambodia, 6,000ha in Soloman Islands and 1,000ha in the  Philippines.

Idris said the Malaysian companies were allegedly involved in legal and unethical practices such as unauthorised occupation in protected forestland, and other forms of illegal logging.

The study also listed land clearing and plantation development without approved Environmental Impact Assessments (EIAs) or other required permits, whilst misleading government authorities about this, as major negative issues.

“The companies also pursued legal claims and occupation of customary rights land without free, prior and informed consent of indigenous communities, and allegedly paid local villagers and plantation workers to hunt for protected species, such as orang-utans,” said Idris.

The SAM chief noted that the High Court in Papua New Guinea had on May 20 declared two large land development leases belonging to Malaysian plantation giant Kuala Lumpur Kepong Berhad (KLK) as null and void.

The court also ordered the PNG government to cancel the title deeds to the Malaysian company which operated in the Collingwood Bay region.

Bernama reported earlier this week that the two 99-year land titles to KLK to develop oil palm plantations on land measuring 38,350ha in Collingwood Bay, Oro province were revoked following complaints by customary landowners.

“This is but one case out of many in countries like PNG, Indonesia and Liberia involving Malaysian based companies and local communities.

“These malpractices have often resulted in intense conflicts between Malaysian investors and local stakeholders,” Idris said.

He suggested that Malaysia look at Singapore which has proposed a “new and unique” legislation that would hold its citizens and businesses legally accountable for involvement in the recurrent transboundary haze problem.