Spurred by investor-friendly law, palm oil firms sue to retrieve licenses

The new filings are the latest wave of litigation in the province since authorities across West Papua’s eight districts revoked the permits of 16 palm oil companies over administrative violations.

South Sorong village
A village in the South Sorong district in West Papua, Indonesia. Image: Behan, CC BY-NC-ND 2.0

Palm oil companies in Indonesia’s West Papua province are suing a local district head for revoking their permits, the second such case filed since authorities last year rescinded licenses for concessions covering an area twice the size of Los Angeles.

Concession holders PT Anugerah Sakti Internusa (ASI) and PT Persada Utama Agromulia (PUA) filed separate suits on Dec. 29, 2021, against Samsuddin Anggiluli, the head of South Sorong district in West Papua province. The companies are asking the state administrative court in Jayapura, in neighboring Papua province, to restore their permits after they were scrapped by Samsuddin and his administration for a litany of violations.

In response to the filing, Samsuddin said the permit revocation was entirely justified.

“We’re ready to face the lawsuits,” he said as quoted by local media. “We, as district heads, of course have clear proof and basis for revoking the oil palm companies’ permits.”

The filing comes weeks after the same court threw out similar lawsuits against the head of neighboring Sorong district that had been filed by two other companies whose licenses were also revoked. Earlier this month, the court also rejected two lawsuits filed by a third company against the Sorong district head.

The permit revocations were carried out in May 2021 following a province-wide audit of oil palm plantation licenses, which was started in 2018 and found widespread administrative and legal violations by the concession holders.

According to the audit, PUA had secured a location permit for 12,100 hectares (29,900 acres) and ASI for 14,667 hectares (36,243 acres). However, neither company had acquired a right-to-cultivate permit, or HGU, the last in a series of licenses that oil palm companies must obtain before being allowed to start planting. That meant they hadn’t started planting oil palm trees by the time they were supposed to, which is an administrative violation and which prompted the South Sorong district government to revoke their licenses.

Indigenous opposition to palm oil plantations

Besides the administrative violations uncovered by the audit, the permit revocation was also driven in part by widespread calls from local and Indigenous peoples seeking to have their ancestral rights to the land officially recognised.

In May 2021, more than 200 Indigenous Papuans protested against the palm oil companies outside the South Sorong district head’s residence, demanding the government rescind the plantation licenses in their area. The protesters, from the Indigenous Tehit clan, have been fighting for the cause since 2015.

“We Tehit are here today because we reject palm oil companies,” protest leader Yuliana Kedemes said at last May’s protest. “We can’t allow them to come here, because where will our children and grandchildren live in the future? We’re calling on the government to revoke the palm oil permits.”

Following district head Samsuddin’s order to revoke the permits, the Indigenous communities have demanded the government now acknowledge their rights to the land in question. During a meeting in November 2021, Sopice Sawor, an Indigenous woman, said the communities are currently mapping their ancestral lands and forests as part of the effort to gaining official recognition of their rights.

But the lawsuits filed by ASI and PUA could obstruct this effort, and have been condemned by the communities.

“We, Indigenous peoples, who are threatened with becoming victims of oil palm companies, view the companies’ move to sue the South Sorong district head as a form of disrespect to our rights as Indigenous Papuans,” said Olland Abago, who heads a popular movement that stands against palm oil companies in South Sorong.

He said that by filing the lawsuits, the companies had “ignored our voices which reject the presence of oil palm companies on our ancestral lands.”

If the companies win their lawsuits and have their permits restored, they could go on to establish large-scale plantations, destroying the forests that the communities lay claim to, Olland said. The government audit found there are still 11,752 hectares (29,040 acres) of intact forests in PUA’s concession, and 14,091 hectares (34,820 acres) of forests in ASI’s.

“[The companies] don’t have commitments to protect the forests and peatland, and only consider economic ambition for their own profits,” Olland said.

Sopice said the Indigenous communities supported the South Sorong district head in the lawsuits, and called on the Jayapura court to reject the litigation as it did in the Sorong case.

“We ask the judges … to not accept the lawsuit because the presence and activity plan by the oil palm companies are rejected by the Indigenous peoples,” she said.

No sustainability certification, no zero-deforestation pledge

ASI and PUA are members of a plantation group called Indonusa Agromulia, which isn’t a member of the Roundtable on Sustainable Palm Oil (RSPO), the world’s leading sustainability certification scheme for palm oil, and doesn’t have a policy of “no deforestation, no peat and no exploitation” (NDPE).

Greenpeace listed the group as No. 7 for the amount of deforestation it’s responsible in West Papua and Papua provinces; it cleared 10,556 hectares (26,084 acres) of forests in the two provinces combined between 2015 and 2020.

Shares in ASI and PUA were transferred in April 2014 to individuals with no known connection to the Indonusa group, according to a 2017 report by Greenpeace. Company deeds name PUA’s shareholders since April 2014 as Agus Frenando Gurning and Andi Nurmanshah Pramono, and ASI’s shareholders as Togap Gurning and Herry Sen.

But as of 2022, both ASI and PUA share the same address with the Indonusa group in a business district in Jakarta, the Indonesian capital; a call by Mongabay to the Indonusa group on Jan. 18 confirmed that ASI and PUA are still members of the group.

Investor-friendly and unconstitutional

The South Sorong case mirrors that of neighboring Sorong district, where three palm oil companies — PT Papua Lestari Abadi (PLA), PT Sorong Agro Sawitindo (SAS) and PT Inti Kebun Lestari (IKL) — sued district head Johny Kamuru after he ordered their permits revoked.

PLA and SAS has had their lawsuits dismissed by the state administrative court in Jayapura on Dec. 7, 2021, while the two lawsuits filed by IKL were rejected on Jan. 12, 2022.

Opponents of the palm oil industry in West Papua say the outcomes so far have been in their favor. But they say the fact that the cases have even gone to court in the first place sets a worrying precedent, given there are another 11 companies across eight districts whose permits were revoked.

Nicodemus Wamafma, Greenpeace Indonesia forest campaigner for Papua, said one of the reasons the companies have been emboldened in suing local governments is the so-called omnibus law on job creation, which was passed in 2020.

The law is a hugely controversial slate of deregulation aimed at making it easier for companies to do business in Indonesia by getting rid of permitting requirements and weakening environmental and social safeguards, among other measures.

The legislation is part of a wider policy under the administration of President Joko Widodo to favor the interests of investors. Last month, for instance, the president ordered the national police chief to fire any local police chiefs who fail to “escort investors.”

In April 2021, he warned local mayors and district heads not to slow down the issuance of business permits, saying that investors are key to creating jobs. And in December, he reiterated the call, reminding them to promote a climate conducive to investment.

“These companies feel confident that the government is siding with them,” Nicodemus said of the palm oil companies, “even though the result of the permit evaluation … has shown that they’ve violated the rules related to palm oil plantation permits.”

The three companies that sued the Sorong district head cited the omnibus law in their litigation, saying the local government’s decision to revoke their licenses went against the law.

In the South Sorong case, the omnibus law could once again play a part. This time, however, it was cited by district head Samsuddin when he revoked the permits of ASI and PUA, according to Syahrul Fitra, a forest campaigner for Greenpeace Indonesia. This gives the companies a chance to ask the court whether the revocation is in line with the omnibus law, he said.

“The judges will see if there’s maladministration [in the revocation of the permits],” Syahrul told Mongabay. “Since the omnibus law is included [in the decree ordering the permits revoked], the judges will use the omnibus law as a consideration.”

But a crucial development late last year could swing the case in the district’s favor. On Nov. 25, the Constitutional Court ruled in favor of a public challenge to the omnibus law and ruled the law to be unconstitutional. For the Samsuddin’s legal team, this provides an argument that, because the law is unconstitutional, the permit revocations can’t be evaluated on the grounds of whether they complied with the law, Syahrul said.

“The Constitutional Court’s decision gives hope [that the lawsuits will be dismissed],” he added.

Indigenous rights protection

Another factor emboldening the companies in their litigation is the weak position of the Indigenous communities, none of whom have had their rights to their ancestral forests formally recognised by the government.

“That’s why [the companies] are brave to sue, because they feel the position of Indigenous peoples isn’t strong enough to defend their territories that were given away to the companies,” Nicodemus said.

Even so, the sustained protests and opposition against the palm oil companies by Indigenous communities might sway the court to rule in favor of the district government, according to Franky Samperante, director of Pusaka, an NGO that advocates for Indigenous rights.

Franky said community opposition to palm oil in South Sorong is stronger than in Sorong.

“Since 2020, the Indigenous communities [in South Sorong] had started to voice their opposition when the companies wanted to renew their permits,” Franky told Mongabay. “Furthermore, the lawsuits are filed long after [the permit revocation].”

Greenpeace Indonesia’s Syahrul said the dismissal of the lawsuits in the Sorong case also give hope that the South Sorong lawsuits will be rejected.

To prevent companies that have had their licenses revoked from taking back control over the land, the South Sorong government must immediately recognise Indigenous peoples’ rights, Nicodemus said.

“One of the important safeguards is for district heads to move fast in pushing for local regulations to acknowledge and protect the rights of Indigenous peoples in South Sorong,” he said. “[This is] to protect Indigenous peoples and their customary lands in South Sorong from bad investments that destroy forests and the environment in the district.” 

This story was published with permission from Mongabay.com.

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