PT Agri Eastborneo Kencana Implements ICC’s Order for Improvement of Its Partnership with BTSS Cooperative in Kutai Kartanegara.

Tuesday, September 26, 2023

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Jakarta (10/08) – The Indonesia Competition Commission (ICC) has again resolved the issue of partnerships among micro, small, and medium enterprises (MSMEs). This time the partnership was carried out by PT Agri Eastborneo Kencana (PT AEK) for its partnership with around 1,100 plasma farmers who are members of the Bina Tani Sawit Sedulang (BTSS) Cooperative in Kutai Kartanegara Regency, East Kalimantan Province. The settlement is in line with the submission of the Stipulation of Termination of Case Number 03/KPPU-K/2022 concerning Alleged Violation of Article 35 Paragraph (1) of Law Number 20 of 2008 from ICC, represented by the Director of Partnership Supervision Lukman Sungkar, to the President Director of PT AEK Adalin Ali on August 9, 2023, at the ICC Head Office in Jakarta. The stipulation was given in line with the implementation of behavioural changes by PT AEK after the issuance of Written Warning Letters I, II, and III and the monitoring period for the implementation of improvements carried out by ICC for 1 year.

For information, ICC conducted an examination of PT AEK’s core plasma partnership after a public report. In the report, PT AEK allegedly violated Article 35, paragraph 1, of Law Number 20/2008 on Micro, Small, and Medium Enterprises (MSMEs). The partnership was considered to not fulfil the principles of partnership as mandated in Law Number 20 of 2008. From the results of the examination, it was found that there was mastery behaviour carried out by PT AEK over the business activities carried out by its plasma farmers who are members of the BTSS Cooperative, which resulting in losses for plasma farmers.

ICC then gave corrective orders through Written Warning I, Written Warning II, and Written Warning III to PT AEK. Various corrective orders were obeyed and implemented by PT AEK, especially on several matters, namely:

  1. Revocation of the clauses of the Cooperation Agreement between PT AEK and BTSS Cooperative, which is a form of control by the core company. Clauses such as the non-allowance of changes to the articles of association, by-laws, and management of BTSS Cooperative without written approval from PT AEK as well as clauses guaranteeing the BTSS Cooperative to PT AEK that the Cooperative will always comply with the contents and provisions of the agreement.
  1. Improvement of the clauses in the Cooperation Agreement so that the two parties can make administrative preparations related to the management and maintenance of budget plan, operational work plan, calculation of maintenance, crop yield calculations, and financial reports. As well as a clause for PT AEK to involve the BTSS Cooperative in the management of the smallholding plasma plantation in the form of business development and the ability of the Cooperative.
  1. The obligation for PT AEK and BTSS Cooperative to discuss the training plan and its implementation for BTSS Cooperative members.
  1. An obligation for PT AEK to conduct a financial audit of the smallholdings using an independent auditor selected jointly with the BTSS Cooperative
  1. An obligation for PT AEK to provide relevant data and information regarding a copy of the land map and a copy of the Right to Cultivate certificate belonging to the BTSS Cooperative

With the improvement in the partnership, ICC terminated Case No. 03/KPPU-K/2022. Through this change in behaviour, around 1,100 smallholder partner members of the BTSS Cooperative will be benefited through coaching and training as a knowledge transfer process, the development of plasma oil palm plantations in accordance with the standards set by the government, the receipt of sales proceeds from the sale of oil palm, and receiving Right to Cultivate certificates and mortgage certificates in the name of BTSS Cooperative.

ICC hopes that the partnership can increase the positive impact in the future, and plasma farmers will increasingly understand their respective rights and obligations to optimize the benefits of the partnership. The oil palm plantation company can carry out its role as a core company by continuing to prioritize the principles of mutual trust and cooperation.