PTPN V Improves Partnership in Riau, ICC Issues Case Termination Order.

Jakarta (26/07) – The Indonesia Competition Commission (ICC) issued a Stipulation of Discontinuation of Case Number 10/ICC-K/2022 concerning the Alleged Violation of Article 35 Paragraph (1) of Law Number 20 of 2008 related to the Implementation of Partnership between PT Perkebunan Nusantara V and Sawit Makmur Cooperative in Kampar Regency, Riau Province, today, July 26, 2023, at the ICC Head Office in Jakarta. The determination was issued in line with the implementation of corrective orders by PT Perkebunan Nusantara V (PTPN V) on its partnership with Sawit Makmur Cooperative (Kopsa-M), after obtaining Written Warning Letter I and Written Warning II from ICC. The conclusion was reached by ICC after passing the improvement monitoring period conducted during the implementation period of Written Warning II.

Previously, ICC received a public report regarding alleged controlling behaviour in the implementation of partnership agreements carried out by PTPN V as the core, related to the development and management of oil palm plantations with its plasma partner, Kopsa-M. PTPN V’s various behaviours, as stipulated in its partnership agreement, allegedly violated Article 35 paragraph (1) of Law Number 20 Year 2008.

After going through the preliminary examination of partnership phases I and II, ICC issued Written Warning I and Written Warning II, which ordered various improvements to PTPN V in the implementation of its partnership relationship with Kopsa-M. Based on the improvement orders, PTPN V partially implemented the partnership improvement orders within 14 days of the implementation of Written Warning I, while all improvement orders were completed within 120 days of the implementation of Written Warning II. The remediation of the partnership relates to, among others:

  1. Transparency of information regarding the cost of developing and managing Kopsa-M’s 1,650 hectares of plantation land, which resulted in Kopsa-M’s debt obligations to the bank and bailout debt to PTPN V.
  2. Improvement of Kopsa-M plantation management with single management for:
  3. plantation maintenance and harvesting activities (harvest preparation and harvesting methods);
  4. preparation of a work plan of activities and budget for Kopsa-M plantation management;
  5. inventory, analysis and evaluation of plasma plantation land that can be managed by PTPN V in coordination with Kopsa-M; and
  6. implementation of administrative, management and technical training activities on oil palm plantations for Kopsa-M.
  7. Improvement of Kopsa-M’s financial management in the form of the submission of data on Kopsa-M’s total debt, debt repayments, list of debts, and remaining debts for each period, as well as planning for the repayment period of Kopsa-M’s bailout debt instalments to PTPN V based on the optimal production of plasma plantations.
  8. Documents showing PTPN V’s efforts to transfer Kopsa-M’s land to other parties were submitted.
  9. Efforts to complete the process of Kopsa-M’s Certificate of Ownership (SHM) that has been carried out by PTPN V, based on the land area under the management of PTPN V in accordance with the data that is the object of the Agreement.

Based on the monitoring, ICC concluded that PTPN V has carried out all corrective orders in Written Warning I and Written Warning II. With the implementation of these warnings, ICC stopped the Partnership case handling process and issued a Commission Stipulation on the case. The settlement of this partnership issue is believed to provide positive benefits to 825 (eight hundred twenty-five) members of the Sawit Makmur Cooperative.