ASEAN Business and Investment Summit 2016
AEC Symposium 2016 – AEC Sustainable
Economic Development
Agus Purnomo, Managing Director
Sustainability and Strategic Stakeholder Engagement
Vientiane, 6 September 2016
Private Sector Involvement in the AEC
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Voluntary standards
• Roundtable for Sustainable Palm Oil
• International Standards for Carbon Certification
• High Carbon Stock Approach
• Sustainable Palm Oil Manifesto
• Palm Oil Innovation Group
Government standards
• Indonesian Sustainable Palm Oil
• Council of Palm Oil Producing Countries
• PROPER
GAR Social and Environmental Policy
• Environmental management
• Social and community engagement
• Work environment and industrial relations
• Marketplace and supply chain
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• Golden Agri-Resources Ltd (GAR) is the second largest palm oil plantation company in the
world.
• Listed on the Singapore Exchange since 1999, market capitalisation of
US$4.5 billion as at 31 Dec 2014.
• Parent company of PT SMART Tbk which is listed on the Indonesia Stock Exchange since
1992.
• Total planted area of 472,837 ha.
• Employs 183,000 people.
• Integrated operations in China.
• Focused on sustainable palm oil production through multi-stakeholder collaboration.
ABOUT GAR
GAR SUSTAINABILITY EFFORT - INNOVATIVE
FINANCING FOR SMALLHOLDERS
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CPO Price
Replanting
2 Million Ha
1 Million Independent Farmers
Yield Increase
(x 2 Mil Ha)
5-6 Mio Ton CPO/Year
Income Increase
Save New Land opening and avoid forest encroachment of
1 Million Ha forest
up to 2-3 Ton CPO
5-6 Mio Ton CPO x USD 700 = USD 3.5-4.2 Bill/Yr
NOT IMPLEMENTING GOOD AGRICULTURE PRACTICE
LOW: 2-3 ton CPO/ha/year
NOT CERTIFIED
COMMERCIAL INTEREST RATE LOAN
NON CERTIFIED and LOW QUALITY
• CERTIFIED BY GOVERNMENT BPN)
• Fund Provided
SUBSIDISED INTEREST RATE LOAN
CERTIFIED and HIGH QUALITY
HIGH: 5-6 Ton CPO/ha/Year
IMPLEMENTING GOOD AGRICULTURE PRACTICE (GAP)
NONE 4 Years during Construction Compensation = Living Cost
SEED
YIELD
PRACTICE
FUND
COMPENSATION
LAND
Before Program After Program
Reduce emissions level through:
Improve yield Improve land use to reduce
deforestation Sustainable farming practices
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NOT CERTIFIED CERTIFIED BY ISPO (Indonesia Sustainable Palm Oil)
SUSTAINABILITY
GAR SUSTAINABILITY EFFORT - INNOVATIVE FINANCING FOR SMALLHOLDERS
GAR’S SUSTAINABILITY EFFORT –
PARTICIPATORY CONSERVATION PLANNING
GARs process for public consultation, village by village, to identify areas for conservation and development formalized with a village regulation
Draft land use map in and around PT PGM
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GAR’S SUSTAINABILITY EFFORT – SUPPLY
CHAIN TRANSFORMATION
The Aggregate Refinery Transformation plan guides GAR in ensuring that its 440 independent mills comply with the GAR Social and Environmental Policy.
Supply Chain Mapping/
Traceability
Mill Prioritization
Process (MPP)
Field Visit
(Mill and its Supply Base)
Develop and Implement Assistance Programs
(Broad and Deep
Engagement)
Monitoring and
Evaluation
Progress - Done
Progress – On Going
Progress - Next
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GAR’S SUSTAINABILITY EFFORT – SUPPLIER
ENGAGEMENT
Suppliers are key in the journey to transform the Indonesian palm oil industry - GAR recently held the first workshop for about 80 suppliers in Medan.
GAR’S SUSTAINABILITY EFFORT – JOINT
PROJECTS WITH CUSTOMERS
GAR welcomes customers to collaborate on sustainability implementation projects related to peat land conservation, fire prevention, smallholder productivity and sustainability
GLOBAL VALUE CHAINS– TAKLING THE
CHALLENGES FOR AEC BLUEPRINT 2025
In shaping economic growth, the AEC member countries must define principles and criteria for sustainable growth and determine a balance between environmental conservation and development across commodities and their supply chains in the ASEAN region. The AEC objective of sustainable economic growth should not only focus on environmental conservation but also pursue rural and inclusive development. In palm oil, independent smallholders represent a great opportunity to increase production without the need for more forest clearance. Within the AEC not just Malaysia and Indonesia grow Palm Oil. The industry is expanding into Thailand and the Philippines as well. At some point, these countries need to come together to guide companies on standards towards sustainable palm oil production and to negotiate as a bloc with off-taker markets in Europe and USA.
ROLE OF THE AEC