Zeitschrift SUARA

Bakrie Sumatera Plantations

Suara No. 1/09, August 2009

by Marianne Klute

Translated into English by biofuelwatch, September 2009


Case study: Bakrie and the attack on the village of Sei Kopas

All of the sudden the bulldozers return. They thunder across the fields and tear down whatever stands in their way. Farmers in their fields freeze in shock. Their rice harvest has been destroyed; young fruit trees have been uprooted. They are powerless against the machinery of the company Bakrie Sumatera Plantations and the hundreds of security forces hired by the company. Amongst them are police officers belonging to the Mobile Brigades, as well as hired criminals.

One farmer shouts: „This is our land! We will die for our land!” The security forces shout back: „Arrest them! Arrest them. Syahmana Damanik, a farmer from Sei Kopas, runs away. The police shouts: „Kill him! Stand still or you’re dead!”. Shots are fired. Damanik suffers a serious bullet injury. Police drag him inside a car. They continue to beat him and hit him on the head. Inside the car, a policeman shoots him for a second time. During the height of the events, the village children protect themselves inside a simple hut in a field. Outside, the police detain their fathers. They beat the fathers with batons and rifle butts and deliberately aim for their heads. Hired criminals arbitrarily hit out at the mothers. Many people are injured. Finally, the bulldozers tear down the huts. Six farmers are arrested. Farmer Rumena Manurung is not found. Villagers search for her all night long. At last she is found, handcuffed and unconscious, down a three metre deep well, 500 metres from where the events had happened. The farmers of Sei Kopas still keep the handcuffs. They are inscribed with the police registration number 90404.

Background to the case of Sei Kopas

The brutal assault on the inhabitants of the village of Sei Kopas in March 2007 illustrates the way in which palm oil companies in Indonesia manage to get hold of land. This is not a unique case. It stands out amongst thousands of land conflicts over oil palm plantations primarily because an Indonesian television team happened to be in the village and filmed how bulldozers belonging to Bakrie Sumatera Plantations (BSP) destroyed the fields, tore down huts and in the process were ‘protected’ by police officers from the Mobile Brigades and criminal gangs.

The conflict between BSP and the village of Sei Kopas (Kisaran Department, Asahan District, North Sumatra Province) had a long previous history. In first the first land grab against the people of Sei Kopas predated the founding of BSP, which was set up after the (for the company) successful takeover of land in 1983. The now third largest Indonesian palm oil producer was thus born amongst fraud, intimidation and violence.

SeiKopas_Google Earth

Monocultures as far as the eye can see. View from 10 km above Kisaran Department in North Sumatra.

Google Earth, viewed 10th June 2009

Anyone who takes the plane from Jakarta towards Medan can see mile after mile of monotonous monocultures. Somewhere below lies Sei Kopas, encircled by oil palm plantations.

Fifty years ago, the land was covered in rainforest. Poor peasant families cleared a piece of forest, set up rice paddies and founded a village. In 1980, the village was registered, which made the villagers legitimate land owners. Just three years later, a company suddenly appeared. Without prior consultation or the consent of the population, the company planted many hundreds of hectares of oil palm. This company formed the basis of the future Bakrie Sumatera Plantations.

During Suharto’s dictatorship, the population did not know how to resist and how to demand the return of their land. This changed when Suharto resigned in 1998. Now it became apparent that BSP had no permit for a plantation. The governor of North Sumatra refused to retrospectively grant them a permit. In 1999, however, a licence suddenly appeared, when Aburizal Bakrie took on the leadership of the family holding Bakrie & Brothers. A legal process started by the farmers of Sei Kopas was disadvantageous for them. They had lost their land for good. During the following years, the company expanded, following the same pattern. For many years, BSP has made the Mobile Brigades of the police work for them.

Families are threatened if they try to work on their rice paddies, heavy machinery destroys the fields. People react with land occupations and demonstrations. BSP retaliates with intimidation, terror and violence. In February 2005, for the example, BSP’s security company together with the police in Asahan Village attacked the village, tore down huts and injured seven farmers.

Numerous mediation attempts by local politicians failed. An appeal by the Parliament to cease the terror against the population remains ineffective. An inspection by the National Police and by the National Human Rights Commission brings no results. Aburizal Bakrie meantime becomes Minister for Business and Industry.

On 17th February 2006, the bulldozers return, with them some 50 of BSP’s security officers, amongst them police officers from the Mobile Brigades, the army, security services and hired criminals with firearms. Dozens of women farmers have to watch their rice paddies being destroyed. Seven women stand in front of the bulldozers. They are beaten by the armed forces. The women resist by opening their clothes in order to shame the security forces. This has no effect; they are scorned and chased away. The women escape onto trees but are brutally pulled down. One woman, Herliana Marbun, registers a criminal charge. So far, the attackers remain unpunished.

Since the start of the ‘biodiesel boom’ the hunt for land has become ever more brutal. Aburizal Barkie is now Minister of Social Welfare and watches his plantation company acquire land through violence, at the expense of ordinary peasant families. The attack in March 2007 has been the most violent so far.

Bakrie Sumatera Plantations

PT Bakrie Sumatera Plantations (BSP) is a palm oil and rubber subsidiary of one of Indonesia’s largest business holdings, the publicly listed PT Bakrie & Brothers, which also includes Indonesia’s largest coal mining, telecommunication, agro-industry and property businesses. BSP was founded in 1983; it emerged from modest beginnings to the – in terms of market value – tenth largest Indonesian agro-industry group in 1997, the fifth largest in 2008 and the third largest one in 2009.

Principal activities of Bakrie Sumatera are agro-industry, processing and trading agricultural and industrial products, namely rubber and crude palm oil. Until 2007, BSP had plantations in Jambi, North and West Sumatra, all three provinces on the island of Sumatra. Three crude palm oil refineries in Java and Sumatra produce RBD olein (Refined, Bleached and Deodorized palm oil), fatty acid and stearin. The main German dealer is Centrotrade Deutschland GmbH. But even the beginnings of the company were under the shadow of evictions and violence, and local communities have lost their land. (See about the village of Sei Kopas). Daily workers on Bakrie’s plantations sometimes earn less than one dollar a day.

During the Asian crisis in 1997, BSP got into trouble. But after a successful debt restructuring process of PT Bakrie & Brothers in 2001 (see below about the Bakrie Group), with foreign stakeholders coming in, BSP began to grow. Responding to the European agrofuels boom, BSP developed ambitious expansion plans. 2007 was a great year for palm oil producers in Indonesia. Demand was high, and prices for palm oil surged to record levels, almost doubling compared to the previous year, and the Indonesian government paved the way for becoming the world’s largest palm oil producing country.

Bakrie Sumatera jumped onto the train and took a huge step forward to become one of the top palm oil producers in Indonesia. First, it realised parts of its expansion plans by acquiring five oil palm plantations, in addition to its already existing plantations in North Sumatra, West Sumatra and Jambi. Through the acquisitions, Bakrie Sumatera increased its operation area (from 53,000 hectares in 2007 of both palm oil and rubber) up to 70,000 hectares dedicated to oil palms alone (2008: 67,745 hectares). With the expansion, the company was aiming to nearly double its palm oil production in just one year, from 180,000 tons in 2007 to 340,000 tons in 2008.

Secondly, it started building an agrofuel (biodiesel) refinery on the island of Batam, through its subsidiary Bakrie Rekin Bio-Energy, a joint venture of BSP (70%) and state owned Rekayasa Industri (30%). This is the second of dozens of planned large agrofuel refineries, after the Wilmar plant in Riau, which are oriented towards producing agrofuels mainly for the European market.

Thirdly, Bakrie Sumatera is aggressively pushing for expansion. This can not be achieved through the acquisition of existing plantations alone, but involves clearcutting of Riau’s, Borneo’s and Papua’s remaining forests, going hand in hand with land grabbing. Bakrie Sumatera is well on the way to tripling its plantation area over the coming three years.

According to M Iqbal Zainuddin, director of business development of BSP, the company is targeting 200,000 hectares by 2011, and 50,000 hectares new plantations are expected to be added every year. (M Iqbal Zainuddin at World Palm Oil Summit in Jakarta, May 2008) High demand and high prices in 2007 aroused Bakrie’s appetite and, ironically, falling prices since then have had the same effect: They apparently force Bakrie to expand in order to be able to repay loans and/or to invest in coal, rubber, communication. Despite declining palm oil price since 2008, increasing production had lead to an increase in income during the first quarter of 2008. Bakrie Sumatera was able to book a 794 percent increase net profit to Rp 18.5 billion (US$ 1.99 million) during that period, compared with the first quarter of 2007. 2009 saw a similar development of profit margins after some heavy ups and downs. http://www.corporateinformation.com/Company-Snapshot.aspx?cusip=C366AP550 Not surprisingly, the global demand for palm oil and agrofuels encourages the company to expand even into forested and untouched regions. In 2008-2009, BSP was able to secure land rights over „conversion forest” (forest which is intended by the Department for Forestry to be converted to agricultural use and therefore open to clearcutting. Other forest status are „production forest” – for logging, but not clearcut, – and „protected forest”), mainly in Kalimantan (the Indonesian part of the island of Borneo) and Papua (the Indonesian part of the island of New Guinea). Today, BSP is holding land rights over more than 100,000 hectares, including the above mentioned 70,000 hectares of active plantations.

The planned expansion which requires an investment of $ 260 million will be partly financed by Bakrie’s own subsidiary Sentosa Persada. According to BSP’s chief executive Ambono Janurianto, $ 30 million come from Bakrie Sentosa Persada, $ 80 million from an international financial consortium of foreign investors through the newly constructed Indo Green International (of which Bakrie Sentosa Persada owns 31% ), and the remainder from local bank loans.

In February 2009, BSP even unveiled preparations for the acquisition of 200,000 hectares in Africa, especially in Liberia, a country which has been torn by civil war for two decades. Liberia is still governed by the United Nations, and the UN is said to support Bakrie during the investment process. (http://us.en.vivanews.com/news/read/26990-bakrie_sumatera_aims_liberia_for_palm_oil)

In response to European demand for certified palm oil for the agrofuel sector, Bakrie Sumatera Plantations has applied for an assessment of five old plantations (Serbangan, Sei Baleh, Gurach Batu, Tanah Raja and Kwala Piasa of BSP’s Kisaran Unit) in the province of North Sumatera, covering 6,880 hectares, and one palm oil mill with a capacity of 243,000 t per annum. In the near future, once the auditing process has been completed, Bakrie will be able to satisfy Europe’s desire for labels with RSPO (Roundtable on Sustainable Palm Oil) certified palm oil coming from plantations with unsolved human rights violations and decadelong conflicts over land rights. (For the BSP certification assessment see: Public Notification on upcoming RSPO Certification Assessment of PT Bakrie Sumatera Plantation Kisaran Unit, North Sumatera, Indonesia in English (56 kB, PDF))

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