Genting Plantations Bhd announced on Friday that its Indonesian subsidiary has been slapped with a substantial fine of 396 billion rupiah (approximately RM96.6 million) by Indonesia’s Forest Area Enforcement Task Force. The penalty was imposed over alleged non-compliance with regulations in forest-designated areas.
The affected unit, PT Susantri Permai, which is 95%-owned indirectly by Genting Plantations, received an interim notice from the enforcement authority. The company confirmed that the fine has already been paid while the notice awaits finalisation by the relevant Indonesian authorities. Details regarding the nature of the alleged breach were not disclosed, and the group did not indicate whether the fine would have any material effect on its financial performance.
Indonesia has in recent years intensified regulatory enforcement against plantation operators found to be conducting activities in restricted forest areas. This crackdown has included seizing non-compliant land and, in some cases, transferring it to state-owned plantation companies such as Agrinas Palma Nusantara.
Genting Plantations, a unit of Genting Bhd, manages a total landbank of about 64,300 hectares in Malaysia and roughly 178,900 hectares in Indonesia, including plasma schemes. The company operates seven palm oil mills in Malaysia and six in Indonesia, with a combined milling capacity of 725 tonnes per hour, supporting its substantial production operations across the region.
Following the announcement, Genting Plantations’ shares were up slightly by 0.4% to RM5.16 during the midday session on Friday, valuing the company at RM4.63 billion. Despite this uptick, the stock has declined 9.31% over the past 12 months, reflecting broader market pressures and investor sentiment in the plantation sector.
The enforcement action against PT Susantri Permai underscores ongoing scrutiny of Indonesian plantation operations, particularly for foreign-owned firms, as the government seeks to ensure sustainable practices and adherence to environmental regulations. Analysts note that while the fine is significant, Genting Plantations’ diversified operations and substantial landholdings may help absorb the financial impact without materially affecting its long-term prospects.
This development comes amid a period of heightened regulatory focus in Indonesia’s palm oil sector, where companies are expected to comply with strict forest and environmental standards to maintain operational licences and avoid penalties.
