YP Olio Sdn Bhd has just received approval from the Department of Environment to turn a sprawling forest in Pahang into oil palm. But evidence suggests the plantation will fail to get mandatory certification and license. So, why cut the forest? Part 1 of 3.
This story is produced in collaboration with the Pulitzer Center’s Rainforest Investigations Network.
For much of 2020 and 2021, loggers cleared huge tracts of forest on private land in southeastern Pahang. The site used to be part of a forest reserve in the Chini-Bera forest complex. Now, silty logging roads wind across the shrubby landscape.
The logging had stopped at a fork in a main logging road since June 2021. Perhaps the loggers were deterred by the wooden blockade erected there by the local Orang Asli. Perhaps the landowner, YP Olio Sdn Bhd, was waiting for authorities’ approval of its environmental impact assessment (EIA) report.
The company planned to turn its 8,498 ha site – about two-thirds still forested – into an oil palm plantation.
The project’s EIA report was rejected by the federal Department of Environment (DOE) in October 2021. The decision was partially informed by protests from some of the Orang Asli living on site.
However, YP Olio submitted a revised EIA. Recently, on 21 September, DOE approved it. The approval, compulsory for the project to start, means YP Olio can proceed to clear the forest. This marks the end for the forest that has survived millions of years and is important in slowing global warming.
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A hurdle and choices
But YP Olio faces a new hurdle: it will likely fail Malaysia’s mandatory sustainability certification for oil palm.
Furthermore, the project is predicted to incur losses of over RM200 million to the state and society.
But like the fork in the road, the company has choices. YP Olio could spare the forest and try alternatives that protect its business in the long run, say conservationists.
YP Olio was accused by local Orang Asli of misleading them into signing their consent for the project. The company refutes the allegations. Read Macaranga's 2021 report of the incident.
No certification, no license
In December 2019, YP Olio acquired a 99-year lease of the 8,498 ha piece of land from the Pahang state government to plant oil palm (see state approval letter below) The site is part of the Bukit Ibam forest reserve in the Chini-Bera forest complex.
Logging began immediately. Satellite images show that between January 2020 and June 2021, loggers cleared almost 2,600 ha of forests. The logging was mostly done by four other companies, and each had EIA report approvals to log on “private land”.
Note that the site was still forest reserve until November 2020 when the Pahang government excised it.
However, this logging of natural forest threatens YP Olio’s future oil palm plantation.
All oil palm plantations in Malaysia must obtain the Malaysian Sustainable Palm Oil (MSPO) certification. But the MSPO scheme’s operator, the Malaysian Palm Oil Certification Council (MPOCC), tells Macaranga that “natural forest clearance [after 31 December 2019] will not qualify for MSPO”.
Nevertheless, the EIA report consultants wrote that YP Olio intends to apply for MSPO certification. For MPOCC, this means that “YP Olio does not understand the standard’s requirements and implications”.
And without a MSPO certification, YP Olio cannot get licenses to sell and transport oil palm.
Regulator says don’t cut forests for oil palm
Oil palm licenses are regulated by the Malaysian Palm Oil Board (MPOB). MPOB tells Macaranga that it sees no need to clear forest reserves for oil palm plantations.
MPOB adds that it had told companies and EIA consultants its “concerns and disagreement” over clearing forests for oil palm. Such activities would tarnish the federal government’s policies, says MPOB. These policies include banning the conversion of forest reserves for oil palm.
Still, because state governments yield authority over land matters, “it depends on the state government to take this matter seriously.”
Macaranga asked the federal DOE if it had considered YP Olio project’s MSPO certification risk. DOE wrote back saying that the Pahang government had approved the project in 2017.
The Pahang Chief Minister and state executive council office did not respond to questions. Neither did YP Olio’s directors.
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Profits for some, losses for most
Data also suggests that YP Olio’s project would reward the company with huge income but could cost the state and society dearly.
The first major revenue YP Olio would get is the timber in the remaining 5,900 ha forest. How much might those logs sell for?
That is a conservative figure provided by an experienced logging manager in Malaysia. Even a margin of error of 50% would still yield RM83 million.
The second major revenue for YP Olio is oil palm. The EIA report estimated that the first 30 years of the project would earn RM89 million. The report did not consider the risk that the plantation fails to get licensed.
The EIA report also listed a third sizeable source of revenue: timber from forest plantations. The consultants estimated log sales to hit RM68 million.
But this valuation could be a mistake because YP Olio’s project does not include forest plantation. The consultants from Eco Synergy Solutions Sdn Bhd did not respond to questions.
However, the EIA report also calculated that losses would be incurred in the first 30 years of operations. A forest gone means lost revenue from sustainable logging and carbon credits of RM171 million and RM77 million, respectively.
However, these costs will be paid for by the state and society, not YP Olio.
Estimates are debatable. But whatever the numbers, none accounted for the loss of habitat and wildlife, or the impact on local Orang Asli communities.
Edited by SL Wong.