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Story Publication logo March 31, 2024

Timber Grab: The Truth Behind Pahang Oil Palm Plantations


A rainforest in Malaysia

An elaborate financial system supports large-scale deforestation projects.


Baca cerita ini dalam bahasa Melayu.


Image courtesy of Malaysiakini.

Overrun by wild elephants, a barren plantation in what was mature forest bears witness to years of mismanagement.

Being in Kampung Tanah Pindah feels like being at the edge of the world. Surrounded by dense mature forests in Hulu Tembeling, Pahang, paved roads stop here.

It is so remote that the village does not even have modern water supply, but nature provides.

Through a self-built channelling system, villagers source their water from Sungai Kancin, a river high up the hills 18 kms away.

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But this harmonious, symbiotic relationship between human and nature is under jeopardy, after a massive oil plantation project wedged itself between the two.

In 2014, Perbadanan Kemajuan Negeri Pahang (PKNP) was granted land titles to develop the jungle into oil palm plantations where Sungai Kancin is situated.

::::: river in PKNP site

In 2016, vegetation still covered riverbanks that run through PKNP’s plantations. In 2022, the riverbank became fully exposed due to extensive logging activities. The Malaysian Sustainable Palm Oil (MSPO) bans clearing of forests on riverbanks since 2013. But the PKNP plantation continues to get MSPO-certified.

Villager Wan Mohamad Razali, 61, is unhappy about the logging activities because it has disrupted their water supply.

Once tucked away in the forest, their water pipes were exposed on the open grounds of the estate, and were soon destroyed by wild elephants.

Still, villagers persisted to head into the hills to repair the pipes. Until the water turned murky, after vegetation along the riverbanks were cleared. Now, they no longer source water from the hills.

The alternative was rainwater or downstream water. At times the water downstream was dirty but the villagers had no choice.

A corporate donor provided villagers with groundwater pumps. But water from underground smelled foul, said Wan Mohamad Razali, incomparable to the pristine water from the hills.

Meanwhile, villager Wan Mohd Masri Wan Azahan used to catch fish in Sg Kancin, Hulu Tembeling, Pahang. The river was once filled with fish, but when the trees along the riverbank were cut down, “fish don’t want to stay in the river anymore”, he says.

Image courtesy of Malaysiakini. View the full interactive map here.

Kampung Tanah Pindah is located to the north of PKNP’s plantation in Jerantut.

Before the plantation, villagers sourced water from Sungai Kancin located 18 kilometres away. This source was disrupted after forest clearings.

Sungai Kancin runs through PKNP’s 8093-hectare-wide plantation, which is one of the largest oil palm plantations in Malaysia. This area is classified as an Environmentally Sensitive Area.

On Nov 16, 2023, a forest neighbouring the plantation was gazetted as the Al-Sultan Abdullah Royal Tiger Reserves. Located to the east of PKNP’s plantation, this gazetted area covers 134,183 hectares.

Just nine kilometres northwest of the plantation is Taman Negara National Park - the largest protected land in Malaysia and home to many animals on the brink of extinction.

Local villagers report tiger sightings from time to time. In October 2023, tiger footprints were discovered in a rubber plantation neighbouring PKNP’s plantation named YP Hevea.

Image courtesy of Malaysiakini.

The villagers have also discovered a salt lick in the plantation site. This is where wild animals in the forest come to obtain minerals. If logging does not stop, this salt lick will disappear.

Despite being rich in biodiversity, the felling of trees in this invaluable forest went on without interruption.

In July 2023, PKNP’s plantation was a jarring sight – a barren expanse, scarce in vegetation, laid pale and weary beside Taman Negara’s vibrant greenery. By then, the plantation had been in development for eight years.

EOS Data Analytics is a US-based company specialised in analysing satellite images of agriculture and forestry. Their soil expert, Vasyl Cherlinka, calculated the opportunity costs of deforestation caused by PKNP plantation from 2016 to 2023.

By Cherlinka’s measure, if the forests were preserved, it could sequester 227,395 tons of carbon dioxide, akin to the amount of carbon emitted by 49,472 cars in eight years.

Deforestation that happened in PKNP’s oil palm plantation from 2016 to 2023. Image courtesy of Malaysiakini.

PKNP’s deforestation was “done rather chaotically”, said Cherlinka. Instead of being systematically planted with palm trees, the deforested area was gradually reclaimed by shrubs and overgrowth.

The project’s environmental impact assessment (EIA) report stated a phased approach in clearing forests was to mitigate environmental damage, yet satellite images showed logging was done in fragmented patches.

Image courtesy of Malaysiakini.

In contrast to the flourishing green plantations lining the North-South Highway, this plantation is an extended area of sun-scorched brown.

Image courtesy of Malaysiakini.

In this post-apocalyptic sight, what little green left are mostly weeds and some scattered oil palm trees.

Image by Mukhriz Hazim.

Elephant dung was found everywhere on the hillslopes, but the plantation management seems to have no intention of preventing the animals from entering.

Image courtesy of Malaysiakini.

Wan Rokman Wan Ngah, a local villager, finds the plantation’s pitifully low yield laughable.

“The elephants are here almost every night and eat all the palm trees.”

It takes about four years for a palm tree to reach maturity.

PKNP told the Auditor General it first started planting in Oct 2015, and expected to harvest by 2019. Eight years later, the harvest has been disappointing.

Half of PKNP’s plantation - about 4,046 hectares - are in operation, and from there the plantation yielded just 29 tonnes of fresh fruit bunches (FFB) a year, according to a report published by the Malaysian Palm Oil Board (MPOB) in 2022. This is just seven kilograms per hectare of land, annually.

If we estimate that mature oil palm trees occupy 10% of the total area or 809 hectares, the average yield per hectare of land is 35 kilograms per hectare, annually.

In contrast, the average oil palm harvest of Peninsular Malaysia in 2022 is 16.41 tonnes of FFB per hectare of land - or 469 times more than PKNP’s yield.

According to the report, crops in “almost 90 percent” of the area were damaged by elephant encroachment. An environmental consultant even said that this is “the worst-managed oil palm plantation in Malaysia.”

Warnings of the Human-Elephant Conflict ignored

PKNP appointed a consultant agency to conduct an EIA study in 2014. The consultants concluded that this area is a wild elephant habitat, because elephant dung and footprints could be seen everywhere.

PKNP were told that human-elephant conflict was inevitable, but the agency made no preparations. The consultants even cautioned that wild elephants are bound to be a threat to a plantation set up in this area.

“The clearance of the forest area will result in habitat fragmentation, which reduces food availability. Generally, young shoots of oil palm trees would be the main target of wildlife.”

The remaining palm trees in PKNP’s plantation. Image by Mukhriz Hazim/Malaysiakini.

The consultants proposed several mitigation measures: construct ditches and electric fencing, and set up buffer zones.

According to the EIA report, the plantation developer has to appoint an Assistant Estate Manager to lead the Environmental Management Team that is responsible for overseeing the execution and adherence to the EIA report’s guidelines.

But nothing of the sort could be seen at PKNP’s plantation. No ditches, no fences, no buffer zones to keep the elephants away.

In short, PKNP failed to follow the Environmental Management Plan (EMP) requirements listed in the EIA report.

The Malaysian Palm Oil Certification Council (MPOCC) oversees the Malaysian Sustainable Palm Oil (MSPO). The council told Malaysiakini its checks found that the plantation owner did not properly implement the recommendations of EIA, which resulted in the poor crop production due to elephant encroachment.

“Therefore, to preserve impartiality, MSPO decided to bring forward these matters to the Accreditation Body (the Department of Standard Malaysia) for onward verification and action.”

Forests logged but oil palms unsold

In a way, when it comes to deforestation for plantations in Malaysia, the PKNP plantation story is not unique, forestry insiders say.

A retired timber merchant shared that some parties would cut down forest ostensibly to make way for a plantation, but actually have zero interest in cultivation. Just like PKNP, these parties would hide behind “wildlife conflict” as an excuse, he said.

“Some developers would just grab their timber and run, as plantations are costly to manage, and you won’t see profit for two to three years. They will plant something for show, and write a report about how wild elephants are a problem, they can’t develop this place properly,” the retired timber merchant, who declined to be named, said.

If PKNP was serious about cultivating the oil palm plantation business, it could have chosen to develop a smaller piece of land and prioritise the protection of young oil palm shoots.

After these palm trees have matured, it could then move on to develop the rest of the land in stages. This would be a way to minimise the loss caused by elephants trespassing, but PKNP did not do this.

Instead, despite their issues with elephants, PKNP continued to cut down 539 hectares of forests between 2020 January and 2024 February.

Worse, as the oil palm produced from these forest lands were in non-compliance with the industry’s deforestation regulations, it cannot be sold on the market.

Logging truck in PKNP site. Image by Mukhriz Hazim/Malaysiakini.

Rising concerns among consumers in the international market - in particular in Europe - on the impact of the oil palm industry on the environment, have prompted industry players to implement various certification standards.

By law, Malaysian palm oil plantations must be MSPO-certified to keep their operating licence.

On top of that, in response to criticisms of excessive logging from the international community, MSPO promised to enforce tighter regulations to keep the oil palm industry sustainable.

Following that, the government banned the conversion of natural forests to oil palm plantations effective Dec 31, 2019. Other measures have also been announced, which included the cap on nationwide oil palm cultivation area at 6.5 million hectares.

Since the establishment of the oil palm plantation, PKNP has been focused on cutting down forests and developing areas in the west.
Source: Planet Labs (July 13, 2019)

Five years since planting started, satellite images show most of the area is still bare.
Source: Planet Labs (Oct 27, 2020)

Despite the government restriction, deforestation for the PKNP plantation did not cease on Dec 31, 2019. Instead, clearing was sped up in the northeastern area.
Source: Planet Labs (Aug 6, 2021)

As of July 2023, mature forests in the northeastern part of the plantation are almost entirely cleared.
Source: Planet Labs (15 July 2023)

Around 539 hectares of forests were cleared after the MSPO ban. With nothing in PKNP’s way, at this rate, more than 2,000 hectares of the remaining forest lands will be gone in a matter of years - the equivalent size of 3,737 football pitches.
Source: Planet Labs (24 March 2024)

Despite clear violation of MSPO guidelines, their certification has not been revoked. This allows them to continue logging under the name of cultivating oil palm plantations.

When contacted, PKNP said the entire 8093-land was leased to its subsidiary - PKNP Agro Tech Sdn Bhd (PASB) - to develop palm oil plantations.

Malaysiakini contacted PASB for a response on Jan 18 but at publication time, the firm has been unable to respond. On March 25, a PASB representative offered to set up a meeting after Hari Raya Aidilfitri, which is likely to fall on April 10. The Pahang state government has not responded to queries.

Responding to Malaysiakini, MPOCC said that MSPO and the certification body Care Certification International had in February interviewed the local community, specifically the chief of Kampung Tanah Pindah found that there have been no instances of water disruption in Sungai Kancin.

“PASB has proactively installed a tube well in the village since 2017, and to date, no complaints have been registered regarding its functionality or service.”

Investigations of MPOCC found that PASB only manages 4046 hectares of land, which is within the MSPO certification scope.

“The land clearing activity (between the period of 2020 to 2023) was found outside of the certified area, which has been leased out to another entity,” MPOCC told Malaysiakini without revealing which entity.

However, a logging licence plate on site confirmed that PKNP is the landowner of the cleared area.

A logging licence plate established on site named PKNP as landowner. Image by Mukhriz Hazim/Malaysiakini.

MPOCC further stated that if the cleared areas are designated for oil palm cultivation, it will fall under the purview of the MSPO New Planting Mechanism, which prohibits conversion of natural forest to oil palm plantations after Dec 31, 2019.

Furthermore, satellite images show that the river bank in the MSPO-certified area was not conserved. The Department of Environment (DOE)’s investigation in February 2024 found that PKNP didn’t maintain the riparian area and failed to arrange for an environmental audit by a third party in 2023.

“Due to the failure of the project proponent to adhere to approval conditions of EIA report dated July 10, 2014, order notifications were issued under section 31 (power to require owner to install, operate, repair etc) and section 37 (owner to furnish information) under the Environmental Quality Act 1974,” the DOE said.

The department added that its investigations in 2019 also found open burning in the plantation and 18 compounds were issued. Order notifications were also issued for the compliance of EIA approval conditions regarding erosion and sediment control.

DOE’s follow up investigation in 2020 and 2023 concluded that the project proponent has complied with these order notifications and EIA approval conditions.

Asked about the deforestation risks of PKNP’s plantation, MPOB said that “any violation of MPOB legislation may be subject to enforcement action”.

A dream business model

All produced oil palm fruits without an MSPO certification have no place in the market. But this doesn’t mean PKNP would suffer losses, because timber in primary forests have high value.

It is estimated that this forest of 8,093 hectares could bring in at least RM858 million in revenue - more than double the total Pahang budget, which stood at RM318 million in 2023.

Curiously, however, PKNP is not directly involved in the logging business.

The GLC gave up the lucrative segment of this venture and was given to a private logging company named A&T Associates.

Instead, the GLC is saddled with the expensive plantation development work, a decision that goes against business sense.

Loggers loading timbers onto trucks. Image by Mukhriz Hazim/Malaysiakini.

This arrangement may be baffling, but is not atypical, said environmental conservationist Lim Teck Wyn. The state government usually does not earn much from selling logging titles to timber merchants, while the ones making a fortune are timber merchants, the honorary associate professor of the University of Nottingham said.

“These companies that are logging are making a lot of profits, billions (of ringgit), but the state does not get billions (of ringgit). So how come the state wants to enrich the company?”

“The royalty imposed by the state government is less than 10 percent of the timber price. In theory, they should increase the royalty, but the reality is, they do not intend to do so.”

Image by Mukhriz Hazim/Malaysiakin.

Forest politics of the VIPs

DOE enforcers play a crucial role to prevent businesses from exploiting loopholes, i.e. conducting logging activities under the guise of developing plantations.

To stop this from happening, DOE enforcement officers are supposed to conduct regular inspections on plantations, one senior MPOB officer told Malaysiakini on condition of anonymity.

This is to ensure that contractors are complying with the EIA requirements and commitments, while failure to do so would result in penalties.

Regrettably, he said, Malaysia’s robust laws are failed by poor enforcement.

“Sometimes, you do have to consider who is the developer behind these projects. It is difficult to do our job if they are VIPs,” he said.

How deeply involved are political VIPs in these plantation developments? To answer this, Malaysiakini analysed oil palm plantation’s EIA reports approved by Peninsular DOE on their official website and data scraped from DOE’s public geospatial server.

It is important to note that the findings are not conclusive as we lack the complete list of approved EIAs, but it gives us a glimpse of VIP’s involvement in deforestation.

Checks found that of the 28 Pahang oil palm plantation projects that were approved by DOE from 2001 to 2023, most have political or royal affiliations.

Pahang has the most number of approved projects, spanning an area of 51,603 hectares - almost as big as Penang Island and Kuala Lumpur combined.

Between 2001 and 2023, DOE approved at least 94,000 hectares of forests to be developed into oil palm plantations in Peninsular Malaysia alone.
Data source: DOE website and scrapped from DOE geospatial server

Pahang’s approved projects make up 55 percent of the total oil palm plantation area across all peninsular states.

Among all the DOE approved projects in Pahang, the developers who were developing 95 percent of the land (48,945 hectares) have political or royal affiliations.

Pahang GLCs own the most land, 35,053 hectares in total. Other corporations with political or royal affiliations include federal government-linked companies, companies owned by royal family members etc.

Trading lands for more profits

The numbers show that Pahang GLCs plantations are the main driving force behind Pahang’s deforestation.

These lands, home to villagers and wildlife, are seen by commercial interests as precious goods to be traded for profit - a cosy situation for corruption.

When landholders get approval from the state government to develop a part of the forest, they will first profit from logging and selling valuable timber. After that, they can cultivate those grounds into a plantation to maximise their gains.

However, managing a massive plantation requires professional knowledge and experience. Should they fail just like PKNP did, landholders could still squeeze some profits out through land leases or sales.

YP Olio, a developer managing an oil palm plantation in Rompin, Pahang seemed to have this exact plan in mind.

Its initial plan was to develop a plantation of 8,499 hectares in the Bukit Ibam forests. However, like PKNP, they have continued logging after MSPO’s forest clearing ban, rendering their produced oil palm fruits unmarketable.

This hasn’t stopped them profiting from land sales. Since 2018, there have been posts on Facebook and also the e-commerce platform Mudah advertising the sale of this land at the price of RM 12,000 per acre.

Image by Mukhriz Hazim/Malaysiakini.

Environment watchdog RimbaWatch director Adam Farhan has been tracking and monitoring forestland sale advertisements on social media.

He found that in Peninsular Malaysia, many forests were logged in the name of oil palm plantation development. But with the land being put up for sale, it is in reality a real estate venture, instead of a plantation business, he said.

Environmental portal Macaranga reported that the background of YP Olio is anything but simple with both the Pahang government and Pahang royalty in the mix.

The Pahang government granted oil palm plantation projects to several government-linked and royal-affiliated companies such as PKNPYP Olio and other companies.

PKNP, the central figure of this article, is a GLC fully-owned by the Pahang government and overseen by the menteri besar of Pahang. PKNP leased the land to its subsidiary PASB.

YP Olio was originally owned by Sultan Pahang’s nephew, Tun Putera Yasir Ahmad Shah bin Mohamed Moiz (70%) and the Pahang MB-led Yayasan Pahang (30%).

YP Olio’s oil palm plantation project was approved by the Pahang state executive council in July 2017. Nine months later, Yayasan Pahang sold all their shares to Tun Putera Yasir Ahmad Shah.

Tun Putera Yasir Ahmad Shah further split his shares with a foreign company and two Malaysians.

The EIA report for YP Olio’s oil palm plantations was approved by DOE in September 2022. Malaysiakini has reached out to YP Olio for comment.

The federal government has implemented numerous policies to protect forest coverage and made assurance to the international community that Malaysia’s oil palm industry is not engaged in excessive logging.

Despite this, land and forest regulation matters still fall under the jurisdiction of the state governments. Without their cooperation, it would be difficult for the federal government to institutionalise long-term environment policies.

Furthermore, after MSPO’s sustainability regulations came into effect, the DOE has given the green light to at least seven plantation projects in Pahang, Kelantan, Johor and Perak. This involves 14,423 hectares of forests - an area three times the size of Putrajaya.

This is bewildering because the DOE is approving new plantations in spite of a restriction instituted by the Ministry of Plantations and Commodities.

Responding to Malaysiakini, DOE said it is responsible for making decisions on the EIA report, such as whether the proposed project is in line with the local plans, outlined environmental impacts and mitigation measures.

“However, project approval is under the jurisdiction of the project-approving authority which takes into account the approval of the EIA report as well as other relevant policies, including the sustainable management of oil palm plantations.

“DOE always conducts continuous monitoring of projects subject to the Environmental Quality Act 1974 to ensure compliance with this Act and the Regulations under it.”

A worker transporting oil palm fruits at Hulu Tembeling. Image by Mukhriz Hazim/Malaysiakini.

To confront these “forest politics”, civil society should demand transparency from state governments, so the public can scrutinise the decision-making process, said Pushpan Murugiah, CEO of the Center for Combating Corruption and Cronyism (C4).

Puspan suggested states establish a system of checks and balances by setting up a select committee in its state assembly to oversee how the government grants land.

“Without transparency, we cannot fight corruption and abuse of power. Although there are no laws stopping members of the royal family and politicians from doing business, laws regarding information transparency will allow people to ask questions.”

“An open and transparent process allows the public to see what's going on and they can be the voice of the people and tell the members of the royal family, look, this is a project that we are concerned about and we know you are involved.”


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