Social Conflicts


Karang Mendapo (Karmen)

No. Desc. Period Events Status
1 Disagreement over village boundaries between Karang Mendapo (Karmen) and Batu Ampar, Sarolangun, Jambi Feb 2013 As detailed in our Sustainability Reports, collaboration with The Forest Trust (TFT) has been ongoing to reach a peaceful resolution of a case in the village of Karmen, Jambi. The case involves SMART subsidiary PT Kresna Duta Agroindo (KDA), which, in partnership with the Koperasi Tiga Serumpun (KTS), manages the plasma plantations of farmers of eight villages under the cooperative credit scheme, Koperasi Kredit Primer Anggota (KKPA).

Central to this dispute are land and estate management issues. Under the KKPA, smallholders in the KTS cooperative entrusted their land to KDA, which manages the plantations. A bank loan was granted to KTS with KDA as guarantor as per national banking regulations. As part of the plasma partnership, KTS is contractually obliged to sell the fresh fruit bunches (FFB) harvested to KDA. The proceeds would then be used to repay the loan and interest.

In Sep 2008, a group of villagers from Karmen began to manage the disputed plantations in Karmen and Batu Ampar, a neighbouring village. The group sold the FFB harvested to other mills instead of KDA. As a result, loan and interest payments from the disputed areas was discontinued. Meanwhile, KDA, being the guarantor of the credit facility, continued to service the bank loan and interest. The conflict escalated in Jan 2011 when a clash between the group of villagers from Karmen and the local police resulted in injuries.

To resolve the conflict amicably, SMART engaged TFT to assist in mediation.

Following a series of seminars and consultations facilitated by TFT to ensure a common understanding between the parties, the Karmen leadership, KTS and KDA signed a resolution on 14 Oct 2011 with an action plan for mutual cooperation.

The 12 points of the agreement included a commitment that all FFB harvested in Karmen would be delivered to KDA, and that a proportion of the revenue received would be used to repay the loan and interest.

The various parties were working on implementing the agreed action plan until 19 Feb 2013, when Karmen stopped delivering FFB to KDA. The bank loan repayment came to a halt as a result.

Apr 2013 On 3 Apr 2013, TFT gathered the key parties concerned to review the implementation of the resolution and action plan that was signed in 2011. The meeting was attended by representatives from SMART, KDA, KTS, the Village Representative Board (Badan Perwakilan Desa or BPD) and leaders of Karmen, leaders of Batu Ampar village and local NGOs. The meeting concluded with a commitment expressed by each party to keep the engagement process going and resolve any issues that could hinder the process.
May 2013 Field verifications of the village boundary between Karmen and Batu Ampar were completed with support from TFT. The District Head or Bupati of Sarolangun made the boundary official, recording it in an official letter. TFT then arranged a meeting involving leaders from Karmen and Batu Ampar to discuss the implementation of the boundary as stated in the letter.
Oct 2013 The BPD resumed bank loan repayments and negotiated to deduct a proportion of the gross revenue from FFB sales from Karmen to offset production costs since Oct 2013.
May 2014 To move forward on the 12-point agreement that was signed in Oct 2011, TFT gathered key stakeholders from SMART, KDA, KTS, BPD, Karmen, Batu Ampar, four local NGOs, RSPO and the Sub-District Head or Camat of Pauh for a meeting.

It was agreed that the BPD would set up an institution to manage plasma plantations for the communities in Karmen and ensure continual and, eventually, full delivery of FFB to KDA as committed in the plasma partnership between KTS and KDA.

Aug 2014 Full delivery of FBB from Karmen to KDA resumed. Bank loan repayments resumed.
Dec 2014 Following the decree by the Regent of Sarolangun which defined the boundary between Karmen and Batu Ampar, both communities agreed to accept the official decision.

Village heads of Karmen and Batu Ampar agreed to socialise the official decision.

It was also agreed that the border between the two villages would be defined by a canal.

Jun 2015 SMART established a team to close this conflict case with the RSPO.
Aug 2015 SMART decided to organise a Focus Group discussion (FGD) on progress on the 12-point agreement. The FGD would involve PT KDA, KTS and Village Heads of Karmen and Batu Ampar.

The Village Head of Batu Ampar would also be invited for further discussion on the border delineation between the two villages.

Oct 2015 A meeting was held on 16 Oct on the status of the implementation of the 12-point agreement between PT. KDA, KTS and Karmen Village.

Discussion topics included:

  1. Willingness of parties to continue the conflict resolution processes
  2. Agreement on the 12 points and acceptance of the agreement by all parties
  3. New leadership in the village

Outcomes and recommended solutions:
Long-term: within 1 year
To establish a local agency that is inclusive, transparent and accountable which would represent the village . This agency would manage plantation-related work and all issues in the village

Mid-term: within 4 – 6 months
To foster dialogue amongst all stakeholders and to support the new leadership of the village as the focal point

Short-term: within 3 months
To hold a meeting to review of the 12-point agreement and prior to the meeting to work on facilitating close dialogue amongst stakeholders.

Nov 2015 At the Dispute Facility Settlement (DSF) Advisory Group meeting at the RSPO Roundtable, the DSF reported that all stakeholders had agreed to DSF recommendations, including the recruitment of a consultant as a facilitator and/or mediator.

DSF would engage a consultant and prepare for the review meeting together with the consultant following the appointment of the new Village Head of Karmen.

Feb 2016 DSF facilitated a review meeting involving all relevant parties.
Jun 2016 The RSPO Complaints Panel noted in a letter to GAR dated 7 June 2016, that it was satisfied that KDA has carried out its obligations in the 12-point agreement and continues implementation of ongoing actions in Karmen. As such the Panel agreed that the case has been resolved through bilateral engagement and that it should be considered closed.

Last updated: 16 June 2016

Padang Halaban

No. Desc. Period Events Status
2 Land tenure conflict involving three villages and PT SMART (SMART) in Padang Halaban, Labuhan Batu, North Sumatra 2014 SMART acquired PT Maskapai Perkebunan Sumcana Padang in 1983 which was previously owned by Plantagen AG.

In 2000, a group of Padang Halaban community members formed the Farmers Group of Padang Halaban and Surroundings (KTPHS). They eventually laid claim to 3,000 hectares of land.

Their claim was based on:

  1. A Land Registration and Occupation document (KTPPT) which had been issued in 1956
  2. Their familial relationships to the original plantation workers on PT Maskapai Perkebunan Sumcana
  3. The allegation that the land had been seized by Plantagen AG.

The Land Dispute Settlement Team of Labuhan Batu Regency concluded that the claim of KTPHS was invalid. They concluded that the community claim was not based on the right of land, as stipulated in Law No. 5 of 1960 (UUPA). KTPHS did not accept the conclusions of the Dispute Settlement Team.

In 2007, KTPHS became a formal organisation, consisting of 2,040 Families in 11 villages. In 2009, 200 members of KTPHS built structures and planted fruit trees on the disputed land.

The illegal land occupation was reported to the local and regional police. They consulted the Head of Legal Division of the Regional Secretariat of Labuhan Batu Regency; the Head of the Land Affairs Office of Labuhan Batu; the Binkum of North Sumatera Police; the Head of Police Operations and Kanit Tipiter over the matter.

The officials concluded that the Land Use License of SMART was valid and in accordance with the law and the KTPHS claim was rejected. The Labuhan Batu Police ordered KTPHS to vacate the disputed land.

From 2009-2012, KTPHS brought the case to the courts seeking to revoke the transfer of land rights from Plantagen AG to SMART. The Supreme Court finally ruled against KTPHS in 2012.

Following the Supreme Court ruling, government officials tried to reach out to KTPHS to discuss eviction and compensation in accordance with the ruling. KTPHS did not meet the officials and asked for negotiations with SMART instead.

Subsequently, SMART filed a lawsuit against KTPHS and the court in Rantau Prapat ruled that KTPHS must dismantle the structures, remove their plants and vacate the land. In May 2014, the District Court in Rantau Prapat ruled in favour of SMART.

Apr 2015 The court in Medan upheld the ruling of the District Court that KTPHS vacate and leave the land.

SMART then met local NGOs and the National Commission of Human Rights (KOMNAS HAM) to discuss how the Supreme Court ruling would be carried out.

The Governor and KOMNAS HAM recommended that SMART release 87 hectares to KTPHS. SMART did not agree with this recommendation as the Supreme Court had already ruled against KTPHS and this would set a precedent of contempt of the rules and regulations of the Indonesian legal system. However, the company said it was willing to sponsor plasma development for KTPHS members on land allocated by the local government.

Jun 2015 SMART formed a team to close the case with the Roundtable on Sustainable Palm Oil (RSPO). The District Court also decided to set up a team to carry out the Supreme Court’s decision to remove the KTPHS’ structures upon SMART’s request.
Nov 2015 SMART and TFT began work on socialising the Supreme Court’s decision. This would involve consultations with stakeholders, KTPHS members and local government to find a win-win solution.

One of the proposed solutions is to move ahead with plans for plasma development for KTPHS and the community, subject to land availability from local government.

Feb 2016 SMART and TFT are scheduled to conduct socialisation and discussions with the newly-elected Governor of Labuhan Batu Regency.

Last updated: 4 Feb 2016