InfoSAWIT, SINGAPORE – Bumitama Agri Ltd, a palm oil plantation company operating in Indonesia, has expressed its readiness to face new challenges arising from government regulatory updates concerning land overlaps with forest areas and spatial planning.
During a meeting with shareholders, management acknowledged that the recent enforcement of regulations by the Indonesian government has directly impacted many palm oil companies, including Bumitama Agri. The government now requires companies to possess land certificates to ensure clarity on "clean and clear" land boundaries.
“We are awaiting further clarification from the government to assess the situation comprehensively and take necessary steps to remain compliant with the latest regulations,” management stated, as quoted by InfoSAWIT from the Minutes of the Annual General Meeting, dated Monday (June 2, 2025). They anticipate that the regulations will become clearer within the next three months.
The company also addressed reports regarding the transfer of confiscated land previously managed by several companies to a new state-owned enterprise (BUMN). Although no official announcement has been made, there is a possibility that the BUMN will offer an operational cooperation scheme in exchange for management fees.
Amid this uncertainty, Bumitama Agri reaffirms its commitment to conducting business responsibly and sustainably. “We continue to prioritize compliance with the law and update our sustainability initiatives in line with the changing dynamics of the industry,” management emphasized.
Regarding production performance, the company reported a decline in output consistent with industry trends, ranging from 6% to 16% in surrounding areas. This decline is believed to be due to extreme weather conditions over the past few years, including three consecutive La Niña events in 2020, followed by El Niño in 2023, and La Niña again in 2024. Nevertheless, the company expects production to recover by up to 5% this year as weather conditions improve.
In the 2024 Annual Report, management also explained the reasons behind a 16% increase in the cost of goods sold, which exceeded revenue growth of 9%. This was attributed to increased purchases of external fresh fruit bunches (TBS) to optimize mill utilization in response to potential declines in internal production.
Despite facing pressures from commodity price volatility, extreme weather, and fertilizer costs, Bumitama Agri remains confident about the future. “We have navigated similar challenges in recent years and have still managed to achieve satisfactory financial and operational performance. The spirit of ‘Excellence Through Discipline’ has always been the foundation of our operations,” stated the Chairman of the Board.
The company concluded its statement by reaffirming its commitment to remain agile in the face of both domestic and global uncertainties, in order to protect shareholder interests and maintain business sustainability. (T2)
