[EN-BIZ] "Unilever" Invited to Inspect "Sinar Mas" Ops

(JAKARTA) Indonesia's Sinar Mas Group yesterday said that it had invited Unilever to inspect its palm oil operations after the consumer goods giant suspended purchases of edible oil on environmental concerns.

Unilever, the world's largest user of palm oil, said last week that it has suspended purchases of edible oil from Sinar Mas' unit PT SMART on concerns about rainforest destruction in Indonesia, the world's top palm oil producer.

Unilever, which uses palm oil in products including Dove soap, Ben & Jerry's ice cream and Stork margarine, cancelled its annual £pounds;20 million (S$45.4 million) contract with Sinar Mas after a critical report by environmental group Greenpeace.

'We urge Unilever not to just look at data from Greenpeace because we have denied the report, which is inaccurate,' Gandi Sulistyanto, a managing director of Sinar Mas, told Reuters.

'It is up to Unilever to decide but for us, Greenpeace data is incorrect,' he added.

Pressure from Western buyers encouraged the palm oil industry to set up the Roundtable on Sustainable Palm Oil (RSPO) five years ago, in order to develop an ethical certification system that includes commitment to preserve rainforest and wildlife.

Sinar Mas and Unilever belong to the RSPO, but green groups remain sceptical about RSPO's credibility and effectiveness in preventing further deforestation, calling it a 'toothless tiger'.

Greenpeace alleged that Sinar Mas, Indonesia's biggest palm oil producer and the second-biggest in the world, has been responsible for widespread deforestation and peatland clearance, practices which release vast amounts of carbon dioxide.

Unilever accounts for about 3 per cent out of Sinar Mas' total annual palm oil sales of US$1 billion, Mr Sulistyanto said.

SMART president director Daud Dharsono told Reuters that Unilever will honour existing contracts with SMART which are due to expire in March 2010.

Mr Dharsono said that Unilever also based its decision to cease ties with Sinar Mas on an audit by independent surveyor Aidenvironment.

'Aidenvironment could have been more professional and scientific in their survey of Sinar Mas,' Mr Dharsono said.

Indonesia relies on overseas buyers, led by India and China, the world's top vegetable oil buyers, to absorb about 70 per cent of its palm oil products.

South-east Asia's biggest economy is expecting its palm oil exports to rise to 17 million tonnes next year from 16 million tonnes seen for this year.

Source : Business Times, 15.12.09.