[ ]Stage-1 [ ] Stage-2 [ ] Surveillance [ ] Re-Assessment

Transcription

1 PT. MUTUAGUNG LESTARI Roundtable on Sustainable Palm Oil Certification [ ]Stage-1 [ ] Stage-2 [ ] Surveillance [ ] Re-Assessment Plantation Management/Owner : Bumitama Agri Limited Plantation Name : Gunung Makmur Mill PT Karya Makmur Bahagia (Gunung Makmur Estate, Bukit Kecubung Estate, Bukit Makmur Estate & Sungai Mentaya Estate) Location : Ranto Tampang Village, Antang Kalang Sub District, Kotawaringin Timur District, Province of Central Kalimantan, Indonesia Certificate Code : MUTU-RSPO/045 Date of certificate issue : 21 July 2014 Date of expiry of certificate : 20 July 2014 Assessment Assessment Date PT. Mutuagung Lestari Auditor Reviewed By Approved By ST October 2012 ST January 2014 Octo HPN Nainggolan; Ibnu Satria Prabudi; Rudi Ramdani; Naila Karima; Bukti Bagja Bukti Bagja; Naila Karima; Ardiansyah; Rudi Ramdani; Ganapathy Ramasamy Taufik Margani Assessment Approved by Certification Body on: ST-2 21 July 2014 Mutuagung Lestari Raya Bogor Km 33,5 Number 19 Cimanggis Depok Indonesia Telephone (+62) (21) Fax (+62) (21) /6 agri@mutucertification.com MUTU Certification Accredited by Accreditation Services International on March 12 th, 2014

2 PT. MUTUAGUNG LESTARI TABLE OF CONTENT FIGURE Figure 1. Location Map of PT Karya Makmur Bahagia Figure 2. Operational Map of PT Karya Makmur Bahagia SCOPE OF THE CERTIFICATION ASSESSMENT National Interpretation Used Organization Information Type of Assessment Location of Plantations, Mill and Area Statement Description of Supply Base Dates of Plantings and Cycles Tonnage Certified Other Certifications Time-Bound Plan for Other Management Units ASSESSMENT PROCESS Certification Body Assessment Team Assessment Methodology, Assessment Process and Locations of Assessment Stakeholder Consultation and List of Stakeholders Contacted Date of Next Surveillance Visit ASSESSMENT FINDINGS Summary of Assessment Report of the RSPO Certification Summary of Assessment Report of Supply Chain Requirement Conformity Checklist of Certificate and Logo Use Summary of RSPO Partial Certification Identification of Findings, Corrective Actions, Observations, Opportunity for Improvement and Noteworthy Positive Components Summary of Arising Issues from Public, Management and Auditor Responses CERTIFIED ORGANIZATION S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY Formal Signing of Assessment Findings 73 APPENDICES 1. List of Stakeholders Contacted in the RSPO Certification Process Assessment Program Glossary 76 SPO 4006a.5 Prepared by Mutuaging Lestari for Gunung Makmur POM PT Karya Makmur Bahagia i

3 PT MUTUAGUNG LESTARI Figure 1. Location Map of PT Karya Makmur Bahagia PT. KMB SPO 4006a.5 Halaman 1

4 PT MUTUAGUNG LESTARI Figure 2. Operational Map of PT Karya Makmur Bahagia SPO 4006a.5 Halaman 2

5 1.0 SCOPE OF THE CERTIFICATION ASSESSMENT 1.1 National Interpretation Used National Interpretation, RSPO Principles and Criteria (P&C) for Sustainable Palm Oil Production, Republic of Indonesia - RSPO INA- NIWG, May 2008 and RSPO Supply Chain Certification Standard November Organization Information Company name BUMITAMA AGRI LIMITED GUNUNG MAKMUR POM (PT KARYA MAKMUR BAHAGIA) Contact person Francisca Tiurma Damanik Company address and site address Organization Address: Jl. Melawai Raya No. 10 Kebayoran Baru Jakarta Selatan Indonesia Site: Gunung Makmur Village, Sub District of Antang Kalang, District of Kotawaringan Timur, Province of Central Kalimantan, Indonesia Telephone (62-21) Fax (62-21) francisca.damanik@bumitama.com Web page address Company status Private Management Representative who completed the application for certification Francisca Tiurma Damanik (Corporate Communication & Sustainability Group Department Head) Registered as RSPO member 8 October 2007 Registration number: Type of Assessment Scope of Assessment Palm Oil Mill and supply base Type of certificate Single Company names listed in the certificate PT KARYA MAKMUR BAHAGIA Number of management unit 1 (one) Palm Oil Mill (Gunung Makmur POM) and 4 (four) Estates owned by PT. KMB: Gunung Makmur Estate (GMKE), Bukit Kecubung Estate (BKCE), Bukit Makmur Estate (BKME) & Sungai Mentaya Estate (SMNE). 1.4 Locations of Mill, Plantations and Area Statement Location of Mill Name of Mill Gunung Makmur Location Rantau Tampang Village, Telaga Antang Sub District, Kotawaringin Timur District, Central Kalimantan Province, Indonesia Latitude SPO 4006a.5 3 GPS Longitude S E

6 1.4.2 Location of Supply Base Name of Supply Base Gunung Makmur Estate Bukit Kecubung Estate Bukit Makmur Estate Sungai Mentaya Estate Location Gunung Makmur Village, Antang Kalang Sub District, Kotawaringin Timur District, Central Kalimantan Province, Indonesia Waringing Agung Village, Antang Kalang Sub District, Kotawaringin Timur District, Central Kalimantan Province, Indonesia Sungai Hanya Village, Antang Kalang Sub District, Kotawaringin Timur District, Central Kalimantan Province, Indonesia. Gunung Makmur Village, Antang Kalang Sub District, Kotawaringin Timur District, Central Kalimantan Province, Indonesia GPS Latitude Longitude S E S E S E S E Tenure Private - State Land Use Permit (HGU) : 15, Ha Building Use Permit (HGB) : M 2 Community Area Statement Total area 15, Ha Mature Area 10, Ha Immature Area 2, Ha Gunung Makmur Mill Ha Emplacement Ha Conservation 693,48 Ha Road & Bridge Ha Ocupacy Ha Village Ha Reserve Area for LC 691 Ha Cemetary Ha 1.5 Description of Supply Base Description of Mill Name of Mill Capacity (tonnes/ hour) FFB Processed (tonnes/ year) Out put (tonnes) CPO Palm Kernel PKO Extraction (%) Out put (tonnes) Extraction (%) Out put (tonnes) Gunung Makmur , , , *Source : Production Data periode of January December 2013 SPO 4006a.5 4 Extractio n (%)

7 1.5.2 Description of Estate(s) Name of Estate(s) Total Area (Ha) Planted Area (Ha) FFB (tonnes/year) Yield (tonnes/ha/ye ar) Supplied to Mill FFB (tonnes/year) Gunung Makmur Estate 3, , , , Bukit Kecubung Estate 3, , , , Bukit Makmur Estate 2, , , , Sungai Mentaya Estate 4, , , , TOTAL 15, , , , *Source : Production Data of January December Smallholder(s) and other source Name of source(s) Member(s) Location Total Area (Ha) FFB (tonnes/year) % Supplied to Mill FFB % (tonnes/year) BAGE (Plasma) - PT KMB 2, , MAGE (Plasma) - PT KMB 2, , BHJE (Plasma) - PT KMB 2, , SMRE (Plasma) - PT KMB - - 1, SPYE (Plasma) - PT KMB 2, , SPRE (Plasma) - PT KMB 4, BDME , BBGE TBS Luar , Total , *Source : Received Data for 12 month before audit Product categories FFB/CPO/PK /PKO 1.6 Dates of Plantings and Cycles Age profile of planted palms* Planting Year Ha GMKE SMNE BMKE BKCE Total , , , , , SPO 4006a.5 5

8 , TOTAL 3, , , , , New Planting area after January , Ha Planting Cycle 1 st /2 nd Cycle 1.7 Approximate Tonnage Certified Past Annual Claim Certified Product FFB Production - Tonnes/year CPO Production - Tonnes/year Palm Kernel (PK) Production - Tonnes/year Palm Kernel Oil (PKO) Production - Tonnes/year Claim Certified Tonnage of FFB Name of Estate(s) Total Area (Ha) Planted Area (Ha) FFB (tonnes/year) Yield (tonnes/ha/year) Gunung Makmur Estate 3, , , Bukit Kecubung Estate 3, , , Bukit Makmur Estate 2, , , Sungai Mentaya Estate 4, , , TOTAL , , ,51 15, Claim Certified Tonnage of Palm Product Name of Mill Gunung Makmur Mill Capacity (tonnes/ hour) FFB Processed (tonnes/year) Out put (tonnes) CPO Palm Kernel PKO Extraction (%) Out put (tonnes) Extraction (%) Out put (tonnes) , ,72 23, ,59 4, Extractio n (%) 1.8 Other Certifications ISO 9001:2008/ISO 14001: OHSAS 18001: HACCP Others Time Bound Plan for Other Management Units Management Unit Location Hectarage (Ha) Time Bound Plan Status PT Windu Nabatindo Lestari : Central Kalimantan 11, Audited SPO 4006a.5 6

9 Pundu Nabatindo Mill Katari Agro Mill PT Karya Makmur Bahagia : Gunung Makmur Mill Bukit Makmur Mill PT Gunajaya Karya Gemilang (Kendawangan Mill) PT Gunajaya Ketapang Sentosa (Kendawangan Mill) PT Windu Nabatindo Abadi (Selucing Agro Mill) PT Bumitama Gunajaya Abadi (Kotawaringin Mill) PT Rohul Sawit Industri & PT Masuba Citra Mandiri (Suka Damai Mill) 2020 Planned Central Kalimantan 15, Audited 2020 Planned West Kalimantan 7, Planned West Kalimantan 7, Planned West Kalimantan 7, Planned Central Kalimantan 5, Planned Riau 2, Planned SPO 4006a.5 7

10 2.0 ASSESSMENT PROCESS 2.1 Certification Body PT Mutuagung Lestari Jl. Raya Bogor Km 33,5 No. 19, Cimanggis - Depok Telp ; Fax /46 Website: agri@mutucertification.com 2.2 Assessment Team Lead Assessor and Assessment Team ST-1 1. Octo Nainggolan (Lead Auditor). A bachelor of Agriculture, majoring of Social Economics of Agriculture (Agribusiness). He has a working experience since 2004 oil palm Plantation Company in Indonesia. Trainings attended namely: Training of Conservation of Natural and Biological Resources in supporting HCV, Basic Plantation Management Program, Plantation Integrated Pest Management training, Followed the Management System Certification (ISO /SNI :2008), Environment Management System (ISO 14001:2004), RSPO Lead Auditors Training Course, Indonesian Sustainable Palm Oil (ISPO) Lead Auditor training course and supply chain certification system training by BM Trada. Currently, he worked at Professional Certification Body. In the assessment activity, he assessed on legal aspect, best practices, environment aspect, social aspect, workers welfare, FFB Processing and supply chain requirement. 2. Ibnu Satria Prabudi (Auditor). A Bachelor of Agriculture Majoring in Agro-technology, Agriculture Faculty of Instiper Yogyakarta. Currently he has been working with an independent certification agency as auditor. Training he has followed are: Lead Auditor RSPO, Auditor ISPO, Awareness HACCP certification, Awareness SQMS Mc Donald, In House Training Green House Gas and Awareness ISO: He has followed several audit activities related to certification system of sustainable palm oil (RSPO certification) as observer and Auditor. He has been working with an independent certification body as auditor 3. Ardiansyah (Auditor). Indonesian citizen, Bachelor of Forest Resources Conservation, Department of Forestry, Bogor Agricultural University. He has followed the Management System Certification (ISO ), followed several activities such as preparing EIA document for plantation and plantation forest; contribute on several HCV assesments and several times following audit activities related to sustainable palm oil certification system as an auditor. In this Assessment he assessed the environmental aspects, HCV, soil and water conservation. 4. Naila Karima (Auditor). Bachelor of Public Health, Department of Occupational Health and Safety. Faculty of Public Health, University of Indonesia. She has experience working in private oil palm plantation companies in Indonesia. Who had attended the training including training understanding the RSPO certification system, ISPO Lead Auditor, and certified Integrated Management System (Occupational Health and Safety Management System OHSAS 18001:2007, Environmental ISO 14001:2004, Quality ISO 9001:2008). 5. Rudi Ramdani (Auditor). Bachelor of Agriculture Majoring in Agronomy, Agriculture Faculty of Bogor Agricultural University. He has experienced more than two years as an operational staff in a private oil palm plantation company in Indonesia. He also followed training he namely: Indonesian Sustainable Palm Oil auditor, Awareness RSPO, Management System Certification (ISO ) training and awareness OHSAS. Currently he works for Independent Certification Body. He had involved activities RSPO and ISPO certification assessment as an auditor. In this assessment he is assess for best management practices. ST-2 1. Bukti Bagja (Lead Auditor). Indonesian citizen, Master of Science in Environmental Sciences, University of Indonesia. Has passed RSPO Lead Auditor Course, ISPO Lead auditor course, HCV training, GIS training. Expereinced in RSPO / ISPO audit in various plantation in Indonesia. Experience in HCV assessment as assessor with the specifications in the field of GIS (mapping). Has expertise in mapping and GIS. Has various experince in environmental and forestry project in Indonesia for more than 10 years. 2. Ardiansyah (Auditor). Indonesian citizen, Bachelor of Forest Resources Conservation, Department of Forestry, Bogor Agricultural University. He has followed the Management System Certification (ISO ), followed several activities such as preparing EIA document for plantation and plantation forest; contribute on several HCV assesments and several times following audit activities related to sustainable palm oil certification system as an auditor. In this Assessment he assessed the environmental aspects, HCV, soil and water conservation. 3. Naila Karima (Auditor). SPO 4006a.5 8

11 4. Rudi Ramdani (Auditor). 2.3 Assessment Methodology, Assessment Process and Locations of Assessment Figure of person days to implement assessment ST-1 Number of auditors : 5 (four) auditors Number of days for ST-1 on site : 5 (four) days Number of working days for ST-1 on site: 25 (twenty) working days ST-2 Number of auditors : 4 (four) auditors Number of days for ST-2 on site : 4 (five) days Number of working days for ST-2 on site: 16 (sixteen) working days Detail process of assessment ST-2 The assessment was conducted by measuring the sufficiency of implementation with the consistency done by the Gunung Makmur POM and its supply base (PT Karya Makmur Bahagia) to the requirements of National Interpretation of the Republic of Indonesia from RSPO Principles and Criteria for Sustainable Palm Oil Production (RSPO INA-NIWG, May 2008 and Supply Chain Requirement for CPO Mill. The assessment was conducted in three methods: (1) document review, aiming to observe the sufficiency of types or substances from required documents; (2) interview, aiming to obtain more detailed information and cross check the information; and (3) field observation, aiming to observe directly the sufficiency of implementation on site. Several opportunities for improvement of the results ST-2 delivered by the auditors to the management unit and the results are the subject will be verified at the next assessment. Improvement of findings from ST-1 assesment findings were observed by auditors at this ST-2 assessment. All information obtained was recorded in Check List of PT Mutuagung Lestari (MUTU) and part of ST-2. Please find Appendix 2 for the assessment program Locations of Assessment ST-1 The sample locations were selected by the Auditor Team using on the following criteria; 1. The minimum number of locations; which is determined by the 0.8 y formula. 2. The selected locations are the representation of each operational area. 3. The concern of issues arising from the result of the document study which are basic and crucial. Below is the complete list of the locations that were visited; Location 1 Block F09 Div. III SMNE. The auditor team was doing the observation on the matters related to spraying activity, the practice of OHS at work, remuneration system, infrastructure & facilities provided by the company, the training conducted by the company, and the practice of IPM. Location 2 Block D08 Div. III SMNE. The auditor team was doing the observation on the matters related to harvesting activities, the practice of OHS at work, remuneration system, premiums (incentives), as well as the infrastructure & facilities provided by the company. Location 3 Hazardous Waste Temporary Warehouse at Central Traction. The auditor team was doing the observation on the matters related to hazardous waste management activities, the practice of OHS at the premise, and the hazardous waste Balance Sheet. Location 4 Central Traction. The auditor team was doing the observation on the practice of OHS at work, and the infrastructure and facilities for land fire. Location 5 Gunung Makmur POM. The auditor team was doing the observation on the mill s operational activities, starting from the fruit receipt until the CPO stockpiling, and the practice of OHS at work. ST-2 Location of Boundaries Poles No. BPN71, BPN72, and BPN73. The poles were in a well-maintained condition. No poles were found to be installed on the unacquired HGU land, because it was impossible for the company to do so since it tried to avoid any misunderstanding or conflict that would possibly arise between the company and the cultivators/residents at that area. Locations of Boundaries Poles No. BPN67 BPN70. The poles were in a well-maintained condition. There were poles installed at location marking the border lines that were separating PT KMB from PT BUM. SPO 4006a.5 9

12 Waringin Agung Village. The interviews were conducted in order to get verification on the dissemination activities done by the company, the CSR program, the compensation settlements, and the conflict settlements. Bakti Karya Village. The interview was conducted for the verification purpose of the dissemination activity done by the company, the CSR program, compensation settlements, and conflict settlements. Riparian at BMKE, Block O36. The observation was done on the riparian management. There are boundaries poles at the riparian, which were installed as the marking of chemical-free area. Riparian of Meraya River at BKCE, Division IV, Block R29. The observation was done on the riparian management. Trees such as pulai (Alstonia scholaris) and rain trees (samanea saman) have been planted at the HCV area, as well as the area marking at the riparian, and the prohibition to use chemicals at the riparian. Bukit Makmur Estate Wellspring. The observation was done on the management of clean water for the employees. This area has been established as HCV area. Water source for the housing complex of division V and VI at BKCE, Block O37. The water source located there comes from a wellspring reserve in an artificial pond and an artesian well. A boundary fence has been installed at the area. Location of Land Application (LA) at BMKE, Block F28. The observation was done on the management of effluent application at the plantation area. Flatbed was functioning well. Monitoring well at BKME, Block F30 & G29. The well was functioning well, and there was no indication of water contamination caused by Land Application. Processing activity (from loading ramp to dispatch). The observation was done on matters related to the process of FFB to become CPO, the infrastructure for fire emergency response at the mill, and the first aid emergency facility. A number of interviews were also conducted with the mill s workers (boiler operators and engine room operators) regarding health examination, operator license, wage system, grievance system, OHS practice, and the availability of PPE. Waste Water Treatment Plant. The observation was done on the effluent management and how they reduce the pollution at the surrounding area of the WWTP. Supporting facilities. The observation was done on matters such as the workshop, material warehouse, hazardous waste warehouse, chemical warehouse, and water treatment plant. All the areas mentioned were well managed, as can been seen from the availability of signage notifying hazardous materials, hazardous waste, fire extinguishers, fire trucks, first aid kit, drainage channels, and second containments to prevent any spillage of hazardous materials and hazardous waste to the environment. Infrastructure and Facilities for Employees at Division III, IV, and V of BKME. The observation and interviews were done with the employees on matters such as housing facilities, clean water supply, lighting source (from generators), worshipping facility, infrastructure/facilities of education, daycare, and sports facility, all of which were provided by the company. The interviews done with female workers revealed the following facts; infrastructure and facilities were sufficiently provided, workers were well aware of their leave-taking rights, health center was provided (polyclinic & central polyclinic), the availability of gender committee, and the prohibition for pregnant women to be assigned to spraying and manuring works. Infrastructure and Facilities for Employees at Division V & VI of BKCE. The observation and interviews were done with the employees on matters such as housing facilities, clean water supply, lighting source (from generators), worshipping facility, infrastructure/facilities of education, daycare, and sports facility, all of which were provided by the company. The interviews done with female workers revealed the following facts; infrastructure and facilities were sufficiently provided, workers were well aware of their leave-taking rights, health center was provided (polyclinic & central polyclinic), the availability of gender committee, and the prohibition for pregnant women to be assigned to spraying and manuring works. Generator house at BKCE, housing complex of division 5 & 6. The observation revealed that the building has been equipped with second containment, fire extinguishers, first aid emergency kit, earmuffs for the operators, and working instructions available at generator room. Support clinic at BKME. The observation done on the health care service for the employees and the interview done with one nurse were both on the matters related to health care service for the employees, medication availability, and health care equipment. BSS (Block Spraying System) of BMKE & BKCE. The observation was done on the management of the infrastructure and facilities for spraying works, the pond for collecting wastewater from work tools cleaning, and the SPO 4006a.5 10

13 sanitation facility for the workers. PT. MUTUAGUNG LESTARI Harvesting activity at BMKE, Division 4 Block P35 & BKCE Division 5 Block T39. The observation and interview were done with the supervisors and harvesters on matters related to the working safety; the criteria of the fruits ready to be harvested; the use of PPE (helmet, gloves, and shoes); the supervisors who, after being given the necessary training, carry first aid kit during on site; the age requirement policy; waging system; premiums; and Jamsostek. BKCE, Division 5 Block Q35. The management of marginal area was done through the construction of siltpit on sandy land and through empty bunch application. BKCE, Division 5 Block O38 & P34. The management of sloping areas was done through the construction of contoured terrace, and the cover crop plant nursery. 2.4 Stakeholder Consultation and List of Stakeholders Contacted Summary of stakeholder consultation process. ST-2 Public consultation process was carried out Consultation of PT Karya Makmur Bahagia stakeholders was held by public consultation meeting with internal (workers and labour union), external (villagers, local peoples, non government organization and district agencies) by interviews, electronic mail and interviews. Numbers of input from stakeholders were clarified by PT KMB management. Numbers of inputs from stakeholders both positive and negative were received by the audit team as a material of consideration and observations in the assessment. The consultation result present on 3.6 (Summary of Arising Issues from Public, Management and Auditor Response) List of stakeholder contacted ST-2 Please find appendix Determining Next Visiting ST-2 The next visit (first surveillance) will be determined nine months after the certificate issued. SPO 4006a.5 11

14 3.0. ASSESSMENT RESULT 3.1. Summary of Assessment Report of the RSPO Certification MUTUAGUNG LESTARI has conducted an assessment of Gunung Makmur Mill PT Karya Makmur Bahagia, Bumitama Agro Ltd operation of 1 (one) mill and 4 (four) oil palm estates. During the second assessment, there were 2 (two) Nonconformities were assigned against Major compliance; 4 (four) Nonconformities assigned against Minor Compliance; 0 (Nil) & 4 (four) opportunities for improvement were identified. Further explanation of the non-conformities raised and corrective actions taken by the company are provided in section 3.5. The company prepared and implemented corrective action that was reviewed and accepted by MUTU in form of documents and photographic evidence. The corrective action consisting of 2 (two) Major Nonconformities have been fulfilled; 2 (two) Minor Nonconformities has not been fulfilled and will be a material verification and observations back to the next assessment visit. MUTUAGUNG LESTARI found that Gunung Makmur Mill - PT Karya Makmur Bahagia comply with the requirements of RSPO Principles & Criteria and National Interpretation, RSPO Principles and Criteria (P&C) for Sustainable Palm Oil Production, Republic of Indonesia - RSPO INA-NIWG, May Therefore MUTUAGUNG LESTARI recommends a certificate of compliance is issued. Ref Std. HASIL VERIFIKASI MUTU-Certification PRINSIP #1 KOMITMEN TERHADAP TRANSPARANSI 1.1 Plantation and Palm Oil Factory have to give adequate information for stakeholders in appropriate language and forms, to ensure the effective participation of stakeholders in decision-making. The company has set up a mechanism for the information request and release, which is specified in the procedure of Transparency and Mechanism (Document No. BGA-SOP-KMB 16-RO) authorized by the Area I Controller on 15 September The procedure explains that any information requested by the stakeholders shall be submitted via , letter, telephone, facsimile, or by directly visiting the regional office and or the head office. The average period needed for the management to give response to the information request is ten days from the date the request is received. The public consultation conducted with stakeholders and the observation done on the logbook of incoming letters have both confirmed that there has been no such request submitted by the stakeholders. The only type of letters received so far was the request for support submitted by the community around the company. As for the retention period for such document, it falls into the category of general document, which, referring the Procedure of Record Control (No. BGA-SOP-GI RO) is kept for a period of 5 years. Status: Full compliance 1.2 Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes. The Procedure of Transparency and Mechanism (No. Dok BGA-SOP-KMB 16-RO) which was authorized by Area Controller I on 15 September 2012 lists down several types of documents that are publicly accessible, such as; 1. The types of document that are public and accessible for stakeholders, such as; Licensing Documents: EIA, HGU and other related license, Company Registration Certificate (TDP), and other similar documents. SPO 4006a.5 12

15 Environmental documents including waste management and disposal plan and pollution prevention plans on plantations and in mills Documents of Company s Report: Company s Annual Report, and Monthly Production Reports for the Estate and the Mill. Documents of Work Process or Standardization: SOP, Company Policy, Operational Procedure for the Estate and the Mill, Quality Policy and OHS, and Company s Environmental and Social Documents. Documents related to Business Physical and General Documents: Company s Organizational Structure, Employee Data, Data of Employment of Foreign Workers (TKWNAP), the Total Operational Area of the Estate and the Mill, which is equipped with the Soil Map, Natural Drainage and Catchment Areas, Topography Map, Customary Right and Village Boundary and Estate Land Use Map, the Map of Rivers flowing through the plantation area, HCV Reports and Management Plan, SIA Reports, Internal Magazines/Bulletin, Investment Activity Reports, Plantation Business Operational Reports, Plantation Statistic Monitoring, Land Use Data, CPO Sale Data, Scheme Production Data, CSR Program Activities, OHS Program, Company s Environmental and Social report, Progress from OHS Program, Environment and RSPO/ISPO of the company. 2. The types of documents that are non-public and are accessible under the consent from the Department Head / Area Controller. For example; Deed of Establishment and Amendment of the Company, Company s Profit & Loss, Company s Balance Sheet, List of Company s Asset, List of Land/Area of Plantation Business, Community Development Plan, Land Acquisition Payment data, Complaints and Grievances, Distribution Map of Rare Animal Species within the Conservation Area, and Data of Scheme Fund Utilization. 3. The types of document that are non-public and are accessible only with the consent from the Group Department Head / GM Level. For example; Employee s Payroll, List of Shareholders and Board of Company, List of Chief Operations Officers, and Third Party Contributions. 4. The types of document that are non-public and are accessible only with the consent from the Management Level. For example: Deed of Establishment and Amendment of the Company, Company s Profit & Loss, Company s Balance Sheet, Employee s Payroll, List of Shareholders and Board of Company, List of Chief Operations Officers, List of Company s Asset, List of Land/Area of Plantation Business, Community Development Plan, Land Acquisition Payment data, Complaints and Grievances, Distribution Map of Rare Animal Species within the Conservation Area, Data of Scheme Fund Utilization, and Third Party Contributions. The company has determined that the retention period for such document is referring to its importance, which is described in the Procedure of Record Control (Document No. BGA-SOP-GI RO). Below is the complete list of the documents and their retention period respectively; Licensing Documents: retained for as long as the estate and the mill are in operation. Operational Documents: retained for a minimum of 5-year period. Accounting & Finance Documents: retained for a minimum of 10-year period. Taxation Documents: retained for a minimum of 10-year period. Occupational Health & Safety Documents: retained for a minimum of 5-year period. Environmental Documents: retained for a minimum of 5-year period. Internal & External Audit Documents: retained for a minimum of 5-year period. General Documents: retained for a minimum of 5-year period. Status: Full compliance PRINSIP #2 MEMENUHI HUKUM DAN PERATURAN YANG BERLAKU 2.1 There is compliance with all applicable local, national and ratified international laws and regulations. The documents verification and field visit have both exposed that the company has been generally in compliance with the applicable legal requirements, especially those related to the plantation operations, as seen in the below details; a. Legality of the Plantation 1. In compliance with the Statute (UU) No. 5 Year 1960 concerning Basic Regulations on Agrarian Principles, the company has acquired the certificate of Land Use Title (HGU) No. 19 from National Land Agency (BPN) on 22 October 2001, which covers an area of 15, Ha. 2. In compliance with the Regulation of Agricultural Ministry No. 98 year 2013, the company has acquired the Plantation Business Permit (IUP) from the Regent of Kotawaringin Timur on 4 August 2006, which covers an area of approx. SPO 4006a.5 13

16 15, Ha. PT. MUTUAGUNG LESTARI b. Employment 3. In compliance with the Statute (UU) No. 3 Year 1992, all employees have been enlisted to JAMSOSTEK (Labor Social Assurance). The company has also been submitting the occupational accident reports on a regular basis. 4. The company has provided the Occupational Health and Safety (OHS) program and the supporting facilities for all employees, in compliance with the Statute (UU) No. 1 year No discrimination acts have been committed by the company against its employees, which complies with the Statute (UU) No. 21 Year 1999 (ILO Ratification on Anti-Discrimination) stipulated in the Collective Labour Agreement (CLA) made and approved by both the company and the employees. 6. In compliance with Regulation of the Ministry of Labor No 01 Year 1988 specifying the Qualifications and Requirements needed for Boiler Operators. There are list of boiler operator certificate : No Operator No. License/ Certificate Expiry date 1 Jhon W /PNK3-PUBT/OB-1/X September M. Shodik /PNK3-PUBT/OB-1/X September Miyanto 3187/OPK3-PUBT-B.1/X/ Oktober Sultoni 3188/OPK3-PUBT-B.1/X/ Oktober 2017 c. Environment 1. Preparing the environmental management documents (RKL/RPL) and those documents have been authorized by the Agricultural Ministry of the Republic of Indonesia. 2. No burning method has been used during land clearing, which complies with the Statute (UU) No. 18 Year Acquired the license for Hazardous Waste management, which complies with the Government Regulation (PP) No. 18 Year Allocating one part of an area for a protected area which complies with the Presidential Decree (Keppres) No. 32 Year 1990, and with Statute (UU) No. 41 Year 1999 on Forestry. 5. Has done the delineation of protected area on a 50-meter riparian, which complied with the Presidential Decree (Keppres) No. 32 Year 1990 on protected area. 6. Has acquired the license for hazardous waste temporary warehouse at the mill area, which complied with the Government Regulation (PP) No. 18 Year 1999 on the Management of Hazardous Waste. The company is also proven to have been adjusting to the amendments of laws and regulations, as seen on the following samples, among others; 1) Employee Wage, which is annually amended referring to the Decree of the Governor of Central Kalimantan Province on the Minimum Wage; 2) Company s participation in the ISPO audit, which complied with the Regulation of Agricultural Ministry (Permentan) No. 19 Year 2011; 3) Establishment of HCV area, which complied with the Regulation of Agricultural Ministry (Permentan) No. 19 Year The company has proven the existence of the documents of legal and regulation requirements that needed to be complied with by the company, such as see in the following samples; 1. List of Legal Provisions and Rules and Regulations on Environment (document no. 001/LR-LH/KMB/VII/2012). 2. List of Legal Provisions and Rules and Regulations on Occupational Health and Safety (OHS) (document No. 002/LR- K3/KMB/VII/2012). 3. List of Legal Provisions and Rules and Regulations on Plantation Management (document No. 003/LR- KB/KMB/VII/2012). 4. List of Legal Provisions and Rules and Regulations on Employment (document No. 004/LR-TK/KMB/VII/2012). 5. List of Rules and Regulations related to Gunung Makmur POM. The following list reveals a number of legal requirements with which PT KMB had not yet complied (during audit visit); SPO 4006a.5 14

17 1. Regulation of Labour and Transmigration Ministry No. 15 Year 2008 on First Aid Emergency at Work Article 3 Paragraph Regulation of Labour and Transmigration Ministry No. 02 year 1982 on Qualification of Welder at Work Article 3 Paragraph Regulation of Labour and Transmigration Ministry No. 09 on Conveying and Forklift Operator Chapter II Article 5 Paragraph Document of EIA is not equipped with Letter of Verification of EIA as a form of Environmental Feasibility Decision by Local Government in accordance with Government Regulation No. 27 year 2012 article 32. Non conformance potential refer to CAR Observation 24 January In compliance with the Regulation of the Ministry of Labor and Transmigration (Permenakertrans) No. 15 Year 2008 on First Aid Emergency at Workplace Article 3 Paragraph 1, the company has assigned Dr. Ribeldi Bimantara, a trained First- Aid staff with a valid certificate No. 1817/PJK3-P3K/XII/ In compliance with the Regulation of the Ministry of Labor and Transmigration (Permenakertrans) No. 2 Year 1982 on the Qualifications for Welding Specialist at Workplace Article 3 Paragraph 1, there were certificates of competence available for welding specialists (such as that by the name of Supriyanto, whose valid certificate was under a document No. S.935/JL/PNK3/XII/13). 3. In compliance with the Regulation of the Ministry of Labor and Transmigration (Permenakertrans) No. 9 Year 2010 on Conveying and Forklift Operators and Staff, Chapter II Article 5 Paragraph 1, there were OHS License certificates available for Loader Operators (such as that by the name of Kamri, whose license was under a document No OPK3- PAA/X/2012). 4. The company was able to present the EIA Document which was issued by the Regional Agency of Environmental Impact Control (Bapedalda) of Kotawaringin Timur under a document No. 25/Komisi-Kotim/VIII/02 on 9 August Non conformance potential CAR is complied. KMB has presented the evaluation system of the implementation of the compliance with the applicable and related laws, which was described in the SOP No. BGA-SOP-KMB 005-R0 on Identification and Audit of the Compliance with the Applicable Regulations and Legal Requirements, in which the following process is illustrated; 1) Identification of the regulations that need to be complied with, performed by Human Capital Group Department (HCGD), Corporate Communication Sustainability (CCS), Corporate Communication Sustainability (CCS), and Public Affair Department (PAD) collectively; 2) Verification of the Accuracy of Information, done by the specialist in each department, who subsequently provides recommendation for regulation compliance; 3) Law Register Audit, performed every 6 (six) months by the CCS Department on the recommendation from each department; 4) Once the consent is required, the operational unit shall be initiating the regulation compliance practice. Major Status: CAR is complied 2.2 The right to use the land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights KMB demonstrate the following records of the land use right : 1. Site permit. KMB has demonstrated document of Site Permit in the Decree of the Head of Land Office of Kotawaringin Timur District No dated 27 June 1995 covering ± 12,500 Ha. However, the coverage area of the site permit is not in accordance with the area stated in Business Plantation Permit/IUP. 2. Business Plantation Permit/IUP. KMB has demonstrated documents of business plantation permit/iup covering 15, Ha, but has not been able to demonstrate the license for operational activities outside the IUP. 3. Document of Land Ownership/HGU. KMB has demonstrated the document of land ownership/hgu covering 16, Ha. However, they have not been able to demonstrate the ownership evidence over the land in the area outside the use title owned. Non conformance potential refer to CAR Observation 27 February 2013 The document verification revealed that KMB has kept the records of land acquisition and land tenure which complied with the laws and regulations, as seen in the following details; 1. Holds a location permit which is based on the Decree of Head of National Land Agency Office of Kotawaringin Timur Regency No on the Issuance of Location Permit for Oil Palm Plantation Business of PT Karya Makmur SPO 4006a.5 15

18 Bahagia, at Sei Hanya Village, Tumbang Sepayung Village, Tumbang Boli Village, Tumbang Bahjanet Village, and Luwukkuan Village, of Mentaya Hulu Sub-district, Kotawaringin Timur Regency, dated 27 June 1995 covering an area of approx. 12,500 Ha. 2. Holds a location permit which is based on the Decree of Head of National Land Agency Office of Kotawaringin Timur Regency No on the Issuance of Location Permit for Oil Palm Plantation Business of PT Karya Makmur Bahagia, at Tumbang Sepayang Village, Sei Hanya Village, and Luwuk Kuan Village, of Mentaya Hulu Sub-district, Kotawaringin Timur Regency, dated 25 September 1996 covering an area of approx. 5,000 Ha. 3. Plantation Business Permit (IUP) of PT Karya Makmur Bahagia, based on the Decree of Kotawaringin Timur Regent No /603/VII/EKBANG/2006 dated 4 August 2006 covering an area of approx. 15, Ha, for plant type of Oil Palm, with the Mill Capacity of 90 Tons per hour, and Scheme-Smallholders as the development model. The permit was issued under a document No. 09/IUP/PT.KMB/K-1/KOTIM/2006 for an area located at Antang Kalang Sub-district of Kotawaringin Timur Regency. 4. Acquired the Certificate of Land Use Title (HGU) No. 19 from National Land Agency (BPN) of Central Kalimantan Province, Kotawaringin Timur Regency, Antang Kalang Sub-district, on 22 October 2001 covering an area of 15, Ha ( Fifteen thousand fifty-six point thirty-one hectares) and valid through 22 October Building Use Title (HGB) No. 1 from National Land Agency (BPN) of Central Kalimantan Province, Kotawaringin Timur Regency, Antang Kalang Sub-district, which was issued on 18 January 2005, covering an area of m 2 located at Rantau Tampang Village. The document is valid through 18 January Observation 28 February 2014 In spite of the above explanation, both the document verification done on the operational map of PT KMB, specifically that of Bukit Kecubung Estate (BKCE) area and the field verification done by the auditors at Division 05 and division 06 of BKCE revealed the existence of ± ha of smallholders estate located outside the legal borderline of land acquisition / land tenure as specified in the HGU and IUP documents. Consequently, there is a non conformance potential CAR which is still declared Open. Observation 26 May 2014 The Company filed a corrective action : - Mediation by the BPN facilitation of Central Kalimantan Province on February 25, and March 14, PT. KMB receives referrals from BPN through letter No.246/ /III/2014 dated 12 March 2014 which said that PT. KMB is not supposed to work outside the concession area located in the area of PT. BUM. - Against the settlement scheme land cases, PT. Karya Makmur Bahagia by the BPN, PT. KMB has approved the scheme, while the PT-Bangkitgiat Usaha Mandiri has not agreed on the amount of compensation and asked for time to think. Based on the official letter from the Central Kailmantan BPN Province, auditor concludes that still not provided evidence that PT. KMB ceased production on land that does not have a foundation permit the acquisition and exploitation, or provide proof of appropriate permit for the land. Therefore, non conformance potential CAR is still declared Open. Observation June 11, 2014 The company showed improvement efforts by stopping all operations on the plantations outside the concession area as indicated by the presence of Letter of Instruction from Regional Head Controller Area I to Area Controller II (including PT. KMB) dated June 9, 2014 No.001/Sustainability-RH-I/VI/2014 on Cessation of Operations Overlapping concession area of PT. KMB and PT. BUM +80 ha area as of the issuance of the letter. With the cessation of the operations, then after the date of June 9, 2014 is officially the PT. KMB only operates on a licensed concession area and there is no FFB production activities in areas outside the concession. Non conformance potential CAR is declared Complied with the observation. KMB has not demonstrated the documentation of the legal identification/signs of 102 HGU boundaries demarcated have been wellmaintained. Non conformance potential see CAR Observation 24 January 2014 The company has presented the documentation for the inventory and maintenance of HGU boundaries pole in the following forms; a. List of coordinates and map of the positions of the poles, which was issued by the BPN of Kotawaringin Timur, consists of SPO 4006a.5 16

19 104 units. b. The monitoring of the maintenance program and realization of the entire poles (104 legal boundary poles) for the year of 2013, and shall be proceeded on to c. Dissemination of HGU boundary poles to the community around the estate, as shown in the document of dissemination to the local officials of eight villages around the estate, and the document of Minutes of Dissemination event which have been conducted in a number of villages. Non conformance potential CAR is declared complied with observation. KMB has not been able to demonstrate the identification of a recognized (occupied) land by the community or other companies in the operational area of the company, so the company has not been able to show evidence of conflict resolution agreed by related parties (occupants). Non conformance potential see CAR Observation 28 February 2013 : KMB demonstrated the location of the land in dispute in the Map of Land Claim Problem Identification in PT. KMB Year 2012 Region 1 that includes Sungai Mentaya Estate and Gunung Makmur Estate. PT KMB has demonstrated all the evidence in the form of a copy of the agreement has been agreed for the settlement of land dispute, especially in the area of Region 1 (Sungai Mentaya Estate and Gunung Makmur Estate). 15 August 2013 : KMB has been able to demonstrate the map of the location identified as disputes (land claim) in the operational area of PT Karya Makmur Bahagia in the scale of 1:40.000, such as in Bukit Kecubung Estate and Bukit Makmur Estate. 24 January 2014 : KMB has demonstrated the evidence of efforts to resolve the land disputes especially with another plantation company namely PT Bangkit Giat Usaha Mandiri, such as in the form of minutes recording of the mediation facilitated by local government. KMB showed the latest progress of the effort of land dispute resolution mediation with PT BGUM in the form of mediation minutes by Local Government on 24 October 2013 and 19 November There is a number of agreements between both parties that are in the process of implementation. Non conformance potential CAR No is declared complied with observation. The document examination and field verification to the village people showed that the land cultivated by the company was originated from a voluntary land acquisition. Below is the complete list of the compensation documents; Certificate of Ownership of Land, acknowledged by the Head of Village and the Sub-district representative; Statement of Ownership of Land, acknowledged by the Chief of Neighborhood (RT Rukun Tetangga); Agreement of Release of Land, acknowledged by the Head of Village and the Sub-district representative; Minutes of Inspection and Measurement of Land, acknowledged by the Head of Village and the Customary Leader; Receipt of Payment, which took place in the presence of the Head of Village and the Customary Leader; Statement of Release of Land, acknowledged by the Head of Village and the Sub-district representative The following list gives a detailed information on the compensated land in chronological order; - During 2001, there have been 52 areas which covered a ha of land that were compensated; areas covering 1,346 ha of land in 2002; - 42 locations with the total area of 39.3 Ha in 2004; - 48 locations with the total area of Ha in 2005; - 70 locations with the total area of 1, Ha in 2007; - 57 locations with the total area of Ha in 2008; - 94 locations with the total area of Ha in 2009; locations with the total area of 5, Ha in 2010; locations with the total area of 2,207.9 Ha in 2011; locations with the total area of 1, Ha in 2012; - 15 locations with the total area of 2.9 Ha in 2013 SPO 4006a.5 17

20 As for the conflict with another company (PT BGUM) over an area at Bukit Kecubung Estate (BKCE), it was due to the land tenure conducted by PT BGUM on the land owned by PT KBM, and also due to the HGU overlapping between PT BGUM and PT KMB. Said conflict is still under arbitration process escorted by the regional government. PT KMB has presented the following records of their efforts in pursuing the conflict settlement; 1. A letter from PT Bangkit Giat Usaha Mandiri sent to PT KMB on 20 April 2012 regarding the warning for legal violation over the area operated by PT KMB (overlapping with the one cultivated by PT Bangkit Giat Usaha Mandiri). 2. A response letter from PT KMB, sent on 24 April 2012 (document no. 011/KMB-Dir/IV/2012) to PT Bangkit Giat Usaha Mandiri which explained PT KMB s attempt in seeking to end the conflict through deliberation, and stated that PT KMB has been operating the area according to existing legality. 3. A letter sent by PT KMB to the Regent of Kotawaringin Timur on 30 April 2013 (No, 009/KMB-DIR/IV/2013) regarding a request for facilitating the conflict of HGU overlapping between PT KMB and PT Bangkit Giat Usaha Mandiri. 4. Minutes of Mediation event. Facilitated by the local government on 24 October 2013 and on 19 November The Minutes showed a number of actions which will be taken by both of the disputing parties in an attempt to seek for the conflict settlement. KMB has not been able to demonstrate the mechanism of disputed land resolution carried out and agreed by both parties (company and community). Non conformance potential see CAR Observation 27 February 2014 KMB has kept a procedure for Handling Land Conflict No. BGA-SOP-KMB 25-RO, suggesting that the settlement process of land conflict shall be based on the agreement between the involving parties. Said process consists of the following steps; 1) Identification of area or potential land to incur conflict; 2) conflict settlement process in stages that starts with the collection of information, negotiations, agreements, and payment of compensation (if required); 3) payment of land clearing fee, and administration process; 4) Legal action, which shall be taken should there be any unresolved agreement during negotiation. Non-conformance potential CAR is declared complied with observation. Major Major Major Minor CAR is Complied with observation CAR is Complied with observation CAR is Complied with observation CAR is Complied with observation 2.3 Use of the land for oil palm does not diminish the legal rights, or customary rights, of other users, without their free, prior and informed consent. KMB has not been able to demonstrate the identification result of traditional right ownership area or the location (map) that has conflict potential in the operational area with traditional right ownership or customary right/ulayat. Non conformance potential see CAR Observation 24 January 2014 The following inventory result exposed that there were no proofs showing the existence of traditional / customary rights -- communal land, to be specific within the plantation area; a) The document of 2011 Social Impact Assessment result which confirmed that there were no traditional rights of indigenous people found at the plantation area and its surrounding. The land which became the plantation area and its surrounding was originated from the transmigration land, individually owned land acquired from purchase or inheritance, and from individual clearing activity of the state-owned land. b) Minutes of Dissemination and Data Collection of local cultures inventory on 4 March 2013, which was conducted by the company through a consultation with the local community leaders, including customary leaders of Dayak Tribe. On 23 January 2014, the Auditor has verified the existence of traditional rights through a consultation with the village authorities around the plantation, as well as with the local government (BPN and Plantation Agency), which confirmed that the establishment of the plantation did not interfere with the traditional rights. Non conformance potential CAR is complied. KMB has not been able to show the location (map) of the area with conflict potential, since the company has not identified the SPO 4006a.5 18